0000950168-95-000595.txt : 19950818
0000950168-95-000595.hdr.sgml : 19950818
ACCESSION NUMBER: 0000950168-95-000595
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950809
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ANGELES PARTNERS IX
CENTRAL INDEX KEY: 0000313499
STANDARD INDUSTRIAL CLASSIFICATION: 6512
IRS NUMBER: 953417136
STATE OF INCORPORATION: CA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-09704
FILM NUMBER: 95560045
BUSINESS ADDRESS:
STREET 1: ONE INSIGNIA FINANCIAL PLZ
STREET 2: PO BOX 1089
CITY: GREENVILLE
STATE: SC
ZIP: 29602
BUSINESS PHONE: 8032391000
MAIL ADDRESS:
STREET 1: ONE INSIGNIA FINANCIAL PLAZA
STREET 2: P.O. BOX 1089
CITY: GREENVILLE
STATE: SC
ZIP: 29602
10QSB
1
INSIGNIA 10QSB 82098 AP IX
FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-9704
ANGELES PARTNERS IX
(Exact name of small business issuer as specified in its charter)
California 95-3417137
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES PARTNERS IX
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 1995
Assets
Cash:
Unrestricted $ 502,827
Restricted--tenant security deposits 176,107
Accounts receivable 27,982
Escrow for taxes and insurance 290,113
Restricted escrows 538,579
Other assets 667,182
Investment properties:
Land $ 3,082,586
Buildings and related personal
property 31,426,682
34,509,268
Less accumulated depreciation (18,384,529) 16,124,739
$18,327,529
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 149,119
Tenant security deposits 177,846
Accrued taxes 253,828
Other liabilities 306,941
Mortgage notes payable 19,277,503
Partners' Deficit
General partners $ (193,410)
Limited partners (19,975 units
issued and outstanding) (1,644,298) (1,837,708)
$18,327,529
See Accompanying Notes to Financial Statements
1
b) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenues:
Rental income $1,703,014 $1,639,430 $3,352,124 $3,269,120
Other income 89,753 75,099 168,671 142,515
Total revenues 1,792,767 1,714,529 3,520,795 3,411,635
Expenses:
Operating 612,118 572,149 1,125,778 1,039,502
General and administrative 54,257 42,597 105,013 73,880
Property management fees 89,086 85,537 175,280 169,678
Maintenance 262,074 249,246 491,411 475,211
Depreciation 389,815 348,651 768,610 693,321
Interest 461,068 460,164 923,250 920,816
Property taxes 103,127 86,338 208,324 189,137
Total expenses 1,971,545 1,844,682 3,797,666 3,561,545
Loss on disposal of
property -- (435) -- (435)
Net loss $ (178,778) $ (130,588) $ (276,871) $ (150,345)
Net loss allocated
to general partners (1%) $ (1,788) $ (1,306) $ (2,769) $ (1,503)
Net loss allocated
to limited partners (99%) (176,990) (129,282) (274,102) (148,842)
$ (178,778) $ (130,588) $ (276,871) $ (150,345)
Net loss per limited
partnership unit $ (8.86) $ (6.46) $ (13.72) $ (7.44)
See Accompanying Notes to Financial Statements
2
c) ANGELES PARTNERS IX
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 20,000 $ 1,000 $20,000,000 $20,001,000
Partners' deficit at
December 31, 1994 19,975 $(190,641) $(1,370,196) $(1,560,837)
Net loss for the six months
ended June 30, 1995 -- (2,769) (274,102) (276,871)
Partners' deficit at
June 30, 1995 19,975 $(193,410) $(1,644,298) $(1,837,708)
See Accompanying Notes to Financial Statements
3
d) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net loss $(276,871) $(150,345)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 768,610 693,321
Amortization of discounts and loan costs 70,536 65,319
Loss on disposal of property -- 435
Change in accounts:
Restricted cash (5,743) (3,698)
Accounts receivable 6,097 59,097
Escrows for taxes and insurance 57,411 (122,090)
Other assets (6,500) (5,656)
Accounts payable (226,993) (34,656)
Tenant security deposit liabilities 9,905 (3,411)
Accrued taxes (13,334) 87,021
Other liabilities 31,270 (31,021)
Net cash provided by
operating activities 414,388 554,316
Cash flows from investing activities:
Property improvements and replacements (358,202) (230,876)
Deposits to restricted escrows (16,895) (54,966)
Receipts from restricted escrows 273,848 48,591
Net cash used in investing
activities (101,249) (237,251)
See Accompanying Notes to Financial Statements
4
d) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from financing activities:
Payments on mortgage notes payable $(115,863) $(106,050)
Net cash used in financing
activities (115,863) (106,050)
Net increase in cash 197,276 211,015
Cash at beginning of period 305,551 272,754
Cash at end of period $ 502,827 $ 483,769
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 852,714 $ 862,528
See Accompanying Notes to Financial Statements
5
e) ANGELES PARTNERS IX
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended
June 30, 1995, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-KSB for the year
ended December 31, 1994.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B - Angeles Acceptance Pool, Angeles Mortgage Investment Trust
Angeles Mortgage Investment Trust, ("AMIT"), a real estate investment
trust, has provided a second trust deed loan which is secured by the
Partnership's real property known as Panorama Terrace. Total interest
expense for this loan was $14,063 for the six months ended June 30,
1994, and June 30, 1995.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner,
owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert
these Class B Shares, in whole or in part, into Class A Shares on the
basis of 1 Class A Share for every 49 Class B Shares. These Class B
Shares entitle MAE GP to receive 1% of the distributions of net cash
distributed by AMIT. These Class B Shares also entitle MAE GP to vote
on the same basis as Class A Shares which allows MAE GP to vote
approximately 33% of the total shares (unless and until converted to
Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the
vote). Between the date of acquisition of these shares (November 24,
1992) and March 31, 1995, MAE GP declined to vote these shares. Since
that date, MAE GP voted its shares at the annual meeting in connection
with the election of trustees and other matters. MAE GP has not exerted
and continues to decline to exert any management control over or
participate in the management of AMIT. However, MAE GP may choose to
vote these shares as it deems appropriate in the future.
As part of the above described settlement, MAE GP granted to AMIT an
option to acquire the Class B shares owned by it. This option can be
exercised at the
6
ANGELES PARTNERS IX
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note B - Angeles Acceptance Pool, Angeles Mortgage Investment Trust-
continued
end of 10 years or when all loans made by AMIT to partnerships
affiliated with MAE GP as of November 9, 1994, which is the date of
execution of a definitive Settlement Agreement, have been paid in full,
but in no event prior to November 9, 1997. AMIT delivered to MAE GP
cash in the sum of $250,000 at closing, which occurred April 14, 1995,
as payment for the option. Upon exercise of the option, AMIT would
remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be
able to vote Class B shares on all matters except those involving
transactions between AMIT and MAE GP affiliated borrowers or the
election of any MAE GP affiliate as an officer or trustee of AMIT. On
those matters, MAE GP granted to the AMIT trustees in their capacity as
trustees of AMIT, proxies with regard to the Class B shares instructing
such trustees to vote said Class B shares in accordance with the vote of
the majority of the Class A shares voting to be determined without
consideration of the votes of "Excess Class A Shares" as defined in
Section 6.13 of the Declaration of Trust of AMIT.
In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware
limited partnership was organized to acquire and hold the obligations
evidencing the working capital loan previously provided to the
Partnership by Angeles Capital Investments, Inc. ("ACII"). Angeles
Corporation ("Angeles") is the 99% limited partner of AAP and Angeles
Acceptance Directives, Inc. ("AAD"), an affiliate of the General
Partner, was, until April 14, 1995, the 1% general partner of AAP. On
April 14, 1995, as part of a settlement of claims between affiliates of
the General Partner and Angeles, AAD resigned as general partner of AAP
and simultaneously received a 1/2% limited partner interest in AAP. An
affiliate of Angeles now serves as the general partner of AAP.
The Partnership has filed a Proof of Claim in the bankruptcy
proceeding of Angeles Corporation concerning the Partnership's
indebtedness to AAP. The Proof of Claim alleges that instead of causing
the Partnership to pay AAP on account of such debt, Angeles either
itself or through an affiliate, caused the Partnership to make payment
to another Angeles affiliate. To the extent that such action results in
the Partnership not receiving credit for the payments so made, the
Partnership will have been damaged in an amount equal to the
misappropriated payments. The General Partner anticipates resolution in
favor of the Partnership, however, such resolution cannot be assured at
this time.
While a plan of reorganization in the Angeles bankruptcy case was
confirmed in March 1995, Angeles reserves the right to object to certain
claims and, accordingly, the claim described above has not yet been
resolved.
7
ANGELES PARTNERS IX
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for payments
to affiliates for services and as reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. (See Note B for
additional discussion concerning transactions with AMIT and AAP,
affiliates of the General Partner.)
The following transactions with the General Partner and affiliates
for the six months ended June 30, 1995 and 1994 are as follows:
1995 1994
Property management fees $175,280 $169,678
Reimbursement of services of affiliates 68,897 21,132
The Partnership insures its properties under a master policy through
an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a
business, certain financial obligations from an insurance agency which
was later acquired by the agent who placed the current year's master
policy. The current agent assumed the financial obligations to the
affiliate of the General Partner, who receives payments on these
obligations from the agent. The amount of the Partnership's insurance
premiums accruing to the benefit of the affiliate of the General Partner
by virtue of the agent's obligations is not significant.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of five apartment
complexes. The following table sets forth the average occupancy of the
properties for the six months ended June 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
The Pines of Northwest Crossing Apartments
Houston, Texas 85% 95%
Panorama Terrace Apartments
Birmingham, Alabama 98% 95%
Forest River Apartments
Gadsden, Alabama 97% 94%
Village Green Apartments
Montgomery, Alabama 96% 97%
The Greens Apartments
San Antonio, Texas 93% 90%
In an attempt to address the occupancy decline at The Pines, the
General Partner has instructed the property manager to offer
concessions, such as discounts on rents based on the size of the leased
units and length of lease, as well as reduced required security
deposits. In addition, the General Partner is in the process of
upgrading the interiors of the units as cash reserves allow. The
General Partner attributes the increase in occupancy at Panorama Terrace
to increasing interest rates deterring tenants from buying homes.
Furthermore, the increase in occupancy at Forest River Apartments is due
to extensive exterior renovations and increased rental rates, which have
attracted a more stable clientele than the students which have
historically made up 30-35% of the tenants. Finally, the General
Partner attributes the increase in occupancy at The Greens to an
aggressive concession program which included a reduced move-in cost
program in the first quarter.
The Partnership's net loss for the six months ended June 30, 1995,
was $276,871 with the second quarter having a loss of $178,778. The
Partnership had losses of $150,345 and $130,588 for the corresponding
periods of 1994. The increased loss is primarily attributable to
increased operating expenses. Operating expenses increased due to
increases in resident concessions, resident relations costs, training
and travel expense and insurance expense. Concessions, as discussed
previously, increased in an attempt to increase occupancy at The Greens
and The Pines. Resident relations costs, which are special items
provided to tenants, such as greeting baskets and free video rentals,
increased in an attempt to retain tenants. Training and travel expense
increased due to participation in various training courses and seminars
by several properties' personnel. Finally, insurance expense increased
due to new premiums at higher rates with additional coverage which began
in the second quarter of 1994. Also contributing to the overall
increase in net loss was increased general and administrative expenses
resulting from increased cost reimbursements for the
9
General Partner. In addition, depreciation expense increased due
to the addition of approximately $1,000,000 in fixed assets in
1994 resulting from property improvement activity as required by
refinancing agreements and other efforts to improve the overall
interior and exterior appearance of the apartment complexes.
Offsetting these increased expenses was an increase in rental
revenue due to increased rental rates at all of the properties and
increased occupancy at four of the properties as noted above. In
addition, other income increased primarily due to stricter
enforcement of various tenant charges, such as legal fees,
cleaning and damage charges, and late charges, as well as
increased interest income earned on capital reserve accounts.
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from
increases in expenses. As part of this plan the General Partner
attempts to protect the Partnership from the burden of inflation-related
increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, due to changing market conditions, which can
result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General
Partner will be able to sustain such a plan.
At June 30, 1995, the Partnership had unrestricted cash of $502,827
compared to $483,769 at June 30, 1994. Net cash provided by operating
activities decreased primarily as a result of the decrease in accounts
payable due to the accrual at December 31, 1994, for property
improvements at The Greens Apartments. Also contributing to this change
was the increased net loss as discussed above. In addition, accrued
taxes decreased resulting from the timing of property tax payments for
The Pines of Northwest Crossing. This change is offset by the receipt
of cash from escrows for taxes and insurance to fund the tax payments.
The change in accounts receivable decreased between the first six months
of 1994 and the first six months of 1995 due to the refund in January
1994 of Forest River's tax escrow held by the previous mortgage company.
Finally, other liabilities increased primarily due to the timing of
rental collections and the accrual of General Partner cost
reimbursements. Net cash used in investing activities decreased
primarily due to the receipt of funds from the restricted escrows in
1995 to cover improvements at the properties. Net cash used in
financing activities increased due to an increase in principal paid on
mortgage notes.
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the level of
capital expenditures required at the various properties to adequately
maintain the physical assets and other operating needs of the
Partnership. Such assets are currently thought to be sufficient for any
near-term needs of the Partnership. The mortgage indebtedness of
$19,277,503, net of discount, is amortized over varying periods with
required balloon payments ranging from May 1997 to October 15, 2003, at
which time the properties will either be refinanced or sold. Future
cash distributions will depend on the levels of cash generated from
operations, property sales and the availability of cash reserves.
Distributions may also be restricted by the requirement to deposit net
operating income (as defined in the mortgage notes) into the Reserve
Account until the $1,000 per apartment unit is funded for each
respective property. No cash distributions were paid during fiscal 1994
or during the first six months of fiscal 1995. At this time, the
General Partner does not anticipate a cash distribution during 1995.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership has filed a Proof of Claim in the bankruptcy
proceeding of Angeles Corporation concerning the Partnership's
indebtedness to Angeles Acceptance Pool, L.P. ("AAP"). The Proof of
Claim alleges that, instead of causing the Partnership to pay AAP on
account of such debt, Angeles, either itself or through an affiliate,
caused the Partnership to make payment to another Angeles affiliate. To
the extent that such action results in the Partnership not receiving
credit for the payments so made, the Partnership will have been damaged
in an amount equal to the misappropriated payments. The General Partner
anticipates resolution in favor of the Partnership, however, such
resolution cannot be assured at this time.
While a plan of reorganization in the Angeles bankruptcy case was
confirmed in March 1995, Angeles reserves the right to object to certain
claims and, accordingly, the claim described above has not yet been
resolved.
The Registrant is unaware of any pending or outstanding litigation
that is not of a routine nature except as noted above. The General
Partner of the Registrant believes that all such pending or outstanding
litigation will be resolved without a material adverse effect upon the
business, financial condition, or operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as
an exhibit to this report.
b) Reports on Form 8-K: None filed during the quarter ended
June 30, 1995.
11
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANGELES PARTNERS IX
By: Angeles Realty Corporation
General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and
Principal Accounting Officer
Date: August 9, 1995
12
EX-27
2
EXHIBIT 27
5
1
6-MOS
DEC-31-1995
JUN-30-1995
502,827
0
27,982
0
0
997,029
34,509,268
18,384,529
18,327,529
887,734
19,277,503
0
0
0
(1,837,708)
18,327,529
0
3,520,795
0
0
3,797,666
0
923,250
(276,871)
0
(276,871)
0
0
0
(276,871)
(13.72)
0