-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L86aai9S/blqHJHRlLiMnfu2Lat3bLixtrBTN6y7OrxubBzBY8dTNQ17pRMxM0hP baurgNnmysBsx50ncOIk0w== 0000317900-98-000005.txt : 19980521 0000317900-98-000005.hdr.sgml : 19980521 ACCESSION NUMBER: 0000317900-98-000005 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980520 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES PARTNERS X CENTRAL INDEX KEY: 0000317900 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953557899 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: SEC FILE NUMBER: 000-10304 FILM NUMBER: 98628494 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391513 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10KSB/A 1 FORM 10-KSB - ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) FORM 10-KSB/A (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-10304 ANGELES PARTNERS X (Name of small business issuer in its charter) California 95-3557899 (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 (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Limited Partnership Units (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB X . State issuer's revenues for its most recent fiscal year $9,010,000. State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests, as of a specified date within the past 60 days: Market value information for the Registrant's partnership interests is not available. Should a trading market develop for these interests, it is the General Partner's belief that the aggregate market value of the voting partnership's interest would not exceed $25,000,000. DOCUMENTS INCORPORATED BY REFERENCE NONE PART I ITEM 2. DESCRIPTION OF PROPERTIES Amended to properly disclose debt at the Partnership level and lender's recourse. The following table sets forth the Partnership's investments in properties: Date of Property Purchase Type of Ownership Use Greentree Apartments 12/31/81 Fee ownership subject to Apartment Mobile, Alabama first and second mortgages 178 units Carriage Hills Apartments 07/30/82 Fee ownership subject to Apartment East Lansing, Michigan first mortgage 143 units Vista Hills Apartments 08/26/82 Fee ownership subject to Apartment El Paso, Texas first mortgage 264 units SCHEDULE OF PROPERTIES (IN THOUSANDS): Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis Greentree $ 4,342 $ 3,221 5-25 yrs S/L $ 818 Carriage Hills 4,359 2,595 5-25 yrs S/L 806 Vista Hills 6,109 3,535 5-25 yrs S/L 1,282 $14,810 $ 9,351 $ 2,906 See "Note A" included in "Item 7, Financial Statements" for a description of the Partnership's depreciation policy. SCHEDULE OF NOTES PAYABLE (IN THOUSANDS):
Principal Principal Balance At Balance December 31, Interest Period Maturity Due At Property 1997 Rate Amortized Date Maturity Greentree 1st mortgage $ 3,478 7.83% 28.67 yrs 10/03 $ 3,135 2nd mortgage 113 7.83% (a) 10/03 113 Carriage Hills 1st mortgage 5,400 7.39% 30 yrs 12/04 4,958 Vista Hills 1st mortgage 3,667 10.23% 30 yrs 9/00 3,567 Other notes payable: Angeles Partners X (b) 1,561 10.82% (a) 9/02 1,561 Vista APX (in default) (b) 150 (c) (a) 11/97 150 14,369 Less unamortized discount (48) Total $14,321 (a) Interest only payments with a balloon payment at maturity. (b) Loan provided by Angeles Acceptance Pool, L.P. ("AAP") (see discussion below). (c) Interest accrues at the prime interest rate plus 2%.
On November 20, 1997, the Partnership refinanced the debt encumbering Carriage Hills. The refinancing replaced indebtedness of approximately $4,769,000 with a new mortgage in the amount of $5,400,000. Payments of approximately $37,000 are due on the first day of each month until maturity. Total loan costs related to the refinancing were approximately $116,000. Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust, provided unsecured loans to the Partnership. Concurrent with the sale of Cardinal Woods Apartments on August 15, 1997, the Partnership repaid approximately $588,000 to AMIT, and upon the refinancing of Carriage Hills on November 20, 1997, approximately $1,432,000 was repaid. The Partnership also has a loan that was previously secured by Vista Hills Apartments; however, the second mortgage was released in 1992 as part of the terms and conditions for refinancing the first mortgage. A multifamily rider was executed between the Partnership and the first mortgage holder for Vista APX, stating that any subordinated debt must be non-foreclosable and have a maturity date not less than 2 years beyond the maturity of the refinanced first mortgage; the agreement also provided for interest to be paid based on available cash flow. In June 1996, but effective March 31, 1996, this loan was modified, adding non-default accrued interest payable to the loan balance and waiving accrued, but unpaid, default interest and late charges. The modified note matures in September 2002 and provides for interest at 12.5% on the original $1,300,000 note amount. The debt restructuring was accounted for as a modification of terms. The total future cash payments under the restructured loan exceed the carrying value of the loan as of the date of restructure. Consequently, interest on the restructured debt is being recorded at an effective rate of 10.8% which is the rate required to equate the present value of the total future cash payments under the new terms with the carrying amount of the loan at the date of restructure. As part of the modifications, AMIT was granted a first priority lien on the Partnership's 99% limited partnership interests in the Vista APX lower-tier partnership which owns Vista Hills Apartments. The lender's recourse is limited to the assets of Vista APX; the debt is non-recourse to the assets of the Partnership. This loan, with a carrying amount of approximately $1,561,000 plus accrued interest of approximately $325,000, was assigned to AAP on December 31, 1997. As a result of the repayments and assignment mentioned above, the Partnership has no outstanding obligations to AMIT at December 31, 1997. Total interest expense on financing provided by AMIT was $387,000 and $404,000 for the years ended December 31, 1997 and 1996, respectively. In November 1992, 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. This working capital loan funded Vista APX's operating deficits in prior years. Total indebtedness, which is included as a note payable, was $150,000 and $651,000 at December 31, 1997, and December 31, 1996, respectively, with interest accruing at prime plus two percent. As a result of the sale of Cardinal Woods Apartments on August 15, 1997, $501,000 of the then outstanding debt to AAP was repaid. Principal is to be paid the earlier of i) the availability of funds, ii) the sale of one or more properties owned by the Partnership, or iii) November 25, 1997. Upon maturity, Vista APX did not have the means with which to satisfy the maturing debt obligation. The loan is unsecured; AAP's recourse is limited to the assets of Vista APX. The debt is non-recourse to the other assets of the Partnership. At this time, the General Partner does not believe that it is in the Partnership's best interest to fund Vista APX for this default. Total interest expense for these loans was $44,000 and $58,000 for the twelve months ended December 31, 1997 and 1996, respectively. SCHEDULE OF RENTAL RATES AND OCCUPANCY: Average Annual Average Annual Rental Rates Occupancy Property 1997 1996 1997 1996 Greentree $5,307/unit $5,121/unit 98% 97% Carriage Hills 9,076/unit 8,832/unit 95% 93% Vista Hills 5,177/unit 5,320/unit 77% 82% The decrease in average annual occupancy at Vista Hills Apartments is due to a high unemployment rate in the El Paso, Texas area with residents looking for short-term leasing arrangements. As a result, the property has increased advertising and lowered rental rates in an attempt to increase occupancy. At December 31, 1997, occupancy at Vista Hills had increased to 87%. As noted under "Item 1, Description of Business", the real estate industry is highly competitive. All of the properties of the Partnership are subject to competition from other residential apartment complexes in the area. The General Partner believes that all of the properties are adequately insured. The multi- family residential properties' lease terms are for one year or less. No residential tenant leases 10% or more of the available rental space. SCHEDULE OF REAL ESTATE TAXES (IN THOUSANDS) AND RATES: 1997 Taxes 1997 Rate Greentree $ 36 1.03% Carriage Hills 125 5.12% Vista Hills 95 2.83% PART II ITEM 7. FINANCIAL STATEMENTS Amended to properly disclose debt at the Partnership level and lender's recourse. ANGELES PARTNERS X LIST OF FINANCIAL STATEMENTS Report of Ernst & Young LLP, Independent Auditors Consolidated Balance Sheet - December 31, 1997 Consolidated Statements of Operations - Years ended December 31, 1997 and 1996 Consolidated Statement of Changes in Partners' Deficit - Years ended December 31, 1997 and 1996 Consolidated Statements of Cash Flows - Years ended December 31, 1997 and 1996 Notes to the Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Angeles Partners X We have audited the accompanying consolidated balance sheet of Angeles Partners X as of December 31, 1997, and the related consolidated statements of operations, changes in partners' deficit and cash flows for each of the two years in the period ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Angeles Partners X at December 31, 1997, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /S/ ERNST & YOUNG LLP Greenville, South Carolina February 25, 1998, except for Note J, as to which the date is March 17, 1998 ANGELES PARTNERS X CONSOLIDATED BALANCE SHEET December 31, 1997 (in thousands, except unit data) Assets Cash and cash equivalents $ 1,531 Receivables and deposits 302 Restricted escrows 369 Other assets 331 Investment properties Land $ 1,117 Buildings and related personal property 13,693 14,810 Less accumulated depreciation (9,351) 5,459 $ 7,992 Liabilities and Partners' Deficit Liabilities Accounts payable $ 119 Tenant security deposits payable 38 Accrued property taxes 106 Other liabilities 632 Notes payable, including $150 in default 14,321 Partners' Deficit General partner's $ (253) Limited partners' (18,625 units issued and outstanding) (6,971) (7,224) $ 7,992 See Accompanying Notes to Consolidated Financial Statements ANGELES PARTNERS X CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data)
Years Ended December 31, 1997 1996 Revenues: Rental income $ 3,961 $ 4,354 Other income 218 221 Gain on sale of investment property (Note B) 4,831 -- Total revenues 9,010 4,575 Expenses: Operating 1,857 2,026 General and administrative 179 203 Depreciation 801 939 Interest 1,715 1,869 Property taxes 303 342 Total expenses 4,855 5,379 Income (loss) before extraordinary items 4,155 (804) Extraordinary loss on early extinguishments of debt (Notes B and C) (569) -- Extraordinary gain on forgiveness of debt (Note C) 49 -- Net income (loss) $ 3,635 $ (804) Net income (loss) allocated to general partner (1%) $ 36 $ (8) Net income (loss) allocated to limited partners (99%) 3,599 (796) $ 3,635 $ (804) Net income (loss) per limited partnership unit: Income (loss) before extraordinary items $ 220.75 $ (42.69) Extraordinary items (27.62) -- Net income (loss) $ 193.13 $ (42.69) See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS X CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (in thousands, except unit data)
Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 18,714 $ 1 $ 18,714 $ 18,715 Partners' deficit at December 31, 1995 18,645 $ (267) $ (9,774) $ (10,041) Net loss for the year ended December 31, 1996 -- (8) (796) (804) Abandonment of partnership units (10) -- -- -- Partners' deficit at December 31, 1996 18,635 (275) (10,570) (10,845) Net income for the year ended December 31, 1997 -- 36 3,599 3,635 Distributions to partners -- (14) -- (14) Abandonment of partnership units (10) -- -- -- Partners' deficit at December 31, 1997 18,625 $ (253) $ (6,971) $ (7,224) See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS X CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 1997 1996 Cash flows from operating activities: Net income (loss) $ 3,635 $ (804) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation 801 939 Amortization of discounts and loan costs 90 99 Extraordinary loss on early extinguishments of debt 569 -- Gain on sale of investment property (4,831) -- Extraordinary gain on forgiveness of debt (49) -- Change in accounts: Receivables and deposits 116 98 Other assets (14) (5) Accounts payable 25 22 Tenant security deposits payable (18) (14) Accrued property taxes (27) (61) Due to affiliate (533) 132 Other liabilities (9) 273 Net cash (used in) provided by operating activities (245) 679 Cash flows from investing activities: Property improvements and replacements (435) (358) Net deposits to restricted escrows (132) (42) Proceeds from sale of investment property 6,987 -- Net cash provided by (used in) investing activities 6,420 (400) Cash flows from financing activities: Payments on notes payable (158) (184) Repayment of notes payable (9,762) -- Proceeds from refinancing 5,400 -- Loan costs paid (116) (14) Distributions to partners (14) -- Debt extinguishment costs (372) -- Net cash used in financing activities (5,022) (198) Net increase in cash and cash equivalents 1,153 81 Cash and cash equivalents at beginning of year 378 297 Cash and cash equivalents at end of year $ 1,531 $ 378 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,644 $ 1,398 Supplemental disclosure of non-cash financing activities: Interest on notes transferred to notes payable $ -- $ 493 See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS X Notes to Consolidated Financial Statements December 31, 1997 NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization: Angeles Partners X (the "Partnership") is a California limited partnership organized in June 1980, to acquire and operate residential properties. As of December 31, 1997, the Partnership operates three residential properties located in or near major urban areas in the United States. The Partnership's general partner is Angeles Realty Corporation (the "General Partner" or "ARC"). In December 1992, 100% of the General Partner's outstanding stock was purchased by MAE GP Corporation ("MAE GP"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia. Thus the General Partner is now a wholly-owned subsidiary of IPT. Principles of Consolidation: The consolidated financial statements of the Partnership include its 99% limited partnership interests in Cardinal Woods Apartments, Ltd., Carriage APX, Ltd. and Vista APX, Ltd. The Partnership may remove the General Partner of these lower tiers, therefore, the partnership is controlled and consolidated by the Partnership. All significant interpartnership balances have been eliminated. Minority interest is immaterial and not shown separately in the financial statements. Allocations to Partners: Net income (other than that arising from the occurrence of a sale or disposition) and net loss shall be allocated 1% to the General Partner and 99% to the Limited Partners. Except as discussed below, the Partnership will allocate distributions 1% to the General Partner and 99% to the Limited Partners. Upon the sale or other disposition, or refinancing, of any asset of the Partnership other than in connection with the dissolution of the Partnership, the Distributable Net Proceeds thereof, if any, which the General Partner determines are not required for support of the operations of the Partnership must be distributed: (i) first, to the General Partner and the Limited Partners in proportion to their interests in the Partnership, until all Limited Partners have received distributions equal to their Original Capital Investment Applicable to the Disposition plus their 6% additional Cumulative Distribution; (ii) second, to the General Partner in an amount equal to 4% of the aggregate sales price of the property; (iii) third, to the General Partner and the Limited Partners in proportion to their interests in the Partnership until all Limited Partners shall have received their additional 4% Cumulative Distribution; and (iv) thereafter, the remaining proceeds of the disposition shall be distributed eighty-eight percent (88%) to the Limited Partners in proportion to their interests in the Partnership, and twelve percent (12%) to the General Partner. Depreciation: Depreciation is computed utilizing the straight-line method over an estimated useful life of 10 to 25 years for buildings and improvements and 5 years for furniture and fixtures. For tax purposes, depreciation is computed by using the straight-line method over an estimated life of 5 to 12 years for personal property and 40 years for real property. Cash and Cash Equivalents: The Partnership considers all highly liquid investments with a maturity when purchased of three months or less to be cash equivalents. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Tenant Security Deposits: The Partnership requires security deposits from all lessees for the duration of the lease, and such deposits are included in receivables and deposits. The security deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Investment Properties: Investment properties are stated at cost. Acquisition fees are capitalized as a cost of real estate. The Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. Restricted Escrows: Capital Improvement - At the time of the refinancing of Carriage Hills Apartments' mortgage notes payable during 1997, approximately $159,000 of the proceeds were designated for "capital improvements escrows" for certain capital improvements. In addition, approximately $2,000 remains in a capital improvement escrow for Greentree Apartments at December 31, 1997. The total balance in capital improvement escrows at December 31, 1997, is approximately $161,000. Reserve Account - In addition to the capital improvement reserves, a general reserve account was established with the refinancing proceeds for Greentree. These funds were established to cover necessary repairs and replacements of existing improvements, debt service, out-of-pocket expenses incurred for ordinary and necessary administrative tasks, and payment of real property taxes and insurance premiums. Reserve accounts are also maintained for Vista Hills Apartments. Reserve escrows for all properties totaled approximately $133,000 at December 31, 1997. Other Escrows - Upon the sale of Cardinal Woods on August 15, 1997, a "Comfort Sum" deposit escrow was established for $75,000. These funds are being held back by the purchaser until one year from the date of the sale. At that time, the funds will be released to the Partnership, provided there are no outstanding claims with regard to the sale of Cardinal Woods. Loan Costs: Loan costs of approximately $436,000 less accumulated amortization of approximately $173,000, are included in other assets in the accompanying consolidated balance sheet. Loan costs are amortized as interest expense on a straight-line basis over the life of the loans. Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Fair Value: The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The fair value of the Partnership's long term debt, after discounting the scheduled loan payments based on estimated borrowing rates currently available, approximates its carrying balance. Advertising Costs: Advertising costs of approximately $69,000 and $78,000 for the years ended December 31, 1997 and 1996, respectively, are charged to expense as they are incurred and are included in operating expenses. Reclassifications: Certain reclassifications have been made to the 1996 balances to conform to the 1997 presentation. NOTE B - DISPOSITION OF RENTAL PROPERTY On August 15, 1997, Cardinal Woods Apartments located in Cary, North Carolina, was sold to an unaffiliated party for $7,100,000. After closing expenses of approximately $113,000, the net proceeds received by the Partnership were approximately $6,987,000. The Partnership used most of the proceeds from the sale of the property to pay off the debt encumbering the property. The first mortgage was approximately $3,782,000 and the second mortgage was approximately $122,000. Both the first and second mortgages were scheduled to mature in October 2003. The property was also encumbered by a note payable to Angeles Mortgage Investment Trust ("AMIT") (see "Note E") of approximately $588,000. The Partnership also paid off a note payable to Angeles Acceptance Pool, L.P. ("AAP") (see "Note E") in the amount of approximately $501,000. The remaining net proceeds were used to establish additional cash reserves for the Partnership. For financial statement purposes, the sale resulted in a gain of approximately $4,831,000. The Partnership also recorded an extraordinary loss on early extinguishment of debt of approximately $539,000, as a result of the payment of prepayment penalties and the write off of the remaining unamortized loan costs and debt discount. NOTE C - NOTES PAYABLE The principle terms of notes payable are as follows (in thousands):
Principal Monthly Principal Balance At Payment Balance December 31, Including Interest Maturity Due At Property 1997 Interest Rate Date Maturity Greentree 1st mortgage $ 3,478 $ 27 7.83% 10/03 $ 3,135 2nd mortgage 113 1 7.83% 10/03 113 Carriage Hills Apartments 1st mortgage (a) 5,400 37 7.39% 12/04 4,958 Vista Hills 1st mortgage 3,667 34 10.23% 9/00 3,567 Other notes payable: Angeles Partners X (d) 1,561 (b) 10.82% (c) 9/02 1,561 Vista APX (in default)(d) 150 (e) (e) 11/97 150 14,369 Less unamortized discounts at a rate of 8.13% (f) (48) Total $ 14,321 $ 99 (a) Debt was refinanced effective November 20, 1997 (see below for further explanation). (b) Interest only payments are based on available cash flow. (c) Debt was restructured effective March 31, 1996 (see below for further explanation). (d) Loan provided by Angeles Acceptance Pool, L.P. (see "Note E"). (e) Interest only payments at the prime interest rate or the prime interest rate plus 2%. (f) An interest rate buy-down was exercised for Greentree when the debt was refinanced. The fee for the interest rate reductions amounted to $73,700 and is being amortized as a mortgage discount on the interest method over the life of the loan. The unamortized discount fees are reflected as a reduction of the note payable and increase the effective rate of the debt to 8.13%.
At December 31, 1997, Vista APX did not have the means with which to pay its $150,000 outstanding indebtedness for Angeles Acceptance Pool, L.P., which matured in November 1997. The loan is unsecured; AAP's recourse is limited to the assets of Vista APX. The debt is non-recourse to the other assets of the Partnership. At this time, the General Partner does not believe that it is in the Partnership's best interest to fund Vista APX for this default. On November 20, 1997, the Partnership refinanced the mortgage debt encumbering Carriage Hills Apartments. The refinancing replaced indebtedness of approximately $4,769,000 with a new mortgage in the amount of $5,400,000 at an interest rate of 7.39%. The former indebtedness included a first mortgage of approximately $3,379,000 with an interest rate of 9.84% and a note payable to AMIT (see "Note E") of approximately $1,432,000 with an interest rate of 10.2%. Payments on the new debt are due on the first day of each month until the loan matures on December 1, 2004. Total capitalized loan costs were approximately $116,000. As a result of the refinancing, the Partnership recognized an extraordinary loss on early extinguishment of debt of approximately $30,000 due to the write off of unamortized loan costs and an extraordinary gain on forgiveness of debt of $49,000 on the AMIT note. AMIT, a real estate investment trust, provided unsecured loans to the Partnership. Concurrent with the sale of Cardinal Woods Apartments on August 15, 1997, the Partnership repaid approximately $588,000 to AMIT, and upon the refinancing of Carriage Hills on November 20, 1997, approximately $1,432,000 was repaid. The Partnership also has a loan that was previously secured by Vista Hills Apartments; however, the second mortgage was released in 1992 as part of the terms and conditions for refinancing the first mortgage. A multifamily rider was executed between the Partnership and the first mortgage holder for Vista APX, stating that any subordinated debt must be non-foreclosable and have a maturity date not less than 2 years beyond the maturity of the refinanced first mortgage; the agreement also provided for interest to be paid based on available cash flow. In June 1996, but effective March 31, 1996, this loan was modified, adding non-default accrued interest payable to the loan balance and waiving accrued, but unpaid, default interest and late charges. The modified note matures in September 2002 and provides for interest at 12.5% on the original $1,300,000 note amount. The debt restructuring was accounted for as a modification of terms. The total future cash payments under the restructured loan exceed the carrying value of the loan as of the date of restructure. Consequently, interest on the restructured debt is being recorded at an effective rate of 10.8% which is the rate required to equate the present value of the total future cash payments under the new terms with the carrying amount of the loan at the date of restructure. As part of the modifications, AMIT was granted a first priority lien on the Partnership's 99% limited partnership interests in the Vista APX lower-tier partnership which owns Vista Hills Apartments. The lender's recourse is limited to the assets of Vista APX; the debt is non-recourse to the assets of the Partnership. This loan, with a carrying amount of approximately $1,561,000 plus accrued interest of approximately $325,000, was assigned to AAP on December 31, 1997. As a result of the repayments and assignment mentioned above, the Partnership has no outstanding obligations to AMIT at December 31, 1997. Total interest expense on financing provided by AMIT was $387,000 and $404,000 for the years ended December 31, 1997 and 1996, respectively. Scheduled principal payments of notes payable subsequent to December 31, 1997, are as follows (in thousands): 1998 $ 284 1999 146 2000 3,711 2001 126 2002 1,697 Thereafter 8,405 $14,369 The mortgage notes payable are nonrecourse and are secured by a pledge of the respective properties and by a pledge of revenues from operations of the respective properties. Certain of the mortgage notes impose prepayment penalties if repaid prior to maturity. NOTE D - INCOME TAXES Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. The following is a reconciliation of reported net income (loss) and Federal taxable income (loss) (in thousands): 1997 1996 Net income (loss) as reported $ 3,635 $ (804) Add (deduct): Depreciation differences 360 (54) Unearned income 8 (61) Amortization (2) (2) Gain on sale 1,081 -- Other -- (22) Federal taxable income (loss) $ 5,082 $ (943) Federal taxable income (loss) per limited partnership unit $ 235.26 $ (50.12) The following is a reconciliation at December 31, 1997, between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): Net deficiency - as reported $ (7,224) Land and buildings 2,596 Accumulated depreciation (5,149) Syndication fees 2,071 Other 112 Net deficiency - Federal tax basis $ (7,594) NOTE E - 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. The following expenses were paid or accrued to the General Partner and affiliates in 1997 and 1996 (in thousands): 1997 1996 Property management fees (included in operating expenses) $ 216 $ 227 Reimbursement for services of affiliates including, $16,000 and $14,000 of construction service reimbursement in 1997 and 1996, respectively (included in investment properties and general and administrative and operating expenses) 142 152 Additionally, the Partnership paid approximately $87,000 to affiliates of Insignia for reimbursements of costs related to the sale of Cardinal Woods Apartments in August of 1997 and $26,000 for reimbursements of costs related to the refinancing of Carriage Hills in November of 1997. The refinancing costs were capitalized as loan costs and are being amortized over the term of the loan. For the period from January 1, 1996, to August 31, 1997, the Partnership insured 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 master policy. The agent assumed the financial obligations to the affiliate of the General Partner who received payment on these obligations from the agent. The amount of the Partnership's insurance premiums that accrued to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. AMIT provided unsecured loans to the Partnership. Concurrent with the sale of Cardinal Woods Apartments on August 15, 1997, the Partnership repaid approximately $588,000 to AMIT, and upon the refinancing of Carriage Hills on November 20, 1997, approximately $1,432,000 was repaid. The Partnership also has a loan that was previously secured by Vista Hills Apartments; however, the second mortgage was released in 1992 as part of the terms and conditions for refinancing the first mortgage. A multifamily rider was executed between the Partnership and the first mortgage holder for Vista APX, stating that any subordinated debt must be non-foreclosable and have a maturity date not less than 2 years beyond the maturity of the refinanced first mortgage; the agreement also provided for interest to be paid based on available cash flow. In June 1996, but effective March 31, 1996, this loan was modified, adding non-default accrued interest payable to the loan balance and waiving accrued, but unpaid, default interest and late charges. The modified note matures in September 2002 and provides for interest at 12.5% on the original $1,300,000 note amount. The debt restructuring was accounted for as a modification of terms. The total future cash payments under the restructured loan exceed the carrying value of the loan as of the date of restructure. Consequently, interest on the restructured debt is being recorded at an effective rate of 10.8% which is the rate required to equate the present value of the total future cash payments under the new terms with the carrying amount of the loan at the date of restructure. As part of the modifications, AMIT was granted a first priority lien on the Partnership's 99% limited partnership interests in the Vista APX lower-tier partnership which owns Vista Hills Apartments. The lender's recourse is limited to the assets of Vista APX; the debt is non-recourse to the assets of the Partnership. This loan, with a carrying amount of approximately $1,561,000 plus accrued interest of approximately $325,000, was assigned to AAP on December 31, 1997. As a result of the repayments and assignment mentioned above, the Partnership has no outstanding obligations to AMIT at December 31, 1997. Total interest expense on financing provided by AMIT was $387,000 and $404,000 for the years ended December 31, 1997 and 1996, respectively. In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The terms of the Class B shares provide that they are convertible, in whole or in part, into Class A Common Shares of AMIT on the basis of 1 Class A share for every 49 Class B shares (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed not to convert the Class B shares so long as AMIT's option is outstanding). These Class B Shares entitle the holder to receive 1% of the distributions of net cash distributed by AMIT (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed to waive its right to receive dividends and distributions so long as AMIT's option is outstanding). The holder of the Class B shares is also entitled to vote on the same basis as the holders of Class A shares, providing the holder with approximately 39% of the total voting power of AMIT (unless and until converted to Class A shares, in which case the percentage of the vote controlled represented by such shares would approximate 1.3% of the total voting power of AMIT). As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B shares owned by it. This option can be exercised at the end of 10 years or when all loans made by AMIT to partnerships which were 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. In connection with such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing (which occurred April 14, 1995), as payment for the option. If and when the option is exercised, AMIT will be required to remit to MAE GP an additional $94,000. Simultaneously with the grant of the option and as part of the settlement, MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that the holder of the Class B shares is permitted to vote those 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. With respect to such matters, the trustees of AMIT are required to vote (pursuant to the irrevocable proxy) the Class B shares (as a single block) in the same manner as a majority of the Class A shares are voted (to be determined without consideration of the votes of "Excess Class A Shares" (as defined in Section 6.13 of AMIT's Declaration of Trust)). Between its acquisition of the Class B shares (in November 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection with the election of trustees and other matters. In February 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), and in connection with that merger, MAE GP dividended all of the Class B shares to its sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a result, MAE, as the holder of the Class B shares, is now subject to the terms of the settlement agreement, option and irrevocable proxy described in the two preceding paragraphs. Neither MAE GP nor MAE has exerted and intends to exert any management control over or participate in the management of AMIT. However, subject to the terms of the proxy described below, MAE may choose to vote the Class B shares as it deems appropriate in the future. Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE and Insignia (affiliates of which provide property management and partnership administration services to the Partnership), owned 96,800 Class A shares of AMIT at December 31, 1997. These Class A shares represent approximately 2.2% of the total voting power of AMIT. On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in principle contemplating, among other things, a business combination of AMIT and IPT, an entity then owned 98% by Insignia and its affiliates. On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to which (subject to shareholder approval and certain other conditions, including the receipt by AMIT of a fairness opinion from its investment bankers) AMIT would be merged with and into IPT, with each Class A share and Class B share being converted into 1.625 and 0.0332 common shares of IPT, respectively. The foregoing exchange ratios are subject to adjustment to account for dividends paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1, 1997. It is anticipated that Insignia and its affiliates (including MAE) would own approximately 57% of post-merger IPT when this transaction is consummated. In November 1992, 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. This working capital loan funded Vista APX's operating deficits in prior years. Total indebtedness, which is included as a note payable, was $150,000 and $651,000 at December 31, 1997, and December 31, 1996, respectively, with interest accruing at prime plus two percent. As a result of the sale of Cardinal Woods Apartments on August 15, 1997, $501,000 of the then outstanding debt to AAP was repaid. Principal is to be paid the earlier of i) the availability of funds, ii) the sale of one or more properties owned by the Partnership, or iii) November 25, 1997. Upon maturity, Vista APX did not have the means with which to satisfy the maturing debt obligation. The loan is unsecured; AAP's recourse is limited to the assets of Vista APX. The debt is non-recourse to the other assets of the Partnership. At this time, the General Partner does not believe that it is in the Partnership's best interest to fund Vista APX for this default. Total interest expense for these loans was $44,000 and $58,000 for the twelve months ended December 31, 1997 and 1996, respectively. NOTE F - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (IN THOUSANDS) Initial Cost To Partnership Buildings Cost and Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition Greentree Apartments $ 3,591 $ 211 $ 3,345 $ 786 Carriage Hills Apartments 5,400 101 3,509 749 Vista Hills Apartments 3,667 805 4,827 477 Other notes payable 1,711 -- -- -- Totals $14,369 $ 1,117 $ 11,681 $ 2,012
Gross Amount At Which Carried At December 31, 1997 Buildings And Related Personal Accumulated Date of Date Depreciation Description Land Property Total Depreciation Construction Acquired Life-Years Greentree $ 211 $ 4,131 $ 4,342 $ 3,221 08/74 12/31/81 5-25 Carriage Hills 101 4,258 4,359 2,595 06/72 07/30/82 5-25 Vista Hills 805 5,304 6,109 3,535 02/77 08/26/82 5-25 Totals $ 1,117 $ 13,693 $14,810 $ 9,351
Reconciliation of Investment Properties and Accumulated Depreciation: Years Ended December 31, 1997 1996 Investment Properties Balance at beginning of year $ 19,898 $ 19,595 Dispositions of property (5,523) (55) Property improvements 435 358 Balance at end of year $ 14,810 $ 19,898 Accumulated Depreciation Balance at beginning of year $ 11,917 $ 11,022 Depreciation expense 801 939 Dispositions of property (3,367) (44) Balance at end of year $ 9,351 $ 11,917 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1997 and 1996, is approximately $17,406,000 and $23,604,000. The accumulated depreciation taken for Federal income tax purposes at December 31, 1997 and 1996, is approximately $14,500,000 and $19,570,000. NOTE G - DISTRIBUTIONS During the year ended December 31, 1997, distributions of $1,394,000 were made by Cardinal Woods Apartments, Ltd., a lower-tier partnership. Of these distributions, Angeles Partners X, the Limited Partner, received $1,380,000, or 99% of the distribution. Angeles Realty Corporation, the General Partner of Cardinal Woods Apartments, Ltd., received $14,000 or 1% of the distribution. For the year ended December 31, 1996, there were no distributions. NOTE H - ABANDONMENT OF UNITS In 1997 and 1996, the number of Limited Partnership Units decreased by 10 each year due to limited partners abandoning their units. In abandoning his or her Limited Partnership Units, a limited partner relinquishes all right, title and interest in the Partnership as of the date of abandonment. However, during the year of abandonment, the limited partner is allocated his or her share of the income or loss for that year. The net income (loss) per limited partnership unit is calculated based on the number of units outstanding at the beginning of the year. NOTE I - CONTINGENCY On January 20, 1995 an employee at Vista Hills Apartments ("Plaintiff") allegedly sustained personal injuries during the ordinary course of business. The Plaintiff alleges that his employment was thereafter terminated in retaliation for his having filed a workers compensation claim. Plaintiff seeks compensatory and punitive damages. The General Partner cannot predict the outcome of this proceeding or the range of settlement for the Plaintiff, if settled in favor of Plaintiff; however, the General Partner believes that this claim is without merit and intends to vigorously defend it. NOTE J - SUBSEQUENT EVENT On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. PART III ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 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. The following expenses were paid or accrued to the General Partner and affiliates in 1997 and 1996 (in thousands): 1997 1996 Property management fees $ 216 $ 227 Reimbursement for services of affiliates including, $16,000 and $14,000 of construct- ion service reimbursements in 1997 and 1996, respectively 142 152 Additionally, the Partnership paid approximately $87,000 to affiliates of Insignia for reimbursements of costs related to the sale of Cardinal Woods Apartments in August of 1997 and $26,000 for reimbursements of costs related to the refinancing of Carriage Hills in November of 1997. The refinancing costs were capitalized as loan costs and are being amortized over the term of the loans. For the period from January 1, 1996, to August 31, 1997, the Partnership insured 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 master policy. The agent assumed the financial obligations to the affiliate of the General Partner who received payment on these obligations from the agent. The amount of the Partnership's insurance premiums that accrued to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. AMIT provided unsecured loans to the Partnership. Concurrent with the sale of Cardinal Woods Apartments on August 15, 1997, the Partnership repaid approximately $588,000 to AMIT, and upon the refinancing of Carriage Hills on November 20, 1997, approximately $1,432,000 was repaid. The Partnership also has a loan that was previously secured by Vista Hills Apartments; however, the second mortgage was released in 1992 as part of the terms and conditions for refinancing the first mortgage. A multifamily rider was executed between the Partnership and the first mortgage holder for Vista APX, stating that any subordinated debt must be non-foreclosable and have a maturity date not less than 2 years beyond the maturity of the refinanced first mortgage; the agreement also provided for interest to be paid based on available cash flow. In June 1996, but effective March 31, 1996, this loan was modified, adding non-default accrued interest payable to the loan balance and waiving accrued, but unpaid, default interest and late charges. The modified note matures in September 2002 and provides for interest at 12.5% on the original $1,300,000 note amount. The debt restructuring was accounted for as a modification of terms. The total future cash payments under the restructured loan exceed the carrying value of the loan as of the date of restructure. Consequently, interest on the restructured debt is being recorded at an effective rate of 10.8% which is the rate required to equate the present value of the total future cash payments under the new terms with the carrying amount of the loan at the date of restructure. As part of the modifications, AMIT was granted a first priority lien on the Partnership's 99% limited partnership interests in the Vista APX lower-tier partnership which owns Vista Hills Apartments. The lender's recourse is limited to the assets of Vista APX; the debt is non-recourse to the assets of the Partnership. This loan, with a carrying amount of approximately $1,561,000 plus accrued interest of approximately $325,000, was assigned to AAP on December 31, 1997. As a result of the repayments and assignment mentioned above, the Partnership has no outstanding obligations to AMIT at December 31, 1997. Total interest expense on financing provided by AMIT was $387,000 and $404,000 for the years ended December 31, 1997 and 1996, respectively. In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The terms of the Class B shares provide that they are convertible, in whole or in part, into Class A Common Shares of AMIT on the basis of 1 Class A share for every 49 Class B shares (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed not to convert the Class B shares so long as AMIT's option is outstanding). These Class B Shares entitle the holder to receive 1% of the distributions of net cash distributed by AMIT (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed to waive its right to receive dividends and distributions so long as AMIT's option is outstanding). The holder of the Class B shares is also entitled to vote on the same basis as the holders of Class A shares, providing the holder with approximately 39% of the total voting power of AMIT (unless and until converted to Class A shares, in which case the percentage of the vote controlled represented by such shares would approximate 1.3% of the total voting power of AMIT). As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B shares owned by it. This option can be exercised at the end of 10 years or when all loans made by AMIT to partnerships which were 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. In connection with such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing (which occurred April 14, 1995), as payment for the option. If and when the option is exercised, AMIT will be required to remit to MAE GP an additional $94,000. Simultaneously with the grant of the option and as part of the settlement, MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that the holder of the Class B shares is permitted to vote those 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. With respect to such matters, the trustees of AMIT are required to vote (pursuant to the irrevocable proxy) the Class B shares (as a single block) in the same manner as a majority of the Class A shares are voted (to be determined without consideration of the votes of "Excess Class A Shares" (as defined in Section 6.13 of AMIT's Declaration of Trust)). Between its acquisition of the Class B shares (in November 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection with the election of trustees and other matters. In February 1998, MAE GP was merged into Insignia Properties Trust("IPT"), and in connection with that merger, MAE GP dividended all of the Class B shares to its sole stockholder, Metropolitan Asset enhancement, L.P. ("MAE"). As a result, MAE, as the holder of the Class B shares, is now subject to the terms of the settlement agreement, option and irrevocable proxy described in the two preceding paragraphs. Neither MAE GP nor MAE has exerted and intends to exert any management control over or participate in the management of AMIT. However, subject to the terms of the proxy described below, MAE may choose to vote the Class B shares as it deems appropriate in the future. Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE and Insignia (which provides property management and partnership administration services to the Partnership), owned 96,800 Class A shares of AMIT at December 31, 1997. These Class A shares represent approximately 2.2% of the total voting power of AMIT. On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in principle contemplating, among other things, a business combination of AMIT and IPT, an entity then owned 98% by Insignia and its affiliates. On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to which (subject to shareholder approval and certain other conditions, including the receipt by AMIT of a fairness opinion from its investment bankers) AMIT would be merged with and into IPT, with each Class A share and Class B share being converted into 1.625 and 0.0332 common shares of IPT, respectively. The foregoing exchange ratios are subject to adjustment to account for dividends paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1, 1997. It is anticipated that Insignia and its affiliates (including MAE) would own approximately 57% of post-merger IPT when this transaction is consummated. In November 1992 AAP was organized to acquire and hold the obligations evidencing the working capital loan previously provided to the Partnership by ACII. Angeles is the 99% limited partner of AAP and 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. This working capital loan funded Vista APX's operating deficits in prior years. Total indebtedness, which is included as a note payable, was $150,000 and $651,000 at December 31, 1997, and December 31, 1996, respectively, with interest accruing at prime plus two percent. As a result of the sale of Cardinal Woods Apartments on August 15, 1997, $501,000 of the then outstanding debt to AAP was repaid. Principal is to be paid the earlier of i) the availability of funds, ii) the sale of one or more properties owned by the Partnership, or iii) November 25, 1997. Upon maturity, Vista APX did not have the means with which to satisfy the maturing debt obligation. The loan is unsecured and is non-recourse to the Partnership. At this time, the General Partner does not believe that it is in the Partnership's best interest to fund Vista APX for this default. Total interest expense for these loans was $44,000 and $58,000 for the twelve months ended December 31, 1997 and 1996, respectively. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES PARTNERS X By: Angeles Realty Corporation Its General Partner By: /s/ Carroll D. Vinson Carroll D. Vinson President and Director Date: May 20, 1998 In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. /s/ Carroll D. Vinson President and Director May 20, 1998 Carroll D. Vinson /s/ Robert D. Long, Jr. Vice President and Chief May 20, 1998 Robert D. Long, Jr. Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----