-----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, Bg8DvqNJ7S3cYizTYe1zdHZGdXqRdreK2Op9xJENbo4le1HlmeTEH644iG3H/slK M05+NrLzzc2wmatxSC6Nbg== 0000317900-97-000001.txt : 19970812 0000317900-97-000001.hdr.sgml : 19970812 ACCESSION NUMBER: 0000317900-97-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970811 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10304 FILM NUMBER: 97654934 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 10QSB 1 FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-10304 ANGELES PARTNERS X (Exact name of small business issuer as specified in its charter) California 95-3557899 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) 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 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) ANGELES PARTNERS X CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 1997 Assets Cash and cash equivalents: Unrestricted $ 506 Restricted--tenant security deposits 58 Accounts receivable 20 Escrows for taxes and insurance 190 Restricted escrows 257 Other assets 420 Investment properties: Land $ 1,386 Buildings and related personal property 18,736 20,122 Less accumulated depreciation (12,356) 7,766 $ 9,217 Liabilities and Partners' Deficit Liabilities Accounts payable $ 82 Tenant security deposits 58 Accrued property taxes 126 Due to affiliate 579 Other liabilities 895 Notes payable 18,683 Partners' Deficit General partner's $ (279) Limited partners' (18,714 units issued and 18,635 outstanding) (10,927) (11,206) $ 9,217 See Accompanying Notes to Consolidated Financial Statements b) ANGELES PARTNERS X CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1997 1996 1997 1996 Revenues: Rental income $ 1,098 $ 1,091 $ 2,194 $ 2,131 Other income 52 70 115 126 Total revenues 1,150 1,161 2,309 2,257 Expenses: Operating 394 387 773 739 General and administrative 43 53 84 101 Maintenance 118 118 230 195 Depreciation 221 225 439 448 Interest 472 473 942 939 Property taxes 101 98 202 197 Total expenses 1,349 1,354 2,670 2,619 Net loss $ (199) $ (193) $ (361) $ (362) Net loss allocated to general partner (1%) $ (2) $ (2) $ (4) $ (4) Net loss allocated to limited partners (99%) (197) (191) (357) (358) $ (199) $ (193) $ (361) $ (362) Net loss per limited partnership unit $(10.57) $(10.24) $(19.16) $(19.20) Limited partnership units outstanding 18,635 18,645 18,635 18,645 See Accompanying Notes to Consolidated Financial Statements
c) ANGELES PARTNERS X CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (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, 1996 18,635 $ (275) $(10,570) $(10,845) Net loss for the six months ended June 30, 1997 -- (4) (357) (361) Partners' deficit at June 30, 1997 18,635 $ (279) $(10,927) $(11,206) See Accompanying Notes to Consolidated Financial Statements
d) ANGELES PARTNERS X CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1997 1996 Cash flows from operating activities: Net loss $(361) $(362) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 439 448 Amortization of discounts and loan costs 51 49 Change in accounts: Restricted cash (2) 4 Accounts receivable 39 (10) Escrows for taxes and insurance 113 117 Other assets (43) (31) Accounts payable (12) 21 Tenant security deposit liabilities 2 (5) Accrued property taxes (7) (48) Due to affiliates 46 65 Other liabilities 205 183 Net cash provided by operating activities 470 431 Cash flows from investing activities: Property improvements and replacements (224) (125) Deposits to restricted escrows (42) (39) Receipts from restricted escrows 22 28 Net cash used in investing activities (244) (136) Cash flows from financing activities: Payments on notes payable (98) (92) Loan costs -- (14) Net cash used in financing activities (98) (106) Net increase in unrestricted cash and cash equivalents 128 189 Unrestricted cash and cash equivalents at beginning of period 378 297 Unrestricted cash and cash equivalents at end of period $ 506 $ 486 Supplemental disclosure of cash flow information: Cash paid for interest $ 688 $ 705 Supplemental disclosure of non-cash financing and investing activities: Interest on notes transferred to notes payable $ -- $ 493 Property improvements and replacements included in accounts payable $ -- $ 22 See Accompanying Notes to Consolidated Financial Statements
e) ANGELES PARTNERS X NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements for Angeles Partners X (the "Partnership") 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 Angeles Realty Corporation (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, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1996. NOTE B - 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 amounts were paid or accrued to the General Partner and affiliates for the six months ended June 30, 1997 and 1996 (in thousands): 1997 1996 Property management fees (included in operating expenses) $ 115 $ 111 Reimbursement for services of affiliates including $579,000 accrued at June 30, 1997 (included in general and administrative expenses) 49 68 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 payment 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. Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust, has provided unsecured loans totaling approximately $3,585,000 at June 30, 1997. Total interest expense on this financing was $212,000 and $206,000 for the six month periods ended June 30, 1997 and 1996, respectively. Accrued interest payable was approximately $419,000 at June 30, 1997. Two of these loans totaling $2,500,000 were previously secured by two investment properties; however, the second mortgages were released in 1992 as part of the terms and conditions for refinancing the first mortgages. Multifamily riders were executed between the Partnership and the first mortgage holders for Carriage APX and Vista APX, stating that any subordinated debt must be non-foreclosable and have maturity dates not less than 2 years beyond the maturity of the refinanced first mortgages; the agreement also provided for interest to be paid based on available cash flow. In June 1996, but effective March 31, 1996, these loans were modified, adding non-default accrued interest payable to the loan balances and waiving accrued, but unpaid, default interest and late charges. The modified $1,404,000 Carriage APX note matures in September 2000 and provides for interest at 12% on the original $1,200,000 note amount. The modified $1,530,000 Vista APX 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% for Vista Hills and 10.2% for Carriage Hills, 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 and Carriage APX lower-tier partnerships which own Vista Hills Apartments and Carriage Hills Apartments, respectively. MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns 1,675,113 Class B Shares of AMIT. The terms of the Class B shares provide that they are convertible in whole or in part, into Class A Shares 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 has agreed not to convert the Class B shares so long as AMIT's option is outstanding). These Class B Shares entitle MAE GP 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 has agreed to waive it's right to receive dividends and distributions so long as AMIT's option is outstanding). These Class B Shares also entitle MAE GP to vote on the same basis as Class A Shares, providing MAE GP 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 the shares held by MAE GP would approximate 1.3% 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 1995 and 1996 annual meetings 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. MAE GP may choose to vote these shares as it deems appropriate in the future. In addition, Liquidity Assistance L.L.C., an affiliate of the General Partner and an affiliate of Insignia Financial Group, Inc. ("Insignia"), which provides property management and partnership administration services to the Partnership, owns 96,800 Class A Shares of AMIT at June 30, 1997. These Class A Shares represent approximately 2.2% 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 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. 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 execution of the option and as part of the settlement, MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is MAE GP is permitted to vote the 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 is obligated to deliver 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). 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 Insignia Properties Trust, an entity owned 98% by Insignia and its affiliates ("IPT"). 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, through the closing date of the merger. It is anticipated that Insignia (and its affiliates) and MAE GP (and its affiliates) would own approximately 55% and 2.4%, respectively, of post-merger IPT when this transaction is consummated. 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 loans 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. These working capital loans funded the Partnership's operating deficits in prior years. Total indebtedness, which is included as a note payable, was $651,000 at June 30, 1997, with monthly interest only payments at prime and prime plus 2%. 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. Total interest expense for this loan was $29,000 and $29,000 for the six months ended June 30, 1997 and 1996, respectively. The General Partner will initiate negotiations with AAP and anticipates that these loans will be restructured. However, there is no assurance that these negotiations will be successful. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of four apartment complexes. The following table sets forth the average occupancy of the properties for the six months ended June 30, 1997 and 1996: Average Occupancy Property 1997 1996 Cardinal Woods Apartments Cary, North Carolina 98% 97% Greentree Apartments Mobile, Alabama 98% 97% Carriage Hills Apartments East Lansing, Michigan 94% 93% Vista Hills Apartments (1) El Paso, Texas 74% 81% (1)The General Partner attributes the low occupancy at Vista Hills Apartments 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 offered rent concessions to increase occupancy. The Partnership realized a net loss of approximately $361,000 for the six months ended June 30, 1997 compared to a net loss of approximately $362,000 for the six months ended June 30, 1996. The Partnership's net loss for the three months ended June 30, 1997 was approximately $199,000 compared to a net loss of approximately $193,000 for the three months ended June 30, 1996. Total revenue increased, primarily due to rental rate increases at every property accompanied by slight increases in average occupancy at three of the investment properties. In addition, general and administrative expenses decreased due to a decrease in professional fees and expense reimbursements for the six months ended June 30, 1997 compared to the six months ended June 30, 1996. Partially offsetting these changes was increased maintenance expense, which was primarily due to increases in fire protection costs, electrical supplies, tennis court repairs, and landscaping. Included in maintenance expense for the six months ended June 30, 1997 is approximately $40,000 for major repairs and renovations comprised primarily of tennis court repairs, exterior building repairs, parking lot repairs and landscaping. For the six months ended June 30, 1996, approximately $24,000 of major repairs and renovations comprised primarily of swimming pool repairs, interior building improvements and landscaping was included in maintenance expense. 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 expense. 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, 1997 the Partnership held unrestricted cash and cash equivalents of approximately $506,000 compared to approximately $486,000 at June 30, 1996. Net cash provided by operating activities increased as a result of increased collections on accounts receivable and changes in timing of payments of accrued taxes and other liabilities. Net cash used in investing activities increased primarily due to increased property improvements and replacements in 1997. Net cash used in financing activities decreased due to loan costs paid during the six months ended June 30, 1996. 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 property 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. In June 1996, but effective March 31, 1996, two of the Partnership's AMIT notes were modified. Previously accrued interest of $493,000 was added to the principal balance of existing debt. The debt restructuring was accounted for as a modification of terms. The total future cash payments under the restructured loan exceeded 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% for Vista Hills and 10.2% for Carriage Hills, 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. The outstanding indebtedness of $18,683,000 (net of discount) has maturity dates ranging from November 1997 to December 2003, at which time $17,879,000 of balloon payments are due. The General Partner has entered into a sales agreement on Cardinal Woods Apartments, which is scheduled to close August 15, 1997. Working capital loans totaling $651,000, payable to Angeles Acceptance Pool, L.P. mature in November 1997. The General Partner plans to initiate negotiations with AAP and anticipates that these loans will be restructured. However, there is no assurance that these negotiations will be successful. Future cash distributions will depend on the levels of net cash generated from operations, refinancings, property sales and the availability of cash reserves. There were no distributions made during 1996 or during the six month periods ended June 30, 1997. PART II - OTHER INFORMATION 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, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly 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 By: /s/ Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: August 11, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Partners X 1997 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000317900 ANGELES PARTNERS X 1,000 6-MOS DEC-31-1997 JUN-30-1997 506 0 20 0 0 0 20,122 12,356 9,217 0 18,683 0 0 0 (11,206) 9,217 0 2,309 0 0 2,670 0 942 0 0 0 0 0 0 (361) (19.16) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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