-----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, KGqjJo5XKKW5XTb3Fgu4WY0N2uIOcQpHqiOSv4ITXVGrXG5SdG7ZhWdf0OyitawW tyrgGF9sqga9jlkvPKXOTA== 0000702986-95-000002.txt : 19951119 0000702986-95-000002.hdr.sgml : 19951119 ACCESSION NUMBER: 0000702986-95-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES PARTNERS XI CENTRAL INDEX KEY: 0000702986 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953788040 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11766 FILM NUMBER: 95590443 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 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 September 30, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-11766 ANGELES PARTNERS XI (Exact name of small business issuer as specified in its charter) California 95-3788040 (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) (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 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 XI CONSOLIDATED BALANCE SHEET (Unaudited)
September 30, 1995 Assets Cash: Unrestricted $ 1,226,358 Restricted--tenant security deposits 508,747 Accounts receivable, net of an allowance of $30,788 10,077 Escrows for taxes 136,715 Restricted escrows 75,000 Other assets 112,767 Investment in joint venture 181,935 Investment properties: Land $ 3,998,115 Buildings and related personal 24,089,815 28,087,930 Less accumulated depreciation (13,916,985) 14,170,945 $ 16,422,544 Liabilities and Partners' Deficit Liabilities Accounts payable $ 256,514 Due to affiliates 317,474 Tenant security deposits 506,860 Accrued taxes 11,795 Other liabilities 685,139 Notes payable, including $178,423 in default 30,721,534 Partners' Deficit General partners' $ (476,916) Limited partners' (39,842 units issued and outstanding) (15,599,856) (16,076,772) $ 16,422,544
[FN] See Accompanying Notes to Consolidated Financial Statements b) ANGELES PARTNERS XI CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenues: Rental income $1,852,396 $2,488,142 $5,608,104 $ 7,457,771 Other income 102,362 142,707 268,736 408,488 Total revenues 1,954,758 2,630,849 5,876,840 7,866,259 Expenses: Operating 466,522 697,560 1,458,368 2,179,966 General and administrative 49,391 47,000 189,353 235,971 Property management fees 94,321 131,826 283,812 389,048 Maintenance 223,697 287,936 573,419 769,366 Depreciation 409,460 529,651 1,216,037 1,587,081 Interest 849,164 1,179,860 2,540,538 3,581,437 Property taxes 204,004 229,352 563,099 675,631 Bad debt expense 30,788 -- 30,788 -- Total expenses 2,327,347 3,103,185 6,855,414 9,418,500 Loss before loss on disposal of property, gain on sale of investment property, equity in income (loss) of joint venture and debt restructure fees (372,589) (472,336) (978,574) (1,552,241) Loss on disposal of property -- (47,197) -- (47,197) Gain on sale of investment property 2,336,262 -- 2,336,262 -- Equity in income (loss) of joint venture 39,620 24,391 (7,487) 31,793 Debt restructure costs (330,276) -- (330,276) -- Income (loss) before extraordinary item 1,673,017 (495,142) 1,019,925 (1,567,645) Extraordinary item-debt forgiveness 220,594 -- 220,594 -- Net income (loss) $1,893,611 $ (495,142) $1,240,519 $(1,567,645) Net income (loss) allocated to general partners (1%) $ 18,936 $ (4,951) $ 12,405 $ (15,676) Net income (loss) allocated to limited partners (99%) 1,874,675 (490,191) 1,228,114 (1,551,969) Net income (loss) $1,893,611 $ (495,142) $1,240,519 $(1,567,645) Per limited partnership unit: Income (loss) before extraordinary item $ 41.57 $ (12.25) $ 25.34 $ (38.80) Extraordinary item 5.48 -- 5.48 -- Net income (loss) $ 47.05 $ (12.25) $ 30.82 $ (38.80)
[FN] See Accompanying Notes to Consolidated Financial Statements c) ANGELES PARTNERS XI CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 40,000 $ 30,000 $ 40,000,000 $ 40,030,000 Partners' deficit at December 31, 1994 39,842 $(489,321) $(16,827,970) $(17,317,291) Net loss for the nine months ended September 30, 1995 -- 12,405 1,228,114 1,240,519 Partners' deficit at September 30, 1995 39,842 $(476,916) $(15,599,856) $(16,076,772)
[FN] See Accompanying Notes to Consolidated Financial Statements d) ANGELES PARTNERS XI CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net income $1,240,519 $(1,567,645) Adjustments to reconcile net loss to cash provided by operating activities: Equity in loss (income) from joint venture 7,487 (31,793) Depreciation 1,216,037 1,587,081 Amortization of loan costs and discounts 76,324 162,517 Bad debt expense 30,788 -- Loss on disposal of property -- 47,197 Gain on sale of investment property (2,336,262) -- Debt forgiveness (220,594) -- Change in accounts: Restricted cash (13,331) 10,341 Accounts receivable (13,685) (3,936) Escrows for taxes 88,873 73,012 Other assets (7,609) (37,332) Accounts payable (371,687) (149,943) Tenant security deposit liabilities (8,911) 15,894 Accrued taxes (61,854) (92,283) Due to affiliates 45,166 158,209 Other liabilities 926,856 918,106 Net cash provided by operating activities 598,117 1,089,425 Cash flows from investing activities: Proceeds from sale of investment property 4,716,872 -- Property improvements and replacements (1,095,560) (407,997) Deposits to restricted escrows (615,000) -- Withdrawals from restricted escrows 540,000 -- Net cash provided by (used in) investing activities 3,546,312 (407,997) Cash flows from financing activities: Additions to mortgage notes payable 33,600 -- Repayments of mortgage notes payable (3,986,937) -- Payments on mortgage notes payable (570,288) (350,297) Net cash used in financing activities (4,523,625) (350,297) (Decrease) increase in cash (379,196) 331,131 Cash at beginning of period 1,605,554 386,854 Cash at end of period $ 1,226,358 $ 717,985 Supplemental disclosure of cash flow information: Cash paid during this period for interest $ 1,656,750 $ 2,608,745 Property improvements and replacements included in accounts payable $ 57,145 $ -- Interest transferred to mortgage notes payable $ 1,880,009 $ --
[FN] See Accompanying Notes to Consolidated Financial Statements ANGELES PARTNERS XI NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Going Concern The Partnership continues to suffer from inadequate liquidity. In addition, there are no identified capital resources available to the Partnership. The Partnership is in default on $178,423 of its unsecured indebtedness due to its inability to make interest and principal payments when due. The Partnership is current on its first mortgage secured by the Fox Run property. Until September 6, 1995, Harbour Landing Apartments was owned by Harbour Landing AP XI L.P. ("Sub-tier Partnership") of which the Partnership is the 99.9% limited partner. The Sub-tier Partnership was in default on the first and second mortgages secured by the Harbour Landing property and filed for bankruptcy protection and subsequently filed a plan of reorganization with the bankruptcy court to avoid foreclosure by the lenders. During the second quarter of 1995, the court approved the plan which gave the Sub-tier Partnership through September 1995 to pay the debt secured by the property through a refinancing or sale of the property. The plan provided that the lender could foreclose on the property if the debt was not paid by September 1995. On September 6, 1995, the Partnership sold the Harbour Landing property. The second mortgages secured by Fox Run are held by Angeles Mortgage Investment Trust ("AMIT"). The Managing General Partner has negotiated amendments to these mortgages which now require interest only payments based on an 8% pay rate with interest continuing to accrue at the original rate as per the note agreement. The principal amount of this debt is due in September 1996 (see Note E for further discussion). The first mortgage on the Fox Run property matures in July 1996. The Managing General Partner intends to refinance the first and second mortgages prior to maturity, however, there is no assurance that these negotiations will be successful. As a result of the above conditions, there is substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts or classification of liabilities that may result from the outcome of these uncertainties. Note B - 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 Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 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 fiscal year ended December 31, 1994. Certain reclassifications have been made to the 1994 information to conform to the 1995 presentation. Note C Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Managing 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 Managing General Partner and affiliates during the nine months ended September 30, 1995 and 1994: 1995 1994 Property management fees $283,812 $389,048 Reimbursement for services of affiliates, (Total of $317,474 and $388,693 accrued at September 30, 1995 and 1994, respectively) 101,190 158,210 Marketing services 851 8,199 The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing 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 Managing 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 Managing General Partner by virtue of the agent's obligations is not significant. Note C Transactions with Affiliated Parties (continued) 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. Angeles Acceptance Directives, Inc. ("AAD"), an affiliate of the Managing 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 Managing 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 the Partnership's operating deficits in prior years. Total indebtedness, which is included as a note payable, was $1,797,299 at September 30, 1995, and $2,761,717 at September 30, 1994, with monthly interest only payments at prime. A principal payment of $770,078 was made in December 1994 from the proceeds of the sale of Westmont Village Apartments. A principal payment was also made in September 1995 in the amount of $194,340 from the proceeds of the sale of Harbour Landing Apartments. The remaining principal balance is to be paid the earlier of i) the availability of funds, ii) the sale of the remaining property owned by the Partnership, or iii) November 25, 1997. Total interest expense for this loan was $132,168 and $143,264 for the nine months ended September 30, 1995 and 1994, respectively. There was $14,522 in interest accrued at September 30, 1995. AMIT currently provides secondary financing secured by the Partnership's investment property, Fox Run Apartments. In addition, AMIT provides unsecured financing to the Partnership. Total AMIT indebtedness included as a note payable, was $6,942,032 at September 30, 1995. $178,423 of this indebtedness, which is unsecured debt provided to the Partnership, was in default at September 30, 1995. Total interest expense on this financing was $508,328 and $667,625 for the nine months ended September 30, 1995 and 1994, respectively. Accrued interest was $268,975 at September 30, 1995. MAE GP Corporation ("MAE GP"), an affiliate of the Managing 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 to 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 37% 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 1995 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. As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B Shares. 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. 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 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 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. Note D - Investment in Joint Venture The Partnership owns a 41.1% interest in Princeton Meadows Golf Course Joint Venture ("Joint Venture"). AMIT currently provides financing on the Joint Venture, secured by the investment property, in the amount of $1,320,419 which is in default at September 30, 1995. (See PART II, ITEM 1. LEGAL PROCEEDINGS for further discussion). Condensed balance sheet information of the Joint Venture at September 30, 1995, is as follows: Assets Cash $ 276,240 Other assets 123,988 Investment properties, net 1,898,912 Total $2,299,140 Liabilities and Partners' Capital Notes payable to AMIT, in default $1,320,419 Other liabilities 533,382 Partners' capital 445,339 Total $2,299,140 Note D - Investment in Joint Venture The condensed statements of operations of the Joint Venture are summarized as follows: Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenue $ 501,362 $ 429,594 $ 985,090 $ 975,529 Costs and expenses (404,963) (370,247) (1,003,307) (898,174) Net income (loss) $ 96,399 $ 59,347 $ (18,217) $ 77,355 The Princeton Meadows Golf Course property had an underground fuel storage tank that was removed in 1992. This fuel storage tank caused contamination to the area. Reports were filed with the proper authorities. Subsequent to September 30, 1995, the State of New Jersey Department of Environmental Protection issued a corrective actions letter to the Joint Venture. Based on discussions with environmental engineers and others, the Managing General Partner expects the remediation costs to be immaterial to the Partnership. Note E - Debt Restructure Fees Prior to the third quarter of 1995, the Partnership was in default on the mortgage held by AMIT, which is secured by the Fox Run property, due to its inability to make interest and principal payments when due. However, during the third quarter of 1995, the Partnership was successful in negotiating amendments to these mortgages effective September 1, 1995. As a result of the modifications, $330,276 of debt restructure costs were incurred. The accrued interest balance of $1,880,009 at August 31, 1995, was reclassed to the principal balance of the mortgage pursuant to the agreement. The agreement also requires interest only payments of $45,091 based on an 8% pay rate with interest continuing to accrue at the original rate as per the original note agreement, with the principal amount due in September 1996. Note F - Sale of Investment Property On September 6, 1995, the Managing General Partner sold the Harbour Landing property to an unaffiliated third party. The total consideration paid to the Partnership was $4,900,000. The total gain on the sale was $2,336,262. Also, as a result of the sale $220,594 of debt was forgiven. The second mortgage secured by Harbour Landing is held by AMIT and is still in default at September 30, 1995. Due to the sale of the property, this debt became unsecured debt of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment property consists of one apartment complex. The following table sets forth the average occupancy of the property for the nine months ended September 30, 1995 and 1994: Average Occupancy Property 1995 1994 Fox Run Apartments Plainsboro, New Jersey 96% 95% The Partnership realized net income of $1,893,611 and $1,240,519 for the three and nine months ended September 30, 1995, respectively, versus net losses of $495,142 and $1,567,645 for the three and nine months ended September 30, 1994, respectively. The increase in income during 1995 can primarily be attributed to the gain on the sale of Harbour Landing Apartments, one of the partnership's investment properties, during the third quarter of 1995 (See discussion below). Due to the sale of Westmont Village Apartments during the fourth quarter of 1994, and the sale of Harbour Landing Apartments during the third quarter of 1995, rental and other income decreased for the three and nine months ended September 30, 1995, versus the three and nine months ended September 30, 1994. Also contributing to the decrease in other income were decreases in corporate units, deposit forfeitures, and laundry income at Fox Run Apartments. As a result of the above mentioned sales, there was an overall decrease in the following expenses for the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994: operating, property management fees, maintenance, depreciation, interest, and property tax expense. Operating expenses also decreased due to decreased advertising and utility expenses at Fox Run Apartments. General and administrative expenses decreased for the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994, due to decreased fee reimbursements for partnership accounting, investor services and asset management services. A decrease in snow removal expense at Fox Run Apartments also contributed to the lower maintenance expense for the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994. The bad debt expense in 1995 resulted from the reserve established on accounts receivable from tenants of the Harbour Landing Apartments that were considered uncollectible following the sale of the property. During the third quarter of 1994, the Partnership realized a loss on disposal of property of $47,197. The loss was due to a re-roofing project at Fox Run Apartments, resulting in the write off of the original roofs not yet fully depreciated. Prior to September 6, 1995, Harbour Landing Apartments was owned by Harbour Landing AP XI L.P. ("Sub-tier Partnership") of which the Partnership is the 99.9% limited partner. The Sub-tier Partnership was in default on the first and second mortgages secured by the Harbour Landing property and filed for bankruptcy protection and subsequently filed a plan of reorganization with the bankruptcy court to avoid foreclosure by the lenders. During the second quarter of 1995, the court approved the plan which gave the Sub-tier Partnership through September 1995 to pay the debt secured by the property through a refinancing or sale of the property. The plan provided that the lender could foreclose on the property if the debt was not paid by September 1995; however, on September 6, 1995, the Managing General Partner sold the property to an unaffiliated third party. The total consideration paid to the Partnership was $4,900,000. The total gain on the sale was $2,336,262. Also, as a result of the sale $220,594 of debt was forgiven. The second mortgage secured by Harbour Landing is held by AMIT and is still in default at September 30, 1995. Due to the sale of the property, this debt became unsecured debt of the Partnership. The Partnership has a 41.1% investment in the Princeton Meadows Golf Course Joint Venture. For the three and nine months ended September 30, 1995, the Partnership realized equity in income and equity in loss of the Joint Venture of $39,620 and $7,487, respectively, as compared to an equity in income of the Joint Venture of $24,391 and $31,793 for the three and nine months ended September 30, 1994, respectively (See Note C - Investment in Joint Venture). The loss for the nine months ended September 30, 1995, can be attributed to bad debt expense recorded during the year due to the reserve for uncollectible receivables. Prior to the third quarter of 1995, the Partnership was in default on the mortgage held by AMIT, which is secured by the Fox Run property, due to its inability to make interest and principal payments when due. However, during the third quarter of 1995, the Partnership was successful in negotiating amendments to these mortgages effective September 1, 1995. As a result of the modifications, $330,276 of debt restructure costs were incurred. The accrued interest balance of $1,880,009 at August 31, 1995, was reclassed to the principal balance of the mortgage pursuant to the agreement. The agreement also requires interest only payments of $45,091 based on an 8% pay rate with interest continuing to accrue at the original rate as per the original note agreement, with the principal amount due in September 1996. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment property 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 Managing 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 Managing General Partner will be able to sustain such a plan. At September 30, 1995, the Partnership had unrestricted cash of $1,226,358 as compared to $717,985 at September 30, 1994. Net cash provided by operating activities decreased primarily due to a decrease in accounts payable. Net cash from investing activities increased due to the proceeds received from the sale of Harbour Landing Apartments. Net cash used in financing activities increased due to the repayments on the mortgage notes payable due to the sale of Harbour Landing Apartments. 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 investment property to adequately maintain the physical assets and other operating needs of the Partnership. The mortgage indebtedness of $30,721,534, of which $178,423 is in default, is amortized over 30 years and includes interest only payments with maturity dates of July 1996, September 1996, and November 1997, at which time the property will either be refinanced or sold. Future cash distributions will depend on the levels of net cash generated from operations, property sales, and the availability of cash reserves. There were no cash distributions made during the first nine months of 1995. As a result of the above conditions, there is substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts or classification of liabilities that may result from the outcome of these uncertainties. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS AMIT, a real estate investment trust, made loans to the Partnership in June 1988, September 1992 and September 1992 in the amounts of $1,250,000, $2,000,000 and $1,600,000, respectively, secured by the Partnership's real property known as Fox Run Apartments. AMIT also made a loan to the Joint Venture in September 1991 in the amount of $1,280,000 secured by the Joint Venture's real property known as Princeton Meadows Golf Course. Due to default interest and late fees that are delinquent and have been added to the principal balance, the current balance of the debt secured by Princeton Meadows Golf Course is $1,320,419. The Partnership believed that the loans were non-recourse obligations. AMIT asserted that these loans were recourse by virtue of certain amendments purportedly entered into as of November 1, 1992, but which the Partnership has been informed and believes were actually executed in December 1992 ("Note Modifications"). The Partnership has been further informed and believes that the amendments were executed at the direction of Angeles by an individual in his purported capacity as an officer of the Managing General Partner of the Partnership and the Joint Venture at a time when such person was not in fact an officer of such entities. Accordingly, the Partnership and the Joint Venture filed Proofs of Claim in the Angeles bankruptcy proceeding with respect to such purported amendments. Additionally, the Partnership and the Joint Venture filed a Proof of Claim in the Angeles Funding Corporation and Angeles Real Estate Corporation bankruptcy proceedings on similar grounds. Both Angeles Funding Corporation and Angeles Real Estate Corporation are affiliates of Angeles. Subsequently, the Partnership has determined that the original note agreements evidencing the $1,250,000 and $1,600,000 obligations were recourse and, therefore, the Partnership's Proofs of Claim were withdrawn. In addition, Angeles has agreed to cooperate with the Partnership and the Joint Venture in any action commenced by or against them by AMIT asserting that the $2,000,000 and the $1,280,000 obligations owed to AMIT are recourse to the Partnership. Angeles further agreed to waive the attorney-client privilege with respect to any information relating to the Note Modifications. Accordingly, the Partnership and the Joint Venture withdrew their Proofs of Claim on August 9, 1995. MAE GP Corporation ("MAE GP"), an affiliate of the Managing 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 distribution 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 37% 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 1995 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. MAE GP may choose to vote these shares as it deems appropriate in the future. As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B Shares. 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. 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 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 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. The Registrant is unaware of any other pending or outstanding litigation that is not of a routine nature. The Managing 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 2. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: 10.11 Contract to Purchase and Sell Property with Exhibits dated July 24, 1995, between Harbour Landing AP XI, L.P., a South Carolina limited partnership, and New Plan Realty Trust, a Massachusetts Business Trust. 10.12 Special Warranty Deed dated September 5, 1995, between Harbour Landing AP XI, L.P., and New Plan Realty Trust. 10.13 Comfort Sum Escrow Agreement dated September 6, 1995, between New Plan Realty Trust, Harbour Landing AP XI, L.P., and Coastal Abstract Service, Inc. 10.14 Blanket Conveyance, Bill of Sale and Assignment between Harbour Landing AP XI, L.P., and New Plan Realty Trust. 10.15 Non-Warranty Deed between Harbour Landing AP XI, L.P., and New Plan Realty Trust. 10.16 Assignment and Assumption of Leases dated September 5, 1995, between Harbour Landing, AP XI, L.P., and New Plan Realty Trust. Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: A Form 8-K dated September 6, 1995 was filed reporting the sale of Harbour Landing Apartments located at 7625 Garner's Ferry Road in Columbia, South Carolina. 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 XI By: Angeles Realty Corporation II Managing General Partner By: /s/Carroll D. Vinson Carroll D. Vinson President and Principal Executive Officer By: /s/Robert D. Long, Jr. Robert D. Long, Jr. Controller and Principal Accounting Officer Date: November 13, 1995 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Partners XI 1995 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB. 0000702986 ANGELES PARTNERS XI 1 9-MOS DEC-31-1995 SEP-30-1995 1,226,358 0 10,077 30,788 0 0 28,087,930 13,916,985 16,422,544 0 30,721,534 0 0 0 (16,076,772) 16,422,544 0 5,876,840 0 0 6,855,414 0 2,540,538 1,240,519 0 1,240,519 0 220,594 0 1,240,519 30.82 0 The Registrant has an unclassified balance sheet.
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