-----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, TMWZd2uPrBIv7RHWn5LBLPDQSLRNZWuGBUXNNRGlawzvwQwR0qWuIIzOsmmqslP4 KYcBCtIYnqT99YESy3LNJQ== 0000720460-96-000005.txt : 19960515 0000720460-96-000005.hdr.sgml : 19960515 ACCESSION NUMBER: 0000720460-96-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES INCOME PROPERTIES LTD III CENTRAL INDEX KEY: 0000720460 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953903984 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13192 FILM NUMBER: 96562749 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 March 31, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT For the transition period.........to......... Commission file number 0-13192 ANGELES INCOME PROPERTIES, LTD. III (Exact name of small business issuer as specified in its charter) California 95-3903984 (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 (864) 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 INCOME PROPERTIES, LTD. III BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 1996 Assets Cash and cash equivalents: Unrestricted $ 1,433 Restricted--tenant security deposits 47 Accounts receivable, less allowance for doubtful accounts of $30 18 Escrows for taxes 154 Other assets 122 Investment properties Land $ 1,527 Buildings and related personal property 12,490 14,017 Less accumulated depreciation (8,091) 5,926 $ 7,700 Liabilities and Partners' Deficit Liabilities Accounts payable $ 12 Tenant security deposits 47 Accrued taxes 12 Other liabilities 59 Mortgage notes payable 3,434 Equity interest in net liabilities of joint venture, net of advances of $1,369 (Note B) 5,642 Partners' Deficit General partners $ (389) Limited partners (86,818 units issued and outstanding) (1,117) (1,506) $ 7,700 See Accompanying Notes to Financial Statements b) ANGELES INCOME PROPERTIES, LTD. III STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended March 31, 1996 1995 Revenues: Rental income $ 400 $ 429 Other income 13 19 Total revenues 413 448 Expenses: Operating 110 86 General and administrative 56 74 Maintenance 37 35 Depreciation 161 159 Interest 106 99 Property taxes 22 41 Bad debt expense 11 -- Total expenses 503 494 Loss before equity in loss of joint ventures (90) (46) Equity in loss of joint ventures (Note B) (241) (272) Net loss $ (331) $ (318) Net loss allocated to general partners (1%) $ (3) $ (3) Net loss allocated to limited partners (99%) (328) (315) Net loss $ (331) $ (318) Net loss per limited partnership unit $ (3.78) $ (3.63) See Accompanying Notes to Financial Statements
c) ANGELES INCOME PROPERTIES, LTD. III STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 86,920 $ 1 $ 43,460 $ 43,461 Partners' deficit at December 31, 1995 86,818 $ (386) $ (789) $ (1,175) Net loss for the three months ended March 31, 1996 -- (3) (328) (331) Partners' deficit at March 31, 1996 86,818 $ (389) $ (1,117) $ (1,506) See Accompanying Notes to Financial Statements
d) ANGELES INCOME PROPERTIES, LTD. III STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1996 1995 Cash flows from operating activities: Net loss $ (331) $ (318) Adjustments to reconcile net loss to net cash provided by operating activities: Equity in loss of joint ventures 241 272 Depreciation 161 159 Amortization of loan costs and leasing commissions 19 10 Bad debt expense 11 -- Change in accounts: Restricted cash -- 3 Accounts receivable 13 2 Escrows for taxes (36) 44 Other assets 6 (11) Accounts payable 1 6 Tenant security deposit liabilities -- (2) Accrued taxes (32) (38) Other liabilities (34) 15 Net cash provided by operating activities 19 142 Cash flows from investing activities: Capital improvements (25) (54) Advances to Joint Venture (436) (195) Distributions from Joint Venture -- 963 Net cash (used in) provided by investing activities (461) 714 Cash flows used in financing activities: Payments on mortgage notes payable (13) (12) Net (decrease) increase in cash (455) 844 Cash and cash equivalents at beginning of period 1,888 1,221 Cash and cash equivalents at end of period $ 1,433 $ 2,065 Supplemental disclosure of cash flow information: Cash paid for interest $ 95 $ 96 See Accompanying Notes to Financial Statements
e) ANGELES INCOME PROPERTIES, LTD. III NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in Angeles Income Properties, Ltd. III's (the "Partnership") annual report on Form 10-KSB for the fiscal year ended December 31, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Note B - Investment in Joint Venture The Partnership has a 33.3% investment in Northtown Mall Partners ("Northtown") which is shown as "Equity interest in net liabilities of joint venture" on the balance sheet. The Partnership had a 57% investment in Burlington Outlet Mall Joint Venture ("Burlington") and a 50% investment in Moraine West Carrollton Joint Venture ("Moraine"). The Partnership no longer has an investment in these joint ventures due to the foreclosure of Burlington's investment property and the dissolution of Moraine during 1995. The condensed balance sheet information as of March 31, 1996, for Northtown and Burlington is as follows: Northtown Burlington (in thousands) Assets Cash $ 420 $ 26 Other assets 7,751 2 Investment properties, net 25,833 -- Total $34,004 $ 28 Note B - Investment in Joint Venture (continued) Liabilities and Partners' (Deficit) Capital Northtown Burlington (in thousands) Other liabilities $ 3,540 $ 17 Mortgage notes payable 51,649 -- Partners' (deficit) capital (21,185) 11 Total $ 34,004 $ 28 The condensed profit and loss statements for the three months ended March 31, 1996 and 1995, for the joint ventures is as follows: Northtown Burlington (in thousands) 1996 Revenue $ 2,573 $ 11 Costs and expenses (3,293) -- Net (loss) income $ (720) $ 11 Northtown Burlington Moraine 1995 Revenue $ 2,543 $ 143 $ 13 Costs and expenses (3,147) (273) (1) Net (loss) income $ (604) $ (130) $ 12 The Partnership's equity in the losses of the joint ventures was $241,000 and $272,000 for the three months ended March 31, 1996 and 1995, respectively. The Partnership accounts for its 33.3% investment in Northtown using the equity method of accounting. Under the equity method, the Partnership records its equity interest in earnings or losses of the joint ventures; however, the investment in the joint ventures will be recorded at an amount less than zero (a liability) to the extent of the Partnership's share of net liabilities of the joint ventures. 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 owed to the Managing General Partner and affiliates during the three months ended March 31, 1996, and March 31, 1995, were paid or accrued: 1996 1995 (in thousands) Property management fees $16 $15 Reimbursement for services of affiliates 37 58 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. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of one apartment complex and one commercial property. The following table sets forth the average occupancy of the properties for the three months ended March 31, 1996 and 1995: Average Occupancy 1996 1995 Lake Forest Apartments (1) Brandon, Mississippi 87% 95% Poplar Square Shopping Center Medford, Oregon 97% 97% (1) The decrease in occupancy at Lake Forest Apartments is due to competition from new apartment complexes in the Brandon, Mississippi area. The Partnership realized a net loss of $331,000 for the three months ended March 31, 1996, as compared to a net loss of $318,000 for the three months ended March 31, 1995. The increase in the net loss for the three months ended March 31, 1996, as compared to the three months ended March 31, 1995, is primarily due to a decrease in rental income, offset, in part, by a decrease in equity in loss of joint venture(s). Rental income decreased during the months ended March 31, 1996, as compared to the three months ended March 31, 1995, due to the decrease in occupancy at Lake Forest Apartments and a decrease in average rental rates at Poplar Square Shopping Center. The decrease in other income during the three months ended March 31, 1996, as compared to the three months ended March 31, 1995, is a result of decreased lease cancellation fees, deposits forfeited and other fees and collections. The increase in operating expenses relates primarily to increased maintenance payroll associated with improvements being made on vacant units at Lake Forest Apartments. The decrease in general and administrative expenses during the three months ended March 31, 1996, as compared to the three months ended March 31, 1995, is primarily related to decreases in cost reimbursements for asset management, partnership accounting and investor services. The decrease in property tax expense relates to a refund for an overpayment of property taxes on Poplar Square Shopping Center. Bad debt expenses increased as a result of an increase in the reserve required based on a review of tenant accounts. The decrease in the equity loss of joint ventures can be attributed to the loss recognized on the Partnership's investment in Burlington for the three months ended March 31, 1995. Due to the foreclosure of the Burlington investment property in 1995, this loss did not recur in 1996. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the 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 March 31, 1996, the Partnership had unrestricted cash of $1,433,000 compared to $2,065,000 at March 31, 1995. Net cash provided by operating activities decreased as a result of an increase in net loss, an increase in escrows for taxes and a decrease in other liabilities, offset, in part, by a decrease in other assets. Net cash used in investing activities increased due to more advances to Northtown Mall in 1996 and a non-recurring distribution received from Moraine in 1995. The Northtown Mall property has continued to experience cash shortfalls and has been dependent upon the Partnership and Angeles Income Properties, Ltd. IV (the 66.7% owner of Northtown) to cover such shortfalls in order to meet operating and debt service requirements for this property (see discussion below for the Managing General Partner's plans regarding this investment property). 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 properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of $3,434,000, which is secured by the Poplar Square Shopping Center investment property, matured in June 1995. The Managing General Partner is in negotiations to refinance this indebtedness and has received two six month extensions from the mortgage company to do so. The current extension expires June 1996. The Managing General Partner does not anticipate that there will be any excess cash available to the Partnership, if in fact the refinance is successful. The outcome of the negotiations to refinance cannot presently be determined. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. On March 15, 1991, Northtown and the holder of the Northtown Mall mortgage note payable entered into an Option Agreement ( Option ) whereby such lender has the right and an option to purchase the Northtown Mall property on the terms and conditions as set forth in the Option. The purchase price of the property, as set forth in the Option, is defined as the fair market value of the property. Such Option can be exercised by written notice by the lender at specified dates. The Managing General Partner is presently in negotiations to refinance this indebtedness as well, however, the outcome of such negotiations cannot presently be determined. On October 30, 1995, the Partnership lost Burlington Outlet Mall located in Burlington, NC, through a foreclosure by an unaffiliated mortgage holder. The property was not generating sufficient cash flow to meet debt service requirements. The non-payment of principal and interest constituted a default under the terms of the mortgage agreement and allowed the holder of the mortgage agreement to foreclose on the property. The Partnership deemed it to be in the best interest of the Partnership not to contest the foreclosure action. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Angeles Corporation ("Angeles"), either directly or through an affiliate, maintained a central disbursement account (the account ) for the properties and partnerships managed by Angeles and its affiliates, including the Registrant. Angeles caused the Partnership to make deposits to the account ostensibly to fund the payment of certain obligations of the Partnership. However, of these total deposits, at least $42,213 deposited by or on behalf of the Partnership was used for purposes other than satisfying the liabilities of the Partnership. Accordingly, the Partnership filed a Proof of Claim in the Angeles bankruptcy proceedings for such amount. However, subsequently the Managing General Partner of the Partnership determined that the cost involved to pursue such claim would likely exceed any amount received, if in fact such claim were to be resolved in favor of the Partnership. Therefore, the Partnership withdrew this claim on August 9, 1995. 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 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits - None. b) Reports on Form 8-K: None filed during the three months ended March 31, 1996. 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 INCOME PROPERTIES, LTD. III By: Angeles Realty Corporation II Managing General Partner By: /s/Carroll D. Vinson Carroll D. Vinson President By: /s/Robert D. Long Robert D. Long Vice President/CAO Date: May 14, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Income Properties Ltd, III 1996 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing 0000720460 ANGELES INCOME PROPERTIES LTD III 1,000 3-MOS DEC-31-1996 MAR-31-1996 1,433 0 18 30 0 0 14,017 8,091 7,700 0 3,434 0 0 0 (1,506) 7,700 0 413 0 0 503 0 106 (331) 0 (331) 0 0 0 (331) (3.78) 0 The Registrant has an unclassified balance sheet. Amount not in thousands.
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