-----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, WQyDX5el39vQt0hMZ5iRR78vi/PazY2mYjZ1hGSf8D+hyG9b3KkjmSgItpoN4Ie1 JODVGAYC+Ij+WdHRKtpfwA== 0000720460-95-000001.txt : 19951118 0000720460-95-000001.hdr.sgml : 19951118 ACCESSION NUMBER: 0000720460-95-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951109 SROS: AMEX 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: 95588689 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 0-13192 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 (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 INCOME PROPERTIES. LTD. III BALANCE SHEET (Unaudited)
September 30, 1995 Assets Cash: Unrestricted $ 2,017,381 Restricted--tenant security deposits 47,987 Accounts receivable, less allowance for doubtful accounts of $21,514 74,329 Escrow deposits for taxes 82,898 Other assets 972,084 Investment properties: Land $ 1,527,024 Buildings and related personal property 12,443,022 13,970,046 Less accumulated depreciation (7,793,182) 6,176,864 $ 9,371,543 Liabilities and Partners' Deficit Liabilities Accounts payable $ 35,589 Tenant security deposits 47,837 Property taxes 61,736 Other 91,554 Mortgage note payable 3,460,054 Equity interest in net liabilities joint ventures 8,201,271 Partners' Deficit General partners $ (399,724) Limited partners capital (86,818 units issued and outstanding) (2,126,774) (2,526,498) $ 9,371,543
[FN] See Accompanying Notes to Financial Statements b) ANGELES INCOME PROPERTIES, LTD. III STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenues: Rental income $ 398,107 $ 381,815 $ 1,170,620 $ 1,177,698 Other income 28,437 11,729 85,748 39,695 Total revenues 426,544 393,544 1,256,368 1,217,393 Expenses: Operating 93,239 64,473 206,993 180,379 General and administrative 71,744 117,937 223,959 467,810 Property management fees 19,787 15,477 51,083 50,814 Maintenance 64,056 43,830 135,532 120,288 Depreciation 163,504 160,306 482,884 479,456 Amortization 8,186 6,272 22,316 15,559 Interest 108,804 105,526 306,018 338,524 Property taxes 42,463 36,289 124,870 106,798 Tenant reimbursements (70,152) (35,597) (140,653) (110,221) Total expenses 501,631 514,513 1,413,002 1,649,407 Loss before equity in loss of joint ventures (75,087) (120,969) (156,634) (432,014) Equity in loss of joint ventures (Note B) (443,545) (289,919) (971,055) (981,087) Gain on sale of property -- 513,910 -- 513,910 Net (loss) income $(518,632) $ 103,022 $(1,127,689) $ (899,191) Net (loss) income allocated to general partners (1%) $ (5,186) $ 1,030 $ (11,277) $ (8,992) Net (loss) income allocated to limited partners (99%) (513,446) 101,992 (1,116,412) (890,199) $(518,632) $ 103,022 $(1,127,689) $ (899,191) Net (loss) income per limited partnership unit $ (5.91) $ 1.17 $ (12.86) $ (10.24)
[FN] See Accompanying Notes to Financial Statements c) ANGELES INCOME PROPERTIES, LTD. III STATEMENT OF CHANGES IN PARTNERS' DEFICIT - September 30, 1995 (Unaudited)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 86,920 $ 1,000 $43,460,000 $43,461,000 Partners' deficit at December 31, 1994 86,818 $(388,447) $(1,010,362) $(1,398,809) Net loss for the nine months ended September 30, 1995 -- (11,277) (1,116,412) (1,127,689) Partners' deficit at September 30, 1995 86,818 $(399,724) $(2,126,774) $(2,526,498)
[FN] See Accompanying Notes to Financial Statements d) ANGELES INCOME PROPERTIES, LTD. III STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net loss $(1,127,689) $ (899,191) Adjustments to reconcile net loss to net cash used in operating activities: Equity in loss of joint ventures 971,055 981,087 Depreciation 482,884 479,456 Amortization of loan costs and leasing commissions 41,518 24,067 Gain on sale of property -- (513,910) Change in accounts: Restricted cash 2,463 (2,211) Accounts receivable (29,621) (18,614) Escrows for taxes 15,085 (75,644) Other assets (436,660) 87,990 Accounts payable 25,368 (11,808) Tenant security deposit liabilities (3,533) (909) Property taxes 4,062 39,335 Other liabilities 33,678 (21,008) Net cash (used in) provided by operating activities (21,390) 68,640 Cash flows from investing activities: Capital improvements (111,406) (45,442) Proceeds from sale of asset -- 600,000 Distributions from joint venture 965,731 -- Net cash provided by investing activities 854,325 554,558 Cash flows used in financing activities Payments on mortgage notes payable (36,157) (639,713) Net increase (decrease) in cash 796,778 (16,515) Cash at beginning of period 1,220,603 1,233,009 Cash at end of period $ 2,017,381 $1,216,494 Supplemental disclosure of cash flow information Cash paid for interest $ 286,815 $ 335,880
[FN] 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 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 B - Investment in Joint Ventures The Partnership has a 33.3% investment in Northtown Mall Partners ("Northtown"), a 50% investment in Moraine West Carrollton Joint Venture ("Moraine") and a 57% investment in Burlington Outlet Mall Joint Venture ("Burlington"). The investments in Northtown and Burlington are included in the "Equity interest in net liabilities of joint ventures". A purchase agreement was executed on May 8, 1994 for the sale of all of the Moraine properties to an affiliate of the third party managing agent. The sale closed on July 21, 1994. Moraine received a net amount of approximately $2,199,000 in cash after satisfying all indebtedness. Moraine realized a $140,553 gain on the transaction of which the Partnership's pro rata share was $70,277. During the nine month period ended September 30, 1995, all of Moraine's remaining cash was distributed. Also during this period, Moraine earned interest income and incurred a minimal amount of expense. Note B - Investment in Joint Ventures (continued) Condensed balance sheet information as of September 30, 1995, for the joint ventures is as follows: Burlington Northtown Assets Cash $ 67,889 $ 290,827 Other assets 18,611 6,354,276 Investment properties, net 4,384,299 26,963,125 Total $ 4,470,799 $33,608,228 Liabilities and Partners' Deficit Burlington Northtown Other liabilities $ 323,808 $ 2,217,985 Notes payable 6,700,281 51,813,776 Partners' deficit (2,553,290) (20,423,533) Total $ 4,470,799 $ 33,608,228 The condensed profit and loss statements for the three and nine months ended September 30, 1995 and 1994 for the joint ventures are as follows: Three Months Ended September 30, 1995 Burlington Moraine Northtown Revenue $ 3,369 $ -- $ 1,207,032 Costs and expenses (293,425) -- (2,033,205) Net loss $ (290,056) $ -- $ (826,173) Three Months Ended September 30, 1994 Burlington Moraine Northtown Revenue $ 155,772 $ 130,952 $ 1,190,193 Costs and expenses (295,596) (279,153) (2,026,260) Gain on disposal of property -- 323,153 -- Net (loss) income $ (139,824) $ 174,952 $ (836,067) Nine Months Ended September 30, 1995 Burlington Moraine Northtown Revenue $ 223,145 $12,447 $ 4,294,193 Costs and expenses (701,557) (625) (6,381,215) Net (loss) income $ (478,412) $11,822 $(2,087,022) Nine Months Ended September 30, 1994 Burlington Moraine Northtown Revenue $ 475,822 $ 1,019,649 $ 4,335,646 Costs and expenses (1,025,333) (1,210,804) (6,424,209) Gain on disposal of property -- 323,153 -- Net (loss) income $ (549,511) $ 131,998 $(2,088,563) The Partnership's equity in the losses of the joint ventures was $971,055 and $981,087 for the nine months ended September 30, 1995 and 1994, respectively. The Partnership accounts for its 33.3% investment in Northtown, its 57% investment in Burlington and its 50% investment in Moraine 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 payments were made to the Managing General Partner and affiliates in 1995 and in 1994: 1995 1994 Property management fees $ 51,083 $ 50,814 Reimbursement for services of affiliates 171,467 274,741 Marketing services 901 -- 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 nine months ended September 30, 1995 and 1994: Average Occupancy Property 1995 1994 Lake Forest Apartments Brandon, Mississippi 95% 94% Poplar Square Shopping Center Medford, Oregon 97% 99% The Partnership realized a net loss of $1,127,689 for the nine months ended September 30, 1995, as compared to a net loss of $899,191 for the nine months ended September 30, 1994. The Partnership realized a net loss of $518,632 for the three months ended September 30, 1995, as compared to net income of $103,022 for the three months ended September 30, 1994. The increase in the net loss for the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994, is primarily due to the gain on the sale of land at Poplar Square on July 7, 1994, offset partially by a decrease in general and administrative expenses during 1995 (see discussion below). The Partnership realized a decrease in rental income during the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994, as a result of a decrease in rental revenue at Poplar Square Shopping Center. Poplar Square lost $7,500 per month in rental revenue due to the sale of a parcel of land in September 1994. This decrease in revenue is partially offset by an increase in occupancy at Lake Forest. This decrease is offset by the increase in other income during the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994. This increase in other income is a result of increased interest income, as a result of investments in short term commercial paper, increased lease cancellation fees, deposits forfeited and other miscellaneous fees and collections. The decrease in general and administrative expenses during the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994, is primarily related to decreases in asset management, partnership accounting and investor services reimbursements. The decrease in interest expense for the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994, is due to a decrease in the outstanding mortgage note payable. The decrease in the outstanding mortgage balance resulted from the proceeds from the sale of land at Poplar Square Shopping Center being applied against the outstanding mortgage balance. The decrease in expenses are complimented by an increase in tenant reimbursements for the three and nine months ended September 30, 1995. This increase is due to the tenant reimbursements in 1994 being based on information provided to the Partnership by the previous management company. Such estimates were not an accurate reflection of actual reimbursements. In addition to a decrease in expenses, the Partnership also experienced a decrease in overall losses from its joint venture properties for the nine months ended September 30, 1995, versus the nine months ended September 30, 1994. However, for the three months ended September 30, 1995, the Partnership's equity in the losses of the joint ventures increased significantly over the three months ended September 30, 1994. This increase in the equity in loss of joint ventures can be attributed to increased losses relating to Burlington and a change from net income of $174,952 for Moraine for the three months ended September 30, 1994, versus no income for the three months ended September 30, 1995, due to the sale of this investment property on July 21, 1994. Revenue decreased at Burlington for the three and nine months ended September 30, 1995, versus the three and nine months ended September 30, 1994, as a result of decreased occupancy. This decrease in revenue was offset by a large decrease in expenses primarily caused by decreased occupancy and a decrease in interest expense as a result of the loan modification agreement (see discussion below). 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 September 30, 1995, the Partnership had unrestricted cash of $2,017,381 versus $1,216,494 at September 30, 1994. Net cash used in operating activities increased as a result of an increase in other assets. Net cash provided by investing activities increased as a result of cash distributions received from Moraine. Net cash used in financing activities decreased as a result of a prepayment of a portion of the mortgage note payable secured by the Poplar Square investment property from the proceeds of the sale of land during 1994. 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 $3,460,054, 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 a six month extension from the mortgage company to do so. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. No cash distributions were recorded in 1994 or during the nine months ended September 30, 1995. On March 15, 1991 ("Effective Date"), 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 any time during any of the thirty-day periods occurring immediately prior to the third, fifth, seventh, ninth, eleventh, thirteenth and fifteenth anniversaries of the Effective Date. The first date on which the Option could have been exercised was March 15, 1994. On February 22, 1994, the lender gave notice to the Partnership that it intended to exercise this Option. The lender offered $58,000,000 based on an annual appraisal. Northtown determined that the fair value as determined in accordance with the loan documents is $62,000,000. Northtown is negotiating with the lender to retain ownership of the property in order to protect the Partnership's equity in the property. However, the Managing General Partner cannot presently determine the outcome of such negotiations. The mortgage note payable secured by the Burlington investment property matured on July 1, 1994. Burlington has obtained new financing terms which consolidate all principal, accrued interest and late charges outstanding on July 1, 1994, into a new loan amount which will accrue interest at the greater of 2% or net cash flow as defined in the loan extension agreement. The loan maturity date had been extended until April 1, 1995. The mortgage holder has initiated foreclosure proceedings against this property, however, the mortgage holder has issued a stay of these proceedings in order to give the Managing General Partner an opportunity to sell the property. The Managing General Partner is not optimistic that a sale will be consummated within an amount of time satisfactory to the mortgage holder and therefore anticipates that the mortgage holder will proceed with the foreclosure. A purchase agreement was executed on May 8, 1994 for the sale of all of the Moraine properties to an affiliate of the third party managing agent. The sale closed on July 21, 1994. Moraine received a net amount of approximately $2,199,000 in cash after satisfying all indebtedness. Moraine realized a $140,553 gain on the transaction of which the Partnership's pro rata share was $70,277. 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. Angeles further caused checks on such account to be written to or on behalf of certain other partnerships. 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 has 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 - Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K - None. 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 Controller and Principal Accounting Officer Date: November 9, 1995 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Income Properties Ltd. III 1995 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB. 0000720460 ANGELES INCOME PROPERTIES LTD III 1 9-MOS DEC-31-1995 SEP-30-1995 2,017,381 0 74,329 21,514 0 0 13,970,046 7,793,182 9,371,543 0 3,460,054 0 0 0 (2,526,498) 9,371,543 0 1,256,368 0 0 1,413,002 0 306,018 (1,127,689) 0 (1,127,689) 0 0 0 (1,127,689) (12.86) 0 The Registrant has an unclassified balance sheet.
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