10KSB 1 ap14.txt AP14 FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) Form 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the fiscal year ended December 31, 2001 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from to Commission file number 0-14248 ANGELES PARTNERS XIV (Name of small business issuer in its charter) California 95-3959771 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Limited Partnership Units (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $5,374,000 State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests as of December 31, 2001. No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Description of Business Angeles Partners XIV (the "Partnership" or "Registrant") is a publicly held limited partnership organized under the California Uniform Limited Partnership Act on June 29, 1984, as amended (the "Agreement"). The Partnership's managing general partner is Angeles Realty Corporation II ("ARC II" or the "Managing General Partner"), a California corporation and was a wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia Financial Group, Inc. ("Insignia"). Effective October 1, 1998, and February 26, 1999, Insignia and IPT, respectively, were merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. Thus the Managing General Partner is now a wholly-owned subsidiary of AIMCO. The Partnership's Non-Managing General Partner is ARCII/AREMCO Partners, Ltd., which is also a wholly-owned subsidiary of AIMCO effective December 1, 2001. ARC II and ARCII/AREMCO Partners, Ltd. are herein collectively referred to as the "General Partners". The Partnership Agreement provides that the Partnership is to terminate on December 31, 2035, unless terminated prior to such date. The Registrant is engaged in the business of operating and holding real estate properties for investment. In 1985 and 1987, during its acquisition phase, the Registrant acquired four existing apartment properties, one office building and one industrial complex. The Registrant continues to own and operate two of the apartment properties. See "Item 2. Description of Properties". Commencing in February 1985, the Registrant offered, pursuant to a Registration Statement filed with the Securities and Exchange Commission, up to 80,000 Units of Limited Partnership Interest (the "Units") at a purchase price of $1,000 per Unit with a minimum purchase of 5 Units ($5,000). The offering terminated in February 1987. Upon termination of the offering, the Registrant had accepted subscriptions for 44,390 Units, for an aggregate $44,390,000. Since its initial offering, the Registrant has not received, nor are limited partners required to make, additional capital contributions. The Managing General Partner contributed capital in the amount of $1,000 for a 1% interest in the Partnership. The Partnership was formed for the purpose of acquiring fee interests in various types of real estate property. The Managing General Partner intends to maximize the operating results and, ultimately, the net realizable value of each of the Partnership's properties in order to achieve the best possible return for the investors. Such results may best be achieved through property sales, refinancings, debt restructurings or relinquishment of the assets. The Partnership intends to evaluate each of its holdings periodically to determine the most appropriate strategy for each of the assets. The Partnership has no full time employees. The Managing General Partner is vested with full authority as to the general management and supervision of the business and affairs of the Partnership. Limited Partners have no right to participate in the management or conduct of such business and affairs. Property management and administrative services are provided by affiliates of the Managing General Partner. The real estate business in which the Partnership is engaged is highly competitive. There are other residential properties within the market area of the Partnership's properties. The number and quality of competitive properties, including those which may be managed by an affiliate of the Managing General Partner, in such market area could have a material effect on the rental market for the apartments at the Registrant's properties and the rents that may be charged for such apartments. While the Managing General Partner and its affiliates own and/or control a significant number of apartment units in the United States, such units represent an insignificant percentage of total apartment units in the United States and competition for the apartments is local. Both the income and expenses of operating the properties owned by the Partnership are subject to factors outside of the Partnership's control, such as changes in the supply and demand for similar properties resulting from various market conditions, increases/decreases in unemployment or population shifts, changes in the availability of permanent mortgage financing, changes in zoning laws, or changes in patterns or needs of users. In addition, there are risks inherent in owning and operating residential properties because such properties are susceptible to the impact of economic and other conditions outside of the control of the Partnership. There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Partnership is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties owned by the Partnership. The Partnership monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed, which resulted in no material adverse conditions or liabilities. In no case has the Partnership received notice that it is a potentially responsible party with respect to an environmental clean up site. A further description of the Partnership's business is included in "Management's Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form 10-KSB. Item 2. Description of Properties The following table sets forth the Registrant's investments in properties: Date of Property Purchase Type of Ownership Use Waterford Square 05/31/85 Fee ownership subject to Apartments Apartments first mortgage (1) 487 units Huntsville, Alabama Fox Crest Apartments 06/30/85 Fee ownership subject to Apartments Waukegan, Illinois first mortgage 245 units (1) Property is held by a Limited Partnership in which the Registrant owns a 99% interest. Schedule of Properties Set forth below for each of the Registrant's properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis.
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis (in thousands) (in thousands) Waterford Square Apartments $18,384 $13,666 5-20 yrs (1) $ 4,883 Fox Crest Apartments 10,510 7,578 5-20 yrs (1) 2,897 $28,894 $21,244 $ 7,780
(1) Straight line and accelerated See "Note B" of the consolidated financial statements included in "Item 7. Financial Statements" for a description of the Partnership's depreciation policy. Schedule of Property Indebtedness The following table sets forth certain information relating to the loans encumbering the Registrant's properties.
Principal Principal Balance At Balance December 31, Interest Period Maturity Due At Property 2001 Rate Amortized Date (6) Maturity (6) (in thousands) (in thousands) Waterford Square Apartments 1st mortgage $11,435 7.90% 31 yrs 11/2027 $ -- Fox Crest Apartments 1st mortgage 5,743 8.00% 30 yrs 05/2003 5,445 Angeles Partners XIV Working capital loan, in default(3) 1,281 (1) (1) 11/1997 1,281 Working capital loan, in default(3) 3,295 (1) (1) 11/1997 3,295 Note payable (2) ("Glenwood") 2,405 12.50% (4) 03/2002 2,405 Note payable (2) ("Foxcrest") 4,765 12.50% (5) 03/2003 4,765 Total $28,924 $17,191
(1) Interest accrues at prime plus 2%; payments are made based on excess cash flow as defined. (2) Payable to Angeles Mortgage Investment Trust ("AMIT"), an affiliate of the Managing General Partner. (3) These loans were payable to Angeles Acceptance Pool, L.P. ("AAP"). During the year ended December 31, 2000, AAP transferred ownership of the loans to Saticoy Investments Company, LLC ("Saticoy"), a wholly owned entity of The PNL Companies. (4) Payment of excess cash flow only, as defined, due semi-annually. (5) No payments due until maturity. (6) See "Item 7. Financial Statements - Note C" for information with respect to the Registrant's ability to prepay these loans and more specific details as to the terms of the loans Rental Rates and Occupancy Average annual rental rates and occupancy for 2001 and 2000 for each property are as follows: Average Annual Average Annual Rental Rates Occupancy (per unit) Property 2001 2000 2001 2000 Waterford Square Apartments $6,484 $6,337 96% 97% Fox Crest Apartments 8,713 8,326 97% 97% As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties of the Partnership are subject to competition from other residential apartment complexes in the area. The Managing General Partner believes that all of the properties are adequately insured. Each property is an apartment complex which leases its units for terms of one year or less. No residential tenant leases 10% or more of the available rental space. All of the buildings are in good physical condition, subject to normal depreciation and deterioration as is typical for assets of this type and age. Real Estate Taxes and Rates Real estate taxes and rates in 2001 for each property were: 2001 2001 Billing Rate (in thousands) Waterford Square Apartments $ 179 5.80% Fox Crest Apartments 231 8.14% Capital Improvements Waterford Square Apartments During the year ended December 31, 2001, the Partnership spent approximately $194,000 on capital improvements at Waterford Square Apartments, consisting primarily of air conditioning unit, floor covering and appliance replacements. These improvements were funded from replacement reserves and operations. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount to be budgeted is expected to be $300 per unit or $146,100. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Fox Crest Apartments During the year ended December 31, 2001, the Partnership spent approximately $203,000 on capital improvements at Fox Crest Apartments, consisting primarily of roof replacement, floor covering replacement and cabinet upgrades. These improvements were funded from replacement reserves and operations. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount to be budgeted is expected to be $300 per unit or $73,500. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Item 3. Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Managing General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the Managing General Partner and its affiliates filed a demurrer to the third amended complaint. On May 14, 2001, the Court heard the demurrer to the third amended complaint. On July 10, 2001, the Court issued an order sustaining defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed a fourth amended class and derivative action complaint. On September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the Managing General Partner and affiliated defendants filed a demurrer to the fourth amended complaint, which was heard on December 11, 2001. On February 2, 2002, the Court served its order granting in part the demurrer. The Court has dismissed without leave to amend certain of the plaintiffs' claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a putative class comprised of all non-affiliated persons who own or have owned units in the partnerships. The Managing General Partner and affiliated defendants intend to oppose the motion and are scheduled to file their opposition brief on March 26, 2002. A hearing on the motion has been scheduled for April 29, 2002. The Court has set the matter for trial in January 2003. During the third quarter of 2001, a complaint (the "Heller action") was filed against the same defendants that are named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed a first amended complaint. The first amended complaint in the Heller action is brought as a purported derivative action, and asserts claims for among other things breach of fiduciary duty; unfair competition; conversion, unjust enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a motion to consolidate the Heller action with the Nuanes action and stated that the Heller action was filed in order to preserve the derivative claims that were dismissed without leave to amend in the Nuanes action by the Court order dated July 10, 2001. On October 5, 2001, the Managing General Partner and affiliated defendants moved to strike the first amended complaint in its entirety for violating the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer in the Nuanes action, or alternatively, to strike certain portions of the complaint based on the statute of limitations. Other defendants in the action demurred to the fourth amended complaint, and, alternatively, moved to strike the complaint. On December 11, 2001, the court heard argument on the motions and took the matters under submission. On February 4, 2002, the Court served notice of its order granting defendants' motion to strike the Heller complaint as a violation of its July 10, 2001 order in the Nuanes action. The Managing General Partner does not anticipate that any costs, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. Item 4. Submission of Matters to a Vote of Security Holders The Unit holders of the Registrant did not vote on any matter during the quarter ended December 31, 2001. PART II Item 5. Market for the Partnership's Common Equity and Related Security Holder Matters The Partnership, a publicly-held limited partnership, offered and sold 44,390 limited partnership units aggregating $44,390,000. The Partnership currently has 3,290 holders of record owning an aggregate of 43,411 Units. An affiliate of the Managing General Partner owned 10,768 units or 24.80% at December 31, 2001. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future. In 2001 and 2000, the number of Limited Partnership Units decreased by 10 and 168 units, respectively, due to Limited Partners abandoning their Limited Partnership Units. In abandoning his or her Limited Partnership Units, a Limited Partner relinquishes all right, title and interest in the Partnership as of the date of abandonment. However, the Limited Partner is allocated his or her share of loss for that year. The loss per Limited Partnership Unit in the accompanying consolidated statements of operations is calculated based on the number of units outstanding at the beginning of the year. For the year ended December 31, 2001, Waterford Square Apartments, Ltd. (a limited partnership in which the Registrant owns a 99% interest) made a surplus cash distribution of approximately $701,000 of which approximately $7,000 was paid to the Managing General Partner which is the general partner of Waterford Square Apartments, Ltd. For the year ended December 31, 2000, a surplus cash distribution of approximately $500,000 of which approximately $5,000 was paid to the Managing General Partner which is the general partner of Waterford Square Apartments, Ltd. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves and the timing of debt maturities, refinancings, and/or property sales. The Registrant's cash available for distribution is reviewed on a monthly basis. However, based on the current default under the working capital loans and the pending maturities of the AMIT loans and the first mortgage loan on Fox Crest, it is unlikely that a distribution will be made by the Registrant in the foreseeable future. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 10,768 limited partnership units in the Partnership representing 24.80% of the outstanding units at December 31, 2001. These units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of its affiliation with the Managing General Partner. Item 6. Management's Discussion and Analysis or Plan of Operation The matters discussed in this Form 10-KSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-KSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operation. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. Results of Operations The Partnership's net loss for the year ended December 31, 2001 was approximately $1,916,000 compared to a net loss of approximately $2,083,000 for the year ended December 31, 2000. The decrease in net loss for the year ended December 31, 2001 is primarily due to an increase in total revenues which was partially offset by an increase in total expenses. The increase in total revenues is due to increases in rental income and other income. Rental income increased primarily due to an increase in the average annual rental rate at both of the Partnership's investment properties, which was partially offset by a slight decrease in occupancy at Waterford Square Apartments. Other income increased primarily due to increases in utility reimbursements at Fox Crest Apartments and cable television income and lease cancellation fees at both of the Partnership's investment properties. The increase in other income was partially offset by a decrease in interest income, as a result of lower cash balances in interest-bearing accounts. The increase in total expenses is primarily due to increases in operating and depreciation expenses partially offset by a decrease in interest expense. Operating expense increased primarily due to increases in payroll related expenses and management fees as a result of increased rental income at both of the Partnership's investment properties. The increase in operating expense was partially offset by a decrease in advertising expense at Fox Crest Apartments and a decrease in maintenance expense at Waterford Square Apartments. Depreciation expense increased due to property improvements and replacements placed into service at both of the Partnership's investment properties over the past year. Interest expense decreased due to scheduled principal payments made on the properties' mortgages, the repayment of one of the AMIT loans and payments made on the remaining AMIT loans. Property tax expense and general and administrative expenses remained relatively constant for the comparable periods. Included in general and administrative expenses for the years ended December 31, 2001 and 2000 are management reimbursements to the Managing General Partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. As part of the ongoing business plan of the Partnership, the Managing General Partner continues to monitor the rental market environment 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. Liquidity and Capital Resources At December 31, 2001, the Partnership had cash and cash equivalents of approximately $1,177,000 as compared to approximately $1,497,000 at December 31, 2000. The decrease in cash and cash equivalents of approximately $320,000 is due to approximately $381,000 of cash used in investing activities and approximately $312,000 of cash used in financing activities, partially offset by approximately $373,000 of cash provided by operating activities. Cash used in investing activities consisted of property improvements and replacements and net deposits to escrow accounts maintained by the mortgage lender. Cash used in financing activities consisted primarily of payments of principal on the mortgages encumbering the Registrant's properties, a principal payment on the Waterford Square note payable to AMIT and, to a lesser extent, a distribution to the general partner of Waterford Square Apartments, Ltd., partially offset by an advance received from an affiliate. The Registrant invests its working capital reserves in interest bearing accounts. The accompanying consolidated financial statements have been prepared assuming the Partnership will continue as a going concern. The Partnership continues to incur recurring operating losses and suffers from inadequate liquidity. Recourse indebtedness of approximately $4,576,000, plus accrued interest of approximately $3,989,000 is in default at December 31, 2001, as a result of nonpayment of interest and principal upon its maturity in November 1997. These loans were payable to Angeles Acceptance Pool, L.P. ("AAP"). During the year ended December 31, 2000, AAP transferred ownership of the loans to Saticoy Investments Company, LLC ("Saticoy"), a wholly owned entity of The PNL Companies. This indebtedness is recourse to the Partnership. During the year ended December 31, 2001, the Managing General Partner signed a forebearance agreement with Saticoy. The Managing General Partner agreed to market Waterford Square Apartments for sale. The forebearance period began June 1, 2001 and was to end the earlier of March 1, 2002 or the date Waterford Square Apartments was sold. The Managing General Partner and Saticoy negotiated an extension of the forebearance agreement until April 1, 2002. The extension until April 1, 2002 was granted to allow the Partnership to finalize a contract for the sale of Waterford Square Apartments that is currently in negotiations. Upon the sale of Waterford Square Apartments, the distributable sale proceeds, after deducting reasonable closing costs, will be used to repay the first lien mortgage debt on the property and repay certain AMIT debt. Saticoy has agreed to accept 68.75% of the remaining proceeds in full satisfaction of its notes. No other sources of additional financing have been identified by the Partnership, nor does the Managing General Partner have any other plans to remedy the liquidity problems the Partnership is currently experiencing. The Managing General Partner anticipates that Fox Crest Apartments and Waterford Square Apartments will generate sufficient cash flows during 2002 to meet all property operating expenses, property debt service requirements and to fund capital expenditures. However, these cash flows will be insufficient to provide debt service for the unsecured Partnership indebtedness. If the Managing General Partner is unsuccessful in its efforts to restructure these loans, then it may be forced to liquidate the Partnership. As a result of the above, 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 and classifications of liabilities that may result from these uncertainties. With respect to the Partnership's two apartment complexes, 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 and to comply with Federal, state, and local legal and regulatory requirements. The Partnership is currently evaluating the capital improvement needs of each of its properties for the upcoming year. The minimum amount to be budgeted for the Partnership is expected to be $300 per unit or $219,600. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The existing first mortgage indebtedness, working capital loans and amounts due to AMIT are thought to be in excess of the value of the properties. (Pursuant to a series of transactions, affiliates of the Managing General Partner acquired ownership interests in AMIT as follows: On September 17, 1998, AMIT was merged with and into IPT; effective February 26, 1999, IPT was merged into AIMCO. Accordingly, AIMCO is the current holder of the AMIT loans.) One AMIT note was paid in full during the year ended December 31, 2001. One AMIT Note in the aggregate amount of approximately $2,405,000 plus related accrued interest at 12.5% per annum compounded monthly of approximately $819,000 matures in March 2002; this note is recourse to the Partnership only. This loan requires monthly payments of excess cash flow, as defined in the terms of the promissory note. The Partnership's other remaining note to AMIT for approximately $4,765,000, plus accrued interest at 12.5% per annum compounded monthly, is due March 2003 and does not require any payments until maturity. Accrued interest on this note as of December 31, 2001 is approximately $4,535,000. The first mortgage loan encumbering Waterford Square Apartments, which is guaranteed by HUD, is scheduled to mature November 2027. The first mortgage loan encumbering Fox Crest Apartments is scheduled to mature in May 2003, at which time a balloon payment of $5,445,000 is due. The Registrant is current in its payments on both of these mortgages. With respect to Fox Crest Apartments, the Managing General Partner will attempt to refinance such indebtedness and/or sell the property prior to such maturity date. If the property cannot be refinanced or sold for a sufficient amount, the Registrant will risk losing such property through foreclosure. For the year ended December 31, 2001, Waterford Square Apartments, Ltd. (a limited partnership in which the Registrant owns a 99% interest) made a surplus cash distribution of approximately $701,000 of which approximately $7,000 was paid to the Managing General Partner which is the general partner of Waterford Square Apartments, Ltd. For the year ended December 31, 2000, a surplus cash distribution of approximately $500,000 of which approximately $5,000 was paid to the Managing General Partner which is the general partner of Waterford Square Apartments, Ltd. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves and the timing of debt maturities, refinancings, and/or property sales. The Registrant's cash available for distribution is reviewed on a monthly basis. However based on the current default under the working capital loans and the pending maturities of the AMIT loans and the first mortgage loan on Fox Crest, it is unlikely that a distribution will be made by the Registrant in the foreseeable future. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 10,768 limited partnership units in the Partnership representing 24.80% of the outstanding units at December 31, 2001. These units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of its affiliation with the Managing General Partner. Recent Accounting Pronouncements In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 provides accounting guidance for financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Managing General Partner does not anticipate that its adoption will have a material effect on the financial position or results of operations of the Partnership. Item 7. Financial Statements ANGELES PARTNERS XIV LIST OF FINANCIAL STATEMENTS Report of Ernst & Young, LLP, Independent Auditors Consolidated Balance Sheet - December 31, 2001 Consolidated Statements of Operations - Years ended December 31, 2001 and 2000 Consolidated Statements of Changes in Partners' Deficit - Years ended December 31, 2001 and 2000 Consolidated Statements of Cash Flows - Years ended December 31, 2001 and 2000 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Angeles Partners XIV We have audited the accompanying consolidated balance sheet of Angeles Partners XIV as of December 31, 2001, and the related consolidated statements of operations, changes in partners' deficit, and cash flows for each of the two years in the period ended December 31, 2001. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Angeles Partners XIV at December 31, 2001, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. The accompanying consolidated financial statements have been prepared assuming that Angeles Partners XIV will continue as a going concern. As more fully described in Note A, the Partnership continues to incur recurring operating losses and suffers from inadequate liquidity. It is in default on unsecured indebtedness of $4,576,000, plus related accrued interest of $3,989,000, due to non-payment upon maturity of the debt in November 1997. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note A. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. /s/ERNST & YOUNG LLP Greenville, South Carolina February 15, 2002 ANGELES PARTNERS XIV CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 2001
Assets Cash and cash equivalents $ 1,177 Receivables and deposits 286 Restricted escrows 157 Other assets 283 Investment properties (Notes C and F): Land $ 2,243 Buildings and related personal property 26,651 28,894 Less accumulated depreciation (21,244) 7,650 $ 9,553 Liabilities and Partners' Deficit Liabilities Accounts payable $ 50 Tenant security deposit liabilities 129 Accrued property taxes 291 Accrued interest (including $3,989 in default) 9,456 Due to affiliates (Note E) 2,090 Other liabilities 159 Notes payable, including $4,576 in default (Notes C, E, and F) 28,924 Partners' Deficit General partners $ (710) Limited partners (43,411 units issued and outstanding) (30,836) (31,546) $ 9,553 See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data)
Years Ended December 31, 2001 2000 Revenues: Rental income $ 5,058 $ 4,920 Other income 316 235 Total revenues 5,374 5,155 Expenses: Operating 1,763 1,691 General and administrative 306 303 Depreciation 1,399 1,362 Interest 3,408 3,469 Property taxes 414 413 Total expenses 7,290 7,238 Net loss $(1,916) $(2,083) Net loss allocated to general partners (1%) $ (19) $ (21) Net loss allocated to limited partners (99%) (1,897) (2,062) $(1,916) $(2,083) Net loss per limited partnership unit $(43.69) $(47.31) See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 44,390 $ 1 $ 44,390 $ 44,391 Partners' deficit at December 31, 1999 43,589 $ (658) $(26,877) $(27,535) Net loss for the year ended December 31, 2000 -- (21) (2,062) (2,083) Distribution to partners -- (5) -- (5) Abandonment of Limited Partnership Units (Note G) (168) -- -- -- Partners' deficit at December 31, 2000 43,421 (684) (28,939) (29,623) Net loss for the year ended December 31, 2001 -- (19) (1,897) (1,916) Distribution to partners -- (7) -- (7) Abandonment of Limited Partnership Units (Note G) (10) -- -- -- Partners' deficit at December 31, 2001 43,411 $ (710) $(30,836) $(31,546) See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December 31, 2001 2000 Cash flows from operating activities: Net loss $(1,916) $(2,083) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 1,399 1,362 Amortization of loan costs 30 28 Change in accounts: Receivables and deposits (3) (30) Other assets 24 (14) Accounts payable (71) (7) Tenant security deposit liabilities (5) 27 Accrued property taxes 13 13 Accrued interest 808 1,813 Due to affiliates 201 205 Other liabilities (107) (8) Net cash provided by operating activities 373 1,306 Cash flows from investing activities: Property improvements and replacements (318) (501) Net (deposits to) receipts from restricted escrows (63) 107 Net cash used in investing activities (381) (394) Cash flows from financing activities: Principal payments on notes payable (455) (620) Advance from affiliate 150 -- Distribution to general partner (7) (5) Net cash used in financing activities (312) (625) Net (decrease) increase in cash and cash equivalents (320) 287 Cash and cash equivalents at beginning of year 1,497 1,210 Cash and cash equivalents at end of year $ 1,177 $ 1,497 Supplemental disclosure of cash flow information: Cash paid for interest $ 2,507 $ 1,572 Supplemental disclosure of non-cash activity: Property improvements and replacements in Due to Affiliates $ 79 $ -- See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2001 Note A - Going Concern The accompanying consolidated financial statements have been prepared assuming Angeles Partners XIV (the "Partnership" or "Registrant") will continue as a going concern. The Partnership continues to incur recurring operating losses and suffers from inadequate liquidity. The Partnership has unsecured working capital loans in the amount of approximately $4,576,000 plus related accrued interest of approximately $3,989,000 that is in default at December 31, 2001 as a result of non-payment of interest and principal upon its maturity in November 1997. These loans were payable to Angeles Acceptance Pool, L.P. ("AAP"). During the year ended December 31, 2000, AAP transferred ownership of the loans to Saticoy Investments Company, LLC ("Saticoy"), a wholly owned entity of The PNL Companies. This indebtedness is recourse to the Partnership. The Partnership does not have the means with which to satisfy this obligation, and Saticoy has a judgment against the Partnership for this debt. During the year ended December 31, 2001, the Managing General Partner signed a forebearance agreement with Saticoy. The Managing General Partner agreed to market Waterford Square Apartments for sale. The forebearance period began June 1, 2001 and was to end the earlier of March 1, 2002 or the date Waterford Square Apartments was sold. The Managing General Partner and Saticoy negotiated an extension of the forebearance agreement until April 1, 2002. The extension until April 1, 2002 was granted to allow the Partnership to finalize a contract for the sale of Waterford Square Apartments that is currently in negotiations. Upon the sale of Waterford Square Apartments, the distributable sale proceeds, after deducting reasonable closing costs, will be used to repay the first lien mortgage debt on the property and repay certain AMIT debt. Saticoy has agreed to accept 68.75% of the remaining proceeds in full satisfaction of its notes. The Partnership realized a net loss of approximately $1,916,000 for the year ended December 31, 2001. The Managing General Partner expects the Partnership to continue to incur such losses from operations. The Partnership generated cash from operations of approximately $373,000 during the year ended December 31, 2001; however, this was primarily the result of accruing interest of approximately $808,000 on its indebtedness and, to a lesser extent, $201,000 for services provided by affiliates. No other sources of additional financing have been identified by the Partnership, nor does the Managing General Partner have any other plans to remedy the liquidity problems the Partnership is currently experiencing. The Managing General Partner anticipates that Fox Crest Apartments and Waterford Square Apartments will generate sufficient cash flows for the next twelve months to meet all property operating expenses, property debt service requirements and to fund capital expenditures. However, these cash flows will be insufficient to provide debt service for the unsecured Partnership indebtedness. As a result of the above, there is substantial doubt about the Partnership's ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classifications of liabilities that may result from these uncertainties. Note B - Organization and Significant Accounting Policies Organization: The Partnership is a California limited partnership organized in June 1984, to acquire and operate residential and commercial real estate properties. The Partnership's managing general partner is Angeles Realty Corporation II ("ARC II" or "Managing General Partner") an affiliate of Insignia Financial Group, Inc. ("Insignia") and wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"). Effective October 1, 1998 and February 26, 1999, Insignia and IPT, respectively, were merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. Thus the Managing General Partner is now a wholly-owned subsidiary of AIMCO. The Partnership's Non-Managing General Partner is ARCII/AREMCO Partners, Ltd., which is also a wholly-owned subsidiary of AIMCO effective December 1, 2001. ARC II and ARC II/AREMCO Partners, Ltd. are herein collectively referred to as the "General Partners". The Partnership commenced operations on June 29, 1984, and completed its acquisition of apartment and commercial properties on December 20, 1985. As of December 31, 2001 the Partnership continues to operate two apartment properties, one in Illinois and the other in Alabama. The Partnership Agreement provides that the Partnership will terminate on December 31, 2035 unless terminated prior to such date. Principles of Consolidation: The consolidated financial statements include all of the accounts of the Partnership and its 99% limited partnership interest in Waterford Square Apartments, Ltd. The general partner of the consolidated partnership is the Managing General Partner. The Managing General Partner may be removed by the Registrant; therefore, this consolidated partnership is controlled and consolidated by the Registrant. All significant interpartnership balances have been eliminated. Allocations and Distributions to Partners: In accordance with the Agreement, any gain from the sale or other disposition of Partnership assets will be allocated first to the General Partners to the extent of the amount of any Incentive Interest (as defined below) to which the General Partners are entitled. Any gain remaining after said allocation will be allocated to the Limited Partners in proportion to their interests in the Partnership; provided that the gain shall first be allocated to Partners with negative account balances, in proportion to such balances, in an amount equal to the sum of such negative capital account balances. The Partnership will allocate other profits and losses 1% to the General Partners and 99% to the Limited Partners. Except as discussed below, the Partnership will allocate distributions 1% to the General Partners and 99% to the Limited Partners. Upon the sale or other disposition, or refinancing of any asset of the Partnership, the Distributable Net Proceeds shall be distributed as follows: (i) First, to the Partners in proportion to their interests until the Limited Partners have received proceeds equal to their Original Capital Investment; (ii) Second, to the Partners until Limited Partners have received distributions from all sources equal to their 6% Cumulative Distribution, (iii) Third, to the General Partners until they have received their cumulative distributions equal to 3% of the aggregate Disposition Prices of all properties, mortgages or other investments sold ("Initial Incentive Interest") and (iv) Thereafter, 85% to the Limited Partners in proportion to their interests and 15% to the General Partners ("Final Incentive Interest"). Cash and Cash Equivalents: Cash and cash equivalents includes cash on hand and in banks. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances included approximately $1,077,000 at December 31, 2001 that are maintained by the affiliated management company on behalf of affiliated entities in cash concentration accounts. Tenant Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. The security deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Advertising Costs: Advertising costs of approximately $47,000 in 2001 and approximately $60,000 in 2000 are charged to expense as they are incurred and are included in operating expenses in the accompanying consolidated statements of operations. Investment Properties: Investment properties consist of two apartment complexes and are stated at cost. Acquisition fees are capitalized as a cost of real estate. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. Costs of apartment properties that have been permanently impaired have been written down to appraised value. No adjustment for impairment of value was recorded for the years ended December 31, 2001 or 2000. See "Recent Accounting Pronouncements" below. Depreciation: Depreciation is provided by the straight-line method over the estimated lives of the apartment properties and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used for real property over 18 years for additions after March 15, 1984 and before May 9, 1985, and 19 years for additions after May 8, 1985, and before January 1, 1987. For additions after December 31, 1986, the modified accelerated cost recovery method is used for depreciation of (1) real property over 27 1/2 years and (2) personal additions over 5 years. Loan Costs: Loan costs of approximately $356,000 at December 31, 2001, which are included in other assets on the accompanying consolidated balance sheet, are being amortized on a straight-line basis over the lives of the loans. At December 31, 2001, accumulated amortization of approximately $151,000 is also included in other assets on the accompanying consolidated balance sheet. Leases: The Partnership generally leases apartment units for twelve-month terms or less. In addition, the Managing General Partner's policy is to offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Concessions are charged against rental income as incurred. Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The fair value of the Partnership's first mortgages, after discounting the scheduled loan payments to maturity, approximates its carrying balance. The Managing General Partner believes that it is not appropriate to use the Partnership's incremental borrowing rate for debt to affiliates or debt that is in default as there is no market in which the Partnership could obtain similar financing. Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also established standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment. The Managing General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the consolidated financial statements as currently presented. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Recent Accounting Pronouncements: In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 provides accounting guidance for financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Managing General Partner does not anticipate that its adoption will have a material effect on the financial position or results of operations of the Partnership. Note C - Notes Payable
Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At Property 2001 Interest Rate Date Maturity (in thousands) (in thousands) (in thousands) Waterford Square Apartments 1st mortgage $11,435 $87 7.90% 11/2027 $ -- Fox Crest Apartments 1st mortgage 5,743 56 8.00% 05/2003 5,445 Angeles Partners XIV Working capital loan, in default(3) 1,281 (1) (1) 11/1997 1,281 Working capital loan, in default(3) 3,295 (1) (1) 11/1997 3,295 Note payable (2) ("Glenwood") 2,405 (4) 12.50% 03/2002 2,405 Note payable (2) ("Foxcrest") 4,765 (5) 12.50% 03/2003 4,765 Total $28,924 $17,191
(1) Interest accrues at prime plus 2% (6.75% at December 31, 2001); payments are based on excess cash flow as defined. (2) Payable to AMIT, an affiliate of the Managing General Partner. (3) These loans were payable to Angeles Acceptance Pool, L.P. ("AAP"). During the year ended December 31, 2000, AAP transferred ownership of the loans to Saticoy Investments Company, LLC ("Saticoy"), a wholly owned entity of The PNL Companies. (4) Payments of excess cash flow only, as defined, due semi-annually. (5) No payments due until maturity. In June 1996, the Waterford Square note and the Glenwood note, both held by AMIT, were restructured, adding previously accrued delinquent interest and late charges of approximately $874,000 to the original note amounts. The notes provided for the accrual of interest on the unpaid balance at 12.0% (Waterford Square note) and 12.5% (Glenwood note). In July 1998, the lender agreed to extend the maturity date on these notes to March 2002. At the time of the granting of the extension, an additional $28,000 in loan costs was added to the principal. During the year ended December 31, 2001, the Waterford Square note with a principal balance of approximately $121,000 was paid in full. In November 1992, AAP, a Delaware limited partnership which controlled the working capital loans previously provided by Angeles Capital Investment, Inc. ("ACII"), was organized. Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc. ("AAD"), which was wholly-owned by Insignia Properties Trust ("IPT"), was the 1% general partner of AAP, until April 14, 1995. 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 0.5% limited partner interest in AAP. An affiliate of Angeles now serves as the general partner of AAP. The AAP working capital loans funded the Partnership's operating deficits in prior years. Total indebtedness was approximately $4,576,000, plus accrued interest of approximately $3,989,000, at December 31, 2001, with monthly interest accruing at the prime rate plus two percent. Upon maturity on November 25, 1997, the Partnership did not have the means with which to satisfy this maturing debt obligation. Total interest expense for this loan was approximately $427,000 and $518,000 for the years ended December 31, 2001 and 2000, respectively. During the year ended December 31, 2000, AAP transferred ownership of the loans to Saticoy Investments Company, LLC ("Saticoy"), a wholly owned entity of the PNL Companies, which is an unrelated party. During the year ended December 31, 2001, the Managing General Partner signed a forebearance agreement with Saticoy. The Managing General Partner agreed to market Waterford Square Apartments for sale. The forebearance period began June 1, 2001 and was to end the earlier of March 1, 2002 or the date Waterford Square Apartments was sold. The Managing General Partner and Saticoy negotiated an extension of the forebearance agreement until April 1, 2002. The extension until April 1, 2002 was granted to allow the Partnership to finalize a contract for the sale of Waterford Square Apartments that is currently in negotiations. Upon the sale of Waterford Square Apartments, the distributable sale proceeds, after deducting reasonable closing costs, will be used to repay the first lien mortgage debt on the property and repay certain AMIT debt. Saticoy has agreed to accept 68.75% of the remaining proceeds in full satisfaction of its notes. Mortgage notes payable totaling approximately $17,178,000 are nonrecourse and are secured by pledge of certain of the Partnership's investment properties and by pledge of revenues from the respective investment properties. Certain of the notes include prepayment penalties if repaid prior to maturity. Further, the properties may not be sold subject to existing indebtedness. Scheduled principal payments of notes payable subsequent to December 31, 2001, are as follows (in thousands): 2002 $ 7,342 2003 10,438 2004 164 2005 177 2006 192 Thereafter 10,611 Total $28,924 Note D - Income Taxes The Partnership has received a ruling from the Internal Revenue Service that it is to be classified as a partnership for Federal income tax purposes. Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. The following is a reconciliation of reported net loss and Federal taxable loss (in thousands, except unit data): 2001 2000 Net loss as reported $(1,916) $(2,083) Add (deduct): Depreciation differences 134 117 Unearned income (37) (2) Other 507 418 Federal taxable loss $(1,312) $(1,550) Federal taxable loss per limited partnership unit $ (31.98) $(33.11) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net liabilities (in thousands): Net liabilities as reported $ (31,546) Land and buildings (16) Accumulated depreciation 146 Syndication and distribution costs 6,047 Other 625 Net liabilities - Federal tax basis $ (24,744) Note E - 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 (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were paid or accrued to the Managing General Partner and affiliates during the years ended December 31, 2001 and 2000. 2001 2000 (in thousands) Property management fees (included in operating expenses) $ 324 $ 282 Reimbursement for services of affiliates (included in investment properties and general and administrative expenses) 335 205 Interest expense accrued to affiliates 1,511 1,467 Due to affiliates 2,090 1,660 As compensation for providing property management services, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from Foxcrest Apartments during the years ended December 31, 2001 and 2000, and 6% of gross receipts from Waterford Square Apartments for the year ended December 31, 2000 and through June 30, 2001. Effective July 1, 2001, the rate was increased to 7.82% of gross receipts. The Registrant paid to such affiliates approximately $324,000 and $282,000 for the years ended December 31, 2001 and 2000, respectively. Affiliates of the Managing General Partner were eligible to receive reimbursement of accountable administrative expenses amounting to approximately $335,000 and $205,000 for the years ended December 31, 2001 and 2000, respectively. Included in these amounts are fees related to construction management services provided by an affiliate of the Managing General Partner of approximately $135,000 for the year ended December 31, 2001. No such fees were incurred during the year ended December 31, 2000. The construction management service fees are calculated based on a percentage of current and certain prior year additions to investment properties and are being depreciated over 15 years. The Partnership owed the affiliates of the Managing General Partner approximately $1,935,000 and $1,660,000 at December 31, 2001 and 2000, respectively, for reimbursement of accountable administrative expenses. These amounts were included in "Due to affiliates" at December 31, 2001 and 2000. During the year ended December 31, 2001, the Partnership received an advance from an affiliate of the Managing General Partner in the amount of approximately $150,000. Interest is charged at the prime rate plus 2%. Interest expense was approximately $5,000 for the year ended December 31, 2001. These amounts are included in "Due to affiliates" at December 31, 2001. There were no loans from the Managing General Partner or associated interest during the year ended December 31, 2000. Angeles Mortgage Investment Trust ("AMIT") provided financing (the "AMIT Loans") to the Partnership. Pursuant to a series of transactions, affiliates of the Managing General Partner acquired ownership interests in AMIT. On September 17, 1998, AMIT was merged with and into Insignia Properties Trust ("IPT"), the entity which controlled the Managing General Partner. Effective February 26, 1999, IPT was merged into AIMCO. Thus, AIMCO is the current holder of the AMIT loans. The principal balances on the AMIT Loans total approximately $7,170,000 at December 31, 2001, accrue interest at a rate of 12.5% per annum and are recourse to the Partnership. One of the three notes was paid in full during the year ended December 31, 2001. One of the two remaining notes in the amount of $2,405,000 originally matured in March 1998. The Managing General Partner negotiated with AMIT to extend this indebtedness through March 2002. The remaining note with a principal balance of approximately $4,765,000 matures in March 2003. Total interest expense on the AMIT Loans was approximately $1,511,000 and $1,467,000 for the years ended December 31, 2001 and 2000, respectively. Total interest paid on the AMIT loans was approximately $978,000 and $169,000 for the years ended December 31, 2001 and 2000, respectively. Accrued interest was approximately $5,354,000 at December 31, 2001. Beginning in 2001, the Partnership began insuring its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the year ended December 31, 2001, the Partnership paid AIMCO and its affiliates approximately $56,000 for insurance coverage and fees associated with policy claims administration. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 10,768 limited partnership units in the Partnership representing 24.80% of the outstanding units at December 31, 2001. These units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of its affiliation with the Managing General Partner. Note F - Investment Properties and Accumulated Depreciation
Initial Cost To Partnership (in thousands) Buildings Cost and Related Capitalized Personal Net Subsequent Description Encumbrances Land Property to Acquisition Waterford Square Apartments $11,435 $ 1,382 $13,479 $ 3,523 Fox Crest Apartments 5,743 861 8,198 1,451 Angeles Partners XIV 11,746 -- -- -- Totals $28,924 $ 2,243 $21,677 $ 4,974
Gross Amount At Which Carried At December 31, 2001 (in thousands) Buildings And Related Personal Accumulated Date Depreciable Description Land Property Total Depreciation Acquired Life-Years Waterford Square Apartments $ 1,382 $17,002 $18,384 $13,666 05/31/85 5-20 yrs Fox Crest Apartments 861 9,649 10,510 7,578 06/30/85 5-20 yrs Totals $ 2,243 $26,651 $28,894 $21,244
The depreciable lives included above are for the building and components. The depreciable lives for related personal property are for 3 to 7 years. Reconciliation of "Investment Properties and Accumulated Depreciation": Years Ended December 31, 2001 2000 (in thousands) Investment Properties Balance at beginning of year $28,497 $27,996 Property improvements 397 501 Balance at end of year $28,894 $28,497 Accumulated Depreciation Balance at beginning of year $19,845 $18,483 Additions charged to expense 1,399 1,362 Balance at end of year $21,244 $19,845 The aggregate cost of the investment properties for Federal income tax purposes at December 31, 2001 and 2000, is approximately $28,878,000 and $28,472,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 2001 and 2000, is approximately $21,098,000 and $19,833,000, respectively. Note G - Abandonment of Limited Partnership Units In 2001 and 2000, the number of Limited Partnership Units decreased by 10 and 168 units, respectively, due to Limited Partners abandoning their Limited Partnership Units. In abandoning his or her Limited Partnership Units, a Limited Partner relinquishes all right, title and interest in the Partnership as of the date of abandonment. However, the Limited Partner is allocated his or her share of loss for that year. The loss per Limited Partnership Unit in the accompanying consolidated statements of operations is calculated based on the number of units outstanding at the beginning of the year. Note H - Distributions For the year ended December 31, 2001, Waterford Square Apartments, Ltd. (a limited partnership in which the Registrant owns a 99% interest) made a surplus cash distribution of approximately $701,000 of which approximately $7,000 was paid to the Managing General Partner which is the general partner of Waterford Square Apartments, Ltd. For the year ended December 31, 2000, a surplus cash distribution of approximately $500,000 of which approximately $5,000 was paid to the Managing General Partner which is the general partner of Waterford Square Apartments, Ltd. Note I - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Managing General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the Managing General Partner and its affiliates filed a demurrer to the third amended complaint. On May 14, 2001, the Court heard the demurrer to the third amended complaint. On July 10, 2001, the Court issued an order sustaining defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed a fourth amended class and derivative action complaint. On September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the Managing General Partner and affiliated defendants filed a demurrer to the fourth amended complaint, which was heard on December 11, 2001. On February 2, 2002, the Court served its order granting in part the demurrer. The Court has dismissed without leave to amend certain of the plaintiffs' claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a putative class comprised of all non-affiliated persons who own or have owned units in the partnerships. The Managing General Partner and affiliated defendants intend to oppose the motion and are scheduled to file their opposition brief on March 26, 2002. A hearing on the motion has been scheduled for April 29, 2002. The Court has set the matter for trial in January 2003. During the third quarter of 2001, a complaint (the "Heller action") was filed against the same defendants that are named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed a first amended complaint. The first amended complaint in the Heller action is brought as a purported derivative action, and asserts claims for among other things breach of fiduciary duty; unfair competition; conversion, unjust enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a motion to consolidate the Heller action with the Nuanes action and stated that the Heller action was filed in order to preserve the derivative claims that were dismissed without leave to amend in the Nuanes action by the Court order dated July 10, 2001. On October 5, 2001, the Managing General Partner and affiliated defendants moved to strike the first amended complaint in its entirety for violating the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer in the Nuanes action, or alternatively, to strike certain portions of the complaint based on the statute of limitations. Other defendants in the action demurred to the fourth amended complaint, and, alternatively, moved to strike the complaint. On December 11, 2001, the court heard argument on the motions and took the matters under submission. On February 4, 2002, the Court served notice of its order granting defendants' motion to strike the Heller complaint as a violation of its July 10, 2001 order in the Nuanes action. The Managing General Partner does not anticipate that any costs, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. Item 8. Changes in and Disagreements with Accountant on Accounting and Financial Disclosures None. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Angeles Realty Corporation II ("ARC II" or the "Managing General Partner"), was a wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"). Effective February 26, 1999, IPT was merged into Apartment Investment and Management Company ("AIMCO"). Thus the Managing General Partner is now a wholly-owned subsidiary of AIMCO. The names and ages of, as well as the positions and offices held by, the present executive officers and director of ARC II are set forth below. There are no family relationships between or among any officers or director. Name Age Position Patrick J. Foye 44 Executive Vice President and Director Martha L. Long 42 Senior Vice President and Controller Patrick J. Foye has been Executive Vice President and Director of the Managing General Partner since October 1, 1998. Mr. Foye has served as Executive Vice President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power Authority and serves as a member of the New York State Privatization Council. He received a B.A. from Fordham College and a J.D. from Fordham University Law School. Martha L. Long has been Senior Vice President and Controller of the Managing General Partner since October 1998 as a result of the acquisition of Insignia Financial Group, Inc. As of February 2001, Ms. Long was also appointed head of the service business for AIMCO. From June 1994 until January 1997, she was the Controller for Insignia, and was promoted to Senior Vice President - Finance and Controller in January 1997, retaining that title until October 1998. From 1988 to June 1994, Ms. Long was Senior Vice President and Controller for The First Savings Bank, FSB in Greenville, South Carolina. One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act: Further, one or more of the above persons are also directors and/or officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act. The executive officers and director of the Managing General Partner fulfill the obligations of the Audit Committee and oversee the Partnership's financial reporting process on behalf of the Managing General Partner. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the executive officers and director of the Managing General Partner reviewed the audited financial statements with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The executive officers and director of the Managing General Partner reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, their judgments as to the quality, not just the acceptability, of the Partnership's accounting principles and such other matters as are required to be discussed with the Audit Committee or its equivalent under auditing standards generally accepted in the United States. In addition, the Partnership has discussed with the independent auditors the auditors' independence from management and the Partnership including the matters in the written disclosures required by the Independence Standards Board and considered the compatibility of non-audit services with the auditors' independence. The executive officers and director of the Managing General Partner discussed with the Partnership's independent auditors the overall scope and plans for their audit. In reliance on the reviews and discussions referred to above, the executive officers and director of the Managing General Partner have approved the inclusion of the audited financial statements in the Form 10-KSB for the year ended December 31, 2001 for filing with the Securities and Exchange Commission. The Managing General Partner has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Partnership for the current fiscal year. Fees for the last fiscal year were audit services of approximately $32,000 and non-audit services (principally tax-related) of approximately $16,000. Item 10. Executive Compensation No compensation or remuneration was paid by the Partnership to any officer or director of ARC II. The Partnership has no plan, nor does the Partnership presently propose a plan, which will result in any remuneration being paid to any officer or director upon termination of employment. However, certain fees and other payments have been made to the Partnership's Managing General Partner and its affiliates, as described in "Item 12.". Item 11. Security Ownership of Certain Beneficial Owners and Management Except as noted below, no person or entity was known by the Registrant to be the beneficial owner of more than 5% of the Limited Partnership Units of the Registrant as of December 31, 2001. Entity Number of Units Percentage AIMCO Properties LP 10,768 24.80% (an affiliate of AIMCO) AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business address is 2000 South Colorado Blvd., Denver, Colorado 80222. The Partnership knows of no contractual arrangements, the operation of the terms of which may at a subsequent date result in a change in control of the Partnership, except for: Article 12.1 of the Agreement, which provides that upon a vote of the Limited Partners holding more than 50% of the then outstanding Limited Partnership Units the Managing General Partner may be expelled from the Partnership upon 90 days written notice. In the event that a successor general partner has been elected by Limited Partners holding more than 50% of the then outstanding Limited Partnership Units and if said Limited Partners elect to continue the business of the Partnership, the Partnership is required to pay in cash to the expelled Managing General Partner an amount equal to the accrued and unpaid management fee described in Article 10 of the Agreement and to purchase the Managing General Partner's interest in the Partnership on the effective date of the expulsion, which shall be an amount equal to the difference between (i) the balance of the Managing General Partner's capital account and (ii) the fair market value of the share of Distributable Net Proceeds to which the Managing General Partner would be entitled. Such determination of the fair market value of the share of Distributable Net Proceeds is defined in Article 12.2(b) of the Agreement. Item 12. Certain Relationships and Related Transactions 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 (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were paid or accrued to the Managing General Partner and affiliates during the years ended December 31, 2001 and 2000. 2001 2000 (in thousands) Property management fees $ 324 $ 282 Reimbursement for services of affiliates 335 205 Interest expense accrued to affiliates 1,511 1,467 Due to affiliates 2,090 1,660 As compensation for providing property management services, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from Foxcrest Apartments during the years ended December 31, 2001 and 2000, and 6% of gross receipts from Waterford Square Apartments for the year ended December 31, 2000 and through June 30, 2001. Effective July 1, 2001, the rate was increased to 7.82% of gross receipts. The Registrant paid to such affiliates approximately $324,000 and $282,000 for the years ended December 31, 2001 and 2000, respectively. Affiliates of the Managing General Partner were eligible to receive reimbursement of accountable administrative expenses amounting to approximately $335,000 and $205,000 for the years ended December 31, 2001 and 2000, respectively. Included in these amounts are fees related to construction management services provided by an affiliate of the Managing General Partner of approximately $135,000 for the year ended December 31, 2001. No such fees were incurred during the year ended December 31, 2000. The construction management service fees are calculated based on a percentage of current and certain prior year additions to investment properties and are being depreciated over 15 years. The Partnership owed the affiliates of the Managing General Partner approximately $1,935,000 and $1,660,000 at December 31, 2001 and 2000, respectively, for reimbursement of accountable administrative expenses. These amounts were included in "Due to affiliates" at December 31, 2001 and 2000. During the year ended December 31, 2001, the Partnership received an advance from an affiliate of the Managing General Partner in the amount of approximately $150,000. Interest is charged at the prime rate plus 2%. Interest expense was approximately $5,000 for the year ended December 31, 2001. These amounts are included in "Due to affiliates" at December 31, 2001. There were no loans from the Managing General Partner or associated interest during the year ended December 31, 2000. Angeles Mortgage Investment Trust ("AMIT") provided financing (the "AMIT Loans") to the Partnership. Pursuant to a series of transactions, affiliates of the Managing General Partner acquired ownership interests in AMIT. On September 17, 1998, AMIT was merged with and into Insignia Properties Trust ("IPT"), the entity which controlled the Managing General Partner. Effective February 26, 1999, IPT was merged into AIMCO. Thus, AIMCO is the current holder of the AMIT loans. The principal balances on the AMIT Loans total approximately $7,170,000 at December 31, 2001, accrue interest at a rate of 12.5% per annum and are recourse to the Partnership. One of the three notes was paid in full during the year ended December 31, 2001. One of the two remaining notes in the amount of $2,405,000 originally matured in March 1998. The Managing General Partner negotiated with AMIT to extend this indebtedness through March 2002. The remaining note with a principal balance of approximately $4,765,000 matures in March 2003. Total interest expense on the AMIT Loans was approximately $1,511,000 and $1,467,000 for the years ended December 31, 2001 and 2000, respectively. Total interest paid on the AMIT loans was approximately $978,000 and $169,000 for the years ended December 31, 2001 and 2000, respectively. Accrued interest was approximately $5,354,000 at December 31, 2001. Beginning in 2001, the Partnership began insuring its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the year ended December 31, 2001, the Partnership paid AIMCO and its affiliates approximately $56,000 for insurance coverage and fees associated with policy claims administration. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 10,768 limited partnership units in the Partnership representing 24.80% of the outstanding units at December 31, 2001. These units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of its affiliation with the Managing General Partner. PART IV Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: None. (b) Reports on Form 8-K: No reports were filed during the quarter ended December 31, 2001. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES PARTNERS XIV (A California Limited Partnership) (Registrant) By: Angeles Realty Corporation II Managing General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: March 25, 2002 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on the date indicated. /s/Patrick J. Foye Executive Vice President Date:March 25, 2002 Patrick J. Foye and Director /s/Martha L. Long Senior Vice President Date:March 25, 2002 Martha L. Long and Controller ANGELES PARTNERS XIV EXHIBIT INDEX Exhibit Number Description of Exhibit 3.1 Amended Certificate and Agreement of Limited Partnership filed in Form S-11 dated December 24, 1984 incorporated herein by reference. 10.1 Agreement of Purchase and Sale of Real Property with Exhibits - Waterford Square Apartments filed in Form 8-K dated May 31, 1985 incorporated herein by reference. 10.2 Agreement of Purchase and Sale of Real Property with Exhibits - Fox Crest Apartments filed in Form 8-K dated June 30, 1985 incorporated herein by reference. 10.3 Agreement of Purchase and Sale of Real Property with Exhibits - Dayton Industrial Complex filed in Form 8-K dated December 20, 1985 incorporated herein by reference. 10.4 Agreement of Purchase and Sale of Real Property with Exhibits - Camelot Village Apartments filed in Form 8-K dated March 31, 1987 incorporated herein by reference. 10.5 Agreement of Purchase and Sale of Real Property with Exhibits - Glenwood Plaza Shopping Center filed in Form 8-K dated March 31, 1987 incorporated herein by reference. 10.6 Glenwood Plaza Shopping Center financing disclosed in notes to financial statements filed in Form 10-Q dated June 30, 1988, incorporated herein by reference. 10.7 Promissory note - Waterford Square Apartments financing disclosed in notes to financial statements filed in Form 10-K dated December 31, 1989 incorporated herein by reference. 10.8 Promissory note - Fox Crest Apartments financing disclosed in notes to financial statements filed in Form 10-K dated December 31, 1989 incorporated herein by reference. 10.9 Sale agreement - Cascades Apartments filed in Form 8-K, Exhibit I, dated August 28, 1991, incorporated herein by reference. 10.10 Stock Purchase Agreement dated November 24, 1992 showing the purchase of 100% of the outstanding stock of Angeles Realty Corporation II by IAP GP Corporation, a subsidiary of MAE GP Corporation, filed in Form 8-K dated December 31, 1992, which is incorporated herein by reference. 10.11 Agreement of Purchase and Sale of Real Property with Exhibits Camelot Village Apartments and Glenwood Plaza Shopping Center filed in Form 8-K dated July 15, 1993 incorporated herein by reference. 10.12 Agreement of Purchase and Sale of Real Property with Exhibits Building 54 of the Dayton Industrial Complex Shopping Center filed in Form 8-K dated December 28, 1994 incorporated herein by reference. 10.13 Agreement of Purchase and Sale of Real Property with Exhibits Building 47 of the Dayton Industrial Complex Shopping Center filed in Form 8-K dated August 31, 1995 incorporated herein by reference. 10.14 Purchase Agreement - Building 45 of the Dayton Industrial Complex - between the Partnership and Miller-Valentine Partners, dated December 31, 1995. 10.15 Amendment to and Assignment of Purchase Agreement - Building 45 of the Dayton Industrial Complex - between the Partnership, Miller-Valentine Partners and Mid-States Development Company, dated April 8, 1996. 10.16 Assignment of Permits, Etc. - Building 45 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated April 8, 1996. 10.17 Assignment and Assumption of Leases and Security Deposits - Building 45 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated April 8, 1996. 10.18 Assignment of Warranties - Building 45 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated April 8, 1996. 10.19 Bill of Sale and Assignment - Building 45 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated April 8, 1996. 10.20 Limited Warranty Deed - Building 45 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated April 8, 1996. 10.21 Purchase Agreement - Building 52 of the Dayton Industrial Complex - between the Partnership and Miller-Valentine Partner, dated December 31, 1995. 10.22 Assignment of Purchase Agreement - Building 52 of the Dayton Industrial Complex - between the Partnership, Miller-Valentine Partners and Mid-States Development Company, dated April 8, 1996. 10.23 Assignment of Permits, Etc. - Building 52 of the Dayton Industrial Complex-between the Partnership, Miller-Valentine Partners and Mid-States Development Company, dated April 8, 1996. 10.24 Assignment of Assumption of Leases and Security Deposits - Building 52 of the Dayton Industrial Complex - between the Partnership, Miller-Valentine Partners and Mid-States Development Company, dated April 8, 1996. 10.25 Assignment of Warranties - Building 52 of the Dayton Industrial Complex - between the Partnership, Miller-Valentine Partners and Mid-States Development Company, dated April 8, 1996. 10.26 Bill of Sale and Assignment - Building 52 of the Dayton Industrial Complex - between the Partnership, Miller-Valentine Partners and Mid-States Development Company, dated April 8, 1996. 10.27 Limited Warranty Deed - Building 52 of the Dayton Industrial Complex - between the Partnership, Miller-Valentine Partners and Mid-States Development Company, dated April 8, 1996. 10.28Purchase Agreement - between Angeles Partners XIV and ABMD, LTD., dated July 30, 1996. 10.29Assignment of Service Agreements - between Angeles Partners XIV to ABMD, LTD. 10.30Assignment of Licenses and Permits - between Angeles Partners XIV to ABMD, LTD. 10.31Assignment of Warranties and Guarantees - by Angeles Partners XIV to ABMD, LTD. 10.32Bill of Sale and Assignment - between Angeles Partners XIV to ABMD, LTD. 10.33 Limited Warranty Deed - by Angeles Partners XIV to ABMD, LTD. 10.34Assignment and Assumption of Leases and Subleases - by Angeles Partners XIV to ABMD, LTD. 10.35Mortgage Note between Washington Capital Associates, Inc. and Waterford Square Apartments, a California general partnership, dated October 28, 1996. 10.36Rider to Mortgage Note by Waterford Square Apartments, a California general partnership, to the order of Washington Capital Associates, Inc. dated as of October 28, 1996. 10.37Assignment of Warranties - Building 41 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated June 12, 1998. 10.38Assignment of Permits - Building 41 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated June 12, 1998. 10.39Purchase Agreement - Building 41 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated June 12, 1998. 10.40Closing Statement - Building 41 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated June 12, 1998. 10.41Journal Entry Confirming Sale, Ordering Deed and Distributing Sale Proceeds - between The Traveler's Insurance Company and the Partnership, dated June 12, 1998. 10.42 Agreement of Purchase and Sale - Building 55 of the Dayton Industrial Complex - between Angeles Partners XIV and Shopsmith Inc., dated December 31, 1998 filed in 10-KSB for the year ended December 31, 1998. 16.1 Letter from the Registrant's former independent accountant regarding its concurrence with the statements made by the Registrant, is incorporated by reference to the Exhibit filed with Form 8-K dated September 1, 1993.