-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kf3o1NoRW+lmloIPl2SgUOOnGHcx+gtqb7yg/KORT1h7u+6He1y7j8uYSi2BO0vN +4pE9uRlIZM4Z/nISIlnyA== 0000759859-96-000008.txt : 19961115 0000759859-96-000008.hdr.sgml : 19961115 ACCESSION NUMBER: 0000759859-96-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES PARTNERS XIV CENTRAL INDEX KEY: 0000759859 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953959771 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14284 FILM NUMBER: 96660293 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93.) U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-14248 ANGELES PARTNERS XIV (Exact name of small business issuer as specified in its charter) California 95-3959771 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) ANGELES PARTNERS XIV CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1996 Assets Cash and cash equivalents: Unrestricted $ 411 Restricted--tenant security deposits 87 Accounts receivable, (net of allowance for doubtful accounts of $35) 20 Escrows deposits for taxes 297 Restricted escrows 348 Other assets 852 Investment properties: Land $ 3,313 Buildings and related personal property 39,069 42,382 Less accumulated depreciation (23,258) 19,124 $ 21,139 Liabilities and Partners' Deficit Liabilities Accounts payable $ 137 Tenant security deposits 100 Accrued taxes 425 Accrued interest 3,116 Due to affiliates 985 Other liabilities 158 Notes payable, including $1,175 in default 42,557 Partners' Deficit General partners $ (646) Limited partners (44,139 units issued and outstanding) (25,693) (26,339) $ 21,139 See Accompanying Notes to Consolidated Financial Statements b) ANGELES PARTNERS XIV CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 1,523 $ 1,977 $ 5,041 $ 5,987 Other income 77 43 156 181 Total revenues 1,600 2,020 5,197 6,168 Expenses: Operating 571 451 1,603 1,614 General and administrative 109 70 322 210 Maintenance 183 169 580 455 Depreciation 483 694 1,637 2,139 Interest 1,175 1,581 3,781 4,489 Property taxes 121 110 389 325 Bad debt (4) 8 (15) 21 Total expenses 2,638 3,083 8,297 9,253 Gain on sale of investment property 131 78 626 78 Loss before extraordinary item (907) (985) (2,474) (3,007) Extraordinary gain on extinguishment of debt -- -- 1,126 -- Net loss $ (907) $ (985) $(1,348) $(3,007) Net loss allocated to general partners (1%) $ (9) $ (10) $ (13) $ (30) Net loss allocated to limited partners (99%) (898) (975) (1,335) (2,977) Net loss $ (907) $ (985) $(1,348) $(3,007) Per limited partnership unit: Loss before extraordinary item $(20.34) $(22.10) $(55.49) $(67.44) Extraordinary gain on extinguishment of debt -- -- 25.26 -- Net loss $(20.34) $(22.10) $(30.23) $(67.44) See Accompanying Notes to Consolidated Financial Statements
c) ANGELES PARTNERS XIV CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (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, 1995 44,139 $ (633) $(24,358) $(24,991) Net loss for the nine months ended September 30, 1996 (13) (1,335) (1,348) Partners' deficit at September 30, 1996 44,139 $ (646) $(25,693) $(26,339) See Accompanying Notes to Consolidated Financial Statements
d) ANGELES PARTNERS XIV CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net loss $ (1,348) $(3,007) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 1,637 2,139 Amortization of mortgage discounts, loan costs, and leasing commissions 96 211 Extraordinary gain on extinguishment of debt (1,126) -- Gain on sale of investment property (626) (78) Bad debt (recovery) expense (15) 21 Change in accounts: Restricted cash 9 (4) Accounts receivable 30 (2) Escrows for taxes 219 (32) Other assets (32) (131) Accounts payable 41 (18) Tenant security deposit liabilities (33) (33) Accrued taxes (32) (24) Accrued interest 1,783 1,990 Due to affiliates 221 130 Other liabilities 31 7 Net cash provided by operating activities 855 1,169 Cash flows from investing activities: Property improvements and replacements (195) (248) Proceeds from sale of investment property 5,995 4,096 Deposits to restricted escrows (129) (90) Withdrawals from restricted escrows 66 84 Net cash provided by investing activities 5,737 3,842 Cash flows from financing activities: Payments on mortgage notes payable (336) (771) Repayments of loans (12,620) (4,089) Loan cost (148) (67) Proceeds from mortgage notes payable 6,700 49 Net cash used in financing activities (6,404) (4,878) Net increase in cash and cash equivalents 188 133 Cash and cash equivalents at beginning of period 223 183 Cash and cash equivalents at end of period $ 411 $ 316 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,921 $ 2,307 Supplemental disclosure of non-cash investing and financing activities: Interest on notes transferred to notes payable $ 2,477 $ 978 See Accompanying Notes to Consolidated Financial Statements
e) ANGELES PARTNERS XIV NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - GOING CONCERN The accompanying financial statements have been prepared assuming Angeles Partners XIV (the "Partnership") will continue as a going concern. The Partnership continues to suffer from inadequate liquidity and is in default on approximately $1,175,000 of its debt obligations due to non-payment upon maturity. In 1995, Angeles Mortgage Investment Trust ("AMIT") brought suit against the Partnership to protect its interest in $1,175,000 of this indebtedness, which was previously unsecured indebtedness of the Partnership. On April 30, 1996, the Partnership granted to AMIT a security interest in the Partnership's general partner interest in Waterford Square Apartments, Ltd., which owns the Waterford Square Apartments, as security for the $1,175,000 of AMIT indebtedness. In April 1996, delinquent accrued interest and late charges of $1,764,000, which had been previously accrued, were added to $3,000,000 (the "Fox Crest Note") of the AMIT indebtedness and the maturity date was extended to the earlier of March 2003 or the occurrence of certain events (see "Note E"). The Partnership granted AMIT a security interest in the beneficiary interest in the trust which owns Fox Crest Apartments, as security for $4,764,000 of the AMIT indebtedness. In return for granting the aforementioned interests, AMIT has agreed not to file a judgment lien directly against the Fox Crest Apartments property. The mortgage secured by Waterford Square Apartments and guaranteed by HUD is current and is not in default. The Managing General Partner anticipates sufficient cash flow to be generated by the properties over the next twelve months to meet all non-debt related operating expenses. 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. NOTE B - BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Angeles Realty Corporation II (the "Managing General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1995. NOTE B - BASIS OF PRESENTATION (CONTINUED) Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following expenses owed to the Managing General Partner and affiliates during each of the nine months ended September 30, 1996 and 1995, were paid or accrued: 1996 1995 (in thousands) Property management fees $173 $272 Reimbursement for services of affiliates, (Approximately $221,000 accrued at September 30, 1996) 228 132 The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Managing General Partner who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware limited partnership, was organized to acquire and hold the obligations evidencing the working capital loans previously provided to the Partnership by Angeles Capital Investments, Inc. ("ACII"). Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc.("AAD"), an affiliate of the Managing General Partner, was, until April 14, 1995, the 1% general partner of AAP. On April 14, 1995, as part of a settlement of claims between affiliates of the Managing General Partner and Angeles, AAD resigned as general partner of AAP and simultaneously received a 1/2% limited partner interest in AAP. An affiliate of Angeles now serves as the general partner of AAP. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) These working capital loans funded the Partnership's operating deficits in prior years. Total indebtedness was approximately $4,576,000 at September 30, 1996, with monthly interest accruing at prime plus two percent. Interest is to be paid based on excess cash flow, as defined. Principal is to be paid the earlier of i) the availability of funds, ii) the sale of one or more properties owned by the Partnership, or iii) November 25, 1997. Total interest expense for this loan was approximately $353,000 and $370,000 for the nine months ended September 30, 1996 and 1995, respectively. Accrued interest payable was $1,671,000 at September 30, 1996. AMIT currently provides notes payable to the Partnership and secondary financing on one of the Partnership's investment properties in the amount of $6,264,000. Total interest expense on this financing was $743,000 and $672,000 for the nine months ended September 30, 1996 and 1995, respectively. Accrued interest payable was $1,291,000 at September 30, 1996. MAE GP Corporation ("MAE GP"), an affiliate of the Managing General Partner, owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to receive 1.2% of the distributions of net cash distributed by AMIT. These Class B Shares also entitle MAE GP to vote on the same basis as Class A Shares which allows MAE GP to vote approximately 37% of the total shares (unless and until converted to Class A Shares at which time the percentage of the vote controlled represented by the shares held by MAE GP would approximate 1.2% of the vote). Between the date of acquisition of these shares (November 24, 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 annual meeting in connection with the election of trustees and other matters. MAE GP has not exerted, and continues to decline to exert, any management control over or participate in the management of AMIT. MAE GP may choose to vote these shares as it deems appropriate in the future. In addition, Liquidity Assistance, LLC, ("LAC"), an affiliate of the Managing General Partner and an affiliate of Insignia Financial Group, Inc., which provides property management and partnership administration services to the Partnership, currently owns 87,700 Class A Shares of AMIT. These Class A Shares entitle LAC to vote approximately 2% of the total shares. The number of Class A shares of AMIT owned by LAC increased from 63,200 shares as of September 30, 1996, to 87,700 shares as of October 22, 1996. The voting percentage also increased from 1.5% to 2% over the same period. As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B Shares owned by it. This option can be exercised at the end of 10 years or when all loans made by AMIT to partnerships affiliated with MAE GP as of November 9, 1994, (which is the date of execution of a definitive Settlement Agreement) have been paid in full, but in no event prior to November 9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which occurred April 14, 1995, as payment for the option. Upon exercise of the option, AMIT will remit to MAE GP an additional $94,000. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) Simultaneously with the execution of the option, MAE GP executed an irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to vote the Class B Shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. On these matters, MAE GP will deliver to the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to the Class B Shares instructing such trustees to vote said Class B Shares in accordance with the vote of the majority of the Class A Shares voting to be determined without consideration of the votes of "Excess Class A Shares" as defined in Section 6.13 of the Declaration of Trust of AMIT. In March 1992, the Partnership entered into an incentive management agreement with Miller-Valentine Realty, an Ohio corporation ("MV"). An affiliate of MV was the original seller of the Dayton Industrial Complex to the Partnership. Pursuant to the agreement, MV was appointed exclusive leasing agent, property manager and sales agent for these properties. As part of the agreement, MV secured the agreement of its affiliate which holds the secured mortgages on these properties to change their terms to reflect that interest on such debt will be paid only to the extent of the properties' cash flows, after payment of operating expenses and senior financing costs. Interest on the second mortgages that is not paid on a current basis will continue to accrue and will be due upon sale or refinancing of the properties. Additionally, MV has agreed to lend the Partnership up to $1,000,000 for working capital requirements of which $278,000 is outstanding at September 30, 1996. The balance of such loan proceeds may be used for capital improvements at the properties, as and when deemed appropriate and necessary by MV; payment of tenant improvements necessary for leasing space; and to cover any shortfalls in operating expenses or debt service payments. It is questionable whether MV will fund the remainder. The loan bears interest at 10% per annum with principal and interest payments deferred until all necessary repairs, expenses and other arrearages have been fully funded and anticipated income from the properties appears sufficient so that all operating expenses, real estate taxes, and debt service can continue to be paid timely. This loan is secured by the properties and is nonrecourse to any other assets of the Partnership. MV will also attempt to refinance the properties and has secured the agreement of the holder of the second mortgages on the properties to subordinate its debt to any such refinancing. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) The Partnership has agreed to pay MV property management fees, leasing commissions, and financing fees and sales commissions upon the refinancing or sale of the properties. The Partnership will receive the first $3,000,000 of excess cash from operations, refinancings or sales of the properties less unrefunded arrearages. Thereafter, the agreement provides that MV shall receive, as incentive for providing property management, leasing and asset management services to the Partnership, two-thirds of the next $12,000,000 of excess cash proceeds generated by the properties. Cash in excess of $15,000,000 shall be shared equally by MV and the Partnership. The agreement contemplates that the properties will be sold at an opportune time but no later than 10 years after commencement of the agreements (March 2, 1992). In addition, the agreement contains an option for MV to buy the properties five years after the commencement date of the agreement. The Managing General Partner does not anticipate that there will be any proceeds available to the Partnership. Should the Partnership elect not to sell, it would be obligated to purchase MV's incentive interest based on the offered purchase price. The Partnership intends to maintain ownership of the Dayton properties only as long as they are under the management of MV. There is no certainty as to the future of the Dayton properties otherwise. NOTE D - SALES OF INVESTMENT PROPERTIES The Partnership sold Building 47 of the Dayton Industrial Complex on August 31, 1995. Proceeds from the sale were approximately $4,096,000 which were used to pay off the first mortgage and pay down the second mortgage. The Partnership recognized an approximate $78,000 gain on the sale. In April 1996, the Partnership sold Buildings 45 and 52 of the Dayton Industrial Complex to an unaffiliated party, Mid-States Development Company, an Ohio general partnership, and an affiliate of Miller-Valentine Realty, an Ohio Corporation, for net sales proceeds of approximately $4,188,000 after payment of closing costs. The Partnership realized a gain of approximately $495,000 on the sales and a related $1,126,000 extraordinary gain on the early extinguishment of debt during the second quarter of 1996. The extraordinary gain was the result of forgiveness of debt. The sales transactions are summarized as follows (amounts in thousands): Cash proceeds received $ 4,188 Net real estate (1) (3,720) Net other liabilities 27 Gain on sale of real estate $ 495 (1) Net of accumulated depreciation of approximately $3.3 million. NOTE D - SALE OF INVESTMENT PROPERTIES (CONTINUED) In August 1996, the Partnership sold Building 63 of the Dayton Industrial Complex to an unaffiliated party, ABMD, Ltd., an Ohio limited liability company, for net sales proceeds of approximately $1,807,000 after payment of closing costs. The Partnership realized a gain of approximately $131,000 on the sale during the third quarter of 1996. The sales transactions are summarized as follows (amounts in thousands): Cash proceeds received $ 1,807 Net real estate (1) (1,676) Net other liabilities -- Gain on sale of real estate $ 131 (1) Net of accumulated depreciation of approximately $1.5 million. The following unaudited pro-forma information reflects the operations of the Partnership for the three months ended September 30, 1996 and 1995, and the nine months ended September 30, 1996 and 1995, as if Buildings 45, 52 and 63 had been sold January 1, 1995.
Proforma Results of Operations for the Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 (in thousands) (in thousands) Revenues $ 1,573 $ 1,678 $ 4,730 $ 5,116 Net loss (990) (972) (2,883) (2,887) Loss per limited partnership unit (22.20) (21.80) (64.66) (64.75)
NOTE E - REFINANCING On April 30, 1996, the Partnership refinanced the mortgage encumbering Fox Crest Apartments. The total mortgage indebtedness, which carried a stated interest rate of 10.25%, was in default since its maturity date in August 1994. The new mortgage indebtedness of $6,700,000 carries a stated interest rate of 8.00% with a balloon payment due March 12, 2003. Monthly payments of principal and interest are $56,000. In April 1996, the Fox Crest Note, held by AMIT, was restructed adding previously accrued delinquent interest and late charges of $1,764,000 to the original note amount. The $4,764,000 note is a term loan which matures the earlier of March 2003, the date of sale or refinance of Fox Crest Apartments, the occurrence of a default under the terms of the mortgage encumbering Fox Crest Apartments, or a sale or refinance of the Partnership's beneficiary interest in the trust which owns Fox Crest Apartments. The note provides for interest of 12.5%. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of two apartment complexes and one commercial property. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1996 and 1995: Property 1996 1995 Waterford Square Apartments Huntsville, Alabama 87% 87% Fox Crest Apartments Waukegan, Illinois 95% 97% Dayton Industrial Complex Dayton, Ohio (1) 72% 86% (1)Dayton Industrial Complex's occupancy decreased due to several tenants vacating. Attempts to lease the space have proven unsuccessful. The Partnership recorded net losses for the nine months ended September 30, 1996, and September 30, 1995, of approximately $1,348,000 and $3,007,000, respectively. The Partnership recorded net losses of approximately $907,000 and $985,000 for the three months ended September 30, 1996, and September 30, 1995, respectively. The decrease in net loss for both the three and nine months ended September 30, 1996, versus the three and nine months ended September 30, 1995, can be attributed to the increase in the gain on the sale of investment properties recognized as a result of the sale of Buildings 45 and 52 in the Dayton Industrial Complex on April 8, 1996, and the sale of Building 63 in the Dayton Industrial Complex on August 7, 1996. In 1995, the gain on the sale of investment properties reflects the gain recognized on the sale of only one building, Building 47, which occurred in August of 1995. Rental income decreased for the period ended September 30, 1996, versus September 30, 1995, due to the sale of certain buildings which was partially offset by an increase in rental income at Fox Crest Apartments and Waterford Square Apartments. Although average occupancy decreased from September 30, 1995, to September 30, 1996, at Fox Crest Apartments and remained the same at Waterford Square Apartments, there was an increase in average rental rates for the period ended September 30, 1996, which caused the increase in rental income for these properties. Other income decreased due to the sales as well as decreases in cleaning and damage fees, late charges and deposit forfeitures at Fox Crest Apartments. The sales of Buildings 47, 45, 52 and 63 in the Dayton Industrial Complex also contributed to a decrease in operating and depreciation expense for the period September 30, 1996, as compared to September 30, 1995. Maintenance and general and administrative expenses increased for the period ended September 30, 1996. Maintenance expense increased at the Dayton Industrial Complex due to increased snow removal costs, window repairs, emergency lighting and painting. Increased partnership cost reimbursements and professional fees resulted in an increase in general and administrative expense. The decrease in interest expense resulting from the sales was partially offset by an increase in Partnership debt as interest was added to principal. Also, the increase in property tax expense was partially offset by a decrease in property tax expense at Dayton Industrial Complex due to the sales. The Partnership sold Building 47 of the Dayton Industrial Complex on August 31, 1995. Proceeds from the sale were approximately $4,096,000 which were used to pay off the first mortgage and pay down the second mortgage. The Partnership recognized an approximate $78,000 gain on the sale. In April 1996, the Partnership sold Buildings 45 and 52 of the Dayton Industrial Complex to an unaffiliated party, Mid-States Development Company, an Ohio general partnership, and an affiliate of Miller-Valentine Realty, an Ohio Corporation, for net sales proceeds of approximately $4,188,000 after payment of closing costs. The Partnership realized a gain of approximately $495,000 on the sales and a related $1,126,000 extraordinary gain on the early extinguishment of debt during the second quarter of 1996. In August 1996, the Partnership sold Building 63 of the Dayton Industrial Complex to an unaffiliated party, ABMD, Ltd., an Ohio limited liability company, for net sales proceeds of approximately $1,807,000 after payment of closing costs. The Partnership realized a gain of approximately $131,000 on the sale during the third quarter of 1996. The Managing General Partner continues to monitor the rental market environment at its investment properties to assess the feasibility of increasing rents, to maintain or increase the occupancy level and to protect the Partnership from increases in expense. The Managing General Partner expects to be able, at a minimum, to continue protecting the Partnership from inflation-related increases in expenses by increasing rents and increasing the overall occupancy level. However, rental concessions and rental reductions needed to offset softening market conditions could affect the ability to sustain such a plan. At September 30, 1996, the Partnership had unrestricted cash of approximately $411,000 compared to approximately $316,000 at September 30, 1995. The decrease in net cash provided by operating activities resulted from a decrease in the increase in accrued interest offset, in part, by a reduction in escrows. Proceeds from the sale of the three buildings at the Dayton Industrial Complex resulted in an increase in net cash provided by investing activities. Net cash used in financing activities increased due to the repayment of the loan for Fox Crest Apartments, partially offset by the proceeds from notes payable due to the refinancing. In addition, the sales of buildings of 45,52 and 63 at the Dayton Industrial complex also resulted in repayments of mortgage notes payable contributing to the increase in net cash used in financing activities. On April 30, 1996, the Partnership refinanced the mortgage encumbering Fox Crest Apartments. The total mortgage indebtedness, which carried a stated interest rate of 10.25%, was in default since its maturity date in August 1994. The new mortgage indebtedness of approximately $6,700,000 carries a stated interest rate of 8.00%, with a balloon payment due March 12, 2003. In April 1996, the Fox Crest Note, held by AMIT, was restructured, adding previously accrued delinquent interest and late charges of $1,764,000 to the original note amount. The approximately $4,764,000 note is a term loan which matures the earlier of March, 2003, the date of sale or refinance of Fox Crest Apartments, the occurrence of a default under the terms of the mortgage encumbering Fox Crest Apartments, or a sale or refinance of the Partnership's beneficiary interest in the trust which owns Fox Crest Apartments. The note provides for interest of 12.5%. The Partnership has no material capital programs scheduled to be performed in 1996, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve account. The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern. The Partnership continues to suffer from inadequate liquidity and is in default on certain of its debt obligations due to non-payment upon maturity. Limited sources of additional financing have been identified by the Partnership. The total amount of debt in default at September 30, 1996, is $1,175,000. In 1995, AMIT brought suit against the Partnership to protect its interest in $1,175,000 of this indebtedness, which was previously unsecured indebtedness of the Partnership. On April 30, 1996, the Partnership granted to AMIT a security interest in the Partnership's general partner interest in Waterford Square Apartments, Ltd., which owns the Waterford Square Apartments, as security for the $1,175,000 of AMIT indebtedness. In April 1996, delinquent accrued interest and late charges of $1,764,000, which had been previously accrued, were added to $3,000,000 (the "Fox Crest Note") of the AMIT indebtedness and the maturity date was extended to the earlier of March 2003 or the occurrence of certain events (see "Note E"). The Partnership granted AMIT a security interest in the beneficiary interest in the trust which owns Fox Crest Apartments, as security for $4,764,000 of the AMIT indebtedness. In return for granting the aforementioned interests, AMIT has agreed not to file a judgment lien directly against the Fox Crest Apartments property. The mortgage secured by Waterford Square Apartments and guaranteed by HUD is current and is not in default. The Managing General Partner anticipates sufficient cash flow to be generated by the properties over the next twelve months to meet all non-debt related operating expenses. 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. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On December 11, 1995, AMIT filed a breach of contract action with respect to a $1,300,000 (original face amount) promissory note issued by it on April 1, 1991, to the Partnership. The Partnership defaulted on its repayment obligations in June 1993, after which the property which secured the note was foreclosed upon. A default judgment in the amount of $1,775,000 had been sought as a result of this action. In April 1996, this matter was resolved by transferring a security interest in the beneficiary interest in the trust which owns Fox Crest Apartments and a security interest in the general partner interest which owns the Waterford Square Apartments to AMIT in consideration for their not filing a judgment lien against the Fox Crest property. MAE GP Corporation ("MAE GP"), an affiliate of the Managing General Partner, owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to receive 1.2% of the distributions of net cash distributed by AMIT. These Class B Shares also entitle MAE GP to vote on the same basis as Class A Shares which allows MAE GP to vote approximately 37% of the total shares (unless and until converted to Class A Shares at which time the percentage of the vote controlled represented by the shares held by MAE GP would approximate 1.2% of the vote). Between the date of acquisition of these shares (November 24, 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 annual meeting in connection with the election of trustees and other matters. MAE GP has not exerted, and continues to decline to exert, any management control over or participate in the management of AMIT. MAE GP may choose to vote these shares as it deems appropriate in the future. In addition, Liquidity Assistance, LLC, ("LAC"), an affiliate of the Managing General Partner and an affiliate of Insignia Financial Group, Inc., which currently owns 87,700 Class A Shares of AMIT. These Class A Shares entitle LAC to vote approximately 2% of the total shares. The number of Class A shares of AMIT owned by LAC increased from 63,200 shares as of September 30, 1996, to 87,700 shares as of October 22, 1996. The voting percentage also increased from 1.5% to 2% over the same period. As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B Shares owned by it. This option can be exercised at the end of 10 years or when all loans made by AMIT to partnerships affiliated with MAE GP as of November 9, 1994, (which is the date of execution of a definitive Settlement Agreement) have been paid in full, but in no event prior to November 9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which occurred on April 14, 1995, as payment for the option. Upon exercise of the option, AMIT will remit to MAE GP an additional $94,000. Simultaneously with the execution of the option, MAE GP executed an irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to vote the Class B Shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. On these matters, MAE GP granted to the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to the Class B Shares instructing such trustees to vote said Class B Shares in accordance with the vote of the majority of the Class A Shares voting to be determined without consideration of the votes of "Excess Class A Shares" as defined in Section 6.13 of the Declaration of Trust of AMIT. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The Managing General Partner of the Partnership believes that all such pending or outstanding, litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule. b) Reports on Form 8-K: A Form 8-K was filed on August 22, 1996, reporting the sale of Building 63 of the Dayton Industrial Complex. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES PARTNERS XIV By: Angeles Realty Corporation II Managing General Partner By: /s/Carroll D. Vinson Carroll D. Vinson President By: /s/Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: November 12, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Partners XIV 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000759859 ANGELES PARTNERS XIV 1,000 9-MOS DEC-31-1996 SEP-30-1996 411 0 20 35 0 0 42,382 23,258 21,139 0 42,557 0 0 0 (26,339) 21,139 0 5,197 0 0 8,297 0 3,781 0 0 (2,474) 0 1,126 0 (1,348) (30.23) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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