-----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, NUazWi6HOOfHqDBcd4Gxq1Rct5HmgGkxAzmNxmIFWvf7UvwgtL49A3+KP3sB38Yr 0NoYANELYADyqMPfWtiPng== 0000763049-96-000007.txt : 19961115 0000763049-96-000007.hdr.sgml : 19961115 ACCESSION NUMBER: 0000763049-96-000007 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 INCOME PROPERTIES LTD IV CENTRAL INDEX KEY: 0000763049 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953974194 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14283 FILM NUMBER: 96660589 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 0-14283 ANGELES INCOME PROPERTIES LTD. IV (Exact name of small business issuer as specified in its charter) California 95-3974194 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) ANGELES INCOME PROPERTIES. LTD. IV CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1996
Assets Cash and cash equivalents: Unrestricted $ 2,831 Restricted--tenant security deposits 6 Accounts receivable, net of allowance of $72 188 Escrow for taxes 148 Other assets 589 Investment properties: Land $ 2,708 Buildings and related personal property 20,134 22,842 Less accumulated depreciation (11,240) 11,602 $ 15,364 Liabilities and Partners' Deficit Liabilities Accounts payable $ 25 Tenant security deposits 10 Accrued taxes 134 Other liabilities 186 Mortgage note payable 14,242 Equity interest in net liabilities of joint ventures, net of advances of $1,632 (Note B) 13,586 Partners' Deficit General partner $ (1,395) Limited partners (131,760 units issued and outstanding) (11,424) (12,819) $ 15,364 See Accompanying Notes to Consolidated Financial Statements
b) ANGELES INCOME PROPERTIES, LTD. IV 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 $ 989 $ 1,570 $ 3,038 $ 3,700 Other income 42 79 112 153 Total revenue 1,031 1,649 3,150 3,853 Expenses: Operating 308 285 988 819 General and administrative 123 99 301 313 Maintenance 185 85 333 251 Depreciation 263 276 782 828 Interest 363 370 1,095 1,116 Property taxes 56 53 169 160 Bad debt (recovery), expense net (23) 37 (232) 92 Total expenses 1,275 1,205 3,436 3,579 Equity in loss of joint ventures (475) (729) (1,523) (937) Net loss $ (719) $ (285) $ (1,809) $ (663) Net loss allocated to general partners (2%) $ (14) $ (6) $ (36) $ (13) Net loss allocated to limited partners (98%) (705) (279) (1,773) (650) Net loss $ (719) $ (285) $ (1,809) $ (663) Net loss per limited partnership unit $ (5.35) $ (2.12) $ (13.46) $ (4.93) See Accompanying Notes to Consolidated Financial Statements c) ANGELES INCOME PROPERTIES, LTD. IV CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 131,800 $ 1 $ 65,900 $ 65,901 Partners' deficit at December 31, 1995 131,760 $(1,359) $ (9,651) $(11,010) Net loss for the nine months ended September 30, 1996 (36) (1,773) (1,809) Partners' deficit at September 30, 1996 131,760 $(1,395) $(11,424) $(12,819) See Accompanying Notes to Consolidated Financial Statements
d) ANGELES INCOME PROPERTIES, LTD. IV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net loss $(1,809) $ (663) Adjustments to reconcile net loss to net cash provided by operating activities: Equity in income of joint ventures 1,523 937 Depreciation 782 828 Bad debt (recovery) expense (232) 92 Amortization of loan costs and leasing commissions 170 86 Change in accounts: Restricted cash 2 -- Accounts receivable 148 (409) Escrows for taxes 75 1 Other assets (45) (55) Accounts payable (38) (10) Tenant security deposit liabilities 2 (1) Accrued taxes (13) (9) Other liabilities 44 (14) Net cash provided by operating activities: 609 783 Cash flows from investing activities: Property improvements and replacements (103) (89) Advances to joint venture (741) (646) Distributions from joint venture -- 966 Proceeds from note receivable 109 2,111 Net cash (used in) provided by investing activities (735) 2,342 Cash flows from financing activities: Payments on mortgage notes payable (227) (206) Loan costs (242) -- Net cash used in financing activities (469) (206) Net (decrease) increase in cash (595) 2,919 Cash at beginning of period 3,426 548 Cash at end of period $ 2,831 $3,467 Supplemental disclosure of cash flow information Cash paid for interest $ 1,064 $1,085 See Accompanying Notes to Consolidated Financial Statements e) ANGELES INCOME PROPERTIES, LTD. IV NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Angeles Realty Corporation II (the "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 months 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 Angeles Income Properties, Ltd. IV's (the "Partnership") annual report on Form 10-KSB for the fiscal year ended December 31, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. NOTE B - INVESTMENT IN JOINT VENTURE The Partnership has a 66.7% investment in Northtown Mall Partners ("Northtown") which is shown as "Equity interest in net liabilities of the joint venture" on the balance sheet. The Partnership had a 43% investment in the Fort Worth Option Joint Venture ("Fort Worth"), a 43% investment in the Burlington Outlet Mall Joint Venture ("Burlington") and a 50% investment in the Moraine West Carrollton Joint Venture ("Moraine"). As of December 31, 1995, the Partnership no longer had an investment in Fort Worth, Burlington or Moraine due to the sale of Fort Worth's last investment property, the foreclosure of Burlington's investment property and the dissolution of Moraine during 1995. The condensed balance sheet information as of September 30, 1996, for Northtown is as follows: Assets Northtown (in thousands) Cash $ 662 Other assets 6,586 Investment properties, net 25,815 Total $ 33,063 NOTE B - INVESTMENT IN JOINT VENTURES (CONTINUED) Liabilities and Partners' Deficit Northtown (in thousands) Other liabilities $ 4,339 Notes payable 51,476 Partners' (deficit) capital (22,752) Total $ 33,063 The condensed profit and loss statements for the three and nine months ended September 30, 1996 and 1995, for the joint ventures are summarized as follows: Three Months Ended September 30, (in thousands) Fort Worth Northtown 1996 1995 1996 1995 Revenues $ -- $ 2 $ 2,564 $ 2,547 Costs and expenses -- (133) (3,277) (3,373) Net loss $ -- $ (131) $ (713) $ (826) Three Months Ended September 30, (in thousands) Burlington Moraine 1996 1995 1996 1995 Revenues $ -- $ 38 $ -- $ -- Costs and expenses (11) (328) -- -- Net loss $ (11) $(290) $ -- $ -- Nine Months Ended September 30, (in thousands) Fort Worth Northtown 1996 1995 1996 1995 Revenues $ -- $ 214 $ 7,554 $ 7,744 Costs and expenses -- (456) (9,841) (9,831) Bad debt recovery -- 1,933 -- -- Loss on sale of investment property -- (42) -- -- Net income (loss) $ -- $ 1,649 $(2,287) $(2,087) NOTE B - INVESTMENT IN JOINT VENTURES (CONTINUED) Nine Months Ended September 30, Burlington Moraine 1996 1995 1996 1995 Revenues $ 11 $ 223 $ -- $ 13 Costs and expenses (11) (701) -- (1) Net income (loss) $ -- $(478) $ -- $ 12 The Partnership's equity in the losses of the joint ventures was approximately $1,523,000 and $937,000 for the nine months ended September 30, 1996 and 1995, respectively. The Partnership accounts for its 66.7% investment in Northtown using the equity method of accounting. Under the equity method, the Partnership records its equity interest in earnings or losses of the joint venture; however, the investment in the joint venture will be recorded at an amount less than zero (a liability) to the extent of the Partnership's share of net liabilities of the joint venture. The increase in net loss at Northtown is attributable to a decrease in rental income and an increase in insurance and real estate taxes. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the 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 amounts owed to the 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 (included in operating expenses) $ 100 $ 130 Lease commissions 66 48 Reimbursement for services of affiliates (included in general and administrative) 180 245 NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the 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 General Partner who receives payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. In July 1993, Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust formerly affiliated with Angeles Corporation ("Angeles"), initiated litigation against Fort Worth and other partnerships which loaned money to AMIT seeking to avoid repayment of such obligations. The Partnership subsequently filed a counterclaim against AMIT seeking to enforce the obligation, the principal amount of which was $2,240,000 plus accrued interest from March 1993 ("AMIT Obligation"). On November 9, 1994, Fort Worth executed a definitive Settlement Agreement to settle the dispute with respect to the AMIT obligation. The actual closing of the Settlement Agreement occurred April 14, 1995. The Partnership's claim against AMIT was satisfied by a cash payment to Fort Worth by AMIT totaling $1,933,000 (the "Settlement Amount") plus interest at closing. These funds were applied against the Partnership's note receivable from Fort Worth (see discussion below). On August 9, 1995, Fort Worth and Angeles entered into an agreement in principle regarding the allowance of an amended claim for the deficiency between the original principal and the Settlement Amount (the "deficiency"). The amended claim equaled 90% of the deficiency, or $276,000. In January 1996, the Partnership received $48,000 from AMIT as payment on the deficiency. MAE GP Corporation ("MAE GP"), an affiliate of the 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 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 on 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 time period. As part of the settlement 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 would remit to MAE GP an additional $94,000. Simultaneously with the execution of the option, MAE GP executed an irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to vote the Class B Shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. On 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. In 1992, the Partnership loaned Fort Worth $5,000,000 to cover leasing commissions, tenant improvements, and capital expenditures. The note payable requires interest at a rate of prime plus 1.5% with monthly interest only payments through January 1996, at which time the principal was due. The note was in default in prior years due to non-payment of interest when due. On December 22, 1994, the Partnership entered into an agreement with Fort Worth and Angeles Income Properties, Ltd. V ("AIPL V"), an affiliate of the General Partner and the other 57% owner of Fort Worth, whereby Fort Worth transferred, assigned and delivered to the Partnership all of Fort Worth's right, title and interests in and to all payment, distributions, profits, returns of capital and benefits accruing from the repayment by AMIT of the loan made to AMIT from Fort Worth. This transfer effectively transferred AIPL V's right, title and interest in and to all payment, distributions, profits, returns of capital and benefits accruing from the repayment by AMIT of the loan made to AMIT from Fort Worth. AIPL V has consented to this transfer, assignment and delivery. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) The Partnership may make advances to the affiliated joint ventures as deemed appropriate by the General Partner. At this time, the General Partner does not anticipate making significant advances to Northtown in the future. These advances do not bear interest and do not have stated terms of repayment. NOTE D - SUBSEQUENT EVENT - MORTGAGE NOTE REFINANCE On October 1, 1996, Factory Merchants AIP IV, L.P. ("FM"), a Delaware limited partnership, refinanced the mortgage debt secured by Factory Merchants Mall. AIP IV G.P. Limited Partnership owns a 1% general partner interest and Merchants Mall Joint Venture owns a 99% limited partner interest in FM. Merchants Mall Joint Venture is a Tennessee general partnership in which the Partnership and Angeles Realty Corporation II, the Partnership's general partner, own 99.5% and .5% general partner interests, respectively. FM paid off debt and accrued interest of approximately $14,522,000 at closing and paid closing costs and funded tax and insurance escrows and a deferred maintenance reserve with $15,400,000 of proceeds from the new debt. The new loan matures on November 1, 2006 and carries a 9.75% interest rate. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of two commercial properties. The following table sets forth the average occupancy of the properties for the six months ended June 30, 1996 and 1995: Average Occupancy Property 1996 1995 Factory Merchant's Mall Pigeon Forge, Tennessee (1) 89% 90% Eastgate Market Place Walla Walla, Washington (2) 92% 94% (1)Nationwide the outlets mall industry is not performing well. Potential customers of the outlets mall industry are realizing that these malls may not offer large discounts and therefore customers are shopping at more convenient locations. (2)The General Partner is considering a redevelopment of this property. The redevelopment would include a facelift to the store front and decreasing the number of tenants at the property by converting smaller spaces into larger retail spaces. The Partnership recorded a net loss of approximately $1,809,000 for the nine months ended September 30, 1996, as compared to a net loss of approximately $663,000 for the nine months ended September 30, 1995. The Partnership recorded a net loss of approximately $719,000 for the three months ended September 30, 1996, as compared to a net loss of approximately $285,000 for the three months ended September 30, 1995. The increase in the net loss for the nine months ended September 30, 1996, as compared to the nine months ended September 30, 1995, is primarily due to a decrease in rental income and an increase in the equity in the loss of the joint ventures from 1995 to 1996 (see discussion below). The decrease in rental income for the three and nine months ended September 30, 1996, as compared to the three and nine months ended September 30, 1995, is a result of a decrease in rental revenue at Factory Merchants Mall. The decrease in other income is due to a drop in tenant reimbursement for outdoor signage at Factory Merchants Mall, which decreased because the mall was forced to take down the signs in 1996. Operating expenses increased primarily due to the amortization of lease commissions for a tenant that moved out of Eastgate Market Place and an increase in merchant association dues at Factory Merchants Mall. Maintenance expense increased due to an exterior painting project at Factory Merchant's Mall in 1996 in an effort to increase the attractiveness of the property. During the nine months ended September 30, 1996, the Partnership recognized bad debt recovery of $48,000 from AMIT (see discussion at "Note C") and $61,000 from Fort Worth as payment on its note payable to the partnership. In addition, there were debt recoveries from tenants of the Partnership's investment properties that had been previously reserved. The Partnership's equity in the losses of the joint ventures increased for the nine months ended September 30, 1996, versus September 30, 1995. The increase in the equity in loss of joint ventures can be attributed to bad debt recovery for Fort Worth in early 1995 as a result of AMIT's note payment to Fort Worth, and an increase in the loss at Northtown which is attributable to a decrease in rental income and an increase in insurance and real estate tax expense. These increases in the equity in loss of joint venture was partially offset by the Partnership's share of losses from Fort Worth and Burlington in 1995. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the 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 General Partner will be able to sustain such a plan. At September 30, 1996, the Partnership had unrestricted cash of $2,831,000 compared to $3,467,000 at September 30, 1995. Net cash provided by operating activities decreased due to an increase in the net loss (discussed above) offset, in part, by decreases in accounts receivable and other assets. Net cash flow from investing activities decreased as a result of a non-recurring distribution received from Moraine and a collection on the note receivable from Fort Worth in 1995. Net cash used in financing activities increased due to loan costs incurred in an effort to refinance the mortgage indebtedness secured by Factory Merchants Mall. The Partnership advanced money to Northtown during the nine months ended September 30, 1996, to pay for tenant improvements, supervisory fees and debt service. On March 15, 1991, Northtown and the holder of the Northtown Mall mortgage note payable entered into an Option Agreement ("Option") whereby such lender has the right and an option to purchase the Northtown Mall property on the terms and conditions as set forth in the Option. The purchase price of the property, as set forth in the Option, is defined as the fair market value of the property. Such Option can be exercised by written notice by the lender at specified dates. The lender has indicated that it may exercise the Option. If the lender does exercise the Option, the Managing General Partner does not believe the sale of the property will occur until 1997. Currently, it is believed that the fair market value of the property will be less than the underlying debt that secures the property. If the Option is exercised, the Partnership will write-off its equity interest in net liabilities of joint venture which would result in the recording of a significant gain to the Partnership. Also, the General Partner is currently negotiating with a third party as a possible source of an equity infusion, if the current lender does not exercise their option to acquire Northtown. At this time, the Partnership does not anticipate making significant advances to Northtown in the future. A purchase agreement was executed on May 8, 1994, for the sale of all of the Moraine properties to an affiliate of the third party managing agent. The sale closed on July 21, 1994. Moraine made a final distribution of approximately $1,931,000 in 1995, of which the Partnership's pro-rata share was $966,000, and the joint venture was then dissolved. In March 1995, Fort Worth's remaining property was sold for $300,000 to a tenant of the property. All remaining cash was used in 1996 to partially satisfy Fort Worth's debt to the Partnership. The remaining debt was forgiven by the Partnership. On October 30, 1995, the Partnership lost Burlington Outlet Mall located in Burlington, NC, through a foreclosure by an unaffiliated mortgage holder. The property was not generating sufficient cash flow to meet debt service requirements. The non-payment of principal and interest constituted a default under terms of the mortgage agreement and allowed the holder of the mortgage agreement to foreclose on the property. The Partnership deemed it to be in its best interest not to contest the foreclosure action. On October 1, 1996, Factory Merchants AIP IV, L.P. ("FM"), a Delaware limited partnership, refinanced the mortgage debt secured by Factory Merchants Mall. AIP IV G.P. Limited Partnership owns a 1% general partner interest and Merchants Mall Joint Venture owns a 99% limited partner interest in FM. Merchants Mall Joint Venture is a Tennessee general partnership in which the Partnership and Angeles Realty Corporation II, the Partnership's general partner, own 99.5% and .5% general partner interests, respectively. FM paid off debt and accrued interest of approximately $14,522,000 at closing and paid closing costs and funded tax and insurance escrows and a deferred maintenance reserve with $15,400,000 of proceeds from the new debt. The new loan matures on November 1, 2006 and carries a 9.75% interest rate. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of $14,242,000, which is secured by the Factory Merchant's Mall investment property, matures in December 1997. The General Partner is currently in negotiations to refinance this indebtedness, however, the outcome of such negotiations cannot presently be determined. Future cash distributions will depend on the levels of net cash generated from operations, refinancings, property sales and the availability of cash reserves. There were no cash distributions in the first nine months of 1996 or 1995. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In July 1993, AMIT initiated litigation against Fort Worth, and other partnerships which loaned money to AMIT seeking to avoid repayment of such obligations. The Partnership subsequently filed a counterclaim against AMIT seeking to enforce the obligation, the principal amount of which was $2,240,000 plus accrued interest from March 1993 ("AMIT Obligation"). On November 9, 1994, Fort Worth executed a definitive Settlement Agreement to settle the dispute with respect to the AMIT obligation. The actual closing of the Settlement occurred April 14, 1995. The Partnership's claim against AMIT was satisfied by a cash payment by AMIT totaling $1,933,000 (the "Settlement Amount") plus interest at closing. These funds were applied against the Partnership's note receivable from Fort Worth. On August 9, 1995, Fort Worth and Angeles entered into an agreement in principle regarding the allowance of an amended claim for the deficiency between the original principal and the Settlement Amount (the "deficiency"). The amended claim equaled 90% of the deficiency, or $276,000. In January 1996, the Partnership received $48,000 from AMIT as payment on the deficiency. MAE GP, an affiliate of the 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 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 on 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 time period. As part of the settlement, 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 would remit to MAE GP an additional $94,000. Simultaneously with the execution of the option, MAE GP executed an irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to vote the Class B Shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. On 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. Additionally, Angeles, either directly or through an affiliate, maintained a central disbursement account (the "Account") for the properties and partnerships managed by Angeles and its affiliates, including the Partnership. Angeles caused the Partnership to make deposits to the Account ostensibly to fund the payment of certain obligations of the Partnership. Angeles further caused checks on such account to be written to or on behalf of certain other partnerships. However, of these total deposits, at least $81,000 deposited by or on behalf of the Partnership was used for purposes other than satisfying the liabilities of the Partnership. Accordingly, the Partnership filed a Proof of Claim in the Angeles bankruptcy proceedings for such amount. However, subsequently the General Partner of the Partnership determined that the cost involved to pursue such claim would likely exceed any amount received, if in fact such claim were to be resolved in favor of the Partnership. Therefore, the Partnership withdrew this claim on August 9, 1995. The Partnership, along with other affiliates, has been named in a suit brought by a company which owned a 20% interest ("Plaintiff") in Fort Worth's investment property, the W.T. Waggoner Building, which was sold in 1995. The Plaintiff is suing for breach of contract and negligence for mismanagement of the property. The General Partner believes that there is no merit in this suit and intends to vigorously defend it. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the nine months ended September 30, 1996. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES INCOME PROPERTIES, LTD. IV By: Angeles Realty Corporation II 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 Income Properites Ltd. IV 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000763049 ANGELES INCOME PROPERTIES LTD. IV 1,000 9-MOS DEC-31-1996 SEP-30-1996 2,831 0 188 0 0 0 22,842 11,240 15,364 0 14,242 0 0 0 12,819 15,364 0 3,150 0 0 3,436 0 1,095 (1,809) 0 (1,809) 0 0 0 (1,809) (13.46) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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