-----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, Ta/rf5HXp+uk6uODtJw47GsGnQ54RgvotY7ecmCdFFgSuF84DNhL0+iOwk6XqMbk C8sqOyajbeKhAni789uLmg== 0000763049-95-000001.txt : 19951119 0000763049-95-000001.hdr.sgml : 19951119 ACCESSION NUMBER: 0000763049-95-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: AMEX 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: 95590761 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93.) U.S. Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-14283 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 (803) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) ANGELES INCOME PROPERTIES. LTD. IV CONSOLIDATED BALANCE SHEET (Unaudited)
September 30, 1995 Assets Cash: Unrestricted $ 3,466,854 Restricted--tenant security deposits 7,589 Accounts receivable, net of an allowance of $110,267 426,021 Escrow deposits for taxes 169,315 Other assets 1,374,359 Investment properties: Land $ 2,707,811 Buildings and related personal property 19,849,856 22,557,667 Less accumulated depreciation (10,173,794) 12,383,873 $ 17,828,011 Liabilities and Partners' Deficit Liabilities Accounts payable $ 28,745 Tenant security deposits 7,509 Accrued taxes 122,902 Other liabilities 160,776 Mortgage note payable 14,541,605 Equity interest in net liabilities of joint ventures 17,094,745 Partners' Deficit General partner $ (1,421,545) Limited partners (131,760 units issued and outstanding) (12,706,726) (14,128,271) $ 17,828,011
[FN] See Accompanying Notes to Consolidated Financial Statements b) ANGELES INCOME PROPERTIES, LTD. IV CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenues: Rental income $ 923,628 $ 707,174 $ 2,647,437 $ 2,320,835 Other income 79,472 10,154 152,984 34,195 Total revenue 1,003,100 717,328 2,800,421 2,355,030 Expenses: Operating 211,038 250,047 634,131 742,006 General and administrative 99,126 119,881 313,154 544,137 Property management fees 55,189 37,045 130,081 115,685 Maintenance 84,906 65,135 251,090 208,973 Depreciation 276,258 287,101 828,002 845,930 Amortization 18,714 17,167 55,074 53,744 Interest 370,411 376,093 1,116,317 1,132,539 Property taxes 53,406 54,176 160,240 164,793 Bad debt expense 670,867 11,900 725,877 66,759 Bad debt recovery (150,000) -- (2,111,437) -- Tenant reimbursements (646,571) (203,849) (1,053,247) (782,408) Total expenses 1,043,344 1,014,696 1,049,282 3,092,158 (Loss) income before equity in loss of joint ventures (40,244) (297,368) 1,751,139 (737,128) Equity in loss of joint ventures (729,004) (617,639) (937,177) (1,850,405) Net (loss) income $ (769,248) $ (915,007) $ 813,962 $(2,587,533) Net (loss) income allocated to general partners (2%) $ (15,385) $ (18,300) $ 16,279 $ (51,751) Net (loss) income allocated to limited partners (98%) (753,863) (896,707) 797,683 (2,535,782) Net (loss) income $ (769,248) $ (915,007) $ 813,962 $(2,587,533) Net (loss) income per limited partnership unit $ (5.72) $ (6.80) $ 6.05 $ (19.24)
[FN] See Accompanying Notes to Consolidated Financial Statements c) ANGELES INCOME PROPERTIES, LTD. IV CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT - September 30, 1995 (Unaudited)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 131,800 $ 1,000 $ 65,900,000 $ 65,901,000 Partners' deficit at December 31, 1994 131,760 $(1,437,824) $(13,504,409) $(14,942,233) Net income for the nine months ended September 30, 1995 -- 16,279 797,683 813,962 Partners' deficit at September 30, 1995 131,760 $(1,421,545) $(12,706,726) $(14,128,271)
[FN] See Accompanying Notes to Consolidated Financial Statements d) ANGELES INCOME PROPERTIES, LTD. IV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net income (loss) $ 813,962 $(2,587,533) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Equity in income of joint ventures 937,177 1,850,405 Depreciation 828,002 845,930 Bad debt expense 725,877 66,759 Amortization of loan costs and leasing commissions 86,377 83,472 Change in accounts: Restricted cash 557 (2,231) Accounts receivable (409,137) 83,571 Escrows for taxes 1,023 (75,587) Other assets (2,812,370) (362,081) Accounts payable (10,066) (60,847) Tenant security deposit liabilities (637) 1,077 Accrued taxes (9,472) (8,701) Other liabilities (14,369) (108,332) Net cash provided by (used in) operating activities: 136,924 (274,098) Cash flows from investing activities: Capital improvements (89,296) (374,640) Distributions from joint venture 965,730 -- Proceeds from note receivable - Fort Worth 2,111,437 -- Net cash provided by (used in) investing activities 2,987,871 (374,640) Cash flows used in financing activities: Payments on mortgage notes payable (206,159) (186,826) Net increase (decrease) in cash 2,918,636 (835,564) Cash at beginning of period 548,218 1,454,522 Cash at end of period $3,466,854 $ 618,958 Supplemental disclosure of cash flow information Cash paid for interest $1,085,014 $ 1,104,347
[FN] 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 the General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 1995, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1995. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1994. Certain reclassifications have been made to the 1994 information to conform to the 1995 presentation. Note B - Investment In Joint Venture The Partnership has a 43% investment in the Fort Worth Option Joint Venture ("Fort Worth"), a 66.7% investment in Northtown Mall Partners ("Northtown"), a 43% investment in Burlington Outlet Mall Joint Venture ("Burlington") and a 50% investment in Moraine West Carrollton Partners ("Moraine"). The investment in Fort Worth, Northtown and Burlington are included in the "Equity interest in net liabilities of joint ventures" on the balance sheet. A purchase agreement was executed on May 8, 1994, for the sale of all of the Moraine properties to an affiliate of the third party managing agent. The sale closed on July 21, 1994. Moraine received a net amount of approximately $2,199,000 in cash after satisfying all indebtedness. Moraine realized a $140,553 gain on the transaction of which the Partnerships pro rata share was $70,277. During the nine month period ended September 30, 1995, all of Moraine's remaining cash was distributed. Also, during this period, Moraine earned interest income and incurred a minimal amount of expense. Note B - Investment In Joint Ventures (continued) Condensed balance sheet information as of September 30, 1995, for the joint ventures is as follows: Assets Fort Worth Northtown Burlington Cash $ 30,493 $ 290,827 $ 67,889 Other assets 55,732 6,354,276 18,611 Investment properties, net -- 26,963,125 4,384,299 Total $ 86,225 $33,608,228 $ 4,470,799 Liabilities and Partners' Deficit Fort Worth Northtown Burlington Other liabilities $ 2,402,690 $ 2,217,985 $ 323,808 Notes payable 2,888,563 51,813,776 6,700,281 Partners' deficit (5,205,028) (20,423,533) (2,553,290) Total $ 86,225 $ 33,608,228 $ 4,470,799 The condensed profit and loss statements for the three and nine months ended September 30, 1995 and 1994, for the joint ventures are summarized as follows:
Fort Worth Northtown Three Months Ended September 30, 1995 1994 1995 1994 Revenue $ 2,041 $ 176,303 $1,207,032 $1,190,193 Costs and expenses (133,019) (422,302) (2,033,205) (2,026,260) Net loss $ (130,978) $ (245,999) $ (826,173) $ (836,067)
Note B - Investment In Joint Ventures (continued)
Burlington Moraine Three Months Ended September 30, 1995 1994 1995 1994 Revenue $ 3,369 $ 155,772 $ -- $ 130,952 Costs and expenses (293,425) (295,596) -- (279,153) Gain on sale of investment property -- -- -- 323,153 Net (loss) income $ (290,056) $(139,824) $ -- $ 174,952
Fort Worth Northtown Nine Months Ended September 30, 1995 1994 1995 1994 Revenue $ 214,532 $ 573,448 $ 4,294,193 $ 4,335,646 Costs and expenses (456,352) (1,226,186) (6,381,215) (6,424,209) Bad debt recovery 1,932,975 -- -- -- Loss on sale of investment property (42,401) -- -- -- Net income (loss) $1,648,754 $ (652,738) $(2,087,022) $(2,088,563)
Burlington Moraine Nine Months Ended September 30, 1995 1994 1995 1994 Revenue $ 223,145 $ 475,822 $ 12,447 $ 1,019,649 Costs and expenses (701,557) (1,025,333) (625) (1,210,804) Gain on sale of investment property -- -- -- 323,153 Net (loss) income $ (478,412) $ (549,511) $ 11,822 $ 131,998 Note B - Investment In Joint Ventures (continued) The Partnership's equity in the losses of the joint ventures was $937,177 and $1,850,405 for the nine months ended September 30, 1995 and 1994, respectively. On March 22, 1995, a tenant of the W.T. Waggoner Building purchased the investment property for $300,000. The net proceeds to Fort Worth at the time of the sale were $214,749 and the loss on the sale amounted to $42,401. As part of the sales agreement, $55,420 was held in escrow to cover any unknown outstanding payables and a mechanic's lien on the property. The General Partner believes that the escrow is sufficient to cover any outstanding payables and that the mechanic's lien is without merit. The Partnership accounts for its 66.7% investment in Northtown, its 43% investment in Burlington, its 43% investment in Fort Worth and its 50% investment in Moraine using the equity method of accounting. Under the equity method, the Partnership records its equity interest in earnings or losses of the joint ventures; however, the investment in the joint ventures will be recorded at an amount less than zero (a liability) to the extent of the Partnership's share of net liabilities of the joint ventures. Note C - Transactions With Affiliated Parties The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the General Partner and affiliates during the nine months ended September 30, 1995 and 1994: 1995 1994 Property management fees $ 130,081 $115,685 Lease commissions 47,950 -- Reimbursement for services of affiliates 244,837 410,488 Note C - Transactions With Affiliated Parties 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"). 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% 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% 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. 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 to Fort Worth by AMIT totalling $1,932,975 (the "Settlement Amount") plus interest at closing. These funds were used to pay down Fort Worth's $5,000,000 note payable to the Partnership (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 equals 90% of the deficiency, or $276,322. The General Partner estimates that the amended claim will result in a recovery of approximately 20%. Note C - Transactions with Affiliated Parties (continued) As part of the settlement with AMIT, MAE GP granted to AMIT an option to acquire the Class B Shares. 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 is due. In 1992, an allowance of $2,850,000 was established for the uncollectible portion of this note receivable. The remaining note receivable balance was fully reserved in 1993. AMIT has since paid $1,961,437 to the Partnership, (see discussion below), reducing AMIT's note payable to Fort Worth and also Fort Worth's note payable to the Partnership. In addition, the Partnership recovered a portion of the note receivable that was previously written off resulting in recognition of a bad debt recovery on both the Partnership's and Fort Worth's books. 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. The Partnership may make advances to the affiliated joint ventures as deemed appropriate by the General Partner. These advances do not bear interest and do not have stated terms of repayment. 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 nine months ended September 30, 1995 and 1994: Average Occupancy Property 1995 1994 Factory Merchant's Mall Pigeon Forge, Tennessee 91% 93% Eastgate Market Place Walla Walla, Washington 94% 93% The Partnership realized net income of $813,962 for the nine months ended September 30, 1995, as compared to a net loss of $2,587,533 for the nine months ended September 30, 1994. The Partnership realized a net loss of $769,248 for the three months ended September 30, 1995, as compared to a net loss of $915,007 for the three months ended September 30, 1994. The decreased net loss for the three months ended September 30, 1995, versus the three months ended September 30, 1994, is due to increased revenues (see discussion below). The decrease in the net loss for the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994, is primarily due to bad debt recovery of $2,111,437 and a decrease in the equity in the loss of the joint ventures (see discussion below). The increase in rental revenue for the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994, is a result of an increase in occupancy and rental rates at Eastgate Market Place. The increase in other income is due to an increase in interest income as a result of increased cash balances. The decrease in operating expenses for the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994, is a result of 1994's costs including costs associated with the buyout of an outside management company, which had obtained the management contract for Factory Merchant's Mall and Burlington Outlet Mall. General and administrative expense decreased primarily due to a decrease in partnership accounting, investor services and asset management reimbursements. The increase in maintenance expense for the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994, is primarily caused by increased repairs and maintenance at Factory Merchant's Mall in an effort to enhance the property's curb appeal. Bad debt expense for the three and nine months ended September 30, 1995, relates primarily to reserves established for receivables the Partnership has from Fort Worth. Since Fort Worth no longer has any income producing assets and minimal cash, the likelihood of collection by the Partnership of such receivables is doubtful, therefore, a full reserve was established for such amounts. Bad debt recovery as of September 30, 1995, relates to partial recovery of the note receivable that the Partnership has from Fort Worth. The entire note receivable ($5,000,000) had been previously reserved. The $2,111,437 represents proceeds received from Fort Worth. Tenant reimbursements increased for the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994, due to the tenant reimbursements in 1994 being based on information provided to the Partnership by the previous management company. Such estimates were not an accurate reflection of actual reimbursements. The Partnership's equity in the losses of the joint ventures is $937,177 and $1,850,405 for the nine months ended September 30, 1995 and 1994, respectively. The decrease in the equity in loss of joint ventures can be attributed to bad debt recovery for Fort Worth as a result AMIT's note payment to Fort Worth and also to decreased losses relating to Burlington. The decrease in the equity in loss of joint ventures is offset somewhat by a change from net income of $131,998 for Moraine for the first nine months of 1994 versus net income of $11,822 for the first nine months of 1995. As a result of the sale of the W.T. Waggoner Building on March 22, 1995, Fort Worth realized a considerable decrease in costs and expenses for the nine months ended September 30, 1995, versus the nine months ended September 30, 1994. Revenue decreased at Burlington for the nine months ended September 30, 1995, versus the nine months ended September 30, 1994, as a result of decreased occupancy. The decrease in revenue was offset by a large decrease in expenses primarily caused by decreased occupancy and a decrease in interest expense as a result of the loan modification agreement (see discussion below). The decrease in revenue at Moraine for the nine months ended September 30, 1995, versus the nine months ended September 30, 1994, and the decrease in costs and expenses for the same period are the result of the sale of the property on July 21, 1994 (see discussion below). 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 expense. 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, 1995, the Partnership had unrestricted cash of $3,466,854 compared to $618,958 at September 30, 1994. Net cash from operating activities increased due to improved operations of the Partnership's investment properties. Net cash from investing activities increased as a result of distributions received from Moraine and proceeds received from Fort Worth. Net cash used in financing activities remained stable from 1994 to 1995. 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 $14,541,605, which is secured by the Factory Merchant's Mall investment property, matures in December 1997 at which time the indebtedness will be refinanced or the property will be sold. 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 1995 or 1994. The mortgage note payable secured by the Burlington investment property matured on July 1, 1994. Burlington obtained new financing the terms of which consolidate all principal, accrued interest, and late charges outstanding on July 1, 1994, into a new loan amount which will accrue interest at the greater of 2% or net cash flow as defined in the loan extension agreement. The loan maturity date had been extended until April 1, 1995. The mortgage holder has initiated foreclosure proceedings against this property, however, the mortgage holder has issued a stay of these proceedings in order to give the General Partner an opportunity to sell the property. The General Partner is not optimistic that a sale will be consummated within an amount of time satisfactory to the mortgage holder and therefore anticipates that the mortgage holder will proceed with the foreclosure. On March 15, 1991 ("Effective Date"), Northtown and the holder of the Northtown Mall mortgage note payable entered into an Option Agreement ("Option") whereby such lender has the right and an option to purchase the Northtown Mall property on the terms and conditions as set forth in the Option. The purchase price of the property, as set forth in the Option, is defined as the fair market value of the property. Such Option can be exercised by written notice by the lender at any time during any of the thirty day periods occurring immediately prior to the third, fifth, seventh, ninth, eleventh, thirteenth and fifteenth anniversaries of the effective date. The first date on which the Option could have been exercised was March 15, 1994. On February 22, 1994, the lender gave notice to the Partnership that it intended to exercise this Option. The lender offered $58,000,000 based on an annual appraisal. Northtown determined that the fair value as determined in accordance with the loan documents is $62,000,000. Northtown is negotiating with the lender to retain ownership of the property in order to protect the Partnership's equity in the property. However, Northtown cannot presently determine the outcome of such negotiations. A purchase agreement was executed on May 8, 1994 for the sale of all of the Moraine properties to an affiliate of the third party managing agent. The sale closed on July 21, 1994. Moraine received a net amount of approximately $2,199,000 in cash after satisfying all indebtedness. Moraine realized a $140,553 gain on the transaction of which the Partnerships pro rata share was $70,277. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 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"). 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% 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% 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. 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 to Fort Worth by AMIT totalling $1,932,975 (the "Settlement Amount") plus interest at closing. 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 equals 90% of the deficiency, or $276,322. The General Partner estimates that the amended claim will result in a recovery of approximately 20%. As part of the above described settlement, MAE GP granted to AMIT an option to acquire the Class B Shares. 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 Registrant. Angeles caused the Partnership to make deposits to the Account ostensibly to fund the payment of certain obligations of the Partnership. Angeles further caused checks on such account to be written to or on behalf of certain other Partnerships. However, of these total deposits, at least $81,263 deposited by or on behalf of the Partnership was used for purposes other than satisfying the liabilities of the Partnership. Accordingly, the Partnership has filed a Proof of Claim in the Angeles bankruptcy proceedings for such amount. However, subsequently the General Partner of the Partnership has determined that the cost involved to pursue such claim would likely exceed any amount received, if in fact such claim were to be resolved in favor of the Partnership. Therefore, the Partnership withdrew this claim on August 9, 1995. The Registrant is unaware of any other pending or outstanding litigation that is not of a routine nature. The General Partner of the Registrant believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES INCOME PROPERTIES, LTD. 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. Controller and Principal Accounting Officer Date: November 13, 1995
EX-27 2
5 This schedule contains summary financial information extracted from Angeles Income Properties Ltd. IV 1995 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB. 0000763049 ANGELES INCOME PROPERTIES LTD. IV 1 9-MOS DEC-31-1995 SEP-30-1995 3,466,854 0 426,021 110,267 0 0 22,557,667 10,173,794 17,828,011 0 14,541,605 0 0 0 (14,128,271) 17,828,011 0 2,800,421 0 0 1,049,282 0 1,116,317 813,962 0 813,962 0 0 0 813,962 6.05 0 The Registrant has an unclassified balance sheet.
-----END PRIVACY-ENHANCED MESSAGE-----