-----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, UxK9KaiOqQ2S+uFS/dPhrA86GZqtwoY4/9xWk31nuBCg+g9pMuT1vENm0A95qZCJ NUNtGew63ujUdbUIINDzUA== 0000812564-98-000008.txt : 19980810 0000812564-98-000008.hdr.sgml : 19980810 ACCESSION NUMBER: 0000812564-98-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980807 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: SEC FILE NUMBER: 000-14283 FILM NUMBER: 98679028 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 OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 [ ] 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 (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) 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) June 30, 1998 Assets Cash and cash equivalents $ 3,757 Receivables and deposits, net of $116 allowance for doubtful accounts 436 Restricted escrows 364 Other assets 701 Investment properties: Land $ 2,708 Buildings and related personal property 20,844 23,552 Less accumulated depreciation (13,105) 10,447 $ 15,705 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 19 Tenant security deposit liabilities 7 Accrued property taxes 73 Other liabilities 177 Mortgage note payable 15,138 Partners' Capital (Deficit) General partner's $ (1,133) Limited partners' (131,585 units issued and outstanding) 1,424 291 $ 15,705 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 Six Months Ended June 30, June 30, 1998 1997 1998 1997 Revenues: Rental income $ 1,006 $ 970 $ 2,063 $ 2,049 Other income 62 69 162 110 Total revenues 1,068 1,039 2,225 2,159 Expenses: Operating 472 435 919 809 General and administrative 63 83 111 185 Depreciation 272 256 536 513 Interest 378 382 756 765 Property taxes 49 53 99 108 Total expenses 1,234 1,209 2,421 2,380 Loss before equity in income of joint venture and extraordinary item (166) (170) (196) (221) Equity in income of joint venture -- 9,645 -- 9,177 (Loss) income before extraordinary item (166) 9,475 (196) 8,956 Equity in extraordinary gain on debt extinguishment of joint venture -- 4,925 -- 4,925 Net (loss) income $ (166) $ 14,400 $ (196) $ 13,881 Net (loss) income allocated to general partner (2%) $ (3) $ 288 $ (4) $ 278 Net (loss) income allocated to limited partners(98%) (163) 14,112 (192) 13,603 $ (166) $ 14,400 $ (196) $ 13,881 Per limited partnership unit: (Loss) income before extraordinary item $ (1.24) $ 70.57 $ (1.46) $ 66.70 Extraordinary gain -- 36.68 -- 36.68 Net (loss) income $ (1.24) $ 107.25 $ (1.46) $ 103.38 See Accompanying Notes to Consolidated Financial Statements c) ANGELES INCOME PROPERTIES, LTD. IV CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (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) capital at December 31, 1997 131,585 $ (1,129) $ 1,616 $ 487 Net loss for the six months ended June 30, 1998 -- (4) (192) (196) Partners' (deficit) capital at June 30, 1998 131,585 $ (1,133) $ 1,424 $ 291 See Accompanying Notes to Consolidated Financial Statements
d) ANGELES INCOME PROPERTIES, LTD. IV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1998 1997 Cash flows from operating activities: Net (loss) income $ (196) $13,881 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Equity in income of joint venture -- (9,177) Equity in extraordinary gain on debt extinguishment of joint venture -- (4,925) Depreciation 536 513 Amortization of loan costs and leasing commissions 58 51 Change in accounts: Receivables and deposits 126 131 Other assets 3 (111) Tenant security deposit liabilities -- (1) Accounts payable (118) (80) Accrued property taxes (65) (65) Other liabilities (1) 8 Net cash provided by operating activities 343 225 Cash flows from investing activities: Property improvements and replacements (184) (167) Net withdrawals from (deposits to) restricted escrows 122 (95) Net cash used in investing activities (62) (262) Cash flows used in financing activities Payments on mortgage note payable (83) (76) Net increase (decrease) in cash and cash equivalents 198 (113) Cash and cash equivalents at beginning of period 3,559 3,308 Cash and cash equivalents at end of period $ 3,757 $ 3,195 Supplemental disclosure of cash flow information: Cash paid for interest $ 741 $ 748 See Accompanying Notes to Consolidated Financial Statements
ANGELES INCOME PROPERTIES, LTD. IV NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Angeles Income Properties, Ltd. IV (the "Partnership") 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 ("ARC II" or 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 six month periods ended June 30, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE B - INVESTMENT IN JOINT VENTURE The Partnership had a 66.7% investment in Northtown Mall Partners ("Northtown") until the property was sold effective April 1, 1997. During the fourth quarter of 1997, all liabilities were paid and the joint venture was terminated. The condensed profit and loss statements for the three and six months ended June 30, 1997, for Northtown are as follows (in thousands): Three Months Ended Six Months Ended June 30, 1997 June 30, 1997 Revenues $ 31 $ 2,727 Costs and expenses (122) (3,521) Gain on sale of investment property 16,248 16,248 Net income before extraordinary item 16,157 15,454 Extraordinary gain on early extinguishment of debt 7,384 7,384 Net income $ 23,541 $ 22,838 The Partnership's equity in the income of the joint venture was approximately $9,645,000 and $9,177,000 for the three and six months ended June 30, 1997, respectively. For the three and six months ended June 30, 1997, the Partnership recognized approximately $4,925,000 in equity in extraordinary gain on debt extinguishment related to the sale of Northtown Mall. The Partnership accounted for its 66.7% investment in Northtown using the equity method of accounting. Under the equity method, the Partnership recorded its equity interest in earnings or losses of the joint venture. On May 12, 1997, the Partnership sold Northtown Mall to an affiliate of the lender. The economic closing of the sale of Northtown Mall was as of April 1, 1997. The sale resulted in net proceeds of approximately $1,200,000, after payment of closing costs. The gain on the sale amounted to approximately $16,248,000 and approximately $7,384,000 was recognized as extraordinary gain on early extinguishment of debt due to the full release of its non-recourse indebtedness of approximately $51,000,000 as stipulated by the sales agreement. The joint venture was dissolved in December 1997. 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 certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. ARC II was wholly owned by MAE GP Corporation ("MAE GP"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia. Thus, the General Partner is now a wholly-owned subsidiary of IPT. The following amounts were incurred by the General Partner and affiliates during the six months ended June 30, 1998 and 1997 (in thousands): 1998 1997 Property management fees (included in operating expenses) $68 $67 Lease commissions (included in other assets and operating expenses) 21 10 Reimbursement for services of affiliates (included in operating expenses and general and administrative expenses) 88 93 Included in reimbursement for services of affiliates above is approximately $27,500 for consulting performed by an affiliate of the General Partner for the six months ended June 30, 1998. In addition, approximately $1,000 of construction oversight reimbursements were paid to the General Partner and its affiliates during the six months ended June 30, 1998. For the period from January 1, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the General Partner but with an 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 master policy. The agent assumed the financial obligations to the affiliate of the General Partner which received payment on these obligations from the agent. The amount of the Partnership's insurance premiums that accrued to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in September or October of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. 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, 1998 and 1997: Average Occupancy Property 1998 1997 Factory Merchants Mall 93% 94% Pigeon Forge, Tennessee Eastgate Market Place 97% 86% Walla Walla, Washington (1) (1) The occupancy at Eastgate Market Place increased as a result of the move in of an anchor tenant in November 1997. The Partnership realized a net loss of approximately $166,000 and $196,000 for the three and six month periods ended June 30, 1998, versus net income of approximately $14,400,000 and $13,881,000 for the same periods in 1997, respectively. The decrease in net income is primarily attributable to the sale of Northtown Mall during the second quarter of 1997. For the remaining properties, loss before equity income of joint venture decreased for the three and six months ended June 30, 1998, as compare to the same period in 1997 due to increases in rental and other income and a decrease in general and administrative expenses partially offset by an increase in operating expenses. Rental income increased for the three and six month periods ended June 30, 1998, compared to the same periods in 1997, primarily as a result of an increase in occupancy at Eastgate Market Place which was partially offset by a decrease at Factory Merchants Mall. The increase in occupancy at Eastgate Market Place can be attributed to the addition of an anchor tenant in the fourth quarter of 1997. The decrease in rental income at Factory Merchants Mall results from an increase in the number of temporary tenants that pay rent based upon a percentage of sales which is below market rent. In addition, reimbursements for common area maintenance decreased as a result of the temporary tenants not being required to pay fees for common area maintenance. Other income increased for the six month period ended June 30, 1998, as compared to the same period in 1997, as a result of an increase in fees collected at Factory Merchants Mall for lease cancellations as well as an increase in interest income due to larger cash balances in interest-bearing accounts at the Partnership. General and administrative expenses decreased as a result of decreases in General Partner reimbursements and legal and professional fees. Operating expenses increased primarily as a result of an increase in advertising to attract tenants and shoppers to Factory Merchants Mall and professional fees paid to assess the possible redevelopment of the property. This increase in operating expense was partially offset by a decrease in maintenance expense at Factory Merchants Mall due to parking lot repairs and common area cleaning projects performed in 1997. Depreciation expenses increased for the three month period ended June 30, 1998, as a result of additional depreciable assets placed in service resulting from tenant improvement projects at Eastgate Market Place. 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 June 30, 1998, the Partnership held cash and cash equivalents of approximately $3,757,000, as compared to approximately $3,195,000 at June 30, 1997. The increase in cash and cash equivalents for the six month period ended June 30, 1998, was approximately $198,0000, compared to a decrease of approximately $113,000 for the corresponding period in 1997. Net cash provided by operating activities increased primarily due to an increase in cash provided by other assets as a result of a change in the timing of insurance payments. Net cash used in investing activities decreased due to an increase in net withdrawals from restricted escrows. Net cash used in financing activities remained stable. 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 approximately $15,138,000, which is secured by the Factory Merchants Mall investment property, matures in October 2006 and carries a stated interest rate of 9.75%. 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 six months of 1998 or 1997. Year 2000 The Partnership is dependent upon the General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Partnership, along with other affiliates, has been named in a suit brought by a company which owned a 20% interest ("Plaintiff") in an investment property, the W.T. Waggoner Building, which was sold in 1995. The W. T. Waggoner Building was sold by a Joint Venture in which the Partnership held a 43% interest ("Fort Worth"). The Joint Venture was dissolved subsequent to the sale 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. In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia and its affiliates of interests in certain general partner entities, past tender offers by Insignia affiliates as well as a recently announced agreement between Insignia and AIMCO. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. The General Partner believes the action to be without merit, and intends to vigorously defend it. On June 24, 1998, the General Partner filed a motion seeking dismissal of the action. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The General Partner believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: No reports were filed during the quarter ended June 30, 1998. 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 and Chief Accounting Officer Date: August 7, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Income Properties, Ltd. IV 1998 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000763049 ANGELES INCOME PROPERTIES, LTD. IV 1,000 6-MOS DEC-31-1998 JUN-30-1998 3,757 0 0 0 0 0 23,552 13,105 15,705 0 15,138 0 0 0 291 15,705 0 2,225 0 0 1,665 0 756 0 0 0 0 0 0 (196) (1.46) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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