-----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, UsYNW2EH8A2qjcqOSj9k/me/D4oDEPZEKuGNEinW7Bv8c96ywVqy7DvNu+ABKGMs pPSuMbE8nBw+bCjmuBxXOw== 0000310303-95-000001.txt : 19951031 0000310303-95-000001.hdr.sgml : 19951031 ACCESSION NUMBER: 0000310303-95-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951030 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES OPPORTUNITY PROPERTIES LTD CENTRAL INDEX KEY: 0000789282 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 954052473 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16116 FILM NUMBER: 95585463 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 0-16116 ANGELES OPPORTUNITY PROPERTIES, LTD. (Exact name of small business issuer as specified in its charter) California 95-4052473 (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 OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED BALANCE SHEET (Unaudited)
September 30, 1995 Assets Cash: Unrestricted $1,081,269 Restricted--tenant security deposits 44,705 Accounts receivable 6,109 Escrow for taxes 162,832 Restricted escrows 264,713 Other assets 201,426 Investment properties: Land $ 955,873 Buildings and related personal property 6,853,403 7,809,276 Less accumulated depreciation (1,292,427) 6,516,849 $8,277,903 Liabilities and Partners' Capital Liabilities Accounts payable $ 27,606 Tenant security deposits 45,608 Accrued taxes 148,865 Other liabilities 115,806 Mortgage notes payable 4,378,999 Partners' (Deficit) Capital General partner $ (68,081) Limited partners (12,425 units issued and outstanding) 3,629,100 3,561,019 $8,277,903
[FN] See Accompanying Notes to Consolidated Financial Statements b) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenues: Rental income $ 489,477 $ 557,321 $1,581,202 $1,682,498 Other income 30,488 42,625 96,968 106,736 Total revenues 519,965 599,946 1,678,170 1,789,234 Expenses: Operating 177,455 168,273 500,524 511,991 General and administrative 43,180 58,511 171,081 242,758 Property management fees 26,315 19,106 81,520 84,865 Maintenance 35,169 66,287 141,773 218,142 Depreciation 63,358 84,173 204,160 248,132 Amortization of lease commissions -- 2,361 7,374 6,808 Interest 111,356 113,901 335,226 336,682 Property taxes 53,568 53,768 153,872 145,499 Bad debt expense 8,623 8,560 8,623 8,560 Tenant reimbursements 3,200 (13,591) (22,070) (29,856) Total expenses 522,224 561,349 1,582,083 1,773,581 (Loss) income before loss on disposal of property, gain on sale of investment property and casualty gain (2,259) 38,597 96,087 15,653 Loss on disposal of property -- -- -- (5,559) Gain on sale of investment -- -- 957,760 -- property Casualty gain 5,287 25,460 25,989 25,460 Net income $ 3,028 $ 64,057 $1,079,836 $ 35,554 Net income allocated to general partner (1%) $ 30 $ 641 $ 10,798 $ 356 Net income allocated to limited partners (99%) 2,998 63,416 1,069,038 35,198 Net income $ 3,028 $ 64,057 $1,079,836 $ 35,554 Net income per limited partnership unit $ .24 $ 5.10 $ 86.04 $ 2.83
[FN] See Accompanying Notes to Consolidated Financial Statements c) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 12,425 $ 1,000 $12,425,000 $12,426,000 Partners' (deficit) capital at December 31, 1994 12,425 $ (43,879) $ 6,024,997 $ 5,981,118 Distributions to partners -- (35,000) (3,464,935) (3,499,935) Net income for the nine months ended September 30, 1995 -- 10,798 1,069,038 1,079,836 Partners' (deficit) capital at September 30, 1995 12,425 $ (68,081) $ 3,629,100 $ 3,561,019
[FN] See Accompanying Notes to Consolidated Financial Statements d) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net income $1,079,836 $ 35,554 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 204,160 248,132 Amortization of discounts, loan costs, and leasing commissions 30,152 21,602 Bad debt expense 8,623 8,560 Gain on sale of investment property (957,760) -- Casualty gain (25,989) (25,460) Loss on disposal of property -- 5,559 Change in accounts: Restricted cash 34,664 (14,831) Accounts receivable 10,913 (60,192) Escrows for taxes 50,707 62,853 Other assets (9,490) (24,615) Accounts payable (920) 63,057 Tenant security deposit liabilities (6,416) (3,349) Accrued taxes (38,945) (37,346) Due to affiliates -- -- Other liabilities (24,783) 44,123 Net cash provided by operating activities 354,752 323,647 Cash flows from investing activities: Property improvements and replacements (237,573) (85,707) Proceeds from sale of investment property 3,392,871 -- Proceeds from settlement of note receivable -- 1,061,440 Deposits to restricted escrows (33,209) (33,364) Withdrawals from restricted escrows 4,063 32,817 Insurance proceeds 87,673 -- Net cash provided by investing activities 3,213,825 975,186 Cash flows from financing activities: Payments on mortgage notes payable (88,901) (80,464) Distributions to partners (3,499,935) (54,972) Net cash used in financing activities (3,588,836) (135,436) Net (decrease) increase in cash (20,259) 1,163,397 Cash at beginning of period 1,101,528 799,634 Cash at end of period $ 1,081,269 $1,963,031 Supplemental disclosure of cash flow information: Cash paid for interest $ 313,451 $ 321,887
[FN] See Accompanying Notes to Consolidated Financial Statements d) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY Property Damage The changes in accounts receivable, accounts payable, and capital expenditures were adjusted by $64,931 at September 30, 1994 for non-cash amounts in connection with property damage resulting from a hailstorm at Lake Meadows Apartments. (See Managements' Discussion and Analysis or Plan of Operations for further detail). [FN] See Accompanying Notes to Consolidated Financial Statements e) ANGELES OPPORTUNITY PROPERTIES, LTD. NOTES TO 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 September 30, 1994, information to conform to the September 30, 1995, presentation. Note B - Note Receivable The Partnership's assets included a note receivable ("Note") of $1,070,000 from Rolling Greens Communities, Ltd. ("Borrower") net of a write-down for in- substance foreclosure, as more fully described below, of $780,000. This Note was collateralized by a first trust deed on undeveloped commercial and mobile home park land adjacent to Rolling Green Communities ("Rolling Greens"), and required interest only payments computed at a 12.5% rate per annum with a maturity date of June 1997. During 1992, a refinancing of the first mortgage on Rolling Greens was consummated. As a concession to the new first mortgage holder, Angeles Corporation ("Angeles"), a former affiliate of the General Partner and/or its affiliates, released or caused to be released a lien on the developed portion of the mobile home park, retaining a lien upon undeveloped commercial and park zoned land as security for the Note. The Partnership was informed and believes that the release of the lien was without consideration to the Partnership. Proceeds from the refinanced first mortgage and an additional $450,000 that the Partnership advanced to the Borrower in 1992 under this Note were used by the Borrower to pay off (i) third trust deed financing that had been provided by Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust, and (ii) unsecured advances payable to Angeles. Subsequent to the refinancing of the first mortgage discussed above, the developed portion of Rolling Greens was sold to a third party and a note receivable was received by the Partnership as consideration. AMIT continues to have loans outstanding to the Partnership that owns the interest in the Borrower. Note B - Note Receivable - (continued) Since the Partnership's Note from the Borrower is secured by land that does not generate any cash flow, the Borrower has been unable to make interest payments on a current basis and consequently defaulted on the Note. The undeveloped land which serves as collateral for the Partnership's Note is adjacent to the mobile home park that was recently sold by the Borrower. Given its lack of direct access to public highways, it was difficult to ascertain a market value for this particular tract. The General Partner believed that the land securing the $1,850,000 Note had an estimated net realizable value of approximately $1,070,000, net of an estimated $80,000 in selling costs, which was lower than the carrying value of the Note, and that the decline in the value of the real estate was other than temporary. Accordingly, the Partnership had recorded the Note as an in-substance foreclosure at the estimated fair value of the underlying collateral and recorded a write-down for in-substance foreclosed property of $650,000 in the fourth quarter of 1992 and an additional $130,000 in the fourth quarter of 1993. Also, the Partnership ceased recording interest income or late fees on this Note due to the low probability that these fees would be collected. During the first quarter of 1993, the Partnership recorded $61,281 in interest and late fees. These amounts were fully reserved in the second quarter of 1993. On April 29, 1994, the Partnership, the Borrower and AMIT entered into an agreement as to the distribution of the sales proceeds generated by the sale of certain real estate owned by the Borrower, as follows: i) $50,000 was retained in an escrow account for the purpose of paying operating and legal expenses of the Borrower, (an additional sum of $22,000 was retained in the escrow account for the purpose of paying 1994 real estate taxes), ii) $125,000 was paid towards the principal balance outstanding to Angeles Acceptance Pool, L.P. ("AAP"), an affiliate of the General Partner, plus unpaid interest accrued of $19,447 on that balance, iii) $561,741 was distributed to the Partnership to be applied towards the reduction of the outstanding balance due by the Borrower to the Partnership, and iv) the remaining balance was distributed 57.18% to AMIT and 42.82% to the Partnership. In addition, the Partnership executed and delivered to AMIT an assignment of a 57.18% interest in the Note. On August 29, 1994, the Partnership received $1,061,440 in proceeds as a partial settlement from the above described Note. During the first quarter of 1995, the Partnership initiated foreclosure proceedings under the terms of the Note against the Borrower relating to the raw land which is security for the Note. Note B - Note Receivable - (continued) 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. However, MAE GP may choose to vote these shares as it deems appropriate in the future. As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B shares owned by it. This option can be exercised at the end of 10 years or when all loans made by AMIT to partnerships affiliated with MAE GP as of November 9, 1994, (which is the date of execution of a definitive Settlement Agreement) have been paid in full, but in no event prior to November 9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which occurred April 14, 1995, as payment for the option. Upon exercise of the option, AMIT 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 those matters, MAE GP granted to the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to the 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. 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 $ 81,520 $ 84,865 Reimbursement for services of affiliates 105,768 135,099 Marketing services 238 23 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. See Note B for discussion of the transaction with AMIT. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of two apartment complexes. 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 Lake Meadows Apartments Garland, Texas 94% 95% Lakewood Apartments Tomball, Texas 97% 94% For the three and nine months ended September 30, 1995, the Partnership generated net income of $3,028 and $1,079,836, respectively, as compared to net income for the three and nine months ended September 30, 1994, of $64,057 and $35,554, respectively. The decrease in net income for the three months ended September 30, 1995, versus the three months ended September 30, 1994, can primarily be attributed to decreased revenues as a result of the sale of Oquendo Warehouse, one of the Partnership's investment properties, during the first half of 1995. The increase in net income for the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994, is primarily a result of the gain recognized on the sale of the buildings at Oquendo Warehouse (see discussion below). Overall, total revenues and total expenses for the three and nine months ended September 30, 1995, decreased in comparison to the three and nine months ended September 30, 1994. The decreases in rental income, other income, operating expenses, property management fees, maintenance expense, depreciation expense, and tenant reimbursements can all be attributed to the sale of Oquendo Warehouse (See discussion below). Partially offsetting the decrease in rental income for the three and nine months ended September 30, 1995, versus the three and nine months ended September 30, 1994, was the increase in rental rates and occupancy at Lakewood Apartments. Decreases in corporate unit income, cleaning and damage fees, and deposit forfeitures at Lakewood Apartments also contributed to the decrease in other income for the three and nine months ended September 30, 1995, versus the three and nine months ended September 30, 1994. Partially offsetting this decrease in other income was an increase in interest income due to higher cash balances for most of 1995, resulting from the sale of Oquendo Warehouse. General and administrative expenses decreased primarily due to decreased partnership accounting, investor relations, and asset management cost reimbursements. In addition, 1994 general and administrative expenses included additional legal fees associated with the settlement on the Rolling Greens note (see discussion at Note B). Property tax expense increased for the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994 due to a tax refund received by Lakewood Apartments during 1994. The bad debt expense recorded for the three and nine months ended September 30, 1995, and 1994, can be attributed to the reserving of certain amounts considered uncollectible for past due rent and common area maintenance charges relating to one of the tenants at Oquendo Warehouse. On January 20, 1995, the Partnership sold one building at Oquendo Warehouse, located at 3550 W. Quail Avenue in Las Vegas, Nevada to the tenant occupying the building, Czarnowski Display Service, Inc. Total consideration was $1,325,000 resulting in a gain on sale of the property of $491,930. On May 5, 1995, the Partnership sold the remaining two buildings at Oquendo Warehouse, located at 3655 W. Quail and 3600 W. Oquendo in Las Vegas, Nevada, to an unrelated third party. Total consideration was $2,250,000 resulting in a gain on the sale of the property of $465,830. Due to the above transactions, a total gain on sale of the property of $957,760 was realized for the nine months ended September 30, 1995. The General Partner believed that the sale of the property was in the best interest of the Partnership. On March 27, 1995, Lake Meadows Apartments sustained damage to the roofs of the apartment units due to a severe hailstorm. This casualty was covered by insurance. Due to the receipt of additional insurance proceeds over the book value of the roofs written off, a casualty gain of $25,989 was recorded. During the second quarter of 1994, the investment property, Oquendo Warehouse, replaced a roof on one of its buildings. The cost of the new roof was in excess of the book value of the old roof. The write off of the old roof resulted in a $5,559 loss on the disposition of the property. 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, 1995, the Partnership had unrestricted cash of $1,081,269 as compared to $1,963,031 at September 30, 1994. Net cash provided by operating activities increased only slightly for the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994. Net cash provided by investing activities increased due to the cash proceeds received relating to the sale of Oquendo Warehouse during the nine months ended September 30, 1995. Net cash used in financing activities increased due to the distribution to the partners during the second quarter of 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 various 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 $4,378,999, net of discount, is amortized over 10 years and 37 years with maturity dates of October 2003 and March 2008, at which time the properties will either be refinanced or sold. Total cash distributed was $3,499,935 for the nine months ended September 30, 1995, consisting of $3,464,935 to the limited partners and $35,000 to the General Partner. Future cash distributions will depend on the levels of net cash generated from operations, property sales, and the availability of cash reserves. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Registrant is unaware of any 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) Exhibits - Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended September 30, 1995. 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 OPPORTUNITY PROPERTIES, LTD. 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: October 27, 1995 EX-27 2
5 This schedule coitnains summary financial information extraced from Angeles Opportunity Properties Ltd. 1995 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB. 0000789282 ANGELES OPPORTUNITY PROPERTIES LTD. 1 9-MOS DEC-31-1995 SEP-30-1995 1,081,269 0 6,109 0 0 1,294,915 7,809,276 (1,292,427) 8,277,903 222,079 4,378,999 0 0 0 3,561,019 8,277,903 0 1,678,170 0 0 1,582,083 0 335,226 1,079,836 0 1,079,836 0 0 0 1,079,836 86.04 0
-----END PRIVACY-ENHANCED MESSAGE-----