-----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, FHUoPOjH50y2+Ri0kSbQyHuYwZkwZ5XZ7YSuepXUL54HzybI6ioJMzpEC/8nIhVv 2jyqA/U8oUI6Y1hq66oUeQ== 0000317969-96-000003.txt : 19960809 0000317969-96-000003.hdr.sgml : 19960809 ACCESSION NUMBER: 0000317969-96-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 SROS: NONE 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: 96605600 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 June 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT 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 (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 OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 1996 Assets Cash and cash equivalents: Unrestricted $ 761 Restricted--tenant security deposits 41 Accounts receivable 4 Escrow for taxes 115 Restricted escrows 119 Other assets 206 Investment in joint venture 789 Investment properties: Land $ 956 Buildings and related personal property 7,054 8,010 Less accumulated depreciation (1,486) 6,524 $ 8,559 Liabilities and Partners' Capital Liabilities Accounts payable $ 28 Tenant security deposits 41 Accrued taxes 103 Other liabilities 76 Mortgage notes payable 4,285 Partners' (Deficit) Capital General partner $ (63) Limited partners (12,425 units issued and outstanding) 4,089 4,026 $ 8,559 See Accompanying Notes to Consolidated Financial Statements b) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Revenues: Rental income $ 516 $ 530 $ 1,009 $ 1,117 Other income 26 32 54 66 Total revenues 542 562 1,063 1,183 Expenses: Operating 181 181 360 385 General and administrative 53 68 92 128 Maintenance 116 59 172 107 Depreciation 65 67 130 141 Interest 108 112 218 224 Bad debt recovery (789) -- (789) -- Property taxes 53 45 104 100 Total expenses (213) 532 287 1,085 Income before equity in income of joint venture, gain on sale of investment property and casualty gain 755 30 776 98 Equity in income of joint venture 1 -- 1 -- Gain on sale of investment property -- 466 -- 958 Casualty gain -- 17 -- 21 Net income $ 756 $ 513 $ 777 $ 1,077 Net income allocated to general partner (1%) $ 8 $ 5 $ 8 $ 11 Net income allocated to limited partners (99%) 748 508 769 1,066 Net income $ 756 $ 513 $ 777 $ 1,077 Net income per limited partnership unit $ 60.20 $ 40.89 $ 61.89 $ 85.79 See Accompanying Notes to Consolidated Financial Statements
c) ANGELES OPPORTUNITY PROPERTIES, LTD. 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 12,425 $ 1 $12,425 $12,426 Partners' (deficit) capital at December 31, 1995 12,425 $ (68) $ 3,617 $ 3,549 Distributions to partners -- (3) (297) (300) Net income for the six months ended June 30, 1996 -- 8 769 777 Partners' (deficit) capital at June 30, 1996 12,425 $ (63) $ 4,089 $ 4,026 See Accompanying Notes to Consolidated Financial Statements
d) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1996 1995 Cash flows from operating activities: Net income $ 777 $ 1,077 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income from joint venture (1) -- Depreciation 130 141 Amortization of discounts, loan costs, and leasing commissions 15 23 Gain on sale of investment property -- (958) Casualty gain -- (21) Bad debt recovery (789) -- Change in accounts: Restricted cash 1 32 Accounts receivable 1 -- Escrows for taxes 105 108 Other assets (33) (16) Accounts payable (165) 7 Tenant security deposit liabilities (1) (3) Accrued taxes (95) (89) Other liabilities (13) (41) Net cash (used in) provided by operating activities (68) 260 Cash flows from investing activities: Property improvements and replacements (18) (160) Proceeds from sale of investment property -- 3,393 Deposits to restricted escrows (23) (22) Withdrawals from restricted escrows 155 2 Insurance proceeds -- 41 Net cash provided by investing activities 114 3,254 Cash flows from financing activities: Payments on mortgage notes payable (65) (59) Distributions to partners (300) (3,500) Net cash used in financing activities (365) (3,559) Net decrease in cash (319) (45) Cash and cash equivalents at beginning of period 1,080 1,102 Cash and cash equivalents at end of period $ 761 $ 1,057 Supplemental disclosure of cash flow information: Cash paid for interest $ 204 $ 210 See Accompanying Notes to Consolidated Financial Statements
e) ANGELES OPPORTUNITY PROPERTIES, LTD. 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 six month period ended June 30, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in the Angeles Opportunity Properties, Ltd.'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 - Note Receivable Until 1993, the Partnership's assets included a note receivable ("Note") of $1,850,000 from Rolling Greens Communities, Ltd. ("Borrower") collateralized by a first trust deed on undeveloped commercial and mobile home park land adjacent to Rolling Green Communities ("Rolling Greens"). The note required interest only payments computed at a 12.5% rate per annum with a maturity date of June 1997. The note was in default due to nonpayment and had been written down in 1993 to $1,070,000, which is the estimated value of the collateral less the estimated cost to dispose of such collateral. 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 included in the note amount of $1,850,000 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) 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. 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 and an affiliate of AMIT initiated foreclosure proceedings under the terms of the Note, against the Borrower, relating to the remaining security for the Note. On June 6, 1996, the collateralized property was foreclosed upon and the Partnership and AMIT became joint owners of an approximately 8,000 square foot retail strip shopping center and over 150 acres of land with 42.82% and 57.18% ownership, respectively (see "Note D" for further information). 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 on 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, owns 63,200 Class A Shares of AMIT. These Class A Shares entitle LAC to vote approximately 1.5% of the total shares. 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. Note B - Note Receivable - (continued) Simultaneously with the execution of the option, MAE GP executed an irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to vote the Class B shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. On 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 six months ended June 30, 1996 and 1995: 1996 1995 (in thousands) Property management fees $52 $55 Reimbursement for services of affiliates 67 78 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. Note D - Investment in Joint Venture The Partnership has a 42.82% interest in a property owned jointly by the Partnership and an affiliate of AMIT ("Joint Venture") effective June 6, 1996. The Partnership accounts for its investment in this property using the equity method of accounting. The balance sheet of the Joint Venture is summarized as follows: June 30, 1996 (in thousands) Assets Cash $ 1 Other assets 91 Investment properties, net 1,764 Total $ 1,856 Liabilities and Partners' Capital Other liabilities $ 15 Partners' capital 1,841 Total $ 1,856 The statements of operations of the Joint Venture are summarized as follows: Six Months Ended June 30, 1996 (in thousands) Revenue $ 4 Costs and expenses (2) Net income $ 2 The Partnership's equity interest in income of the Joint Venture for the six months ended June 30, 1996, was $1,000. 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 six months ended June 30, 1996 and 1995: Average Occupancy Property 1996 1995 Lake Meadows Apartments Garland, Texas 94% 94% Lakewood Apartments Tomball, Texas 92% 96% For the three and six months ended June 30, 1996, the Partnership generated net income of $756,000 and $777,000, respectively, as compared to net income for the three and six months ended June 30, 1995, of $513,000 and $1,077,000, respectively. The decrease in net income for the first six months of 1996 versus the first six months of 1995 can be attributed to the $958,000 gain recognized on the sale of Oquendo Warehouse during 1995 (See discussion below). However, net income for the three and six months ended June 30, 1996, increased due to the $789,000 bad debt recovery recorded by the Partnership as a result of the foreclosure of the property owned by Rolling Greens Communities, Ltd. (see discussion at "Note B" and "Note D" for further detail). The decrease in rental income, operating expense and depreciation expense for the first six months of 1996, versus the first six months of 1995, can be attributed to the sale of Oquendo Warehouse (See discussion below). General and administrative expenses decreased primarily due to decreased partnership accounting, investor relations, and asset management cost reimbursements. The increase in maintenance expense can be attributed to increases in contract repairs at Lake Meadows Apartments due to this property being without a maintenance technician for part of the year. The increase in maintenance expense can also be attributed to exterior painting at the Lakewood Apartments property in order to enhance the appearance of the property. 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 $492,000. 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 $466,000. Due to the above transactions, a total gain on sale of the property of $958,000 was realized for the six months ended June 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. The casualty gain of $21,000 resulted from the excess insurance proceeds over the book value of the roofs written-off. 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, 1996, the Partnership had unrestricted cash of $761,000 as compared to $1,057,000 at June 30, 1995. Net cash provided by operating activities decreased primarily due to the decreased net income for the six months ended June 30, 1996, versus the six months ended June 30, 1995, and due to the pay- down of accounts payable for fixed asset additions from 1995. Net cash provided by investing activities decreased due to the cash proceeds received relating to the sale of Oquendo Warehouse during the first six months of 1995. Also, net cash used in financing activities decreased due to the decreased cash distribution to partners from 1995 to 1996. 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 $4,285,000, 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 $3,500,000 for the six months ended June 30, 1995. Total cash distributed was $300,000 for the six months ended June 30, 1996. Future cash distributions will depend on the levels of net cash generated from operations, property sales, and the availability of cash reserves. The General Partner is currently negotiating a refinance of the mortgage secured by Lakewood Apartments in an effort to obtain a lower interest rate. However, the General Partner can give no assurances that a refinance will be successful. 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 June 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 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. Vice President/CAO Date: August 8, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Opportunity Properites, Ltd. 1996 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000789282 ANGELES OPPORTUNITY PROPERTIES, LTD. 1,000 6-MOS DEC-31-1996 JUN-30-1996 761 0 4 0 0 0 8,010 1,486 8,559 0 4,285 0 0 0 4,026 8,559 0 1,063 0 0 287 0 218 777 0 777 0 0 0 777 61.89 0 The Registrant has an unclassified balance sheet. Multiplier is 1.
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