-----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, Pc3RX35r8rdXMVW7nVV+sHneDoTeMnNMpIKcBdlffgc3+uS/KtuI9xI1KlsYSDQ4 HbVvg3LWi/IUm8l+LS8ERw== 0000711642-00-000124.txt : 20000510 0000711642-00-000124.hdr.sgml : 20000510 ACCESSION NUMBER: 0000711642-00-000124 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000509 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: SEC FILE NUMBER: 000-16116 FILM NUMBER: 622392 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 10QSB 1 FIRST QUARTER 10-QSB 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 March 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________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 (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO 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 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) March 31, 2000
Assets Cash and cash equivalents $ 543 Receivables and deposits 182 Restricted escrows 48 Other assets 131 Investment properties: Land $ 1,018 Buildings and related personal property 7,931 8,949 Less accumulated depreciation (2,618) 6,331 $ 7,235 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 18 Tenant security deposit liabilities 28 Accrued property taxes 71 Other liabilities 83 Mortgage notes payable 5,389 Partners' (Deficit) Capital: General partner $ (110) Limited partners (12,425 units issued and outstanding) 1,756 1,646 $ 7,235
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 March 31, 2000 1999 Revenues: Rental income $ 567 $ 587 Other income 23 35 Total revenues 590 622 Expenses: Operating 233 234 General and administrative 28 39 Depreciation 85 77 Interest 104 110 Property taxes 63 53 Total expenses 513 513 Net income $ 77 $ 109 Net income allocated to general partner (1%) $ 1 $ 1 Net income allocated to limited partners (99%) 76 108 $ 77 $ 109 Net income per limited partnership unit $ 6.12 $ 8.69 Distributions per limited partnership unit $26.32 $ -- See Accompanying Notes to Consolidated Financial Statements c) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (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, 1999 12,425 $ (104) $ 2,007 $ 1,903 Distributions to partners -- (7) (327) (334) Net income for the three months ended March 31, 2000 -- 1 76 77 Partners' (deficit) capital at March 31, 2000 12,425 $ (110) $ 1,756 $ 1,646
See Accompanying Notes to Consolidated Financial Statements d) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 2000 1999 Cash flows from operating activities: Net income $ 77 $ 109 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 85 77 Amortization of loan costs and discount 9 8 Change in accounts: Receivables and deposits 191 75 Other assets (15) (20) Accounts payable (4) 3 Tenant security deposit liabilities 1 -- Accrued property taxes (174) (180) Other liabilities (124) (6) Net cash provided by operating activities 46 66 Cash flows from investing activities: Property improvements and replacements (35) (87) Net (deposits to) withdrawals from restricted escrows (12) 50 Net cash used in investing activities (47) (37) Cash flows from financing activities: Payments on mortgage notes payable (7) (6) Distributions to partners (334) -- Net cash used in financing activities (341) (6) Net (decrease) increase in cash and cash equivalents (342) 23 Cash and cash equivalents at beginning of period 885 1,060 Cash and cash equivalents at end of period $ 543 $1,083 Supplemental disclosure of cash flow information: Cash paid for interest $ 101 $ 102
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 consolidated financial statements of Angeles Opportunity Properties, Ltd. (the "Partnership" or the "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Angeles Realty Corporation II (the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2000. 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, 1999. Principles of Consolidation The consolidated financial statements of the Partnership include its 99% limited partnership interests in New Lake Meadows LP and Lakewood AOPL Ltd. The General Partner of this consolidated partnership is the general partner. The Partnership may remove the general partner of both of these 99% owned partnerships; therefore, the partnerships are controlled and consolidated by the Partnership. All significant interpartnership balances have been eliminated. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. 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 reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with the General Partner and its affiliates were incurred during the three months ended March 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $ 30 $ 32 Reimbursement for services of affiliates (included in general and administrative expenses and investment properties) 14 20 During the three months ended March 31, 2000 and 1999, affiliates of the General Partner were entitled to receive 5% of gross receipts from both of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $30,000 and $32,000 for the three months ended March 31, 2000 and 1999, respectively. An affiliate of the General Partner received reimbursements of accountable administrative expense amounting to approximately $14,000 and $20,000 for the three months ended March 31, 2000 and 1999, respectively. AIMCO and its affiliates currently own 5,138 limited partnership units in the Partnership representing 41.35% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. As a result of its ownership of 41.35% of the outstanding units, AIMCO is in a position to significantly influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Note D - Distributions During the three months ended March 31, 2000, a distribution of $330,000 (approximately $327,000 to the limited partners, $26.32 per limited partnership unit) was paid to the partners from cash from operations. In conjunction with the transfer of funds from certain majority-owned sub-tier limited partnerships to the Partnership, approximately $4,000 was distributed to the general partner of the majority-owned sub-tier limited partnerships. There were no distributions during the three months ended March 31, 1999. Note E - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has one reportable segment: residential properties. The Partnership's residential property segment consists of two apartment complexes in the state of Texas. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those of the Partnership as described in the Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999. Factors management used to identify the enterprise's reportable segments: The Partnership's reportable segment consists of investment properties that offer similar products and services. Although each of the investment properties is managed separately, they have been aggregated into one segment as they provide services with similar types of products and customers. Segment information for the three months ended March 31, 2000 and 1999, is shown in the tables below. The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segments. 2000 Residential Other Totals (in thousands) Rental income $ 567 $ -- $ 567 Other income 22 1 23 Interest expense 104 -- 104 Depreciation 85 -- 85 General and administrative expense -- 28 28 Segment profit (loss) 104 (27) 77 Total assets 7,184 51 7,235 Capital expenditures for investment properties 35 -- 35 1999 Residential Other Totals (in thousands) Rental income $ 587 $ -- $ 587 Other income 27 8 35 Interest expense 110 -- 110 Depreciation 77 -- 77 General and administrative expense -- 39 39 Segment profit (loss) 140 (31) 109 Total assets 6,938 831 7,769 Capital expenditures for investment properties 87 -- 87 Note F - Legal Proceedings 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 action 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 Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Note B - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of class plaintiffs' counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Partnership from time to time. The discussions of the Partnership's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Partnership's business and results of operation. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy for each of the properties for the three months ended March 31, 2000 and 1999: Average Occupancy Property 2000 1999 Lake Meadows Apartments 98% 98% Garland, Texas Lakewood Apartments (1) 88% 94% Tomball, Texas (1) Occupancy at Lakewood Apartments decreased due to new apartments constructed in the area and a layoff by a major employer. Results from Operations The Partnership reported net income of approximately $77,000 and $109,000 for the three months ended March 31, 2000 and 1999, respectively. The decrease in net income is attributable to a decrease in total revenues. The decrease in total revenues is due to decreased rental income and other income. Rental income decreased due to reduced occupancy at Lakewood Apartments as well as increased concession costs and bad debt expense at Lakewood Apartments. These decreases in rental revenue were partially offset by increased rental rates at both of the Partnership's properties. Other income decreased due to lower cash balances in interest bearing accounts and reduced tenant charges at Lakewood Apartments. Total expenses remained constant between the two periods. The increase in depreciation expense and property tax expense was offset by reduced general and administrative expense and interest expense. The increase in depreciation expense is primarily attributable to the increase in depreciable assets put into service in the last twelve months. The increase in property tax expense is primarily attributable to increases in the assessed values of both investment properties. General and administrative expenses decreased primarily due to reduced general partner reimbursements. Included in general and administrative expenses for the three months ended March 31, 2000 and 1999 are reimbursements to the General Partner allowed under the Partnership Agreement associated with its management of the Partnership. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. Interest expense decreased as a result of principle payments made on the properties' mortgages. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment 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. Liquidity and Capital Resources At March 31, 2000, the Partnership had cash and cash equivalents of approximately $543,000 compared to approximately $1,083,000 for the corresponding period in 1999. The net decrease in cash and cash equivalents was approximately $342,000 from the year ended December 31, 1999, and is due to approximately $341,000 and $47,000 of cash used in financing and investing activities, respectively, offset by approximately $46,000 of cash provided by operating activities. Cash used in financing activities consisted primarily of distributions to the partners and, to a lesser extent, payments of principal made on the mortgages encumbering Lake Meadows Apartments. Cash used in investing activities consisted of property improvements and replacements and net deposits to restricted escrows maintained by the mortgage lenders. The Partnership invests its working capital reserves in money market accounts. 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 and to comply with Federal, state, and local legal and regulatory requirements. Capital improvements for each of the Partnership's properties are detailed below. Lake Meadows Apartments Approximately $65,000 was budgeted for capital improvements for the year 2000 at Lake Meadows Apartments consisting primarily of carpet and vinyl replacement, interior decorations, parking lot improvements, and structural improvements. During the three months ended March 31, 2000, the Partnership completed approximately $10,000 of such budgeted capital improvements at Lake Meadows Apartments, consisting primarily of carpet and vinyl replacement and structural upgrades. These improvements were funded from operating cash flow and replacement reserves. Lakewood Apartments Approximately $93,000 was budgeted for capital improvements for the year 2000 at Lakewood Apartments consisting primarily of carpet and tile replacement, air conditioning unit replacement, structural upgrades, and appliance replacements. During the three months ended March 31, 2000, the Partnership completed approximately $25,000 of such budgeted capital improvements at the property, consisting primarily of carpet and tile replacements, appliance replacements and office equipment. These improvements were funded from operating cash flow. The additional capital expenditures will be incurred only to the extent of cash available from operations and from the Partnership's reserves. To the extent that such budgeted capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness of approximately $5,389,000, net of discount, is interest only or is being amortized over 343 months with balloon payments due at maturity dates of October and November 2003. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure. During the three months ended March 31, 2000, a distribution of $330,000 (approximately $327,000 to the limited partners, $26.32 per limited partnership unit) was paid to the partners consisting of cash from operations. In conjunction with the transfer of funds from certain majority-owned sub-tier limited partnerships to the Partnership, approximately $4,000 was distributed to the general partner of the majority-owned sub-tier limited partnerships. There were no distributions during the three months ended March 31, 1999. The Partnership's distribution policy is reviewed on a semi-annual basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings, and/or property sales. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures to permit further distributions to its partners for the remainder of 2000 or subsequent periods. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEDINGS 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 action 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 Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Part 1 - Financial Information, Item 1. Financial Statements, Note B - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of class plaintiffs' counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. 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 March 31, 2000. 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 Its General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: EX-27 2 FIRST QUARTER 10-QSB
5 This schedule contains summary financial information extracted from Angeles Opportunity Properties, Ltd. 2000 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000789282 Angeles Opportunity Properties, Ltd. 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 543 0 0 0 0 0 8,949 2,618 7,235 0 5,389 0 0 0 1,646 7,235 0 590 0 0 513 0 104 0 0 0 0 0 0 77 6.12 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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