-----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, Q6PiZbY/ZBqN0yDIswQOO+xj045zpxLxGzgdo+kiVVVZvBU4snQNLI+EybeQX35o PkKM9ywFc9KeVBQP5/kXCg== 0000789282-96-000006.txt : 19961106 0000789282-96-000006.hdr.sgml : 19961106 ACCESSION NUMBER: 0000789282-96-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961105 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: 96654279 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 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 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) (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 OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1996 Assets Cash and cash equivalents: Unrestricted $ 813 Restricted--tenant security deposits 38 Accounts receivable 6 Escrow for taxes 179 Restricted escrows 82 Other assets 195 Investment in joint venture 538 Investment properties: Land $ 956 Buildings and related personal property 7,097 8,053 Less accumulated depreciation (1,557) 6,496 $ 8,347 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 26 Tenant security deposits 38 Accrued taxes 155 Other liabilities 103 Mortgage notes payable 4,253 Partners' Capital (Deficit): General partner's $ (69) Limited partners' (12,425 units issued 3,841 3,772 and outstanding) $ 8,347 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 Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 542 $ 486 $ 1,551 $ 1,603 Other income 30 31 84 97 Gain on sale of investment property -- -- -- 958 Casualty gain -- 5 -- 26 Total revenues 572 522 1,635 2,684 Expenses: Operating 177 204 537 589 General and administrative 52 43 144 171 Maintenance 113 35 285 142 Depreciation 71 63 201 204 Interest 108 111 326 335 Bad debt expense (recovery) -- 9 (789) 9 Property taxes 51 54 155 154 Total expenses 572 519 859 1,604 Income before equity in loss of joint venture -- 3 776 1,080 Equity in loss of joint venture (251) -- (250) -- Net (loss) income $ (251) $ 3 $ 526 $ 1,080 Net (loss) income allocated to general partner (1%) $ (3) $ -- $ 5 $ 11 Net (loss) income allocated to limited partners (99%) (248) 3 521 1,069 Net (loss) income $ (251) $ 3 $ 526 $ 1,080 Net (loss) income per limited partnership unit $ (19.96) $ .24 $ 41.93 $ 86.04 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 -- (6) (297) (303) Net income for the nine months ended September 30, 1996 -- 5 521 526 Partners' (deficit) capital at September 30, 1996 12,425 $ (69) $ 3,841 $ 3,772 See Accompanying Notes to Consolidated Financial Statements
d) ANGELES OPPORTUNITY PROPERTIES, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net income $ 526 $ 1,080 Adjustments to reconcile net income to net cash provided by operating activities: Equity in loss of joint venture 250 -- Depreciation 201 204 Amortization of discounts, loan costs, and leasing commissions 23 30 Gain on sale of investment property -- (958) Casualty gain -- (26) Bad debt (recovery) expense (789) 9 Change in accounts: Restricted cash 5 35 Accounts receivable (1) 11 Escrows for taxes 41 51 Other assets (30) (10) Accounts payable (4) (1) Tenant security deposit liabilities (5) (6) Accrued taxes (43) (39) Other liabilities 14 (25) Net cash provided by operating activities 188 355 Cash flows from investing activities: Property improvements and replacements (223) (238) Proceeds from sale of investment property -- 3,393 Deposits to restricted escrows (34) (33) Withdrawals from restricted escrows 203 4 Insurance proceeds -- 88 Net cash (used in) provided by investing activities (54) 3,214 Cash flows from financing activities: Payments on mortgage notes payable (98) (89) Distributions to partners (303) (3,500) Net cash used in financing activities (401) (3,589) Net decrease in cash (267) (20) Cash and cash equivalents at beginning of period 1,080 1,101 Cash and cash equivalents at end of period $ 813 $ 1,081 Supplemental disclosure of cash flow information: Cash paid for interest $ 304 $ 313 See Accompanying Notes to Consolidated Financial Statements e) ANGELES OPPORTUNITY PROPERTIES, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of Angeles Opportunity Properties, Ltd. (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 (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 nine month periods ended September 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 Partnership's 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 - 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, 1996 and 1995: 1996 1995 (in thousands) Property management fees $ 80 $ 82 Reimbursement for services of affiliates 112 106 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 C - INVESTMENT IN JOINT VENTURE The Partnership has a 42.82% interest in a property owned jointly by the Partnership and an affiliate of Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust (the "Joint Venture"). The Joint Venture is the result of the June 6, 1996, foreclosure of an approximate 8,000 square foot retail strip shopping center and over 150 acres of undeveloped land. Prior to the foreclosure, the Partnership and an affiliate of AMIT held a note receivable collateralized by the foreclosed property. 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, currently owns 87,700 Class A Shares of AMIT. These Class A Shares entitle LAC to vote approximately 2% of the total shares. The number of Class A Shares of AMIT owned by LAC increased from 63,200 shares on September 30, 1996 to 87,700 shares as of October 22, 1996. The voting percentage also increased from 1.5% to 2% over the same period. 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 instructing such trustees to vote said Class B shares in accordance with the vote of the majority of the Class A shares voting to be determined without consideration of the votes of "Excess Class A Shares" as defined in Section 6.13 of the Declaration of Trust of AMIT. The balance sheet of the Joint Venture is summarized as follows: September 30, 1996 (in thousands) Assets Cash $ 95 Other assets 1 Investment properties, net 1,177 Total $ 1,273 Liabilities and Partners' Capital Other liabilities $ 16 Partners' capital 1,257 Total $ 1,273 The statement of operations of the Joint Venture is summarized as follows: Nine Months Ended September 30, 1996 (in thousands) Revenue $ 10 Costs and expenses (11) Valuation allowance of investment property (582) Net loss $ (583) During the third quarter, the Joint Venture property was reduced by approximately $582,000 to its fair market value. The valuation allowance is the result of an appraisal received on the Joint Venture property. The Partnership's share of the valuation allowance recorded on the Joint Venture property was approximately $250,000. The Partnership's equity interest in loss of the Joint Venture for the period ended September 30, 1996, was approximately $250,000. 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 nine months ended September 30, 1996 and 1995: Average Occupancy Property 1996 1995 Lake Meadows Apartments Garland, Texas 95% 94% Lakewood Apartments Tomball, Texas 93% 97% The General Partner attributes the decrease in occupancy at Lakewood Apartments to highway construction in front of the property during 1996. The construction made it difficult to attract new tenants to the property. The Partnership's net income for the nine months ended September 30, 1996, was approximately $526,000 compared to net income of approximately $1,080,000 for the corresponding period of 1995. The Partnership incurred a net loss for the three months ended September 30, 1996, of approximately $251,000 compared to net income of approximately $3,000 for the three months ended September 30, 1995. The decrease in net income for the nine month period is primarily due the Partnership recording a gain of approximately $958,000 on the sale of Oquendo Warehouse during 1995 (see discussion below). Partially offsetting the gain on sale in 1995 was a $789,000 bad debt recovery in 1996, as the Partnership foreclosed on property previously collateralized by a note receivable (see discussion in "Note C" for further detail). Also contributing to the decrease in net income for the three and nine month periods ended September 30, 1996, was an increase in maintenance expense and the Partnership's share of the Joint Venture loss. The increase in maintenance expense is primarily due to an exterior rehabilitation project at Lakewood in 1996, including painting and parking lot repairs. Maintenance expense also increased at Lake Meadows primarily due to exterior painting and gutter repairs. The Partnership's share of the Joint Venture loss increased during the three months ended September 30, 1996, due to the valuation allowance of the Joint Venture to its fair market value (see discussion in "Note C" for further detail). Partially offsetting the decrease in net income for the nine months ended September 30, 1996, was a decrease in general and administrative expenses primarily due to a decrease in expense reimbursements. 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 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. The casualty gain of $26,000 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 September 30, 1996, the Partnership had unrestricted cash of $813,000 compared to $1,081,000 at September 30, 1995. Net cash provided by operating activities decreased primarily due to the increase in maintenance expense for the nine months ended September 30, 1996, versus the nine months ended September 30, 1995. Net cash provided by investing activities decreased due to the cash proceeds received relating to the sale of Oquendo Warehouse during the first nine months of 1995. Net cash used in financing activities decreased due to decreased cash distributions 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 $4,253,000, 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 nine months ended September 30, 1995. Total cash distributed was $303,000 for the nine months ended September 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 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, 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: November 5, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Opportunity Properties, Ltd. 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000789282 ANGELES OPPORTUNITY PROPERTIES, LTD. 1,000 9-MOS DEC-31-1996 SEP-30-1996 813 0 6 0 0 0 8,053 1,557 8,347 0 4,253 0 0 0 3,772 8,347 0 1,635 0 0 859 0 326 0 0 0 0 0 0 526 41.93 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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