-----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, IlAg+4KRJcLOZaMV70JQxMvQxXQ0eTYfLq22VV7b2VxYA/FIZQY7TCTlqW1tdWs+ 7wJh+wYEthLe7EaoZDicgg== 0000317969-98-000003.txt : 19980326 0000317969-98-000003.hdr.sgml : 19980326 ACCESSION NUMBER: 0000317969-98-000003 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980325 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES INCOME PROPERTIES LTD V CENTRAL INDEX KEY: 0000792181 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 954049903 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-15547 FILM NUMBER: 98572283 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 10KSB 1 FORM 10-KSB-ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) FORM 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [No Fee Required] For the fiscal year ended December 31, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from ________ to __________ Commission file number 0-15547 ANGELES INCOME PROPERTIES, LTD. V (Name of small business issuer in its charter) California 95-4049903 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) (864) 239-1000 Issuer's telephone number Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Limited Partnership Units (Title of class) 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 [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. N/A State the aggregate market value of the voting partnership interests held by nonaffiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests, as of a specified date within the past 60 days. Market value information for Registrant's partnership interests is not available. Should a trading market develop for these interests, it is the Registrant's belief that the aggregate market value of the voting partnership interests would not exceed $25,000,000. DOCUMENTS INCORPORATED BY REFERENCE NONE PART I ITEM 1. DESCRIPTION OF BUSINESS Angeles Income Properties, Ltd. V (the "Partnership" or "Registrant") is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act pursuant to the Certificate and Agreement of Limited Partnership (hereinafter referred to as "the Agreement") dated June 29, 1984. The Partnership's general partner is Angeles Realty Corporation II, a California corporation (hereinafter referred to as the "General Partner" or "ARC II"). ARC II is wholly-owned by MAE GP Corporation ("MAE GP"), an affiliate of Insignia Financial Group, Inc. (Insignia). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia. Thus, the General Partner is now a wholly-owned subsidiary of IPT. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. The Partnership, through its public offering of Limited Partnership Units, sold 45,450 units aggregating $45,450,000. The General Partner contributed capital in the amount of $1,000 for a 1% interest in the Partnership. The Partnership was formed for the purpose of acquiring fee and other forms of equity interests in various types of real property. The Partnership presently owns one investment property. The Partnership has no full time employees. The General Partner is vested with full authority as to the general management and supervision of the business and affairs of the Partnership. Limited Partners have no right to participate in the management or conduct of such business and affairs. Insignia Residential Group, L.P. provides day-to-day management services for the Partnership's investment property. The business in which the Partnership is engaged is highly competitive, and the Partnership is not a significant factor in its industry. The investment property is located in or near a major urban area and, accordingly, competes for rentals not only with similar properties in its immediate area but with hundreds of similar properties throughout the urban area. Such competition is primarily on the basis of location, rents, services and amenities. In addition, the Partnership competes with significant numbers of individuals and organizations (including similar partnerships, real estate investment trusts and financial institutions) with respect to the sale of improved real properties, primarily on the basis of the prices and terms of such transactions. ITEM 2. DESCRIPTION OF PROPERTIES: The following table sets forth the Registrant's investment in property:
Date of Property Purchase Type of Ownership Use Southgate Village Apts. 06/26/87 Fee ownership, subject to a Residential Rental first and second mortgage 152 units
The Partnership lost Phases I and II of University Park Center via a Deed in Lieu of Foreclosure effective November 17, 1995, and Phase IV was lost through foreclosure effective December 2, 1995. The Partnership lost Phase III of University Park Center and Springdale Lake Estates Mobile Home Park through foreclosure in 1996. The Partnership had a 57% interest in Angeles Fort Worth Option Joint Venture ("Fort Worth"). Fort Worth's remaining asset was sold on March 22, 1995, and all remaining cash was used to pay Partnership liabilities. As a result, Fort Worth was dissolved effective December 31, 1995 and, therefore, the Partnership lost its 57% interest in Fort Worth. SCHEDULE OF PROPERTIES: (dollar amounts in thousands) Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis Southgate Village Apartments $ 3,219 (1) (1) (1) $ 2,682 (1)As a result of adopting the liquidation basis of accounting, the gross carrying value of the property was adjusted to its net realizable value and will not be depreciated further. See "Note B" of the financial statements included in "Item 7." for a description of the Partnership's former depreciation policy. SCHEDULE OF MORTGAGES: (dollar amounts in thousands)
Principal Principal Balance At Balance December 31, Interest Period Maturity Due At Property 1997 Rate Amortized Date Maturity Southgate Village Apts. 1st mortgage $ 2,569 10.63% 25 years 01/2006 $ 1,977 2nd mortgage, in default (1) 2,000 11.50% (2) 03/1995 2,000 Angeles Income Properties, Ltd. V, Note payable, in default (4) 198 (3) (2) 11/1997 198 Total $ 4,767 $ 4,175 (1) Loan provided by Angeles Mortgage Investment Trust ("AMIT"), interest currently accruing at 18%. (2) Interest only payments. (3) Prime rate plus 2%. (4) Loan provided by Angeles Acceptance Pool, L.P. ("AAP").
Average annual rental rate and occupancy for 1997 and 1996 for the investment property is as follows: Average Annual Average Annual Rental Rates Occupancy Property 1997 1996 1997 1996 Southgate Village Apts. $5,771/unit $5,604/unit 91% 93% As noted under "Item 1. Description of Business", the real estate industry is highly competitive. The property is subject to competition from other residential apartment complexes in the area. The General Partner believes that the property is adequately insured. The multi-family residential property's lease terms are for one year or less. No residential tenant leases 10% or more of the available rental space. Real estate taxes and rates in 1997 are as follows: (dollar amounts in thousands) 1997 1997 Billing Rate (in thousands) Southgate Village Apts. $ 72 5.91% ITEM 3. LEGAL PROCEEDINGS The Partnership has a second mortgage in the amount of $2,000,000 which is secured by Southgate Village Apartments. This indebtedness is in default due to nonpayment upon maturity and is recourse to the Partnership. On February 29, 1996, a formal demand for payment of the unpaid principal balance and accrued interest was received from AMIT for the debt secured by Southgate Village Apartments. On June 12, 1996, AMIT filed a Complaint For Foreclosure and Other Relief. The General Partner does not intend to contest the foreclosure and anticipates that this property will be lost in 1998 through foreclosure. In November 1992, MAE GP Corporation ("MAE GP") acquired 1,675,113 Class B Common Shares of AMIT. The terms of the Class B shares provide that they are convertible, in whole or in part, into Class A Common Shares of AMIT on the basis of 1 Class A share for every 49 Class B shares (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed not to convert the Class B shares so long as AMIT's option is outstanding). These Class B Shares entitle the holder to receive 1% of the distributions of net cash distributed by AMIT (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed to waive its right to receive dividends and distributions so long as AMIT's option is outstanding). The holder of the Class B shares is also entitled to vote on the same basis as the holders of Class A shares, providing the holder with approximately 39% of the total voting power of AMIT (unless and until converted to Class A shares, in which case the percentage of the vote controlled represented by such shares would approximate 1.3% of the total voting power of AMIT). 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 which were 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. In connection with such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing (which occurred April 14, 1995), as payment for the option. If and when the option is exercised, AMIT will be required to remit to MAE GP an additional $94,000. Simultaneously with the grant of the option and as part of the settlement, MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that the holder of the Class B shares is permitted to vote those 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. With respect to such matters, the trustees of AMIT are required to vote (pursuant to the irrevocable proxy) the Class B shares (as a single block) in the same manner as a majority of the Class A shares are voted (to be determined without consideration of the votes of "Excess Class A Shares" (as defined in Section 6.13 of AMIT's Declaration of Trust)). Between its acquisition of the Class B shares (in November 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection with the election of trustees and other matters. In February 1998, MAE GP was merged into Insignia Properties Trust, and in connection with that merger, MAE GP dividended all of the Class B shares to its sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a result, MAE, as the holder of the Class B shares, is now subject to the terms of the settlement agreement, option and irrevocable proxy described in the two preceding paragraphs. Neither MAE GP nor MAE has exerted and intends to exert any management control over or participate in the management of AMIT. However, subject to the terms of the proxy described below, MAE may choose to vote the Class B shares as it deems appropriate in the future. Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE and Insignia Financial Group, Inc. ("Insignia") (which provides property management and partnership administration services to the Partnership), owned 96,800 Class A shares of AMIT at December 31, 1997. These Class A shares represent approximately 2.2% of the total voting power of AMIT. On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in principle contemplating, among other things, a business combination of AMIT and Insignia Properties Trust, an entity then owned 98% by Insignia and its affiliates ("IPT"). On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to which (subject to shareholder approval and certain other conditions, including the receipt by AMIT of a fairness opinion from its investment bankers) AMIT would be merged with and into IPT, with each Class A share and Class B share being converted into 1.625 and 0.0332 common shares of IPT, respectively. The foregoing exchange ratios are subject to adjustment to account for dividends paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1, 1997. It is anticipated that Insignia and its affiliates (including MAE) would own approximately 57% of post-merger IPT when this transaction is consummated. In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware limited partnership, was organized to acquire and hold the obligations evidencing the working capital loans previously provided to the Partnership by Angeles Capital Investments, Inc. ("ARC II"). Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc. ("AAD"), an affiliate of the General Partner, was, until April 14, 1995, as part of a settlement of claims between affiliates of the General Partner and Angeles, AAD resigned as general partner of AAP and simultaneously received a 1/2% limited partner interest in AAP. An affiliate of Angeles now serves as the general partner of AAP. The Partnership, along with other affiliates, has been named in a suit brought by a company which owned a 20% interest ("Plaintiff") in Fort Worth's investment property, the W.T. Waggoner Building, which was sold in 1995. The Plaintiff is suing for breach of contract and negligence for mismanagement of the property. The General Partner believes that there is no merit in this suit and intends to vigorously defend it. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The General Partner of the Partnership 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Unit holders of the Partnership did not vote on any matter during the year covered by this report. PART II ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS The Partnership, a publicly-held limited partnership, sold 45,450 Limited Partnership Units during its offering period through June 10, 1987, and currently has 44,421 Limited Partnership Units outstanding and 3,784 Limited Partners of record. There is no intention to sell additional Limited Partnership Units nor is there an established market for these units. During the year ended December 31, 1996, the number of Limited Partnership Units decreased by 600 units due to abandonment by the unitholders. In abandoning his or her Limited Partnership Units, a Limited Partner relinquishes all right, title and interest in the Partnership as of the date of abandonment (see "Note J" of the financial statements included in "Item 7."). ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS, LIQUIDITY, AND CAPITAL RESOURCES As of July 1, 1996, the Partnership adopted the liquidation basis of accounting. The Partnership has significant recurring operating losses and continues to suffer from inadequate liquidity. The Partnership is in default on recourse indebtedness totaling $2,000,000 due to AMIT and does not generate sufficient cash flows to meet current operating requirements. In addition, there are limited identified capital resources available to the Partnership. The Partnership has a second mortgage in the amount of $2,000,000 which is secured by Southgate Village Apartments. This indebtedness is in default due to nonpayment upon maturity and is recourse to the Partnership. On February 29, 1996, a formal demand for payment of the unpaid principal balance and accrued interest was received from AMIT for the debt secured by Southgate Village Apartments. On June 12, 1996, AMIT filed a Complaint For Foreclosure and Other Relief. The Partnership entered into a forbearance agreement with AMIT, effective July 1, 1996, which provides that surplus cash be deposited into a separate account on which the Partnership has granted AMIT a first priority lien. In exchange, AMIT agrees to refrain from appointing a receiver for the property. The General Partner does not intend to contest the foreclosure and anticipates that this property will be lost in 1998 through foreclosure. The Partnership is presently paying non-debt related expenses and is current on its first mortgage note payable. However, the debt to AAP of approximately $198,000 matured in November 1997 and the Partnership does not have the ability to satisfy the indebtedness, which is subordinated to the AMIT debt. The General Partner believes the equity in Southgate Village Apartments is not sufficient to retire the AMIT debt, therefore, the General Partner expects to transfer the Partnership's interest in Southgate Village Apartments to AMIT. These transactions are anticipated to occur during 1998. The Partnership does not expect to contest any of these proceedings. The General Partner does not have any other plans to remedy the liquidity problems the Partnership is experiencing. The Partnership does not intend to purchase any additional properties and the General Partner has decided to terminate the Partnership upon foreclosure of the final property. As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements on July 1, 1996, from the going concern basis of accounting to the liquidation basis of accounting in accordance with generally accepted accounting principles. Consequently, assets have been valued at estimated realizable value (including subsequent actual transactions described below) and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the General Partner's estimates as of the date of the financial statements. For the year ended December 31, 1997, the Partnership recorded a net increase in net liabilities in liquidation of approximately $531,000. The statement of net liabilities in liquidation as of December 31, 1997, includes approximately $381,000 of costs, net of income, that the General Partner estimates will be incurred during the period of liquidation based upon the assumption that the liquidation process will be completed by June 30, 1998. These costs include anticipated legal fees, administrative expenses, and loss from property operations. Because the success in realization of assets and the settlement of liabilities is based on the General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. ITEM 7. FINANCIAL STATEMENTS ANGELES INCOME PROPERTIES, LTD. V LIST OF FINANCIAL STATEMENTS Report of Ernst & Young LLP, Independent Auditors Statement of Net Liabilities in Liquidation - December 31, 1997 Statement of Changes in Net Liabilities in Liquidation - Year ended December 31, 1997 Statement of Changes in Net Liabilities Liquidation - Six months ended December 31, 1996 Statement of Operations - Six months ended June 30, 1996 Statements of Changes in Partners' Deficit - Six months ended June 30, 1996 Statement of Cash Flows - Six months ended June 30, 1996 Notes to Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Angeles Income Properties, Ltd. V We have audited the statement of net liabilities in liquidation of Angeles Income Properties, Ltd. V as of December 31, 1997 and the related statement of changes in net liabilities in liquidation for the year then ended and for the six months ended December 31, 1996, which have been prepared on the liquidation basis of accounting. In addition, we have audited the statements of operations, changes in partners' deficit and cash flows for the six months ended June 30, 1996, which were prepared on the going concern basis of accounting. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The statements of operations, changes in partners' deficit and cash flows for the six months ended June 30, 1996 were prepared assuming that Angeles Income Properties, Ltd. V would continue as a going concern. As more fully described in Note A, the Partnership has incurred recurring operating losses, has defaulted on certain indebtedness and has been unable to generate sufficient cash flows to meet operating requirements. Formal demands for payment of its indebtedness in default have been received. The Partnership lost three investment properties through foreclosure in 1995 and two in 1996. These conditions raised substantial doubt about the Partnership's ability to continue as a going concern. Due to the imminent disposal of its remaining investment properties, the General Partner decided, effective July 1, 1996, to liquidate the Partnership. As a result, the Partnership changed its basis of accounting as of July 1, 1996 from a going concern basis to a liquidation basis. In our opinion, the statement of net liabilities in liquidation as of December 31, 1997 and the related statement of changes in net liabilities in liquidation for the year then ended and for the six months ended December 31, 1996, present fairly, in all material respects, the net liabilities in liquidation of Angeles Income Properties, Ltd. V as of December 31, 1997, and the changes in net liabilities in liquidation for the year ended December 31, 1997, and for the six months ended December 31, 1996, in conformity with generally accepted accounting principles applied on the basis of accounting described in Note A to the financial statements. Because of the possible material effects of the matters described above, we are unable to, and do not, express an opinion on the statements of operations, changes in partners' deficit and cash flows for the six months ended June 30, 1996. /S/ ERNST & YOUNG LLP Greenville, South Carolina February 25, 1998, except for Note K, as to which the date is March 17, 1998 ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF NET LIABILITIES IN LIQUIDATION (in thousands) December 31, 1997 Assets Cash and cash equivalents: Unrestricted $ 40 Restricted - tenant security deposits 29 Accounts receivable 14 Escrow for taxes 41 Investment property (Notes A, E and I) 3,219 3,343 Liabilities Accounts payable 18 Tenant security deposits 29 Accrued interest (Note G) 2,423 Other liabilities 80 Mortgage notes payable, $2,198 in default (Notes A,E,G and I) 4,767 Estimated costs during the period of liquidation (Note A) 381 7,698 Net liabilities in liquidation (Note A) $ (4,355) See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION (in thousands) Year Ended December 31, 1997 Net liabilities in liquidation at December 31, 1996 $ (3,824) Changes in net liabilities in liquidation attributed to: Decrease in unrestricted cash (95) Increase in restricted cash 12 Increase in accounts receivable 7 Decrease in investment properties (24) Decrease in accounts payable 7 Increase in tenant security deposits (2) Increase in accrued interest (723) Increase in other liabilities (8) Decrease in mortgage notes payable 45 Decrease in estimated costs during the period of liquidation 250 Net liabilities in liquidation at December 31, 1997 $ (4,355) See Accompanying Notes To Financial Statements ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION (in thousands) Six Months Ended December 31, 1996 Partner's deficit at June 30, 1996 $ (5,548) Adjustment to liquidation basis of accounting (Note C) 1,809 Net liabilities in liquidation at July 1, 1996 (3,739) Changes in net liabilities in liquidation attributed to: Increase in unrestricted cash 29 Decrease in restricted cash (43) Decrease in escrows for taxes (47) Decrease in investment properties (3,559) Increase in accounts payable (8) Decrease in tenant security deposits 34 Increase in accrued interest (697) Decrease in other liabilities 13 Decrease in mortgage notes payable 3,557 Decrease in estimated costs during the period of liquidation 636 Net liabilities in liquidation at December 31, 1996 $ (3,824) See Accompanying Notes To Financial Statements ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF OPERATIONS (in thousands, except unit data) Six Months Ended June 30, 1996 Revenues: Rental income $ 729 Other income 100 Total revenues 829 Expenses: Operating 411 General and administrative 111 Depreciation 121 Interest 627 Bad debt recovery, net (1) Property taxes 64 Total expenses 1,333 Loss before extraordinary gain (504) Extraordinary gain - extinguishment of debt (Note D) 741 Net income $ 237 Net income allocated to general partner (1%) $ 2 Net income allocated to limited partners (99%) 235 Net income $ 237 Per limited partnership unit: (Loss) income before extraordinary item $ (11.08) Extraordinary item 16.30 Net income $ 5.22 See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN PARTNERS' DEFICIT (in thousands, except unit data) Limited Partnership General Limited Units Partner Partners Total Original capital contributions 45,450 $ 1 $ 45,450 $ 45,451 Partners' deficit at December 31, 1995 45,021 (448) (5,337) (5,785) Abandonment of limited partnership units (Note J) (600) -- -- -- Net income for the six months ended June 30, 1996 -- 2 235 237 Partners' deficit at June 30, 1996 44,421 $ (446) $ (5,102) $ (5,548) See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CASH FLOWS (in thousands) Six Months Ended June 30, 1996 Cash flows from operating activities: Net income $ 237 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 121 Amortization of loan costs and leasing commission 9 Bad debt recovery, net (1) Extraordinary gain on extinguishment of debt (741) Change in accounts: Receivables and deposits 29 Accounts payable (26) Tenant security deposit liabilities 4 Accrued interest 354 Due to affiliates 77 Other liabilities (14) Net cash provided by operating activities 49 Cash flows used in investing activities: Cash transferred upon foreclosure (179) Property improvements and replacements (17) Net cash used in investing activities (196) Cash flows used in financing activities: Payments on mortgage notes payable (40) Net decrease in cash (187) Cash and cash equivalents at December 31, 1995 293 Cash and cash equivalents at June 30, 1996 $ 106 Supplemental disclosure of cash flow information: Cash paid for interest $ 263 See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES Foreclosures During the six months ended June 30, 1996, the Partnership lost its interest in University Center Phase III as the mortgage holder of this property foreclosed on its collateral. In connection with the transaction, the following accounts were adjusted: (in thousands) Other assets $ (2) Investment properties (435) Accounts payable and other liabilities 113 Accrued interest 394 Mortgage notes payable 850 See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V NOTES TO FINANCIAL STATEMENTS December 31, 1997 NOTE A - BASIS OF PRESENTATION As of July 1, 1996, the Partnership adopted the liquidation basis of accounting. The Partnership has significant recurring operating losses and continues to suffer from inadequate liquidity. The Partnership is in default on recourse indebtedness and does not generate sufficient cash flows to meet current operating requirements. In addition, there are no other capital resources available to the Partnership. Until November 1995, the Partnership had a recourse first mortgage note payable to Angeles Mortgage Investment Trust ("AMIT") in the amount of $1,800,000 plus accrued interest on University Park Center - Phase IV that was in default due to nonpayment of interest. In May 1995, AMIT initiated foreclosure proceedings and acquired the property in a sheriff's sale, subject to Minnesota law of one year right of redemption, leaving a deficiency judgment. In November 1995, the Partnership granted to AMIT Deeds in Lieu of Foreclosure on University Park Center Phase I and II and agreed to waive the right of redemption on Phase IV. The Partnership had a non-recourse mortgage of $850,000 secured by University Park Center - Phase III which was in default due to nonpayment of interest. The lender foreclosed on University Park Center - Phase III in 1996. The Partnership had a nonrecourse second mortgage note payable to AMIT, in the amount of $1,720,000 plus accrued interest secured by Springdale Lake Estates Mobile Home Park that was in default due to nonpayment upon maturity. On April 11, 1996, a formal demand for payment of the unpaid principal balance and accrued interest was received from AMIT for the debt secured by Springdale Lake Estates Mobile Home Park. Payment was not made and AMIT foreclosed on the property on August 15, 1996. The Partnership has a second mortgage payable to AMIT in the amount of $2,000,000 which is secured by Southgate Village Apartments. This indebtedness is in default due to nonpayment upon maturity and is recourse to the Partnership. On February 29, 1996, a formal demand for payment of the unpaid principal balance and accrued interest was received from AMIT for the debt secured by Southgate Village Apartments. On June 12, 1996, AMIT filed a Complaint For Foreclosure and Other Relief. The Partnership entered into a forbearance agreement with AMIT, effective July 1, 1996, which provides that surplus cash be deposited into a separate account on which the Partnership has granted AMIT a first priority lien. In exchange, AMIT agrees to refrain from appointing a receiver for the property. The General Partner does not intend to contest the foreclosure and anticipates that this property will be lost in 1998 through foreclosure. The Partnership is presently paying non-debt related expenses of the property and is current on its first mortgage note payable. However, the debt to Angeles Acceptance Pool, L.P. ("AAP") of approximately $198,000 matured in November 1997 and the Partnership does not have the ability to satisfy the indebtedness, which is subordinated to the AMIT debt. At this time, the General Partner believes the equity in Southgate Village Apartments is not sufficient to retire the AMIT debt, therefore, the General Partner expects to transfer the Partnership's interest in Southgate Village Apartments to AMIT. These transactions are anticipated to occur during 1998. The General Partner does not expect to contest any of these proceedings. The General Partner does not have any other plans to remedy the liquidity problems the Partnership is experiencing. The Partnership does not intend to purchase any additional properties and the General Partner has decided to terminate the Partnership upon foreclosure of the final property. As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements on July 1, 1996, from the going concern basis of accounting to the liquidation basis of accounting in accordance with generally accepted accounting principles. Consequently, assets have been valued at estimated realizable value (including subsequent actual transactions described below) and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the General Partner's estimates as of the date of the financial statements. The statement of net liabilities in liquidation as of December 31, 1997, includes approximately $381,000 of costs, net of income, that the General Partner estimates will be incurred during the period of liquidation based upon the assumption that the liquidation process will be completed by June 30, 1998. These costs include anticipated legal fees, administrative expenses, and loss from property operations. Because the success in realization of assets and the settlement of liabilities is based on the General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. NOTE B - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization: Angeles Income Properties, Ltd. V (the "Partnership") is a California limited partnership organized on June 29, 1984, to acquire and operate residential and commercial real estate properties. The Partnership's General Partner is Angeles Realty Corporation II ("ARC II"). ARC II is wholly- owned by MAE GP Corporation ("MAE GP"), an affiliate of Insignia Financial Group, Inc., ("Insignia"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia. Thus, the General Partner is now a wholly-owned subsidiary of IPT. As of December 31, 1997, the Partnership operates one residential property located in Bedford Heights, Ohio. Allocations and Distributions to Partners: In accordance with the Partnership Agreement, any gain from the sale or other disposition of Partnership assets will be allocated first to the General Partner to the extent of the amount of any Brokerage Compensation and Incentive Interest to which the General Partner is entitled. Any gain remaining after said allocation will be allocated to the General Partner and Limited Partners in proportion to their interests in the Partnership. The Partnership will allocate other profits and losses 1% to the General Partner and 99% to the Limited Partners. Except as discussed below, the Partnership will allocate distributions 1% to the General Partner and 99% to the Limited Partners. Upon the sale or other disposition, or refinancing, of any asset of the Partnership, the Distributable Net Proceeds shall be distributed as follows: (i) First, to the Partners in proportion to their interests until the Limited Partners have received proceeds equal to their Original Capital Investment applicable to the property; (ii) Second, to the Partners until the Limited Partners have received distributions from all sources equal to their 6% Cumulative Distribution; (iii) Third, to the General Partner until it has received an amount equal to 3% of the aggregate Disposition Prices of all properties or investments sold (Initial Incentive Interest); (iv) Fourth, to the Partners in proportion to their interests until the Limited Partners have received distributions from all sources equal to their additional 8% Cumulative Distribution; and (v) Thereafter, 76% to the Limited Partners in proportion to their interests and 24% ("Final Incentive Interest") to the General Partner. Depreciation: Depreciation was provided by accelerated and straight-line methods over the estimated lives of the investment properties and related personal property through June 30, 1996. No depreciation was recorded subsequent to June 30, 1996, under the liquidation basis of accounting. For Federal income tax purposes, depreciation is computed by using the straight-line method over an estimated life of 5 to 20 years for personal property and 15 to 40 years for real property. Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in banks, money market funds, and certificates of deposit with original maturities of less than 90 days. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Investment Properties: Prior to July 1, 1996, investment properties were at stated cost. The Partnership recorded impairment losses on long-lived assets used in operations when events and circumstances indicated that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets were less than the assets' carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. As of July 31, 1996, and as result of the Partnership adopting the liquidation basis of accounting, the investment property was adjusted to its estimated net realizable value. Amortization: Loan costs were being amortized on a straight-line basis over the life of the loans. At July 1, 1996, $85,000 of unamortized loan costs were written off in the adjustment to liquidation basis of accounting because the Partnership determined that these intangible assets no longer have value. Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases. In addition, it is the General Partner's policy to offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Concessions are charged to expense as incurred. Tenant Security Deposits: The Partnership requires security deposits from all apartment lessees for the duration of the lease. Deposits are refunded when the tenant vacates the apartment provided the tenant has not damaged the unit and is current on rental payments. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. NOTE C - ADJUSTMENT TO LIQUIDATION BASIS OF ACCOUNTING At July 1, 1996, in accordance with the liquidation basis of accounting, assets were adjusted to their estimated net realizable value and liabilities were adjusted to their settlement amount and include all estimated costs associated with carrying out the liquidation. The net adjustment required to convert to the liquidation basis of accounting was a decrease in net liabilities of $1,809,000. Significant adjustments in 1996 are summarized as follows: (Increase) Decrease in net liabilities (in thousands) Adjustment from book value of property improvements to estimated net realizable value $ 38 Adjustment to record estimated costs during the period of liquidation (1,267) Adjustment of debt to net settlement value 979 Adjustment for other assets and liabilities 2,059 Net decrease in net liabilities $ 1,809 NOTE D - GAIN ON EXTINGUISHMENT OF DEBT AND FORECLOSURE OF PROPERTY The Partnership had a nonrecourse first mortgage in the amount of $850,000 plus accrued interest on University Park Center Phase III that was in default due to nonpayment. In 1995, the lender initiated foreclosure proceedings on this property. During the six months ended June 30, 1996, the lender foreclosed on the property in full satisfaction of the debt. The Partnership recognized an extraordinary gain on the extinguishment of debt of $741,000. NOTE E - NOTES PAYABLE The principle terms of notes payable at December 31, 1997, are as follows: (dollar amounts in thousands)
Monthly Principal Principal Payment Stated Balance Balance At Including Interest Maturity Due At December 31, Interest Rate Date Maturity 1997 Southgate Village Apts. 1st mortgage $ 26 10.63% 01/2006 $ 1,977 $ 2,569 2nd mortgage, in default (1) 19 11.5% 03/1995(2) 2,000 2,000 Angeles Income Properties, Ltd. V Note payable, in default (4) (2) (3) 11/1997(2) 198 198 $ 45 $ 4,175 $ 4,767 (1) Loan provided by AMIT, interest currently accruing at 18% (See "Note G"). (2) Interest only payments. (3) Prime rate plus 2%. (4) Loan from AAP (see "Note G").
The mortgage notes payable are secured by pledge of the Partnership's rental property and by pledge of revenues from the respective rental property. The first mortgage note secured by Southgate Village Apartments requires a prepayment penalty if repaid prior to maturity. Scheduled principal payments of notes payable subsequent to December 31, 1997, are as follows: (dollar amounts in thousands) 1998 $ 2,248 1999 55 2000 61 2001 68 2002 76 Thereafter 2,259 $ 4,767 NOTE F - INCOME TAXES Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities: 1997 Net liabilities in liquidation, as reported $ (4,355) Land and buildings 500 Accumulated depreciation (1,037) Syndication and distribution costs 6,344 Accruals (562) Net assets - Federal tax basis $ 890 NOTE G - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts were paid or accrued to the General Partner and affiliates in 1997 and 1996: (dollar amounts in thousands) 1997 1996 Property management fees $ 41 $ 70 Reimbursement for services of affiliates 58 155 For the period from January 1, 1996, to August 31, 1997, the Partnership insured 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 master policy. The 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 that accrued to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. In November 1992, AAP, a Delaware limited partnership was organized to acquire and hold the obligations evidencing the working capital loan previously provided to the Partnership by Angeles Capital Investments, Inc. ("ACII"). Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc.("AAD"), an affiliate of the General Partner, was until April 14, 1995, the 1% general partner of AAP. On April 14, 1995, as part of a settlement of claims between affiliates of the General Partner and Angeles, AAD resigned as general partner of AAP and simultaneously received a 1/2% limited partner interest in AAP. An affiliate of Angeles now serves as the general partner of AAP. This working capital loan funded the Partnership's operating deficits in prior years. Total indebtedness, which is included as a note payable, was approximately $198,000 at December 31, 1997, with monthly interest only payments at prime plus 2%. This loan is currently in default and is subordinated to the AMIT debt (described below). Total interest incurred for this loan was approximately $21,000 and $20,000 for the years ended December 31, 1997 and 1996, respectively. Accrued interest was approximately $101,000 at December 31, 1997. AMIT currently holds a note receivable from the Partnership in the total principal amount of $2,000,000 secured by Southgate Village Apartments. This debt is in default at December 31, 1997. Total interest incurred on this financing was $703,000 and $1,085,000 for the years ended December 31, 1997 and 1996, respectively. Accrued interest was $2,299,000 at December 31, 1997. In November 1992, MAE GP Corporation ("MAE GP") acquired 1,675,113 Class B Common Shares of AMIT. The terms of the Class B shares provide that they are convertible, in whole or in part, into Class A Common Shares of AMIT on the basis of 1 Class A share for every 49 Class B shares (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed not to convert the Class B shares so long at AMIT's option is outstanding). These Class B Shares entitle the holder to receive 1% of the distributions of net cash distributed by AMIT (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed to waive its right to receive dividends and distributions so long as AMIT's option is outstanding). The holder of the Class B shares is also entitled to vote on the same basis as the holders of Class A shares, providing the holder with approximately 39% of the total voting power of AMIT (unless and until converted to Class A shares, in which case the percentage of the vote controlled represented by such shares would approximate 1.3% of the total voting power of AMIT). 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 which were 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. In connection with such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing (which occurred April 14, 1995), as payment for the option. If and when the option is exercised, AMIT will be required to remit to MAE GP an additional $94,000. Simultaneously with the grant of the option and as part of the settlement, MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that the holder of the Class B shares is permitted to vote those 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. With respect to such matters, the trustees of AMIT are required to vote (pursuant to the irrevocable proxy) the Class B shares (as a single block) in the same manner as a majority of the Class A shares are voted (to be determined without consideration of the votes of "Excess Class A Shares" (as defined in Section 6.13 of AMIT's Declaration of Trust)). Between its acquisition of the Class B shares (in November 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection with the election of trustees and other matters. In February 1998, MAE GP was merged into Insignia Properties Trust, and in connection with that merger, MAE GP dividended all of the Class B shares to its sole stockholder, Metropolitan Asset enhancement, L.P. ("MAE"). As a result, MAE, as the holder of the Class B shares, is now subject to the terms of the settlement agreement, option and irrevocable proxy described in the two preceding paragraphs. Neither MAE GP nor MAE has exerted and intends to exert any management control over or participate in the management of AMIT. However, subject to the terms of the proxy described below, MAE may choose to vote the Class B shares as it deems appropriate in the future. Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE and Insignia Financial Group, Inc. ("Insignia") (which provides property management and partnership administration services to the Partnership), owned 96,800 Class A shares of AMIT at December 31, 1997. These Class A shares represent approximately 2.2% of the total voting power of AMIT. On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in principle contemplating, among other things, a business combination of AMIT and Insignia Properties Trust, an entity then owned 98% by Insignia and its affiliates ("IPT"). On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to which (subject to shareholder approval and certain other conditions, including the receipt by AMIT of a fairness opinion from its investment bankers) AMIT would be merged with and into IPT, with each Class A share and Class B share being converted into 1.625 and 0.0332 common shares of IPT, respectively. The foregoing exchange ratios are subject to adjustment to account for dividends paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1, 1997. It is anticipated that Insignia and its affiliates (including MAE) would own approximately 57% of post-merger IPT when this transaction is consummated. NOTE H - LEGAL PROCEEDINGS The Partnership had an investment interest in the Angeles Forth Worth Option Joint Venture ("Forth Worth") prior to 1997. The Joint Venture was dissolved in January 1996. The Partnership, along with other affiliates, has been named in a suit brought by a company which owned a 20% interest ("Plaintiff") in Fort Worth's investment property, the W.T. Waggoner Building, which was sold in 1995. The Plaintiff is suing for breach of contract and negligence for mismanagement of the property. The General Partner believes that there is no merit in this suit and intends to vigorously defend it. NOTE I - INVESTMENT PROPERTY AND ACCUMULATED DEPRECIATION (dollar amounts in thousands) Initial Cost To Partnership Cost Buildings Capitalized and Related (Removed) Personal Subsequent to Description Encumbrances Land Property Acquisition Southgate Village Apts. $ 4,569 $ 269 $ 3,095 $ (145) Angeles Income Properties, Ltd. V 198 -- -- -- Totals $ 4,767 $ 269 $ 3,095 $ (145)
Gross Amount At Which Carried At December 31, 1997 Buildings And Related Personal Accumulated Date Depreciable Description Land Property Total Depreciation Acquired Life-Years Southgate Village Apts. $ 269 $ 2,950 $3,219 (1) 06/26/87 (1) (1)As a result of adopting the liquidation basis of accounting, the gross carrying value of the property was adjusted to its net realizable value and will not be depreciated further.
Reconciliation of "Investment Properties and Accumulated Depreciation" (in thousands): Years Ended December 31, 1997 1996 Investment Properties Balance at beginning of year $ 3,243 $ 9,818 Property improvements 26 17 Disposal of property -- (4,267) Adjustment due to liquidation (50) (2,325) Balance at end of year $ 3,219 $ 3,243 Accumulated Depreciation Balance at beginning of year $ -- $ 2,515 Additions charged to expense -- 121 Disposal of property -- (273) Adjustment due to liquidation -- (2,363) Balance at end of year $ -- $ -- The aggregate cost of the real estate for Federal income tax purposes at December 31, 1997 and 1996 is $3,719,000 and $3,706,000. The accumulated depreciation taken for Federal income tax purposes at December 31, 1997 and 1996 is $1,037,000 and $930,000. NOTE J - ABANDONMENT OF LIMITED PARTNERSHIP UNITS In 1996, the number of Limited Partnership Units decreased by 600 units, due to limited partners abandoning their units. In abandoning his or her Limited Partnership Unit, a limited partner relinquishes all right, title and interest in the Partnership as of the date of abandonment. However, during the year of abandonment, the Limited Partner will still be allocated his or her share of the income or loss. The net income per Limited Partnership Unit in the accompanying Statement of Operations is calculated based on the number of units outstanding at the beginning of the year. NOTE K - SUBSEQUENT EVENT On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL DISCLOSURES There were no disagreements with Ernst & Young LLP regarding the 1997 or 1996 audits of the Partnership's financial statements. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT ARC II is wholly-owned by MAE GP Corporation ("MAE GP"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia. Thus the General Partner is now a wholly-owned subsidiary of IPT. The names of the directors and executive officers of Angeles Realty Corporation II ("ARC II"), the Partnership's General Partner, their age and the nature of all positions with ARC II presently held by them are as follows: Name Age Position Carroll D. Vinson 57 President and Director Robert D. Long, Jr. 30 Vice President and Chief Accounting Officer William H. Jarrard, Jr. 51 Vice President Daniel M. LeBey 32 Secretary Kelley M. Buechler 40 Assistant Secretary Carroll D. Vinson has been President and Director of the General Partner and President of Metropolitan Asset Enhancement, L.P. ("MAE"), and subsidiaries since August 1994. He has acted as Chief Operating Officer of IPT, since May 1997. During 1993 to August 1994, Mr. Vinson was affiliated with Crisp, Hughes & Co. (regional CPA firm) and engaged in various other investment and consulting activities which included portfolio acquisitions, asset dispositions, debt restructurings and financial reporting. Briefly, in early 1993, Mr. Vinson served as President and Chief Executive Officer of Angeles Corporation, a real estate investment firm. From 1991 to 1993, Mr. Vinson was employed by Insignia in various capacities including Managing Director - President during 1991. Robert D. Long, Jr. has been Vice President of the General Partner since August 1994. Mr. Long joined MAE, in September 1993. Since 1994 he has acted as Vice President and Chief Accounting Officer of the MAE subsidiaries. Mr. Long was an accountant for Insignia until joining MAE in 1993. Prior to joining Insignia, Mr. Long was an auditor for the State of Tennessee and was associated with the accounting firm of Harsman Lewis and Associates. William H. Jarrard, Jr. has been President and Director of the General Partner since December 1992. He has acted as Senior Vice President of IPT, since May 1997. Mr. Jarrard previously acted as Managing Director - Partnership Administration of Insignia from January 1991 through September 1997 and served as Managing Director - Partnership Administration and Asset Management from July 1994 until January 1996. Daniel M. LeBey has been Secretary of the General Partner since January 29, 1998 and Insignia's Assistant Secretary since April 30, 1997. Since July 1996 he has also served as Insignia's Associate General Counsel. From September 1992 until June 1996, Mr. LeBey was an attorney with the law firm of Alston & Bird LLP, Atlanta, Georgia. Kelley M. Buechler has been Assistant Secretary of the General Partner since December 1992 and Assistant Secretary of Insignia since 1991. ITEM 10. EXECUTIVE COMPENSATION No direct form of compensation or remuneration was paid by the Partnership to any officer or director of ARC II. The Partnership has no plan, nor does the Partnership presently propose a plan, which will result in any remuneration being paid to any officer or director upon termination of employment. However, certain fees and other payments have been made to the Partnership's General Partner and its affiliates, as described in "Item 12." below. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of December 31, 1997, no person owned of record more than 5% of the Limited Partnership Units of the Partnership nor was any person known by the Partnership to own of record and beneficially, or beneficially only, more than 5% of such securities. The Partnership knows of no contractual arrangements, the operation of the terms of which may at a subsequent date result in a change in control of the Partnership, except for: Article 12.1 of the Agreement, which provides that upon a vote of the Limited Partners holding more than 50% of the then outstanding Limited Partnership Units the General Partner may be expelled from the Partnership upon 90 days written notice. In the event that the successor general partner has been elected by Limited Partners holding more than 50% of the then outstanding Limited Partnership Units and if said Limited Partners elect to continue the business of the Partnership, the Partnership is required to pay in cash to the expelled General Partner an amount equal to the accrued and unpaid management fee described in Article 10 of the Agreement and to purchase the General Partner's interest in the Partnership on the effective date of the expulsion, which shall be an amount equal to the difference between (i) the balance of the General Partner's capital account and (ii) the fair market value of the share of Distributable Net Proceeds to which the General Partner would be entitled. Such determination of the fair market value of the share of Distributable Net Proceeds is defined in Article 12.2(b) of the Agreement. ITEM 12 . CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts were paid or accrued to the General Partner and affiliates in 1996 and 1997: (dollar amounts in thousands) 1997 1996 Property management fees $ 41 $ 70 Reimbursement for services of affiliates 58 155 For the period from January 1, 1996, to August 31, 1997, the Partnership insured 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 master policy. The 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 that accrued to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. In November 1992, AAP, a Delaware limited partnership was organized to acquire and hold the obligations evidencing the working capital loan previously provided to the Partnership by Angeles Capital Investments, Inc. ("ACII"). Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc.("AAD"), an affiliate of the General Partner, was until April 14, 1995, the 1% general partner of AAP. On April 14, 1995, as part of a settlement of claims between affiliates of the General Partner and Angeles, AAD resigned as general partner of AAP and simultaneously received a 1/2% limited partner interest in AAP. This working capital loan funded the Partnership's operating deficits in prior years. Total indebtedness, which is included as a note payable, was approximately $198,000 at December 31, 1997, with monthly interest only payments at prime plus 2%. This loan is currently in default and is subordinated to the AMIT debt (described below). Total interest incurred for this loan was approximately $21,000 and $20,000 for the years ended December 31, 1997 and 1996, respectively. Accrued interest was approximately $101,000 at December 31, 1997. AMIT currently holds a note receivable from the Partnership in the total principal amount of $2,000,000 secured by Southgate Village Apartments. This debt is in default at December 31, 1997. Total interest incurred on this financing was $703,000 and $1,085,000 for the years ended December 31, 1997 and 1996, respectively. Accrued interest was $2,299,000 at December 31, 1997. In November 1992, MAE GP Corporation ("MAE GP") acquired 1,675,113 Class B Common Shares of AMIT. The terms of the Class B shares provide that they are convertible, in whole or in part, into Class A Common Shares of AMIT on the basis of 1 Class A share for every 49 Class B shares (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed not to convert the Class B shares so long at AMIT's option is outstanding). These Class B Shares entitle the holder to receive 1% of the distributions of net cash distributed by AMIT (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed to waive its right to receive dividends and distributions so long as AMIT's option is outstanding). The holder of the Class B shares is also entitled to vote on the same basis as the holders of Class A shares, providing the holder with approximately 39% of the total voting power of AMIT (unless and until converted to Class A shares, in which case the percentage of the vote controlled represented by such shares would approximate 1.3% of the total voting power of AMIT). 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 which were 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. In connection with such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing (which occurred April 14, 1995), as payment for the option. If and when the option is exercised, AMIT will be required to remit to MAE GP an additional $94,000. Simultaneously with the grant of the option and as part of the settlement, MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that the holder of the Class B shares is permitted to vote those 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. With respect to such matters, the trustees of AMIT are required to vote (pursuant to the irrevocable proxy) the Class B shares (as a single block) in the same manner as a majority of the Class A shares are voted (to be determined without consideration of the votes of "Excess Class A Shares" (as defined in Section 6.13 of AMIT's Declaration of Trust)). Between its acquisition of the Class B shares (in November 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection with the election of trustees and other matters. In February 1998, MAE GP was merged into Insignia Properties Trust, and in connection with that merger, MAE GP dividended all of the Class B shares to its sole stockholder, Metropolitan Asset enhancement, L.P. ("MAE"). As a result, MAE, as the holder of the Class B shares, is now subject to the terms of the settlement agreement, option and irrevocable proxy described in the two preceding paragraphs. Neither MAE GP nor MAE has exerted and intends to exert any management control over or participate in the management of AMIT. However, subject to the terms of the proxy described below, MAE may choose to vote the Class B shares as it deems appropriate in the future. Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE and Insignia Financial Group, Inc. ("Insignia") (which provides property management and partnership administration services to the Partnership), owned 96,800 Class A shares of AMIT at December 31, 1997. These Class A shares represent approximately 2.2% of the total voting power of AMIT. On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in principle contemplating, among other things, a business combination of AMIT and Insignia Properties Trust, an entity then owned 98% by Insignia and its affiliates ("IPT"). On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to which (subject to shareholder approval and certain other conditions, including the receipt by AMIT of a fairness opinion from its investment bankers) AMIT would be merged with and into IPT, with each Class A share and Class B share being converted into 1.625 and 0.0332 common shares of IPT, respectively. The foregoing exchange ratios are subject to adjustment to account for dividends paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1, 1997. It is anticipated that Insignia and its affiliates (including MAE) would own approximately 57% of post-merger IPT when this transaction is consummated. PART IV ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits required by Item 601 of Regulation S-B: Refer to Exhibit Index. (b) Reports on Form 8-K: None filed for the quarter ended December 31, 1997. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES INCOME PROPERTIES, LTD. V (A California Limited Partnership) (Registrant) By: Angeles Realty Corporation II By: /s/Carroll D. Vinson Carroll D. Vinson President Date: March 24, 1998 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the date indicated. /s/Carroll D. Vinson President Date: March 24, 1998 Carroll D. Vinson /s/Robert D. Long, Jr. Vice President Date: March 24, 1998 Robert D. Long, Jr. EXHIBIT INDEX Exhibit Number Description of Exhibit 3.1 Amended Certificate and Agreement of the Limited Partnership filed in the Partnership's Prospectus dated June 11, 1986 which is incorporated herein by reference. 10.1 Promissory Note - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 is incorporated herein by reference. 10.2 Deed of Trust, Assignment of Leases and Rents and Security Agreement - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.3 Deed of Trust - Option - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.4 Security Agreement - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.5 Option Agreement - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.6 Agreement of Purchase and Sale of Real Property with Exhibits - Springdale Lake Estates Mobile Home Park filed in Form 8-K dated December 31, 1986 which is incorporated herein by reference. 10.7 Agreement of Purchase and Sale of Property with Exhibits - Southgate Village Apartments filed in Form 8-K dated June 26, 1987 which is incorporated herein by reference. 10.8 Agreement of Purchase and Sale of Property with Exhibits - University Park Center filed in Form 8-K dated June 29, 1987 which is incorporated herein by reference. 10.9 Agreement of Purchase and Sale of Property with Exhibits - Mesa Dunes Mobile Home Park filed in Form 8-K dated December 23, 1987 which is incorporated herein by reference. 10.10 Beneficiary's Statement of Assumption - Mesa Dunes Mobile Home Park filed in Form 8-K dated December 23, 1987 which is incorporated herein by reference. 10.11 General partnership Agreement of Partners - Mesa Dunes Mobile Home Park filed in Form 8-K dated December 23, 1987 which is incorporated herein by reference. 10.12 Agreement of Purchase and Sale of Property with Exhibits - Wakonda Shopping Center and Town & Country Shopping Center filed in Form 8-K dated December 30, 1987 which is incorporated herein by reference. 10.13 First Amendment to Agreement of Purchase and Sale of Property with Exhibits - Wakonda Shopping Center and Town & Country Shopping Center filed in Form 8-K dated December 30, 1987 which is incorporated herein by reference. 10.14 Agreement for Consulting Services - Wakonda Shopping Center and Town & Country Shopping Center filed Form 8-K dated December 30, 1987 which is incorporated herein by reference. 10.15 First Trust Deed - Springdale Lake Estates Mobile Home Park filed in form 10Q dated September 30, 1988 as Exhibit 10.2 which is incorporated herein by reference. 10.16 Promissory Note - Southgate Apartments filed in Form 10Q dated September 30, 1990 as Exhibit 10.19 which is incorporated herein by reference. 10.17 Promissory Note - Springdale Lake Mobile Home Park filed in Form 10Q dated September 30, 1990 as Exhibit 10.20 which is incorporated herein by reference. 10.18 Promissory Note - Mesa Dunes, Wakonda, Town & Country Joint Venture filed in Form 10Q dated September 30, 1990 as Exhibit 10.21 which is incorporated herein by reference. 10.19 Stock Purchase Agreement dated November 24, 1992 showing the purchase of 100% of the outstanding stock of Angeles Realty Corporation II by IAP GP Corporation, a subsidiary of MAE GP Corporation, filed in Form 8-K dated December 31, 1992, which is incorporated herein by reference. 10.20 Substitute Trustee's Deed showing the foreclosure on the Oil, Gas and Commerce Buildings by American Life and Insurance Company, filed in Form 8-K dated April 6, 1993 which is incorporated herein by reference. 10.21 Proposed settlement of Fort Worth Option Joint Venture's note receivable with Angeles Mortgage Investment Trust, filed in Form 8-K dated September 6, 1994 which is incorporated herein by reference. 10.22 Agreement for Deed in Lieu of Foreclosure dated October 31, 1995, the partnership, Angeles Realty Corporation II and Angeles Mortgage Investment Trust. 10.23 Bill of Sale and Assignment dated October 31, 1995, by the Partnership in favor of Angeles Mortgage Investment Trust. 10.24 Assignment of Leases dated October 31, 1995, by the Partnership in favor of Angeles Mortgage Investment Trust. 10.25 Limited Warranty Deed dated October 31, 1995, by the Partnership to Angeles Mortgage Investment Trust. 16 Letter from Registrant's former accountant regarding its concurrence with the statements made by the Registrant is incorporated by reference to the Exhibit filed with Form 8-K dated September 1, 1993. 27 Financial Data Schedule. EX-27 2
5 This schedule contains summary financial information extracted from Angeles Income Properties, Ltd. V 1997 Year-End 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000792181 ANGELES INCOME PROPERTIES, LTD. V 1,000 12-MOS DEC-31-1997 DEC-31-1997 40 0 14 0 0 0 3,219 0 3,343 0 4,767 0 0 0 381 7,698 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Registrant has an unclassified balance sheet.
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