-----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, WgKLUhRH7MVXqjopy+DS/dNTMqGXhzH5hEvgFBQyb/15xveGXeFi02gdoe2Oi2Sy 9mefK9M1qxTxOa4fvFMpAw== 0000763049-96-000008.txt : 19961115 0000763049-96-000008.hdr.sgml : 19961115 ACCESSION NUMBER: 0000763049-96-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-15547 FILM NUMBER: 96660590 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93.) U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-15547 ANGELES INCOME PROPERTIES, LTD. V (Exact name of small business issuer as specified in its charter) California 95-4049903 (State or other jurisdiction of IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF NET LIABILITIES IN LIQUIDATION (Unaudited) (in thousands) September 30, 1996 Assets Cash and cash equivalents: Unrestricted $ 271 Restricted--tenant security deposits 26 Accounts receivable 3 Escrow for taxes 20 Other assets 1 Investment properties 3,622 3,943 Liabilities Accounts payable 27 Tenant security deposits 25 Accrued interest 1,563 Other liabilities 73 Mortgage notes payable, $2,000 in default 4,826 Estimated costs during the period of liquidation (Note A) 972 7,486 Net liabilities in liquidation (Note A) $ (3,543) See Accompanying Notes to Financial Statements b) ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION (in thousands) September 30, 1996 Net liabilities in liquidation at July 1, 1996 $ (4,107) Changes in net liabilities in liquidation attributed to: Increase in unrestricted cash 165 Decrease in restricted cash (34) Decrease in accounts receivable (4) Decrease in escrows for taxes (68) Increase in other assets 1 Decrease in investment properties (3,560) Increase in accounts payable (10) Decrease in tenant security deposits 36 Decrease in accrued interest 605 Decrease in other liabilities 12 Decrease in mortgage notes payable 4,522 Decrease in estimated costs during the period of liquidation (1,101) Net liabilities in liquidation at September 30, 1996 $ (3,543) See Accompanying Notes To Financial Statements c) ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF OPERATIONS (Unaudited) (in thousands, except unit data) Six Months Ended June 30, 1996 Revenues: Rental income $ 729 Other income 100 Total revenues 829 Expenses: Operating 347 General and administrative 111 Maintenance 64 Depreciation 121 Interest 627 Bad debt recovery, net (1) Property taxes 64 Total expenses 1,333 Loss on transfer of property in foreclosure (435) Loss before extraordinary gain (939) Extraordinary gain - extinguishment of debt 1,176 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 before extraordinary item $ (20.64) Extraordinary item 25.86 Net income $ 5.22 See Accompanying Notes to Financial Statements e) ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 45,450 $ 1 $45,450 $ 45,451 Partners' deficit at December 31, 1995 45,021 $ (448) $(5,338) $ (5,786) Net income for the six months ended June 30, 1996 2 235 237 Partners' deficit at June 30, 1996 45,021 $ (446) $(5,103) $ (5,549) See Accompanying Notes to Financial Statements
f) ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CASH FLOWS (Unaudited) (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 Loss on disposal of property (1) Bad debt expense 435 Extraordinary gain on extinguishment of debt (1,176) Change in accounts: Restricted cash 7 Accounts receivable 11 Escrows for taxes 11 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 from financing activities: Payments on mortgage notes payable (40) Net decrease in cash (187) Cash and cash equivalents at beginning of period 293 Cash and cash equivalents at end of period $ 106 Supplemental disclosure of cash flow information: Cash paid for interest $ 263 Supplemental disclosure of non-cash investing and financing activities: Debt extinguished upon foreclosure $ 850 See Accompanying Notes to Financial Statements f) ANGELES INCOME PROPERTIES, LTD. V STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30 1995 1995 Revenues: Rental income $ 661 $ 1,954 Other income 8 52 Total revenues 669 2,006 Expenses: Operating 206 646 General and administrative 96 223 Maintenance 60 189 Depreciation 97 288 Interest 474 1,646 Property taxes 108 333 Bad debt expense 47 54 Total expenses 1,088 3,379 Equity in (loss) income of joint venture (75) 1,123 Loss before extraordinary item (494) (250) Extraordinary gain on extinguishment of debt -- 497 Net (loss) income $ (494) $ 247 Net (loss) income allocated to general partners $ (5) $ 2 (1%) Net (loss) income allocated to limited partners (489) 245 (99%) Net (loss) income $ (494) $ 247 Per limited partnership unit: (Loss) income before extraordinary item $ (10.85) $ (5.49) Extraordinary gain on extinguishment of debt -- 10.93 Net (loss) income $ (10.85) $ 5.44 See Accompanying Notes to Financial Statements
g) ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CASH FLOWS (in thousands) (Unaudited) Nine Months Ended September 30, 1995 Cash flows from operating activities: Net income $ 247 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of joint ventures (1,123) Depreciation 288 Amortization of loan costs and leasing 71 commissions Bad debt expense 54 Extraordinary gain on forgiveness of debt (497) Change in accounts: Restricted cash (8) Accounts receivable (68) Escrows for taxes (29) Other assets (18) Accounts payable (17) Tenant security deposit liabilities 9 Accrued taxes 168 Accrued interest 1,094 Due to affiliates 93 Other liabilities (34) Net cash provided by operating activities 230 Cash flows from investing activities: Property improvements and replacements (32) Cash flows from financing activities: Payments on mortgage notes payable (55) Net increase in cash 143 Cash at beginning of period 300 Cash at end of period $ 443 Supplemental disclosure of cash flow information Cash paid for interest $ 501 See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES (Unaudited) Foreclosures During 1996, Angeles Income Properties, Ltd. V 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 43 Other liabilities 70 Accrued interest 394 Mortgage notes payable 850 During 1996, Angeles Income Properties LTD. V lost its interest in Springdale Lake Estates 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 $ 38 Investment properties 4,100 Accrued interest 1,215 Other liabilities 75 Mortgage notes payable 4,508 See Accompanying Notes to Financial Statements e) ANGELES INCOME PROPERTIES, LTD. V NOTES TO FINANCIAL STATEMENTS (Unaudited) 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 of approximately $2,000,000 due to Angeles Mortgage Investment Trust ("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 approximately $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 forebearance agreement with AMIT, effective July 1, 1996, which provides that surplus cash be deposited into a seperate account on which the Partnership has granted AMIT a first priority lien. In exchange, the Partnership 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 1997 through foreclosure. Until August 1996, the Partnership had a nonrecourse second mortgage note payable to AMIT, in the amount of approximately $1,720,000 plus accrued interest on 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. AMIT foreclosed on the property on August 15, 1996. Until November 1995, the Partnership had a recourse first mortgage note payable to AMIT, a lending trust sponsored by an affiliate of the General Partner, in the amount of approximately $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 (See "Note B" for further discussion). The Partnership's mortgage of approximately $850,000 secured by University Park Center - Phase III was in default due to nonpayment of interest. The lender foreclosed on University Park Center - Phase III in 1996. The Partnership is presently paying non-debt related expenses of the properties and is current on its first mortgage note payable. 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 as full satisfaction of the debt. These transactions are anticipated to occur during the fourth quarter of 1997. 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 currently 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. NOTE A - BASIS OF PRESENTATION - CONTINUED 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 investment properties were adjusted to their estimated net realizable values. Prior to the change from the going concern basis to the liquidation basis of accounting, investment properties were stated at lower of cost or estimated fair value. The statements of consolidated net liabilities in liquidation as of September 30, 1996, include approximately $972,000 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 December 31, 1997. 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 liquidating period may be shorter than projected or it may be extended beyond the projected period. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 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 1995 information to conform to the 1996 presentation. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) 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 expenses were paid or accrued to the General Partner and affiliates during the nine months ended September 30, 1996 and 1995: 1996 1995 (in thousands) Property management fees $ 60 $ 72 Reimbursement for services of affiliates ($1,006,000 accrued at September 30, 1996) 117 163 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 B - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) 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 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 September 30, 1996, and September 30, 1995, with monthly interest only payments at prime plus 2%. Principal is to be paid the earlier of i) the availability of funds, ii) the sale of one or more properties owned by the Partnership, or iii) November 25, 1997. Total interest expense for this loan was $15,000 and $16,000 for the nine months ended September 30, 1996 and 1995, respectively. AMIT currently provides financing to the Partnership in the total principal amount of approximately $2,000,000 secured by Southgate Village Apartments. This debt is in default at September 30, 1996. During the nine months ended September 30, 1995, AMIT provided approximately $6,400,000 in financing (principal only) to the Partnership secured by Southgate Village Apartments, Springdale Lake Estates Mobile Home Park and University Park Center - Phase IV. Total interest expense on this financing was $928,000 and $863,000 for the nine months ended September 30, 1996 and 1995, respectively. 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 (November 24, 1992) and March 31, 1995, MAE GP has declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 annual meeting in connection with the election of trustees and other matters. MAE GP has not exerted, and continues to decline to exert, any management control over or participate in the management of AMIT. However, MAE GP may choose to vote these shares as it deems appropriate in the future. 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 time period. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) As part of the settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B Shares. 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 these 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 Partnership also had a note payable to Mesa Dunes, Wakonda and Town & Country Partners ("Mesa Dunes") of $5,000,000, secured by its 50% interest in Mesa Dunes, in default due to non-payment of interest and, in February 1995, Mesa Dunes notified the Partnership that it intended to foreclose on its collateral. On April 1, 1995, Mesa Dunes foreclosed on its collateral and the Partnership lost its 50% interest in Mesa Dunes. NOTE C - OTHER ITEMS 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 Fort Worth's liabilities. As a result, Forth Worth was dissolved effective December 31, 1995, and therefore, the Partnership lost its 57% interest in Forth Worth. University Park Center - Phase III was in default of its mortgage ($850,000 principal plus accrued interest) due to non-payment of interest. The mortgage holder foreclosed upon this property and it was lost in 1996. Springdale Lake Estates Mobile Home Park was in default of its second mortgage ($1,720,000 principal plus accrued interest) due to non payment upon maturity. The mortgage holder foreclosed upon this property and it was lost in August 1996. ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS AND PLAN OF OPERATION 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 approximately $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 forebearance agreement with AMIT, effective July 1, 1996, which provides that surplus cash be deposited into a seperate account on which the Partnership has granted AMIT a first priority lien. In exchange, the Partnership 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 1997 through foreclosure. The Partnership is presently paying non-debt related expenses of the properties and is current on its first mortgage note payable. 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 as full satisfaction of the debt. These transactions are anticipated to occur during the fourth quarter of 1997. 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 currently 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 three months ended September 30, 1996, the Partnership recorded a net decrease in net liabilities in liquidation of approximately $564,000. The decrease is primarily due to the foreclosure by AMIT of Springdale Lake Estates Mobile Home Park in the third quarter of 1996. Contributing to the decrease in net liabilities in liquidation was a decrease in estimated net costs during liquidation. The statements of consolidated net liabilities in liquidation as of September 30, 1996, include approximately $972,000 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 December 31, 1997. 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 liquidating period may be shorter than projected or it may be extended beyond the projected period. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In July 1993, AMIT initiated litigation against Fort Worth and other partnerships which loaned money to AMIT seeking to avoid repayment of such obligations. The Partnership subsequently filed a counterclaim against AMIT seeking to enforce the obligation, the principal amount of which is $2,240,000 plus accrued interest from March 1993 ("AMIT Obligation"). On November 9, 1994, Fort Worth executed a definitive Settlement Agreement to settle the dispute with respect to the AMIT Obligation. The actual closing of the Settlement occurred April 14, 1995. The Partnership's claim was satisfied by a cash payment to Fort Worth by AMIT totaling $1,932,975 (the "Settlement Amount") plus interest at closing. 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 (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 the settlement, MAE GP granted to AMIT an option to acquire the Class B Shares. 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 on 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 these 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. In addition, Angeles, either directly or through an affiliate, maintained a central disbursement account (the "Account") for the properties and partnerships managed by Angeles and its affiliates, including the Registrant. Angeles caused the Partnership to make deposits to the Account ostensibly to fund the payment of certain obligations of the Partnership. Angeles further caused checks on such Account to be written to or on behalf of certain other partnerships. At least $2,286 deposited by or on behalf of the Partnership was used for purposes other than satisfying the liabilities of the Partnership. However, subsequently the General Partner of the Partnership has determined that the cost involved to pursue such claim would likely exceed any amount received, if in fact such claim were to be resolved in favor of the Partnership. Therefore, the Partnership withdrew this claim on August 9, 1995. The Partnership has filed a Proof of Claim in the bankruptcy proceeding of Angeles concerning the Partnership's indebtedness to AAP. The Proof of Claim alleges that instead of causing the Partnership to pay AAP on account of such debt in the amount of $605,000, Angeles either itself or through an affiliate, caused the Partnership to make payment to another Angeles affiliate. To the extent that such action results in the Partnership not receiving credit for the payments so made, the Partnership would have been damaged in an amount equal to the misappropriated payments. On August 9, 1995, AAP acknowledged constructive receipt of such payment and, therefore, the General Partner withdrew this claim. 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. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 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: A Form 8-K was filed on August 15, 1996, reporting the foreclosure of Springdale Lake Estates Mobile Home Park by the second mortgage holder. 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 INCOME PROPERTIES, LTD. V 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 13, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Income Properties Ltd. V 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000792181 ANGELES INCOME PROPERTIES LTD. V 1,000 9-MOS DEC-31-1996 SEP-30-1996 271 0 3 0 0 0 3,622 0 3,943 0 4,826 0 0 0 (3,543) 3,943 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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