-----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, PDIwRPega0jHQNfY2qWpzPgR9TXd6SENGWIzRrEI6qsr0m24YgOVRROiMhNjvV5x UTCdZSPoBsVZpWFceEouNA== 0000787621-97-000003.txt : 19970807 0000787621-97-000003.hdr.sgml : 19970807 ACCESSION NUMBER: 0000787621-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970806 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: 97652569 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 U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 [ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 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 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, except unit data) June 30, 1997 Assets Cash and cash equivalents: Unrestricted $ 47 Restricted--tenant security deposits 18 Accounts receivable 8 Escrow for taxes 43 Other assets 18 Investment property 3,107 3,241 Liabilities Accounts payable 22 Tenant security deposits 29 Accrued interest 2,046 Other liabilities 75 Mortgage notes payable, $2,000 in default 4,790 Estimated costs during the period of liquidation (Note A) 315 7,277 Net liabilities in liquidation (Note A) $ (4,036) See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION (in thousands) June 30, 1997 Net liabilities in liquidation at December 31, 1996 $ (3,824) Changes in net liabilities in liquidation attributed to: Decrease in unrestricted cash (88) Increase in restricted cash 1 Increase in accounts receivable 1 Increase in escrows for taxes 2 Increase in other assets 18 Decrease in investment property (136) Decrease in accounts payable 3 Increase in tenant security deposits (2) Increase in accrued interest (346) Increase in other liabilities (3) Decrease in mortgage notes payable 22 Decrease in estimated costs during the period of liquidation 316 Net liabilities in liquidation at June 30, 1997 $ (4,036) See Accompanying Notes To Financial Statements b) ANGELES INCOME PROPERTIES, LTD. V STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1996 1996 Revenues: Rental income $ 361 $ 729 Other income 50 100 Total revenues 411 829 Expenses: Operating 148 347 General and administrative 54 111 Maintenance 29 64 Depreciation 54 121 Interest 286 627 Bad debt recovery, net (1) (1) Property taxes 15 64 Total expenses 585 1,333 Loss before loss on transfer of property in foreclosure and extraordinary item (174) (504) Loss on transfer of property in foreclosure (435) (435) Loss before extraordinary item (609) (939) Extraordinary gain - forgiveness of debt 1,176 1,176 Net income $ 567 $ 237 Net income allocated to general partner (1%) $ 6 $ 2 Net income allocated to limited partners (99%) 561 235 Net income $ 567 $ 237 Per limited partnership unit: Loss before extraordinary item $ (13.39) $ (20.64) Extraordinary gain 25.86 25.86 Net income $ 12.47 $ 5.22 See Accompanying Notes to Financial Statements
c) ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (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) $ (5,338) $ (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
d) ANGELES INCOME PROPERTIES, LTD. V STATEMENTS 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 9 Bad debt recovery, net (1) Loss on transfer of property in foreclosure 435 Extraordinary gain - forgiveness 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 from 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 unrestricted cash and cash equivalents (187) Unrestricted cash and cash equivalents at beginning of 293 period Unrestricted 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 financing activities: Debt extinguished upon foreclosure $ 850 See Accompanying Notes to Financial Statements
ANGELES INCOME PROPERTIES, LTD. V NOTES TO FINANCIAL STATEMENTS (Unaudited) June 30, 1997 NOTE A - BASIS OF PRESENTATION As of July 1, 1996, Angeles Income Properties, Ltd. V (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. 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 in which the Partnership has granted AMIT a first priority lien. In exchange, AMIT agrees to refrain from appointing a receiver for the property. Angeles Realty Corporation II (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 property and is current on its first mortgage note payable. However, the debt to Angeles Acceptance Pool, L.P. ("AAP") matures in November 1997 and the Partnership does not have the ability to satisfy the indebtedness when it is due (See "Note C"). 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 the fourth quarter of 1997. 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 June 30, 1997, include approximately $315,000 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 liquidation period may be shorter than projected or it may be extended beyond the projected period. NOTE B - 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 C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following expenses were paid or accrued to the General Partner and affiliates during the six months ended June 30, 1997 and 1996: 1997 1996 (in thousands) Property management fees $ 20 $ 41 Reimbursement for services of affiliates 26 69 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. 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 June 30, 1997, and June 30, 1996, 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 approximately $10,000 for both the six months ended June 30, 1997 and June 30, 1996. AMIT currently holds notes receivable from the Partnership in the total principal amount of $2,000,000 secured by Southgate Village Apartments. This debt is in default at June 30, 1997. At June 30, 1996, AMIT held notes receivable from the Partnership in the principal amount of $3,720,000 secured by Southgate Village Apartments and Springdale Lake Estate Mobile Home Park. Total interest expense on this financing was approximately $221,000 and $333,000 for the six months ended June 30, 1997 and 1996, respectively. MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns 1,675,113 Class B Shares of AMIT. The terms of the Class B Shares provide that they are convertable, in whole or in part, into Class A Shares 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 has agreed not to convert the Class B Shares so long as AMIT's option is outstanding). These Class B Shares entitle MAE GP 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 has agreed to waive it's right to receive dividends and distributions so long as AMIT's option is outstanding). These Class B Shares also entitle MAE GP to vote on the same basis as Class A Shares, providing MAE GP 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 the shares held by MAE GP would approximate 1.3% 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 and 1996 annual meetings 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 L.L.C., an affiliate of the General Partner and an affiliate of Insignia Financial Group, Inc. ("Insignia"), which provides property management and partnership administration services to the Partnership, owns 96,800 Class A Shares of AMIT at June 30, 1997. These Class A Shares represent approximately 2.2% 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 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. 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 execution of the option and as part of the settlement, MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is that MAE GP is permitted to vote the Class B Shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. On those matters, MAE GP is obligated to deliver 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). 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 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, through the closing date of the merger. It is anticipated that Insignia (and its affiliates) and MAE GP (and its affiliates) would own approximately 55% and 2.4%, respectively, of post-merger IPT when this transaction is consummated. ITEM 2. MANAGEMENT'S 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 $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 in 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. However, the debt to AAP matures in November 1997 and the Partnership does not have the ability to satisfy the indebtedness when it becomes due. 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 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 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 June 30, 1997, the Partnership recorded a net increase in net liabilities in liquidation of approximately $212,000. The statements of net liabilities in liquidation as of June 30, 1997, include approximately $315,000 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 The Partnership had an investment in the Angeles Fort Worth Option Joint Venture ("Fort Worth") until the investment property owned by Fort Worth was sold. At that time, Fort Worth was dissolved. 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 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 1997 through foreclosure. 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. 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. Controller and Principal Accounting Officer Date: August 6, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Income Properties, Ltd. V 1997 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000792181 ANGELES INCOME PROPERTIES LTD. V 1,000 6-MOS DEC-31-1997 JUN-30-1997 47 0 8 0 0 0 3,107 0 3,241 0 4,790 0 0 0 315 7,277 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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