-----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, FIp8JvijRqxfWB1XnWqLOn8h87lyP4FMwNk5Y9lGatn37zBv+ya+wC/hHEL42+Do N4abVSSqdh14XiiFgMerJw== 0000792181-95-000001.txt : 19951119 0000792181-95-000001.hdr.sgml : 19951119 ACCESSION NUMBER: 0000792181-95-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: AMEX 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: 95592145 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, 1995 [ ] 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 (803) 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 BALANCE SHEET (Unaudited)
September 30, 1995 Assets Cash: Unrestricted $ 442,994 Restricted--tenant security deposits 52,291 Accounts receivable (net of allowance for doubtful accounts of $282) 56,309 Escrow deposits for taxes 72,753 Other assets 365,035 Investment properties: Land $ 1,351,522 Buildings and related personal property 11,303,221 12,654,743 Less accumulated depreciation (3,574,196) 9,080,547 $10,069,929 Liabilities and Partners' Deficit Liabilities Accounts payable $ 171,528 Tenant security deposits 78,720 Accrued taxes 318,331 Accrued interest 2,836,769 Due to affiliates 851,942 Other liabilities 81,011 Notes payable, including $7,250,000 in default 12,936,763 Equity interest in net liabilities of joint venture 2,966,866 Partners' Deficit General partners $ (491,521) Limited partners (45,021 units issued and outstanding) (9,680,480) (10,172,001) $10,069,929
[FN] See Accompanying Notes to Financial Statements b) ANGELES INCOME PROPERTIES, LTD. V STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenues: Rental income $ 553,720 $ 582,654 $ 1,676,873 $ 1,725,092 Other income 8,550 11,815 52,426 34,728 Total revenues 562,270 594,469 1,729,299 1,759,820 Expenses: Operating 160,908 186,034 510,409 632,460 General and administrative 95,597 83,271 223,130 387,225 Property management fees 40,192 17,666 114,611 82,269 Maintenance 59,828 44,510 189,318 140,478 Depreciation 97,120 98,502 288,008 295,272 Amortization 5,139 5,433 20,108 18,344 Interest 473,936 659,370 1,646,012 1,946,469 Property taxes 108,287 94,516 333,156 314,354 Bad debt expense 47,041 19,589 54,365 40,981 Tenant reimbursements (106,822) (78,234) (277,167) (303,991) Total expenses 981,226 1,130,657 3,101,950 3,553,861 Loss before equity in (loss) income of joint venture, loss on disposal of property and extraordinary item (418,956) (536,188) (1,372,651) (1,794,041) Equity in (loss) income of joint venture (74,658) (20,768) 1,122,799 111,766 Loss on disposal of property -- -- -- (21,670) Loss before extraordinary item (493,614) (556,956) (249,852) (1,703,945) Extraordinary item - forgiveness of debt -- -- 496,881 -- Net (loss) income $ (493,614) $ (556,956)$ 247,029 $(1,703,945) Net (loss) income allocated to general partner (1%) $ (4,936) $ (5,570)$ 2,470 $ (17,039) Net (loss) income allocated to limited partners (99%) (488,678) (551,386) 244,559 (1,686,906) $ (493,614) $ (556,956)$ 247,029 $(1,703,945) Per limited partnership unit: (Loss) income before extraordinary item $ (10.85) $ (12.13)$ (5.49)$ (37.12) Extraordinary item -- 10.93 -- Net (loss) income $ (10.85) $ (12.13)$ 5.44 $ (37.12)
[FN] See Accompanying Notes to Financial Statements c) ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 45,450 $ 1,000 $45,450,000 $ 45,451,000 Partners' deficit at December 31, 1994 45,021 $(493,991) $(9,925,039) $(10,419,030) Net income for the nine months ended September 30, 1995 2,470 244,559 247,029 Partners' deficit at September 30, 1995 45,021 $(491,521) $(9,680,480) $(10,172,001)
[FN] See Accompanying Notes to Financial Statements d) ANGELES INCOME PROPERTIES, LTD. V STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net income (loss) $ 247,029 $(1,703,945) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Equity in income of joint ventures (1,122,799) (111,766) Depreciation 288,008 295,272 Amortization of loan costs and leasing commission 70,613 109,589 Loss on disposal of property -- 21,670 Bad debt expense 54,365 40,981 Extraordinary gain on forgiveness of debt (496,881) -- Change in accounts: Restricted cash (8,164) (15,949) Accounts receivable (67,966) (4,856) Escrows for taxes (28,724) (30,915) Other assets (18,601) (2,459) Accounts payable (17,351) (16,117) Tenant security deposit liabilities 9,422 1,451 Accrued taxes 167,627 (78,902) Accrued interest 1,094,339 1,333,079 Due to affiliates 93,469 296,516 Other liabilities (34,669) (64,277) Net cash provided by operating activities 229,717 69,372 Cash flows used in investing activities: Property improvements and replacements (31,827) (19,959) Cash flows from financing activities: Proceeds from long-term borrowings -- 71,533 Payments on mortgage notes payable (54,814) (45,105) Net cash (used in) provided by financing activities (54,814) 26,428 Net increase in cash 143,076 75,841 Cash at beginning of period 299,918 226,247 Cash at end of period $ 442,994 $ 302,088 Supplemental disclosure of cash flow information Cash paid for interest $ 501,169 $ 522,145
[FN] See Accompanying Notes to Financial Statements e) ANGELES INCOME PROPERTIES, LTD. V NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Going Concern The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern. The Partnership has incurred recurring operating losses and is experiencing liquidity problems. It is also in default on $7,250,000 of its mortgages and other notes payable due to its inability to service the indebtedness on a current basis, including $6,400,000 indebtedness to Angeles Mortgage Investment Trust ("AMIT"). Included in the debt to AMIT are two second mortgages secured by Southgate Village Apartments and Springdale Lake Estates Mobile Home Park totalling $4,600,000 which are in default due to nonpayment of interest. Also, included in the debt to AMIT are mortgage notes payable secured by University Park Center - - Phase IV in the amount of $1,800,000, which is recourse to the Partnership. In addition, $850,000 in debt, which is secured by University Park Center - Phase III is in default due to nonpayment of interest. On July 21, 1995, and May 24, 1995, Phase III and Phase IV were sold at a foreclosure sale, respectively. Under foreclosure proceedings, the property was sold to the lender, however, the Partnership has a one year redemption period during which it may pay off the debt, including related accrued interest, and retain the property. If the Partnership cannot pay the debt on the property, the title to the property will transfer to the lender at the close of the one year redemption period. AMIT issued a deficiency Judgement against the Partnership on March 3, 1995 in the original amount of $451,406 for the $1,800,000 note. The Judgement constitutes a first lien against University Center Phase I and II, which is also collateral on a $2,600,000 promissory note to AMIT. As of September 30, 1995, the General Partner is negotiating with AMIT an Agreement for Deed in Lieu of Foreclosure for University Center Phase I and II. If such negotiations are successful, the Partnership will lose Phase I and II of the University Park Center, in exchange for (1) the satisfaction of the Judgement, the balance of which is $460,979 at September 30, 1995, and (2) the satisfaction of a portion of the outstanding amount of the $2,600,000 promissory note being an amount equal to $880,000 of accrued interest and late penalties. Finally, the Partnership is delinquent in approximately $50,828 in taxes relating to University Center Phase I & II at September 30, 1995. 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 nonpayment 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. The Partnership is presently paying non-debt related expenses of the properties, is current on two first mortgage notes payable and is making partial interest payments on certain mortgages in default. It is the General Partner's intent at this time to continue to operate the Partnership as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from these uncertainties. Note B Basis of Presentation 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 nine month period ended September 30, 1995, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1995. 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, 1994. Certain reclassifications have been made to the September 30, 1994, information to conform to the September 30, 1995, presentation. Note C - Investment in Joint Venture The Partnership owns a 57% investment in Angeles Fort Worth Option Joint Venture ("Fort Worth"). The investment in Fort Worth is included in "Equity interest in net liabilities of joint venture" on the balance sheet. As mentioned previously, the Partnership lost its 50% interest in Mesa Dunes through foreclosure on April 1, 1995. Condensed balance sheet information of Fort Worth at September 30, 1995, is as follows: Assets Cash $ 30,493 Other assets 55,732 Total $ 86,225 Liabilities and Partners' Deficit Notes payable in default $ 2,888,563 Other liabilities 2,402,690 Partners' deficit (5,205,028) Total $ 86,225 Note C - Investment in Joint Venture (continued) The condensed profit and loss statements of Fort Worth for the three and nine months ended September 30, 1995 and 1994, are summarized as follows: Three Months Ended September 30, 1995 1994 Revenue $ 2,041 $ 176,303 Costs and expenses (133,019) (422,302) Net loss $ (130,978) $(245,999) Nine Months Ended September 30, 1995 1994 Revenue $ 214,532 $ 573,448 Costs and expenses (456,352) (1,226,186) Bad debt recovery 1,932,975 -- Loss on sale of investment property (42,401) -- Net income (loss) $1,648,754 $ (652,738) The Partnership's equity interest in the income of the joint ventures was $1,122,799 for the nine months ended September 30, 1995, and $111,766 for the nine months ended September 30, 1994. On March 22, 1995, a tenant of the W.T. Waggoner Building purchased the investment property for $300,000. The net proceeds to Fort Worth at the time of the sale were $214,749 and the loss on the sale amounted to $42,401. As part of the sales agreement, $55,420 was held in escrow to cover any unknown outstanding payables and a mechanic's lien on the property. The General Partner believes that this escrow is sufficient to cover any outstanding payables and that the mechanic's lien is without merit. The Partnership accounts for its 57% investment in Fort Worth using the equity method of accounting. The Partnership accounted for its 50% investment in Mesa Dunes using the equity method prior to losing its investment on April 1, 1995. Under the equity method, the Partnership records its equity interest in earnings or losses of the joint ventures, however, the investment in the joint ventures will be recorded at an amount less than zero (a liability) to the extent of the Partnership's share of net liabilities of the joint ventures. Note D 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 accrued or paid to the General Partner and affiliates during the nine months ended September 30, 1995 and 1994: 1995 1994 Property management fees $ 71,819 $ 82,269 Reimbursement for services of affiliates including $851,942 and $777,656 accrued at September 30, 1995 and 1994, respectively 163,469 296,516 Marketing services -- 293 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, 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 $198,172 at September 30, 1995, and September 30, 1994, 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 $16,143 and $13,253 during the nine months ended September 30, 1995 and 1994, respectively. Note D - Transactions with Affiliated Parties (continued) AMIT currently provides financing to the Partnership in the total principal amount of $6,400,000 secured by some of the Partnership's investment properties. All of this debt is in default at September 30, 1995. Total interest expense on this financing was $863,437 and $629,287 for the nine months ended September 30, 1995 and 1994, respectively. In July 1993, AMIT, a real estate investment trust, formerly affiliated with Angeles, 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 was $2,240,000 plus accrued interest from March 1993 ("AMIT Obligation"). 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% 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% of the vote). Between the date of acquisition of these shares (November 24, 1992) and March 31, 1995, MAE GP had 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. 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 against AMIT was satisfied by a cash payment to Fort Worth by AMIT totalling $1,932,975 (the "Settlement Amount") plus interest at closing. These funds were transferred to Angeles Income Properties, Ltd. IV, an affiliate of the General Partner (See discussion below). 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 April 14, 1995, as payment for the option. Upon exercise of the option, AMIT would remit to MAE GP an additional $94,000. Note D - Transactions with Affiliated Parties (continued) 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. On December 22, 1994, the Partnership entered into an agreement with Fort Worth and AIPL IV, whereby Fort Worth transferred, assigned and delivered to AIPL IV all of Fort Worth's right, title and interests in and to all payment, distributions, profits, returns of capital and benefits accruing from the repayment by AMIT of the loans made to AMIT from Fort Worth. This transfer effectively transferred all of the Partnership's right, title and interests in and to all payment, distributions, profits, returns of capital and benefits accruing from the repayment by AMIT of the loans made to AMIT from Fort Worth. The Partnership has consented to this transfer, assignment and delivery. As a result, the previously mentioned cash settlement that Fort Worth received from AMIT was assigned to AIPL IV. AIPL IV had previously loaned $5,000,000 to Fort Worth. Fort Worth had made no principal or interest payments on the debt. This assignment was partial satisfaction of the debt Fort Worth has to AIPL IV. On December 6, 1994, Mesa Dunes gave notice to the Partnership that the note in the amount of $5,000,000 dated September 20, 1991, and originally due on September 30, 1996, was in default because of failure to perform under the terms and conditions of said note and security interest, including but not limited to, failure to make interest payments. In February 1995, Mesa Dunes gave notice that it intended to foreclose on its collateral. As mentioned previously, on April 1, 1995, Mesa Dunes foreclosed on its collateral and the Partnership lost its 50% interest in Mesa Dunes. Item 2. Managements Discussion and Analysis and Plan of Operation The Partnership's investment properties consist of one apartment complex, one mobile home park and one commercial property. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1995 and 1994: Average Occupancy Property 1995 1994 Southgate Village Apartments Bedford Heights, Ohio 92% 95% Springdale Lake Estates Mobile Park Belton, Missouri 77% 81% University Park Center Spring Lake Park, Minnesota 80% 85% The Partnership realized net income of $247,029 for the nine months ended September 30, 1995, as compared to a net loss of $1,703,945 for the nine months ended September 30, 1994. The Partnership realized a net loss of $493,614 for the three months ended September 30, 1995, as compared to a net loss of $556,956 for the three months ended September 30, 1994. The increase in net income for the nine months ended September 30, 1995 versus the nine months ended September 30, 1994, is due to decreases in general and administrative expense and interest expense. Complimenting these decreases was an increase in the equity in income of the joint venture and a gain on early extinguishment of debt as a result of the foreclosure of the Partnership's interest in Mesa Dunes by Mesa Dunes. The decrease in rental income during the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994, is a result of a decreased occupancy for Southgate, Springdale and University. Occupancy at Southgate is slightly lower, but for 1995 the occupancy rate has been increasing due to better property management and full time staffing. Springdale's occupancy is decreasing as competition in the area increases and more tenants are buying houses. University's occupancy has also decreased as a result of two large tenants vacating the premises during 1995. The decrease in operating expenses for the three and nine months ended September 30, 1995, versus the three and nine months ended September 30, 1994, is due to a decrease in office payroll and repairs and maintenance payroll for University Center. The decrease in general and administrative expenses during the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994, is primarily related to decreased expense reimbursements for asset management, partnership accounting and investor services. Although revenue has decreased, property management fees have increased. This is the result of increased fees associated with University Center. Property management fees for University Center Phase III and IV, which are in receivership, are not revenue driven, but are a flat fee instead. The increase in maintenance expense for the three and nine months ended September 30, 1995, as compared to the three and nine months ended September 30, 1994, is primarily caused by increased contract services for repairs and maintenance and an increase in snow removal costs. The decrease in interest expense is due to the forgiveness of debt as the Partnership's interest in Mesa Dunes was foreclosed upon in exchange for the $5,000,000 debt that the Partnership owed to Mesa Dunes. Bad debt expense relates to receivables deemed uncollectible from tenants at University Center and have been reserved. Tenant reimbursements were significantly lower for the nine months ended September 30, 1995, versus the nine months ended September 30, 1994. Due to changes in the management companies at University Park Center III, the detail data needed to accurately estimate the receivable in 1994 was not available. The Partnership's equity in income of joint ventures is $1,122,799 for the nine months ended September 30, 1995, and $111,766 for the nine months ended September 30, 1994. The increase in equity in income of joint ventures can be attributed to the bad debt recovery that Fort Worth realized on April 1, 1995, as a result of a partial recovery of its investment in AMIT. In addition, the increase in equity in income of joint venture can be attributed to the sale of the W.T. Waggoner Building. As a result of the sale, Fort Worth realized a decrease in revenues and a considerable decrease in costs and expenses. The Partnership recognized a gain on forgiveness of debt at September 30, 1995, as a result of the loss of its 50% interest in Mesa Dunes. The gain on forgiveness of debt amounted to $496,881 at September 30, 1995. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. At September 30, 1995, the Partnership had unrestricted cash of $442,994 compared to $302,088 at September 30, 1994. Net cash provided by operating activities increased due to increased net income. The increase in cash flows used in investing activities is due to increased capital improvements in 1995. The decrease in cash provided by financing activities is due to proceeds from long-term borrowings that were received in 1994 from AMIT in order to pay property taxes that became due in the third quarter of 1994 for University Center Phase IV. The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern. The Partnership has incurred recurring operating losses and is experiencing liquidity problems. It is also in default on $7,250,000 of its mortgages and other notes payable due to its inability to service the indebtedness on a current basis, including $6,400,000 indebtedness to AMIT. Included in the debt to AMIT are two second mortgages secured by Southgate Village Apartments and Springdale Lake Estates Mobile Home Park totalling $4,600,000 which are in default due to nonpayment of interest. Also included in the debt to AMIT are mortgage notes payable secured by University Park Center - Phase IV in the amount of $1,800,000, which is recourse to the Partnership. In addition, $850,000 in debt, which is secured by University Park Center - Phase III is in default due to nonpayment of interest. As mentioned previously, on July 21, 1995, and on May 24, 1995, Phase III and Phase IV were sold at a foreclosure sale, respectively. Under foreclosure proceedings, the property was sold to the lender, however, the Partnership has a one year redemption period during which it may pay off the debt, including related accrued interest, and retain the property. If the Partnership cannot pay the debt on the property, the title to the property will transfer to the lender at the close of the one year redemption period. AMIT issued a deficiency Judgement against the Partnership on March 3, 1995 in the original amount of $451,406 for the $1,800,000 note. The Judgement constitutes a first lien against University Center Phase I and II, which is also collateral on a $2,600,000 promissory note to AMIT. As of September 30, 1995, the General Partner is negotiating with AMIT an Agreement for Deed in Lieu of Foreclosure for University Center Phase I and II. If such negotiations are successful, the Partnership will lose Phase I and II of the University Park Center, in exchange for (1) the satisfaction of the Judgement, the balance of which is $460,979 at September 30, 1995, and (2) the satisfaction of a portion of the outstanding amount of the $2,600,000 promissory note being an amount equal to $880,000 of accrued interest and late penalties. The Partnership also had a note payable to Mesa Dunes of $5,000,000, secured by its 50% interest in Mesa Dunes, in default due to nonpayment of interest. 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. The Partnership is presently paying non-debt related expenses of the properties, is current on two first mortgage notes payable and is making partial interest payments on certain mortgages in default. It is the General Partner's intent at this time to continue to operate the Partnership as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from these uncertainties. PART II - OTHER INFORMATION Item 1. Legal Proceedings In July 1993, Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust formerly affiliated with Angeles Corporation ("Angeles"), 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"). 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% 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% of the vote). Between the date of acquisition of these shares (November 24, 1992) and March 31, 1995, MAE GP had 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. 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 totalling $1,932,975 (the "Settlement Amount") plus interest at closing. 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. Also, AMIT made a loan to the Partnership on June 29, 1990, in the amount of $2,600,000, secured by the Partnership's real property known as Springdale Lake Estates Mobile Home Park. This loan was made on a non-recourse basis. AMIT now asserts that this loan is recourse by virtue of a certain amendment purportedly entered into as of November 1, 1992, but which the Partnership has been informed and believes was actually executed in December of 1992 ("Note Modification"). The Partnership has been further informed and believes that the amendment may have been executed at the direction of Angeles by an individual in his purported capacity as an officer of the General Partner of the Partnership at a time when such person was not in fact an officer of such entity. Accordingly, the Partnership filed a Proof of Claim in the Angeles bankruptcy proceeding with respect to such purported amendment. Additionally, the Partnership filed a Proof of Claim in the Angeles Funding Corporation and Angeles Real Estate Corporation bankruptcy proceedings on similar grounds. Both Angeles Funding Corporation and Angeles Real Estate Corporation are affiliates of Angeles. Angeles has agreed to cooperate with the Partnership in any action commenced by or against them by AMIT asserting that the $2,600,000 obligation owed to AMIT is recourse to the Partnership. Angeles further agreed to waive the attorney-client privilege with respect to the Note Modification. Accordingly, the Partnership withdrew its Proof of Claim on August 9, 1995. The Partnership has had and continues to have discussions with AMIT regarding resolution of this issue. No agreement has been reached with AMIT at this time. Also, 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. Additionally, 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 Registrant is unaware of any other pending or outstanding litigation that is not of a routine nature. The General Partner of the Registrant 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 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. (b) Reports on Form 8-K: None. 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: November 14, 1995 EX-27 2
5 This schedule contains summary financial information extracted frm Angeles Income Properties, Ltd. V 1995 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB. 0000792181 ANGELES INCOME PROPERTIES, LTD. V. 1 9-MOS DEC-31-1995 SEP-30-1995 442,994 0 56,309 282 0 0 12,654,743 3,574,196 10,069,929 0 12,936,763 0 0 0 (10,172,001) 10,069,929 0 1,729,299 0 0 3,101,950 0 1,646,012 247,029 0 247,029 0 496,881 0 247,029 5.44 0 The Registrant has an unclassified balance sheet.
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