-----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, Q2rOKN2UalTk/gDU59As6ARk9R0Cc4isnMZnoHUB3pOOwzz17VdvaC/9Lp96B+m7 W7wID6Zrv3dOg/SpFuWzMQ== 0000792181-96-000001.txt : 19960321 0000792181-96-000001.hdr.sgml : 19960321 ACCESSION NUMBER: 0000792181-96-000001 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960320 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES INCOME PROPERTIES LTD V CENTRAL INDEX KEY: 0000792181 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 954049903 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-15547 FILM NUMBER: 96536405 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10KSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (Mark One) X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-15547 ANGELES INCOME PROPERTIES, LTD. V California 95-4049903 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) One Insignia Financial Plaza, P.O. Box 1089 29602 Greenville, South Carolina (Zip Code) (Address of principal executive offices) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Limited Partnership Units (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. X State issuer's revenues for its most recent fiscal year. $2,208,185 State the aggregate market value of the voting stock held by nonaffiliates of the Registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. Market value information for Registrant's Partnership Interests is not available. Should a trading market develop for these Interests, it is Management's belief that such trading would not exceed $25 million. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Description of Business Angeles Income Properties, Ltd. V ("the Partnership" or "Registrant") is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act pursuant to the Certificate and Agreement of Limited Partnership (hereinafter referred to as "the Agreement") dated June 29, 1984. The Partnership's general partner is Angeles Realty Corporation II, a California corporation (hereinafter referred to as the "General Partner" or "ARCII"). The Partnership, through its public offering of Limited Partnership Units, sold 45,450 units aggregating $45,450,000. The General Partner contributed capital in the amount of $1,000 for a 1% interest in the Partnership. The Partnership was formed for the purpose of acquiring fee and other forms of equity interests in various types of real property. The Partnership presently owns three investment properties. The General Partner of the Partnership intends to maximize the operating results and, ultimately, the net realizable value of each of the Partnership's properties in order to achieve the best possible return for the investors. Such results may best be achieved through property sales, refinancings, debt restructurings or relinquishment of the assets. The Partnership intends to evaluate each of its holdings periodically to determine the most appropriate strategy for each of the assets. The Partnership has no full time employees. The General Partner is vested with full authority as to the general management and supervision of the business and affairs of the Partnership. Limited Partners have no right to participate in the management or conduct of such business and affairs. Insignia Management Group, L.P. provides day-to-day management services for the Partnership's investment properties. The business in which the Partnership is engaged is highly competitive, and the Partnership is not a significant factor in its industry. Each investment property is located in or near a major urban area and, accordingly, competes for rentals not only with similar properties in its immediate area but with hundreds of similar properties throughout the urban area. Such competition is primarily on the basis of location, rents, services and amenities. In addition, the Partnership competes with significant numbers of individuals and organizations (including similar partnerships, real estate investment trusts and financial institutions) with respect to the sale of improved real properties, primarily on the basis of the prices and terms of such transactions. Item 2. Description of Properties: The following table sets forth the Registrant's investments in properties:
Date of Property Purchase Type of Ownership Use Southgate Village Apts. 06/26/87 Fee ownership, subject to a Residential Rental first and second mortgage 152 units Springdale Lake Estates 12/31/86 Fee ownership, subject to a Residential Rental Mobile Home Park first and second mortgage 443 pads University Park Center- 06/29/87 Fee ownership, subject to a Commercial Phase III first mortgage 26,410 sq. ft.
The Partnership lost Phases I and II of University Park Center via a Deed in Lieu of Foreclosure effective November 17, 1995 and Phase IV was lost through foreclosure effective December 2, 1995. The Partnership 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. Finally, 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 will be used to pay Partnership liabilities. As a result, Fort Worth was dissolved effective December 31, 1995, and, therefore, the Partnership lost its 57% interest in Fort Worth. Schedule of Properties:
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis Southgate Village Apartments $ 3,717,741 $ 1,027,440 5-40 yrs (1) 2,866,604 Springdale Lake Estates Mobile Home Park 5,392,202 1,214,305 5-40 yrs (1) 3,665,189 University Park Center - Phase III 708,407 273,135 2-40 yrs (1) 1,240,437 $ 9,818,350 $ 2,514,880 $ 7,772,230 (1) Straight line
See Note B of the financial statements included in Item 7 for a description of the Partnership's depreciation policy. Schedule of Mortgages:
Principal Principal Balance At Balance December 31, Interest Period Maturity Due At Property 1995 Rate Amortized Date Maturity Southgate Village Apts. 1st mortgage $ 2,653,935 10.63% 25 years 01/2006 $ 1,976,767 2nd mortgage, in default (1) 2,000,000 11.50% (2) 03/1995 2,000,000 Springdale Lake Estates Mobile Home Park 1st mortgage 2,815,487 8.75% 26 years 09/1998 2,693,054 2nd mortgage, in default (1) 1,720,000 12.25% (2) 06/1995 1,720,000 University Park Center Phase III, in default 850,000 10.68% (2) 12/2014 850,000 Angeles Income Properties, Ltd., V Note payable (4) 198,172 (3) (2) 11/1997 198,172 Total $10,237,594 $ 9,437,993 (1) Loan provided by Angeles Mortgage Investment Trust (2) Interest only payments (3) Prime rate plus 2% (4) Loan from Angeles Acceptance Pool, L.P.
Average annual rental rate and occupancy for 1995 and 1994 for each property are as follows:
Average Annual Average Annual Rental Rates Occupancy Property 1995 1994 1995 1994 Southgate Village Apts. $5,356/unit $5,389/unit 92% 94% Springdale Lake Estates Mobile Home Park 2,102/unit 2,145/unit 76%(2) 80% University Park Center - 7.35/s.f. (1) 66% (1) Phase III (1) Information relating to University Park Center - Phase III, which is in receivership, was not available at December 31, 1994. (2) Low occupancy can be attributed to mobile home dealers purchasing mobile homes and moving these homes to the dealership or to private ground. In addition, the economy in the Belton, Missouri area is not good.
As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties of the Partnership are subject to competition from other residential apartment complexes, mobile home parks and commercial buildings in the area. The General Partner believes that all of the properties are adequately insured. The multi-family residential properties' lease terms are for one year or less. No residential tenant leases 10% or more of the available rental space. The following is a schedule of the lease expirations for the years 1996-2005:
Number of % of Gross Expirations Square Feet Annual Rent Annual Rent University Park Center Phase III 1996 2 2,030 $18,565 26% 1997 -- -- -- -- 1998 2 4,490 38,765 54% 1999 1 1,600 14,400 20% 2000-2005 -- -- -- --
Real estate taxes and rates in 1995 for each property were: 1995 1995 Billing Rate Southgate Village Apts. $70,490 6.03 Springdale Lake Estates Mobile Home Park 35,544 5.81 University Park Center - Phase III 44,930 5.37 Item 3. 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 1.2% 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, owns 63,200 Class A Shares of AMIT. These Class A Shares entitle LAC to vote approximately 1.5% of the total shares. 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. 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. Finally, the Partnership has filed a Proof of Claim in the bankruptcy proceeding of Angeles concerning the Partnership's indebtedness to Angeles Acceptance Pool, L.P. ("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 4. Submission of Matters to a Vote of Security Holders The Unit holders of the Partnership did not vote on any matter during the fourth quarter of the fiscal year covered by this report. PART II Item 5. Market for the Partnership's Common Equity and Related Security Holder Matters The Partnership, a publicly-held limited partnership, sold 45,450 Limited Partnership Units during its offering period through June 10, 1987, and currently has 45,021 Limited Partnership Units outstanding and 3,805 Limited Partners of record. There is no intention to sell additional Limited Partnership Units nor is there an established market for these units. During the year, the number of Limited Partnership Units remained the same. In abandoning his or her Limited Partnership Units, a Limited Partner relinquishes all right, title and interest in the Partnership as of the date of abandonment. The Partnership has discontinued making cash distributions from operations until and unless the financial condition of the Partnership and other relevant factors warrant resumption of distributions. Item 6. Management's Discussion and Analysis or Plan of Operation Results of Operations This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. The Partnership realized net income of $4,633,549 for the year ended December 31, 1995, as compared to a net loss of $2,668,413 for the year ended December 31, 1994. The increase in net income for the year ended December 31, 1995, versus the year ended December 31, 1994, is due primarily to decreased expenses, increased equity income from the joint ventures and gains recognized as a result of the foreclosure of University Park Center Phases I, II and IV. The decrease in rental income for the year ended December 31, 1995, as compared to the year ended December 31, 1994, is a result of a decreased occupancy at Southgate Village Apartments and Springdale Lake Estates Mobile Home Park. The increase in other income can be attributed to an increase in lease cancellation fees, application fees and late charge collections at Southgate Village Apartments. The decrease in operating expenses for the year ended December 31, 1995, versus the year ended December 31, 1994, is due to a decrease in water and sewer expense at Springdale Lake Estates Mobile Home Park. During 1995, meter readings of the property's water/sewer usage were read improperly resulting in an approximate $100,000 reduction in charges to the property over 1994. Per discussion with officials of the City of Belton (Missouri) Utility Company, there is no way to quantify the amount of error in the readings, therefore the property will not be billed for any catch-up. The decrease in general and administrative expenses for the year ended December 31, 1995, as compared to the year ended December 31, 1994, is primarily related to decreased expense reimbursements for partnership administrative services. The increase in maintenance expense for 1995 versus 1994 is primarily caused by increased contract services for repairs and maintenance and an increase in snow removal costs. The increase in contract services is due to a shortage of staff as a result of the loss of the on-site maintenance technician. 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. Property tax expense decreased primarily due to the decreased assessment of Springdale Lake Estates Mobile Home Park in 1995. Bad debt expense relates to receivables deemed uncollectible from tenants at University Park Center. Tenant reimbursements are lower in 1995 than in 1994. Due to changes in the management companies at University Park Center Phase III, the detail data needed to accurately estimate the receivable in 1994 was not available. The increase in the equity income of the joint venture can be attributed to Fort Worth. On April 1, 1995, Fort Worth realized approximately $1,900,000 in bad debt recovery as a result of a partial recovery of its receivable from AMIT. In addition, at December 31, 1995, Fort Worth was effectively dissolved resulting in approximately $5,200,000 in debt forgiveness as a result of the write-off of all outstanding non-recourse liabilities of Fort Worth. Finally, as a result of the sale of Fort Worth's remaining asset, the W.T. Waggoner Building, on March 22, 1995, Fort Worth realized a considerable decrease in costs and expenses from 1994 to 1995. As a result of the loss of University Park Center Phases I, II and IV, the Partnership realized a $313,121 gain on transfer of property in foreclosure and a $1,929,788 extraordinary gain on forgiveness of debt. The gain on transfer of property in foreclosure represents the difference between the fair value and the net book value of the properties surrendered. The extraordinary gain represents the difference between the settlement amount of the debt and the recorded amount of the debt extinguished pursuant to foreclosure. During 1994, the Partnership realized a loss on disposal of property of $21,670. This loss is primarily due to the re-roofing of one of the five buildings at the Springdale Lake Estates Mobile Home Park property resulting in the write-off of the original roof not yet fully depreciated. 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. Liquidity and Capital Resources At December 31, 1995, the Partnership had unrestricted cash of $292,865 compared to $299,918 at December 31, 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 property improvements in 1995 and due to lack of distributions from joint ventures in 1995. Net cash used in financing activities remained stable from 1994 to 1995. The accompanying financial statements have been prepared assuming Angeles Income Properties, Ltd. V (the "Partnership" or "Registrant") will continue as a going concern. The Partnership has incurred recurring operating losses and continues to suffer from inadequate liquidity. It is also in default on $4,570,000 of certain of its mortgages and other notes payable 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 had a recourse first mortgage note payable to Angeles Mortgage Investment Trust ("AMIT"), a lending trust sponsored by a former affiliate of the General Partner, 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 sherriff'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 - Phases I and II and agreed to waive the right of redemption on Phase IV. See Note C for further discussion. The Partnership's mortgage of $850,000 secured by University Park Center - Phase III is in default due to nonpayment of interest. The lender has initiated foreclosure proceedings on Phase III, and the Partnership expects to lose this property in 1996. The Partnership has second mortgages to Angeles Mortgage Investment Trust ("AMIT"), a lending trust sponsored by a former affiliate of the General Partner, totaling $3,720,000 and secured by Southgate Village Apartments and Springdale Lake Estates Mobile Home Park. This indebtedness is in default due to nonpayment of interest. In addition, the second mortgage in the amount of $2,000,000 secured by Southgate Village Apartments is recourse to the Partnership. Subsequent to December 31, 1995, a formal demand for payment of the unpaid principal balance and accrued interest was received from the lender for debt secured by Southgate Village Apartments. The aggregate amount of this indebtedness at December 31, 1995 is $2,726,219. 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 the two second mortgages in default. The General Partner does not have any other plans to remedy the liquidity problems the Partnership is currently experiencing. 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 this uncertainty. Item 7. Financial Statements ANGELES INCOME PROPERTIES, LTD. V LIST OF FINANCIAL STATEMENTS Independent Auditors' Report Balance Sheet - December 31, 1995 Statements of Operations - Years ended December 31, 1995 and 1994 Statements of Changes in Partners' Deficit - Years ended December 31, 1995 and 1994 Statements of Cash Flows - Years ended December 31, 1995 and 1994 Notes to Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Angeles Income Properties, Ltd. V We have audited the accompanying balance sheet of Angeles Income Properties, Ltd. V as of December 31, 1995, and the related statements of operations, changes in partners' deficit and cash flows for each of the two years in the period ended December 31, 1995. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our report. The accompanying financial statements have been prepared assuming that Angeles Income Properties, Ltd. V will continue as a going concern. As more fully described in Note A, the Partnership has incurred recurring operating losses, is in default on certain loans and does not generate sufficient cash flows to meet current operating requirements. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note A. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Because of the possible material effects on the financial statements referred to above of the matters described in the preceding paragraph, we are unable to, and do not, express an opinion on these financial statements. /S/ ERNST & YOUNG LLP Greenville, South Carolina February 13, 1996 ANGELES INCOME PROPERTIES, LTD. V BALANCE SHEET December 31, 1995 Assets Cash and cash equivalents: Unrestricted $ 292,865 Restricted--tenant security deposits 67,082 Accounts receivable 17,505 Escrow deposit for taxes 99,139 Other assets 95,950 Investment properties (Notes D and G): Land $ 1,008,411 Buildings and related personal property 8,809,939 9,818,350 Less accumulated depreciation (2,514,880) 7,303,470 $ 7,876,011 Liabilities and Partners' Deficit Liabilities Accounts payable $ 34,539 Tenant security deposits 69,823 Accrued taxes 131,647 Accrued interest 2,207,621 Due to affiliate (Note F) 882,185 Other liabilities 98,083 Notes payable, including $4,570,000 in default (Notes D and G) 10,237,594 Partners' Deficit General partner $ (447,656) Limited partners (45,021 units issued and outstanding) (5,337,825) (5,785,481) $ 7,876,011 See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V STATEMENTS OF OPERATIONS
Years Ended December 31, 1995 1994 Revenues: Rental income $ 2,137,686 $ 2,214,582 Other income 70,499 52,926 Total revenues 2,208,185 2,267,508 Expenses: Operating 669,489 826,166 General and administrative 309,546 469,669 Property management fees 149,264 115,089 Maintenance 245,726 195,145 Depreciation 363,059 393,442 Amortization 20,371 23,567 Interest 2,072,865 2,738,206 Property taxes 385,091 427,818 Bad debt expense 54,365 89,609 Tenant reimbursements (372,610) (422,358) Total expenses 3,897,166 4,856,353 Loss before equity in income (loss) of joint venture, gain on transfer of property in foreclosure, loss on disposal of property and extraordinary gain (1,688,981) (2,588,845) Equity in income (loss) of joint ventures (Note H) 4,079,621 (57,898) Gain on transfer of property in foreclosure (Note C) 313,121 -- Loss on disposal of property -- (21,670) Income (loss) before extraordinary item 2,703,761 (2,668,413) Extraordinary gain - forgiveness of debt (Note C) 1,929,788 -- Net income (loss) $ 4,633,549 $(2,668,413) Net income (loss) allocated to general partner (1%) $ 46,335 $ (26,684) Net income (loss) allocated to limited partners (99%) 4,587,214 (2,641,729) Net income (loss) $ 4,633,549 $(2,668,413) Per limited partnership unit: Income (loss) before extraordinary item $ 59.45 $ (58.68) Extraordinary gain 42.44 -- Net income (loss) $ 101.89 $ (58.68) See Accompanying Notes to Financial Statements
ANGELES INCOME PROPERTIES, LTD. V STATEMENT OF CHANGES IN PARTNERS' DEFICIT
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 45,450 $ 1,000 $45,450,000 $ 45,451,000 Partners' deficit at December 31, 1993 45,450 $(467,307) $(7,283,310) $ (7,750,617) Abandonment of Limited Partnership Units (Note J) (429) -- -- -- Net loss for the year ended December 31, 1994 -- (26,684) (2,641,729) (2,668,413) Partners' deficit at December 31, 1994 45,021 (493,991) (9,925,039) (10,419,030) Net income for the year ended December 31, 1995 -- 46,335 4,587,214 4,633,549 Partners' deficit at December 31, 1995 45,021 $(447,656) $(5,337,825) $ (5,785,481) See Accompanying Notes to Financial Statements
ANGELES INCOME PROPERTIES, LTD. V STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995 1994 Cash flows from operating activities: Net income (loss) $ 4,633,549 $(2,668,413) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Equity in (income) loss of joint ventures (4,079,621) 57,898 Depreciation 363,059 393,442 Amortization of loan costs and leasing commissions 76,905 145,228 Loss on disposal of property -- 21,670 Bad debt expense 54,365 89,609 Extraordinary gain-forgiveness of debt (1,929,788) -- Gain on transfer of property in foreclosure (313,121) Change in accounts: Restricted cash (22,955) (7,878) Accounts receivable (67,318) (43,406) Escrows for taxes (55,218) (5,295) Other assets (67,602) (5,480) Accounts payable (154,581) 162,794 Tenant security deposit liabilities 1,480 1,021 Accrued taxes 87,087 (90,425) Accrued interest 1,382,762 1,620,204 Due to affiliates 123,712 277,333 Other liabilities 132,052 (85,815) Net cash provided by (used in) operating activities 164,767 (137,513) Cash flows from investing activities: Property improvements and replacements (97,837) (27,109) Distributions from joint venture -- 300,250 Net cash (used in) provided by investing activities (97,837) 273,141 Cash flows used in financing activities: Payments on mortgage notes payable (73,983) (61,957) Net (decrease) increase in cash (7,053) 73,671 Cash and cash equivalents at beginning of period 299,918 226,247 Cash and cash equivalents at end of period $ 292,865 $ 299,918 Supplemental disclosure of cash flow information Cash paid for interest $ 633,569 $ 996,341 See Accompanying Notes to Financial Statements
ANGELES INCOME PROPERTIES, LTD. V STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES Foreclosures On April 1, 1995 the Partnership lost its interest in the Mesa Dunes Joint Venture as Mesa Dunes foreclosed on its collateral. In November 1995 the Partnership granted Deeds in Lieu of Foreclosure on University Park Center - Phases I, II, and IV. See Note C. In connection with these non-cash transactions the following accounts were adjusted: Accounts Receivable $ (38,156) Other Assets (227,895) Investment in Joint Venture (6,118,310) Investment Properties (1,768,036) Accounts Payable and Other Accrued Liabilities 150,364 Accrued Taxes 106,143 Accrued Interest 2,458,799 Notes Payable 7,680,000 See Accompanying Notes to Financial Statements ANGELES INCOME PROPERTIES, LTD. V Notes to Financial Statements December 31, 1995 Note A - Going Concern The accompanying financial statements have been prepared assuming Angeles Income Properties, Ltd. V (the "Partnership" or "Registrant") will continue as a going concern. The Partnership has incurred recurring operating losses and continues to suffer from inadequate liquidity. It is also in default on $4,570,000 of certain of its mortgages and other notes payable 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 had a recourse first mortgage note payable to Angeles Mortgage Investment Trust ("AMIT"), a lending trust sponsored by an affiliate of the General Partner, 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 sherriff'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 - Phases I and II and agreed to waive the right of redemption on Phase IV. See Note C for further discussion. The Partnership's mortgage of $850,000 secured by University Park Center - Phase III is in default due to nonpayment of interest. The lender has initiated foreclosure proceedings on Phase III, and the Partnership expects to lose this property in 1996. The Partnership has second mortgages totalling $3,720,000 and secured by Southgate Village Apartments and Springdale Lake Estates Mobile Home Park. This indebtedness is in default due to nonpayment of interest. In addition, the second mortgage in the amount of $2,000,000 secured by Southgate Village Apartments is recourse to the Partnership. Subsequent to December 31, 1995, a formal demand for payment of the unpaid principal balance and accrued interest was received from the lender for the debt secured by Southgate Village Apartments. The aggregate amount of this indebtedness at December 31, 1995 is $2,726,219. The Partnership intends to initiate negotiations with AMIT regarding this indebtedness and the General Partner believes that foreclosure by AMIT is unlikely due to the substantial prepayment penalty of the first mortgage. 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 the two second mortgages in default. The General Partner does not have any other plans to remedy the liquidity problems the Partnership is currently experiencing; however, it intends 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 this uncertainty. Note B Organization and Significant Accounting Policies Organization: Angeles Income Properties, Ltd. V (the "Partnership ) is a California limited partnership organized on June 29, 1984, to acquire and operate residential and commercial real estate properties. The Partnership's General Partner is Angeles Realty Corporation II ("ARC II"), an affiliate of Insignia Financial Group, Inc. As of December 31, 1995, the Partnership operates two residential and one commercial property located in or near major urban areas in the United States. Investment in Joint Ventures: The Partnership accounted for its 50% investment in Mesa Dunes and its 57% investment in Angeles Fort Worth Option Joint Venture ("Fort Worth") using the equity method of accounting (see Note H). Under the equity method, the Partnership recorded its equity interest in earnings or losses of the joint ventures; however, the investment in the joint ventures would be recorded at an amount less than zero (a liability) only to the extent of the Partnership's share of net liabilities of the joint ventures. Allocations and Distributions to Partners: In accordance with the Agreement, any gain from the sale or other disposition of Partnership assets will be allocated first to the General Partner to the extent of the amount of any Brokerage Compensation and Incentive Interest to which the General Partner is entitled. Any gain remaining after said allocation will be allocated to the General Partner and Limited Partners in proportion to their interests in the Partnership. The Partnership will allocate other profits and losses 1% to the General Partner and 99% to the Limited Partners. Except as discussed below, the Partnership will allocate distributions 1% to the General Partner and 99% to the Limited Partners. Upon the sale or other disposition, or refinancing, of any asset of the Partnership, the Distributable Net Proceeds shall be distributed as follows: (i) First, to the Partners in proportion to their interests until the Limited Partners have received proceeds equal to their Original Capital Investment applicable to the property; (ii) Second, to the Partners until the Limited Partners have received distributions from all sources equal to their 6% Cumulative Distribution; (iii) Third, to the General Partner until it has received an amount equal to 3% of the aggregate Disposition Prices of all properties or investments sold (Initial Incentive Interest); (iv) Fourth, to the Partners in proportion to their interests until the Limited Partners have received distributions from all sources equal to their additional 8% Cumulative Distribution; and (v) Thereafter, 76% to the Limited Partners in proportion to their interests and 24% ("Final Incentive Interest") to the General Partner. Depreciation: Depreciation is computed utilizing the straight-line method over the estimated lives of the investment properties and related personal property. For Federal income tax purposes, depreciation is computed by using the straight- line method over an estimated life of 5 to 20 years for personal property and 15 to 40 years for real property. Note B - Organization and Significant Accounting Policies (continued) Cash and Cash Equivalents: The Partnership considers all highly liquid investments with a maturity when purchased of three months or less to be cash equivalents. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Investment Properties: Prior to the fourth quarter of 1995, investment properties were carried at the lower of cost or estimated fair value, which was determined using the higher of the property's non-recourse debt amount, when applicable, or the net operating income of the investment property capitalized at a rate deemed reasonable for the type of property. During the fourth quarter of 1995 the Partnership adopted FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The effect of adoption was not material. Loan Costs: Loan costs, included in other assets, of $228,878 are being amortized on a straight-line basis over the lives of the loans. Current accumulated amortization is $132,928. Advertising Costs: Advertising costs, $27,636 in 1995 and $34,871 in 1994, are charged to expense as they are incurred and are included in operating expenses. Lease Commissions: Lease commissions are being amortized using the straight line method over the terms of the respective leases. Leases: The Partnership generally leases apartment units for twelve-month terms or less. Commercial building lease terms are generally for periods ranging from twelve months to four years. Tenant Security Deposits: The Partnership requires security deposits from all apartment lessees for the duration of the lease. Deposits are refunded when the tenant vacates the apartment if there has been no damage to the unit. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Fair Value: In 1995, the Partnership implemented Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," which requires disclosure of fair value information about financial instruments for which it is practicable to estimate that value. The carrying amount of the Partnership's cash and cash equivalents approximates fair value due to short-term maturities. The Partnership estimates the fair value of its fixed rate mortgage by discounted cash flow analysis, based on estimated borrowing rates currently available to the Partnership. (See Note D) Reclassifications: Certain reclassifications have been made to the 1994 balances to conform to the 1995 presentation. Note C - Gain on Extinguishment of Debt and Foreclosure of Properties The Partnership had a note payable to Mesa Dunes in the amount of $5,000,000 plus accrued interest collateralized by its 50% ownership interest in Mesa Dunes. This note was in default due to failure to perform under the terms and conditions of the note, including failure to make interest payments when due. In December 1994 Mesa Dunes formally notified the Partnership that the note was in default. In February 1995 Mesa Dunes gave notice that it intended to foreclose on its collateral. On April 1, 1995 Mesa Dunes foreclosed and the Partnership lost its interest in the joint venture. Upon the foreclosure the Partnership recognized an extraordinary gain on the extinguishment of debt of $496,881, which represented the difference between its investment in Mesa Dunes and the debt extinguished pursuant to the foreclosure. The Partnership had a recourse first mortgage note payable to 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 for $2,175,000, subject to Minnesota law of one year right of redemption, leaving a deficiency judgment against the Partnership of $451,000. In November 1995, the Partnership granted to AMIT Deeds in Lieu of Foreclosure on University Park Center - Phases I and II and agreed to waive the right of redemption on Phase IV. These Deeds in Lieu of Foreclosure were used to satisfy the $451,000 deficiency. AMIT also granted a reduction of $880,000 of its second mortgage on Springdale Lake Estates Mobile Home Park. The remaining balance at December 31, 1995 for the Springdale second mortgage is $1,720,000 in principal plus accrued interest. The net fair value and the recorded net book value of the properties lost on the date of foreclosure totaled $2,081,157 and $1,768,036, respectively. The net gain on foreclosure amounted to $1,746,028, of which $313,121 represented a gain on transfer of property in foreclosure and $1,432,907 represented a gain on the extinguishment of related debt. The gain on transfer of assets represents the difference between fair value and the net book value of the property surrendered. The extraordinary gain represents the difference between the settlement amount of the debt and the recorded amount of the debt extinguished in the foreclosure. Note D - Notes Payable The principle terms of notes payable are as follows:
Monthly Principal Principal Payment Stated Balance Balance At Including Interest Maturity Due At December 31, Interest Rate Date Maturity 1995 Mortgages: Southgate Village Apts. 1st mortgage $ 26,687 10.63% 01/2006 $ 1,976,767 $ 2,653,935 2nd mortgage, in default (1) 19,167 11.5% 03/1995(2) 2,000,000 2,000,000 Springdale Lake Estates Mobile Home Park 1st mortgage 23,836 8.75% 09/1998 2,693,054 2,815,487 2nd mortgage, in default (1) 17,558 12.25% 06/1995(2) 1,720,000 1,720,000 University Park Center Phase III, in default 7,565 10.68% 12/2014(2) 850,000 850,000 Angeles Income Properties, Ltd., V Note payable (4) (2) (3) 11/1997(2) 198,172 198,172 $ 94,813 $ 9,437,993 $10,237,594 (1) Loan provided by AMIT (See Note F). (2) Interest only payments. (3) Prime rate plus 2% (4) Loan from Angeles Acceptance Pool, L.P. (see Note F)
The estimated fair value of the Partnership's aggregate first mortgages that are not in default is approximately $6,000,000 as compared to the carrying value of $5,469,423. This estimate is not necessarily indicative of the amounts the Partnership may pay in actual market transactions. The General Partner believes that it is not appropriate to use the Partnership's incremental borrowing rate for the mortgages in default and the note payable to an affiliate (Note F) as there is currently no market in which the Partnership could obtain similar financing. Therefore, the General Partner considers estimation of fair value to be impracticable. The mortgage notes payable are secured by pledge of certain of the Partnership s rental properties and by pledge of revenues from the respective rental properties. Certain of the notes require prepayment penalties if repaid prior to maturity. Note D Notes Payable (continued) Scheduled principal payments of notes payable subsequent to December 31, 1995, are as follows: 1996 $ 4,651,463 1997 287,879 1998 2,778,836 1999 55,198 2000 61,357 Thereafter 2,402,861 $10,237,594 Note E - Income Taxes Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Differences between the net loss as reported and Federal taxable loss result primarily from (1) investments in joint venture differences, (2) foreclosure of investment properties, (3) reserve for bad debts, and (4) depreciation over different methods and lives and on differing cost basis of investment properties. The following is a reconciliation of reported net loss and Federal taxable loss: 1995 1994 Net income/(loss) as reported $ 4,633,549 $(2,668,413) Add (deduct): Depreciation differences (141,380) (110,867) Unearned income (5,986) 6,796 Foreclosure of investment properties (4,158,571) -- Investments in joint venture differences (8,822,652) 45,466 Bad debt expense (107,839) 91,317 Accrued audit 5,950 (51,750) Other -- 18,375 Federal taxable loss $(8,596,929) $(2,669,076) Federal taxable loss per limited partnership unit $ (189.04) $ (58.69) Note E - Income Taxes (continued) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities: Net deficit as reported $(5,785,481) Land and buildings 1,178,522 Accumulated depreciation (709,762) Syndication and distribution costs 6,343,568 Accruals 38,459 Net assets - Federal tax basis 1,065,306 Note F Transactions with Affiliated Parties The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the General Partner and affiliates in 1995 and 1994: 1995 1994 Property management fees $ 96,303 $115,089 Reimbursement for services of affiliates including $882,185 and $758,473 accrued at December 31, 1995 and 1994, respectively 226,123 344,626 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 F 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 $198,172 at December 31, 1995, and December 31, 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 $21,469 and $18,331 during the years ended December 31, 1995 and 1994, respectively. AMIT currently provides financing to the Partnership in the total principal amount of $3,720,000 secured by some of the Partnership's investment properties. All of this debt is in default at December 31, 1995. Total interest expense on this financing was $697,201 and $974,192 for the years ended December 31, 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 1.2% 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, owns 63,200 Class A Shares of AMIT. These Class A Shares entitle LAC to vote approximately 1.5% of the total shares. Note F - Transactions with Affiliated Parties (continued) 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. 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. Note G - Investment Properties and Accumulated Depreciation
Initial Cost To Partnership Cost Buildings Capitalized and Related (Removed) Personal Subsequent to Description Encumbrances Land Property Acquisition Southgate Village Apts. $ 4,653,935 $ 269,066 $ 3,094,363 $ 354,312 Springdale Lake Estates Mobile Home Park 4,535,487 705,835 4,765,754 (79,387) University Park Center 850,000 1,031,471 5,844,973 (6,168,037) Angeles Income Properties, Ltd. V 198,172 -- -- -- Totals $10,237,594 $2,006,372 $13,705,090 $(5,893,112)
Gross Amount At Which Carried At December 31, 1995 Buildings And Related Personal Accumulated Date Depreciable Description Land Property Total Depreciation Acquired Life-Years Southgate Village $ 269,066 $ 3,448,675 $ 3,717,741 $ 1,027,440 06/26/87 10-40 Springdale Lake Mobile Home Park 653,835 4,738,367 5,392,202 1,214,304 12/31/86 10-40 University Park Phase III 85,510 622,897 708,407 273,136 06/29/87 10-40 Totals $1,008,411 $ 8,809,939 $ 9,818,350 $2,514,880
The depreciable lives included above are for the buildings and components. The depreciable lives for related personal property are for 5 to 7 years. Note G - Investment Properties and Accumulated Depreciation (continued) Reconciliation of "Investment Properties and Accumulated Depreciation": Years Ended December 31, 1995 1994 Investment Properties Balance at beginning of year $12,622,916 $12,639,634 Property improvements 97,837 27,109 Property valuation reserve -- -- Disposal of property (2,902,403) (43,827) Balance at end of year $ 9,818,350 $12,622,916 Accumulated Depreciation Balance at beginning of year $ 3,286,188 $2,914,903 Additions charged to expense 363,059 393,442 Disposal of property (1,134,367) (22,157) Balance at end of year $ 2,514,880 $ 3,286,188 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1995 and 1994 is $10,996,872 and $17,060,464. The accumulated depreciation taken for Federal income tax purposes at December 31, 1995 and 1994 is $3,224,642 and $3,777,393. As mentioned previously, the mortgage on University Park Center - Phase III in the amount of $850,000 plus accrued interest is in default due to nonpayment of interest. In 1995 the lender initiated foreclosure proceedings on this property, which has a carrying value of $435,000 at December 31, 1995. The Partnership expects to lose the property in 1996, and it has been accounted for as "held for disposal" in accordance with FAS 121. No impairment loss has been recognized as the estimated fair value less costs to dispose exceeds the carrying value. In addition, the property will not be further depreciated. The Partnership will recognize a gain upon foreclosure due to the extinguishment of the debt. The Partnership recognized rental revenues and operating expenses of approximately $160,000 and $134,000, respectively, for this property for the year ended December 31, 1995. Note H - Investment in Joint Ventures The Partnership had a 50% investment in Mesa Dunes and a 57% investment in Fort Worth. As mentioned previously, the Partnership lost its 50% interest in Mesa Dunes on April 1, 1995 as Mesa Dunes foreclosed on its collateral for the note in default. In 1995 the Partnership recognized $183,010 as its equity interest in the earnings of Mesa Dunes up to the date it lost its investment; it recognized $631,973 in 1994. Fort Worth's general partners decided to terminate the joint venture in 1995 after the W.T. Waggoner Building, Fort Worth's remaining property, was sold on March 22, 1995. All remaining cash was used to pay Fort Worth's liabilities in January 1996, at which time the joint venture was dissolved. Note H - Investment in Joint Ventures (continued) Condensed balance sheet information of Fort Worth at December 31, 1995, is as follows: Assets Cash $ 62,015 Total $ 62,015 Liabilities Notes payable $ 62,015 Total $ 62,015 The condensed profit and loss statements of Fort Worth are summarized as follows: Years Ended December 31, 1995 1994 Revenue $ 207,399 $ 758,998 Costs and expenses (460,758) (1,969,300) Bad debt recovery 1,932,975 -- Extraordinary gain-forgiveness of debt 5,174,115 -- Net income (loss) $ 6,853,731 $(1,210,302) The increase in income from 1994 to 1995 can be attributed to the following: 1) bad debt recovery as a result of a partial recovery of its receivable from AMIT (See Note F), 2) debt forgiveness as a result of the write-off of all outstanding liabilities of Fort Worth and 3) as a result of the sale of Fort Worth's remaining asset, Fort Worth realized a considerable decrease in costs and expenses from 1994 to 1995. Note I - Operating Leases Tenants of the commercial property are responsible for their own utilities and maintenance of their space, and payment of their proportionate share of common area maintenance, utilities, insurance and real estate taxes. As of December 31, 1995, the Partnership had minimum future rentals under noncancellable leases with terms ranging from twelve months to four years. 1996 $71,730 1997 53,165 1998 44,004 1999 4,800 $173,699 Note J - Abandonment of Limited Partnership Units In 1994, the number of Limited Partnership Units decreased by 429 units, due to limited partners abandoning their units. In abandoning his or her Limited Partnership Unit, a limited partner relinquishes all right, title and interest in the Partnership as of the date of abandonment. However, during the year of abandonment, the Limited Partner will still be allocated his or her share of the income or loss. The loss per Limited Partnership Unit in the accompanying Statements of Operations is calculated based on the number of units outstanding at the beginning of the year. Item 8. Changes in and Disagreements with Accountant on Accounting and Financial Disclosures There were no disagreements with Ernst & Young LLP regarding the 1995 or 1994 audits of the Partnership's financial statements. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act The names of the directors and executive officers of Angeles Realty Corporation II ("ARC II"), the Partnership's General Partner as of December 31, 1995, their age and the nature of all positions with ARC II presently held by them are as follows: Name Age Office Carroll D. Vinson 55 President, Director Robert D. Long, Jr. 28 Controller, Principal Accounting Officer William H. Jarrard, Jr. 49 Vice President John K. Lines, Esq. 36 Vice President and Secretary Kelley M. Buechler 38 Assistant Secretary Carroll D. Vinson has been President of Metropolitan Asset Enhancement, L.P., and subsidiaries since August of 1994. Prior to that, during 1993 to August 1994, Mr. Vinson was affiliated with Crisp, Hughes & Co. (regional CPA firm) and engaged in various other investment and consulting activities. Briefly, in early 1993, Mr. Vinson served as President and Chief Executive Officer of Angeles Corporation, a real estate investment firm. From 1991 to 1993, Mr. Vinson was employed by Insignia in various capacities including Managing Director-President during 1991. From 1986 to 1990, Mr. Vinson was President and a Director of U.S. Shelter Corporation, a real estate services company, which sold substantially all of its assets to Insignia in December 1990. Robert D. Long, Jr. is Controller and Principal Accounting Officer. Prior to joining Metropolitan Asset Enhancement, L.P., he was an auditor for the State of Tennessee and was associated with the accounting firm of Harshman Lewis and Associates. He is a graduate of the University of Memphis. William H. Jarrard, Jr. has been Managing Director - Partnership Administration of Insignia Financial Group, Inc. ("Insignia") since January 1991. Mr. Jarrard was employed by U.S. Shelter in a similar capacity for the five years prior to his joining Insignia. He was previously associated with the accounting firm Ernst and Whinney for eleven years. Mr. Jarrard is a graduate of the University of South Carolina and a certified public accountant. John K. Lines, Esq. has been Insignia's General Counsel and Secretary since June 1994. From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen Financial Corporation, West Palm Beach, Florida. From October 1991 until May 1993, Mr. Lines was a Senior Attorney with BANC ONE CORPORATION, Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was an attorney with Squire Sanders & Dempsey, Columbus, Ohio. Kelley M. Buechler is Assistant Secretary of Insignia. During the five years prior to joining Insignia, she served in a similar capacity for U.S. Shelter. Ms. Buechler is a graduate of the University of North Carolina. Item 10. Executive Compensation No direct form of compensation or remuneration was paid by the Partnership to any officer or director of ARC II. The Partnership has no plan, nor does the Partnership presently propose a plan, which will result in any remuneration being paid to any officer or director upon termination of employment. However, fees and other payments have been made to the Partnership's General Partner and its affiliates, as described in Note E of the Financial Statements included under Item 7, which is incorporated herein by reference. Item 11. Security Ownership of Certain Beneficial Owners and Management As of January 1, 1996, no person owned of record more than 5% of the Limited Partnership Units of the Partnership nor was any person known by the Partnership to own of record and beneficially, or beneficially only, more than 5% of such securities. The Partnership knows of no contractual arrangements, the operation of the terms of which may at a subsequent date result in a change in control of the Partnership, except for: Article 12.1 of the Agreement, which provides that upon a vote of the Limited Partners holding more than 50% of the then outstanding Limited Partnership Units the General Partner may be expelled from the Partnership upon 90 days written notice. In the event that the successor general partner has been elected by Limited Partners holding more than 50% of the then outstanding Limited Partnership Units and if said Limited Partners elect to continue the business of the Partnership, the Partnership is required to pay in cash to the expelled General Partner an amount equal to the accrued and unpaid management fee described in Article 10 of the Agreement and to purchase the General Partner's interest in the Partnership on the effective date of the expulsion, which shall be an amount equal to the difference between (i) the balance of the General Partner's capital account and (ii) the fair market value of the share of Distributable Net Proceeds to which the General Partner would be entitled. Such determination of the fair market value of the share of Distributable Net Proceeds is defined in Article 12.2(b) of the Agreement. Item 12 . Certain Relationships and Related Transactions No transactions have occurred between the Partnership and any officer or director of ARC II. During the year ended December 31, 1995, the transactions that occurred between the Partnership and ARC II and affiliates of ARC II pursuant to the terms of the Agreement are disclosed under Note F of the Partnerships' Financial Statements included under Item 7, which is hereby incorporated by reference. PART IV Item 13. Exhibits and Reports on Form 8-K (a) Exhibits required by Item 601 of Regulation S-B: Refer to Exhibit Index. (b) Reports on Form 8-K: None filed for the quarter ended December 31, 1995. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES INCOME PROPERTIES, LTD. V (A California Limited Partnership) (Registrant) By: Angeles Realty Corporation II By: /s/Carroll D. Vinson Carroll D. Vinson President Date: March 20, 1996 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on the date indicated. /s/Carroll D. Vinson President March 20, 1996 Carroll D. Vinson /s/Robert D. Long, Jr. Controller March 20, 1996 Robert D. Long, Jr. and Principal Accounting Officer ANGELES INCOME PROPERTIES, LTD. V Exhibit Index Exhibit Number Description of Exhibit 3.1 Amended Certificate and Agreement of the Limited Partnership filed in the Partnership's Prospectus dated June 11, 1986 which is incorporated herein by reference 10.1 Promissory Note - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.2 Deed of Trust, Assignment of Leases and Rents and Security Agreement - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.3 Deed of Trust - Option - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.4 Security Agreement - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.5 Option Agreement - Fort Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July 16, 1986 which is incorporated herein by reference. 10.6 Agreement of Purchase and Sale of Real Property with Exhibits - Springdale Lake Estates Mobile Home Park filed in Form 8-K dated December 31, 1986 which is incorporated herein by reference. 10.7 Agreement of Purchase and Sale of Property with Exhibits - Southgate Village Apartments filed in Form 8-K dated June 26, 1987 which is incorporated herein by reference. 10.8 Agreement of Purchase and Sale of Property with Exhibits - University Park Center filed in Form 8-K dated June 29, 1987 which is incorporated herein by reference. 10.9 Agreement of Purchase and Sale of Property with Exhibits - Mesa Dunes Mobile Home Park filed in Form 8-K dated December 23, 1987 which is incorporated herein by reference. 10.10 Beneficiary's Statement of Assumption - Mesa Dunes Mobile Home Park filed in Form 8-K dated December 23, 1987 which is incorporated herein by reference. 10.11 General Partnership Agreement of Partners - Mesa Dunes Mobile Home Park filed in Form 8-K dated December 23, 1987 which is incorporated herein by reference. 10.12 Agreement of Purchase and Sale of Property with Exhibits - Wakonda Shopping Center and Town & Country Shopping Center filed in Form 8-K dated December 30, 1987 which is incorporated herein by reference. 10.13 First Amendment to Agreement of Purchase and Sale of Property with Exhibits - Wakonda Shopping Center and Town & Country Shopping Center filed in Form 8-K dated December 30, 1987 which is incorporated herein by reference. 10.14 Agreement for Consulting Services - Wakonda Shopping Center and Town & Country Shopping Center filed Form 8-K dated December 30, 1987 which is incorporated herein by reference. 10.15 First Trust Deed - Springdale Lake Estates Mobile Home Park filed in form 10Q dated September 30, 1988 as Exhibit 10.2 which is incorporated herein by reference. 10.16 Promissory Note - Southgate Apartments filed in Form 10Q dated September 30, 1990 as Exhibit 10.19 which is incorporated herein by reference. 10.17 Promissory Note - Springdale Lake Mobile Home Park filed in Form 10Q dated September 30, 1990 as Exhibit 10.20 which is incorporated herein by reference. 10.18 Promissory Note - Mesa Dunes, Wakonda, Town & Country Joint Venture filed in Form 10Q dated September 30, 1990 as Exhibit 10.21 which is incorporated herein by reference. 10.19 Stock Purchase Agreement dated November 24, 1992 showing the purchase of 100% of the outstanding stock of Angeles Realty Corporation II by IAP GP Corporation, a subsidiary of MAE GP Corporation, filed in Form 8-K dated December 31, 1992, which is incorporated herein by reference. 10.20 Substitute Trustee's Deed showing the foreclosure on the Oil, Gas and Commerce Buildings by American Life and Insurance Company, filed in Form 8-K dated April 6, 1993 which is incorporated herein by reference. 10.21 Proposed settlement of Fort Worth Option Joint Venture's note receivable with Angeles Mortgage Investment Trust, filed in Form 8-K dated September 6, 1994 which is incorporated herein by reference. 10.22 Agreement for Deed in Lieu of Foreclosure dated October 31, 1995, the Partnership, Angeles Realty Corporation II and Angeles Mortgage Investment Trust. 10.23 Bill of Sale and Assignment dated October 31, 1995, by the Partnership in favor of Angeles Mortgage Investment Trust. 10.24 Assignment of Leases dated October 31, 1995, by the Partnership in favor of Angeles Mortgage Investment Trust. 10.25 Limited Warranty Deed dated October 31, 1995, by the Partnership to Angeles Mortgage Investment Trust. 16 Letter from Registrant's former accountant regarding its concurrence with the statements made by the Registrant is incorporated by reference to the Exhibit filed with Form 8-K dated September 1, 1993. EX-27 2
5 This schedule contains summary financial information extracted from Angeles Income Properties Ltd V Year-End 1995 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000792181 ANGELES INCOME PROPERTIES LTD V 1 12-MOS DEC-31-1995 DEC-31-1995 292,865 0 17,505 0 0 0 9,818,350 (2,514,880) 7,876,011 0 (10,237,594) 0 0 0 (5,785,481) 7,876,011 0 2,208,185 0 0 3,897,166 0 2,072,865 0 0 2,703,761 0 1,929,788 0 4,633,549 101.89 0 The Partnership has an unclassified balance sheet.
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