-----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, UgjI7HmvPGPFUUbn/ifzYGH8fCl7la9in/+SDrAuJG5IGOS/H1ZCYDSzGh1WVnS8 CXmDWP40T/YBRLO7n6y7nQ== 0000950148-98-001251.txt : 19980514 0000950148-98-001251.hdr.sgml : 19980514 ACCESSION NUMBER: 0000950148-98-001251 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES MORTGAGE INVESTMENT TRUST CENTRAL INDEX KEY: 0000840997 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 956890805 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10202 FILM NUMBER: 98618651 BUSINESS ADDRESS: STREET 1: 340 N WESTLAKE BLVE STREET 2: STE 230 CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91362-3761 BUSINESS PHONE: 3107720147 MAIL ADDRESS: STREET 1: 340 N WESTLAKE BLVD STREET 2: STE 230 CITY: WESTLAKE STATE: CA ZIP: 91362-3761 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM___________TO________ Commission file Number 1-10202 ANGELES MORTGAGE INVESTMENT TRUST - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-6890805 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 340 North Westlake Boulevard, Suite 230, Westlake Village, California 91362 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (805) 449-1335 No Change - -------------------------------------------------------------------------------- Former Name, Former Address and Former Fiscal Year If Changed Since Last Report Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Class A Shares American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE - -------------------------------------------------------------------------------- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. [X] Yes [ ] No AS OF MAY 10, 1998 ANGELES MORTGAGE INVESTMENT TRUST HAS 2,617,000 CLASS A SHARES OUTSTANDING. Total Pages 12 2 ANGELES MORTGAGE INVESTMENT TRUST INDEX
Page No. Part I. Financial Information Item 1. Balance Sheets - March 31, 1998 and December 31, 1997 3 Statements of Operations - Three Months Ended March 31, 1998 and 1997 4 Statements of Stockholders' Equity 5 Statements of Cash Flows - Three Months Ended March 31, 1998 and 1997 6 Notes to the Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11
2 3 PART I FINANCIAL INFORMATION ANGELES MORTGAGE INVESTMENT TRUST BALANCE SHEETS
MARCH 31 DECEMBER 31 1998 1997 ------------ ------------ ASSETS Notes Receivable (primarily due from affiliates): Mortgage notes receivable $ 31,921,000 $ 39,347,000 Promissory notes receivable 6,789,000 6,789,000 ------------ ------------ 38,710,000 46,136,000 Less: Allowances for estimated losses (8,826,000) (8,826,000) ------------ ------------ 29,884,000 37,310,000 Foreclosed real estate held for sale 8,730,000 4,521,000 Cash and cash equivalents 10,860,000 3,947,000 Restricted cash 943,000 -- Accrued interest receivable 615,000 654,000 Prepaid expenses and other 119,000 98,000 ------------ ------------ Total assets $ 51,151,000 $ 46,530,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses $ 537,000 $ 588,000 Mortgage loan payable 4,525,000 -- ------------ ------------ Total liabilities 5,062,000 588,000 ------------ ------------ Shareholders' equity: Class A Shares (2,617,000 issued and outstanding, $1.00 par value, unlimited shares authorized) 2,617,000 2,617,000 Class B Shares (1,675,113 issued and outstanding, $.01 value, unlimited shares authorized) 14,000 14,000 Additional paid-in capital 50,199,000 50,199,000 Accumulated distributions in excess of cumulative net income (6,741,000) (6,888,000) ------------ ------------ Total shareholders' equity 46,089,000 45,942,000 ------------ ------------ Total liabilities and shareholders' equity $ 51,151,000 $ 46,530,000 ============ ============
The accompanying notes are an integral part of the financial statements. 3 4 ANGELES MORTGAGE INVESTMENT TRUST STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31 --------------------------- 1998 1997 ---------- ---------- REVENUE: Interest income $ 973,000 $1,168,000 Rental income 87,000 67,000 ---------- ---------- Total revenue 1,060,000 1,235,000 ---------- ---------- COSTS AND EXPENSES: General and administrative 56,000 335,000 Amortization 20,000 18,000 ---------- ---------- Total costs and expenses 76,000 353,000 ---------- ---------- NET INCOME $ 984,000 $ 882,000 ========== ========== NET INCOME PER CLASS A SHARE $ 0.37 $ 0.33 ========== ========== CASH DISTRIBUTIONS PER CLASS A SHARE $ 0.32 $ 0.22 ========== ========== WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING 2,617,000 2,617,000 ========== ==========
The accompanying notes are an integral part of the financial statements 4 5 ANGELES MORTGAGE INVESTMENT TRUST STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
ACCUMULATED DISTRIBUTIONS IN ADDITIONAL EXCESS OF CLASS A CLASS B PAID-IN CUMULATIVE NET SHARES SHARES CAPTIAL INCOME TOTAL ----------- ----------- ----------- -------------- ----------- Balance at December 31, 1997 $ 2,617,000 $ 14,000 $50,199,000 ($6,888,000) $45,942,000 Distributions paid to Class A Shareholders -- -- -- (837,000) (837,000) Net income -- -- -- 984,000 984,000 ----------- ----------- ----------- ----------- ----------- Balance at March 31, 1998 $ 2,617,000 $ 14,000 $50,199,000 ($6,741,000) $46,089,000 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements 5 6 ANGELES MORTGAGE INVESTMENT TRUST STATEMENTS OF CASH FLOW
THREE MONTHS ENDED MARCH 31 -------------------------------- 1998 1997 ------------ ------------- Cash flows from operating activities: Net income $ 984,000 $ 882,000 Adjustments to reconcile net income to cash flows from operating activities: Amortization 20,000 18,000 Interest income in exchange for notes receivable -- (423,000) Decrease (increase) in interest receivable 39,000 (43,000) Decrease (increase) in prepaid expenses and other assets (44,000) 45,000 Decrease in accounts payable and accrued expenses (455,000) (187,000) Increase (decrease) in unearned loan fee income (63,000) 39,000 ------------ ------------ Cash flows provided by (used in) operating activities 481,000 331,000 ------------ ------------ Cash flows from investing activities: Principal collections of notes receivable 11,973,000 2,036,000 Funding of notes receivable (4,865,000) (5,000,000) Proceeds from foreclosure of real estate 161,000 -- ------------ ------------ Cash flows provided by (used in) investing activities 7,269,000 (2,964,000) ------------ ------------ Cash flows used in financing activities: Distributions to Class A Shareholders (837,000) (576,000) ------------ ------------ Increase (decrease) in cash and cash equivalents 6,913,000 (3,209,000) Cash and cash equivalents: At beginning of period 3,947,000 9,789,000 ------------ ------------ At end of period $ 10,860,000 $ 6,580,000 ============ ============ Schedule of noncash financing and investing activities: Assumption of first mortgage loan payable $ 4,525,000 $ -- Conversion of second mortgage receivable to real property 380,000 -- Deed-in-lieu of foreclosure, real property 4,369,000 --
The accompanying notes are an integral part of the financial statements 6 7 ANGELES MORTGAGE INVESTMENT TRUST NOTES TO FINANCIAL STATEMENTS NOTE 1 - The accompanying financial statements have not been audited by independent certified accountants, but in the opinion of management all of the adjustments necessary to present fairly the financial position of Angeles Mortgage Investment Trust (the "Trust") and the results of operations and its cash flows at the date and for periods indicated have been included. Certain prior year amounts have been reclassified to conform to current year classifications. The accompanying financial statements have been prepared in conformity with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three-month period ended March 31, 1998 are not indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the financial statements and notes thereto included in the Trust's annual report on Form 10-K for the year ended December 31, 1997. NOTE 2 - The net income per Class A Share was based on 2,617,000 weighted average Class A Shares outstanding during the three months ended March 31, 1998 and 1997 after deduction of the 1% interest for Class B Shares. NOTE 3 - The Trust's $5 million line of credit expired April 30, 1997 and required monthly interest only payments based upon prime plus .50% per annum. In May 1998 the line of credit was renewed through October 1998 with the ability to extend the line of credit through April 1999 at the Trust's option. The renewed line of credit provides for the same interest rate and payment terms and requires a $12,500 commitment fee paid quarterly. During the quarter ended March 31, 1998, the Trust did not draw down on the line of credit. NOTE 4 - In December 1997 the Trust purchased a second mortgage loan for $380,000 on a 186-unit apartment complex, Silver Ridge Apartments, located in Maplewood, Minnesota. The Silver Ridge second mortgage has an interest rate of 10% and default rate of 12% and matured December 31, 1997. In addition, during 1997 the Trust obtained judgement liens against the Silver Ridge Apartments property based upon recourse provisions on other Trust loans. Through a judgement lien, the Trust foreclosed on the property in October 1997 subject to a twelve-month redemption period. On January 30, 1998, the Trust received title to Silver Ridge Apartments through deed-in-lieu of foreclosure as a result of provisions in the second mortgage held by the Trust. In connection with taking title to Silver Ridge Apartments the Trust assumed a first trust deed mortgage from a third party in the amount of $4,525,000. This first mortgage provides for a variable interest rate not to exceed 12%, interest only paid monthly, with a current interest rate of 3-1/2% per annum. The loan matures in July 2023. In addition, the Trust assumed control of restricted cash relating to Silver Ridge Apartments with a balance of $943,000 as of March 31, 1998. The restricted cash balance is comprised of approximately $500,000, held by the first mortgage lender in escrow for: principal $295,000; real estate taxes and insurance $100,000; and processing and other fees of $43,000. The remaining $443,000 relates to funds for capital improvements and tenant security deposits. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Trust has invested in loans (the "Trust Loans") which were made principally to partnerships that were affiliated with Angeles Corporation ("Angeles"), parent company to the Trust's prior advisor, Angeles Funding Corporation (the "Advisor" or "AFC"), but the majority of which are now controlled by Insignia Properties Trust ("IPT") an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Trust's $5 million line of credit with the Bank requires monthly interest only payments based upon prime plus 1/2% and matured April 30, 1998. The line of credit with the Bank allows the Trust to draw on such line to facilitate the foreclosure process on Trust loans. As of December 31, 1997 there was no balance due on the line of credit and during the quarter ended March 31, 1998 the Trust did not draw on the line. In May 1998 the line of credit was renewed through October 1998 with the ability to extend the line of credit through April 1999 at the Trust's option. The renewed line of credit provides for the same interest rate and payment terms and requires a $12,500 commitment fee paid quarterly. The Trust's liquidity is dependent upon its borrowers having sufficient cash to pay interest and principal payments as they become due. In February 1993, a significant number of the Insignia Partnerships failed to service their debt obligations under the Trust Loans. The Trust has since completed the process of restructuring the majority of the Trust Loans. The restructured loan terms typically include a reduction in the interest rate, an extension of the loan term, payment of at least net cash flow from the operation of the relevant property on a current basis and a modest increase in the principal balance of the loan as consideration for the modification. In January 1998, the Trust funded a new loan in the amount of $1,000,000 secured by a first deed of trust on a 125,000 square foot warehouse facility located in Memphis, Tennessee. This new loan requires monthly interest only payments at an annual rate of 8% and matures in January 2008. In March 1998 the Trust purchased at par two first mortgage loans from an unaffiliated third party for $3,865,000. These two mortgages are on three industrial warehouse properties located in Cleveland, Ohio. The Trust began the foreclosure process on these three properties in 1996 and expects to take title during the third quarter of 1998. The foreclosure process on these three properties results from the Trust obtaining judgement liens relating to recourse provisions on a defaulted second mortgage loan held by the Trust. The debt service on the first mortgage loans have been and continue to be current through the foreclosure process. These two mortgage loans pay monthly interest only at an annual rate of 7.15% and mature September 1, 1998. As of April 30, 1998 the Trust has an outstanding commitment to fund a first mortgage loan in the amount of $5,500,000 and to purchase a first mortgage loan for approximately $4,250,000. During the quarter ended March 31, 1998, the Trust had its largest mortgage note receivable prepay in full the outstanding principal balance of $9,004,000. This loan, referred to as Lake Arrowhead, paid monthly interest payments at the stated note rate of 10.20%. While the Trust has been able to commit to fund new loans with such proceeds, it is unlikely it will be able to obtain the same yield as the Lake Arrowhead loan due to the recent downward trend of interest rates. 8 9 The Trust's management on a quarterly basis reviews the carrying value of the Trust's Loans and properties held for sale. Generally accepted accounting principles require that the carrying values of a note receivable or property held for sale cannot exceed the lower of its carrying amount or its estimated net realizable value. The estimate of net realizable value is based on management's review and evaluation of the collateral properties as well as recourse provisions included in certain notes receivable. The allowance for loan loss as of March 31, 1998 was approximately $8.8 million. However, the provision for loss is an estimate which is inherently uncertain and depends on the outcome of future events. The Trust's estimates are based on an analysis of the investment portfolio, composition of the loan portfolio, the value of collateral and current economic conditions. As previously announced in a press release on July 18, 1997, AMIT, Insignia Properties Trust ("IPT"), Insignia and MAE GP entered into the Merger Agreement which, provides for, among other things, the Merger of AMIT with and into IPT, with IPT surviving the Merger. Upon consummation of the Merger the separate existence of AMIT will cease. A Special Meeting of AMIT shareholders will be called to consider and vote on proposals to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the merger of AMIT with and into IPT, with IPT being the surviving entity (the "Merger"), and approve the amendment of AMIT's Declaration of Trust (the "Trust Amendment") to permit AMIT to merge and consolidate with other entities subject to the required vote of the AMIT Board and AMIT's shareholders (collectively, the "Merger Proposal"). It is currently expected that the Special Meeting of Shareholders will convene in mid 1998. A proxy statement will be circulated to all AMIT shareholders in advance of the meeting, containing information on the proposed merger. Pursuant to the Merger Agreement, each outstanding AMIT Class A Share will be converted into IPT Common shares (the "Class A Exchange Ratio"). The Class A Exchange Ratio is determined by adjusting the base exchange values set in the Merger Agreement of $16.25 per AMIT Class A Share and $10.00 per IPT Common Share to account for dividends paid by AMIT since December 31, 1996 and by IPT since January 31, 1997. The Class A Exchange Ratio is subject to further adjustment should either AMIT or IPT declare any additional dividends prior to the Merger. No fractional IPT Common Shares will be issued. In lieu of any fractional shares, an AMIT shareholder otherwise entitled to a fractional IPT Common Share will receive cash from IPT in an amount determined by multiplying such fractional share amount by the IPT Share Value. RESULTS OF OPERATIONS During the three months ended March 31, 1998 total revenue and interest income decreased by approximately 14% and 17%, respectively, when compared to the three months ended March 31, 1997. Such decrease is primarily due to the restructuring of the LaSalle loan during the first quarter ending March 31, 1997 which resulted in the Trust capitalizing into principal accrued interest and late fees of $423,000. Recurring revenue and interest income has increased by approximately 31% for the three months ended March 31, 1998 when compared to the same period ended March 31, 1997, due primarily to newly funded loans during 1997 in the amount of $13,867,000. Funds for such new loans in 1997 came from the repayment of non-performing loans and loans paying at a lower rate of interest and from the sale of property obtained through foreclosure. The significant decrease in general and administrative expenses for the quarter ended March 31, 1998 when compared to the previous quarter for the same period, is due primarily to reversing expense accruals in the first quarter of 1998 that were provided in 1997 for state income taxes and legal 9 10 fees in the amounts of $180,000 and $50,000, respectively. Such reversals resulted in a reduction of actual general and expense for the quarter ended March 31, 1998 by $230,000. The general and administrative expense, prior to such adjustments, for the three months ended March 31, 1998 was $286,000, resulting in a decrease of such expense when compared to the same period ended March 31, 1997 by 15%. Such decrease is primarily due to reduced legal expenses incurred by the Trust. 10 11 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. No significant changes have occurred relating to the lawsuit as reported in the Trust's December 31, 1997 Form 10-K. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. EXHIBITS None. b. REPORTS ON FORM 8-K None. Note: All items required under Part II of Form 10-Q which are applicable have been reported herein. 11 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Trust has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES MORTGAGE INVESTMENT TRUST By /s/Anna Merguerian ---------------------------------- Anna Merguerian Chief Financial Officer Date: May 15, 1998 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 11,803,000 0 48,174,000 (8,826,000) 0 51,151,000 0 0 51,151,000 537,000 4,525,000 0 0 46,089,000 0 51,151,000 1,060,000 1,060,000 0 76,000 0 0 0 984,000 0 0 0 0 0 984,000 $0.37 0 Includes Notes Receivable of $38,710,000 and foreclosed real estate held for sale of $8,730,000.
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