FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-9136
ANGELES PARTNERS VIII
(Exact name of small business issuer as specified in its charter)
California 95-3264317
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES PARTNERS VIII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 455
Restricted--tenant security deposits 75
Accounts receivable 13
Escrows for taxes 199
Other assets 208
Investment properties:
Land $ 543
Buildings and related personal property 14,582
15,125
Less accumulated depreciation (10,262) 4,863
$ 5,813
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 87
Tenant security deposit liabilities 75
Accrued taxes 617
Accrued interest 1,895
Other liabilities 231
Note payable to affiliate 371
Mortgage notes payable, $1,350 in default 16,647
Partners' Deficit
General partner $ (175)
Limited partners (12,000 units (13,935) (14,110)
issued and 11,855 units outstanding)
$ 5,813
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES PARTNERS VIII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues:
Rental income $ 931 $ 884 $ 2,747 $ 2,590
Other income 61 40 155 129
Total revenues 992 924 2,902 2,719
Expenses:
Operating 276 284 786 821
General and administrative 38 43 103 123
Maintenance 116 153 344 343
Depreciation 169 170 499 466
Interest 465 440 1,378 1,329
Property taxes 67 121 331 421
Total expenses 1,131 1,211 3,441 3,503
Net loss $ (139) $ (287) $ (539) $ (784)
Net loss allocated to general
partner (1%) $ (1) $ (3) $ (5) $ (8)
Net loss allocated to limited
partners (99%) (138) (284) (534) (776)
$ (139) $ (287) $ (539) $ (784)
Net loss per limited
partnership unit $(11.64) $(23.70) $(45.04) $(64.75)
See Accompanying Notes to Consolidated Financial Statements
c) ANGELES PARTNERS VIII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Nine Months Ended September 30, 1997
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 12,000 $ 121 $ 12,000 $ 12,121
Partners' deficit at
December 31, 1996 11,855 $ (170) $(13,401) $(13,571)
Net loss for the nine months
ended September 30, 1997 -- (5) (534) (539)
Partners' deficit at
September 30, 1997 11,855 $ (175) $(13,935) $(14,110)
See Accompanying Notes to Consolidated Financial Statements
d) ANGELES PARTNERS VIII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except unit data)
Nine Months Ended
September 30,
1997 1996
Cash flows from operating activities:
Net loss $ (539) $ (784)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 499 466
Amortization of loan costs 42 38
Loss on disposition of investment property -- 15
Change in accounts:
Restricted cash (13) (6)
Accounts receivable (7) 5
Escrows for taxes (101) (226)
Other assets (22) (7)
Accounts payable (41) (16)
Tenant security deposit liabilities 13 7
Accrued taxes 207 253
Accrued interest 410 423
Other liabilities 80 81
Net cash provided by
operating activities 528 249
Cash flows from investing activities:
Deposits to restricted escrows -- (404)
Receipts from restricted escrows -- 600
Property improvements and replacements (170) (888)
Receipt of insurance proceeds 65 --
Net cash used in investing
activities (105) (692)
Cash flows from financing activities:
Payments on mortgage notes payable (161) (36)
Repayment of mortgage notes payable -- (9,368)
Proceeds from long-term borrowings -- 9,800
Loan costs paid -- (174)
Net cash (used in) provided by
financing activities (161) 222
Net increase (decrease) in cash and cash equivalents 262 (221)
Cash and cash equivalents at beginning of period 193 330
Cash and cash equivalents at end of period $ 455 $ 109
Supplemental disclosure of cash flow information:
Cash paid for interest $ 927 $ 868
Supplemental disclosure of non-cash activity:
Accrual of cost associated with the
receipt of insurance proceeds $ 65 $ --
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS VIII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1997
NOTE A - GOING CONCERN
The accompanying financial statements have been prepared assuming Angeles
Partners VIII (the "Partnership") will continue as a going concern. The
Partnership has incurred recurring operating losses and continues to suffer from
poor liquidity. In addition, the Partnership is in default on a portion of its
mortgage notes payable and does not generate sufficient cash flows to meet
current debt-service requirements on its subordinated debt.
The Partnership incurred an operating loss of approximately $539,000 for the
nine months ended September 30, 1997, and Angeles Realty Corporation (the
"General Partner") expects this trend to continue. The Partnership generated
net cash from operations of approximately $528,000; however, interest expense of
approximately $409,000 was accrued during the nine months ended September 30,
1997 on the note payable to an affiliate and the second mortgages securing the
Partnership's investment properties.
The Partnership's second mortgage to Angeles Mortgage Investment Trust ("AMIT")
in the amount of $1,350,000 plus accrued interest, which is secured by Bercado
Shores Apartments, has been in default since 1993 due to nonpayment of interest
and the maturity of the note in 1995. This indebtedness is recourse to the
Partnership and the estimated fair value of this property is less than the total
of its first and second mortgages. Since the default in March of 1993, AMIT has
not indicated its intent to pursue its available remedies under the mortgage
agreement; however, this property remains subject to foreclosure under the terms
of the second mortgage agreement. The Partnership has initiated discussions
with AMIT and hopes to negotiate a work-out, however there can be no assurances
that the Partnership's negotiations will prove successful.
The Partnership's note payable and accrued interest of approximately $521,000
due to Angeles Acceptance Pool, L.P. ("AAP") matures in November of 1997. The
Partnership is currently in negotiations with the lender and hopes to either
extend this note or settle the liability at a reduced amount.
There can be no assurance that these negotiations with the lenders will be
successful. No other sources of additional financing are apparent and the
General Partner currently has not developed alternative plans to remedy the
liquidity problems the Partnership is currently experiencing.
The General Partner anticipates that Brittany Point will generate sufficient
cash flows for the next twelve months to meet its operating expenses, debt
service requirements and to fund capital expenditures. The General Partner
anticipates that Bercado Shores will generate sufficient cash flows for the next
twelve months to cover its operating expenditures, however it is not expected to
be able to completely fund desired capital expenditures or to pay its scheduled
debt service on its second mortgage to AMIT. The Partnership's plan is to fund
these items to the extent of available cash flow. The Partnership will fund its
administrative expenses for the next twelve months by using cash on hand at
September 30, 1997, and cash flow generated during 1997.
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 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of the Partnership
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB and
Item 310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the General Partner, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and nine
month periods ended September 30, 1997, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1997. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the year ended December 31,
1996.
Principles of Consolidation
In order to facilitate the refinancing of the first mortgage indebtedness
secured by Brittany Point in January 1996, the property was transferred to a
lower-tier partnership known as Brittany Point AP VIII, L.P. in which the
Partnership effectively owns a 99.99% limited partnership interest. The
financial statements include all of the accounts of the Partnership and its
majority owned partnership. All significant interpartnership balances have been
eliminated.
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for payments to affiliates of the General
Partner 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 the nine months ended September 30, 1997
and 1996, respectively:
1997 1996
(in thousands)
Property management fees $144 $135
Reimbursement for services of affiliates
(including $6,600 and $14,655 of reimbursements
for construction oversight costs) 82 99
For the period of January 1, 1996 to August 31, 1997, the Partnership insured
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 payments 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
obligation is not significant.
In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware limited
partnership which now controls the working capital loan previously provided by
Angeles Capital Investment, Inc. ("ACII"), was organized. 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 .5% limited partner interest in
AAP. An affiliate of Angeles now serves as the general partner of AAP. This
working capital loan funded the Partnership's operating deficits in prior years.
Total indebtedness, which is included in the accompanying consolidated balance
sheet as a note payable to affiliate, was approximately $371,000 at September
30, 1997, and September 30, 1996, with monthly interest only payments at prime
plus 0.75% (9.25% at September 30, 1997). 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. The Partnership is currently in
negotiations with AAP, to extend the maturity or settle the liability at a
reduced amount. There can be no assurance that these negotiations with AAP will
be successful. Total interest expense for this loan was approximately $26,000
at September 30, 1997 and $25,000 at September 30, 1996. Interest of
approximately $150,000 and $116,000 on this loan was accrued at September 30,
1997 and 1996, respectively.
AMIT currently provides secondary financing on the Partnership's investment
properties. Total indebtedness was approximately $2,920,000 at September 30,
1997, of which $1,350,000, secured by Bercado Shores, was in default at
September 30, 1997. Total interest expense related to this debt was
approximately $466,000 and $400,000 at September 30, 1997 and 1996,
respectively. Accrued interest related to this debt was approximately
$1,651,000 and $1,123,000 at September 30, 1997 and 1996, respectively.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. The terms of the Class B Shares provide that
they are convertible, in whole or in part, into Class A Shares on the basis of 1
Class A Share for every 49 Class B Shares (however, in connection with the
settlement agreement described in the following paragraph, MAE GP has agreed not
to convert the Class B Shares so long as AMIT's option is outstanding). These
Class B Shares entitle MAE GP to receive 1% of the distributions of net cash
distributed by AMIT (however, in connection with the settlement agreement
described in the following paragraph, MAE GP has agreed to waive its right to
receive dividends and distributions so long as AMIT's option is outstanding).
These Class B Shares also entitle MAE GP to vote on the same basis as Class A
Shares, providing MAE GP with approximately 39% of the total voting power of
AMIT (unless and until converted to Class A Shares, in which case the percentage
of the vote controlled represented by the shares held by MAE GP would
approximate 1.3% of the vote). Between the date of acquisition of these shares
(November 24, 1992) and March 31, 1995, MAE GP declined to vote these shares.
Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings
in connection with the election of trustees and other matters. MAE GP has not
exerted and continues to decline to exert any management control over or
participate in the management of AMIT. Subject to the terms of the proxy
described below, MAE GP may choose to vote these shares as it deems appropriate
in the future. In addition, Liquidity Assistance, L.L.C., an affiliate of
Insignia Financial Group, Inc. ("Insignia"), which provides property management
and partnership administration services to the Partnership, owns 96,800 Class A
Shares of AMIT at September 30, 1997. These Class A Shares represent
approximately 2.2% of the total voting power of AMIT.
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B shares owned by it. This option can be exercised
at the end of 10 years or when all loans made by AMIT to partnerships affiliated
with MAE GP as of November 9, 1994 (which is the date of execution of a
definitive Settlement Agreement) have been paid in full, but in no event prior
to November 9, 1997. In connection with such settlement, AMIT delivered to MAE
GP cash in the sum of $250,000 at closing (which occurred April 14, 1995) as
payment for the option. If and when the option is exercised, AMIT will be
required to remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option and as part of the settlement,
MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is
that MAE GP is permitted to vote the Class B Shares on all matters except those
involving transactions between AMIT and MAE GP affiliated borrowers or the
election of any MAE GP affiliate as an officer or trustee of AMIT. On those
matters, MAE GP is obligated to deliver to the AMIT trustees, in their capacity
as trustees of AMIT, proxies with regard to the Class B Shares instructing such
trustees to vote said Class B Shares in accordance with the vote of the majority
of the Class A Shares voting to be determined without consideration of the votes
of "Excess Class A Shares" (as defined in Section 6.13 of the Declaration of
Trust of AMIT).
On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in
principle contemplating, among other things, a business combination of AMIT and
Insignia Properties Trust, an entity owned 98% by Insignia and its affiliates
("IPT"). On July 18, 1997, IPT, Insignia and MAE G.P. entered into a definitive
merger agreement pursuant to which (subject to shareholder approval and certain
other conditions, including the receipt by AMIT of a fairness opinion from its
investment bankers) AMIT would be merged with and into IPT, with each Class A
Share and Class B Share being converted into 1.625 and 0.0332 common shares of
IPT, respectively. The foregoing exchange ratios are subject to adjustment to
account for dividends paid by AMIT from January 1, 1997, and dividends paid by
IPT from February 1, 1997. It is anticipated that Insignia (and its affiliates)
and MAE GP (and its affiliates) would own approximately 53.1% and 2.3%,
respectively, of post-merger IPT when this transaction is consummated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for the nine
months ended September 30, 1997 and 1996:
Average Occupancy
1997 1996
Bercado Shores Apartments
Mishawka, Indiana 92% 93%
Brittany Point Apartments
Huntsville, Alabama 94% 87%
Occupancy at Brittany Point increased due to a stronger job market in the
Huntsville area and due to major rehabilitation projects at the property from
funds set aside in the 1996 refinancing.
The Partnership realized net losses of approximately $139,000 and approximately
$539,000 for the three and nine month periods ended September 30, 1997, compared
to net losses of approximately $287,000 and approximately $784,000 for the three
and nine month periods ended September 30, 1996. For the three and nine month
periods ended September 30, 1997, net loss decreased primarily as a result of an
increase in total revenues and a decrease in property tax expense as discussed
below.
Rental income increased as a result of rental rate increases at both of the
Partnership's properties and an increase in occupancy at Brittany Point. The
impact of these rental rate increases was partially negated by the occupancy
decrease at Bercado Shores. Other income increased due to increases in lease
cancellation fees at Brittany Point. Property taxes decreased due to the
receipt of approximately $65,000 for a property tax appeal on Bercado Shores for
1995 and 1996 and a related reduction in the 1997 taxes as a result of the prior
year appeal.
Included in maintenance expense is approximately $56,000 of major repairs and
maintenance comprised primarily of gutter and swimming pool repairs for the nine
months ended September 30, 1997. For the nine months ended September 30, 1996,
approximately $88,000 of major repairs and maintenance comprised primarily of
major landscaping, swimming pool repairs, exterior painting and exterior
building improvements are included in maintenance expense.
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.
The Partnership's primary source of cash has been from property operations with
such cash being utilized for the paydown of existing debt on the investment
properties, capital expenditures and daily operational expenses. It is the
Partnership's policy to commit capital resources as available for the continuing
improvement and maintenance of its properties.
The Partnership held unrestricted cash of approximately $455,000 at September
30, 1997, compared to unrestricted cash of approximately $109,000 at September
30, 1996. Net cash provided by operating activities increased for the nine
months ended September 30, 1997, primarily due to a decrease in escrows for
taxes and a decrease in the net loss, as discussed above. Net cash used in
investing activities decreased primarily due to a decrease in property
improvements and replacements. Net cash used in financing activities increased
due to the absence of refinancing activities in the nine months ended September
30, 1997.
No distributions were made by the Partnership during the first nine months of
1997 or 1996.
Since 1992, the nominal cash generated by the properties has been insufficient
to pay the capital expenditures and scheduled debt service. The Partnership has
incurred recurring operating losses and is in default on a portion of its
mortgage notes payable. The Partnership's first mortgage in the amount of
approximately $4,047,000 secured by Bercado Shores Apartments was previously in
default due to nonpayment of 1993 property taxes. The property is now current
on payment of property taxes and the first mortgage is no longer in default.
However, the second mortgage to AMIT in the amount of $1,350,000, secured by the
Bercado Shores Apartments, has been in default since March 1993 due to
nonpayment of interest. Since the default in March of 1993, the lender has not
indicated its intent to pursue its available remedies under the mortgage
agreement, however, the Partnership's properties remain subject to foreclosure
under the terms of the second mortgage agreement. The General Partner
anticipates sufficient cash flow to be generated by the property over the next
twelve months to meet all non-debt-related operating expenses. The Partnership
has initiated discussions with AMIT and hopes to negotiate a work-out, however,
there can be no assurance that the Partnership's negotiations will prove
successful.
The first mortgage indebtedness of approximately $9,368,000 secured by Brittany
Point matured in June 1995. This first mortgage was refinanced on January 18,
1996, with the existing lender for a principal amount of $9,800,000, a stated
interest rate of 7.875% and a maturity date of February 1, 2001. To facilitate
the refinancing, the property was transferred to a lower-tier partnership known
as Brittany Point AP VIII, L.P. in which the Partnership effectively owns a
99.99% limited partner interest. Although legal ownership of this asset was
transferred to a new entity, the Partnership retained control and substantially
all economic benefits of the property. Also, a workout proposal with AMIT on
the second mortgage of Brittany Point was finalized during the first quarter of
1996 so that the second mortgage is no longer in default. The workout proposal
with AMIT provided for the accrual of interest through February 28, 1997, after
which cash flow payments were to be made through June 30, 1997. Commencing
July 1, 1997, interest payments were to be made at the accrual rate of interest
through the maturity of the note on December 31, 2000.
In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware limited
partnership which now controls the working capital loan previously provided by
Angeles Capital Investment, Inc. ("ACII"), was organized. 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 .5% limited partner interest in
AAP. An affiliate of Angeles now serves as the general partner of AAP. This
working capital loan funded the Partnership's operating deficits in prior years.
Total indebtedness, which is included as a note payable, was approximately
$371,000 at September 30, 1997, and September 30, 1996, with monthly interest
only payments at prime plus 0.75% (9.25% for September 30, 1997). 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. The
Partnership is currently in negotiations with AAP to extend the maturity or
settle the liability at a reduced amount. There can be no assurance that these
negotiations with AAP will be successful. Total interest expense for this loan
was approximately $26,000 and $25,000 at September 30, 1997 and 1996. Interest
of approximately $150,000 and $116,000 on this loan was accrued at September 30,
1997 and 1996, respectively.
AMIT currently provides secondary financing on the Partnership's investment
properties. Total indebtedness was approximately $2,920,000 at September 30,
1997, of which $1,350,000, secured by Bercado Shores, was in default at
September 30, 1997. Total interest expense related to this debt was
approximately $466,000 and $400,000 at September 30, 1997 and 1996,
respectively. Accrued interest related to this debt was approximately
$1,651,000 and $1,123,000 at September 30, 1997 and 1996, respectively.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. 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 (however, in connection with the settlement
agreement described in the following paragraph, MAE GP has agreed not to convert
the Class B Shares so long as AMIT's option is outstanding). These Class B
Shares entitle MAE GP to receive 1% of the distributions of net cash distributed
by AMIT (however, in connection with the settlement agreement described in the
following paragraph, MAE GP has agreed to waive its right to receive dividends
and distributions so long as AMIT's option is outstanding). These Class B
Shares also entitle MAE GP to vote on the same basis as Class A Shares,
providing MAE GP with approximately 39% of the total voting power of AMIT
(unless and until converted to Class A Shares, in which case the percentage of
the vote controlled represented by the shares held by MAE GP would approximate
1.3% of the vote). Between the date of acquisition of these shares (November
24, 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that
date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection
with the election of trustees and other matters. MAE GP has not exerted and
continues to decline to exert any management control over or participate in the
management of AMIT. Subject to the terms of the proxy described below, MAE GP
may choose to vote these shares as it deems appropriate in the future. In
addition, Liquidity Assistance, LLC, an affiliate of Insignia Financial Group,
Inc. ("Insignia"), which provides property management and partnership
administration services to the Partnership, owns 96,800 Class A Shares of AMIT
at September 30, 1997. These Class A Shares represent approximately 2.2% of the
voting power of AMIT.
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B shares owned by it. This option can be exercised
at the end of 10 years or when all loans made by AMIT to partnerships affiliated
with MAE GP as of November 9, 1994, (which is the date of execution of a
definitive Settlement Agreement) have been paid in full, but in no event prior
to November 9, 1997. In connection with such settlement, AMIT delivered to MAE
GP cash in the sum of $250,000 at closing (which occurred April 14, 1995) as
payment for the option. If and when the option is exercised, AMIT will be
required to remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option and as part of the settlement,
MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is
that MAE GP is permitted to vote the Class B Shares on all matters except those
involving transactions between AMIT and MAE GP affiliated borrowers or the
election of any MAE GP affiliate as an officer or trustee of AMIT. On those
matters, MAE GP is obligated to deliver to the AMIT trustees, in their capacity
as trustees of AMIT, proxies with regard to the Class B Shares instructing such
trustees to vote said Class B Shares in accordance with the vote of the majority
of the Class A Shares voting to be determined without consideration of the votes
of "Excess Class A Shares" (as defined in Section 6.13 of the Declaration of
Trust of AMIT).
On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in
principle contemplating, among other things, a business combination of AMIT and
Insignia Properties Trust, an entity owned 98% by Insignia and its affiliates
("IPT"). On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive
merger agreement pursuant to which (subject to shareholder approval and certain
other conditions, including the receipt by AMIT of a fairness opinion from its
investment bankers) AMIT would be merged with and into IPT, with each Class A
Share and Class B Share being converted into 1.625 and 0.0332 common shares of
IPT, respectively. The foregoing exchange ratios are subject to adjustment to
account for dividends paid by AMIT from January 1, 1997, and dividends paid by
IPT from February 1, 1997. It is anticipated that Insignia (and its affiliates)
and MAE GP (and its affiliates) would own approximately 53.1% and 2.3%,
respectively, of post-merger IPT when this transaction is consummated.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS VIII LIMITED PARTNERSHIP
By: Angeles Realty Corporation
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners VII 1997 Third Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000276779
<NAME> ANGELES PARTNERS VIII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 455
<SECURITIES> 0
<RECEIVABLES> 13
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 15,125
<DEPRECIATION> (10,262)
<TOTAL-ASSETS> 5,813
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 16,647
0
0
<COMMON> 0
<OTHER-SE> (14,110)
<TOTAL-LIABILITY-AND-EQUITY> 5,813
<SALES> 0
<TOTAL-REVENUES> 2,902
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,441
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,378
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (539)
<EPS-PRIMARY> (45.04)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
