FORM 10-KSB - ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
(As last amended by 34-31905, eff. 4/26/93)
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934 [No Fee Required]
For the fiscal year ended December 31, 1997
[ ] 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 0-9136
ANGELES PARTNERS VIII
(Name of small business issuer and its charter)
California 95-3264317
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(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: $3,883,000
State the aggregate market value of the voting stock held by non-affiliates
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 the General Partner's belief
that the aggregate market value of the voting partnership interests would not
exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Angeles Partners VIII (the "Partnership" or "Registrant") is a publicly-held
limited partnership organized under the California Uniform Limited Partnership
Act pursuant to a Certificate and Agreement of Limited Partnership (hereinafter
referred to as the "Agreement") dated August 7, 1978. The general partner of
the Partnership is Angeles Realty Corporation (the "General Partner" or "ARC"),
a California corporation, which is a wholly-owned subsidiary of MAE GP
Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged into
Insignia Properties Trust ("IPT"), which is an affiliate of Insignia Financial
Group, Inc. ("Insignia"). Thus the General Partner is now a wholly-owned
subsidiary of IPT.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
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 Registrant has no employees. Management and administrative services are
performed by affiliates of Insignia. The property manager is responsible for
the day-to-day operations of each property. The General Partner has also
selected affiliates of Insignia to provide real estate advisory and asset
management services to the Partnership. As advisor, these affiliates provide
all partnership accounting and administrative services, investment management,
and supervisory services over property management and leasing.
The business in which the Partnership is engaged is highly competitive, and the
Partnership is not a significant factor in its industry. Each of its apartment
properties is located in or near a major urban area and, accordingly, competes
for rentals not only with similar apartment projects in its immediate area but
with hundreds of similar apartments 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
Bercado Shores 05/31/79 Fee ownership, Apartment - 234 units
subject to a first
and second mortgage
Brittany Point 12/31/79 Fee ownership, Apartment - 431 units
subject to a first
and second mortgage
SCHEDULE OF PROPERTIES:
(dollar amounts in thousands)
Gross
Carrying Accumulated Useful Federal
Property Value Depreciation Life Method Tax Basis
Bercado Shores $ 4,912 $ 3,503 5-25 yrs S/L $ 1,755
Brittany Point 10,354 6,932 5-25 yrs S/L 4,356
$15,266 $10,435 $ 6,111
See "Note B" of the financial statements included in "Item 7" for a further
description of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
(dollar amounts in thousands)
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due at
Property 1997 Rate Amortized Date Maturity
Bercado Shores
1st mortgage $ 4,032 (1) 30 yrs 6/2000 $3,919
2nd mortgage, 1,350 12.50% (2) 6/1995(3) 1,350
(in default)
Brittany Point
1st mortgage 9,626 7.875% 20 yrs 2/2001 8,873
2nd mortgage 1,570 12.50% (2) 12/2000 1,570
Total $16,578
1) Based on the one-year Treasury Constant Maturities rate plus 3%; 9% at
December 31, 1997.
2) Interest only payments.
3) In March 1993, the Partnership defaulted on payments on the second trust
deed from Angeles Mortgage Investment Trust ("AMIT") on Bercado Shores.
SCHEDULE OF AVERAGE RENTAL RATES AND OCCUPANCY:
Average Annual Average
Rental Rates Occupancy
Property 1997 1996 1997 1996
Bercado Shores $6,316/unit $6,230/unit 92% 92%
Brittany Point 5,785/unit 5,635/unit 94% 89%
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. The General Partner
believes that all of the properties are adequately insured. The multi-family
residential tenants' lease terms are for one year or less. No individual
residential tenant leases 10% or more of the available rental space.
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.
SCHEDULE OF REAL ESTATE TAXES AND RATES:
(dollar amounts in thousands)
1997 1997
Billing Rate
Bercado Shores $395* 15.05%
Brittany Point 152 5.80%
* Represents an estimate for 1997. Actual billings have not been received as
of the date of this filing.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is unaware of any pending or outstanding litigation that is not
of a routine nature. The General Partner of the Registrant believes that all
such matters will be resolved without a material adverse effect upon the
Partnership's financial condition, results of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the year ended December 31, 1997, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP EQUITY AND RELATED SECURITY HOLDER MATTERS
The Partnership, a publicly-held limited partnership, sold 12,000 Limited
Partnership Units during its offering period ended September 13, 1979, and
currently has 1,316 Limited Partners of record. During the year ended December
31, 1996, the number of Partnership Units decreased by 130 due to limited
partners abandoning their units. In abandoning his or her partnership units, a
limited partner relinquishes all right, title and interest in the Partnership as
of the date of abandonment. As of December 31, 1997, the number of Partnership
units outstanding was 11,855. There is no intention to sell additional Limited
Partnership Units nor is there an established market for these Units.
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. Consequently, there were no distributions
made by the Partnership during either of the years ended December 31, 1997 and
1996.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership realized a net loss of approximately $631,000 for the year ended
December 31, 1997 compared to a net loss of approximately $1,023,000 for the
same period in 1996. The decrease in net loss is primarily attributable to an
increase in total revenue and decreases in operating and property tax expense.
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. In
addition to the increase in rental income, there was an increase in other income
related to increased lease cancellation fees at Brittany Point. The decrease in
property tax expense is 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. The decrease in
operating expense is primarily due to a reduction in concessions necessary at
Brittany Point as a result of the higher occupancy levels attained in 1997.
Partially offsetting these decreases were increases in both interest and
depreciation expense. The increase in interest expense can be attributed to an
increase in the variable interest rate on the first mortgage payable for Bercado
Shores and increases in default interest and late charges on the second mortgage
payable for Bercado Shores. The increase in depreciation expense is primarily
attributable to the extensive rehabilitation project at Brittany Point in 1996
and additional capital expenditures in 1997 at the same property.
Included in operating expenses for the year ended December 31, 1997, is
approximately $148,000 of major repairs and maintenance comprised primarily of
gutter and swimming pool repairs, landscaping and repairs associated with wind
damage at Bercado Shores. Included in operating expense for the year ended
December 31, 1996 is approximately $100,000 of major repairs and maintenance
comprised primarily of major landscaping, exterior painting and exterior
building improvements.
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
The Partnership's primary source of cash has been from property operations and
is 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 for the continuing improvement and
maintenance of its properties.
At December 31, 1997 the Partnership had cash and cash equivalents of
approximately $328,000 compared to approximately $193,000 at December 31, 1996.
The net increase and decrease in cash and cash equivalents for the years ended
December 31, 1997 and 1996 was $135,000 and $137,000, respectively. Net cash
provided by operating activities increased as a result of the decrease in the
net loss as previously discussed, the decrease in cash used for payments of
other liabilities related to the timing of payments to creditors, and increased
collections of receivables and deposits. The increase in cash provided by
operating activities was partially offset by the increase in cash used for
payments of accounts payable, and accrued property taxes. Net cash used in
investing activities decreased primarily due to a decrease in property
improvements and replacements, which was partially offset by the absence of
receipts from restricted escrows in 1997. Net cash used in financing activities
increased due to the absence of refinancing proceeds in 1997.
No distributions were made by the Partnership during 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 second mortgage to AMIT in the amount of
$1,350,000, secured by Bercado Shores, has been in default since March 1993 due
to nonpayment of interest and due to nonpayment of principal at maturity in June
of 1995. 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 for Brittany Point 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 is the 99% limited
partner. Although legal ownership of this asset was transferred to a new
entity, the Partnership retained control over and substantially all economic
benefits of the property. Also, a workout proposal with AMIT on the second
mortgage of Brittany Point was finalized in 1996 so that the second mortgage is
no longer in default. The workout proposal with AMIT provided for the accrual
of interest through January 31, 1997, after which cash flow payments were to be
made through June 30, 1997. Commencing July 1, 1997, interest payments are to be
made at the accrual rate of interest through the maturity of the note, which is
December 31, 2000.
In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The
terms of the Class B Shares provide that they are convertible, in whole or in
part, into Class A Common 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 the
holder 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 agreed to waive its right to receive dividends and
distributions so long as AMIT's option is outstanding). The holder of the Class
B Shares is also entitled to vote on the same basis as the holders of Class A
Shares, providing the holder 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 such shares would approximate 1.3% 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 which were
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. 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 also executed an irrevocable proxy in favor of AMIT, which provides that
the holder of the Class B Shares is permitted to vote those 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. With respect to such matters, the trustees of AMIT are required to vote
(pursuant to the irrevocable proxy) the Class B shares (as a single block) in
the same manner as a majority of the Class A Shares are voted (to be determined
without consideration of the votes of "Excess Class A Shares" (as defined in
Section 6.13 of AMIT's Declaration of Trust)).
Between its acquisition of the Class B shares (in November 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. In February 1998, MAE GP was merged into IPT, and
in connection with that merger, MAE GP dividended all of the Class B Shares to
its sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a
result, MAE, as the holder of the Class B shares, is now subject to the terms of
the settlement agreement, option and irrevocable proxy described in the two
preceding paragraphs. Neither MAE GP nor MAE has exerted and intends to exert
any management control over or participate in the management of AMIT. However,
subject to the terms of the proxy described below, MAE may choose to vote the
Class B shares as it deems appropriate in the future.
Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE
and Insignia (which provides property management and partnership administration
services to the Partnership), owned 96,800 Class A shares of AMIT at December
31, 1997. These Class A shares represent approximately 2.2% of the total voting
power 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
IPT, an entity then owned 98% by Insignia and its affiliates. 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 (including MAE) would
own approximately 57% of post-merger IPT when this transaction is consummated.
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 December 31, 1997 and December 31, 1996, with monthly interest only
payments at prime plus .75% (9.25% for 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 $35,000 and $33,000 in 1997 and 1996, respectively. Total
accrued interest for this loan at December 31, 1997 was approximately $159,000.
Year 2000
The Partnership is dependent upon the General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The General Partner believes that with modifications to
existing software and conversions to new software, the Year 2000 Issue will not
pose significant operational problems for its computer systems. However, if such
modifications and conversions are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the
Partnership.
Other
Certain items discussed in this annual report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this annual report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
ITEM 7. FINANCIAL STATEMENTS
ANGELES PARTNERS VIII
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1997
Consolidated Statements of Operations - Years ended December 31, 1997 and
1996
Consolidated Statements of Changes in Partner's Deficit - Years ended
December 31, 1997 and 1996
Consolidated Statements of Cash Flows - Years ended December 31, 1997 and
1996
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Angeles Partners VIII
We have audited the accompanying consolidated balance sheet of Angeles Partners
VIII as of December 31, 1997, and the related consolidated statements of
operations, changes in partners' deficit and cash flows for each of the two
years in the period ended December 31, 1997. 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
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Angeles Partners
VIII at December 31, 1997, and the consolidated results of its operations and
its cash flows for each of the two years in the period ended December 31, 1997,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that Angeles
Partners VIII 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 indebtedness 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.
/S/ ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 1998,
except for Note H, as to which the date is
March 17, 1998
ANGELES PARTNERS VIII
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1997
Assets
Cash and cash equivalents $ 328
Receivables and deposits 131
Other assets 186
Investment properties: (Notes C and F)
Land $ 543
Buildings and related personal property 14,723
15,266
Less accumulated depreciation (10,435) 4,831
$ 5,476
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 30
Tenant security deposit liabilities 72
Accrued property taxes 365
Accrued interest 2,010
Other liabilities 252
Note payable to an affiliate (Note E) 371
Mortgage notes payable, $1,350 in default 16,578
(Notes A, C, and E)
Partners' Deficit
General partner $ (176)
Limited partners (11,855 units
issued and outstanding) (14,026) (14,202)
$ 5,476
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS VIII
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1997 1996
Revenues:
Rental income $ 3,677 $ 3,472
Other income 206 171
Total revenues 3,883 3,643
Expenses:
Operating 1,496 1,553
General and administrative 145 162
Depreciation 672 624
Interest 1,846 1,777
Property taxes 355 550
Total expenses 4,514 4,666
Net loss $ (631) $(1,023)
Net loss allocated to general partner (1%) $ (6) $ (10)
Net loss allocated to limited partners(99%) (625) (1,013)
$ (631) $(1,023)
Net loss per limited partnership unit $(52.72) $(84.52)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS VIII
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(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, 1995 11,985 $ (160) $(12,388) $(12,548)
Net loss for the year ended
December 31, 1996 -- (10) (1,013) (1,023)
Abandonment of limited
partnership units (Note G) (130) -- -- --
Partners' deficit at
December 31, 1996 11,855 (170) (13,401) (13,571)
Net loss for the year ended
December 31, 1997 -- (6) (625) (631)
Partners' deficit at
December 31, 1997 11,855 $ (176) $(14,026) $(14,202)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS VIII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1997 1996
Cash flows from operating activities:
Net loss $ (631) $(1,023)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 672 624
Amortization of loan costs 55 52
Loss on disposal of property -- 15
Change in accounts:
Receivables and deposits 35 (38)
Other assets (13) (10)
Accounts payable (33) 23
Tenant security deposit liabilities 10 8
Accrued property taxes (45) 75
Accrued interest 525 639
Other liabilities 101 22
Net cash provided by operating activities 676 387
Cash flows from investing activities:
Property improvements and replacements (311) (929)
Withdrawals from restricted escrows -- 196
Net cash used in investing activities (311) (733)
Cash flows from financing activities:
Payments on mortgage notes payable (230) (49)
Repayment of mortgage notes payable -- (9,368)
Proceeds from long-term borrowings -- 9,800
Loan costs -- (174)
Net cash (used in) provided by
financing activities (230) 209
Net increase (decrease) in cash and cash equivalents 135 (137)
Cash and cash equivalents at beginning of year 193 330
Cash and cash equivalents at end of year $ 328 $ 193
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,266 $ 1,085
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS VIII
Notes To Consolidated Financial Statements
December 31, 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
inadequate liquidity. In addition, it 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 $631,000 for the year ended
December 31, 1997, and the General Partner expects this trend to continue. The
Partnership realized net cash provided by operations of $676,000; however,
interest of $525,000 was accrued during 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 $530,000
due to Angeles Acceptance Pool, L.P. ("AAP") matured 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
December 31, 1997, and cash flow generated during 1998.
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 Partners VIII is a California limited partnership
organized on August 7, 1978, to acquire and operate residential and commercial
real estate properties. The Partnership's General Partner is Angeles Realty
Corporation ("ARC"), which is a wholly-owned subsidiary of MAE GP Corporation
("MAE GP"). Effective February 25, 1998, MAE GP was merged into Insignia
Properties Trust ("IPT"), which is an affiliate of Insignia Financial Group,
Inc. ("Insignia"). Thus the General Partner is now a wholly-owned subsidiary of
IPT. As of December 31, 1997, the Partnership operates residential properties
in Mishawaka, Indiana, and Huntsville, Alabama.
ALLOCATIONS AND DISTRIBUTIONS TO PARTNERS: Net income and losses (excluding
those arising from the occurrence of sales or dispositions) of the Partnership
will be allocated 1% to the General Partner and 99% to the Limited Partners on
an annual basis.
In accordance with the Partnership 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 the Ten Percent Distribution (as defined in the
Partnership Agreement) 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.
Distributions of available cash, except as discussed below, are allocated among
the Limited Partners and General Partner in accordance with the Agreement of
Limited Partnership.
Upon the sale, other disposition or refinancing, of any asset of the Partnership
other than in connection with the dissolution of the Partnership, the net
proceeds thereof which the General Partner determines can reasonably be
distributed to the Partners and are not required for support of the operations
of the Partnership or for investment in additional real properties, if any, must
be distributed 1% to the General Partner and 99% to the Limited Partners until
such time as the Partners have received cumulative distributions from the
Partnership equal to the amount of their original capital contributions to the
Partnership plus a cumulative return of 12% per annum (simple interest) on the
Limited Partners' Adjusted Capital Investment, as defined in the Agreement.
Thereafter, 10% of such proceeds will be distributed to the General Partner and
the remaining 90% of such proceeds will be distributed 1% to the General Partner
and 99% to the Limited Partners.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements of the
Partnership include its 99% limited partnership interests in Brittany Point AP
VIII, L.P. and Brittany Point GP, L.P. The Partnership may remove the General
Partner of Brittany Point AP VIII, L.P. and Brittany Point GP, L.P.; therefore,
these partnerships are controlled and consolidated by the Partnership. All
significant interpartnership balances have been eliminated.
DEPRECIATION: Depreciation is computed on an accelerated method over estimated
useful lives of 10 to 25 years for buildings and improvements and 3 to 5 years
for furnishings and equipment until such time as the expense is exceeded by
depreciation as computed on the straight line method. Assets placed in service
after 1987 are depreciated over estimated useful lives of 10 to 15 years for
buildings and improvements and 5 to 7 years for furnishings and equipment using
the straight-line method. For Federal income tax purposes, the accelerated cost
recovery method is used (1) for real property over 18 years for additions after
March 15, 1984, and before May 9, 1985, and 19 years for additions after May 8,
1985, and before January 1, 1987, and (2) for personal property over 5 years for
additions prior to January 1, 1987. As a result of the Tax Reform Act of 1986,
for additions after December 31, 1986, the alternative depreciation system is
used for depreciation of (1) real property additions over 40 years, and (2)
personal property additions from 6-20 years.
CASH AND CASH EQUIVALENTS: Includes cash on hand and in banks, certificates of
deposit and money market funds with original maturities less than 90 days. At
certain times, the amount of cash deposited at a bank may exceed the limit on
insured deposits.
TENANT SECURITY DEPOSITS: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. The security deposits are refunded when the tenant
vacates, provided the tenant has not damaged its space and is current on its
rental payments.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The Partnership believes that the carrying
amount of its financial instruments (except for long term debt) approximates
their fair value due to the short term maturity of these instruments. The fair
value of the Partnership's first mortgages, after discounting the scheduled loan
payments at an estimated borrowing rate currently available to the Partnership,
approximates its carrying balance. The General Partner believes that it is not
appropriate to use the Partnership's incremental borrowing rate for the second
mortgages and the note payable to an affiliate 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 for this
indebtedness.
INVESTMENT PROPERTIES: Investment properties are stated at cost. Acquisition
fees are capitalized as a cost of real estate. The Partnership records
impairment losses on long-lived assets used in operations when events and
circumstances indicate that the assets might be impaired and the undiscounted
cash flows estimated to be generated by those assets are less than the carrying
amounts of those assets.
LOAN COSTS: Loan costs, included in other assets, total approximately $370,000,
and are being amortized on a straight-line basis over the lives of the related
loans. Accumulated amortization is approximately $211,000 and is also included
in other assets. Amortization is included in interest expense.
ADVERTISING COSTS: The Partnership expenses the costs of advertising as
incurred. Advertising expense included in operating expenses was approximately
$54,000 and $56,000 for the years ended December 31, 1997 and 1996,
respectively.
LEASES: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on leases. The General
Partner finds it necessary to offer rental concessions during particularly slow
months or in response to heavy competition from other similar complexes in the
area. Concessions are charged to expense as incurred.
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.
RECLASSIFICATIONS: Certain reclassifications have been made to the 1996
information to conform to the 1997 presentation.
NOTE C - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows (dollar amounts in
thousands):
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1997 Interest Rate Date Maturity
Bercado Shores
1st mortgage $ 4,032 $ 34 (1) 6/2000 $3,919
2nd mortgage, 1,350 (2) 12.50% 6/1995(3) 1,350
(in default)
Brittany Point
1st mortgage 9,626 81 7.875% 2/2001 8,873
2nd mortgage 1,570 (2) 12.50% 12/2000 1,570
Totals $16,578
(1) Based on the one-year Treasury Constant Maturities rate plus 3%; 9% as of
December 31, 1997.
(2) Interest only payments.
(3) In March 1993, the Partnership defaulted on payments on the second trust
deed from AMIT on Bercado Shores.
The mortgage notes payable are secured by certain of the Partnership's
investment properties and by pledge of revenues from the respective investment
properties.
On January 18, 1996, the Partnership refinanced the first mortgage encumbering
Brittany Point. The total mortgage indebtedness refinanced was $9,453,000, of
which $9,368,000 represented principal. The principal is to be amortized over
20 years, with a balloon payment due in February, 2001. The Partnership
capitalized loan costs of $184,000 related to the refinancing.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1997 are as follows (in thousands):
1998 $ 1,632
1999 306
2000 5,744
2001 8,896
2002 --
$16,578
NOTE D - 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.
The following is a reconciliation of reported net loss and Federal taxable loss
(in thousands, except unit data):
1997 1996
Net loss as reported $ (631) $(1,023)
Add (deduct):
Depreciation differences 82 62
Unearned income 60 (70)
Other -- 10
Accruals and prepaids (23) 14
Federal taxable loss $ (512) $(1,007)
Federal taxable loss
per limited partnership unit $(42.79) $ 84.09
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net deficiency as reported $(14,202)
Land and buildings 1,763
Accumulated depreciation (483)
Syndication and distribution costs 1,318
Other 85
Net deficiency - Federal tax basis $(11,519)
NOTE E - 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 its affiliates during the years ended December 31, 1997
and 1996, respectively:
1997 1996
(in thousands)
Property management fees, included in operating expenses $194 $181
Reimbursement for services of affiliates
(including $15,000 and $38,000 of reimbursements
for construction oversight costs), included in
operating and general administrative expenses and
investment properties 120 150
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 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.
AMIT currently provides secondary financing on the Partnership's investment
properties. Total indebtedness was approximately $2,920,000 at December 31,
1997, of which $1,350,000 was in default at December 31, 1997 (See "Notes A and
C"). Total interest expense related to this debt was approximately $632,000 and
$545,000 in 1997 and 1996, respectively. Accrued interest related to this debt
was approximately $1,758,000 and $1,267,000 at December 31, 1997 and 1996,
respectively.
In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The
terms of the Class B Shares provide that they are convertible, in whole or in
part, into Class A Common 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 the
holder 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 agreed to waive its right to receive dividends and
distributions so long as AMIT's option is outstanding). The holder of the Class
B Shares is also entitled to vote on the same basis as the holders of Class A
Shares, providing the holder 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 such shares would approximate 1.3% 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 which were
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. 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 also executed an irrevocable proxy in favor of AMIT, which provides that
the holder of the Class B Shares is permitted to vote those 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. With respect to such matters, the trustees of AMIT are required to vote
(pursuant to the irrevocable proxy) the Class B Shares (as a single block) in
the same manner as a majority of the Class A Shares are voted (to be determined
without consideration of the votes of "Excess Class A Shares" (as defined in
Section 6.13 of AMIT's Declaration of Trust)).
Between its acquisition of the Class B Shares (in November 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. In February 1998, MAE GP was merged into IPT, and
in connection with that merger, MAE GP dividended all of the Class B Shares to
its sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a
result, MAE, as the holder of the Class B Shares, is now subject to the terms of
the settlement agreement, option and irrevocable proxy described in the two
preceding paragraphs. Neither MAE GP nor MAE has exerted and intends to exert
any management control over or participate in the management of AMIT. However,
subject to the terms of the proxy described below, MAE may choose to vote the
Class B Shares as it deems appropriate in the future.
Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE
and Insignia (which provides property management and partnership administration
services to the Partnership), owned 96,800 Class A Shares of AMIT at December
31, 1997. These Class A Shares represent approximately 2.2% of the total voting
power 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
IPT, an entity then owned 98% by Insignia and its affiliates. 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 (including MAE) would
own approximately 57% of post-merger IPT when this transaction is consummated.
In November 1992, 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 December 31,
1997 and December 31, 1996, with monthly interest only payments at prime plus
0.75% (9.25% at December 31, 1997). Principal is to be paid the earlier of i)
the availability of funds, ii) the sale of one or more properties covered 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 $35,000
and $33,000 in 1997 and 1996, respectively. Total accrued interest for this
loan was approximately $159,000 at December 31, 1997.
NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION (IN THOUSANDS)
Initial Cost
To Partnership
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Bercado Shores $ 5,382 $212 $ 4,048 $ 652
Brittany Point 11,196 331 7,932 2,091
Totals $16,578 $543 $11,980 $2,743
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1997
Buildings
And
Related
Personal Accumulated Date of Date Useful
Description Land Property Total Depreciation Construction Acquired Life
(amounts in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Bercado Shores $ 212 $ 4,700 $ 4,912 $ 3,503 1974 05/31/79 5-25
Brittany Point 331 10,023 10,354 6,932 1977 12/31/79 5-25
Totals $ 543 $14,723 $15,266 $10,435
</TABLE>
The useful lives included above are for the buildings and related personal
property.
Reconciliation of "Real Estate and Accumulated Depreciation" (in thousands):
Years Ended December 31,
1997 1996
Investment Properties
Balance at beginning of year $14,955 $14,075
Property improvements 311 929
Write-offs due to replacements -- (49)
Balance at end of year $15,266 $14,955
Accumulated Depreciation
Balance at beginning of year $ 9,763 $ 9,173
Current year expense 672 624
Write-offs due to replacements -- (34)
Balance at end of year $10,435 $ 9,763
The net book value of the write-offs in 1996 of approximately $15,000 is
included in operating expenses on the accompanying statement of operations.
The aggregate cost of the investment properties for Federal income tax purposes
at December 31, 1997 and 1996, was approximately $17,029,000 and $16,687,000,
respectively. The accumulated depreciation for Federal income tax purposes at
December 31, 1997 and 1996, was approximately $10,918,000 and $10,328,000,
respectively.
NOTE G - LIMITED PARTNERSHIP UNITS
In 1996, the number of Limited Partnership Units decreased by 130 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 for the year. The loss per limited partnership unit in the
accompanying statements of operations for the year ended December 31, 1996 is
calculated based on the number of units outstanding at the beginning of the
year.
NOTE H - SUBSEQUENT EVENT
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
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,
Inc. ("ARC"), the Partnership's General Partner, their ages and the nature of
all positions with ARC presently held by them are as follows:
Name Age Position
Carroll D. Vinson 57 President and Director
Robert D. Long, Jr. 30 Vice President and
Chief Accounting
Officer
William H. Jarrard, Jr. 51 Vice President
Daniel M. LeBey 32 Secretary
Kelley M. Buechler 40 Assistant Secretary
Prior to February 25, 1998 ARC was a wholly-owned subsidiary of MAE GP
Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged into
Insignia Properties Trust ("IPT"), which is an affiliate of Insignia Financial
Group, Inc. ("Insignia"). Thus the General Partner is now a wholly-owned
subsidiary of IPT.
Carroll D. Vinson has been President and Director of the General Partner and
President of Metropolitan Asset Enhancement, L.P. ("MAE"), and subsidiaries
since August 1994. He has acted as Chief Operating Officer of IPT since May
1997. 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 which included portfolio acquisitions, asset dispositions, debt
restructurings and financial reporting. 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.
Robert D. Long, Jr. has been the Vice President and Chief Accounting Officer of
the General Partner since August 1994. Mr. Long joined MAE, an affiliate of
Insignia, in September 1993. Since 1994 he has acted as Vice President and
Chief Accounting Officer of the MAE subsidiaries. Mr. Long was an accountant
for Insignia until joining MAE in 1993. Prior to joining Insignia, Mr. Long was
an auditor for the State of Tennessee and was associated with the accounting
firm of Harsman Lewis and Associates.
William H. Jarrard, Jr. has been Vice President of the General Partner since
December 1, 1992. He has acted as Senior Vice President of IPT since May 1997.
Mr. Jarrard previously acted as Managing Director - Partnership Administration
of Insignia from January 1991 through September 1997 and served as Managing
Director - Partnership Administration and Asset Management of Insignia from July
1994 until January 1996.
Daniel M. LeBey has been Secretary of the General Partner since January 29, 1998
and Insignia's Assistant Secretary since April 30, 1997. Since July 1996 he has
also served as Insignia's Associate General Counsel. From September 1992 until
June 1996, Mr. LeBey was an attorney with the law firm of Alston & Bird LLP,
Atlanta, Georgia.
Kelley M. Buechler has been Assistant Secretary of the General Partner since
August 1994 and Assistant Secretary of Insignia since 1991.
ITEM 10. EXECUTIVE COMPENSATION
The Registrant was not required to and did not pay remuneration to officers or
directors of the General Partner during 1997 or 1996. However, reimbursements
and other payments have been made to the Partnership's General Partner and its
affiliates, as described in "Item 12" below.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of January 1, 1998, no person was known to own of record or beneficially more
than five percent of the Limited Partnership Units of the Partnership.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
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 a 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 Partners an amount equal to the accrued
and unpaid management fee described in Article 10 of the Agreement and to
purchase the General Partners' 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.
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 its affiliates
during the years ended December 31, 1997 and 1996, respectively:
1997 1996
(in thousands)
Property management fees $194 $181
Reimbursement for services of affiliates
(including $15,000 and $38,000 of reimbursements
for construction oversight costs) 120 150
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 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.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
See Exhibit Index contained herein for listing of exhibits.
(b) Reports on Form 8-K filed during the fourth quarter of 1997:
None.
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 PARTNERS VIII LIMITED PARTNERSHIP
By: Angeles Realty Corporation
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President and Director
Date: March 26, 1998
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 and Director
Carroll D. Vinson
/s/Robert D. Long, Jr. Vice President and
Robert D. Long, Jr. Chief Accounting Officer
EXHIBIT INDEX
EXHIBIT
3.1 Amended Certificate and Agreement of the Limited Partnership filed
as exhibit 3.1 in Form 10K dated October 31, 1979 and is
incorporated herein by reference.
10.1 Property Management Agreement between the Partnership and Angeles
Real Estate Management Company, filed as exhibit 10.1 in Form 10K
dated October 31, 1980 and is incorporated herein by reference.
10.2 First Trust Deed Mortgage - Bercado Shores, filed as an exhibit
10.8 in Form 10-K dated March 28, 1991 and is incorporated herein
by reference.
10.3 First Trust Deed Mortgage - Devonshire Apartments, filed as an
exhibit 10.9 in Form 10-K dated March 28, 1991 and is incorporated
herein by reference.
10.4 Promissory Note Secured by Mortgage and Other Security -
Breckenridge, filed as an exhibit 10.10 in Form 10-K dated March
28, 1991 and is incorporated herein by reference.
10.5 Promissory Note Secured by Mortgage and Other Security -
Devonshire, filed as an exhibit 10.11 in Form 10-K dated March 28,
1991 and is incorporated herein by reference.
10.6 Promissory Note Secured by Mortgage and Other Security - Brittany
Point, filed as an exhibit 10.12 in Form 10-K dated March 28, 1991
and is incorporated herein by reference.
10.7 Agreement to Purchase and Sale of Real Property between Angeles
Partners VIII and New Plan Realty Trust, dated January 29, 1992
which was filed as exhibit I to the Trust's Form 8-K filed February
28, 1992 and is incorporated herein by reference.
10.8 Stock Purchase Agreement dated November 24, 1992 showing the
purchase of 100% of the outstanding stock of Angeles Realty
Corporation 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.
10.9 Promissory Note Secured by Mortgage and Other Security dated
January 18, 1996 - Brittany Point AP VIII, L.P.
10.10 Mortgage, Assignment of Rents and Security Agreement dated January
18, 1996 - Brittany Point AP VIII, L.P.
16 Letter from the 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
August 30, 1993.
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners VIII 1997 Year-End 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000276779
<NAME> ANGELES PARTNERS VIII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 328
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 15,266
<DEPRECIATION> (10,435)
<TOTAL-ASSETS> 5,476
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 16,578
0
0
<COMMON> 0
<OTHER-SE> (14,202)
<TOTAL-LIABILITY-AND-EQUITY> 5,476
<SALES> 0
<TOTAL-REVENUES> 3,883
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,514
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,846
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (631)
<EPS-PRIMARY> (52.72)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
