FORM 10-QSB.--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period.........to.........
Commission file number 0-8851
ANGELES PARTNERS VII
(Exact name of small business issuer as specified in its charter)
California 95-3215214
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(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 VII
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1998
Assets
Cash and cash equivalents $ 486
Receivables and deposits 61
Other assets 7
Investment properties:
Land $ 366
Buildings and related personal property 5,341
5,707
Less accumulated depreciation (3,960) 1,747
$ 2,301
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 16
Tenant security deposit liabilities 31
Accrued property taxes 11
Other liabilities 32
Mortgage note payable 2,309
Partners' Capital (Deficit)
General partner $ 293
Limited partners' (8,669 units issued and
outstanding) (391) (98)
$ 2,301
See Accompanying Notes to Financial Statements
b)
ANGELES PARTNERS VII
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1998 1997
Revenues:
Rental income $ 299 $ 283
Other income 21 16
Total revenues 320 299
Expenses:
Operating 127 124
General and administrative 19 21
Depreciation 69 67
Interest 53 56
Property taxes 11 10
Total expenses 279 278
Net income $ 41 $ 21
Net income allocated to general
partner (1%) $ -- $ --
Net income allocated to limited
partners (99%) 41 21
Net income $ 41 $ 21
Net income per limited
partnership unit $ 4.73 $ 2.42
See Accompanying Notes to Financial Statements
c)
ANGELES PARTNERS VII
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 8,674 $ 88 $ 8,674 $ 8,762
Partners' capital (deficit) at
December 31, 1997 8,669 $ 293 $ (432) $ (139)
Net income for the three months ended
March 31, 1998 -- -- 41 41
Partners' capital (deficit) at
March 31, 1998 8,669 $ 293 $ (391) $ (98)
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
d)
ANGELES PARTNERS VII
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 41 $ 21
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 69 67
Change in accounts:
Receivable and deposits 26 43
Other assets 4 --
Accounts payable (3) (15)
Tenant security deposit liabilities -- 1
Accrued property taxes (29) (30)
Other liabilities (1) 3
Net cash provided by
operating activities 107 90
Cash flows used in investing activities:
Property improvements and replacements (7) (20)
Cash flows used in financing activities:
Payments on mortgage notes payable (30) (27)
Net increase in cash and cash equivalents 70 43
Cash and cash equivalents at beginning of period 416 239
Cash and cash equivalents at end of period $ 486 $ 282
Supplemental disclosure of cash flow information:
Cash paid for interest $ 53 $ 56
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
e)
ANGELES PARTNERS VII
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of Angeles Realty Corporation (the "General Partner"), all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months
ended March 31, 1998, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1998. For further information,
refer to the financial statements and footnotes thereto included in Angeles
Partners VII's (the "Partnership") annual report on Form 10-KSB for the fiscal
year ended December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATES
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 General Partner is wholly-owned by Insignia Properties Trust ("IPT"), an
affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership
Agreement provides for payments to affiliates for services and as reimbursement
of certain expenses incurred by affiliates on behalf of the Partnership. The
following amounts were paid to the General Partner and affiliates during the
three months ended March 31, 1998 and 1997:
1998 1997
(in thousands)
Property management fees (included in $ 16 $ 14
operating expenses)
Reimbursement for services of affiliates 12 15
(included in general and administrative
expenses)
For the period from January 1, 1997, to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
General Partner with an 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 agent assumed the financial
obligations to the affiliate of the General Partner which receives payment on
these obligations from the agent. The amount of the Partnership's insurance
premiums that accrued to the benefit of the affiliate of the General Partner by
virtue of the agent's obligations was not significant.
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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment property consists of one apartment complex. The
following table sets forth the average occupancy of the property for the three
months ended March 31, 1998 and 1997:
Average
Occupancy
Property 1998 1997
Cedarwood Apartments
Gretna, Louisiana 97% 96%
The Partnership reported net income for the three months ended March 31, 1998,
of $41,000 as compared to net income of approximately $21,000 for the three
months ended March 31, 1997. The increase in net income is primarily due to an
increase in rental income. Rental income increased due to rental rate increases
at Cedarwood Apartments. An increase in other income also contributed to the
increase in net income for the year due to an increase in interest income.
Interest income increased due to higher average cash balances for the three
months ended March 31, 1998 as compared to March 31, 1997.
The General Partner continues to monitor the rental market environment at its
apartment property to assess the feasibility of increasing rents, to maintain or
increase the occupancy level and to protect the Partnership from increases in
expense. The General Partner expects to be able, at a minimum, to continue
protecting the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, rental concessions and rental rate reductions needed to offset
softening market conditions could affect the ability to sustain this plan.
At March 31, 1998, the Partnership had cash and cash equivalents of
approximately $486,000 compared to approximately $282,000 for the corresponding
period of 1997. The net increase in cash and cash equivalents for the three
months ended March 31, 1998 and 1997 was $70,000 and $43,000, respectively. Net
cash provided by operating activities increased due to the increases in net
income as discussed above. Net cash used in investing activities decreased due
to a decrease in property improvements and replacements in 1998 as compared to
1997. Net cash used in financing activities in 1998 was comparable to 1997.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any short-term needs of the Partnership. The mortgage
indebtedness of $2,309,000 is being amortized over 28 years with a maturity date
of May 2007, at which time the property will be refinanced or sold. No cash
distributions were made during the three months ended March 31, 1998. Future
distributions will depend on the levels of net cash generated from operations,
refinancings, property sale and the availability of cash reserves. The General
Partner is evaluating the feasibility of making a cash distribution during May
1998.
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 quarterly report may constitute forward-looking
statements within the meaning of the Private 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 quarterly 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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA
FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and its affiliates of
interests in certain general partner entities, past tender offers by Insignia
affiliates to acquire limited partnership units, the management of partnerships
by Insignia affiliates as well as a recently announced agreement between
Insignia and Apartment Investment and Management Company. The complaint seeks
monetary damages and equitable relief, including judicial dissolution of the
Partnership. The General Partner was only recently served with the complaint
which it believes to be without merit, and intends to vigorously defend the
action.
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 filed during the quarter ended March 31, 1998.
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 VII
By: Angeles Realty Corporation
General Partner and Director
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long
Robert D. Long
Vice President and Principal
Accounting Officer
Date: May 1, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Partners VII 1998 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000310303
<NAME> ANGELES PARTNERS VII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 486
<SECURITIES> 0
<RECEIVABLES> 61
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 5,707
<DEPRECIATION> 3,960
<TOTAL-ASSETS> 2,301
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 2,309
0
0
<COMMON> 0
<OTHER-SE> (98)
<TOTAL-LIABILITY-AND-EQUITY> 2,301
<SALES> 0
<TOTAL-REVENUES> 320
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 279
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41
<EPS-PRIMARY> 4.73<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
