FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D)
(Mark One)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 [No Fee Required]
For the fiscal year ended December 31, 1997
or
[ ] 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 0-8851
ANGELES PARTNERS VII
(Name of small business issuer in its charter)
South Carolina 95-3215214
(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) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
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 of 1934 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 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. $1,230,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of a specified date within the past 60 days. Market value for the
Registrant's partnership interest 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 interest would not exceed
$25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
1. None.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Angeles Partners VII (the "Partnership" or "Registrant") is a publicly-held
limited partnership organized under the California Uniform Limited Partnership
Act pursuant to the Certificate and Agreement of Limited Partnership
(hereinafter referred to as "Agreement") dated January 14, 1977. The
Partnership's General Partner is Angeles Realty Corporation (the "General
Partner"), a California corporation, 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 Partnership, through its public offering of Limited Partnership Units, sold
8,674 units aggregating $8,674,000 and the General Partner contributed capital
in the amount of $87,716 representing a 1% interest in the Partnership. The
Partnership is engaged in the business of investing in and operating improved or
newly constructed real estate. The Partnership's primary objectives for its
partners are the generation of cash flow and capital growth through debt
reduction and appreciation in property values. Funds obtained by the
Partnership during the public offering period of its Limited Partnership Units
(September 19, 1977 through September 19, 1978), together with long-term
borrowings, were used to acquire five operating residential apartment
properties. Two of these properties were sold in September 1983, one was sold
in December 1983 and one was sold in March 1984. The Partnership does not intend
to sell additional Limited Partnership Units. The term of the Partnership's
Agreement extends to December 31, 2035. The Partnership is intended to be self-
liquidating and proceeds from the sale or future refinancing of its operating
property will not be reinvested.
The General Partner of the Registrant intends to maximize the operating results
and, ultimately, the net realizable value of the Registrant's property in order
to achieve the best possible return for the investors. Such results may best be
achieved through a property sale, refinancings, debt restructuring or
relinquishment of the asset. The Registrant intends to evaluate its holding
periodically to determine the most appropriate strategy for its asset.
The Partnership has no full time employees. The General Partner is vested with
full authority as to the general management and supervision of the business and
affairs of the Partnership. Limited Partners have no right to participate in the
management or conduct of such business and affairs. Insignia Residential Group,
L.P., an affiliate of the General Partner, provides day-to-day management
services for the Partnership's investment property.
The business in which the Partnership is engaged is highly competitive, and the
Partnership is not a significant factor in its industry. The Partnership's
investment property is located near a major urban area and, accordingly,
competes for rentals not only with similar properties in its immediate area but
with hundreds of similar properties throughout the urban area. Such competition
is primarily on the basis of location, rents, services and amenities. In
addition, the Partnership competes with significant numbers of individuals and
organizations (including similar partnerships, real estate investment trusts and
financial institutions) with respect to the sale of improved real properties,
primarily on the basis of the price and terms of such transactions.
ITEM 2. DESCRIPTION OF PROPERTY:
The following table sets forth the Partnership's investment in Cedarwood
Apartments:
Date of
Property Purchase Type of Ownership Use
Cedarwood Apartments Fee ownership subject to Residential
Gretna, Louisiana 05/02/79 a first mortgage 226 units
SCHEDULE OF PROPERTY:
(dollar amounts in thousands)
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Cedarwood Apartments
Gretna, Louisiana $ 5,700 $ 3,891 5-25 yrs S/L $ 2,044
See "Note A" of the financial statements included in "Item 7." for a description
of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGE:
(dollar amounts in thousands)
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1997 Rate Amortized Date Maturity
Cedarwood Apartments
First trust deed $ 2,339 9.125% 28 yrs 05/01/07 $ 599
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average Annual Average Annual
Rental Rates Occupancy
Property 1997 1996 1997 1996
Cedarwood Apartments $5,348/unit $5,051/unit 97% 97%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The sole property of the Partnership is subject to
competition from other residential apartment complexes in the area. The General
Partner believes that the property is adequately insured. The multi-family
residential property's lease terms are for one year or less. No residential
tenant leases 10% or more of the available rental space.
SCHEDULE OF REAL ESTATE TAXES AND RATES:
(dollar amounts in thousands):
1997 1997
Billing Rate
Cedarwood Apartments $40 10.55%
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 pending or outstanding litigation will be resolved without a material
adverse effect upon the business, financial condition, or operations of the
Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During 1997 no matter was submitted to a vote of unit holders of the Partnership
through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SECURITY MATTERS
The Partnership, a publicly-held limited partnership, sold 8,674 Limited
Partnership Units during its offering period ending September 19, 1978, and
currently has 8,669 Limited Partnership Units and 875 Limited Partners of
record. There is no intention to sell additional Limited Partnership Units nor
is there an established market for these units.
No distributions were made during the years ended December 31, 1997 and 1996.
Future cash distributions from operations will be dependent upon the
Partnership's earnings, financial condition, and other relevant factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
The Partnership's net income for the year ended December 31, 1997, was
approximately $94,000 compared to approximately $2,000 for the year ended
December 31, 1996. The increase in net income was primarily due to an increase
in rental revenue and a decrease in general and administrative expenses. Rental
income increased as a result of an increase in average rental rates at Cedarwood
Apartments, although occupancy remained constant. General and administrative
expenses decreased due to a decrease in reimbursements for services of
affiliates.
Included in operating expense for the year ended December 31, 1997 is $10,000 of
major repairs and maintenance comprised of exterior building improvements, major
landscaping, swimming pool repairs and window coverings. Included in operating
expense for the year ended December 31, 1996 is approximately $35,000 of major
repairs and maintenance comprised mainly of interior building improvements.
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.
Liquidity and Capital Resources
As of December 31, 1997, the Partnership had cash and cash equivalents of
$416,000 versus $239,000 at December 31, 1996. The net increase in cash and
cash equivalents for the years ended December 31, 1997 and 1996 is approximately
$177,000 and $46,000, respectively. Net cash provided by operating activities
increased due to the increase in net income as described above. Net cash used
in investing activities decreased as a result of a decrease in property
improvements and replacements in 1997 versus 1996. Net cash used in financing
activities remained relatively constant.
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 $2,339,000 is being amortized over 28 years with a maturity date
of May 2007. There were no distributions during the years ended December 31,
1997 and 1996. Future cash distributions will depend on the levels of net cash
generated from operations, refinancings, property sale and the availability of
cash reserves.
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 VII
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Balance Sheet - December 31, 1997
Statements of Operations - Years ended December 31, 1997 and 1996
Statements of Changes in Partners' Capital (Deficit) - Years ended
December 31, 1997 and 1996
Statements of Cash Flows - Years ended December 31, 1997 and 1996
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Angeles Partners VII
We have audited the accompanying balance sheet of Angeles Partners VII as of
December 31, 1997, and the related statements of operations, changes in
partners' capital (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 financial position of Angeles Partners VII at
December 31, 1997, and the 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.
/S/ ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 1998,
except for Note G, as to which the date is
March 17, 1998
ANGELES PARTNERS VII
BALANCE SHEET
December 31, 1997
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 416
Receivables and deposits 87
Other assets 11
Investment properties (Notes B and F):
Land $ 366
Buildings and related personal property 5,334
5,700
Less accumulated depreciation (3,891) 1,809
$ 2,323
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 19
Tenant security deposit liabilities 31
Accrued property taxes 40
Other liabilities 33
Mortgage note payable (Notes B and F) 2,339
Partners' Capital (Deficit)
General partner $ 293
Limited partners (8,669 units issued
and outstanding) (432) (139)
$ 2,323
See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1997 1996
Revenues:
Rental income $ 1,170 $ 1,102
Other income 60 53
Total revenues 1,230 1,155
Expenses:
Operating 531 522
General and administrative 69 99
Depreciation 275 262
Interest 218 228
Property taxes 43 42
Total expenses 1,136 1,153
Net income $ 94 $ 2
Net income allocated to general partner (1%) $ 1 $ --
Net income allocated to limited partners (99%) 93 2
Net income $ 94 $ 2
Net income per limited partnership unit $ 10.73 $ .23
See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 8,674 $ 88 $ 8,674 $ 8,762
Partners' (deficit) capital at
December 31, 1995 8,669 $ 292 $ (527) $ (235)
Net income for the year
ended December 31, 1996 -- -- 2 2
Partners' (deficit) capital at
December 31, 1996 8,669 292 (525) (233)
Net income for the year ended
December 31, 1997 -- 1 93 94
Partners' (deficit) capital at
December 31, 1997 8,669 $ 293 $ (432) $ (139)
See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1997 1996
Cash flows from operating activities:
Net income $ 94 $ 2
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 275 262
Change in accounts:
Receivables and deposits 11 (19)
Other assets (7) --
Accounts payable 1 (17)
Tenant security deposit liabilities -- (1)
Accrued property taxes -- 40
Other liabilities (3) (14)
Net cash provided by operating activities 371 253
Cash flows from investing activities:
Property improvements and replacements (81) (104)
Net cash used in investing activities (81) (104)
Cash flows from financing activities:
Payments on mortgage note payable (113) (103)
Net cash used in financing activities (113) (103)
Net increase in cash and cash equivalents 177 46
Cash and cash equivalents at beginning of period 239 193
Cash and cash equivalents at end of period $ 416 $ 239
Supplemental disclosure of cash flow information
Cash paid for interest $ 219 $ 229
See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII
Notes to Financial Statements
December 31, 1997
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Angeles Partners VII (the "Partnership" or "Registrant") is a
California limited partnership organized in January 1977 to acquire and operate
residential properties. The Partnership's General Partner is Angeles Realty
Corporation ("ARC"), 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 a residential property located in
Gretna, Louisiana.
Allocation of Cash Distributions: Except as discussed below, the Partnership
will allocate distributions 1% to the General Partner and 99% to the Limited
Partners.
Upon the sale or other disposition, or refinancing, of any asset of the
Partnership other than in connection with the dissolution of the Partnership,
the net proceeds thereof which the General Partner determined can reasonably be
distributed to the Partners and are not required for support of the operations
of the Partnership, must be distributed to the Partners until such time as the
Partners have received distributions from the Partnership equal to the amount of
their original capital contributions to the Partnership and a cumulative return
of 12% per annum (simple interest) on their Adjusted Capital Investment, as
defined in the Agreement. Thereafter, 10% of such proceeds will be distributed
to the General Partner ("Ten Percent Distribution") and the remaining 90% of
such proceeds will be distributed 1% to the General Partner and 99% to Limited
Partners.
Allocation of Profits, Gains and Losses: 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
any Ten Percent Distribution, as described above, to which the General Partner
is entitled. Any gain remaining after said allocation will be allocated to the
General Partner and Limited Partners in proportion to their interests in the
Partnership.
The Partnership will allocate other profits and losses 1% to the General Partner
and 99% to the Limited Partners on an annual basis.
Escrow for Taxes: Currently, these funds totaling approximately $46,000 are
held by the Partnership and included in receivables and deposits. All escrow
funds are designated for the payment of real estate taxes.
Depreciation: Depreciation is computed utilizing the straight-line method over
an estimated useful life of 10 to 25 years for buildings and improvements and 5
to 7 years for furniture and fixtures. For tax purposes, depreciation is
computed by using the straight-line method over an estimated life of 6 to 12
years for personal property and 11.5 to 40 years for real property.
Cash and Cash Equivalents: Includes cash on hand and in banks, demand deposits,
money market investments and certificates of deposits with maturities less than
90 days. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less.
Tenant Security Deposits: The Partnership requires security deposits from all
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 the apartment if there has been no damage to the unit and is current on
rental payments.
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. For the years ended December 31, 1997 and 1996, no
adjustments for impairment of value were recorded.
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 long term debt, after discounting the scheduled loan
payments at an estimated borrowing rate currently available to the Partnership,
approximates its carrying balance.
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
balances to conform to the 1997 presentation.
NOTE B - MORTGAGE NOTE PAYABLE
The principle terms of the mortgage note 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
Cedarwood Apartments $ 2,339 $ 28 9.125% 05/01/07 $ 599
The mortgage note payable is non-recourse and is secured by pledge of the
apartment property and by pledge of revenues from the apartment property.
Scheduled principal payments of the mortgage note payable for the five years
subsequent to December 31, 1997, are as follows:
1998 $ 124
1999 136
2000 149
2001 163
2002 178
Thereafter 1,589
$ 2,339
NOTE C - NOTE RECEIVABLE
The Partnership held a note receivable for its sale of Del Lago Apartments. As
a result of the bankruptcy of the owner of Del Lago Apartments and the
subsequent foreclosure of the first lienholder, the Partnership wrote off all
but $300,000 of the Del Lago note receivable in 1988, which represents a
personal guaranty note from the seller which was due in June 1989. During 1997,
approximately $10,000 was received in payment and the remaining balance of
$246,000, which was fully reserved, was written off.
NOTE D - INCOME TAXES
Taxable income 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 income and Federal taxable
income (in thousands, except per unit data):
1997 1996
Net income as reported $ 94 $ 2
Add (deduct):
Depreciation differences 59 54
Change in prepaid rental 2 (4)
Other (3) 1
Federal taxable income $ 152 $ 53
Federal taxable income per
limited partnership unit $ 17.36 $ 6.05
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 $ (139)
Land and Buildings 86
Accumulated depreciation 149
Syndication fees 798
Other 18
Net assets - tax basis $ 912
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 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 in 1997 and 1996:
For the Years Ended
December 31,
1997 1996
(in thousands)
Property management fees, included in operating expense $ 60 $ 57
Reimbursement for services of affiliates, included
in operating and general administrative expenses 50 67
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
agent assumed the financial obligations to the affiliate of the General Partner,
who received payment on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
General Partner by virtue of the agent's obligations were not significant.
NOTE F - INVESTMENT PROPERTY AND ACCUMULATED DEPRECIATION
(dollar amounts in thousands)
Initial Cost
To Partnership
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Cedarwood Apartments $ 2,339 $ 366 $ 4,519 $ 815
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1997
Buildings
And
Personal Accumulated Date of Date Depreciation
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Cedarwood Apartments $ 366 $5,334 $5,700 $ 3,891 1979 05/02/79 10-25 years
</TABLE>
The depreciable lives included above are for the buildings and components. The
depreciable lives for related personal property are for 5 to 7 years.
Reconciliation of "Investment Property and Accumulated Depreciation" (in
thousands):
Years Ended December 31,
1997 1996
Investment Property
Balance at beginning of year $ 5,619 $ 5,515
Property improvements 81 104
Balance at end of year $ 5,700 $ 5,619
Accumulated Depreciation
Balance at beginning of year $ 3,616 $ 3,354
Additions charged to expense 275 262
Balance at end of year $ 3,891 $ 3,616
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996 is $5,786,000 and $5,705,000. The accumulated
depreciation taken for Federal income tax purposes at December 31, 1997 and 1996
is $3,742,000 and $3,527,000.
NOTE G - 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 ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
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
("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
The General Partner 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.
Carroll D. Vinson has been President and Director of the General Partner and
President of Metropolitan Asset Enhancement, L.P. ("MAE"), an affiliate of
Insignia, 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 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
August 1994. 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
December 1, 1993 and Assistant Secretary of Insignia since 1991.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of ARC. The Partnership has no plan, nor does the
Partnership presently propose a plan, which will result in any remuneration
being paid to any officer or director upon termination of employment. However,
fees and other payments have been made to the Partnership's General Partner and
its affiliates, as described in "Item 12".
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1997.
Number
Entity of Units Percentage
Everest Investors 4 LLC 456 5.26%
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 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 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 in 1997
and 1996:
For the Years Ended
December 31,
1997 1996
(in thousands)
Property management fees $ 60 $ 57
Reimbursement for services
of affiliates 50 67
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
agent assumed the financial obligations to the affiliate of the General Partner,
who received payment on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
General Partner by virtue of the agent's obligations were not significant.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K filed in fourth quarter of 1997: None.
SIGNATURES
In accordance with Section 13 or 15(d) 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
By: /s/Carroll D. Vinson
Carroll D. Vinson
President and Director
Date: March 25, 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 and on the
date indicated.
/s/Carroll D. Vinson President and Director Date: March 25, 1998
Carroll D. Vinson
/s/Robert D. Long, Jr. Vice President and Date: March 25, 1998
Robert D. Long, Jr. Principal Accounting
Officer
EXHIBIT INDEX
Exhibit
3.1 Amended Certificate and Agreement of the Limited Partnership of
Partnership, filed as an exhibit to Form 10K dated October 31, 1978 and is
incorporated herein by reference
10.1 Property Management Agreements between the Partnership and Angeles Real
Estate Management Company, filed as an exhibit to Form 10K dated October
31, 1978 and is incorporated herein by reference
10.2 Purchase and Sale Agreement with Exhibits - Northcastle Apartments, filed
as an exhibit to Form 8K dated September 30, 1983 and is incorporated
herein by reference
10.3 Purchase and Sale Agreement with Exhibits - Del Lago Apartments, filed as
an exhibit to Form 8K dated December 29, 1983 and is incorporated herein by
reference
10.4 Purchase and Sale Agreement - Cedarwood Apartments - filed as an Exhibit to
Form 8K dated May 2, 1979 and is incorporated herein by reference
10.5 Promissory Note and Deed of Trust Modification and Extension Agreement -
Northcastle Apartments dated December 7, 1989, filed in Form 10K as Exhibit
10.6 dated March 29, 1990 and is incorporated herein by reference
10.6 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.
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, which is
incorporated herein by reference
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners VII 1997 Year-End 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000310303
<NAME> ANGELES PARTNERS VII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 416
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 5,700
<DEPRECIATION> (3,891)
<TOTAL-ASSETS> 2,323
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 2,339
0
0
<COMMON> 0
<OTHER-SE> (139)
<TOTAL-LIABILITY-AND-EQUITY> 2,323
<SALES> 0
<TOTAL-REVENUES> 1,230
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 218
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 94
<EPS-PRIMARY> 10.73<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
