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, 1998
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.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
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. $1,284,000
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 December 31, 1998. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
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 on 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"). MAE GP is wholly owned by
Metropolitan Asset Enhancement, L.P. ("MAE GP") an affiliate of Insignia
Financial Group, Inc., ("Insignia") which was merged into Apartment Investment
and Management Company ("AIMCO"). Effective February 25, 1998, MAE GP was
merged into Insignia Properties Trust ("IPT") which was an affiliate of Insignia
Financial Group, Inc. ("Insignia"). Effective February 26, 1999, IPT was merged
into Apartment Investment and Management Company ("AIMCO"). See "Transfer of
Control" below. Thus the General Partner is now a wholly-owned subsidiary of
AIMCO.
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. Since
its initial offering, the Registrant has not received, nor are limited partners
required to make, additional capital contributions. The term of the Partnership
Agreement extends to December 31, 2035 unless the Partnership is terminated
prior to such date.
The Partnership is engaged in the business of operating and holding 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 continues to
own and operate one of these properties. See "Item 2, Description of Property".
A further description of the Partnership's business is included in Management's
Discussion and Analysis or Plan of Operations included in "Item 6" of this Form
10-KSB.
The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner provided these services for the years ended
December 31, 1998 and 1997 at the Partnership's properties.
Both the income and expenses of operating the remaining property owned by the
Partnership is subject to factors outside of the Partnership's control, such as
an oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential
properties because such properties are susceptible to the impact of economic and
other conditions outside of the control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed, which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's property. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner, in
such market area could have a material effect on the rental market for the
apartments at the Partnership's property and the rents that may be charged for
such apartments. While the General Partner and its affiliates are a significant
factor in the United States in the apartment industry, competition for
apartments is local. In addition, various limited partnerships have been formed
by the General Partner and/or affiliates to engage in business which may be
competitive with the Partnership.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership
interest in Insignia Properties Trust ("IPT"), the entity which controls the
General Partner. The General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.
ITEM 2. DESCRIPTION OF PROPERTY:
The following table sets forth the Registrant's investment in property:
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:
Set forth below for the Registrant's property is the gross carrying value,
accumulated depreciation, depreciable life, method of depreciation and federal
tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedarwood Apartments
Gretna, Louisiana $ 5,772 $ 4,173 5-25 yrs S/L $ 1,894
</TABLE>
See "Note A" to the financial statements included in "Item 7" for a description
of the Partnership's depreciation policy.
SCHEDULE OF PROPERTY INDEBTEDNESS:
The following table sets forth certain information relating to the loan
encumbering the Registrant's property:
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1998 Rate Amortized Date Maturity (1)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedarwood Apartments
First trust deed $ 2,215 9.125% 28 yrs 05/01/07 $ 599
</TABLE>
(1) See "Item 7, Financial Statements _ Note C" for information with respect to
the Registrant's ability to prepay this loan and other specific details
about the loans.
RENTAL RATES AND OCCUPANCY:
Average annual rental rate and occupancy for 1998 and 1997 for the Registrant's
property:
Average Annual Average Annual
Rental Rates Occupancy
Property 1998 1997 1998 1997
Cedarwood Apartments $5,574/unit $5,348/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 property is an
apartment complex which leases units for lease terms of one year or less. No
tenant leases 10% or more of the available rental space. The property is in
good physical condition subject to normal depreciation and deterioration as is
typical for assets of this type and age.
REAL ESTATE TAXES AND RATES:
Real estate taxes and the tax rate in 1998 for the property were:
1998 1998
Billing Rate
(in thousands)
Cedarwood Apartments $42 11.01%
CAPITAL IMPROVEMENTS
In 1998, the Partnership expended approximately $72,000 of capital improvements,
consisting primarily of floor covering replacements, major sewer replacement,
and the replacement of appliances. These improvements were funded from cash
flows. Based on a report received from an independent third party consultant
analyzing necessary exterior improvements and estimates made by the General
Partner on interior improvements, it is estimated that the property requires
approximately $152,000 of capital improvements over the near term. The
Partnership has budgeted, but is not limited to, approximately $152,000 for
capital improvements which consists of gutters and downspouts, parking lot
repairs and major landscaping and irrigation.
The capital improvements planned for 1999 at the Partnership's property will be
made only to the extent of cash available from operations and Partnership
reserves.
ITEM 3. 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 Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia 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("AIMCO"). The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the General
Partner filed a motion seeking dismissal of the action. In lieu of responding to
the motion, the plaintiffs have filed an amended complaint. The General Partner
has filed demurrers to the amended complaint which were heard during February
1999. No ruling on such demurrers has been received. The General Partner does
not anticipate that costs associated with this case, if any, to be material to
the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of unit holders of the Partnership through the
solicitation of proxies or otherwise during the quarter ended December 31, 1998.
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. The
Partnership currently has 870 holders of record owning an aggregate of 8,669
Units. Affiliates of the General Partner owned 12 units or .138% at December
31, 1998. No public trading market has developed for the Units, and it is not
anticipated that such a market will develop in the future.
During the year ended December 31, 1998, a distribution of $132,000 ($15.11 per
limited partnership unit) was paid from operations. No distributions were made
during the year ended December 31, 1997. Future cash distributions will depend
on the levels of net cash generated from operations, refinancings, the sale of
the remaining property and the availability of cash reserves. The Partnership's
distribution policy is reviewed on a quarterly basis. There can be no assurance
however that the Partnership will generate sufficient funds from operations
after anticipated capital expenditures to permit any additional distributions to
its partners in 1999 or subsequent periods.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the forward-
looking statements as a result of a number of factors, including those
identified herein.
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, 1998, was
approximately $124,000 compared to approximately $94,000 for the year ended
December 31, 1997. The increase in net income was due to an increase in total
revenues which was partially offset by an increase in total expenses. The
increase in revenues was primarily due to an increase in rental income and a
slight increase in other income. Rental income increased as a result of an
increase in the average annual rental rate at Cedarwood Apartments, although
occupancy remained constant.
Expenses increased primarily due to an increase in general and administrative
expenses. All other expenses remained relatively constant. General and
administrative expenses increased primarily due to the payment of a partnership
management fee of $22,000 in May 1998. The fee was paid for executive and
administrative management services and was equal to 7.5% of "net cash available
for distributions" pursuant to the Partnership Agreement. Also included in
general and administrative expenses at December 31, 1998 and 1997 are management
reimbursements to the General Partner allowed under the Partnership Agreement.
In addition, costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement are also included.
As part of the ongoing business plan of the Registrant, the General Partner
monitors the rental market environment of its investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Registrant from increases in expense. As part of this plan, the
General Partner attempts to protect the Registrant 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
At December 31, 1998, the Registrant had cash and cash equivalents of
approximately $499,000 as compared to approximately $416,000 at December 31,
1997. The increase in cash and cash equivalents is due to $411,000 of cash
provided by operating activities, which was partially offset by $72,000 of cash
used in investing activities and $256,000 of cash used in financing activities.
Cash used in investing activities consisted of property improvements and
replacements. Cash used in financing activities consisted of payments of
principal made on the mortgage encumbering the Registrant's property and partner
distributions.
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 Registrant and to comply with federal, state,
and local legal and regulatory requirements. The Registrant has budgeted
approximately $152,000 in capital improvements for the Registrant's property in
1999. Budgeted capital improvements at Cedarwood include gutters and downspouts,
parking lot repairs, and major landscaping and irrigation. The capital
expenditures will be incurred only if cash is available from operations or from
partnership reserves. To the extent that such budgeted capital improvements are
completed, the Registrant's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $2,215,000 is amortized over 28 years with a
maturity date of May 2007. The General Partner will attempt to refinance such
indebtedness and/or sell the property prior to such maturity date. If the
property cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such property through foreclosure.
Cash distributions from operations of approximately $132,000 ($15.11 per limited
partnership unit) were made during the year ended December 31, 1998. No
distributions were made during the year ended December 31, 1997. The
Registrant's distribution policy is reviewed on a quarterly basis. There can be
no assurance, however, that the Partnership will generate sufficient funds from
operations after anticipated capital expenditures to permit any additional
distributions to its partners in 1999 or subsequent periods.
Year 2000 Compliance
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.
The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.
Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase
Computer Hardware:
During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.
The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.
Computer software:
The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.
During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.
The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.
Operating Equipment:
The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.
Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.
The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.
The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.
The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.
The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.
Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
ITEM 7. FINANCIAL STATEMENTS
ANGELES PARTNERS VII
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Balance Sheet - December 31, 1998
Statements of Operations - Years ended December 31, 1998 and 1997
Statements of Changes in Partners' Capital (Deficit) - Years ended December
31, 1998 and 1997
Statements of Cash Flows - Years ended December 31, 1998 and 1997
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, 1998, 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, 1998. 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, 1998, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles.
/S/ ERNST & YOUNG LLP
Greenville, South Carolina
March 3, 1999
ANGELES PARTNERS VII
BALANCE SHEET
December 31, 1998
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 499
Receivables and deposits 97
Other assets 5
Investment properties (Notes C and G):
Land $ 366
Buildings and related personal property 5,406
5,772
Less accumulated depreciation (4,173) 1,599
$ 2,200
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 18
Tenant security deposit liabilities 33
Accrued property taxes 45
Other liabilities 36
Mortgage note payable (Notes C and G) 2,215
Partners' Capital (Deficit)
General partner $ 293
Limited partners (8,669 units issued
and outstanding) (440) (147)
$ 2,200
See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1998 1997
Revenues:
Rental income $ 1,217 $ 1,170
Other income 67 60
Total revenues 1,284 1,230
Expenses:
Operating 524 531
General and administrative 101 69
Depreciation 282 275
Interest 208 218
Property taxes 45 43
Total expenses 1,160 1,136
Net income $ 124 $ 94
Net income allocated to general partner (1%) $ 1 $ 1
Net income allocated to limited partners (99%) 123 93
Net income $ 124 $ 94
Net income per limited partnership unit $ 14.19 $ 10.73
Distribution per limited partnership unit $ 15.11 $ --
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' capital (deficit) at
December 31, 1996 8,669 $ 292 $ (525) $ (233)
Net income for the year
ended December 31, 1997 -- 1 93 94
Partners' capital (deficit) at
December 31, 1997 8,669 293 (432) (139)
Distribution to partners -- (1) (131) (132)
Net income for the year ended
December 31, 1998 -- 1 123 124
Partners' capital (deficit) at
December 31, 1998 8,669 $ 293 $ (440) $ (147)
See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997
Cash flows from operating activities:
Net income $ 124 $ 94
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 282 275
Change in accounts:
Receivables and deposits (10) 11
Other assets 6 (7)
Accounts payable (1) 1
Tenant security deposit liabilities 2 --
Accrued property taxes 5 --
Other liabilities 3 (3)
Net cash provided by operating activities 411 371
Cash flows from investing activities:
Property improvements and replacements (72) (81)
Net cash used in investing activities (72) (81)
Cash flows from financing activities:
Payments on mortgage note payable (124) (113)
Distribution to partners (132) --
Net cash used in financing activities (256) (113)
Net increase in cash and cash equivalents 83 177
Cash and cash equivalents at beginning of period 416 239
Cash and cash equivalents at end of period $ 499 $ 416
Supplemental disclosure of cash flow information
Cash paid for interest $ 208 $ 219
See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII
Notes to Financial Statements
December 31, 1998
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 was an affiliate of Insignia Financial Group ("Insignia").
Effective February 26, 1999, IPT was merged into Apartment Investment and
Management Company ("AIMCO"). Thus the General Partner is now a wholly-owned
subsidiary of AIMCO. See "Note B - Transfer of Control." The directors and
officers of the General Partner also serve as executive officers of AIMCO. The
Partnership Agreement provides that the Partnership is to terminate on December
31, 2035, unless terminated prior to such date. The Partnership commenced
operations on March 1978 and completed its acquisition of properties in October
1979. The Partnership operates an apartment property in 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 $50,000 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 provided by the straight-line method over the
estimated lives of the apartment property and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 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 modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 7 years.
Cash and Cash Equivalents: Includes cash on hand and in banks, money market
funds and certificates of deposit 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. The Partnership recognizes income as earned on its leases. In
addition, the General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Concessions are charged against rental income as
incurred.
Tenant Security Deposits: The Partnership requires security deposits from
leases for the duration of the lease and such deposits are included in
receivables and deposits. 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 Property: Investment property consists of one apartment complex and
is stated at cost. Acquisition fees are capitalized as a cost of real estate.
In accordance with Financial Accounting Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," 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 flow estimated to be generated by those
assets are less than the carrying amounts of those assets. Costs of the
apartment property that have been permanently impaired have been written down to
appraised value. No adjustments for impairment of value were recorded in the
years ended December 31, 1998 or 1997.
Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. 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 to
maturity, approximates its carrying balance.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs of approximately $9,000 and $10,000 for the years ended
December 31, 1998 and 1997, respectively, were charged to operating 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.
Segment Reporting: In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Standards No. 131, Disclosure about Segments of an
Enterprise and Related Information ("Statement 131"), which is effective for
years beginning after December 15, 1997. Statement 131 established standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports. It also establishes standards for related disclosures about products
and services, geographic areas, and major customers. See "Note H" for
disclosure.
Reclassifications: Certain reclassifications have been made to the 1997 balances
to conform to the 1998 presentation.
NOTE B - TRANSFER OF CONTROL
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership
interest in Insignia Properties Trust ("IPT"), the entity which controls the
General Partner. The General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.
NOTE C - MORTGAGE NOTE PAYABLE
The principle terms of the mortgage note payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1998 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedarwood Apartments $ 2,215 $ 28 9.125% 05/01/07 $ 599
</TABLE>
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. The
property may not be sold subject to existing indebtedness. Prepayment penalties
are required if repaid prior to maturity.
Scheduled principal payments of the mortgage note payable for the five years
subsequent to December 31, 1998, are as follows:
1999 $ 136
2000 149
2001 163
2002 178
2003 195
Thereafter 1,394
$ 2,215
NOTE D - 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 E - INCOME TAXES
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income of the Partnership is reported in the income
tax returns of its partners.
The following is a reconciliation of reported net income and Federal taxable
income (in thousands, except per unit data):
1998 1997
Net income as reported $ 124 $ 94
Add (deduct):
Depreciation differences 60 59
Change in prepaid rental -- 2
Other 8 (3)
Federal taxable income $ 192 $ 152
Federal taxable income per
limited partnership unit $ 21.90 $ 17.36
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 $ (147)
Land and Buildings 86
Accumulated depreciation 209
Syndication fees 798
Other 25
Net assets - tax basis $ 971
NOTE F - 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 certain 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 years ended December 31, 1998 and 1997.
1998 1997
(in thousands)
Property management fees, (included in operating expense) $ 63 $ 60
Reimbursement for services of affiliates, (included
in operating and general and administrative expenses) 49 50
Partnership management fee (included in general and
administrative expense) (1) 22 --
(1) The Partnership Agreement provides for a fee equal to 7.5% of "net cash
available for distribution" to the limited partners (as defined in the
Partnership Agreement) to be paid to the General Partner for executive and
administrative management services.
During the years ended December 31, 1998 and 1997 affiliates of the General
Partner were entitled to receive 5% of gross receipts from the Registrant's
property for providing property management services. The Registrant paid to
such affiliates $63,000 and $60,000 for the years ended December 31, 1998 and
1997, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $49,000 and $50,000 for the
years ended December 31, 1998 and 1997, respectively.
For the period of 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 accruing to the benefit of the affiliate of the General Partner by
virtue of the agent's obligations is not significant.
NOTE G - REAL ESTATE AND ACCUMULATED DEPRECIATION
Investment Property
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands)
Cedarwood Apartments
Gutra, Louisana $ 2,215 $ 366 $ 4,519 $ 887
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1998
(in thousands)
Buildings
And
Related
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 $ 5,406 $ 5,772 $ 4,173 1979 05/02/79 10-25 years
</TABLE>
Reconciliation of "Investment Property and Accumulated Depreciation":
Years Ended December 31,
1998 1997
(in thousands)
Investment Property
Balance at beginning of year $ 5,700 $ 5,619
Property improvements 72 81
Balance at end of year $ 5,772 $ 5,700
Accumulated Depreciation
Balance at beginning of year $ 3,891 $ 3,616
Additions charged to expense 282 275
Balance at end of year $ 4,173 $ 3,891
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997 is $5,858,000 and $5,786,000, respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1998 and 1997 is $3,964,000 and $3,742,000, respectively.
NOTE H - DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
Description of the types of products and services from which the reportable
segment derives its revenues
As defined by SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information, Angeles Partners VII has one reportable segment:
residential property. The Partnership's residential property segment consists of
one apartment complex in Gretna, Louisiana. The Partnership rents apartment
units for terms that are typically twelve months or less.
Measurement of segment profit or loss
The Partnership evaluates performance based on net income. The accounting
policies of the reportable segment are the same as those described in the
summary of significant accounting policies.
Factors management used to identify the enterprise's reportable segment
The Partnership's reportable segment consists of investment property that offers
similar products and services.
Segment information for the years 1998 and 1997 is shown in the tables below.
The "Other" column includes partnership administration related items and income
and expense not allocated to the reportable segment.
1998 RESIDENTIAL OTHER TOTALS
Rental income $ 1,217 $ -- $ 1,217
Other income 49 18 67
Interest Expense 208 -- 208
Depreciation 282 -- 282
General and administrative expense -- 101 101
Segment profit/(loss) 207 (83) 124
Total assets 1,808 392 2,200
Capital expenditures for investment
properties 72 -- 72
1997 RESIDENTIAL OTHER TOTALS
Rental income $ 1,170 $ -- $ 1,170
Other income 41 19 60
Interest Expense 218 -- 218
Depreciation 275 -- 275
General and administrative expense -- 69 69
Segment profit/(loss) 144 (50) 94
Total assets 1,956 367 2,323
Capital expenditures for investment
properties 81 -- 81
NOTE I - 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 Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia 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("AIMCO"). The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the General
Partner filed a motion seeking dismissal of the action. In lieu of responding to
the motion, the plaintiffs have filed an amended complaint. The General Partner
has filed demurrers to the amended complaint which were heard during February
1999. No ruling on such demurrers has been received. The General Partner does
not anticipate that costs associated with this case, if any, to be material to
the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
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
Patrick J. Foye 41 Executive Vice President and Director
Timothy R. Garrick 42 Vice President - Accounting and Director
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice President
of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the
law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power
Authority and serves as a member of the New York State Privatization Council.
He received a B.A. from Fordham College and a J.D. from Fordham University Law
School.
Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice
President-Accounting and Director of the General Partner since October 1, 1998.
Prior to that date, Mr. Garrick served as Vice President-Accounting Services of
Insignia Financial Group since June of 1997. From 1992 until June of 1997, Mr.
Garrick served as Vice President of Partnership Accounting and from 1990 to 1992
as an Asset Manager for Insignia Financial Group. From 1984 to 1990, Mr.
Garrick served in various capacities with U.S. Shelter Corporation. From 1979
to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney. Mr. Garrick
received his B.S. Degree from the University of South Carolina and is a
Certified Public Accountant.
ITEM 10. EXECUTIVE COMPENSATION
No compensation was paid by the Partnership to any officer or director of ARC.
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, as of December 31, 1998, 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, 1998.
Number
Entity of Units Percentage
Everest Investors 4 LLC 471 5.433%
Insignia Properties LP
(an affiliate of AIMCO) 12 .138%
Insignia Properties LP is indirectly ultimately owned by AIMCO. Their business
address is 55 Beattie Place, Greenville, SC 29602. The business address for
Everest Investors 4 LLC is 199 South Los Robles Avenue, Suite 440, Pasadena, CA
91101.
On October 1, 1998, Insignia Financial Group, Inc. merged into AIMCO, a real
estate investment trust, whose Class A common Shares are listed on the New York
Stock Exchange. As a result of such merger, AIMCO and AIMCO Properties, L.P., a
Delaware limited partnership and the operating partnership of AIMCO ("AIMCO OP")
acquired indirect control of the General partner. AIMCO and its affiliates
currently own .138% of the limited partnership interests in the Partnership.
AIMCO is presently considering whether it will engage in an exchange offer for
additional limited partnership interests in the Partnership. There is a
substantial likelihood that, within a short period of time, AIMCO OP will offer
to acquire limited partnership interests in the Partnership for cash or
preferred units or common units of limited partnerships interests in AIMCO OP.
While such an exchange offer is possible, no definite plans exist as to when or
whether to commence such an exchange offer, or as to the terms of any such
exchange offer, and it is possible that none will occur.
A registration statement relating to these securities has been filed with the
Securities and Exchange commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Form 10-KSB shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 certain 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 years ended December 31, 1998 and 1997.
1998 1997
(in thousands)
Property management fees, (included in operating expense) $ 63 $ 60
Reimbursement for services of affiliates, (included
in operating and general and administrative expenses) 49 50
Partnership management fee (included in general and
administrative expense) (1) 22 --
(1) The Partnership Agreement provides for a fee equal to 7.5% of "net cash
available for distribution" to the limited partners (as defined in the
Partnership Agreement) to be paid to the General Partner for executive and
administrative management services.
During the years ended December 31, 1998 and 1997 affiliates of the General
Partner were entitled to receive 5% of gross receipts from the Registrant's
property for providing property management services. The Registrant paid to
such affiliates $63,000 and $60,000 for the years ended December 31, 1998 and
1997, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $49,000 and $50,000 for the
years ended December 31, 1998 and 1997, respectively.
For the period of 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 accruing to the benefit of the affiliate of the General Partner by
virtue of the agent's obligations is 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 1998:
Current Report on Form 8-K dated October 1, 1998 filed on October 16, 1998
disclosing change in control of Registrant from Insignia Financial Group,
Inc. to AIMCO.
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/ Patrick J. Foye
Patrick J. Foye
Executive Vice President
By:/s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
Date: March 25, 1999
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/ Patrick J. Foye Date: March 25, 1999
Patrick J. Foye
Executive Vice President
and Director
/s/ Timothy R. Garrick Date: March 25, 1999
Timothy R. Garrick
Vice President - Accounting
and Director
EXHIBIT INDEX
Exhibit
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and between
AIMCO and IPT.
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 1998 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-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 499
<SECURITIES> 0
<RECEIVABLES> 97
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 5,772
<DEPRECIATION> 4,173
<TOTAL-ASSETS> 2,220
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 2,215
0
0
<COMMON> 0
<OTHER-SE> (147)
<TOTAL-LIABILITY-AND-EQUITY> 2,200
<SALES> 0
<TOTAL-REVENUES> 1,284
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,160
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 124
<EPS-PRIMARY> 14.19<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
