March 27, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Angeles Partners VII
Form 10-KSB
File No. 0-8851
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB ---ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
[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, 1999
[ ] 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, PO 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 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 the 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.
State issuer's revenues for its most recent fiscal year. $1,326,000
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, 1999. 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, previously 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.
Effective February 26, 1999, IPT was merged into 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".
The Registrant has no employees. Management and administrative services are
performed by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner has been providing such property management
services.
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 own and/or control
a significant number of apartment units in the United States, such units
represent an insignificant percentage of total apartment units in the United
States and competition for apartments is local.
Both the income and expenses of operating the property owned by the Partnership
are subject to factors outside of the Partnership's control, such as changes in
the supply and demand for similar properties resulting from various market
conditions, increases/decreases in unemployment or population shifts, changes in
the 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 property
owned by the Partnership.
The Partnership monitors its property 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.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6." of this Form
10-KSB.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and IPT merged into AIMCO, a publicly traded real
estate investment trust with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the
General Partner. The General Partner does not believe that this transaction has
had or 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 05/02/79 Fee ownership, subject to Apartment
Gretna, Louisiana 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 $ 6,001 $ 4,457 5-25 yrs S/L $ 1,835
</TABLE>
See "Note A" to the financial statements included in "Item 7 - Financial
Statements" for a description of the Partnership's depreciation policy and "Note
I - Change in Accounting Principle".
Schedule of Property Indebtedness:
The following table sets forth certain information relating to the loan
encumbering the Partnership's property.
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (1)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedarwood
Apartments
1st trust deed $ 2,079 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 repay this loan and other specific details
about the loan.
Rental Rates and Occupancy:
Average annual rental rate and occupancy for 1999 and 1998 for the Registrant's
property are as follows:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
Cedarwood Apartments $5,848 $5,574 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. As of
December 31, 1999, no residential tenant leases 10% or more of the available
rental space. The property is in good condition, subject to normal depreciation
and deterioration as is typical for assets of this type and age.
Schedule of Real Estate Taxes and Rates:
Real estate taxes and the tax rate in 1999 for the property were as follows:
1999 1999
Billing Rate
(in thousands)
Cedarwood Apartments $ 41 10.69%
Capital Improvements:
Cedarwood Apartments: The Partnership completed approximately $229,000 in
capital expenditures at Cedarwood Apartments as of December 31, 1999, consisting
primarily of structural building improvements, parking lot improvements,
exterior painting and floor covering replacements. These improvements were
funded primarily from operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $67,800.
Additional improvements may be considered and will depend on the physical
condition of the property as well as Partnership reserves and anticipated cash
flow generated by the property.
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 action 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 and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek 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 filed demurrers to the
amended complaint which were heard February 1999. Pending the ruling on such
demurrers, settlement negotiations commenced. On November 2, 1999, the parties
executed and filed a Stipulation of Settlement, settling claims, subject to
final court approval, on behalf of the Partnership and all limited partners who
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will 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
During the quarter ended December 31, 1999, no matter was submitted to a vote of
security holders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Partnership Equity and Related Partner 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 408 holders of record owning an aggregate of 8,669
Units. Affiliates of the General Partner owned 4,631 units or 53.42% at December
31, 1999. No public trading market has developed for the Units, and it is not
anticipated that such a market will develop in the future.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999.
Distributions
Per Limited
Aggregate Partnership Unit
01/01/98 - 12/31/98 $132,000 (1) $15.11
01/01/99 - 12/31/99 235,000 (2) 26.88
(1) Distribution was made from cash from operations ($131,000 to the limited
partners or $15.11 per limited partnership unit).
(2) Distributions was made from cash from operations ($233,000 to the limited
partners or $26.88 per limited partnership unit).
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. The Partnership's distribution
policy is reviewed on an annual basis. There can be no assurance, however, that
the Partnership will generate sufficient funds from operations, after required
capital expenditures, to permit any additional distributions to its partners in
2000 or subsequent periods. See "Item 2. Description of Property - Capital
Improvements" for information relating to anticipated capital expenditures for
the Partnership's investment property.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 4,631
units of limited partnership interest in the Partnership representing 53.42% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the General
Partner because of their affiliation with the General Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
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 years ended December 31, 1999 and 1998 was
approximately $170,000 and $124,000, respectively. The increase in net income
was due primarily to an increase in total revenues. Total revenues increased due
to an increase in rental income, which was partially offset by a decrease in
other income. The increase in rental income is due to an increase in the average
annual rental rate at the Partnership's investment property. The decrease in
other income is due primarily to lower interest income as a result of a decrease
in interest bearing cash balances as a result of distributions paid to the
partners in 1999.
Total expenses remained relatively constant for the comparable periods. The
decrease in operating and interest expense were offset by an increase in general
and administrative expense. Operating expense decreased primarily due to a
decrease in maintenance expense and, to a lesser extent, a decrease in insurance
expense. Maintenance expense decreased due to lower repair costs to the pool and
buildings for the year ended December 31, 1999 as compared to 1998. The decrease
in insurance expense is due to a change in the Partnership's insurance carrier
in late 1998 which resulted in lower premiums. Interest expense decreased due to
scheduled principal payments, which reduced the carrying balance of the debt
encumbering the property.
General and administrative expenses increased primarily as a result of an
increase in legal costs, which include the Partnership's portion of settlement
costs paid in 1999 related to matters disclosed in the Partnership's annual
report on Form 10-KSB for the year ended December 31, 1998 and the Nuanes
matter. Included in general and administrative expense at both December 31, 1999
and 1998 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.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase income by approximately $52,000 ($5.93 per limited partnership unit).
The cumulative effect, had this change been applied to prior periods, is not
material. The accounting principle change will not have an effect on cash flow,
funds available for distribution or fees payable to the General Partner and
affiliates.
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 needed 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, 1999, the Partnership had cash and cash equivalents of
approximately $356,000 as compared to approximately $499,000 at December 31,
1998. The decrease in cash and cash equivalents of approximately $143,000 is due
to approximately $371,000 of cash used in financing activities and approximately
$229,000 of cash used in investing activities, which was offset by approximately
$457,000 of cash provided by operating activities. Cash used in investing
activities consisted of property improvements and replacements. Cash used in
financing activities consisted primarily of partner distributions and, to a
lesser extent, payments of principal made on the mortgage encumbering the
Registrant's property. The Partnership invests its working capital reserves in
money market accounts.
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 investment property to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state, local, legal, and regulatory requirements. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $67,800. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as Partnership reserves and
anticipated cash flow generated by the property. To the extent that such
budgeted capital improvements are completed, the Partnership'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 $2,079,000 is amortized over 28 years with a
maturity date of May 2007. The General Partner may 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.
During the year ended December 31, 1999, cash distributions of approximately
$235,000 ($233,000 of which was paid to the limited partners, $26.88 per limited
partnership unit) were paid from operations. During the year ended December 31,
1998, the Partnership distributed approximately $132,000 ($131,000 to the
limited partners or $15.11 per limited partnership unit) from operations. The
Registrant's distribution policy is reviewed on an annual basis. Future cash
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves and the timing of debt maturities,
refinancings, and/or property sales. There can be no assurance, however, that
the Partnership will generate sufficient funds from operations, after required
capital expenditures, to permit any additional distributions to its partners in
2000 or subsequent periods.
Tender Offer
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 4,631
units of limited partnership interest in the Partnership representing 53.42% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the General
Partner because of their affiliation with the General Partner.
Year 2000 Compliance
General Description
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 Managing Agent's computer
programs or hardware that had date-sensitive software or embedded chips might
have recognized a date using "00" as the year 1900 rather than the year 2000.
This could have resulted 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.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
ANGELES PARTNERS VII
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Balance Sheet - December 31, 1999
Statements of Operations - Years ended December 31, 1999 and 1998
Statements of Changes in Partners' Capital (Deficit) - Years ended
December 31, 1999 and 1998
Statements of Cash Flows - Years ended December 31, 1999 and 1998
Notes to Financial Statements
<PAGE>
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, 1999, 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, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
As discussed in Note I to the financial statements, the Partnership changed its
method of accounting to capitalize the cost of exterior painting and major
landscaping effective January 1, 1999.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
<PAGE>
ANGELES PARTNERS VII
BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents $ 356
Receivables and deposits 94
Other assets 18
Investment properties (Notes C and F):
Land $ 366
Buildings and related personal property 5,635
6,001
Less accumulated depreciation (4,457) 1,544
$ 2,012
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 18
Tenant security deposit liabilities 35
Other liabilities 92
Mortgage notes payable (Notes C and F) 2,079
Partners' Capital (Deficit)
General partner $ 293
Limited partners (8,669 units issued and
outstanding) (505) (212)
$ 2,012
See Accompanying Notes to Financial Statements
</TABLE>
ANGELES PARTNERS VII
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
<S> <C> <C>
Revenues:
Rental income $ 1,266 $ 1,217
Other income 60 67
Total revenues 1,326 1,284
Expenses:
Operating 465 524
General and administrative 170 101
Depreciation 284 282
Interest 192 208
Property taxes 45 45
Total expenses 1,156 1,160
Net income $ 170 $ 124
Net income allocated to general partner (1%) $ 2 $ 1
Net income allocated to limited partners (99%) 168 123
Net income $ 170 $ 124
Net income per limited partnership unit $ 19.38 $ 14.19
Distributions per limited partnership unit $ 26.88 $ 15.11
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS VII
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions $ 8,674 $ 88 $ 8,674 $ 8,762
Partners' capital (deficit)
at December 31, 1997 8,669 $ 293 $ (432) $ (139)
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)
Distribution to partners -- (2) (233) (235)
Net income for the year
ended December 31, 1999 -- 2 168 170
Partners' capital (deficit)
at December 31, 1999 8,669 $ 293 $ (505) $ (212)
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS VII
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 170 $ 124
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 284 282
Change in accounts:
Receivables and deposits 3 (10)
Other assets (13) 6
Accounts payable -- (1)
Tenant security deposit liabilities 2 2
Accrued property taxes (45) 5
Other liabilities 56 3
Net cash provided by operating activities 457 411
Cash flows from investing activities:
Property improvements and replacements (229) (72)
Net cash used in investing activities (229) (72)
Cash flows from financing activities:
Payments on mortgage notes payable (136) (124)
Distributions to partners (235) (132)
Net cash used in financing activities (371) (256)
Net (decrease) increase in cash and cash equivalents (143) 83
Cash and cash equivalents at beginning of the period 499 416
Cash and cash equivalents at end of period $ 356 $ 499
Supplemental disclosure of cash flow information:
Cash paid for interest $ 196 $ 208
See Accompanying Notes to Financial Statements
</TABLE>
ANGELES PARTNERS VII
NOTES TO FINANCIAL STATEMENTS
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"), previously 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
located 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 $51,000 are held
by the Partnership and are included in receivables and deposits. All escrow
funds are designated for the payment of real estate taxes.
Depreciation: Depreciation is calculated 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 5 years.
Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping (Note I).
Cash and Cash Equivalents: Includes cash on hand, in banks, and money market
funds. 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
lessees for the duration of the lease and such deposits are included in
receivables and deposits. The security deposits are refunded when the tenant
vacates, provided the tenant has not damaged its space and is current on its
rental payments.
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 Statement of 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 flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
Cost of apartment properties 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, 1999 or 1998.
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 $7,000 and $9,000 for the years ended
December 31, 1999 and 1998, 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: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" 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 G" for detailed disclosures of this information).
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and IPT merged into AIMCO, a publicly traded real
estate investment trust with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the
General Partner. The General Partner does not believe that this transaction has
had or will have a material effect on the affairs and operations of the
Partnership.
Note C - Mortgage Notes Payable
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedarwood Apartments $ 2,079 $ 28 9.125% 05/01/07 $ 599
1st mortgage
</TABLE>
The mortgage note payable is non-recourse and is secured by pledge of the
apartment property and by a pledge of revenues from the operation of 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 subsequent to December
31, 1999, are as follows (in thousands):
2000 $ 149
2001 163
2002 178
2003 195
2004 214
Thereafter 1,180
$ 2,079
Note D - 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):
1999 1998
Net income as reported $ 170 $ 124
Add (deduct):
Depreciation differences (4) 60
Other 54 8
Federal taxable income $ 220 $ 192
Federal taxable income per limited
partnership unit $25.12 $21.90
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 $ (212)
Land and buildings 86
Accumulated depreciation 205
Syndication fees 797
Other 81
Net assets - tax basis $ 957
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 (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were made or accrued to the
General Partner and affiliates during the years ended December 31, 1999 and
1998:
1999 1998
(in thousands)
Property management fees (included in
operating expense) $ 66 $ 63
Reimbursement for services of affiliates (included in
operating, general and administrative expenses, and
investment properties) 49 49
Partnership management fee (included in other
liabilities, general and administrative expense) (1) 8 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, 1999 and 1998, 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 approximately $66,000 and $63,000 for the years ended December 31,
1999 and 1998, respectively.
Affiliates of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $49,000 for each of the years
ended December 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 4,631
units of limited partnership interest in the Partnership representing 53.42% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the General
Partner because of their affiliation with the General Partner.
Note F - Real Estate and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
Cedarwood Apartments
Gretna, Louisiana $ 2,079 $ 366 $ 4,519 $ 1,116
<TABLE>
<CAPTION>
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
Buildings
And Related Date of
Personal Accumulated Construc- Date Depreciable
Description Land Property Total Depreciation tion Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Cedarwood $ 366 $ 5,635 $6,001 $4,457 1979 05/02/79 10-25
Apartments
</TABLE>
Reconciliation of "Investment Property and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Investment Property
Balance at beginning of year $ 5,772 $ 5,700
Property improvements 229 72
Balance at end of year $ 6,001 $ 5,772
Accumulated Depreciation
Balance at beginning of year $ 4,173 $ 3,891
Additions charged to expense 284 282
Balance at end of year $ 4,457 $ 4,173
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998 is approximately $6,087,000 and $5,858,000
respectively. The accumulated depreciation for Federal income tax purposes at
December 31, 1999 and 1998, is $4,252,000 and $3,964,000, respectively.
Note G - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential property. The
Partnership's residential property segment consists of one apartment complex
located in Gretna, Louisiana. The Partnership rents apartment units to tenants
for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.
Segment information for the years ended December 31, 1999 and 1998 is shown in
the tables below. The "Other" column includes Partnership administration related
items and income and expense not allocated to the reportable segment.
1999
Residential Other Totals
(in thousands)
Rental income $ 1,266 $ -- $ 1,266
Other income 49 11 60
Interest expense 192 -- 192
Depreciation 284 -- 284
General and administrative expense -- 170 170
Segment profit (loss) 329 (159) 170
Total assets 1,852 160 2,012
Capital expenditures for investment
property 229 -- 229
1998
Residential Other Totals
(in thousands)
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
property 72 -- 72
Note H - 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 action 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 and the Insignia Merger. The
plaintiffs seek 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 filed demurrers
to the amended complaint which were heard February 1999. Pending the ruling on
such demurrers, settlement negotiations commenced. On November 2, 1999, the
parties executed and filed a Stipulation of Settlement, settling claims, subject
to final court approval, on behalf of the Partnership and all limited partners
who own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will 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.
Note I - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase income by approximately $52,000 ($5.93 per limited partnership unit).
The cumulative effect, had this change been applied to prior periods, is not
material. The accounting principle change will not have an effect on cash flow,
funds available for distribution or fees payable to the General Partner and
affiliates.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
The Registrant has no officers or directors. The General Partner is Angeles
Realty Corporation. The names and ages of, as well as the position and offices
held by, the present executive officers and director of the General Partner are
set forth below. There are no family relationships between or among any officers
or directors.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
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.
Martha L. Long has been Senior Vice President and Controller of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group, Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO and its joint filers failed to timely file a Form 4 with respect to its
acquisition of Units.
Item 10. Executive Compensation
None of the directors and officers of the General Partner received any
remuneration from the Registrant.
<PAGE>
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, 1999.
Entity Number of Units Percentage
AIMCO Properties LP 4,619 53.28%
(an affiliate of AIMCO)
Insignia Properties LP
(an affiliate of AIMCO) 12 .14%
Insignia Properties LP is indirectly ultimately owned by AIMCO. Its business
address is 55 Beattie Place, Greenville, SC 29602.
AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
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 (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were made or accrued to the
General Partner and affiliates during the years ended December 31, 1999 and
1998:
1999 1998
(in thousands)
Property management fees $ 66 $ 63
Reimbursement for services of affiliates 49 49
Partnership management fee (1) 8 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, 1999 and 1998, 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 approximately $66,000 and $63,000 for the years ended December 31,
1999 and 1998, respectively.
Affiliates of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $49,000 for each of the years
ended December 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 4,631
units of limited partnership interest in the Partnership representing 53.42% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the General
Partner because of their affiliation with the General Partner.
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change
in Accounting Principle, is filed as an exhibit to this report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed during the fourth quarter of 1998:
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS VII
By: Angeles Realty Corporation
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date:
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 Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
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.
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.
27 Financial Data Schedule.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Angeles Realty Corporation
General Partner for Angeles Partners VII
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note I of Notes to the Financial Statements of Angeles Partners VII included in
its Form 10-KSB for the year ended December 31, 1999 describes a change in the
method of accounting to capitalize exterior painting and major landscaping,
which would have been expensed under the old policy. You have advised us that
you believe that the change is to a preferable method in your circumstances
because it provides a better matching of expenses with the related benefit of
the expenditures and is consistent with policies currently being used by your
industry and conforms to the policies of the General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners VII 1999 Fourth Quarter 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 356
<SECURITIES> 0
<RECEIVABLES> 94
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 6,001
<DEPRECIATION> 4,457
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 2,079
0
0
<COMMON> 0
<OTHER-SE> (212)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 1,326
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,156
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 192
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 170
<EPS-BASIC> 19.38 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
