FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-9704
ANGELES PARTNERS IX
(Exact name of small business issuer as specified in its charter)
California 95-3417137
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X . No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES PARTNERS IX
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash:
Unrestricted $ 444,226
Restricted--tenant security deposits 173,546
Investments 25,147
Accounts receivable 29,529
Escrow for taxes and insurance 389,010
Restricted escrows 510,998
Other assets 636,420
Investment properties:
Land $ 3,082,586
Buildings and related personal
property 31,630,320
34,712,906
Less accumulated depreciation (18,777,743) 15,935,163
$18,144,039
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 147,256
Tenant security deposits 173,862
Accrued taxes 359,774
Other liabilities 273,088
Mortgage notes payable 19,222,014
Partners' Capital (Deficit)
General partners $ (195,352)
Limited partners (19,975 units
issued and outstanding) (1,836,603) (2,031,955)
$18,144,039
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
b) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $1,695,780 $1,641,359 $5,047,904 $4,910,479
Other income 109,301 109,243 277,972 251,758
Total revenues 1,805,081 1,750,602 5,325,876 5,162,237
Expenses:
Operating 580,497 530,533 1,706,275 1,570,035
General and administrative 50,285 43,037 155,298 116,917
Property management fees 88,927 85,385 264,207 255,063
Maintenance 317,832 359,494 809,243 834,705
Depreciation 397,428 361,188 1,166,038 1,054,509
Interest 458,412 462,296 1,381,662 1,383,112
Property taxes 105,947 102,018 314,271 291,155
Total expenses 1,999,328 1,943,951 5,796,994 5,505,496
Gain on disposal of property -- 10,864 -- 10,429
Net loss $ (194,247) $ (182,485) $ (471,118) $ (332,830)
Net loss allocated
to general partners (1%) $ (1,942) $ (1,825) $ (4,711) $ (3,328)
Net loss allocated
to limited partners (99%) (192,305) (180,660) (466,407) (329,502)
$ (194,247) $ (182,485) $ (471,118) $ (332,830)
Net loss per limited
partnership unit $ (9.63) $ (9.03) $ (23.35) $ (16.48)
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
c) ANGELES PARTNERS IX
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 20,000 $ 1,000 $20,000,000 $20,001,000
Partners' deficit at
December 31, 1994 19,975 $(190,641) $(1,370,196) $(1,560,837)
Net loss for the nine months
ended September 30, 1995 -- (4,711) (466,407) (471,118)
Partners' deficit at
September 30, 1995 19,975 $(195,352) $(1,836,603) $(2,031,955)
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
d) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (471,118) $ (332,830)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,166,038 1,054,509
Amortization of discounts and loan costs 105,910 98,499
Gain on disposal of property -- (10,429)
Change in accounts:
Restricted cash (3,182) (6,417)
Accounts receivable 4,550 48,049
Escrows for taxes and insurance (41,486) (230,465)
Other assets (4,523) 6,041
Accounts payable (228,856) (44,399)
Tenant security deposit liabilities 5,921 (4,422)
Accrued taxes 92,612 177,341
Other liabilities (2,583) 21,466
Net cash provided by operating activities 623,283 776,943
Cash flows from investing activities:
Property improvements and replacements (568,031) (1,061,224)
Cash invested in short-term investments (25,147) --
Deposits to restricted escrows (22,910) (116,965)
Receipts from restricted escrows 307,444 584,222
Insurance proceeds from casualty -- 75,948
Net cash used in investing activities (308,644) (518,019)
Cash flows from financing activities:
Payments on mortgage notes payable (175,964) (161,223)
Payments of loan costs -- (57,992)
Net cash used in financing activities (175,964) (219,215)
Net increase in cash 138,675 39,709
Cash at beginning of period 305,551 272,754
Cash at end of period $ 444,226 $ 312,463
Supplemental disclosure of cash
Cash paid for interest $1,276,904 $ 1,291,646
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
e) ANGELES PARTNERS IX
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the year ended December 31,
1994.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Note B - Angeles Acceptance Pool, Angeles Mortgage Investment Trust
Angeles Mortgage Investment Trust, ("AMIT"), a real estate investment trust,
has provided a second trust deed loan which is secured by the Partnership's real
property known as Panorama Terrace. Total interest expense for this loan was
$14,063 for the nine months ended September 30, 1994, and September 30, 1995.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class
B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A
Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1% of the distributions of net cash distributed by AMIT. These Class B
Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the vote).
Between the date of acquisition of these shares (November 24, 1992) and March
31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted
its shares at the annual meeting in connection with the election of trustees and
other matters. MAE GP has not exerted, and continues to decline to exert, any
management control over or participate in the management of AMIT. However, MAE
GP may choose to vote these shares as it deems appropriate in the future.
As part of the above described settlement, MAE GP granted to AMIT an option
to acquire the Class B shares owned by it. This option can be exercised at the
end of 10 years or when all loans made by AMIT to partnerships affiliated with
MAE GP as of November 9, 1994, (which is the date of execution of a definitive
Settlement Agreement), have been paid in full, but in no event prior to November
9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which
occurred April 14, 1995, as payment for the option. Upon exercise of the
option, AMIT would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to
vote Class B shares on all matters except those involving transactions between
AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as
an officer or trustee of AMIT. On those matters, MAE GP granted to the AMIT
trustees, in their capacity as trustees of AMIT, proxies with regard to the
Class B shares instructing such trustees to vote said Class B shares in
accordance with the vote of the majority of the Class A shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware limited
partnership was organized to acquire and hold the obligations evidencing the
working capital loan previously provided to the Partnership by Angeles Capital
Investments, Inc. ("ACII"). Angeles Corporation ("Angeles") is the 99% limited
partner of AAP and Angeles Acceptance Directives, Inc. ("AAD"), an affiliate of
the General Partner, was, until April 14, 1995, the 1% general partner of AAP.
On April 14, 1995, as part of a settlement of claims between affiliates of the
General Partner and Angeles, AAD resigned as general partner of AAP and
simultaneously received a 1/2% limited partner interest in AAP. An affiliate
of Angeles now serves as the general partner of AAP.
The Partnership has filed a Proof of Claim in the bankruptcy proceeding of
Angeles Corporation concerning the Partnership's indebtedness to AAP. The Proof
of Claim alleges that instead of causing the Partnership to pay AAP on account
of such debt, Angeles either itself or through an affiliate, caused the
Partnership to make payment to another Angeles affiliate. To the extent that
such action results in the Partnership not receiving credit for the payments so
made, the Partnership would have been damaged in an amount equal to the
misappropriated payments. On August 9, 1995, AAP acknowledged constructive
receipt of such payment and, therefore, the General Partner withdrew the
Partnership's claim.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and
its affiliates for the management and administration of all Partnership
activities. The Partnership Agreement provides for payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. (See Note B for additional discussion concerning
transactions with AMIT and AAP, affiliates of the General Partner.)
Note C - Transactions with Affiliated Parties - continued
The following transactions with the General Partner and affiliates for the
nine months ended September 30, 1995 and 1994 are as follows:
1995 1994
Property management fees $264,207 $255,063
Reimbursement of services of affiliates 105,210 55,879
The Partnership insures its properties under a master policy through an
agency and insurer unaffiliated with the General Partner. An affiliate of the
General Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner, who receives
payments on these obligations from the agent. The amount of the Partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of five apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
The Pines of Northwest Crossing Apartments
Houston, Texas 87% 94%
Panorama Terrace Apartments
Birmingham, Alabama 97% 95%
Forest River Apartments
Gadsden, Alabama 96% 95%
Village Green Apartments
Montgomery, Alabama 95% 96%
The Greens Apartments
San Antonio, Texas 89% 89%
In an attempt to address the occupancy decline at The Pines, the General
Partner has instructed the property manager to offer concessions, such as
discounts on rents based on the size of the leased units and length of lease,
as well as reduced required security deposits. In addition, the General Partner
is in the process of upgrading the interiors of the units as cash reserves
allow.
The Partnership's net loss for the nine months ended September 30, 1995, was
$471,118 with the third quarter having a loss of $194,247. The Partnership had
losses of $332,830 and $182,485 for the corresponding periods of 1994. The
increased loss is primarily attributable to increased operating expense.
Operating expenses increased due to increases in resident concessions, resident
relations costs, training and travel expense and insurance expense.
Concessions, as discussed previously, increased in an attempt to increase
occupancy at The Greens and The Pines. Resident relations costs, which are
special items provided to tenants, such as greeting baskets and free video
rentals, increased in an attempt to retain tenants. Training and travel expense
increased due to participation in various training courses and seminars by
several properties' personnel. Finally, insurance expense increased due to new
premiums at higher rates with additional coverage. In addition, depreciation
expense increased due to the addition of approximately $1,000,000 in fixed
assets in 1994 resulting from property improvement activity as required by
refinancing agreements and other efforts to improve the overall interior and
exterior appearance of the apartment complexes. Also contributing to the
overall increase in net loss was increased general and administrative expenses
resulting from increased cost reimbursements for the General Partner.
Offsetting these increased expenses was an increase in rental revenue due to
increased rental rates at all of the properties. In addition, other income
increased primarily due to the stricter enforcement of various tenant charges,
such as legal fees, cleaning and damage charges, application fees and late
charges.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that
the General Partner will be able to sustain such a plan.
At September 30, 1995, the Partnership had unrestricted cash of $444,226
compared to $312,463 at September 30, 1994. Net cash provided by operating
activities decreased primarily as a result of the decrease in accounts payable
due to the payment of amounts relating to property improvements at The Greens
Apartments which were accrued at December 31, 1994. Also contributing to this
change was the increase in net loss as discussed above. In addition, accrued
taxes decreased resulting from the timing of property tax payments for The Pines
of Northwest Crossing. This change is offset by an increase in receipts of cash
from escrows for taxes and insurance to fund the tax payments. The change in
accounts receivable decreased between the first nine months of 1994 and the
first nine months of 1995 due to the return of Forest River's tax escrow held by
the previous mortgage company in January 1994. Net cash used in investing
activities decreased primarily due to the decrease in property improvements,
many of which were required by refinancing agreements in 1994. Offsetting this
decrease in cash used in investing activities is a reduction in funds received
from the restricted escrows to cover improvements at the properties. Also in
1994, insurance proceeds of $75,948 were received relating to hail damage to
the roofs at The Greens. There were no such proceeds in 1995. Net cash used in
financing activities decreased due to the payment of loan costs in 1994 relating
to the refinancing of three of the investment properties.
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 various properties to adequately maintain the
physical assets and other operating needs of the Partnership. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The mortgage indebtedness of $19,222,014, net of discount, is amortized over
varying periods with required balloon payments ranging from May 1997 to October
15, 2003, at which time the properties will either be refinanced or sold.
Future cash distributions will depend on the levels of cash generated from
operations, property sales and the availability of cash reserves.
Distributions may also be restricted by the requirement to deposit net operating
income (as defined in the mortgage notes) into the Reserve Account until the
$400 per apartment unit is funded for each respective property. No cash
distributions were paid during fiscal 1994 or during the first nine months
of fiscal 1995. At this time, the General Partner does not anticipate a cash
distribution during 1995.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership has filed a Proof of Claim in the bankruptcy proceeding of
Angeles Corporation concerning the Partnership's indebtedness to Angeles
Acceptance Pool, L.P. ("AAP"). The Proof of Claim alleges that, instead of
causing the Partnership to pay AAP on account of such debt, Angeles, either
itself or through an affiliate, caused the Partnership to make payment to
another Angeles affiliate. To the extent that such action results in the
Partnership not receiving credit for the payments so made, the Partnership would
have been damaged in an amount equal to the misappropriated payments. On August
9, 1995, AAP acknowledged constructive receipt of such payment and, therefore,
the General Partner withdrew the Partnership's claim.
The Registrant is unaware of any pending or outstanding litigation that is
not of a routine nature except as noted above. The General Partner of the
Registrant believes that all such pending or outstanding litigation will be
resolved without a material adverse effect upon the business, financial
condition, or operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit
to this report.
b) Reports on Form 8-K: None filed during the quarter ended September 30,
1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS IX
By: Angeles Realty Corporation
General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and
Principal Accounting Officer
Date: November 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners IX 1995 Third Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB.
</LEGEND>
<CIK> 0000313499
<NAME> ANGELES PARTNERS IX
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 444,226
<SECURITIES> 25,147
<RECEIVABLES> 29,529
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,061,458
<PP&E> 34,712,906
<DEPRECIATION> 18,777,743
<TOTAL-ASSETS> 18,144,039
<CURRENT-LIABILITIES> 953,980
<BONDS> 19,222,014
<COMMON> 0
0
0
<OTHER-SE> (2,031,955)
<TOTAL-LIABILITY-AND-EQUITY> 18,144,039
<SALES> 0
<TOTAL-REVENUES> 5,325,876
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,796,994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,381,662
<INCOME-PRETAX> (471,118)
<INCOME-TAX> 0
<INCOME-CONTINUING> (471,118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (471,118)
<EPS-PRIMARY> (23.35)
<EPS-DILUTED> 0
</TABLE>
