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 June 30, 1996
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 (864) 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 past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days
Yes X No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES PARTNERS IX
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents:
Unrestricted $ 409
Restricted--tenant security deposits 145
Accounts receivable 61
Escrows for taxes 292
Restricted escrows 457
Other assets 566
Investment properties:
Land $ 3,083
Buildings and related personal property 32,306
35,389
Less accumulated depreciation (20,012) 15,377
$ 17,307
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 195
Tenant security deposits 146
Accrued taxes 276
Other liabilities 279
Mortgage notes payable 19,048
Partners' Deficit
General partner $ (202)
Limited partners (19,975 units
issued and outstanding) (2,435) (2,637)
$ 17,307
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,773 $ 1,703 $ 3,495 $ 3,352
Other income 85 90 183 169
Total revenues 1,858 1,793 3,678 3,521
Expenses:
Operating 698 701 1,342 1,301
General and administrative 78 54 132 105
Maintenance 289 263 596 492
Depreciation 423 390 834 769
Interest 456 461 913 923
Property taxes 114 103 229 208
Total expenses 2,058 1,972 4,046 3,798
Net loss $ (200) $ (179) $ (368) $ (277)
Net loss allocated to
general partner (1%) $ (2) $ (2) $ (4) $ (3)
Net loss allocated to
limited partners (99%) (198) (177) (364) (274)
Net loss $ (200) $ (179) $ (368) $ (277)
Net loss per limited
partnership unit $( 9.91) $ (8.86) $(18.22) $(13.72)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) ANGELES PARTNERS IX
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 20,000 $ 1 $ 20,000 $ 20,001
Partners' deficit at
December 31, 1995 19,975 $ (198) $ (2,071) $ (2,269)
Net loss for the six months
ended June 30, 1996 -- (4) (364) (368)
Partners' deficit at
June 30, 1996 19,975 $ (202) $ (2,435) $ (2,637)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (368) $ (277)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 834 769
Amortization of loan costs and
mortgage discount 71 71
Change in accounts:
Restricted cash 28 (6)
Accounts receivable (38) 6
Escrows for taxes and insurance (49) 57
Other assets -- (7)
Accounts payable (17) (227)
Tenant security deposit liabilities (28) 10
Accrued taxes 37 (13)
Other liabilities 25 31
Net cash provided by operating activities 495 414
Cash flows from investing activities:
Property improvements and replacements (397) (358)
Deposits to restricted escrows (10) (17)
Receipts from restricted escrows 18 274
Net cash used in investing activities (389) (101)
Cash flows from investing activities:
Payments on mortgage notes payable (127) (116)
Payment of deferred loan costs (21) --
Net cash used in financing activities (148) (116)
Net (decrease) increase in cash (42) 197
Cash and cash equivalents at beginning of period 451 306
Cash and cash equivalents at end of period $ 409 $ 503
Supplemental disclosure of cash flow information:
Cash paid for interest $ 842 $ 853
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
e) ANGELES PARTNERS IX
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Angeles Realty Corporation (the
"General Partner"), all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended June 30, 1996, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1996. For further information, refer to the financial
statements and footnotes thereto included in Angeles Partners IX's (the
"Partnership") annual report on Form 10-KSB for the fiscal year ended December
31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Note B - Transaction with Affiliates
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for payments to affiliates for services and
as reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following amounts owed to the General Partner and affiliates were paid or
accrued for the six months ended June 30, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $184 $175
Reimbursement of services
of affiliates 116 74
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.
Note B - Transaction with Affiliates (continued)
Angeles Mortgage Investment Trust, ("AMIT"), a real estate investment trust, has
provided secondary financing to the Partnership secured by the Partnership's
investment property known as Panorama Terrace Apartments. Total interest
expense for this loan was $14,000 for each of the six months ended June 30, 1996
and June 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 1.2% 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 1.2% 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 1995 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. In addition, Liquidity Assistance, LLC, ("LAC"), an affiliate of the
General Partner and an affiliate of Insignia Financial Group, Inc., which
provides property management and partnership administration services to the
Partnership, owns 63,200 Class A Shares of AMIT. These Class A Shares entitle
LAC to vote approximately 1.5% of the total shares.
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B Shares. 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 these 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.
Note C - Subsequent Event
On July 1, 1996, the General Partner refinanced the mortgage debt secured by
Village Green Apartments. The bridge loan, in the principal amount of
$4,900,000, matures in September 1996, and contains an option to extend the
maturity date to October 1996 and thereafter to convert the loan to long-term
permanent financing. The bridge loan is collateralized by a mortgage on Village
Green Apartments and carries an interest rate of 8% through August 1, 1996, with
interest at LIBOR plus 2.5% thereafter. The bridge loan was obtained to pay-off
debt with a higher interest rate and is intended to be replaced by longer term
mortgage debt when longer term financing is obtained, which is expected to occur
in the third or fourth quarter of 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consists of five apartment complexes.
The following table sets forth the average occupancy of the properties for the
six months ended June 30, 1996 and 1995:
Average Occupancy
Property 1996 1995
Pines of Northwest Crossing Apartments 92% 85%
Houston, Texas
Panorama Terrace Apartments 93% 98%
Birmingham, Alabama(1)
Forest River Apartments 94% 97%
Gadsden, Alabama
Village Green Apartments 93% 96%
Montgomery, Alabama
Rosemont Crossing Apartments 88% 93%
San Antonio, Texas (2)
(1) Occupancy has decreased due to low interest rates, which have made home
purchases attractive.
(2) During the second quarter of 1996, The Greens Apartments was renamed
"Rosemont Crossing Apartments". Occupancy has decreased due to an over
supply of rental units in the local market.
The Partnership's net losses for the three and six months ended June 30, 1996,
were $200,000 and $368,000, respectively, versus $179,000 and $277,000 for the
three and six months ended June 30, 1995, respectively. The Partnership
experienced increases in both revenues and expenses in the six months ended June
30, 1996. Revenue increases due to a significant increase in occupancy at Pines
of Northwest Crossing Apartments, and an increase in rental rates at all of the
Partnership's properties, more than offset the effects of a decrease in
occupancy at the Partnership's other properties. Other income increased due
primarily to an increase in lease cancellation fees and late charges. The
increase in lease cancellation fees can be attributed to residents breaking
their leases in order to purchase houses. The increase in late charges was due
to the properties strictly enforcing the policies regarding late rent payment
penalties. These increases were partially offset by a decrease in application
fees. This decrease was due to some of the properties reducing or waiving the
fee in order to increase occupancy. General and administrative expenses
increased due to an increase in cost reimbursements for partnership accounting,
investor relations and asset management services. Maintenance expense increased
due to increases in major landscaping and exterior building improvements. Major
landscaping increased due to efforts to enhance the image at Village Green
Apartments. Exterior building improvements increased largely due to exterior
upgrades being undertaken at Panorama Terrace Apartments and the Pines of
Northwest Crossing Apartments. The increase in real estate taxes is due to an
increase in the real estate taxes at the Pines of Northwest Crossing Apartments
due to an increase in the assessed value of the property.
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 June 30, 1996, the Partnership had unrestricted cash of $409,000 as compared
to $503,000 at June 30, 1995. There was an increase in net cash provided by
operating activities due to a smaller decrease in accounts payable offset in
part by increases in tax and insurance escrows. During the six months ended
June 30, 1995, the Partnership paid for property improvements for Rosemont
Crossing Apartments that were accrued for at December 31, 1994. Net cash used
in investing activities increased due to an increase in property improvements
and replacements and due to no withdrawals from the restricted escrows in 1996.
The restricted escrows for property improvements were set up when Forest River
Apartments, Rosemont Crossing Apartments and Pines of Northwest Crossing
Apartments were refinanced in late 1993. Those escrows have been substantially
expended at June 30, 1996, and therefore, any property improvements for these
properties must come from operating cash flow. Finally, net cash used in
financing activities increased due to the increase in principal payments on
outstanding mortgage notes payable and payment of deferred loan costs associated
with the refinance of the first mortgage secured by Village Green Apartments.
The Partnership's primary source of cash is from the operations of its
properties and from financing placed on such properties. Cash for these sources
is utilized for property operations, capital improvements, and/or repayment of
debt. 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 $19,048,000, net of discount, is amortized over
varying periods with required balloon payments of $18,924,000 from September
1996 to October 2003, at which time the properties will either be refinanced or
sold. Subsequent to June 30, 1996, the General Partner refinanced the mortgage
debt secured by Village Green Apartments. The bridge loan, in the principal
amount of $4,900,000 matures in September 1996, and contains an option to extend
the maturity date to October 1996, and thereafter to convert the loan to long-
term permanent financing. The bridge loan is collateralized by a mortgage on
Village Green Apartments and carries an interest rate of 8% through August 1,
1996, with interest at LIBOR plus 2.5% thereafter. The bridge loan was obtained
to pay-off debt with a higher interest rate and a portion of the excess funds
(of approximately $1,000,000) will be used for capital improvement projects,
principally at Village Green Apartments, Pines of Northwest Crossing Apartments
and Panorama Terrace Apartments. The bridge loan is intended to be replaced by
longer term mortgage debt when longer term financing is obtained, which is
expected to occur in the third or fourth quarter of 1996. Future cash
distributions will depend on the levels of cash generated from operations,
property sales and the availability of cash reserves. No cash distributions
were paid in the six months ended June 30, 1996, or the six months ended June
30, 1995.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership filed a Proof of Claim in the bankruptcy proceeding of Angeles
Corporation ("Angeles") 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 will
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. 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.
(b) No reports on Form 8-K were filed during the quarter ended June 30,
1996.
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.
Vice President/CAO
Date: August 9, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners IX 1996 Second Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000313499
<NAME> ANGELES PARTNERS IX
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 409
<SECURITIES> 0
<RECEIVABLES> 61
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 35,389
<DEPRECIATION> 20,012
<TOTAL-ASSETS> 17,307
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 19,048
0
0
<COMMON> 0
<OTHER-SE> (2,637)
<TOTAL-LIABILITY-AND-EQUITY> (7,307)
<SALES> 0
<TOTAL-REVENUES> 3,678
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,046
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 913
<INCOME-PRETAX> (368)
<INCOME-TAX> 0
<INCOME-CONTINUING> (368)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (368)
<EPS-PRIMARY> (18.22)<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
