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, 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 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)
(in thousands, except unit data)
September 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 1,476
Restricted--tenant security deposits 137
Accounts receivable 62
Escrow for taxes 272
Restricted escrows 316
Other assets 502
Investment properties:
Land $ 3,083
Buildings and related personal property 32,520
35,603
Less accumulated depreciation (20,445) 15,158
$17,923
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 160
Tenant security deposits 138
Accrued taxes 389
Other liabilities 305
Mortgage notes payable 20,016
Partners' Deficit
General partners $ (206)
Limited partners (19,975 units
issued and outstanding) (2,879) (3,085)
$17,923
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,798 $ 1,696 $ 5,293 $ 5,048
Other income 99 109 282 278
Total revenues 1,897 1,805 5,575 5,326
Expenses:
Operating 686 669 2,028 1,970
General and administrative 73 51 205 156
Maintenance 343 317 939 809
Depreciation 432 397 1,266 1,166
Interest 526 459 1,439 1,382
Property taxes 112 106 341 314
Total expenses 2,172 1,999 6,218 5,797
Loss before extraordinary item (275) (194) (643) (471)
Extraordinary loss on
extinguishment of debt (173) -- (173) --
Net loss $ (448) $ (194) $ (816) $ (471)
Net loss allocated to
general partners (1%) $ (4) $ (2) $ (8) $ (5)
Net loss allocated to
limited partners (99%) (444) (192) (808) (466)
Net loss $ (448) $ (194) $ (816) $ (471)
Per limited partnership unit:
Loss before extraordinary item $(13.64) $ (9.63) $(31.87) $(23.35)
Extraordinary Item (8.58) -- (8.58) --
Net loss $(22.22) $ (9.63) $(40.45) $(23.35)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) ANGELES PARTNERS IX
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners 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 nine months
ended September 30, 1996 (8) (808) (816)
Partners' deficit at
September 30, 1996 19,975 $ (206) $(2,879) $(3,085)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net loss $ (816) $ (471)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,266 1,166
Amortization of discounts and loan costs 169 106
Extraordinary loss on extinguishment of debt 173 --
Change in accounts:
Restricted cash 36 (3)
Accounts receivable (39) 4
Escrows for taxes (29) (41)
Other assets 2 (5)
Accounts payable (52) (229)
Tenant security deposit liabilities (36) 6
Accrued taxes 150 93
Other liabilities 51 (3)
Net cash provided by operating activities 875 623
Cash flows from financing activities:
Property improvements and replacements (611) (568)
Cash invested in short-term investments -- (25)
Deposits to restricted escrows (15) (23)
Receipts from restricted escrows 164 307
Net cash used in investing activities (462) (309)
Cash flows from financing activities:
Additions to mortgage notes payable 4,900 --
Repayment of mortgage notes payable (3,888) --
Prepayment penalty (122) --
Payments on mortgage notes payable (176) (176)
Loan costs (102) --
Net cash provided by (used in) financing activities 612 (176)
Net increase in cash 1,025 138
Cash and cash equivalents at beginning of period 451 306
Cash and cash equivalents at end of period $ 1,476 $ 444
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 1,223 $1,277
See Accompanying Notes to Consolidated Financial Statements
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 nine month periods ended September 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 nine months ended September 30, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $277 $264
Reimbursement of services
of affiliates 175 105
Included in "reimbursements of services of affiliates" for 1996 are
approximately $23,000 in reimbursements for construction oversight costs.
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 $21,000 for the nine months ended September 30, 1996,
and $14,000 for the nine months ended 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 1.2% 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, currently owns 87,700 Class A Shares of AMIT. These Class A Shares
entitle LAC to vote approximately 2% of the total shares. The number of Class A
Shares of AMIT owned by LAC increased from 63,200 shares on September 30, 1996,
to 87,700 shares as of October 22, 1996. The voting percentage also increased
from 1.5% to 2% over the same time period.
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 - MORTGAGE NOTE REFINANCING
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, matured in September 1996. The Partnership exercised an option under
the loan to extend the maturity date to November 15, 1996. The bridge loan may
be extended to December 31, 1996, and provides for conversion to long-term
permanent financing. The bridge loan is collateralized by a mortgage on Village
Green Apartments and carried 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 fourth quarter of 1996.
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, 1996 and 1995:
Average Occupancy
Property 1996 1995
Pines of Northwest Crossing Apartments 92% 87%
Houston, Texas (1)
Panorama Terrace Apartments 94% 97%
Birmingham, Alabama (2)
Forest River Apartments 94% 96%
Gadsden, Alabama
Village Green Apartments 93% 95%
Montgomery, Alabama
Rosemont Crossing Apartments 90% 89%
San Antonio, Texas (3)
(1) Occupancy has increased due to concessions and an improvement in the
economic environment in the immediate surrounding area.
(2) Occupancy has decreased due to low interest rates, which have made home
purchases attractive.
(3) Occupancy is low due to an over supply of rental units in the
local market.
The Partnership's net losses for the three and nine months ended September 30,
1996, were approximately $448,000 and $816,000, respectively, versus net losses
of approximately $194,000 and $471,000 for the three and nine months ended
September 30, 1995, respectively. The Partnership experienced an increase in
both revenues and expenses for the nine months ended September 30, 1996. Revenue
increases are 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. 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 an increase in major
landscaping and interior and exterior building improvements. Major landscaping
increased due to efforts to enhance the image at Village Green Apartments and
Pines of Northwest Crossing Apartments. Interior building improvements increased
principally due to upgrades of plumbing fixtures at Village Green Apartments,
Panorama Terrace Apartments and Forest River 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 September 30, 1996, the Partnership had unrestricted cash of approximately
$1,476,000 as compared to approximately $444,000 at September 30, 1995. The
increase in net cash provided by operating activities was due primarily to a
reduction in the decrease in accounts payable and increases in accrued taxes and
other liabilities. Net cash used in investing activities increased due to an
increase in property improvements and replacements and a decrease in receipts
from restricted escrows. Finally, net cash provided by financing activities
increased due to net proceeds received from the refinancing of Village Green
Apartments offset, in part, by the payment of associated loan costs and a
prepayment penalty.
The Partnership has plans to upgrade landscaping and improve the overall
appearance of the partnership's properties using the approximately $1,000,000 of
net proceeds from the refinancing of Village Green Apartments. These
improvements include replacement of older appliances and worn floor coverings.
Forest River Apartments intends to build a boardwalk along the river adjacent to
the property. Village Green Apartments capital improvements will include
repairs to the buildings exterior and balconies and replace electrical breaker
boxes. The Pines at Northwest Crossing will be making repairs to the buildings
exterior. Improvements to Rosemont Crossing include plans to replace patio
doors, add additional exterior lighting and make repairs to the parking areas.
The improvements at Panorama Terrace will include repairs to balconies and
exterior lighting upgrades.
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 $20,016,000, net of discount, is amortized over
varying periods with required balloon payments of $18,924,000 ranging from
November 1996 to October 2003, at which time the properties will either be
refinanced or sold. In July 1996, the General Partner refinanced the mortgage
debt secured by Village Green Apartments. The bridge loan, in the principal
amount of $4,900,000 matured in September 1996. The Partnership exercised an
option to extend the maturity date to November 1996. The bridge loan may be
extended to December 31, 1996, and provides for conversion to long-term
permanent financing. The bridge loan is collateralized by a mortgage on Village
Green Apartments and carried 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 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 nine
months ended September 30, 1996, or the nine months ended September 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 September 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: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners IX 1996 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000313499
<NAME> ANGELES INCOME PROPERTIES LTD. IX
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,476
<SECURITIES> 0
<RECEIVABLES> 62
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 35,603
<DEPRECIATION> 20,445
<TOTAL-ASSETS> 17,923
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 20,016
0
0
<COMMON> 0
<OTHER-SE> (3,085)
<TOTAL-LIABILITY-AND-EQUITY> 17,923
<SALES> 0
<TOTAL-REVENUES> 5,575
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,218
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,439
<INCOME-PRETAX> (816)
<INCOME-TAX> 0
<INCOME-CONTINUING> (816)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (816)
<EPS-PRIMARY> (40.45)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
