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 March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT
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 (IRS 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 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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES PARTNERS IX
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 506
Restricted--tenant security deposits 159
Accounts receivable 50
Escrow for taxes and insurance 188
Restricted escrows 465
Other assets 579
Investment properties:
Land $ 3,083
Buildings and related personal property 32,092
35,175
Less accumulated depreciation (19,590) 15,585
$ 17,532
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 312
Tenant security deposits 161
Accrued taxes 162
Other liabilities 226
Mortgage notes payable 19,108
Partners' Deficit
General partner $ (200)
Limited partners (19,975 units issued
and outstanding) (2,237) (2,437)
$ 17,532
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 1,722 $ 1,649
Other income 98 79
Total revenues 1,820 1,728
Expenses:
Operating 644 600
General and administrative 54 51
Maintenance 307 229
Depreciation 411 379
Interest 457 462
Property taxes 115 105
Total expenses 1,988 1,826
Net loss $ (168) $ (98)
Net loss allocated to general
partners (1%) $ (2) $ (1)
Net loss allocated to limited
partners (99%) (166) (97)
$ (168) $ (98)
Net loss per limited partnership unit $ (8.31) $ (4.86)
See Accompanying Notes to Consolidated Financial Statements
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 three months
ended March 31, 1996 -- (2) (166) (168)
Partners' deficit at
March 31, 1996 19,975 $ (200) $ (2,237) $ (2,437)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (168) $ (98)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 411 379
Amortization of loan costs and discounts 36 35
Change in accounts:
Restricted cash 14 (3)
Accounts receivable (27) 20
Escrows for taxes and insurance 55 151
Other assets -- (7)
Accounts payable 100 (273)
Tenant security deposit liabilities (13) 7
Accrued taxes (77) (116)
Other liabilities (27) 40
Net cash provided by operating activities 304 135
Cash flows from investing activities:
Property improvements and replacements (183) (122)
Deposits to restricted escrows -- (6)
Receipts from restricted escrows -- 192
Net cash (used in) provided by investing activities (183) 64
Cash flows from financing activities:
Payments on mortgage notes payable (62) (57)
Payment of deferred loan costs (4) --
Net cash used in financing activities (66) (57)
Net increase in cash 55 142
Cash and cash equivalents at beginning of period 451 306
Cash and cash equivalents at end of period $ 506 $ 448
Supplemental disclosure of cash flow information:
Cash paid for interest $ 422 $ 427
<FN>
See Accompanying Notes to Consolidated 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 the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 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 the
Partnership's 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 were paid to the General Partner and affiliates for the
three months ended March 31, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $ 91 $ 86
Reimbursement of services
of affiliates 61 34
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 $7,000 for each of the three months ended March 31,
1996 and March 31, 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 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.
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
three months ended March 31, 1996 and 1995:
Average Occupancy
Property 1996 1995
Pines of Northwest Crossing Apartments 90% 84%
Houston, Texas
Panorama Terrace Apartments 94% 97%
Birmingham, Alabama
Forest River Apartments 95% 96%
Gadsden, Alabama
Village Green Apartments 92% 97%
Montgomery, Alabama (1)
The Greens Apartments 88% 92%
San Antonio, Texas
(1) Occupancy has decreased due to low-interest rates, which has made home
purchases attractive.
The Partnership's net loss for the three months ended March 31, 1996, was
$168,000 versus $98,000 for the three months ended March 31, 1995. This increase
in net loss was primarily caused by an overall increase in expenses. Despite
the increase in net loss, revenues increased. Rental income increased due to an
increase in the prevailing market rates in the areas in which the investment
properties are located. Other income also increased. This increase was 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. Although several expense categories
increased, maintenance expense had the largest impact. 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.
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 March 31, 1996, the Partnership had unrestricted cash of $506,000 as compared
to $448,000 at March 31, 1995. Net cash provided by operating activities
increased primarily due to an increase in accounts payable. 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.
Finally, net cash used in financing activities increased due to the increase in
principal payments on outstanding mortgage notes payable.
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 $19,108,000, net of discount, is amortized over
varying periods with required balloon payments of $17,566,000 from June 1997 to
October 2003, at which time the properties will either be refinanced or sold.
The General Partner is currently in negotiations to refinance the mortgage which
is secured by Village Green Apartments. This indebtedness, which amounts to
$3,663,000, has a maturity date of June 1997 and a fixed interest rate of
9.875%. If the General Partner is successful in the refinance negotiations, the
new mortgage indebtedness should carry a lower interest rate and produce excess
proceeds for the Partnership to be used for capital improvements for the
Partnership's investment properties. However, the outcome of such negotiations
cannot presently be determined. 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 three months ended March
31, 1996, and the three months ended March 31, 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: None.
(b) No reports on Form 8-K were filed during the three months ended March
31, 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: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners IX 1996 First 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 506
<SECURITIES> 0
<RECEIVABLES> 50
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 35,175
<DEPRECIATION> (19,590)
<TOTAL-ASSETS> 17,532
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 19,108
0
0
<COMMON> 0
<OTHER-SE> (2,437)
<TOTAL-LIABILITY-AND-EQUITY> 17,532
<SALES> 0
<TOTAL-REVENUES> 1,820
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,988
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 457
<INCOME-PRETAX> (168)
<INCOME-TAX> 0
<INCOME-CONTINUING> (168)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (168)
<EPS-PRIMARY> (8.31)
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
