FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
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, 1997
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
Greenville, South Carolina 29602
(Address of principal executive offices)
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, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 808
Restricted--tenant security deposits 122
Accounts receivable 36
Escrows for taxes 260
Restricted escrows 645
Other assets 626
Investment properties:
Land $ 3,083
Buildings and related personal property 33,291
36,374
Less accumulated depreciation (21,790) 14,584
$ 17,081
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 144
Tenant security deposits 123
Accrued taxes 262
Other liabilities 189
Mortgage notes payable 19,874
Partners' Deficit
General partner $ (210)
Limited partners (19,975 units
issued and outstanding) (3,301) (3,511)
$ 17,081
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues:
Rental income $ 1,781 $ 1,773 $ 3,566 $ 3,495
Other income 87 85 185 183
Total revenues 1,868 1,858 3,751 3,678
Expenses:
Operating 685 697 1,377 1,341
General and administrative 59 79 125 133
Maintenance 348 289 593 596
Depreciation 452 423 895 834
Interest 438 456 875 913
Property taxes 107 114 217 229
Bad debt (11) -- -- --
Total expenses 2,078 2,058 4,082 4,046
Net loss $ (210) $ (200) $ (331) $ (368)
Net loss allocated to
general partner (1%) $ (2) $ (2) $ (3) $ (4)
Net loss allocated to
limited partners (99%) (208) (198) (328) (364)
Net loss $ (210) $ (200) $ (331) $ (368)
Net loss per limited
partnership unit $ (10.41) $ ( 9.91) $ (16.42) $ (18.22)
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, 1996 19,975 $ (207) $ (2,973) $ (3,180)
Net loss for the six months
ended June 30, 1997 -- (3) (328) (331)
Partners' deficit at
June 30, 1997 19,975 $ (210) $ (3,301) $ (3,511)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Net loss $ (331) $ (368)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 895 834
Amortization of loan costs and discounts 57 71
Change in accounts:
Restricted cash 5 28
Accounts receivable 20 (38)
Escrows for taxes 38 (49)
Other assets (61) --
Accounts payable (106) (17)
Tenant security deposit liabilities (6) (28)
Accrued taxes (67) 37
Other liabilities (9) 25
Net cash provided by operating activities 435 495
Cash flows from investing activities:
Property improvements and replacements (321) (397)
Deposits to restricted escrows (65) (10)
Receipts from restricted escrows -- 18
Net cash used in investing activities (386) (389)
Cash flows from investing activities:
Payments on mortgage notes payable (110) (127)
Loan costs (8) (21)
Net cash used in financing activities (118) (148)
Net decrease in unrestricted cash and cash
equivalents (69) (42)
Unrestricted cash and cash equivalents at
beginning of period 877 451
Unrestricted cash and cash equivalents at
end of period $ 808 $ 409
Supplemental disclosure of cash flow information:
Cash paid for interest $ 820 $ 842
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 of Angeles
Partners IX (the "Partnership" or the "Registrant") 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, 1997, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1997. 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, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 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
six months ended June 30, 1997 and 1996:
1997 1996
(in thousands)
Property management fees (included
in operating expenses) $186 $184
Reimbursement of services
of affiliates (included in
general and administrative
expenses) 84 93
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 C - REFINANCE OF MORTGAGE NOTE PAYABLE
On November 1, 1996, the Partnership refinanced the mortgage debt secured by
Village Green Apartments. The new loan had a principal amount of $4,900,000 and
has a maturity date of November 1, 2003. This note carries a stated interest
rate of 7.33% per annum and replaced debt that matured in June 1997 and carried
a 9.875% stated interest rate.
NOTE D - LAWSUIT AT THE PINES OF NORTHWEST CROSSING
On March 4, 1994, an employee at The Pines of Northwest Crossing Apartments
("Plaintiff") allegedly sustained personal injuries during the ordinary course
of business. The Plaintiff remained out of work until March 24, 1994. The
Plaintiff alleges that upon his return back to work, he was terminated in
retaliation for having filed a worker's compensation claim. The Plaintiff seeks
actual damages, exemplary damages, attorney's fees and court costs. The General
Partner can not predict the outcome of this proceeding or the range of
settlement for the Plaintiff, if settled in favor of the Plaintiff; however the
General Partner believes that this claim is without merit and intends to
vigorously defend it.
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, 1997 and 1996:
Average Occupancy
Property 1997 1996
Pines of Northwest Crossing Apartments 91% 92%
Houston, Texas (1)
Panorama Terrace Apartments 91% 93%
Birmingham, Alabama (2)
Forest River Apartments 91% 94%
Gadsden, Alabama (3)
Village Green Apartments 91% 93%
Montgomery, Alabama (2)
Rosemont Crossing Apartments 94% 88%
San Antonio, Texas (4)
(1) The General Partner believes that occupancy will improve as a result of
exterior building improvements, as discussed below.
(2) Occupancy at Panorama Terrace Apartments and Village Green Apartments is
consistent with the Birmingham and Montgomery markets, which have occupancy
rates of approximately 91%.
(3) Occupancy at Forest River Apartments has decreased due to the attractive
incentives that Gadsden area finance companies are offering to first time
home buyers.
(4) Occupancy at Rosemont Crossing Apartments has increased due to a stronger
rental market and attractive move-in specials.
The Partnership's net losses for the three and six months ended June 30, 1997,
were approximately $210,000 and $331,000, respectively, versus $200,000 and
$368,000 for the corresponding periods of 1996. The decreased net loss for the
first six months of 1997 versus the first six months of 1996 is primarily due to
increases in rental revenue.
Rental income increased for the three and six months ended June 30, 1997, as a
result of increased occupancy at Rosemont Crossing Apartments and increased
rental rates at Village Green Apartments and Forest River Apartments. Partially
offsetting the increase in rental income for the six months ended June 30, 1997,
was an increase in operating and depreciation expense. Operating expenses
increased due to increased rental incentives and advertising in an effort to
increase occupancy at the Partnership's investment properties. Depreciation
expense increased due to capitalized building improvements and purchases of
appliances and carpeting during the second half of 1996 and the first six months
of 1997. Interest expense decreased due to the refinancing in 1996 of the
mortgage note secured by Village Green Apartments (See "Note C"). For the three
months ended June 30, 1997, maintenance expense increased compared to the
corresponding period in 1996. This increase occurred primarily as a result of
the start of an exterior renovation project, during the second quarter of 1997,
at the Pines of Northwest Crossing Apartments. These improvements are necessary
in order to improve the appearance of the apartment complex in order to remain
competitive in the market area.
Included in maintenance expense for the six months ended June 30, 1997, is
$104,000 of major repairs and maintenance comprised of exterior building
improvements, exterior painting and major landscaping. Included in maintenance
expense for the six months ended June 30, 1996, is $146,000 of major repairs and
maintenance comprised of exterior building improvements, swimming pool repairs,
and major landscaping.
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, 1997, the Partnership had unrestricted cash and cash equivalents of
approximately $808,000, compared to approximately $409,000 at June 30, 1996. Net
cash provided by operating activities decreased primarily due to the timing of
payments for accounts payable and accrued taxes. This was offset slightly by
the decreased net loss, as discussed above, and decreased escrows for taxes. Net
cash used in investing activities remained stable due to decreased purchases of
property improvements and replacements, offset by increased deposits to
restricted escrows. Net cash used in financing activities decreased due to
decreased principal payments resulting from the refinancing in 1996 of the
mortgage note secured by Village Green Apartments. Also, loan costs were paid
in January 1997 that relate to the refinancing.
The Partnership's primary source of cash is from the operations of its
properties and from financing placed on such properties. Cash from 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 approximately $19,874,000, net of
discount, is amortized over varying periods with required balloon payments of
$18,258,000 from August 2002 to November 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. No cash distributions were paid in the six months ended June 30,
1997, or the six months ended June 30, 1996.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 4, 1994, an employee at The Pines of Northwest Crossing Apartments
("Plaintiff") allegedly sustained personal injuries during the ordinary course
of business. The Plaintiff remained out of work until March 24, 1994. The
Plaintiff alleges that upon his return back to work, he was terminated in
retaliation for having filed a worker's compensation claim. The Plaintiff seeks
actual damages, exemplary damages, attorney's fees and court costs. The General
Partner can not predict the outcome of this proceeding or the range of
settlement for the Plaintiff, if settled in favor of the Plaintiff; however the
General Partner believes that this claim is without merit and intends to
vigorously defend it.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The General Partner 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 three months ended June 30,
1997.
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 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners IX 1997 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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 808
<SECURITIES> 0
<RECEIVABLES> 36
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 36,374
<DEPRECIATION> 21,790
<TOTAL-ASSETS> 17,081
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 19,874
0
0
<COMMON> 0
<OTHER-SE> (3,511)
<TOTAL-LIABILITY-AND-EQUITY> 17,081
<SALES> 0
<TOTAL-REVENUES> 3,751
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,082
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 875
<INCOME-PRETAX> (331)
<INCOME-TAX> 0
<INCOME-CONTINUING> (331)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (331)
<EPS-PRIMARY> (16.42)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
