FORM 10-QSB--QUARTERLY OR TRANSITIONAL 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 September 30, 1997
[ ] 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)
(864) 239-1000
(Issuer's telephone number)
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)
September 30, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 749
Restricted--tenant security deposits 117
Accounts receivable 39
Escrows for taxes 360
Restricted escrows 675
Other assets 613
Investment properties:
Land $ 3,083
Buildings and related personal property 33,502
36,585
Less accumulated depreciation (22,247) 14,338
$ 16,891
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 130
Tenant security deposits 118
Accrued taxes 369
Other liabilities 191
Mortgage notes payable 19,822
Partners' Deficit
General partner $ (213)
Limited partners (20,000 units
issued and 19,975 outstanding) (3,526) (3,739)
$ 16,891
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,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,772 $ 1,798 $ 5,338 $ 5,293
Other income 110 99 295 282
Total revenues 1,882 1,897 5,633 5,575
Expenses:
Operating 687 687 2,064 2,028
General and administrative 78 72 203 205
Maintenance 344 343 937 939
Depreciation 457 432 1,352 1,266
Interest 436 526 1,311 1,439
Property taxes 108 112 325 341
Total expenses 2,110 2,172 6,192 6,218
Loss before extraordinary item (228) (275) (559) (643)
Extraordinary loss on
extinguishment of debt -- (173) -- (173)
Net loss $ (228) $ (448) $ (559) $ (816)
Net loss allocated to
general partner (1%) $ (2) $ (4) $ (6) $ (8)
Net loss allocated to
limited partners (99%) (226) (444) (553) (808)
Net loss $ (228) $ (448) $ (559) $ (816)
Per limited partnership unit:
Loss before extraordinary item $ (11.31) $ (13.63) $ (27.68) $ (31.87)
Extraordinary item -- (8.57) -- (8.57)
Net loss $ (11.31) $ (22.20) $ (27.68) $ (40.44)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</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, 1996 19,975 $ (207) $ (2,973) $ (3,180)
Net loss for the nine months
ended September 30, 1997 -- (6) (553) (559)
Partners' deficit at
September 30, 1997 19,975 $ (213) $ (3,526) $ (3,739)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
d) ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1997 1996
Cash flows from operating activities:
Net loss $ (559) $ (816)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 1,352 1,266
Amortization of loan costs and discounts 86 169
Extraordinary loss on extinguishment of debt -- 173
Change in accounts:
Restricted cash 10 36
Accounts receivable 17 (39)
Escrows for taxes (62) (29)
Other assets (72) 2
Accounts payable (120) (52)
Tenant security deposit liabilities (11) (36)
Accrued taxes 40 150
Other liabilities (7) 51
Net cash provided by operating activities 674 875
Cash flows from investing activities:
Property improvements and replacements (532) (611)
Deposits to restricted escrows (95) (15)
Receipts from restricted escrows -- 164
Net cash used in investing activities (627) (462)
Cash flows from financing activities:
Proceeds from refinancing -- 4,900
Repayment of mortgage notes payable -- (3,888)
Prepayment penalty -- (122)
Payments on mortgage notes payable (167) (176)
Loan costs paid (8) (102)
Net cash (used in) provided by financing
activities (175) 612
Net (decrease) increase in unrestricted cash and
cash equivalents (128) 1,025
Unrestricted cash and cash equivalents at
beginning of period 877 451
Unrestricted cash and cash equivalents at
end of period $ 749 $ 1,476
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,228 $ 1,223
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 nine month periods ended September 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
nine months ended September 30, 1997 and 1996:
1997 1996
(in thousands)
Property management fees $279 $277
Reimbursement of services of
affiliates (includes approximately
$8,000 and $23,000 for construction
oversight costs for the nine months
ended September 30, 1997 and 1996,
respectively) 141 174
For the period from January 1, 1996, to August 31, 1997, the Partnership insured
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 master policy. The
agent assumed the financial obligations to the affiliate of the General Partner
who receives payment on these obligations from the agent. The amount of the
Partnership's insurance premiums that accrued to the benefit of the affiliate of
the General Partner by virtue of the agent's obligations was not significant.
NOTE C - REFINANCE OF MORTGAGE NOTE PAYABLE
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. On November 1, 1996, the Partnership
closed on the long term 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.
Village Green Apartments incurred losses of approximately $173,000 resulting
from the refinance of the mortgage note. Of these losses, $122,000 related to
pre-payment penalties on the previous mortgage and the remainder of the loss was
due to the write off of the unamortized loan costs.
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
nine months ended September 30, 1997 and 1996:
Average Occupancy
Property 1997 1996
Pines of Northwest Crossing Apartments 91% 92%
Houston, Texas (1)
Panorama Terrace Apartments 90% 94%
Birmingham, Alabama (2)
Forest River Apartments 92% 94%
Gadsden, Alabama (3)
Village Green Apartments 92% 93%
Montgomery, Alabama (4)
Rosemont Crossing Apartments 94% 90%
San Antonio, Texas (5)
(1) The General Partner believes that occupancy will improve as a result of
exterior building improvements made to improve the appearance of the
complex and attract new tenants.
(2) Occupancy at Panorama Terrace Apartments decreased due to construction of
new apartments in the Birmingham area and is consistent with occupancy
rates in the local market. The General Partner will increase concessions
in order to elevate occupancy.
(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 Village Green Apartments decreased due to an increase in first
time home purchases. These purchases resulted from attractive interest
rates and builder specials offered in the Montgomery area. Occupancy at
Village Green Apartments is consistent with the local market.
(5) Occupancy at Rosemont Crossing Apartments has increased due to a stronger
rental market and attractive move-in specials.
The Partnership's net loss for the three and nine months ended September 30,
1997, was approximately $228,000 and $559,000, respectively, versus net losses
of approximately $448,000 and $816,000 for the corresponding periods of 1996.
The decrease in net loss for the nine months ended September 30, 1997, versus
the same period in 1996 is primarily due to an increase in rental revenues, a
decrease in interest expense and no extraordinary loss on extinguishment of
debt. The decrease in net loss for the three months ended September 30, 1997,
versus the same period in 1996, is due to a decrease in interest expense and no
extraordinary loss on extinguishment of debt.
Rental revenue increased for the nine months ended September 30, 1997, as a
result of increased occupancy at Rosemont Crossing Apartments and increases in
rental rates at Rosemont Crossing Apartments, Forest River Apartments, The Pines
of Northwest Crossing Apartments and Village Green Apartments. Interest expense
decreased due to the refinancing of the mortgage note secured by Village Green
Apartments (see "Note C"). The new mortgage indebtedness, which carries a stated
interest rate of 7.33%, replaced previous mortgage indebtedness which carried a
stated interest rate of 9.875%. In 1996, Village Green Apartments incurred
extraordinary losses of approximately $173,000 resulting from the refinance of
the mortgage note. Of these losses, $122,000 related to pre-payment penalties
on the previous mortgage and the remainder of the loss was due to the write off
of the unamortized loan costs. Partially offsetting these favorable impacts on
income for the nine months ended September 30, 1997, were increases in operating
and depreciation expenses. 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 the
addition of depreciable assets throughout 1997.
Included in maintenance expense for the nine months ended September 30, 1997, is
approximately $193,000 of major repairs and maintenance comprised of exterior
building improvements, exterior painting, parking lot repairs, and major
landscaping. Included in maintenance expense for the nine months ended September
30, 1996, is $161,000 of major repairs and maintenance comprised of exterior
building improvements, swimming pool repairs, parking lot 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 September 30, 1997 the Partnership held unrestricted cash and cash
equivalents of approximately $749,000, compared to approximately $1,476,000 at
September 30, 1996. Net cash provided by operating activities decreased, despite
a decreased net loss, due to an increase in other assets and the timing of
payments for accounts payable and other liabilities. Net cash used in investing
activities increased due to an increase in deposits to restricted escrow and a
decrease in receipts from restricted escrows. Net cash used in financing
activities increased resulting from the net proceeds received from the
refinancing in 1996 of Village Green Apartments offset, in part, by the
repayment of the mortgage debt that was refinanced, payment of associated loan
costs and the prepayment penalty.
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 $19,822,000, 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 nine months ended
September 30, 1997, or the nine months ended September 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
September 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: November 10, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners IX 1997 Third 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 749
<SECURITIES> 0
<RECEIVABLES> 39
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 36,585
<DEPRECIATION> 22,247
<TOTAL-ASSETS> 16,891
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 19,822
0
0
<COMMON> 0
<OTHER-SE> (3,739)
<TOTAL-LIABILITY-AND-EQUITY> 16,891
<SALES> 0
<TOTAL-REVENUES> 5,633
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,192
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,311
<INCOME-PRETAX> (559)
<INCOME-TAX> 0
<INCOME-CONTINUING> (559)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (559)
<EPS-PRIMARY> 27.68<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
