FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934 [No Fee Required]
For the fiscal year ended December 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from to
Commission file number 0-9704
ANGELES PARTNERS IX
(Name of small business issuer in its charter)
California 95-3417137
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $7,558,000
State the aggregate market value of the voting partnership interests held by
nonaffiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1998. No market exists for the limited
partnership interests of the Registrant, and, therefore, no aggregate market
value can be determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Angeles Partners IX (the "Partnership" or "Registrant") is a publicly-held
limited partnership organized under the California Uniform Limited Partnership
Act on September 12, 1979. The general partner of the Partnership is Angeles
Realty Corporation, a California corporation (the "General Partner" or "ARC").
ARC was wholly owned by MAE GP Corporation ("MAE GP"). Effective February 25,
1998, MAE GP was merged into Insignia Properties Trust ("IPT"), a subsidiary of
Apartment Investment and Management Company ("AIMCO"). Thus, the General
Partner is now a wholly-owned subsidiary of AIMCO. The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2035, unless
terminated prior to such date.
The Partnership's primary business is to operate and hold existing real estate
properties for investments. Funds obtained during the public offering were
invested in seven existing apartment properties. The Partnership continues to
hold five of these properties. See "Item 2. Description of Properties", below
for a description of the Partnership's remaining properties.
The Partnership, through its public offering of limited partnership units, sold
20,000 units aggregating $20,000,000. The General Partner contributed capital
in the amount of $1,000 for a 1% interest in the Partnership. In addition, the
General Partner purchased 100 Units. Since its initial offering, the Registrant
has not received, nor are the limited partners required to make, additional
capital contributions. The General Partner of the Partnership intends to
maximize the operating results and, ultimately, the net realizable value of each
of the Partnership's properties in order to achieve the best possible return for
the investors. Such results may best be achieved by holding and operating the
properties or through property sales or exchanges, refinancings, debt
restructurings or relinquishment of the assets. The Partnership intends to
evaluate each of its holdings periodically to determine the most appropriate
strategy for each of the assets.
The Registrant has no employees. The General Partner is vested with full
authority as to the general management and supervision of the business and
affairs of the Partnership. Limited partners have no right to participate in
the management or conduct of such business and affairs. An affiliate of the
General Partner provided management services for the Partnership's investment
properties for the years ended December 31, 1998 and 1997.
A further description of the Partnership's business is included in Management's
Discussion and Analysis or Plan of Operation included in "Item 6" of this Form
10-KSB.
The business in which the Partnership is engaged is highly competitive. There
are other residential properties within the market area of the Registrant's
properties. The number and quality of competitive properties, including those
which may be managed by an affiliate of the General Partner, in such market area
could have a material effect on the rental market for the apartments at the
Partnership's properties and the rents that may be charged for such apartments.
While the General Partner and its affiliates are a significant factor in the
United States in the apartment industry, competition for the apartments is
local. In addition, various limited partnerships have been formed by the
General Partner and/or affiliates to engage in business which may be competitive
with the Partnership.
Both the income and expenses of operating the remaining properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
an oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential
properties because such properties are susceptible to the impact of economic and
other conditions outside of the control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100%
ownership interest in Insignia Properties Trust ("IPT"), the entity which
controls the General Partner. The General Partner does not believe that this
transaction will have a material effect on the affairs and operations of the
Partnership.
ITEM 2. DESCRIPTION OF PROPERTIES:
The following table sets forth the Partnership's investments in properties:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
The Pines of Northwest
Crossing Apartments 05/30/80 Fee ownership, subject to Apartment -
Houston, Texas first and second mortgages (1) 412 units
Panorama Terrace Apartments 06/30/80 Fee ownership, subject to a Apartment -
Birmingham, Alabama first mortgage 227 units
Forest River Apartments 12/29/80 Fee ownership, subject to Apartment -
Gadsden, Alabama first and second mortgages (1) 248 units
Village Green Apartments 12/31/80 Fee ownership, subject to Apartment -
Montgomery, Alabama a first mortgage 337 units
Rosemont Crossing Apartments 12/31/80 Fee ownership, subject to Apartment -
San Antonio, Texas first and second mortgages (1) 217 units
</TABLE>
(1) Properties are held by a Limited Partnership in which the Registrant owns a
99% interest.
SCHEDULE OF PROPERTIES:
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
The Pines of Northwest
Crossing Apartments $11,284 $ 6,957 5-25 yrs (1) $ 5,213
Panorama Terrace Apartments 8,709 5,843 5-25 yrs (1) 3,888
Forest River Apartments 5,085 3,632 5-25 yrs (1) 1,855
Village Green Apartments 8,250 5,750 5-25 yrs (1) 3,395
Rosemont Crossing Apartments 4,399 2,385 5-19 yrs (1) 2,253
$37,727 $24,567 $16,604
</TABLE>
(1) Straight-line and accelerated methods used.
See "Note A" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation
policy.
SCHEDULE OF PROPERTY INDEBTEDNESS:
The following table sets forth certain information relating to the loans
encumbering the Partnership's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1998 Rate Amortized Date Maturity (5)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
The Pines of Northwest
Crossing Apartments
1st mortgage $ 4,745 7.83% (2) 10/15/03 $ 4,338
2nd mortgage 156 7.83% (4) 10/15/03 156
Panorama Terrace Apartments
1st mortgage 3,777 10.13% (3) 08/10/02 3,590
Forest River Apartments
1st mortgage 3,210 7.83% (2) 10/15/03 2,935
2nd mortgage 106 7.83% (4) 10/15/03 106
Village Green Apartments
1st mortgage 4,798 7.33% (1) 11/01/03 4,489
Rosemont Crossing Apartments
1st mortgage 2,791 7.83% (2) 10/15/03 2,552
2nd mortgage 92 7.83% (4) 10/15/03 92
19,675 $18,258
Less unamortized
discounts (130)
$19,545
</TABLE>
(1) The principal balance is being amortized over 360 months with a balloon
payment due November 1, 2003.
(2) The principal balance is being amortized over 344 months with a balloon
payment due October 15, 2003.
(3) The principal balance is being amortized over 360 months with a balloon
payment due August 10, 2002.
(4) Interest only payments.
(5) See "Item 7. Financial Statements - Note C" for information with respect to
the Registrant's ability to prepay these loans and other specific details
about the loans.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average annual rental rates and occupancy for 1998 and 1997 for each property:
Average Annual Average Annual
Rental Rates Occupancy
Property 1998 1997 1998 1997
The Pines of Northwest
Crossing Apartments (1) $5,396/unit $5,249/unit 95% 91%
Panorama Terrace Apartments 7,173/unit 7,186/unit 92% 90%
Forest River Apartments 4,840/unit 4,670/unit 92% 93%
Village Green Apartments 5,274/unit 5,161/unit 94% 92%
Rosemont Crossing Apartments (2) 5,610/unit 5,526/unit 90% 93%
(1) Occupancy at The Pines of Northwest Crossing Apartments increased due to
exterior building improvements made to increase curb appeal.
(2) Occupancy at Rosemont Crossing Apartments decreased due to new construction
in the area and low interest rates attracting first time home buyers.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the area. The General
Partner believes that all of the properties are adequately insured. Each
property is an apartment complex which leases units for one year or less. No
residential tenant leases 10% or more of the available rental space. All of the
properties are in good physical condition subject to normal depreciation and
deterioration as is typical for assets of this type and age.
REAL ESTATE TAXES AND RATES
Real estate taxes and rates in 1998 for each property were:
1998 1998
Billing Rate
(in thousands)
The Pines of Northwest Crossing Apartments $166 3.08%
Panorama Terrace Apartments 87* 7.27%
Forest River Apartments 60* 4.90%
Village Green Apartments 59* 3.45%
Rosemont Crossing Apartments 67 2.82%
* Due to this property having a tax year different than its fiscal year, the
tax bill does not equal tax expense.
CAPITAL IMPROVEMENTS
The Pines of Northwest Crossing Apartments
During 1998, the Partnership completed approximately $228,000 of capital
improvements at the property, consisting primarily of carpet replacement,
perimeter fencing, air conditioning units and appliances. These improvements
were funded from the Partnership's operating cash flow. Based on a report
received from an independent third party consultant analyzing necessary exterior
improvements and estimates made by the General Partner on interior improvements,
it is estimated that the property requires approximately $304,000 of capital
improvements over the near term. Capital improvements planned for 1999 consist
of carpet and vinyl replacement, landscaping, parking lot repairs, exterior
painting, air conditioning units and roof replacement. These improvements are
budgeted for, but not limited to, approximately $432,000.
Panorama Terrace Apartments
During 1998, the Partnership completed approximately $228,000 of capital
improvements at the property, consisting primarily of carpet and tile
replacement, appliances, air conditioning units, and other building
improvements. These improvements were funded from the Partnership's operating
cash flow. Based on a report received from an independent third party consultant
analyzing necessary exterior improvements and estimates made by the General
Partner on interior improvements, it is estimated that the property requires
approximately $511,000 of capital improvements over the near term. Capital
improvements planned for 1999 consist of carpet and vinyl replacement,
landscaping, parking lot repairs, roof replacement and other structural repairs.
These improvements are budgeted for, but not limited to, approximately $527,000.
Forest River Apartments
During 1998, the Partnership completed approximately $111,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliances, balconies and other structural improvements. These
improvements were funded from the Partnership's operating cash flow. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the General Partner on interior
improvements, it is estimated that the property requires approximately $235,000
of capital improvements over the near term. Capital improvements planned for
1999 consist of carpet and vinyl replacement, landscaping, roof replacement and
other structural improvements. These improvements are budgeted for, but not
limited to, approximately $209,000.
Village Green Apartments
During 1998, the Partnership completed approximately $236,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, air conditioning units, signage and other building improvements.
These improvements were funded from the Partnership's reserves. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the General Partner on interior
improvements, it is estimated that the property requires approximately $101,000
of capital improvements over the near term. Capital improvements planned for
1999 consist of carpet and vinyl replacement, landscaping, perimeter fencing,
and appliances. These improvements are budgeted for, but not limited to,
approximately $191,000.
Rosemont Crossing Apartments
During 1998, the Partnership completed approximately $64,000 of capital
improvements at the property, consisting primarily of carpet replacement, water
heaters and air conditioning units. These improvements were funded from the
Partnership's operating cash flow. Based on a report received from an
independent third party consultant analyzing necessary exterior improvements and
estimates made by the General Partner on interior improvements, it is estimated
that the property requires approximately $677,000 of capital improvements over
the near term. Capital improvements planned for 1999 consist primarily of
carpet and vinyl replacement. These improvements are budgeted for, but not
limited to, approximately $60,000.
The capital improvements planned for 1999 at the Partnership's properties will
be made only to the extent of cash available from operations and Partnership
reserves.
ITEM 3. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Corporate General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and entities which were, at
the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain
general partner entities, past tender offers by Insignia Affiliates as well as a
recently announced agreement between Insignia and AIMCO. The complaint seeks
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the General Partner filed a motion seeking
dismissal of the action. In lieu of responding to the motion, the plaintiffs
have filed an amended complaint. The General Partner has filed demurrers to the
amended complaint which were heard during February 1999. No ruling on such
demurrers has been received. The General Partner does not anticipate that costs
associated with this case, if any, to be material to the Partnership's overall
operations.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties, LLC, et.
al. v. Insignia Financial Group, Inc., et. al. in the Superior Court of the
State of California, County of Los Angeles. The action involves 44 real estate
limited partnerships (including the Partnership) in which the plaintiffs
allegedly own interests and which Insignia Affiliates allegedly manage or
control (the "Subject Partnerships"). This case was settled on March 3, 1999.
The Partnership is responsible for a portion of the settlement costs. The
expense will not have a material effect on the Partnership's net income.
In July 1998, a limited partner of the Partnership commenced an action in the
Circuit Court for Jackson County, Missouri entitled Bond Purchase LLC v. Angeles
Partners IX, et al. The complaint claims that the Partnership and an affiliate
of the General Partner breached certain contractual and fiduciary duties
allegedly owed to the claimant and seeks damages and injunctive relief.
The General Partner does not anticipate that costs associated with this case,
if any, to be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The unit holders of the Partnership did not vote on any matter during the fourth
quarter of 1998.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
The Partnership, a publicly-held limited partnership, sold 20,000 Limited
Partnership Units during its offering period through September 12, 1979,
including 100 Units purchased by the General Partner. The Partnership currently
has 1,308 Limited Partners of record owning an aggregate of 19,975 units.
Affiliates of the General Partner owned 6,008 Units or 30.078% at December 31,
1998. No public trading market has developed for the Units and it is not
anticipated that such a market will develop in the future.
No distributions were made during the years ended December 31, 1998 and 1997.
Future cash distributions will depend on the levels of net cash generated from
operations, refinancings, property sales, and the availability of cash reserves.
The Partnership's distribution policy will be reviewed on a quarterly basis.
There can be no assurance, however, that the Partnership will generate
sufficient funds from operations after required capital expenditures to permit
any distributions to its partners in 1999 or subsequent periods.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operations.
Accordingly, actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
RESULTS OF OPERATIONS
The Partnership's net loss for the year ended December 31, 1998, was
approximately $784,000 versus a net loss of approximately $971,000 for the year
ended December 31, 1997. The decrease in net loss is primarily due to an
increase in total revenues and to a lesser extent a decrease in total expenses.
The increase in total revenues is due to an increase in rental revenues
partially offset by a decrease in other revenue. The increase in rental
revenues is primarily due to increases in average annual rental rates at The
Pines of Northwest Crossing Apartments, Forest River Apartments, Village Green
Apartments, and Rosemont Crossing Apartments and increases in average occupancy
at Panorama Apartments, The Pines of Northwest Apartments, and Village Green
Apartments. The decrease in other income is primarily due to reduced tenant
charges. The decrease in total expenses is due primarily to decreased operating
expenses partially offset by increased general and administrative expenses. The
decrease in operating expenses is primarily due to a decrease in maintenance
expenses due to fewer repairs and maintenance projects at the Partnership's
investment properties during 1998. The increase in general and administrative
expenses is primarily the result of increased expense reimbursements and
increased printing and mailing costs related to correspondence with the limited
partners. Included in general and administrative expenses at December 31, 1998
and 1997 are reimbursements to the General Partner allowed under the Partnership
Agreement associated with its management of the Partnership. In addition, costs
associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement
are included.
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.
CAPITAL RESOURCES AND LIQUIDITY
At December 31, 1998, the Partnership held cash and cash equivalents of
approximately $799,000, compared to approximately $683,000 at December 31, 1997.
The increase in cash and cash equivalents is due to approximately $992,000 of
cash provided by operating activities, which was partially offset by
approximately $631,000 of cash used in investing activities and approximately
$245,000 of cash used in financing activities. Cash used in investing
activities consisted of property improvements and replacements offset by
withdrawals from restricted escrows. Cash used in financing activities
consisted of payments of principal made on the mortgages encumbering the
Registrant's properties. The Registrant invests its working capital reserves in
money market accounts.
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 and to comply with
Federal, state, and local legal and regulatory requirements. The Partnership
has budgeted, but is not limited to, approximately $1,419,000 in capital
improvements for all of the Partnership's properties in 1999. Budgeted capital
improvements at The Pines of Northwest Crossing Apartments include carpet and
vinyl replacement, landscaping, parking lot repairs, exterior painting, air
conditioning units and roof replacement. Budgeted capital improvements at
Panorama Terrace Apartments include carpet and vinyl replacement, landscaping,
parking lot repairs, roof replacement, and other structural improvements.
Budgeted capital improvements at Forest River Apartments include carpet and
vinyl replacement, landscaping, roof replacement and other structural
improvements. Budgeted capital improvements at Village Green Apartments include
carpet and vinyl replacement, landscaping, perimeter fencing and appliances.
Budgeted capital improvements at Rosemont Crossing Apartments include carpet and
vinyl replacement. The capital expenditures will be incurred only if cash is
available from operations or from Partnership reserves. To the extent that such
budgeted capital improvements are completed, the Partnership's distributable
cash flow, if any, may be adversely affected.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $19,545,000, net of discounts, is amortized over
periods ranging from approximately 29 to 30 years with balloon payments due in
2002 and 2003. The General Partner will attempt to refinance such indebtedness
and/or sell the properties prior to such maturity date. If the properties cannot
be refinanced or sold for a sufficient amount, the Partnership will risk losing
such properties through foreclosure.
No cash distributions were paid to the partners during the years ended December
31, 1998 and 1997, respectively. The Partnership's distribution policy will be
reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital improvements to permit distributions to its partners in 1999 or
subsequent periods.
Year 2000 Compliance
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.
The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.
Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase
Computer Hardware:
During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.
The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.
Computer software:
The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.
During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.
The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.
Operating Equipment:
The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.
Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.
The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.
The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.
The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.
The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.
Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
ITEM 7. FINANCIAL STATEMENTS
ANGELES PARTNERS IX
LIST OF FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Balance Sheet - December 31, 1998
Consolidated Statements of Operations - Years ended December 31, 1998 and 1997
Consolidated Statement of Changes in Partners' Deficit - Years ended December
31, 1998 and 1997
Consolidated Statements of Cash Flows - Years ended December 31, 1998 and 1997
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Angeles Partners IX
We have audited the accompanying consolidated balance sheet of Angeles Partners
IX as of December 31, 1998, and the related consolidated statements of
operations, changes in partners' deficit and cash flows for each of the two
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Angeles Partners
IX at December 31, 1998, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
March 3, 1999
ANGELES PARTNERS IX
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1998
Assets
Cash and cash equivalents $ 799
Receivables and deposits 501
Restricted escrows 470
Other assets 418
Investment properties (Notes C and F):
Land $ 3,083
Buildings and related personal property 34,644
37,727
Less accumulated depreciation (24,567) 13,160
$ 15,348
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 140
Tenant security deposit liabilities 114
Accrued property taxes 283
Other liabilities 201
Mortgage notes payable (Note C) 19,545
Partners' Deficit
General partner's $ (225)
Limited partners' (19,975 units issued
and outstanding) (4,710) (4,935)
$ 15,348
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1998 1997
Revenues:
Rental income $ 7,213 $ 6,997
Other income 345 389
Total revenues 7,558 7,386
Expenses:
Operating 4,016 4,108
General and administrative 323 270
Depreciation 1,848 1,824
Interest 1,727 1,744
Property taxes 428 411
Total expenses 8,342 8,357
Net loss $ (784) $ (971)
Net loss allocated to general partner (1%) $ (8) $ (10)
Net loss allocated to limited partners (99%) (776) (961)
$ (784) $ (971)
Net loss per limited partnership unit $(38.85) $(48.11)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS IX
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
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 year ended
December 31, 1997 -- (10) (961) (971)
Partners' deficit at
December 31, 1997 19,975 (217) (3,934) (4,151)
Net loss for the year ended
December 31, 1998 -- (8) (776) (784)
Partners' deficit at
December 31, 1998 19,975 $ (225) $(4,710) $(4,935)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997
Cash flows from operating activities:
Net loss $ (784) $ (971)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 1,848 1,824
Amortization of discounts and loan costs 112 113
Change in accounts:
Receivables and deposits (112) 92
Other assets 60 (48)
Accounts payable (158) 40
Tenant security deposit liabilities (1) (13)
Accrued property taxes 59 (105)
Other liabilities (32) 42
Net cash provided by operating activities 992 974
Cash flows from investing activities:
Property improvements and replacements (867) (807)
Net withdrawals from (deposits to) restricted escrows 236 (126)
Net cash used in investing activities (631) (933)
Cash flows from financing activities:
Payments on mortgage notes payable (245) (227)
Loan costs paid -- (8)
Net cash used in financing activities (245) (235)
Net increase (decrease) in cash and cash equivalents 116 (194)
Cash and cash equivalents at beginning of year 683 877
Cash and cash equivalents at end of year $ 799 $ 683
Supplemental disclosure of cash flow information:
Cash paid for interest $1,614 $1,634
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS IX
Notes to Consolidated Financial Statements
December 31, 1998
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Angeles Partners IX (the "Partnership" or "Registrant") is a
California limited partnership organized on September 12, 1979, to acquire and
operate residential properties. The Partnership's general partner is Angeles
Realty Corporation ("ARC" or the "General Partner"), which was a wholly-owned
subsidiary of MAE GP Corporation ("MAE GP"). Effective 25, 1998, MAE GP was
merged into Insignia Properties Trust ("IPT"), which is a subsidiary of
Apartment Investment and Management Company ("AIMCO"). Thus, the General
Partner is a wholly-owned subsidiary of AIMCO. The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2035, unless
terminated prior to such date. As of December 31, 1998, the Partnership
operates five residential properties located in Alabama and Texas.
Principles of Consolidation: The consolidated financial statements of the
Partnership include its 99% limited partnership interest in Houston Pines, Ltd.
Houston Pines Ltd. owns the Pines of Northwest Crossing Apartments, Forest River
Apartments and Rosemont Crossing Apartments. The Partnership may remove the
general partner of Houston Pines Ltd.; therefore, the partnership is controlled
and consolidated by the Partnership. All significant interpartnership balances
have been eliminated. Minority interest is immaterial and not shown separately
in the consolidated financial statements.
Allocations and Distributions to Partners: Net income and losses (excluding
those arising from the occurrence of sales or dispositions) of the Partnership
will be allocated 1% to the General Partner and 99% to the limited partners on
an annual basis.
Except as discussed below, the Partnership will allocate all distributions 1% to
the General Partner and 99% to the limited partners.
Upon the sale or other disposition, or refinancing, of any asset of the
Partnership and in connection with the dissolution of the Partnership, the
distributable net proceeds, if any, thereof which the General Partner determines
are not required for support of the operations of the Partnership will be
distributed to the General Partner and the limited partners in proportion to
their interests in the Partnership until all limited partners have received
distributions from the Partnership equal to the amount of their original
contributions to the Partnership and a cumulative return of 10% per annum
(simple interest) on the limited partners' adjusted capital investment, as
defined in the Agreement. Thereafter, 14% of such proceeds will be distributed
to the General Partner and the remaining 86% of such proceeds will be
distributed 1% to the General Partner and 99% to the limited partners.
Depreciation: Depreciation is computed using the straight-line and accelerated
methods over the estimated lives of the investment properties and related
personal property. For Federal income tax purposes, the accelerated cost
recovery method is used (1) for real property over 18 years for additions after
March 15, 1984, and before May 9, 1985, and 19 years for additions after May 8,
1985, and before January 1, 1987, and (2) for personal property over 5 years for
additions prior to January 1, 1987. As a result of the Tax Reform Act of 1986,
for additions after December 31, 1986, the alternative depreciation system is
used for depreciation of (1) real property additions over 40 years, and (2)
personal property additions over 6-20 years.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and
in banks, money market funds and certificates of deposit with original
maturities of less than ninety days. At certain times, the amount of cash
deposited at a bank may exceed the limit on insured deposits.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged the space and is current on its rental
payments.
Loan Costs: Loan costs of approximately $838,000 are included in other assets
in the accompanying consolidated balance sheet and are being amortized on a
straight-line basis over the life of the related loans. At December 31, 1998,
accumulated amortization is approximately $440,000.
Restricted Escrows:
Capital Improvement Reserves: In 1993, as part of the refinancing of Forest
River Apartments, Rosemont Crossing Apartments, and The Pines of Northwest
Crossing Apartments' mortgage notes payable, $997,000 of the proceeds were
designated for "capital improvement escrows" for certain capital improvements.
As of December 31, 1998 the scheduled property improvements have been made,
and a refund has been requested for the remaining escrow balance of
approximately $13,000.
Reserve Account: General Reserve accounts of $283,000 were established with
the refinancing proceeds for the refinanced properties discussed above. These
funds were established to cover necessary repairs and replacements of existing
improvements, debt service, out-of-pocket expenses incurred for ordinary and
necessary administrative tasks, and payment of real property taxes and
insurance premiums. The Partnership is required to deposit net operating
income (as defined in the mortgage note) from the refinanced properties to the
reserve accounts until the reserve accounts equal $400 per apartment unit, or
approximately $351,000 in total. At December 31, 1998, the balance in these
accounts was approximately $336,000.
Replacement Reserve Escrow: In addition to the above escrows, Village Green
Apartments maintains a replacement reserve escrow to fund replacement,
refurbishment or repair of improvements to the property pursuant to the
mortgage note documents. The property is required to deposit $4,000 per month
until the escrow balance reaches $126,000. As of December 31, 1998, the
balance in this account is approximately $121,000.
Investment Properties: Investment properties consist of five apartment complexes
and are stated at cost. Acquisition fees are capitalized as a cost of real
estate. In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", the Partnership records impairment losses on long-
lived assets used in operations when events and circumstances indicate that the
assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
For the years ended December 31, 1998 and 1997 no adjustments for impairment of
value were necessary.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In
addition, the General Partner's policy is to offer rental concessions during
periods of declining occupancy or in response to heavy competition from other
similar complexes in the area. Concessions are charged against rental income as
incurred.
Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair
Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Advertising Costs: Advertising costs of approximately $131,000 and $157,000,
for the years ended December 31, 1998 and 1997, respectively, are charged to
expense as incurred and are included in operating expenses in the accompanying
consolidated statements of operations.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Segment Reporting: In June 1997, the Financial Accounting Standards Board
issued SFAS 131, "Disclosure about Segments of an Enterprise and Related
Information" ("Statement 131"), which is effective for years beginning after
December 15, 1997. Statement 131 established standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. (See "Note G" for disclosure.)
Reclassifications: Certain reclassifications have been made to the 1997
balances to conform to the 1998 presentation.
NOTE B - TRANSFER OF CONTROL
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100%
ownership interest in Insignia Properties Trust ("IPT"), the entity which
controls the General Partner. The General Partner does not believe that this
transaction will have a material effect on the affairs and operations of the
Partnership.
NOTE C - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1998 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
The Pines of Northwest
Crossing Apartments
1st mortgage $ 4,745 $ 37 7.83% 10/15/03 $ 4,338
2nd mortgage (1) 156 1 7.83% 10/15/03 156
Panorama Terrace Apartments
1st mortgage 3,777 35 10.13% 08/10/02 3,590
Forest River Apartments
1st mortgage 3,210 25 7.83% 10/15/03 2,935
2nd mortgage (1) 106 1 7.83% 10/15/03 106
Village Green Apartments
1st mortgage 4,798 34 7.33% 11/01/03 4,489
Rosemont Crossing Apartments
1st mortgage 2,791 22 7.83% 10/15/03 2,552
2nd mortgage (1) 92 1 7.83% 10/15/03 92
19,675 $ 156 $18,258
Less unamortized
discounts (2) (130)
$19,545
</TABLE>
(1) Interest only payments.
(2) The Partnership exercised an interest rate buy-down option for the Pines of
Northwest Crossing Apartments, Forest River Apartments and Rosemont
Crossing Apartments when the debt was refinanced, reducing the stated rate
from 8.13% to 7.83%. The fee for the interest rate reduction amounted to
$231,000 and is being amortized as a mortgage discount on the effective
interest method over the life of the related loans. The unamortized
discount fee is reflected as a reduction of the mortgage notes payable
and increases the effective rate of the debt to 8.13%.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's rental properties and by pledge of revenues from the respective
rental properties. Certain of the notes impose prepayment penalties if repaid
prior to maturity and prohibit resale of the properties subject to existing
indebtedness.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1998, are as follows (in thousands):
1999 $ 266
2000 289
2001 313
2002 3,904
2003 14,903
$19,675
NOTE D - INCOME TAXES
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
consolidated financial statements of the Partnership.
The following is a reconciliation of reported net loss and Federal taxable
income (loss) (in thousands):
1998 1997
Net loss as reported $ (784) $ (971)
Add (deduct):
Depreciation differences 788 787
Unearned income 138 40
Discounts on mortgage notes -- (2)
Other (30) 45
Federal taxable income (loss) $ 112 $ (101)
Federal taxable income (loss) per
limited partnership unit $ 5.54 $ (5.01)
The following is a reconciliation at December 31, 1998, between the
Partnership's reported amounts and Federal tax basis of net assets and
liabilities (in thousands):
Net liabilities as reported $(4,935)
Land and buildings 5,614
Accumulated depreciation (2,170)
Syndication and distribution costs 2,036
Other 268
Net assets - Federal tax basis $ 813
NOTE E - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
Affiliates of the General Partner provide property management and asset
management services to the Partnership. 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 or accrued to the General Partner and/or its
affiliates in 1998 and 1997:
1998 1997
(in thousands)
Property management fees (included in operating expenses) $383 $373
Reimbursement for services of affiliates (included in
investment properties, operating expenses and general
and administrative expenses) (1) 268 208
Partnership management fee (included in general and
administrative expenses). 9 --
(1) Included in "Reimbursement for services of affiliates" is approximately
$51,000 and $24,000 for construction oversight reimbursements in 1998 and
1997, respectively.
During the years ended December 31, 1998 and 1997, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of Registrant's
properties for providing property management services. The Registrant paid to
such affiliates approximately $383,000 and $373,000 for the years ended December
31, 1998 and 1997 respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $268,000 and $208,000 for the
years ended December 31, 1998 and 1997, respectively.
Pursuant to the Partnership Agreement, the General Partner is entitled to a fee
for executive and administrative management services equal to 7.5% of "net cash
from operations". The General Partner was entitled to this fee in the amount of
approximately $9,000, which was accrued at December 31, 1998.
For the period from January 1, 1997, to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
General Partner with an 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 which received 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 is not significant.
On April 13, 1998, an affiliate of the General Partner (the "Purchaser")
commenced a tender offer for limited partnership interests in the Partnership.
The Purchaser offered to purchase up to 8,300 of the outstanding units of
limited partnership interest ("Units") in the Partnership at a purchase price of
$325 per Unit, net to the seller in cash. On May 11, 1998, the tender offer was
closed, and the Purchaser acquired 2,529 Units of limited partnership interest.
On August 12, 1998, another affiliate of the General Partner (the "Second
Purchaser") commenced a second tender offer for limited partnership interests in
the Partnership. The Second Purchaser offered to purchase up to 5,000 of the
outstanding units of limited partnership interest ("Units") in the Partnership
at a purchase price of $330 per Unit, net to the seller in cash. In the fourth
quarter, the second Purchaser closed the tender offer and acquired 1,360 Units
of limited partnership interest. AIMCO currently owns, through its affiliates, a
total of 6,008 limited partnership units or 30.078%. Consequently, AIMCO could
be in a position to significantly influence all voting decisions with respect to
the Registrant. Under the Partnership Agreement, unit holders holding a
majority of the Units are entitled to take action with respect to a variety of
matters. When voting on matters, AIMCO would in all likelihood vote the Units
it acquired in a manner favorable to the interest of the General Partner because
of their affiliation with the General Partner.
NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
The Pines of Northwest
Crossing Apartments $ 4,901 $ 1,641 $ 7,399 $ 2,244
Panorama Terrace Apartments 3,777 473 6,262 1,974
Forest River Apartments 3,316 123 4,189 773
Village Green Apartments 4,798 409 5,786 2,055
Rosemont Crossing Apts. 2,883 437 3,933 29
Totals $19,675 $ 3,083 $27,569 $ 7,075
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which Carried
At December 31, 1998
(in thousands)
Buildings
And
Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
The Pines of Northwest
Crossing Apartments $ 1,641 $ 9,643 $11,284 $ 6,957 05/30/80 5-25
Panorama Terrace Apartments 473 8,236 8,709 5,843 06/30/80 5-25
Forest River Apartments 123 4,962 5,085 3,632 12/29/80 5-25
Village Green Apartments 409 7,841 8,250 5,750 12/31/80 5-25
Rosemont Crossing Apartments 437 3,962 4,399 2,385 12/31/80 5-19
Totals $ 3,083 $34,644 $37,727 $24,567
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1998 1997
Investment Properties
Balance at beginning of year $36,860 $36,053
Property improvements 867 807
Balance at end of year $37,727 $36,860
Accumulated Depreciation
Balance at beginning of year $22,719 $20,895
Additions charged to expense 1,848 1,824
Balance at end of year $24,567 $22,719
The aggregate cost of the investment properties for Federal income tax purposes
at December 31, 1998 and 1997, is approximately $43,341,000 and $42,474,000.
The accumulated depreciation, taken for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $26,737,000 and $25,677,000.
NOTE G - SEGMENT INFORMATION
Description of the types of products and services from which the reportable
segment derives its revenues: As defined by SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", the Partnership has one
reportable segment: residential properties. The Partnership's residential
property segment consists of five apartment complexes in two states in the
United States. The Partnership rents apartment units to people for terms that
are typically twelve months or less.
Measurement of segment profit or loss: The Partnership evaluates performance
based on net income. The accounting policies of the reportable segment are the
same as those described in the summary of significant accounting policies.
Factors management used to identify the enterprise's reportable segment: The
Partnership's reportable segment consists of investment properties that offer
similar products and services. Although each of the investment properties is
managed separately, they have been aggregated into one segment as they provide
services with similar types of products and customers.
Segment information for the years 1998 and 1997 is shown in the tables below (in
thousands). The "Other" column includes partnership administration related
items and income and expense not allocated to the reportable segment.
1998
Residential Other Totals
Rental income $ 7,213 $ -- $ 7,213
Other income 323 22 345
Interest expense 1,727 -- 1,727
Depreciation 1,848 -- 1,848
General and administrative expense -- 323 323
Segment loss (483) (301) (784)
Total assets 14,847 501 15,348
Capital expenditures for investment
properties 867 -- 867
1997
Residential Other Totals
Rental income $ 6,997 $ -- $ 6,997
Other income 364 25 389
Interest expense 1,744 -- 1,744
Depreciation 1,824 -- 1,824
General and administrative expense -- 270 270
Segment loss (726) (245) (971)
Total assets 15,914 573 16,487
Capital expenditures for investment
properties 807 -- 807
NOTE H - LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and entities which were, at
the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain
general partner entities, past tender offers by Insignia Affiliates as well as a
recently announced agreement between Insignia and AIMCO. The complaint seeks
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the General Partner filed a motion seeking
dismissal of the action. In lieu of responding to the motion, the plaintiffs
have filed an amended complaint. The Managing General Partner has filed
demurrers to the amended complaint which were heard during February 1999. No
ruling on such demurrers has been received. The General Partner does not
anticipate that costs associated with this case, if any, to be material to
the Partnership's overall operations.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties, LLC, et.
al. v. Insignia Financial Group, Inc., et. al. in the Superior Court of the
State of California, County of Los Angeles. The action involves 44 real estate
limited partnerships (including the Partnership) in which the plaintiffs
allegedly own interests and which Insignia Affiliates allegedly manage or
control (the "Subject Partnerships"). This case was settled on March 3, 1999.
The Partnership is responsible for a portion of the settlement costs. The
expense will not have a material effect on the Partnership's net income.
In July 1998, a limited partner of the Partnership commenced an action in the
Circuit Court for Jackson County, Missouri entitled Bond Purchase LLC v. Angeles
Partners IX, et al. The complaint claims that the Partnership and an affiliate
of the General Partner breached certain contractual and fiduciary duties
allegedly owed to the claimant and seeks damages and injunctive relief.
The General Partner does not anticipate that costs associated with this case,
if any, to be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL
DISCLOSURES
There were no disagreements with Ernst & Young LLP regarding the 1998 or 1997
audits of the Partnership's consolidated financial statements.
PART III
ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
Angeles Partners IX (the "Partnership" or the "Registrant") has no officers or
directors. The names of the directors and executive officers of the
Partnership's general partner, Angeles Realty Corporation ("ARC" or the "General
Partner"), their ages and the nature of all positions with ARC presently held by
them are as follows:
Name Age Position
Patrick J. Foye 41 Executive Vice President and Director
Timothy R. Garrick 42 Vice President - Accounting and Director
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice President
of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the
law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power
Authority and serves as a member of the New York State Privatization Council.
He received a B.A. from Fordham College and a J.D. from Fordham University Law
School.
Timothy R. Garrick has served as Vice President-Accounting and Director of AIMCO
and Vice President-Accounting and Director of the General Partner since October
1, 1998. Prior to that date, Mr. Garrick served as Vice President-Accounting
Services of Insignia Financial Group since June of 1997. From 1992 until June
of 1997, Mr. Garrick served as Vice President of Partnership Accounting and from
1990 to 1992 as an Asset Manager for Insignia Financial Group. From 1984 to
1990, Mr. Garrick served in various capacities with U.S. Shelter Corporation.
From 1979 to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney.
Mr. Garrick received his B.S. Degree from the University of South Carolina and
is a Certified Public Accountant.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of ARC. The Partnership has no plan, nor does the
Partnership presently propose a plan, which will result in any remuneration
being paid to any officer or director upon termination of employment. However,
certain fees and other payments have been made to the Partnership's General
Partner and its affiliates, as described in "Item 12." below.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Units of the Registrant as of December
31, 1998.
Entity Number of Units Percentage
Insignia Properties, LP 981 4.911%
Broad River Properties, LLC 2,529 12.661%
AIMCO Properties, LP 1,138 5.697%
Cooper River Properties, LLC 1,360 6.809%
Insignia Properties, LP, Broad River Properties, LLC, and Cooper River
Properties, LLC are indirectly ultimately owned by AIMCO. Their business
address is 55 Beattie Place, Greenville, SC 29602. AIMCO Properties, LP is
also owned by AIMCO, and its business address is 1873 South Bellaire Street,
17th Floor, Denver, CO 80222.
As of December 31, 1998, no director or office of the General Partner owns, nor
do the directors or officers as a whole, own more than 1% of the Registrant's
Units. No such director or officer had any right to acquire beneficial
ownership of additional Units of the Registrant.
On October 1, 1998, Insignia Financial Group, Inc. merged into AIMCO, a real
estate investment trust, whose Class A Common Shares are listed on the New York
Stock Exchange. As a result of such merger, AIMCO and AIMCO Properties, L.P., a
Delaware limited partnership and the operating partnership of AIMCO ("AIMCO OP")
acquired indirect control of the General Partner. AIMCO and its affiliates
currently own 30.078% of the limited partnership interests in the Partnership.
AIMCO is presently considering whether it will engage in an exchange offer for
additional limited partnership interests in the Partnership. There is a
substantial likelihood that, within a short period of time, AIMCO OP will offer
to acquire limited partnership interests in the Partnership for cash or
preferred units or common units of limited partnerships interests in AIMCO OP.
While such an exchange offer is possible, no definite plans exist as to when or
whether to commence such an exchange offer, or as to the terms of any such
exchange offer, and it is possible that none will occur.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Form 10-KSB shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.
The Partnership knows of no contractual arrangements, the operation of the terms
of which may at a subsequent date result in a change in control of the
Partnership, except for: Article 12.1 of the Agreement, which provide that upon
a vote of the limited partners holding more than 50% of the then outstanding
Limited Partnership Units the General Partner may be expelled from the
Partnership upon 90 days written notice. In the event that a successor general
partner has been elected by limited partners holding more than 50% of the then
outstanding Limited Partnership Units and if said limited partners elect to
continue the business of the Partnership, the Partnership is required to pay in
cash to the expelled General Partner an amount equal to the accrued and unpaid
management fee described in Article 10 of the Agreement and to purchase the
General Partner's interest in the Partnership on the effective date of the
expulsion, which shall be an amount equal to the difference between the balance
of the General Partner's capital account and the fair market value of the share
of Distributable Net Proceeds to which the General Partner would be entitled.
Such determination of the fair market value of the share of Distributable Net
Proceeds is defined in Article 12.2(b) of the Agreement.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
Affiliates of the General Partner provide property management and asset
management services to the Partnership. 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 or accrued to the General Partner and/or its
affiliates in 1998 and 1997:
1998 1997
(in thousands)
Property management fees $383 $373
Reimbursement for services of affiliates (1) 268 208
Partnership management fee 9 --
(1) Included in "Reimbursement for services of affiliates" is approximately
$51,000 and $24,000 for construction oversight reimbursements in 1998 and
1997, respectively.
During the years ended December 31, 1998 and 1997, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of Registrant's
properties for providing property management services. The Registrant paid to
such affiliates approximately $383,000 and $373,000 for the years ended December
31, 1998 and 1997 respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $268,000 and $208,000 for the
years ended December 31, 1998 and 1997, respectively.
Pursuant to the Partnership Agreement, the General Partner is entitled to a fee
for executive and administrative management services equal to 7.5% of "net cash
from operations". The General Partner was entitled to this fee in the amount of
approximately $9,000, which was accrued at December 31, 1998.
For the period from January 1, 1997, to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
General Partner with an 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 which received 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 is not significant.
On April 13, 1998, an affiliate of the General Partner (the "Purchaser")
commenced a tender offer for limited partnership interests in the Partnership.
The Purchaser offered to purchase up to 8,300 of the outstanding units of
limited partnership interest ("Units") in the Partnership at a purchase price of
$325 per Unit, net to the seller in cash. On May 11, 1998, the tender offer was
closed, and the Purchaser acquired 2,529 Units of limited partnership interest.
On August 12, 1998, another affiliate of the General Partner (the "Second
Purchaser"), commenced a second tender offer for limited partnership interests
in the Partnership. The Second Purchaser offered to purchase up to 5,000 of the
outstanding units of limited partnership interest ("Units") in the Partnership
at a purchase price of $330 per Unit, net to the seller in cash. In the fourth
quarter, the Second Purchaser closed the tender offer and acquired 1,360 Units
of limited partnership interest. AIMCO currently owns, through its affiliates,
a total of 6,008 limited partnership units or 30.078%. Consequently, AIMCO
could be in a position to significantly influence all voting decisions with
respect to the Registrant. Under the Partnership Agreement, unit holders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units if acquired in a manner favorable to the interest of the General
Partner because of their affiliation with the General Partner.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits:
See Exhibit Index contained herein.
(b)Reports on Form 8-K filed during the fourth quarter of 1998:
Current Report on Form 8-K dated October 1, 1998 and filed October 16, 1998
disclosing change in control of the Partnership from Insignia Financial
Group, Inc. to AIMCO.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS IX
(A California Limited Partnership)
(Registrant)
By: Angeles Realty Corporation
General Partner
By: /s/ Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
Date: March 26, 1999
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities on the date
indicated.
/s/ Patrick J. Foye Executive Vice President Date: March 26, 1999
Patrick J. Foye and Director
/s/ Timothy R. Garrick Vice President - Accounting Date: March 26, 1999
Timothy R. Garrick and Director
ANGELES PARTNERS IX
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by
and between AIMCO and IPT (incorporated by reference to
Exhibit 2.1 filed with Registrant's Current Report on Form 8-
K dated October 1, 1998).
3.1 Amended Certificate and Agreement of the Limited Partnership
filed in Form S-11 dated December 24, 1984 incorporated
herein by reference
10.1 Earnest Money Contract (Phase I and II) - the Pines of
Northwest Crossing Apartments filed in Form 8K dated May 30,
1980 and incorporated herein by reference
10.2 Purchase and Sale Agreement with Exhibits - Panorama Terrace
filed in Form 8K dated June 30, 1980 and incorporated herein
by reference
10.3 Purchase and Sale Agreement with Exhibits - Forest River
Apartments filed in Form 8K dated December 29, 1980 and
incorporated herein by reference
10.4 Purchase and Sale Agreement with Exhibits - Village Green
Apartments filed in Form 8K dated December 31, 1980 and
incorporated herein by reference
10.5 Purchase and Sale Agreement with Exhibits - The Greens
Apartments filed in Form 8K dated December 31, 1980 and
incorporated herein by reference
10.6 Promissory Note - Village Green Apartments filed in Form 10K
as Exhibit 10.8 dated March 24, 1989 and incorporated herein
by reference
10.7 Promissory Note and deed of trust modification and extension
agreement - the Pines of Northwest Crossing Apartments filed
in the 1989 Form 10K as Exhibit 10.9 dated January 15, 1991
and incorporated herein by reference
10.8 Promissory Note and deed of trust modification and
reinstatement agreement - the Greens Apartments filed in Form
10K as Exhibit 10.10 dated March 28, 1991 and incorporated
herein by reference
10.9 Stock Purchase Agreement dated November 24, 1992 showing the
purchase of 100% of the outstanding stock of Angeles Realty
Corporation by IAP GP Corporation, a subsidiary of MAE GP
Corporation, filed in Form 8-K dated December 31, 1992, which
is incorporated herein by reference
10.10 (a)First Deeds of Trust and Security Agreements dated September
30, 1993 between Houston Pines, a California Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing The Pines of Northwest Crossing.*
(b)Second Deeds of Trust and Security Agreements dated September
30, 1993 between Houston Pines, a California Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing The Pines of Northwest Crossing.*
(c)First Assignments of Leases and Rents dated September 30,
1993 between Houston Pines, a California Limited Partnership
and Lexington Mortgage Company, a Virginia Corporation,
securing The Pines of Northwest Crossing.*
(d)Second Assignment of Leases and Rents dated September 30,
1993 between Houston Pines, a California Limited Partnership
and Lexington Mortgage Company, a Virginia Corporation,
securing The Pines of Northwest Crossing.*
(e)First Deeds of Trust Notes dated September 30, 1993 between
Houston Pines, a California Limited Partnership and Lexington
Mortgage Company, relating to The Pines of Northwest
Crossing.*
(f)Second Deeds of Trust Notes dated September 30, 1993 between
Houston Pines, a California Limited Partnership and Lexington
Mortgage Company, relating to The Pines of Northwest
Crossing.*
*Filed as Exhibits 10.10 (a) through (f), respectively, in
Form 10-KSB for the year ended December 31, 1993 and
incorporated herein by reference.
10.11 (a)First Deeds of Trust and Security Agreements dated September
30, 1993 between Houston Pines, a California Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing The Greens.**
(b)Second Deeds of Trust and Security Agreements dated September
30, 1993 between Houston Pines, a California Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing The Greens.**
(c)First Assignments of Leases and Rents dated September 30,
1993 between Houston Pines, a California Limited Partnership
and Lexington Mortgage Company, a Virginia Corporation,
securing The Greens.**
(d)Second Assignment of Leases and Rents dated September 30,
1993 between Houston Pines, a California Limited Partnership
and Lexington Mortgage Company, a Virginia Corporation,
securing The Greens.**
(e)First Deeds of Trust Notes dated September 30, 1993 between
Houston Pines, a California Limited Partnership and Lexington
Mortgage Company, relating to The Greens.**
(f)Second Deeds of Trust Notes dated September 30, 1993 between
Houston Pines, a California Limited Partnership and Lexington
Mortgage Company, relating to The Greens.**
**Filed as Exhibits 10.11 (a) through (f), respectively, in Form
10-KSB for the year ended December 31, 1993 and incorporated
herein by reference.
10.12 (a)First Deeds of Trust and Security Agreements dated September
30, 1993 between Houston Pines, a California Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Forest River Apartments.***
(b)Second Deeds of Trust and Security Agreements dated September
30, 1993 between Houston Pines, a California Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Forest River Apartments.***
(c)First Assignments of Leases and Rents dated September 30,
1993 between Houston Pines, a California Limited Partnership
and Lexington Mortgage Company, a Virginia Corporation,
securing Forest River Apartments.***
(d)Second Assignment of Leases and Rents dated September 30,
1993 between Houston Pines, a California Limited Partnership
and Lexington Mortgage Company, a Virginia Corporation,
securing Forest River Apartments.***
(e)First Deeds of Trust Notes dated September 30, 1993 between
Houston Pines, a California Limited Partnership and Lexington
Mortgage Company, relating to Forest River Apartments.***
(f)Second Deeds of Trust Notes dated September 30, 1993 between
Houston Pines, a California Limited Partnership and Lexington
Mortgage Company, relating to Forest River Apartments.***
***Filed as Exhibits 10.12 (a) through (f), respectively, in
Form 10-KSB for the year ended December 31, 1993, and
incorporated herein by reference.
10.13 Multifamily Mortgage dated November 1, 1996, between Angeles
Partners IX, a California Limited Partnership and Lehman
Brothers Holdings, Inc., relating to Village Green
Apartments.
16 Letter from the Registrant's former independent accountant
regarding its concurrence with the statements made by the
Registrant is incorporated by reference to the exhibit filed
with Form 8-K dated September 1, 1993.
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Properties IX 1998 Year-End 10-KSB and is qualified in its entirety by reference
to such 10-KSB filing.
</LEGEND>
<CIK> 0000313499
<NAME> ANGELES PROPERTIES IX
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 799
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 37,727
<DEPRECIATION> 24,567
<TOTAL-ASSETS> 15,348
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 19,545
0
0
<COMMON> 0
<OTHER-SE> (4,935)
<TOTAL-LIABILITY-AND-EQUITY> 15,348
<SALES> 0
<TOTAL-REVENUES> 7,558
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,342
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,727
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (784)
<EPS-PRIMARY> (38.85)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
