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
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________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.)
55 Beattie Place, P.O. Box 1089
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 Exchange Act during the 12 months (or for such shorter period
that the Partnership was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES PARTNERS IX
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 803
Receivables and deposits 325
Restricted escrows 301
Other assets 380
Investment properties:
Land $ 3,083
Buildings and related personal property 37,249
40,332
Less accumulated depreciation (27,493) 12,839
$ 14,648
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 259
Tenant security deposit liabilities 136
Accrued property taxes 255
Other liabilities 244
Mortgage notes payable 19,160
Partners' Deficit
General partner $ (230)
Limited partners (19,975 units issued and
outstanding) (5,176) (5,406)
$ 14,648
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
b)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues:
Rental income $ 1,933 $ 1,905 $ 3,841 $ 3,791
Other income 140 87 223 168
Casualty gain 50 -- 50 --
Total revenues 2,123 1,992 4,114 3,959
Expenses:
Operating 856 946 1,695 1,727
General and administrative 77 76 140 159
Depreciation 511 392 1,047 920
Interest 443 430 863 856
Property taxes 82 101 189 249
Total expenses 1,969 1,945 3,934 3,911
Net income $ 154 $ 47 $ 180 $ 48
Net income allocated to
general partner (1%) $ 2 $ -- $ 2 $ --
Net income allocated to
limited partners (99%) 152 47 178 48
$ 154 $ 47 $ 180 $ 48
Net income per limited
partnership unit $ 7.61 $ 2.35 $ 8.91 $ 2.40
Distribution per limited
partnership unit $ 33.79 $ -- $ 33.79 $ --
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 20,000 $ 1 $ 20,000 $ 20,001
Partners' deficit at
December 31, 1999 19,975 $ (225) $ (4,679) $ (4,904)
Distribution to partners (7) (675) (682)
Net income for the six months
ended June 30, 2000 -- 2 178 180
Partners' deficit
at June 30, 2000 19,975 $ (230) $ (5,176) $ (5,406)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 180 $ 48
Adjustments to reconcile net income to net cash
provided by operating activities:
Casualty gain (50) --
Depreciation 1,047 920
Amortization of loan costs and discounts 74 48
Change in accounts:
Receivables and deposits 129 33
Other assets (41) (120)
Accounts payable (255) (32)
Tenant security deposit liabilities 18 2
Accrued property taxes 32 (3)
Other liabilities (99) 28
Net cash provided by operating activities 1,035 924
Cash flows from investing activities:
Insurance proceeds received 154 --
Property improvements and replacements (761) (346)
Net (deposits to) withdrawals from restricted escrows (115) 73
Net cash used in investing activities (722) (273)
Cash flows from financing activities:
Payments on mortgage notes payable (141) (130)
Distributions to partners (682) --
Net cash used in financing activities (823) (130)
Net (decrease) increase in cash and cash equivalents (510) 521
Cash and cash equivalents at beginning of period 1,313 799
Cash and cash equivalents at end of period $ 803 $1,320
Supplemental disclosure of cash flow information:
Cash paid for interest $ 788 $ 800
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
ANGELES PARTNERS IX
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles Partners
IX (the "Partnership" or "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" or "ARC"),
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three and
six months ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1999.
Principles of Consolidation
The financial statements include all of the accounts of the Partnership and its
99% owned partnership. The general partner of the consolidated partnership is
Angeles Realty Corporation. Angeles Realty Corporation may be removed as the
general partner of the consolidated partnership by the Registrant; therefore,
the consolidated Partnership is controlled and consolidated by the Registrant.
All significant interpartnership balances have been eliminated.
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 acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
Note C - Subsequent Event
On July 20, 2000, The Pines of Northwest Crossing Apartments, located in
Houston, Texas, was sold to an unaffiliated third party for a gross sales price
of $9,500,000. After closing expenses of approximately $559,000 the net proceeds
realized by the Partnership were approximately $8,941,000. The Partnership used
a portion of the proceeds from the sale of the property to pay off the debt
encumbering the property of approximately $5,028,000.
Note D - Casualty Gain
In March 2000, a fire occurred at Forest River Apartments, which resulted in
damage to four apartment units. The property incurred damages of approximately
$160,000 and estimated lost rents of approximately $12,000. Insurance proceeds
of approximately $154,000 have been received during the three months ended June
30, 2000. The Partnership realized a casualty gain of approximately $50,000 from
this event.
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.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
The following amounts were paid to the General Partner and its affiliates for
the six months ended June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in
operating expenses) $205 $201
Reimbursement for services of affiliates
(included in investment properties, operating
expenses and general and administrative expenses) 138 94
During the six months ended June 30, 2000 and 1999, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $205,000 and $201,000 for the
six months ended June 30, 2000 and 1999, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $138,000 and $94,000 for the
six months ended June 30, 2000 and 1999, respectively. Included in these
expenses is approximately $43,000 and $11,000 for construction oversight
reimbursements for the six months ended June 30, 2000 and 1999, respectively.
AIMCO and its affiliates currently own 12,169 limited partnership units in the
Partnership representing 60.92% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 60.92% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. 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 - Distributions
During the six months ended June 30, 2000, cash distributions of approximately
$682,000 ($675,000 of which was paid to the limited partners or $33.79 per
limited partnership unit) were paid from operations. No cash distributions were
paid to the partners during the six months ended June 30, 1999.
Note G - Segment Information
Description of the types of products and services from which the reportable
segment derives its revenue:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of five apartment complexes
located in Texas (2) and Alabama (3). The Partnership rents apartment units to
tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the year ended December 31, 1999.
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 three and six month periods ended June 30, 2000 and
1999, is shown in the tables below. The "Other" column includes partnership
administration related items and income and expense not allocated to the
reportable segment.
Three Months Ended June 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 1,933 $ -- $ 1,933
Other income 139 1 140
Casualty gain 50 -- 50
Interest expense 443 -- 443
Depreciation 511 -- 511
General and administrative expense -- 77 77
Segment profit (loss) 230 (76) 154
Six Months Ended June 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 3,841 $ -- $ 3,841
Other income 220 3 223
Casualty gain 50 -- 50
Interest expense 863 -- 863
Depreciation 1,047 -- 1,047
General and administrative expense -- 140 140
Segment profit (loss) 317 (137) 180
Total assets 14,436 212 14,648
Capital expenditures for
investment properties 761 -- 761
Three Months Ended June 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 1,905 $ -- $ 1,905
Other income 82 5 87
Interest expense 430 -- 430
Depreciation 392 -- 392
General and administrative expense -- 76 76
Segment profit (loss) 118 (71) 47
Six Months Ended June 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 3,791 $ -- $ 3,791
Other income 159 9 168
Interest expense 856 -- 856
Depreciation 920 -- 920
General and administrative expense -- 159 159
Segment profit (loss) 198 (150) 48
Total assets 14,887 381 15,268
Capital expenditures for
investment properties 346 -- 346
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, its General Partner and several of their affiliated
partnerships and corporate entities. The action 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 of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek 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 filed demurrers to the amended complaint which
were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case. The Court will entertain applications for lead counsel which must
be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000
to address the issue of appointing lead counsel. The General Partner does not
anticipate that costs associated with this case will 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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussions 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.
The Partnership's investment properties consist of five apartment complexes. The
following table sets forth the average occupancy of the properties for the six
months ended June 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Pines of Northwest Crossing Apartments 97% 97%
Houston, Texas
Panorama Terrace Apartments 94% 97%
Birmingham, Alabama
Forest River Apartments 96% 96%
Gadsden, Alabama
Village Green Apartments 95% 97%
Montgomery, Alabama
Rosemont Crossing Apartments 94% 93%
San Antonio, Texas
The General Partner attributes the decrease in occupancy at Panorama Terrace
Apartments to the competitive market of the apartment industry in the Birmingham
area.
Results of Operations
The Registrant's net income for the three and six months ended June 30, 2000 was
approximately $154,000 and $180,000, respectively, as compared to approximately
$47,000 and $48,000 for the three and six months ended June 30, 1999. The
increase in net income is due to an increase in total revenues. Total revenues
increased primarily due to increases in other income, rental income and
recognition of a casualty gain in 2000. Other income increased primarily due to
an increase in late charges and an increase in miscellaneous income at four of
the Partnership's investment properties. The increase in other income was
partially offset by a decrease in lease cancellation fees. The increase in
rental income is due primarily to an increase in the average rental rates at all
five of the Partnership's investment properties. The increase in rental income
was partially offset by a decrease in occupancy at Panorama Terrace Apartments
and Village Green Apartments in addition to an increase in bad debt expense and
concession costs at all properties except Village Green Apartments. The casualty
gain is a result of a March 2000 fire which occurred at Forest River Apartments.
Four apartment units were damaged with a cost of approximately $160,000.
Insurance proceeds of approximately $154,000 were received to cover these
damages. After writing off the undepreciated cost of the damaged units, the
Partnership recognized a casualty gain of approximately $50,000.
Total expenses remained relatively constant for the comparable periods, as an
increase in depreciation expense and interest expense was offset by decreases in
operating and property tax expenses. Depreciation expense increased as a result
of recent capital improvements performed at all five of the Partnership's
investment properties. The decrease in property tax expense is due to the timing
of the receipt of tax bills, which affected the tax accruals recorded for the
respective periods. The decrease in operating expense is due primarily to a
decrease in maintenance expense and, to a lesser extent, a decrease in
advertising and rental expense. The decrease in maintenance expense is due
primarily to decreases in interior building improvements and painting supplies.
The decrease in maintenance expense was partially offset by insurance proceeds
received during 1999 that exceeded the expenses relating to a casualty at The
Pines of Northwest Crossing Apartments and fire damage at Panorama Terrace
Apartments. The decrease in advertising and rental expense is due to a decrease
in referral fees incurred in 1999 in an effort to increase occupancy at the
Partnership's investment properties.
General and administrative expenses remained relatively constant for the three
months ended June 30, 2000. General and administrative expenses decreased for
the six months ended June 30, 2000, primarily due to a decrease in legal costs,
which included the Partnership's portion of settlement costs paid during the six
months ended June 30, 1999. The decrease in general and administrative expenses
was partially offset by an increase in management reimbursements to the General
Partner allowed under the Partnership Agreement. Also included in general and
administrative expense at both June 30, 2000 and 1999 are costs associated with
the quarterly and annual communications with investors and regulatory agencies
and the annual audit required by the Partnership Agreement.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment 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.
Liquidity and Capital Resources
At June 30, 2000, the Partnership had cash and cash equivalents of approximately
$803,000 compared to approximately $1,320,000 at June 30, 1999. The decrease in
cash and cash equivalents of approximately $510,000 for the six months ended
June 30, 2000, from the Partnership's calendar year end, is due to approximately
$722,000 of cash used in investing activities and approximately $823,000 of cash
used in financing activities, which was partially offset by approximately
$1,035,000 of cash provided by operating activities. Cash used in investing
activities consisted of property improvements and replacements and, to a lesser
extent, net deposits to escrow accounts maintained by the mortgage lender which
were slightly offset by the receipt of insurance proceeds related to the
casualty at Forest River Apartments. Cash used in financing activities consisted
of distributions to partners and, to a lesser extent, payments of principal made
on the mortgages encumbering the Registrant's properties. The Partnership
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. Capital
improvements planned for each of the Partnership's properties are detailed
below.
Pines of Northwest Crossing Apartments: For 2000 the Partnership has budgeted
approximately $144,000 for capital improvements, consisting primarily of
plumbing improvements, and floor covering, appliances, and air conditioning
replacements. The Partnership completed approximately $114,000 in capital
expenditures at The Pines of Northwest Crossing Apartments as of June 30, 2000,
consisting primarily of floor covering and appliance replacements and other
building improvements. These improvements were funded primarily from operations.
This property was sold on July 20, 2000 (see subsequent event below).
Panorama Terrace Apartments: For 2000 the Partnership has budgeted approximately
$477,000 for capital improvements, consisting primarily of exterior painting,
parking lot improvements, floor covering and appliance replacements, roof
replacements and major landscaping. The Partnership completed approximately
$429,000 in capital expenditures at Panorama Terrace Apartments as of June 30,
2000, consisting primarily of roof improvements, major landscaping, exterior
painting and parking lot upgrades. These improvements were funded primarily from
operations.
Forest River Apartments: For 2000 the Partnership has budgeted approximately
$131,000 for capital improvements, consisting primarily of floor covering,
appliances, and air conditioning replacements. The Partnership completed
approximately $84,000 in capital expenditures at Forest River Apartments as of
June 30, 2000, consisting primarily of floor covering replacement and
construction related to the repair of the units damaged in the fire, as
discussed above. These improvements were funded primarily from operations and
replacement reserves. In March 2000, the property sustained damage to four
apartments that were damaged by fire. These improvements will be funded from
insurance proceeds.
Village Green Apartments: For 2000 the Partnership has budgeted approximately
$134,000 for capital improvements, consisting primarily of floor covering,
appliances and air conditioning replacement and plumbing improvements. The
Partnership completed approximately $61,000 in capital expenditures at Village
Green Apartments as of June 30, 2000, consisting primarily of floor covering
replacements, appliances, swimming pool improvements, and HVAC improvements.
These improvements were funded primarily from replacement reserves.
Rosemont Crossing Apartments: For 2000 the Partnership has budgeted
approximately $530,000 for capital improvements, consisting primarily of floor
covering, cabinet replacements, appliances, major landscaping and interior and
exterior building improvements. The Partnership completed approximately $73,000
in capital expenditures at Rosemont Crossing Apartments as of June 30, 2000,
consisting primarily of major landscaping and floor covering replacement and
other building improvements. These improvements were funded primarily from
operations and replacement reserves.
The additional capital expenditures will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
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 $19,160,000, 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 may attempt to refinance such indebtedness
and/or sell the properties prior to such maturity dates. If the properties
cannot be refinanced or sold for a sufficient amount, the Partnership will risk
losing such properties through foreclosure.
During the six months ended June 30, 2000, cash distributions of approximately
$682,000 ($675,000 of which was paid to the limited partners or $33.79 per
limited partnership unit) were paid from operations. No cash distributions were
paid to the partners during the six months ended June 30, 1999. Future cash
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves, and the timing of debt maturities,
refinancings and/or property sales. The Partnership's distribution policy is
reviewed on a semi-annual basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations, after planned
capital improvement expenditures, to permit additional distributions to its
partners during the remainder of 2000 or subsequent periods. In addition, the
Partnership may be restricted from making distributions if the amount in the
reserve account maintained by the mortgage lender is less than $200 per
apartment unit at Forest River Apartments, Rosemont Crossing Apartments and The
Pines of Northwest Crossing Apartments for a total of approximately $175,000. As
of June 30, 2000 the balance in the reserve account is approximately $265,000.
Subsequent Event
On July 20, 2000, The Pines of Northwest Crossing Apartments, located in
Houston, Texas, was sold to an unaffiliated third party for a gross sales price
of $9,500,000. After closing expenses of approximately $559,000 the net proceeds
received by the Partnership were approximately $8,941,000. The Partnership used
a portion of the proceeds from the sale of the property to pay off the debt
encumbering the property of approximately $5,028,000. The Partnership
anticipates realizing a gain of approximately $4,570,000 on the sale of the
property and an extraordinary loss from debt extinguishment of $323,000 during
the third quarter of 2000.
The following unaudited pro-forma information reflects the operations of the
Partnership for the three and six months ended June 30, 2000, as if The Pines of
Northwest Crossing Apartments (which actually sold July 20, 2000) had been sold
January 1, 2000 (in thousands except per unit data)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues $ 1,492 $ 1,426 $ 2,894 $ 2,822
Net income 103 75 61 7
Income per limited
partnership unit 5.11 3.72 3.02 .35
</TABLE>
PART II - OTHER INFORMATION
ITEM 1. 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, its General Partner and several of their affiliated
partnerships and corporate entities. The action 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 of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek 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 filed demurrers to the amended complaint which
were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case. The Court will entertain applications for lead counsel which must
be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000
to address the issue of appointing lead counsel. The General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) No reports on Form 8-K were filed during the quarter ended
June 30, 2000.
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
Its General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: August 14, 2000
