March 23, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Angeles Partners IX
Form 10-KSB
File No. 0-9704
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended December 31, 1999
[ ] 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, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
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 the 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.
State issuer's revenues for its most recent fiscal year. $7,979,000
State the aggregate market value of the voting partnership interests held by
non-affiliates 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, 1999. 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"). Effective
February 26, 1999, IPT was merged into Apartment Investment and Management
Company ("AIMCO"). Thus, the General Partner is now a wholly-owned subsidiary of
AIMCO (See "Transfer of Control"). 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 real estate properties
for investment. 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. Management and administrative services are
performed by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner has been providing such property management
services.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership'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 Registrant's properties and the rents that may be charged for
such apartments. While the General Partner and its affiliates own and/or control
a significant number of apartment units in the United States, such units
represent an insignificant percentage of total apartment units in the United
States and competition for the apartments is local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the 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.
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.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and IPT merged into 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.
<PAGE>
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 a Apartment -
Montgomery, Alabama 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
(1) Properties are held by a Limited Partnership in which the Registrant owns
a 99% interest.
</TABLE>
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 Useful Federal
Property Value Depreciation Life Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
The Pines of Northwest
Crossing Apartments $11,813 $ 7,496 5-25 yrs (1) $ 5,232
Panorama Terrance
Apartments 8,861 6,263 5-25 yrs (1) 3,752
Forest River
Apartments 5,369 3,883 5-25 yrs (1) 1,979
Village Green
Apartments 8,415 6,158 5-25 yrs (1) 3,320
Rosemont Crossing
Apartments 5,249 2,678 5-19 yrs (1) 2,940
Total $39,707 $26,478 $17,223
</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
and "Note I - Change in Accounting Principle".
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 1999 Rate Amortized Date (5) Maturity (5)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
The Pines of Northwest
Crossing Apartments
1st mortgage $ 4,672 7.83% (2) 10/15/03 $4,338
2nd mortgage 156 7.83% (4) 10/15/03 156
Panorama Terrace
Apartments
1st mortgage 3,731 10.13% (3) 08/10/02 3,590
Forest River
Apartments
1st mortgage 3,160 7.83% (2) 10/15/03 2,935
2nd mortgage 106 7.83% (4) 10/15/03 106
Village Green
Apartments
1st mortgage 4,744 7.33% (1) 11/01/03 4,489
Rosemont Crossing
Apartments
1st mortgage 2,748 7.83% (2) 10/15/03 2,552
2nd mortgage, 92 7.83% (4) 10/15/03 92
19,409 $18,258
Less unamortized
discounts (116)
$19,293
</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 repay these loans and other
specific details about the loans.
Schedule of Rental Rates and Occupancy:
Average annual rental rates and occupancy for 1999 and 1998 for each property:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
The Pines of Northwest
Crossing Apartments $ 5,593 $ 5,396 97% 95%
Panorama Terrace
Apartments 7,093 7,173 96% 92%
Forest River
Apartments 4,813 4,840 95% 92%
Village Green
Apartments 5,432 5,274 97% 94%
Rosemont Crossing
Apartments 5,910 5,610 92% 90%
The General Partner attributes the increase in occupancy at Panorama Terrace
Apartments, Forest River Apartments, and Village Green Apartments to
management's aggressive marketing campaigns to attract new tenants.
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 that leases units for lease terms of one year
or less. As of December 31, 1999, no tenant leases 10% or more of the available
rental space. All of the properties are in good 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 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
The Pines of Northwest
Crossing Apartments $149 3.02%
Panorama Terrace Apartments 105* 7.27%
Forest River Apartments 42* 4.90%
Village Green Apartments 59* 3.45%
Rosemont Crossing Apartments 66 2.89%
* 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: The Partnership completed
approximately $529,000 in capital expenditures at The Pines of Northwest
Apartments as of December 31, 1999, consisting primarily of structural building
improvements, appliances, exterior painting, electrical improvements and floor
covering replacement. These improvements were funded primarily from replacement
reserves and operations. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $123,600. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
Panorama Terrace Apartments: The Partnership completed approximately $153,000 in
capital expenditures at Panorama Terrace Apartments as of December 31, 1999,
consisting primarily of structural building improvements, parking lot
improvements and floor covering replacements. These improvements were funded
primarily from operations. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $68,100. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
Forest River Apartments: The Partnership completed approximately $284,000 in
capital expenditures at Forest River Apartments as of December 31, 1999,
consisting primarily of roof replacement, major landscaping, and appliance and
floor covering replacement. These improvements were funded primarily from
replacement reserves and operations. The Partnership is currently evaluating the
capital improvement needs of the property for the upcoming year. The minimum
amount to be budgeted is expected to be $300 per unit or $74,400. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Village Green Apartments: The Partnership completed approximately $165,000 in
capital expenditures at Village Green Apartments as of December 31, 1999,
consisting primarily of fencing improvements, and appliances and floor covering
replacement. These improvements were funded primarily from replacement reserves
and operations. The Partnership is currently evaluating the capital improvement
needs of the property for the upcoming year. The minimum amount to be budgeted
is expected to be $300 per unit or $101,100. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Rosemont Crossing Apartments: The Partnership completed approximately $849,000
in capital expenditures at Rosemont Crossing Apartments as of December 31, 1999,
consisting primarily of structural building improvements, major landscaping,
plumbing improvements, air conditioning upgrades, and appliance and floor
covering replacements. These improvements were funded primarily from replacement
reserves and operations. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $65,100. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
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 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). 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
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, 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 class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. 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 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1999 no matter was submitted to a vote of
security holders through the solicitation of proxies or otherwise.
<PAGE>
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 777 Limited Partners of record owning an aggregate of 19,975 units.
Affiliates of the General Partner owned 11,879 Units or approximately 59.47% at
December 31, 1999. 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, 1999 and 1998.
Future cash distributions will depend on the levels of net cash generated from
operations, refinancings and/or property sales, the availability of cash
reserves and the timing of debt maturities. 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
required capital expenditures to permit any distributions to its partners in
2000 or subsequent periods. See "Item 2. Description of Properties - Capital
Improvements" for information relating to anticipated capital expenditures at
the properties. 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 $400 per apartment unit at Forest River Apartments, Rosemont
Crossing Apartments, and The Pines of Northwest Crossing Apartments for a total
of approximately $351,000. As of December 31, 1999 the balance in the reserve
account is $141,000.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 11,879
limited partnership units in the Partnership representing approximately 59.47%
of the outstanding units. 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. Consequently, AIMCO is in a position to influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders 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.
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
disclosures 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
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.
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 realized net income of approximately $31,000 for the year ended
December 31, 1999 compared to a net loss of approximately $784,000 for the year
ended December 31, 1998. The increase in net income is due to an increase in
total revenue and a decrease in total expenses. Total revenues increased
primarily due to an increase in rental income and, to a lesser extent, an
increase in other income. The increase in rental income is primarily due to an
increase in average occupancy at all five of the Partnership's investment
properties and an increase in average rental rates at Rosemont Crossing, The
Pines of Northwest Crossing and the Village Green Apartments. Other income
increased due to the receipt of approximately $35,000 in insurance proceeds at
Forest River Apartments from a prior year's claim which had previously been
deemed uncollectible.
Total expenses decreased primarily due to a decrease in operating expenses and,
to a lesser extent, a slight decrease in interest expense. Operating expenses
decreased primarily due to a decrease in maintenance expense and, to a lesser
extent, a decrease in property expense and insurance expense. Maintenance
expense decreased primarily due to the completion of exterior building
renovation projects at The Pines of Northwest Crossing and Village Green
Apartments. The exterior building repairs were necessary to improve the
appearance of the properties in order to remain competitive in the market areas.
The decrease in insurance expense is due to a change in the Partnership's
insurance carrier which resulted in lower premiums for all five of the
Partnership's properties. Interest expense decreased as a result of the
reduction in the principal balances of the mortgages through scheduled debt
payments. The decrease in total expenses was partially offset by slight
increases in property tax, depreciation, and general and administrative
expenses. Property tax expense increased due to an increase in the property
values of Panorama Terrace Apartments. The increase in depreciation expense
resulted from an increase in capital improvements performed at all of the
investment properties during the past two years to improve the overall
appearance and quality of the Partnership's investment properties.
General and administrative expense increased primarily as a result of an
increase in legal costs, which include the Partnership's portion of settlement
costs paid in 1999 related to legal matters discussed in the Partnership's
annual report on Form 10-KSB for the year ended December 31, 1998 and the Nuanes
matter. Included in general and administrative expense at both December 31, 1999
and 1998 are management reimbursements to the General Partner allowed under the
Partnership Agreement. 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 also included.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $131,000 ($6.49 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
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.
Liquidity and Capital Resources
At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $1,313,000 compared to approximately $799,000 at December 31,
1998. The increase in cash and cash equivalents of approximately $514,000 for
the year ended December 31, 1999 is due to approximately $2,080,000 of cash
provided by operating activities, which was partially offset by approximately
$1,300,000 of cash used in investing activities and approximately $266,000 of
cash used in financing activities. Cash used in investing activities consisted
of property improvements and replacements, which was partially offset by net
withdrawals from escrow accounts maintained by the mortgage lender. Cash used in
financing activities consisted of 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, local, legal, and regulatory requirements. The Partnership is
currently evaluating the capital improvement needs of the properties for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $432,300. Additional improvements may be considered and will depend on the
physical condition of the properties as well as replacement reserves and
anticipated cash flow generated by the properties.
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 $19,293,000, 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 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, 1999 and 1998. 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 required capital improvements to permit distributions to its
partners in 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 $400 per apartment unit at Forest
River Apartments, Rosemont Crossing Apartments, and The Pines of Northwest
Crossing Apartments for a total of approximately $351,000. As of December 31,
1999 the balance in the reserve account is $141,000.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 11,879
units of limited partnership units in the Partnership representing approximately
59.47% of the outstanding units. 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. Consequently, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders 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.
Year 2000 Compliance
General Description
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 Managing Agent's computer
programs or hardware that had date-sensitive software or embedded chips might
have recognized a date using "00" as the year 1900 rather than the year 2000.
This could have resulted 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.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
ANGELES PARTNERS IX
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and
1998
Consolidated Statements of Changes in Partners' Deficit - Years ended
December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and
1998
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, 1999, 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, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
As discussed in Note I to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
<PAGE>
ANGELES PARTNERS IX
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 1,313
Receivables and deposits 454
Restricted escrows 186
Other assets 405
Investment properties (Notes C and F):
Land $ 3,083
Buildings and related personal property 36,624
39,707
Less accumulated depreciation (26,478) 13,229
$15,587
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 514
Tenant security deposit liabilities 118
Accrued property taxes 223
Other liabilities 343
Mortgage notes payable (Note C) 19,293
Partners' Deficit
General partner $ (225)
Limited partners (19,975 units issued and
outstanding) (4,679) (4,904)
$15,587
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
<S> <C> <C>
Revenues:
Rental income $ 7,579 $ 7,213
Other income 400 345
Total revenues 7,979 7,558
Expenses:
Operating 3,511 4,016
General and administrative 374 323
Depreciation 1,911 1,848
Interest 1,685 1,727
Property taxes 467 428
Total expenses 7,948 8,342
Net income (loss) $ 31 $ (784)
Net income (loss) allocated to general partner (1%) $ -- $ (8)
Net income (loss) allocated to limited partners (99%) 31 (776)
$ 31 $ (784)
Net income (loss) per limited partnership unit $ 1.55 $(38.85)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS IX
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(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, 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)
Net income for the year
ended December 31, 1999 -- -- 31 31
Partners' deficit
at December 31, 1999 19,975 $ (225) $ (4,679) $ (4,904)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 31 $ (784)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 1,911 1,848
Amortization of discounts and loan costs 97 112
Change in accounts:
Receivables and deposits 47 (112)
Other assets (70) 60
Accounts payable (22) (158)
Tenant security deposit liabilities 4 (1)
Accrued property taxes (60) 59
Other liabilities 142 (32)
Net cash provided by operating activities 2,080 992
Cash flows from investing activities:
Property improvements and replacements (1,584) (867)
Net withdrawals from restricted escrows 284 236
Net cash used in investing activities (1,300) (631)
Cash flows from financing activities:
Payments on mortgage notes payable (266) (245)
Net cash used in financing activities (266) (245)
Net increase in cash and cash equivalents 514 116
Cash and cash equivalents at beginning of year 799 683
Cash and cash equivalents at end year $ 1,313 $ 799
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,593 $ 1,614
Supplemental disclosure of non-cash activity:
Property improvements and replacements included in
accounts payable $ 396 $ --
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
ANGELES PARTNERS IX
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Organization and Significant Accounting Policies
Organization: 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").
Effective February 26, 1999, IPT was merged into Apartment Investment and
Management Company ("AIMCO"). Thus, the General Partner is now a wholly-owned
subsidiary of AIMCO (See "Transfer of Control"). The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2035, unless
terminated prior to such date. As of December 31, 1999, the Partnership operates
five residential properties located in Alabama and Texas.
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.
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 provided by the straight-line method 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 15 years for additions prior to March 16, 1984, 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 modified
accelerated cost recovery method is used for depreciation of (1) real property
additions over 27 1/2 years, and (2) personal property additions over 5 years.
Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note I).
Cash and Cash Equivalents: Includes cash on hand and in banks and money market
accounts. 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. The security deposits are refunded when the tenant
vacates, provided the tenant has not damaged its 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, 1999,
accumulated amortization is approximately $523,000.
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. During 1999, the remaining balance in this account
was returned to the properties as all required capital improvements had
been completed.
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, 1999, the balance in these accounts was
approximately $141,000.
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, 1999, the balance in this account is approximately $45,000.
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 Financial Accounting Standard Board Statement 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.
Costs of apartment properties that have been permanently impaired have been
written down to appraised value. No adjustments for impairment of value were
recorded in the years ended December 31, 1999 or 1998.
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 particularly
slow months or in response to heavy competition from other similar complexes in
the area. Concessions are charged to rental income as incurred.
Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("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 $119,000 and $131,000 for
the years ended December 31, 1999 and 1998, 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: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" 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 required disclosure).
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group and IPT merged into 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 - Mortgage Notes Payable
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
The Pines of Northwest
Crossing Apartments
1st mortgage $ 4,672 $ 37 7.83% 10/15/03 $4,338
2nd mortgage (1) 156 1 7.83% 10/15/03 156
Panorama Terrace
Apartments
1st mortgage 3,731 35 10.13% 08/10/02 3,590
Forest River
Apartments
1st mortgage 3,160 25 7.83% 10/15/03 2,935
2nd mortgage (1) 106 1 7.83% 10/15/03 106
Village Green
Apartments
1st mortgage 4,744 34 7.33% 11/01/03 4,489
Rosemont Crossing
Apartments
1st mortgage 2,748 22 7.83% 10/15/03 2,552
2nd mortgage (1) 92 1 7.83% 10/15/03 92
19,409 $156 $18,258
Less unamortized
discounts (2) (116)
$ 19,293
</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, 1999, are as follows (in thousands):
2000 $ 289
2001 313
2002 3,904
2003 14,903
$19,409
Note D - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation of reported net income (loss) and Federal
taxable income (in thousands):
1999 1998
Net income (loss) as reported $ 31 $ (784)
Add (deduct):
Depreciation differences 533 788
Unearned income (108) 138
Discounts on mortgage notes 14 --
Other 11 (30)
Federal taxable income $ 481 $ 112
Federal taxable income per
limited partnership unit $23.84 $ 5.54
The following is a reconciliation at December 31, 1999, between the
Partnership's reported amounts and Federal tax basis of net assets and
liabilities (in thousands):
Net liabilities as reported $(4,904)
Land and buildings 5,614
Accumulated depreciation (1,620)
Syndication and distribution costs 2,036
Other 168
Net assets - Federal tax basis $ 1,294
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 or accrued to the
General Partner and its affiliates during the years ended December 31, 1999 and
1998:
1999 1998
(in thousands)
Property management fees (included in operating expenses) $403 $ 383
Reimbursement for services of affiliates (included in
investment properties, operating expenses and general
and administrative expenses) 278 268
Partnership management fee (included in general and
administrative expenses) 25 9
During the years ended December 31, 1999 and 1998, 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 $403,000 and $383,000 for the years ended December
31, 1999 and 1998, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $278,000 and $268,000 for the
years ended December 31, 1999 and 1998, respectively. Included in these services
is approximately $104,000 and $51,000 for construction oversight reimbursements
in 1999 and 1998, 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 $25,000 and $9,000 which was accrued at December 31, 1999 and
1998, respectively.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 11,879
limited partnership units in the Partnership representing approximately 59.47%
of the outstanding units. 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. Consequently, AIMCO is in a position to influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders 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
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
The Pines of Northwest
Crossing Apartments $ 4,828 $ 1,641 $ 7,399 $ 2,773
Panorama Terrace
Apartments 3,731 473 6,262 2,126
Forest River
Apartments 3,266 123 4,189 1,057
Village Green
Apartments 4,744 409 5,786 2,220
Rosemont Crossing
Apartments 2,840 437 3,933 879
Totals $19,409 $ 3,083 $27,569 $ 9,055
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1999
(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 $ 10,172 $ 11,813 $ 7,496 5/30/80 5-25
Panorama Terrace
Apartments 473 8,388 8,861 6,263 6/30/80 5-25
Forest River
Apartments 123 5,246 5,369 3,883 12/29/80 5-25
Village Green
Apartments 409 8,006 8,415 6,158 12/31/80 5-25
Rosemont Crossing
Apartments 437 4,812 5,249 2,678 12/31/80 5-19
Totals $ 3,083 $ 36,624 $ 39,707 $ 26,478
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Investment Properties
Balance at beginning of year $37,727 $36,860
Property improvements 1,980 867
Balance at end of year $39,707 $37,727
Accumulated Depreciation
Balance at beginning of year $24,567 $22,719
Additions charged to expense 1,911 1,848
Balance at end of year $26,478 $24,567
The aggregate cost of the investment properties for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $45,321,000 and $43,341,000,
respectively. The accumulated depreciation, taken for Federal income tax
purposes at December 31, 1999 and 1998, is approximately $28,098,000 and
$26,737,000, respectively.
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 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 ended December 31, 1999 and 1998 is shown in
the tables below. The "Other" column includes partnership administration related
items and income and expense not allocated to the reportable segment.
1999 Residential Other Totals
(in thousands)
Rental income $ 7,579 $ -- $ 7,579
Other income 385 15 400
Interest expense 1,685 -- 1,685
Depreciation 1,911 -- 1,911
General and administrative expense -- 374 374
Segment profit (loss) 390 (359) 31
Total assets 15,481 106 15,587
Capital expenditures for investment
properties 1,980 -- 1,980
1998 Residential Other Totals
(in thousands)
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
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 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). 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 own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, 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 class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the General Partner and its affiliates
terminated the proposed settlement. Certain plaintiffs have filed a motion to
disqualify some of the plaintiffs' counsel in the action. 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.
Note I - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $131,000 ($6.49 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
<PAGE>
Item 8. Changes in and Disagreements with Accountant on Accounting and Financial
Disclosures
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
The Registrant has no officers or directors. The General Partner is Angeles
Realty Corporation. The names and ages of, as well as the position and offices
held by, the present executive officers and director of the General Partner are
set forth below. There are no family relationships between or among any officers
or directors.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
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.
Martha L. Long has been Senior Vice President and Controller of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group, Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO Properties, L.P. and its joint filers failed to timely file a Form 3 with
respect to its acquisition of Units and AIMCO and its joint filers failed to
timely file a Form 4 with respect to its acquisition of Units.
Item 10. Executive Compensation
None of the directors and officers of the General Partner received any
remuneration from the Registrant.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, as of December 31, 1999 no person or entity was known by
the Registrant to own of record or beneficially more than 5% of the Limited
Partnership Units of the Registrant.
Entity Number of Units Percentage
Insignia Properties LP 981 4.91%
(an affiliate of AIMCO)
Broad River Properties, LLC 2,529 12.66%
(an affiliate of AIMCO)
AIMCO Properties, LP 7,009 35.09%
(an affiliate of AIMCO)
Cooper River Properties, LLC 1,360 6.81%
(an affiliate of AIMCO)
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 indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Blvd., Denver, CO 80222.
No director or officer of the General Partner owns any Units. The General
Partner owns 100 Units as required by the terms of the Partnership Agreement
governing the Partnership.
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.
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 or accrued to the
General Partner and its affiliates during the years ended December 31, 1999 and
1998:
1999 1998
(in thousands)
Property management fees $403 $ 383
Reimbursement for services of affiliates 278 268
Partnership management fee 25 9
During the years ended December 31, 1999 and 1998, 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 $403,000 and $383,000 for the years ended December
31, 1999 and 1998, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $278,000 and $268,000 for the
years ended December 31, 1999 and 1998, respectively. Included in these services
is approximately $104,000 and $51,000 for construction oversight reimbursements
in 1999 and 1998, 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 $25,000 and $9,000 which was accrued at December 31, 1999 and
1998, respectively.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 11,879
limited partnership units in the Partnership representing approximately 59.47%
of the outstanding units. 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. Consequently, AIMCO is in a position to influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders 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.
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for
Change in Accounting Principle, is filed as an exhibit to this
report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
(b) Reports on Form 8-K filed during the fourth quarter of calendar
year 1999:
None.
<PAGE>
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/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date:
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:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
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 8-K dated May 30,
1980 and incorporated herein by reference
10.2 Purchase and Sale Agreement with Exhibits - Panorama Terrace
filed in Form 8-K dated June 30, 1980 and incorporated herein
by reference
10.3 Purchase and Sale Agreement with Exhibits - Forest River
Apartments filed in Form 8-K dated December 29, 1980 and
incorporated herein by reference
10.4 Purchase and Sale Agreement with Exhibits - Village Green
Apartments filed in Form 8-K dated December 31, 1980 and
incorporated herein by reference
10.5 Purchase and Sale Agreement with Exhibits - The Greens
Apartments filed in Form 8-K dated December 31, 1980 and
incorporated herein by reference
10.6 Promissory Note - Village Green Apartments filed in Form 10-K
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 10-K 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
10-K 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 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.*
(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 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.
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.
27 Financial Data Schedule
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Angeles Realty Corporation
General Partner of Angeles Partners IX
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note I of Notes to the Consolidated Financial Statements of Angeles Partners IX
included in its Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. You have
advised us that you believe that the change is to a preferable method in your
circumstances because it provides a better matching of expenses with the related
benefit of the expenditures and is consistent with policies currently being used
by your industry and conforms to the policies of the General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners IX 1999 Fourth Quarter 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000313499
<NAME> Angeles Partners IX
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,313
<SECURITIES> 0
<RECEIVABLES> 454
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 39,707
<DEPRECIATION> 26,478
<TOTAL-ASSETS> 15,587
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 19,293
0
0
<COMMON> 0
<OTHER-SE> (4,904)
<TOTAL-LIABILITY-AND-EQUITY> 15,587
<SALES> 0
<TOTAL-REVENUES> 7,979
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,948
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,685
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31
<EPS-BASIC> 1.55 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
