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 September 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)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 1,174
Receivables and deposits 388
Restricted escrows 152
Other assets 265
Investment properties:
Land $ 1,442
Buildings and related personal property 27,336
28,778
Less accumulated depreciation (20,084) 8,694
$ 10,673
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 230
Tenant security deposit liabilities 124
Accrued property taxes 262
Other liabilities 183
Due to General Partner 362
Mortgage notes payable 14,364
Partners' Deficit
General partner $ (262)
Limited partners (19,975 units issued and
outstanding) (4,590) (4,852)
$ 10,673
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 Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
Rental income $ 1,460 $ 1,910 $ 5,301 $ 5,701
Other income 177 142 400 310
Casualty gain -- -- 50 --
Gain on sale of property 4,857 -- 4,857 --
Total revenues 6,494 2,052 10,608 6,011
Expenses:
Operating 811 901 2,506 2,628
General and administrative 151 88 291 247
Depreciation 411 490 1,458 1,410
Interest 367 421 1,230 1,277
Property taxes 86 117 275 366
Total expenses 1,826 2,017 5,760 5,928
Income before extraordinary
item 4,668 35 4,848 83
Extraordinary loss on early
extinguishment of debt (324) -- (324) --
Net income $ 4,344 $ 35 $ 4,524 $ 83
Net income allocated to
general partner (1%) $ 43 $ -- $ 45 $ 1
Net income allocated to
limited partners (99%) 4,301 35 4,479 82
$ 4,344 $ 35 $ 4,524 $ 83
Per limited partnership unit:
Income before extraordinary item $231.38 $ 1.75 $240.29 $ 4.11
Extraordinary loss on early
extinguishment of debt (16.06) -- (16.06) --
Net income $215.32 $ 1.75 $224.23 $ 4.11
Distribution per limited
partnership unit $185.98 $ -- $219.77 $ --
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
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 (82) (4,390) (4,472)
Net income for the nine months
ended September 30, 2000 -- 45 4,479 4,524
Partners' deficit
at September 30, 2000 19,975 $ (262) $ (4,590) $ (4,852)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
d)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 4,524 $ 83
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of investment property (4,857) --
Extraordinary loss on early extinguishment of debt 324 --
Casualty gain (50) --
Depreciation 1,458 1,410
Amortization of loan costs and discounts 95 70
Change in accounts:
Receivables and deposits 66 (37)
Other assets (11) (101)
Accounts payable 12 (15)
Tenant security deposit liabilities 6 7
Accrued property taxes 39 114
Due to general partner 77 --
Other liabilities (160) 34
Net cash provided by operating activities 1,523 1,565
Cash flows from investing activities:
Sale proceeds received 9,338 --
Insurance proceeds received 154 --
Property improvements and replacements (1,561) (741)
Net withdrawals from restricted escrows 34 262
Net cash provided by (used in) investing activities 7,965 (479)
Cash flows from financing activities:
Repayment of mortgage notes payable (4,739) --
Payments on mortgage notes payable (201) (197)
Prepayment penalty (215) --
Distributions to partners (4,472) --
Net cash used in financing activities (9,627) (197)
Net (decrease) increase in cash and cash equivalents (139) 889
Cash and cash equivalents at beginning of period 1,313 799
Cash and cash equivalents at end of period $ 1,174 $1,688
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,149 $1,198
At December 31, 1999 approximately $396,000 of property improvements and
replacements were included in accounts payable.
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
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
nine months ended September 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 - Disposition of Investment Property
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. The net proceeds realized by the Partnership were approximately
$9,338,000. The Partnership used a portion of the proceeds from the sale of the
property to pay off the debt encumbering the property of approximately
$4,739,000. The sale of property resulted in a gain on sale of investment
property of approximately $4,857,000 and a loss on early extinguishment of debt
of approximately $324,000, consisting of a prepayment penalty and the write off
of unamortized loan costs.
<PAGE>
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 nine months ended
September 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 nine months ended September 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in
operating expenses) $291 $302
Reimbursement for services of affiliates
(included in investment properties, operating
expenses and general and administrative expenses) 279 169
Real estate brokerage commission (included in gain
on sale of investment property and due to General
Partner) 285 --
Due to General Partner 362 --
During the nine months ended September 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 $291,000 and $302,000 for the
nine months ended September 30, 2000 and 1999, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $279,000 and $169,000 for the
nine months ended September 30, 2000 and 1999, respectively. Included in these
expenses is approximately $56,000 and $36,000 for construction oversight
reimbursements for the nine months ended September 30, 2000 and 1999,
respectively, approximately $77,000 of which was accrued at September 30, 2000
and is included in due to General Partner.
<PAGE>
In connection with the sale of The Pines of Northwest Crossing Apartments, the
General Partner earned a commission of 3% of the selling price or $285,000.
However, this fee is subordinate to the limited partners receiving a preferred
return, as specified in the Partnership Agreement and is included in due to
General Partner.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 12,598 limited partnership
units in the Partnership representing 63.07% 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, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the General Partner. As a result of
its ownership of 63.07% 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 nine months ended September 30, 2000, cash distributions of
approximately $4,472,000 (approximately $4,390,000 of which was paid to the
limited partners or $219.77 per limited partnership unit) were paid to the
partners, of which approximately $682,000 (approximately $675,000 to the limited
partners or $33.79 per limited partnership unit) was paid from operations and
approximately $3,752,000 (approximately $3,715,000 to the limited partners or
$185.98 per limited partnership unit) was paid from proceeds from the sale of
The Pines of Northwest Crossing Apartments. In conjunction with the transfer of
funds from the majority-owned sub-tier limited partnership, to the Partnership,
approximately $38,000 was distributed to the general partner of the majority
owned sub-tier limited partnership. No cash distributions were paid to the
partners during the nine months ended September 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 four apartment complexes
located in Texas (1) and Alabama (3). The Partnership rents apartment units to
tenants for terms that are typically twelve months or less.
<PAGE>
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 nine month periods ended September 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 September 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 1,460 $ -- $ 1,460
Other income 166 11 177
Gain on sale of investment property 4,857 -- 4,857
Interest expense 367 -- 367
Depreciation 411 -- 411
General and administrative expense -- 151 151
Extraordinary loss on early
extinguishment of debt (324) -- (324)
Segment profit (loss) 4,484 (140) 4,344
Nine Months Ended September 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 5,301 $ -- $ 5,301
Other income 386 14 400
Casualty gain 50 -- 50
Gain on sale of investment property 4,857 -- 4,857
Interest expense 1,230 -- 1,230
Depreciation 1,458 -- 1,458
General and administrative expense -- 291 291
Extraordinary loss on early
extinguishment of debt (324) -- (324)
Segment profit (loss) 4,801 (277) 4,524
Total assets 10,200 473 10,673
Capital expenditures for
investment properties 1,165 -- 1,165
<PAGE>
Three Months Ended September 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 1,910 $ -- $ 1,910
Other income 141 1 142
Interest expense 421 -- 421
Depreciation 490 -- 490
General and administrative expense -- 88 88
Segment profit (loss) 122 (87) 35
Nine Months Ended September 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 5,701 $ -- $ 5,701
Other income 300 10 310
Interest expense 1,277 -- 1,277
Depreciation 1,410 -- 1,410
General and administrative expense -- 247 247
Segment profit (loss) 320 (237) 83
Total assets 15,080 304 15,384
Capital expenditures for
investment properties 741 -- 741
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. ("Insignia") 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.
<PAGE>
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 is considering applications for lead counsel and has
currently scheduled a hearing on the matter for November 20, 2000. 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.
<PAGE>
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
operation. 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 four apartment complexes. The
following table sets forth the average occupancy of the properties for the nine
months ended September 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Panorama Terrace Apartments 93% 96%
Birmingham, Alabama
Forest River Apartments 96% 96%
Gadsden, Alabama
Village Green Apartments 95% 96%
Montgomery, Alabama
Rosemont Crossing Apartments 94% 92%
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 nine months ended September 30,
2000 was approximately $4,344,000 and $4,524,000, respectively, as compared to
approximately $35,000 and $83,000 for the three and nine months ended September
30, 1999, respectively. The increase in net income for both the three and nine
months ended September 30, 2000 is primarily attributable to an increase in
total revenues due to the gain recognized during 2000 on the sale of The Pines
of Northwest Crossing Apartments. The gain recognized in 2000 was partially
offset by the loss on early extinguishment of debt recognized upon the sale of
the property. 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. The net proceeds realized by the Partnership were
approximately $9,338,000. The Partnership used a portion of the proceeds from
the sale of the property to pay off the debt encumbering the property of
approximately $4,739,000. The sale of property resulted in a gain on sale of
investment property of approximately $4,857,000 and a loss on early
extinguishment of debt of approximately $324,000, consisting of a prepayment
penalty and the write off an unamortized loan costs.
<PAGE>
Excluding the impact of the sale of The Pines of Northwest Crossing Apartments
and the property's operating results for 2000 and 1999, net loss for the three
months ended September 30, 2000 was approximately $4,000 and net income was
approximately $106,000 for the nine months ended September 30, 2000. Net loss
for the three and nine months ended September 30, 1999 was approximately $21,000
and $15,000, respectively. The increase in net income for both the three and
nine months ended September 30, 2000 was due to an increase in total revenues,
which was partially offset by an increase in total expenses. Total revenues
increased for the three and nine months ended September 30, 2000 primarily due
to increases in other income, rental income, and the recognition of a casualty
gain in 2000. Other income increased for both periods primarily due to increases
in late charges, cable television fees, and utility reimbursements. Rental
income increased primarily due to increases in the average annual rental rate at
all four of the Partnership's remaining investment properties. The increase in
rental income was partially offset by decreases in occupancy at Panorama Terrace
Apartments and 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 repairs 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.
Excluding the property expenses of The Pines of Northwest Crossing Apartments,
total expenses increased for the three and nine months ended September 30, 2000
primarily due to increases in general and administrative expenses, property tax
expense and depreciation expense. Depreciation expense increased as a result of
recent capital improvements performed at all four of the Partnership's remaining
investment properties. Property tax expense increased due to a reassessment and
increased tax rates at Rosemont Crossing Apartments. Operating and interest
expense remained relatively constant for the comparable periods.
General and administrative expenses increased primarily due to an increase in
the cost of services included in the management reimbursements to the General
Partner as allowed under the Partnership Agreement and increased professional
fees associated with the management of the Partnership partially offset by
reduced legal expenses due to the settlement of a legal case in 1999. Also
included in general and administrative expenses at both September 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 September 30, 2000, the Partnership had cash and cash equivalents of
approximately $1,174,000 compared to approximately $1,688,000 at September 30,
1999. The decrease in cash and cash equivalents of approximately $139,000 for
the nine months ended September 30, 2000, from the Partnership's calendar year
end, is due to approximately $9,627,000 of cash used in financing activities,
which was partially offset by approximately $7,965,000 of cash provided by
investing activities and approximately $1,523,000 of cash provided by operating
activities. Cash provided by investing activities consisted primarily of
proceeds received from the sale of The Pines of Northwest Crossing Apartments
and, to a lesser extent, receipt of insurance proceeds related to the casualty
at Forest River Apartments and net withdrawals from escrow accounts maintained
by the mortgage lender, partially offset by property improvements and
replacements. Cash used in financing activities consisted of distributions to
partners, repayment of mortgage notes payable, and to a lesser extent, debt
extinguishment costs and 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. Capital improvements
planned for each of the Partnership's properties are detailed below.
Pines of Northwest Crossing Apartments: During 2000, the Partnership completed
approximately $144,000 in capital expenditures at The Pines of Northwest
Crossing Apartments, 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.
Panorama Terrace Apartments: For 2000 the Partnership has budgeted approximately
$457,000 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
$484,000 in budgeted and unbudgeted capital expenditures at Panorama Terrace
Apartments as of September 30, 2000, consisting primarily of roof improvements,
major landscaping, floor covering replacements, 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 $321,000 in budgeted and unbudgeted capital expenditures at Forest
River Apartments as of September 30, 2000, consisting primarily of floor
covering replacements, appliances and construction related to the repair of the
units damaged in the fire, as discussed above. These improvements were funded
primarily from operations, replacement reserves and 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 $97,000 in capital expenditures at Village
Green Apartments as of September 30, 2000, consisting primarily of floor
covering replacements, appliances, 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 replacements, cabinet replacements, appliances, major landscaping and
interior and exterior building improvements. The Partnership completed
approximately $119,000 in capital expenditures at Rosemont Crossing Apartments
as of September 30, 2000, consisting primarily of major landscaping, floor
covering replacements and plumbing upgrades. These improvements were funded
primarily from operations.
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 $14,364,000, 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 nine months ended September 30, 2000, cash distributions of
approximately $4,472,000 (approximately $4,390,000 of which was paid to the
limited partners or $219.77 per limited partnership unit) were paid to the
partners, of which approximately $682,000 (approximately $675,000 to the limited
partners or $33.79 per limited partnership unit) was paid from operations and
approximately $3,752,000 (approximately $3,715,000 to the limited partners or
$185.98 per limited partnership unit) was paid from proceeds from the sale of
The Pines of Northwest Crossing Apartments. In conjunction with the transfer of
funds from the majority-owned sub-tier limited partnership, to the Partnership,
approximately $38,000 was distributed to the general partner of the majority
owned sub-tier limited partnership. No cash distributions were paid to the
partners during the nine months ended September 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 quarterly 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 and Rosemont Crossing Apartments for a
total of approximately $93,000. As of September 30, 2000 the balance in the
reserve account exceeds the requirement and is approximately $128,000.
<PAGE>
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. ("Insignia") 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 is considering applications for lead counsel and has
currently scheduled a hearing on the matter for November 20, 2000. The General
Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
<PAGE>
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) Current report on Form 8-K filed on August 4, 2000 in
connection with the sale of The Pines of Northwest Crossing
Apartments on July 20, 2000.
<PAGE>
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: November 14, 2000
