FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-11767
ANGELES INCOME PROPERTIES, LTD. II
(Exact name of small business issuer as specified in its charter)
California 95-3793526
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 2,990
Restricted--tenant security deposits 272
Accounts receivable (net of allowance for
doubtful accounts of $72) 121
Escrows for taxes 131
Restricted escrows 1,429
Other assets 490
Investment in, and advances of $43 to,
joint venture 57
Investment properties:
Land $ 2,197
Buildings and related personal property 32,644
34,841
Less accumulated depreciation (22,598) 12,243
$17,733
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 48
Tenant security deposits 259
Accrued taxes 293
Other liabilities 289
Mortgage notes payable 18,404
Partners' Deficit
General partner $ (454)
Limited partners (99,851 units
issued and outstanding) (1,106) (1,560)
$17,733
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues:
Rental income $ 1,654 $ 1,650 $ 4,861 $ 5,125
Other income 83 75 229 218
Total revenue 1,737 1,725 5,090 5,343
Expenses:
Operating 460 480 1,392 1,560
General and administrative 76 76 234 250
Maintenance 256 266 646 622
Depreciation 442 431 1,313 1,426
Interest 551 400 1,340 1,380
Property taxes 142 192 422 471
Bad Debt -- -- 19 --
Total expenses 1,927 1,845 5,366 5,709
Equity in income (loss) of
joint venture 11 14 (8) (3)
Gain on transfer of
property in foreclosure -- -- -- 1,385
Loss on disposal of property -- -- -- (40)
(Loss) income before
extraordinary item (179) (106) (284) 976
Extraordinary (loss) gain on
extinguishment of debt (173) -- (173) 565
Net (loss) income $ (352) $ (106) $ (457) $ 1,541
Net (loss) income allocated
to general partners (1%) $ (4) $ (1) $ (5) $ 15
Net (loss) income allocated
to limited partners (99%) (348) (105) (452) 1,526
Net (loss) income $ (352) $ (106) $ (457) $ 1,541
Per limited partnership unit:
(Loss) income before
extraordinary item $ (1.77) $ (1.05) $ (2.81) $ 9.68
Extraordinary (loss) gain on
extinguishment of debt (1.72) -- (1.72) 5.60
Net (loss) income $ (3.49) $ (1.05) $ (4.53) $ 15.28
See Accompanying Notes to Consolidated Financial Statements
c) ANGELES INCOME PROPERTIES, LTD, II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 100,000 $ 1 $ 50,000 $50,001
Partners' deficit at
December 31, 1995 99,851 $ (449) $ (654) $(1,103)
Net income for the nine months
ended September 30, 1996 (5) (452) (457)
Partners' deficit at
September 30, 1996 99,851 $ (454) $ (1,106) $(1,560)
See Accompanying Notes to Consolidated Financial Statements
d) ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (457) $ 1,541
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Bad Debt Expense 19 --
Depreciation 1,313 1,426
Amortization of discounts, loan costs and lease
commissions 244 103
Equity in loss of joint venture 8 3
Gain on transfer of property in foreclosure -- (1,385)
Loss on disposal of property -- 40
Extraordinary loss (gain) on extinguishment of debt 173 (565)
Change in accounts:
Restricted cash (26) 11
Accounts receivable (31) (80)
Escrows for taxes (36) (31)
Other assets (38) (40)
Accounts payable (100) (66)
Tenant security deposit liabilities 15 9
Accrued taxes 179 92
Other liabilities 45 137
Net cash provided by operating activities 1,308 1,195
Cash flows from investing activities:
Property improvements and replacements (300) (446)
Insurance proceeds -- 19
Deposits to restricted escrows (1,262) (64)
Receipts from restricted escrows 247 30
Advances to joint venture (29) --
Net cash used in investing activities (1,344) (461)
Cash flows from financing activities:
Loan costs (225) --
Payments on mortgage notes payable (156) (195)
Repayments of mortgage notes payable (11,069) --
Proceeds from mortgage notes payable 12,900 --
Debt extinguishment costs (132) --
Net cash provided by (used in) financing activities 1,318 (195)
Net increase in cash balances 1,282 539
Cash and cash equivalents at beginning of period 1,708 1,063
Cash and cash equivalents at end of period $ 2,990 $ 1,602
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,111 $ 1,125
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
ANGELES INCOME PROPERTIES, LTD. II
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
(Unaudited)
Foreclosures
On March 20, 1995, the Partnership negotiated a Deed in Lieu of Foreclosure for
Executive Plaza Office Park, located in Huntsville, Alabama. The property was
lost to the wrap note holder. Angeles Realty Corporation II, the ("Managing
General Partner") believes that the Deed in Lieu of Foreclosure was in the best
interest of the Partnership.
In connection with the foreclosure of Executive Plaza Office Park on March 20,
1995, the following accounts were adjusted by the following non-cash amounts:
Accounts receivable $ (101,035)
Investment properties (4,481,841)
Other assets (88,775)
Taxes 144,629
Tenant security deposits 39,919
Mortgage 5,987,086
Other liabilities 509,904
See Accompanying Notes to Consolidated Financial Statements
e) ANGELES INCOME PROPERTIES, LTD. II
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements 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 II, (the "Managing General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine month periods ended September 30, 1996, are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1996. For further information, refer to the financial statements
and footnotes thereto included in Angeles Income Properties, Ltd. II's (the
"Partnership") annual report on Form 10-KSB for the fiscal year ended December
31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were paid to
the Managing General Partner and affiliates during the nine month periods ended
September 30, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $238 $247
Reimbursement for services
of affiliates 186 194
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Managing General Partner. An affiliate of the
Managing General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency which were later acquired by the
agent who placed the current year's master policy. The current agent assumed
the financial obligations to the affiliate of the Managing General Partner who
receives payments on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
Managing General Partner by virtue of the agent's obligations is not
significant.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES - (CONTINUED)
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
provided financing to the Princeton Meadows Golf Course Joint Venture ("Joint
Venture") which is secured by the Joint Venture's investment property known as
the Princeton Meadows Golf Course, in the original amount of $1,280,000 (see
"Part II, Item 1. Legal Proceedings").
MAE GP Corporation ("MAE GP"), an affiliate of the Managing General Partner,
owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these
Class B Shares, in whole or in part, into Class A Shares on the basis of 1 Class
A Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1.2% of the distributions of net cash distributed by AMIT. The Class B
Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1.2% of the vote).
Between the date of acquisition of these shares (November 24, 1992) and March
31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted
its shares at the 1995 annual meeting in connection with the election of
trustees and other matters. MAE GP has not exerted, and continues to decline to
exert, any management control over or participate in the management of AMIT. MAE
GP may choose to vote these shares as it deems appropriate in the future. In
addition, Liquidity Assistance, LLC ("LAC"), an affiliate of the Managing
General Partner and an affiliate of Insignia Financial Group, Inc., which
provides property management and partnership administration services to the
Partnership, currently owns 87,700 Class A Shares of AMIT. These Class A Shares
entitle LAC to vote approximately 2% of the total shares. The number of Class A
Shares of AMIT owned by LAC increased from 63,200 shares on September 30, 1996,
to 87,700 shares as of October 22, 1996. The voting percentage also increased
from 1.5% to 2% over the same period.
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B Shares. This option can be exercised at the end
of 10 years or when all loans made by AMIT to partnerships affiliated with MAE
GP as of November 9, 1994, (which is the date of execution of a definitive
Settlement Agreement) have been paid in full, but in no event prior to November
9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which
occurred April 14, 1995, as payment for the option. Upon exercise of the
option, AMIT would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an irrevocable
proxy in favor of AMIT, the result of which is MAE GP will be able to vote the
Class B Shares on all matters except those involving transactions between AMIT
and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an
officer or trustee of AMIT. On those matters, MAE GP granted to the AMIT
trustees, in their capacity as trustees of AMIT, proxies with regard to the
Class B Shares instructing such trustees to vote said Class B Shares in
accordance with the vote of the majority of the Class A Shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
NOTE C - INVESTMENT IN JOINT VENTURE
The Partnership owns a 14.4% interest in the Joint Venture. The Partnership
accounts for the Joint Venture on the equity method. AMIT currently provides
financing to the Joint Venture, secured by the investment property, in the
amount of $1,567,000.
Condensed balance sheet information of the Joint Venture is as follows:
September 30, 1996
(in thousands)
Assets
Cash $ 232
Deferred charges and other assets 169
Investment properties, net 1,899
Total $ 2,300
Liabilities and Partners' Capital
Notes payable to AMIT $ 1,567
Other liabilities 642
Partners' capital 91
Total $ 2,300
The condensed profit and loss statements of the Joint Venture are summarized as
follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
(in thousands) (in thousands)
Revenue $ 568 $ 501 $ 1,177 $ 985
Costs and expenses (495) (405) (1,235) (1,003)
Net income (loss) $ 73 $ 96 $ (58) $ (18)
The Partnership's equity interest in the net income and net loss of the Joint
Venture for the three and nine months ended September 30, 1996, was $11,000 and
$8,000, respectively. The Partnership's equity interest in the net income and
net loss of the Joint Venture for the three and nine months ended September 30,
1995, was $14,000 and $3,000, respectively.
The Princeton Meadows Golf Course property had an underground fuel storage tank
that was removed in 1992. This fuel storage tank caused contamination to the
area. Management installed monitoring wells in the area where the tank was
formerly buried. Some samples from these wells indicated lead and phosphorus
readings that were higher than the range prescribed by the New Jersey Department
of Environmental Protection ("DEP"). The Joint Venture notified DEP of the
findings when they were first discovered. However, DEP did not give any
directives as to corrective action until late 1995.
In November 1995, representatives of the Joint Venture and the New Jersey DEP
met and developed a plan of action to clean-up the contamination site at
Princeton Meadows Golf Course. The Joint Venture has engaged an engineering
firm to conduct consulting and compliance work and a second firm to perform the
field work necessary for the clean-up. The Joint Venture has recorded a
liability of $199,000 for the costs of the clean-up. The contracts have been
executed and work has commenced with the expected completion date to be sometime
in late 1996. The Managing General Partner believes the liability recorded is
sufficient to cover all costs associated with this incident.
NOTE D - FORECLOSURE OF EXECUTIVE PLAZA
On March 20, 1995, the Partnership negotiated a Deed in Lieu of Foreclosure for
Executive Plaza Office Park located in Huntsville, Alabama. The total
outstanding debt on the property at the time of foreclosure was approximately
$6,430,000 including approximately $443,000 in accrued interest. The net fair
value and the recorded net book value less related net operating liabilities as
of the date of foreclosure totaled approximately $5,867,000 and approximately
$4,482,000, respectively. The net gain on foreclosure amounted to approximately
$1,950,000 of which approximately $1,385,000 represented a gain on transfer of
property in foreclosure and approximately $565,000 represented an extraordinary
gain on the extinguishment of related debt. The gain on transfer of assets
represents the difference between fair value and the net book value of the
property surrendered. The extraordinary gain represents the difference between
the settlement amount of the debt and the recorded amount of the debt
extinguished pursuant to the foreclosure.
NOTE E - REFINANCING
On July 1, 1996, the Partnership refinanced the mortgages encumbering Deer Creek
Apartments and Landmark Apartments. The total indebtedness refinanced was
approximately $7,517,000 (interest rate - 9.13%) and $3,552,000 (interest rate -
9.75%), respectively. Resulting from the refinancing was a loss of
approximately $173,000 from the write-off of unamortized loan costs and
incurring of prepayment penalties. The new mortgage indebtedness of
approximately $6,300,000 for Deer Creek Apartments and approximately $6,600,000
for Landmark Apartments carries a stated interest rate of 2.50% plus LIBOR and
a maturity date of November 15, 1996. This interim financing was necessary due
to the maturity of the mortgage secured by Deer Creek Apartments in July 1996.
Landmark Apartments was refinanced to obtain a lower interest rate and to
provide funds needed to help close the Deer Creek Apartments refinancing. Both
of these properties are in the process of negotiating long term financing which
is anticipated to close in the fourth quarter of 1996. The outcome of such
negotiations cannot presently be determined. The net surplus from these
refinancings was $214,000 and will be held in an escrow account to be used for
operating and capital needs of the properties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Results of Operations
The Partnership's investment properties consist of three apartment complexes and
one commercial property. The following table sets forth the average occupancy
of the properties for the nine months ended September 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Atlanta Crossing Shopping Center
Montgomery, Alabama 92% 91%
Deer Creek Apartments
Plainsboro, New Jersey 95% 95%
Georgetown Apartments
South Bend, Indiana 97% 98%
Landmark Apartments
Raleigh, North Carolina (1) 92% 96%
(1)This property typically attracts a student tenant base. This year a number
of long time residents graduated. Occupancy should increase as those
vacancies are filled.
The Partnership's net loss for the nine months ended September 30, 1996, was
approximately $457,000 versus net income of approximately $1,541,000 for the
nine months ended September 30, 1995. The Partnership's net losses for the three
months ended September 30, 1996 and 1995, were approximately $352,000 and
approximately $106,000, respectively. The decrease in net income is due
primarily to the gain on transfer of property in foreclosure and the gain on
extinguishment of debt related to the foreclosure of Executive Plaza Office Park
on March 20, 1995 (see discussion below). Contributing to the decrease in net
income was an extraordinary loss on extinguishment of debt of $173,000 from
Landmark and Deer Creek Apartments on July 1, 1996 (see "Note E").
As a result of the transfer of property in foreclosure, the Partnership realized
a decrease in expenses for the nine months ended September 30, 1996, versus the
nine months ended September 30, 1995, except for maintenance and bad debt. The
decrease in property tax expense was offset by a tax rate increase and an
increase in the assessed value of Georgetown Apartments. The decrease in
interest expense was offset by an increase in loan cost amortization associated
with the interim refinancing of Deer Creek and Landmark Apartments. Maintenance
expense increased due to an increase in exterior and interior building
improvements at Landmark Apartments.
The Managing General Partner determined that past due amounts from tenants of
the Atlanta Crossing Shopping Center amounting to $41,000 were uncollectible,
and therefore reserved these amounts, resulting in bad debt expense for the nine
months ended September 30, 1996. Partially offsetting this amount was $22,000
in bad debt recovery by the Partnership from an affiliate of the former owner of
the Managing General Partner of the Partnership.
The Partnership realized a net $40,000 loss on disposal of property during the
nine months ended September 30, 1995. Approximately $47,000 of the loss related
to Georgetown Apartments was due to the write-off of roofs due to replacement.
These roofs were not fully depreciated at the time of replacement. Offsetting
this loss was a gain of approximately $7,000 in 1995 at Deer Creek Apartments
related to one unit being written off due to fire damage which was covered by
insurance. The refinancing on Deer Creek Apartments and Landmark Apartments debt
resulted in a loss of $173,000 from prepayment penalties and the write-off of
unamortized loan costs.
The Partnership has a 14.4% investment in the Princeton Meadows Golf Course
Joint Venture. For the nine months ended September 30, 1996, the Partnership
realized equity in loss of the Joint Venture of approximately $8,000 as compared
to a approximately $3,000 loss for the nine months ended September 30, 1995. The
increased loss at Princeton Meadows Golf Course can be attributed to an increase
in advertising, salaries, insurance and maintenance expense. Advertising
expense increased as a result of an aggressive advertising campaign and salary
expense increased due to the hiring of additional personnel, including a full
time golf pro for the course. The environmental issue at the property (See
"Note C - Investment in Joint Venture") necessitated a purchase of new
insurance. The Partnership also implemented a preventive maintenance program
and repairs were made to the cart paths and course. These increases in expenses
were only partially offset by an increase in revenues. The increase in revenue
can be attributed to an increase in advertising and to maintenance upgrades at
the golf course that have improved the appearance of the property.
On March 20, 1995, the Partnership negotiated a Deed in Lieu of Foreclosure for
Executive Plaza Office Park located in Huntsville, Alabama, and as a result the
property was transferred to the wrap note holder. The Managing General Partner
believes the Deed In Lieu of Foreclosure was in the best interest of the
Partnership. The Partnership realized a gain of $1,950,000 of which $1,385,000
represented a gain on transfer of property in foreclosure and $565,000
represented an extraordinary gain on the extinguishment of related debt. The
gain on transfer of property in foreclosure represents the difference between
the fair value and the net book value of the property surrendered. The
extraordinary gain represents the difference between the settlement amount of
the debt (the fair value of the property surrendered) and the recorded amount of
the debt extinguished pursuant to foreclosure.
As part of the ongoing business plan of the Partnership, the Managing 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
expense. As part of this plan, the Managing 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 Managing General Partner will be able to sustain such a plan.
At September 30, 1996, the Partnership had unrestricted cash of approximately
$2,990,000 versus approximately $1,602,000 at September 30, 1995. Net cash
provided by operating activities increased due to an increase in accrued taxes
resulting from a prepayment of taxes at Landmark Apartments for the period
ending September 30, 1995. Net cash used in investing activities increased due
to an increase in deposits to restricted escrows resulting from a capital repair
escrow set up for Deer Creek Apartments with the refinancing. Net cash provided
by financing activities increased due to the proceeds received from the
refinancing of Deer Creek and Landmark Apartments.
The Partnership has no material capital programs scheduled to be performed in
1996, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations or is received from the
capital reserve account.
On July 1, 1996, the Partnership refinanced the mortgages encumbering Deer Creek
Apartments and Landmark Apartments. The total indebtedness refinanced was
approximately $7,517,000 (interest rate - 9.13%) and $3,552,000 (interest rate -
9.75%), respectively. Resulting from the refinancing was a loss of
approximately $173,000 from the write-off of unamortized loan costs and
incurring of prepayment penalties. The new mortgage indebtedness of
approximately $6,300,000 for Deer Creek Apartments and approximately $6,600,000
for Landmark Apartments carries a stated interest rate of 2.50% plus LIBOR and
a maturity date of November 15, 1996. This interim financing was necessary due
to the maturity of the mortgage secured by Deer Creek Apartments in July 1996.
Landmark Apartments was refinanced to obtain a lower interest rate and to
provide funds needed to help close the Deer Creek Apartments refinancing. Both
of these properties are in the process of negotiating long term financing which
is anticipated to close in the fourth quarter of 1996. The outcome of such
negotiations cannot presently be determined. The net surplus from these
refinancings was $214,000 and will be held in an escrow account to be used for
operating and capital needs of the properties.
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 property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The partnership has
mortgage notes payable totaling approximately $18,404,000. The first mortgages
secured by Deercreek Apartments and Landmark Apartments totaling approximately
$12,900,000 were refinanced with interim financing as noted above, which matures
on November 15, 1996. Both of these properties are in the process of negotiating
long term financing which is anticipated to close in the fourth quarter of 1996.
The remaining debt, which is secured by Georgetown Apartments, matures on
October 2003 at which time the property will either be sold or refinanced.
Future cash distributions will depend on the levels of net cash generated from
operations, refinancings, property sale and the availability of cash reserves.
There were no cash distributions in the nine months ended September 30, 1996, or
September 30, 1995. At this time, The Managing General Partner does not
anticipate a cash distribution during fiscal 1996.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
AMIT, a real estate investment trust, made a loan to the Joint Venture on a non-
recourse basis in September 1991, in the original amount of $1,280,000 secured
by the Joint Venture's real property known as Princeton Meadows Golf Course.
AMIT asserts that the loan is recourse by virtue of a certain amendment
purportedly entered into as of November 1, 1992, but which the Partnership and
the Joint Venture have been informed and believe were actually executed in
December of 1992 ("Note Modification"). The Partnership and the Joint Venture
have been further informed and believe that the amendment was executed at the
direction of Angeles Corporation ("Angeles") by an individual in his purported
capacity as an officer of the Managing General Partner of the Partnership and
the Joint Venture at a time when such person was not in fact an officer of such
entities. Accordingly, the Partnership and the Joint Venture filed Proofs of
Claim in the Angeles bankruptcy proceeding with respect to such purported
amendment. Additionally, the Partnership and the Joint Venture filed a Proof of
Claim in the Angeles Funding Corporation and Angeles Real Estate Corporation
bankruptcy proceedings on similar grounds. Both Angeles Funding Corporation and
Angeles Real Estate Corporation are affiliates of Angeles. Angeles has agreed
to cooperate with the Partnership and the Joint Venture in any action commenced
by or against them by AMIT asserting that the original $1,280,000 obligation
owed to AMIT is recourse to the Partnership. Angeles further agreed to waive
the attorney-client privilege with respect to any information relating to the
Note Modification. Accordingly, the Partnership and the Joint Venture withdrew
their Proofs of Claim on August 9, 1995. The Partnership continues to have
discussions with AMIT regarding resolution of this issue. No agreement has been
reached with AMIT at this time.
MAE GP, an affiliate of the Managing General Partner, owns 1,675,113 Class B
Shares of AMIT. MAE GP has the option to convert these Class B Shares, in whole
or in part, into Class A Shares on the basis of 1 Class A Share for every 49
Class B Shares. These Class B Shares entitle MAE GP to receive 1.2% of the
distributions of net cash distributed by AMIT. The Class B Shares also entitle
MAE GP to vote on the same basis as Class A Shares which allows MAE GP to vote
approximately 37% of the total shares (unless and until converted to Class A
Shares at which time the percentage of the vote controlled represented by the
shares held by MAE GP would approximate 1.2% of the vote). Between the date of
acquisition of these shares (November 24, 1992) and March 31, 1995, MAE GP
declined to vote these shares. Since that date, MAE GP voted its shares at the
1995 annual meeting in connection with the election of trustees and other
matters. MAE GP has not exerted, and continues to decline to exert, any
management control over or participate in the management of AMIT. MAE GP may
choose to vote these shares as it deems appropriate in the future. In addition,
LAC, an affiliate of the Managing General Partner and an affiliate of Insignia
Financial Group, Inc., which provides property management and partnership
administration services to the Partnership, currently owns 87,700 Class A Shares
of AMIT. These Class A Shares entitle LAC to vote approximately 2% of the total
shares. The number of Class A Shares of AMIT owned by LAC increased from 63,200
shares on September 30, 1996, to 87,700 shares as of October 22, 1996. The
voting percentage also increased from 1.5% to 2% over the same period.
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B Shares. This option can be exercised at the end
of 10 years or when all loans made by AMIT to partnerships affiliated with MAE
GP as of November 9, 1994, (which is the date of execution of a definitive
Settlement Agreement) have been paid in full, but in no event prior to November
9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which
occurred April 14, 1995, as payment for the option. Upon exercise of the
option, AMIT would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an irrevocable
proxy in favor of AMIT the result of which is MAE GP will be able to vote the
Class B Shares on all matters except those involving transactions between AMIT
and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an
officer or trustee of AMIT. On those matters, MAE GP granted to the AMIT
trustees, in their capacity as trustees of AMIT, proxies with regard to the
Class B Shares instructing such trustees to vote said Class B Shares in
accordance with the vote of the majority of the Class A Shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
Also, Angeles, either directly or through an affiliate, maintained a central
disbursement account (the "Account") for the properties and partnerships managed
by Angeles and its affiliates, including the Partnership. Angeles caused the
Partnership to make deposits to the Account ostensibly to fund the payment of
certain obligations of the Partnership. Angeles further caused checks on such
Account to be written to or on behalf of certain other partnerships. At least
$63,412 deposited by or on behalf of the Partnership was used for purposes other
than satisfying the liabilities of the Partnership. Accordingly, the
Partnership filed a Proof of Claim in the Angeles bankruptcy proceedings for
such amount. However, subsequently the Managing General Partner of the
Partnership determined that the cost involved to pursue such claim would likely
exceed any amount received, if in fact such claim were to be resolved in favor
of the Partnership. Therefore, the Partnership withdrew this claim on August 9,
1995.
Except as mentioned above, the Partnership is not involved in any legal
proceedings other than those arising in the normal course of business. The
Managing General Partner believes that any losses experienced as a result of
such proceedings will not have a material adverse effect upon the Partnership's
operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
Exhibit 10.14, Multifamily Note between Angeles Income Properties, Ltd.
II and Lehman Brothers Holdings, Inc d/b/a Lehman Capital, a division of
Lehman Brothers Holdings, Inc., dated July 1, 1996.
Exhibit 10.15, Multifamily Note between Angeles Income Properties, Ltd.
II and Lehman Brothers Holdings, Inc d/b/a Lehman Capital, a division of
Lehman Brothers Holdings, Inc., dated July 1, 1996.
Exhibit 10.16, Multifamily Mortgage, Assignment of Rents and Security
Agreement between Angeles Income Properties, Ltd. II and Lehman Brothers
Holdings, Inc d/b/a Lehman Capital, a division of Lehman Brothers
Holdings, Inc., dated July 1, 1996.
Exhibit 10.17, Multifamily Deed of Trust, Assignment of Rents and
Security Agreement Collateral Includes Fixtures between Angeles Income
Properties, Ltd. II and Lehman Brothers Holdings, Inc d/b/a Lehman
Capital, a division of Lehman Brothers Holdings, Inc., dated July 1,
1996.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1996.
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 INCOME PROPERTIES, LTD. II
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties, Ltd. II 1996 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000711642
<NAME> ANGELES INCOME PROPERTIES LTD. II
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,990
<SECURITIES> 0
<RECEIVABLES> 121
<ALLOWANCES> 72
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 34,841
<DEPRECIATION> 22,598
<TOTAL-ASSETS> 17,733
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 18,404
0
0
<COMMON> 0
<OTHER-SE> (1,560)
<TOTAL-LIABILITY-AND-EQUITY> 17,733
<SALES> 0
<TOTAL-REVENUES> 5,090
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,366
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,340
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (284)
<DISCONTINUED> 0
<EXTRAORDINARY> (173)
<CHANGES> 0
<NET-INCOME> (457)
<EPS-PRIMARY> (4.53)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
MULTIFAMILY NOTE
US $6,300,000.00 New York, New York
As of July 1, 1996
FOR VALUE RECEIVED, the undersigned promises to pay LEHMAN BROTHERS
HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or order, the principal sum of Six Million Three Hundred Thousand and 00/100
Dollars ($6,300,000.00) with interest on the unpaid principal balance from the
date of this Note, until paid, at the Applicable Interest Rate (defined herein).
Principal and interest shall be payable at 3 World Financial Center, New York,
New York 10285, or such other place as the holder hereof may designate in
writing, as follows:
(i) payments of interest only commencing on the first day of August,
1996 and thereafter on the first day of each succeeding calendar
month up to and including the Maturity Date (defined herein); and
(ii) the balance of the aggregate outstanding principal sum and all
accrued but unpaid interest thereon shall be due and payable on the
Maturity Date.
The term "Maturity Date" shall mean September 1, 1996, or any extension
thereof pursuant to the terms of this Note.
Interest on the principal sum of the Note shall be calculated on the basis
of the actual number of days elapsed in a three hundred sixty (360) day year.
All payments to Lender under the Note or this Agreement shall be made by wire
transfer of immediately available federal funds.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, attorney's fees.
Prepayments shall be applied against the outstanding principal balance of
this Note and shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless the
holder hereof shall agree otherwise in writing.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance of this Note,
without giving notice to or obtaining the consent of the undersigned, the
successors or assigns of the undersigned or guarantors, and without liability on
the part of the holder hereof, the holder hereof may, at the option of the
holder hereof, extend the time for payment of said outstanding principal balance
or any part thereof, reduce the payments thereon, release anyone liable on any
of said outstanding principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors and endorsers, and
shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by a Mortgage or Deed
of Trust dated as of the date hereof and reference is made thereto for rights as
to acceleration of the indebtedness evidenced by this Note. This Note shall be
governed by the law of the jurisdiction in which the Property subject to the
Mortgage or Deed of Trust is located.
The undersigned shall pay any installment of principal and/or interest due
hereunder within ten (10) calendar days after such installment of principal
and/or interest is due. The undersigned shall pay any other installment due
hereunder or due in accordance with the terms of the Mortgage or Deed of Trust
securing this Note, within thirty (30) calendar days of the date such
installment is due.
ANGELES INCOME PROPERTIES, LTD. II, a California
limited partnership
By: Angeles Realty Corporation II, a California
corporation, its general partner
By: /s/ Robert D. Long, Jr.
Name: Robert D. Long, Jr.
Title: Vice-President/CAO
CORPORATE ACKNOWLEDGEMENT
State South Carolina
County Greenville
I CERTIFY that on July 1, 1996 Robert D. Long, Jr. personally
came before me and this person acknowledged under oath to my satisfaction that
this person signed, sealed and delivered the attached document a VP/CAO of
Angeles Realty Corporation II, a California corporation, the corporation named
in this document; and this document was signed, and made by the corporation as
its voluntary act and deed by virtue of authority from its Board of Directors,
as general partner of Angeles Income Properties, Ltd. II, a California limited
partnership, on behalf of said limited partnership.
/s/ Antoinette M. Wolf
Printed Name Antoinette M. Wolf
NOTARY PUBLIC, State of SC
[NOTARIAL SEAL] Commission No.:
My commission expires: 2/25/2004
MULTIFAMILY NOTE
US $6,600,000.00 New York, New York
As of July 1, 1996
FOR VALUE RECEIVED, the undersigned promises to pay LEHMAN BROTHERS
HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or order, the principal sum of Six Million Six Hundred Thousand and 00/100
Dollars ($6,600,000.00) with interest on the unpaid principal balance from the
date of this Note, until paid, at the Applicable Interest Rate (defined herein).
Principal and interest shall be payable at 3 World Financial Center, New York,
New York 10285, or such other place as the holder hereof may designate in
writing, as follows:
(i) payments of interest only commencing on the first day of August,
1996 and thereafter on the first day of each succeeding calendar
month up to and including the Maturity Date (defined herein); and
(ii) the balance of the aggregate outstanding principal sum and all
accrued but unpaid interest thereon shall be due and payable on the
Maturity Date.
The term "Maturity Date" shall mean September 1, 1996, or any extension
thereof pursuant to the terms of this Note.
Interest on the principal sum of the Note shall be calculated on the basis
of the actual number of days elapsed in a three hundred sixty (360) day year.
All payments to Lender under the Note or this Agreement shall be made by wire
transfer of immediately available federal funds.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, attorney's fees.
Prepayments shall be applied against the outstanding principal balance of
this Note and shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless the
holder hereof shall agree otherwise in writing.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance of this Note,
without giving notice to or obtaining the consent of the undersigned, the
successors or assigns of the undersigned or guarantors, and without liability on
the part of the holder hereof, the holder hereof may, at the option of the
holder hereof, extend the time for payment of said outstanding principal balance
or any part thereof, reduce the payments thereon, release anyone liable on any
of said outstanding principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors and endorsers, and
shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by a Mortgage or Deed
of Trust dated as of the date hereof and reference is made thereto for rights as
to acceleration of the indebtedness evidenced by this Note. This Note shall be
governed by the law of the jurisdiction in which the Property subject to the
Mortgage or Deed of Trust is located.
The undersigned shall pay any installment of principal and/or interest due
hereunder within ten (10) calendar days after such installment of principal
and/or interest is due. The undersigned shall pay any other installment due
hereunder or due in accordance with the terms of the Mortgage or Deed of Trust
securing this Note, within thirty (30) calendar days of the date such
installment is due.
ATTEST: ANGELES INCOME PROPERTIES, LTD. II, a
California limited partnership
/s/ Kelly M. Buechler [SEAL]
Asst. Secretary
By: Angeles Realty Corporation II, a
California corporation, its general
(Corporate Seal) partner
By: /s/ Robert D. Long, Jr.
Name:Robert D. Long, Jr.
Title:Vice-President/CAO
CORPORATE ACKNOWLEDGEMENT
STATE OF South Carolina
COUNTY OF Greenville
I, a Notary Public of the County and State aforesaid, certify that Kelly
Buechler, personally appeared before me this day and acknowledged that (s)he is
Assistant Secretary of Angeles Realty Corporation II, a California corporation,
and that by authority duly given and as the act of the corporation it is
capacity as a general partner in and on behalf of Angeles Income Properties,
Ltd. II, a California limited partnership, the foregoing instrument was signed
in its name by its Vice President, sealed with its corporate seal and atttested
by (him) (her) as its Assistant Secretary.
Witness my hand and official stamp or seal, this 1st day of July, 1996.
/s/Antoinette M. Wolf
Notary Public
My Commission Expires:
2/25/2004
[NOTARIAL SEAL]
WHEN RECORDED MAIL TO
James L. Gregory III, Esq.
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
SPACE ABOVE THIS LINE FOR RECORDER'S USE
This instrument was prepared by:
James L. Gregory III, Esq.
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
THIS MORTGAGE (herein "Instrument") is made this 1st day of July, 1996,
between the Mortgagor/Grantor, ANGELES INCOME PROPERTIES, LTD. II, a California
limited partnership, whose address is c/o Insignia Financial Group, Inc., 1
Insignia Financial Plaza, Greenville, South Carolina 29602 (herein "Borrower"),
and the Mortgagee, LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A
Division of Lehman Brothers Holdings Inc., a corporation organized and existing
under the laws of Delaware, whose address is Three World Financial Center, New
York, New York 10285 (herein "Lender").
WHEREAS, Borrower is indebted to Lender in the principal sum of Six
Million Three Hundred Thousand Dollars, which indebtedness is evidenced by
Borrower's note dated July 1, 1996 (herein "Note"), providing for monthly
installments of principal and interest, with the balance of the indebtedness, if
not sooner paid, due and payable on September 1, 1996;
TO SECURE TO LENDER (a) the repayment of the indebtedness evidenced by the
Note, with interest thereon, and all renewals, extensions and modifications
thereof; (b) the repayment of any future advances, with interest thereon, made
by Lender to Borrower pursuant to paragraph 30 hereof (herein "Future
Advances"); (c) the payment of all other sums, with interest thereon, advanced
in accordance herewith to protect the security of this Instrument; and (d) the
performance of the covenants and agreements of Borrower herein contained,
Borrower does hereby mortgage, grant, convey and assign to Lender the following
described property located in Middlesex County, State of New Jersey:
See Exhibit A attached hereto and made a part hereof.
TOGETHER with all buildings, improvements, and tenements now or hereafter
erected on the property, and all heretofore or hereafter vacated alleys and
streets abutting the property, and all easements, rights, appurtenances, rents,
royalties, mineral, oil and gas rights and profits, water, water rights, and
water stock appurtenant to the property, and all fixtures, machinery, equipment,
engines, boilers, incinerators, building materials, appliances and goods of
every nature whatsoever now or hereafter located in, or on, or used, or intended
to be used in connection with the property, including, but not limited to, those
for the purposes of supplying or distributing heating, cooling, electricity,
gas, water, air and light; and all elevators, and related machinery and
equipment, fire prevention and extinguishing apparatus, security and access
control apparatus, plumbing, bath tubs, water heaters, water closets, sinks,
ranges, stoves, refrigerators, dishwashers, disposals, washers, dryers, awnings,
storm windows, storm doors, screens, blinds, shades, curtains and curtain rods,
mirrors, cabinets, panelling, rugs, attached floor coverings, furniture,
pictures, antennas, trees and plants; all of which, including replacements and
additions thereto, shall be deemed to be and remain a part of the real property
covered by this Instrument; and all of the foregoing, together with said
property (or the leasehold estate in the event this Instrument is on a
leasehold) are herein referred to as the "Property".
Borrower covenants that Borrower is lawfully seised of the estate hereby
conveyed and has the right to mortgage, grant, convey and assign the Property
(and, if this Instrument is on a leasehold, that the ground lease is in full
force and effect without modification except as noted above and without default
on the part of either lessor or lessee thereunder), that the Property is
unencumbered, and that Borrower will warrant and defend generally the title to
the Property against all claims and demands, subject to any easements and
restrictions listed in a schedule of exceptions to coverage in any title
insurance policy insuring Lender's interest in the Property.
Non-Uniform Covenants. Borrower and Lender further covenant and agree as
follows:
27. ACCELERATION; REMEDIES. Upon either:
(a) any failure by Borrower to timely make any payment
of principal, interest or other sums secured by
this Instrument before the expiration of any
applicable grace period; or
(b) any failure by Borrower to observe or perform any
other covenant or agreement contained in this
Instrument, which failure is not cured within
thirty (30) calendar days after notice by Lender
to Borrower of such failure,
then Lender at Lender's option may declare all of the sums secured by this
Instrument to be immediately due and payable without further demand and may
foreclose this Instrument by judicial proceeding and may invoke any other
remedies permitted by applicable law or provided herein. Lender shall be
entitled to collect all costs and expenses incurred in pursuing such remedies,
including, but not limited to, attorney's fees, costs of documentary evidence,
abstracts and title reports.
28. RELEASE. Upon payment of all sums secured by this Instrument, Lender
shall cancel this Instrument. Borrower shall pay Lender's reasonable costs
incurred in cancelling this Instrument.
29. NO CLAIM OF CREDIT FOR TAXES. Borrower will not make or claim credit on or
deduction from the principal or interest on the sums secured by this Instrument
by reason of any municipal or governmental taxes, assessments or charges
assessed upon the Property, nor claim any deduction from the taxable value of
the Property by reason of this Instrument.
30. FUTURE ADVANCES. Upon request of Borrower, Lender, at Lender's option so
long as this Instrument secures indebtedness held by Lender, may make Future
Advances to Borrower. Such Future Advances, with interest thereon, shall be
secured by this Instrument when evidenced by promissory notes stating that said
notes are secured hereby. At no time shall Future Advances secured by this
Instrument, not including sums advanced in accordance herewith to protect the
security of this Instrument, exceed US $6,300,000.00, nor shall such Future
Advances plus the unpaid principal balance of the Note exceed the original
principal amount of the Note (US $630,000.00).
IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused
the same to be executed by its representatives thereunto duly authorized.
ANGELES INCOME PROPERTIES, LTD. II, a California
limited partnership
By: Angeles Realty Corporation II, a California
corporation, its general partner
By: /s/ Robert D. Long, Jr.
Name:Robert D. Long, Jr.
Title:Vice-President/CAO
CORPORATE ACKNOWLEDGEMENT
State SC
County Greenville
I CERTIFY that on July 1, 1996, Robert D. Long, Jr. personally came
before me and this person acknowledged under oath to my satisfaction that this
person signed, sealed and delivered the attached document as VP/CAO of Angeles
Realty Corporation II, a California corporation, the corporation named in this
document; and this document was signed, and made by the corporation as its
voluntary act and deed by virtue of authority from its Board of Directors, as
general partner of Angeles Income Properties, Ltd. II, a California limited
partnership, on behalf of said limited partnership.
/s/ Antoinette M. Wolf
Printed Name Antoinette M. Wolf
NOTARY PUBLIC, State of SC
[NOTARIAL SEAL] Commission No.:
My commission expires: 2/25/2004
WHEN RECORDED MAIL TO
James L. Gregory III, Esq.
Thacher Proffitt & Wood
2 World Trade Center
New York, New York 10048
SPACE ABOVE THIS LINE FOR RECORDER'S USE
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
COLLATERAL INCLUDES FIXTURES
THIS DEED OF TRUST (herein "Instrument") is made as of this 1st day of
July, 1996, among the Trustor/Grantor, ANGELES INCOME PROPERTIES, LTD. II, a
California limited partnership whose address is c/o Insignia Financial Group,
Inc., 1 Insignia Financial Plaza, Greenville, South Carolina 29602 (herein
"Borrower"), COMMONWEALTH LAND TITLE INSURANCE COMPANY OF NORTH CAROLINA, as
Trustee (herein "Trustee"), and the Beneficiary, LEHMAN BROTHERS HOLDINGS INC.
d/b/a LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC., a corporation
organized and existing under the laws of Delaware, whose address is Three World
Financial Center, New York, New York (herein "Lender").
BORROWER, in consideration of the indebtedness herein recited and the
trust herein created, irrevocably grants, conveys and assigns to Trustee and
Trustee's successors and assigns, in trust, with power of sale, the following
described property located in Wake County, State of North Carolina:
See Exhibit A attached hereto and made a part hereof.
TO HAVE AND TO HOLD unto Trustee and Trustee's successors and assigns,
forever, together with all buildings, improvements, and tenements now or
hereafter erected on the property, and all heretofore or hereafter vacated
alleys and streets abutting the property, and all easements, rights,
appurtenances, rents (subject however to the assignment of rents to Lender
herein), royalties, mineral, oil and gas rights and profits, water, water
rights, and water stock appurtenant to the property, and all fixtures,
machinery, equipment, engines, boilers, incinerators, building materials,
appliances and goods of every nature whatsoever now or hereafter located in, or
on, or used, or intended to be used in connection with the property, including,
but not limited to, those for the purposes of supplying or distributing heating,
cooling, electricity, gas, water, air and light; and all elevators, and related
machinery and equipment, fire prevention and extinguishing apparatus, security
and access control apparatus, plumbing, bath tubs, water heaters, water closets,
sinks, ranges, stoves, refrigerators, dishwashers, disposals, washers, dryers,
awnings, storm windows, storm doors, screens, blinds, shades, curtains and
curtain rods, mirrors, cabinets, panelling, rugs, attached floor coverings,
furniture, pictures, antennas, trees and plants; all of which, including
replacements and additions thereto, shall be deemed to be and remain a part of
the real property covered by this Instrument; and all of the foregoing, together
with said property (or the leasehold estate in the event this Instrument is on a
leasehold) are herein referred to as the "Property".
TO SECURE TO LENDER (a) the repayment of the indebtedness evidenced by
Borrower's note dated as of July 1, 1996 (herein "Note") in the principal sum of
Six Million Six Hundred Thousand Dollars ($6,600,000.00), with interest thereon,
with the balance of the indebtedness, if not sooner paid, due and payable on
September 1, 1996, and all renewals, extensions and modifications thereof; (b)
the repayment of any future advances, with interest thereon, made by Lender to
Borrower pursuant to paragraph 30 hereof (herein "Future Advances"); (c) the
payment of all other sums, with interest thereon, advanced in accordance
herewith to protect the security of this Instrument; and (d) the performance of
the covenants and agreements of Borrower herein contained.
Borrower covenants that Borrower is lawfully seised of the estate hereby
conveyed and has the right to grant, convey and assign the Property (and, if
this Instrument is on a leasehold, that the ground lease is in full force and
effect without modification except as noted above and without default on the
part of either lessor or lessee thereunder), that the Property is unencumbered,
and that Borrower will warrant and defend the title to the Property against all
claims and demands, subject to any easements and restrictions listed in a
schedule of exceptions to coverage in any title insurance policy insuring
Lender's interest in the Property.
Non-Uniform Covenants. Borrower and Lender further covenant and agree as
follows:
27. ACCELERATION; REMEDIES. Upon either: (a) any failure by Borrower to
timely make any payment of principal, interest or other sums secured by this
Instrument before the expiration of any applicable grace period, or (b) any
failure by Borrower to observe or perform any other covenant or agreement
contained in this Instrument, which failure is not cured within thirty (30)
calendar days after notice by Lender to Borrower of such failure, then Lender at
Lender's option may declare all of the sums secured by this Instrument to be
immediately due and payable without further demand, and may invoke the power of
sale and any other remedies permitted by applicable law or provided herein.
Lender shall be entitled to collect all costs and expenses incurred in pursuing
such remedies, including, but not limited to, costs of documentary evidence,
abstracts and title reports.
If Lender invokes the power of sale and if it is determined in a hearing
held in accordance with applicable law that Trustee can proceed to sale, Trustee
shall take such action regarding notice of sale and shall give such additional
notices to Borrower and to other persons as North Carolina law may require.
After the lapse of such time as may be required by applicable law and after the
publication of the notice of sale, Trustee shall sell the Property according to
the laws of North Carolina. Trustee may sell the Property at the time and place
and under the terms designated in the notice of sale in one or more parcels and
in such order as Trustee may determine. Trustee may postpone sale of all or any
parcel of the Property by public announcement at the time and place of any
previously scheduled sale. Lender or Lender's designee may purchase the
Property at any sale.
Trustee shall deliver to the purchaser Trustee's deed conveying the
Property so sold without any covenant or warranty, expressed or implied. The
recitals in the Trustee's deed shall be prima facie evidence of the truth of the
statements made therein. Trustee shall apply the proceeds of the sale in the
following order: (a) to all costs and expenses of the sale, including, but not
limited to, Trustee's fees of 5% of the gross sale price and costs of title
evidence; (b) to all sums secured by this Instrument in such order as Lender, in
Lender's sole discretion, directs; and (c) the excess, if any, to the person or
persons legally entitled thereto.
28. RELEASE. Upon payment of all sums secured by this Instrument, Lender or
Trustee shall cancel this Instrument. Borrower shall pay the reasonable costs
incurred in cancelling this Instrument. If Trustee is requested to cancel this
Instrument, all notes evidencing indebtedness secured by this Instrument shall
be surrendered to Trustee.
29. SUBSTITUTE TRUSTEE. Lender may from time to time remove Trustee and
appoint a successor trustee to any Trustee appointed hereunder by an instrument
recorded in the county in which this Instrument is recorded. Without conveyance
of the Property, the successor trustee shall succeed to all the title, power and
duties conferred upon the Trustee herein and by applicable law.
30. FUTURE ADVANCES. Upon request of Borrower, Lender, at Lender's option
within ten years of the date of this Instrument or any amendment thereto, may
make Future Advances to Borrower. Such Future Advances, with interest thereon,
shall be secured by this Instrument when evidenced by promissory notes stating
that said notes are secured hereby. At no time shall the principal amount of
the indebtedness secured by this Instrument, not including sums advanced in
accordance herewith to protect the security of this Instrument, exceed the
original amount of the Note (US $6,600,000.00) plus the additional sum of US
$660,000.00.
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IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused
the same to be executed under seal by its representatives thereunto duly
authorized.
ATTEST: ANGELES INCOME PROPERTIES, LTD. II, a
California limited partnership
/s/ Kelly M Buechler [SEAL]
Secretary
By: Angeles Realty Corporation II, a
California corporation, its general
(Corporate Seal) partner
By: /s/ Robert D. Long, Jr.
Name:Robert D. Long, Jr.
Title:Vice-President/CAO
CORPORATE ACKNOWLEDGEMENT
STATE OF SC
COUNTY OF Greenville
I, a Notary Public of the County and State aforesaid, certify that Kelly
Buechler, personally appeared before me this day and acknowledged that (s)he is
Assistant Secretary of Angeles Realty Corporation II, a California corporation,
and that by authority duly given and as the act of the corporation in its
capacity as a general partner in and on behalf of Angeles Income Properties,
Ltd. II, a California limited partnership, the foregoing instrument was signed
in its name by its Vice President, sealed with its corporate seal and attested
by (him) (her) as its Assistant Secretary.
Witness my hand and official stamp or seal, this 1st day of July, 1996.
/s/ Antoinette M. Wolf
Notary Public
My Commission Expires:
2/25/2004
[NOTARIAL SEAL]
