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 June 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)
June 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 2,016
Restricted--tenant security deposits 255
Accounts receivable, net of allowance for
doubtful accounts of $72 121
Escrows for taxes 243
Restricted escrows 445
Other assets 518
Investment in, and advances of $43 to,
joint venture 47
Investment properties:
Land $ 2,197
Buildings and related personal property 32,548
34,745
Less accumulated depreciation (22,156) 12,589
$ 16,234
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 95
Tenant security deposits 261
Accrued taxes 215
Other liabilities 284
Mortgage notes payable 16,587
Partners' Deficit
General partners $ (450)
Limited partners (99,851 units issued and
outstanding) (758) (1,208)
$ 16,234
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,598 $ 1,563 $ 3,207 $ 3,475
Other income 77 73 146 143
Total revenue 1,675 1,636 3,353 3,618
Expenses:
Operating 480 473 932 1,081
General and administrative 70 95 158 174
Maintenance 218 215 390 356
Depreciation 438 423 871 995
Interest 393 402 789 980
Property taxes 147 154 280 279
Bad debt expense (19) -- 19 --
Total expenses 1,727 1,762 3,439 3,865
Equity in income (loss) of
joint venture 11 2 (19) (17)
Gain on transfer of property
in foreclosure -- -- -- 1,385
Loss on disposal of property -- -- -- (40)
(Loss) income before
extraordinary item (41) (124) (105) 1,081
Extraordinary gain on
extinguishment of debt -- 14 -- 565
Net (loss) income $ (41) $ (110) $ (105) $ 1,646
Net (loss) income allocated
to general partners (1%) $ -- $ (1) $ (1) $ 16
Net (loss) income allocated
to limited partners (99%) (41) (109) (104) 1,630
Net (loss) income $ (41) $ (110) $ (105) $ 1,646
Per limited partnership unit:
(Loss) income before
extraordinary item $ (.41) $ (1.23) $ (1.04) $ 10.72
Extraordinary item -- .14 -- 5.60
Net (loss) income $ (.41) $ (1.09) $ (1.04) $ 16.32
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) ANGELES INCOME PROPERTIES, LTD, II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 100,000 $ 1 $ 50,000 $50,001
Partners' deficit at
December 31, 1995 99,851 $ (449) $ (654) $(1,103)
Net loss for the six
months ended June 30, 1996 -- (1) (104) (105)
Partners' deficit at
June 30, 1996 99,851 $ (450) $ (758) $(1,208)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (105) $ 1,646
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Bad debt expense 19 --
Depreciation 871 995
Amortization of discounts, loan costs and
lease commissions 58 71
Equity in loss of joint venture 19 17
Gain on transfer of property in foreclosure -- (1,385)
Extraordinary gain on extinguishment of debt -- (565)
Loss on disposal of property -- 40
Change in accounts:
Restricted cash (10) 5
Accounts receivable (30) --
Escrows for taxes (147) (99)
Other assets (19) 20
Accounts payable (53) (140)
Tenant security deposit liabilities 17 10
Accrued taxes 101 51
Other liabilities 39 141
Net cash provided by operating activities 760 807
Cash flows from investing activities:
Property improvements and replacements (204) (290)
Insurance proceeds -- 19
Deposits to restricted escrows (31) (49)
Receipts from restricted escrows -- 30
Advances to joint venture (29) --
Net cash used in investing activities (264) (290)
Cash flows from financing activities:
Loan costs (47) --
Payments on mortgage notes payable (141) (128)
Net cash used in financing activities (188) (128)
Net increase in cash balance 308 389
Cash and cash equivalents at beginning of period 1,708 1,063
Cash and cash equivalents at end of period $ 2,016 $ 1,452
Supplemental disclosure of cash flow information:
Cash paid for interest $ 739 $ 752
<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 the Managing General Partner, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June 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 six month periods ended
June 30, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $158 $168
Reimbursement for services
of affiliates 121 140
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, owns 63,200 Class A Shares of AMIT. These Class A Shares entitle
LAC to vote approximately 1.5% of the total shares.
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:
June 30, 1996
(in thousands)
Assets
Cash $ 292
Deferred charges and other assets 163
Investment properties, net 1,911
Total $ 2,366
Liabilities and Partners' Capital
Notes payable to AMIT $ 1,567
Other liabilities 780
Partners' capital 19
Total $ 2,366
The condensed profit and loss statement of the Joint Venture are summarized as
follows:
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(in thousands) (in thousands)
Revenue $ 494 $ 379 $ 609 $ 484
Costs and expenses (416) (363) (740) (598)
Net income (loss) $ 78 $ 16 $(131) $ (114)
The Partnership's equity interest in the loss of the Joint Venture for the six
months ended June 30, 1996, was $19,000 and was $17,000 for the six months ended
June 30, 1995.
Note C - Investment in Joint Venture - (continued)
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 $6,430,000
including $443,000 in accrued interest. The net gain on foreclosure amounted to
$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 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 - Subsequent Event
On July 1, 1996, the Partnership refinanced the mortgages encumbering Deer Creek
Apartments and Landmark Apartments. The total indebtedness refinanced was
$7,517,000 (interest rate - 9.13%) and $3,552,000 (interest rate - 9.75%),
respectively. The new mortgage indebtedness of $6,300,000 for Deer Creek
Apartments and $6,600,000 for Landmark Apartments carries a stated interest rate
of 8.0% and a maturity date of September 1, 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 get a lower interest rate
and to provide funds needed to help close the Deer Creek Apartments refinance.
Both of these properties are in the process of negotiating longer term financing
which is anticipated to close in 1996. However, 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 six months ended June 30, 1996, and June 30, 1995:
Average
Occupancy
Property 1996 1995
Atlanta Crossing Shopping Center
Montgomery, Alabama 91% 89%
Deer Creek Apartments
Plainsboro, New Jersey 95% 95%
Georgetown Apartments
South Bend, Indiana 97% 98%
Landmark Apartments
Raleigh, North Carolina (1) 93% 96%
(1) This property typically attracts a student tenant base. Occupancy should
increase in the fall as students return to classes.
The Partnership's net loss for the six months ended June 30, 1996, was $105,000
versus net income of $1,646,000 for the six months ended June 30, 1995. The
decrease in net income is due primarily to the gain on foreclosure and the gain
on early extinguishment of debt related to the foreclosure of Executive Plaza
Office Park on March 20, 1995 (see discussion below). The Partnership's net
losses for the three months ended June 30, 1996 and 1995, were $41,000 and
$110,000, respectively. Total revenues and expenses did not fluctuate
materially between these two periods.
As a result of the foreclosure, the Partnership realized a decrease in rental
income as well as a decrease in the following expenses for the six months ended
June 30, 1996, versus the six months ended June 30, 1995: operating,
depreciation, and interest expense. Maintenance expense increased due to an
increase in snow removal costs at Deer Creek Apartments and Landmark Apartments
due to the harsh winter in 1996. Also contributing to the increase was exterior
and interior building improvements at Landmark Apartments. Tax expense
increased at Georgetown Apartments due to a tax rate increase and an increase in
assessed value. This increase offset tax expense reductions associated with the
foreclosure of Executive Plaza Office Park. 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,
resulting in bad debt expense for the six months ended June 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 first six months of 1995. The $47,000 loss at Georgetown
Apartments related to the write-off of roofs due to replacement. These roofs
were not fully depreciated at the time of replacement. The gain of $7,000 at
Deer Creek Apartments related to one unit being written off due to fire damage.
The insurance proceeds received for the damage were in excess of the book value
of the unit destroyed.
The Partnership has a 14.4% investment in the Princeton Meadows Golf Course
Joint Venture. For the six months ended June 30, 1996, the Partnership realized
equity in loss of the Joint Venture of $19,000 as compared to a $17,000 loss for
the six months ended June 30, 1995. Princeton Meadows Golf Course has realized
increases in bad debt, insurance, and maintenance and repairs expense. The
property's environmental issues (see "Note C - Investment in Joint Venture")
necessitated a purchase of new insurance. The golf course also implemented a
preventative maintenance program and repairs were made to the cart paths and
course. These increases in expense were offset by an increase in revenues.
These revenue increases can be attributed 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.
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 June 30, 1996, the Partnership had unrestricted cash of $2,016,000 versus
$1,452,000 at June 30, 1995. Net cash provided by operating activities
decreased due to increased escrows for taxes and increased other assets. Net
cash used in investing activities decreased due to a decrease in property
improvements and replacements. Net cash used in financing activities increased
due to additional loan costs incurred during the first six months of 1996 in an
effort to refinance the indebtedness secured by Deer Creek Apartments and
Landmark Apartments.
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 mortgage
indebtedness of $16,587,000 is being amortized over 30 years, 28.67 years and 20
years with maturity dates of July 1996, October 2003 and July 1997. The first
mortgages secured by Deer Creek Apartments and Landmark Apartments mature July
1996 and July 1997, respectively. The Managing General Partner negotiated a
refinance of this indebtedness on July 1, 1996 (see "Note E - Subsequent
Event"). The second mortgage on Georgetown Apartments is interest only with the
principal balance due October 2003. Future cash distributions will depend on
the levels of net cash generated from operations, refinancings, property sale
and the availability of cash reserves.
The Partnership's primary source of cash is from the operations of its
properties and from financing placed on such properties. Cash from these
sources is utilized for property operations, capital improvements, and/or
repayment of debt. 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 investment properties to adequately
maintain the physical assets and other operating needs of the Partnership.
Future cash distributions will depend on the levels of net cash generated from
operations, refinancings and property sales. 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 has
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, owns 63,200 Class A Shares of AMIT.
These Class A Shares entitle LAC to vote approximately 1.5% of the total shares.
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 has 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.
b) Reports on Form 8-K:
None filed during the quarter ended June 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: August 6, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties, Ltd. II 1996 Second 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,016
<SECURITIES> 0
<RECEIVABLES> 121
<ALLOWANCES> 72
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 34,745
<DEPRECIATION> 22,156
<TOTAL-ASSETS> 16,234
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 16,587
0
0
<COMMON> 0
<OTHER-SE> (1,208)
<TOTAL-LIABILITY-AND-EQUITY> 16,234
<SALES> 0
<TOTAL-REVENUES> 3,353
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,439
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 789
<INCOME-PRETAX> (105)
<INCOME-TAX> 0
<INCOME-CONTINUING> (105)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (105)
<EPS-PRIMARY> (1.04)<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multipler is 1.
</FN>
</TABLE>
