FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from.........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
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the 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)
June 30, 1998
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 3,559
Receivables and deposits, net of allowance
for doubtful accounts of $159 663
Restricted escrows 822
Other assets 649
Investment in, and advances of $46 to,
joint venture 69
Investment properties:
Land $ 2,198
Buildings and related personal property 34,108
36,306
Less accumulated depreciation (25,268) 11,038
$16,800
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 51
Tenant security deposit liabilities 266
Accrued property taxes 227
Other liabilities 183
Mortgage notes payable 18,100
Partners' Deficit
General partners' $ (460)
Limited partners' (99,784 units issued and
outstanding) (1,567) (2,027)
$16,800
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 Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Rental income $1,744 $1,788 $3,478 $3,376
Other income 129 116 233 222
Total revenues 1,873 1,904 3,711 3,598
Expenses:
Operating 864 685 1,487 1,310
General and administrative 72 50 142 119
Depreciation 459 445 917 888
Interest 360 369 721 734
Property taxes 140 137 289 277
Bad debt recoveries, net (28) (30) (77) (20)
Loss on disposal of property 39 74 39 111
Total expenses 1,906 1,730 3,518 3,419
Equity in income of
joint venture (Note C) 25 26 9 11
Net (loss) income $ (8) $ 200 $ 202 $ 190
Net (loss) income allocated
to general partners (1%) $ -- $ 2 $ 2 $ 2
Net (loss) income allocated
to limited partners (99%) (8) 198 200 188
$ (8) $ 200 $ 202 $ 190
Net (loss) income per limited
partnership unit $(0.08) $ 1.98 $ 2.00 $ 1.88
istributions per limited
partnership unit $ -- $ 9.92 $ -- $ 9.92
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, 1997 99,784 $ (462) $(1,767) $(2,229)
Net income for the six months
ended June 30, 1998 -- 2 200 202
Partners' deficit
at June 30, 1998 99,784 $ (460) $(1,567) $(2,027)
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Net income $ 202 $ 190
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 917 888
Amortization of discounts, loan costs and lease
commissions 49 49
Bad debt recoveries, net (77) (20)
Equity in income of joint venture (9) (11)
Loss on disposal of property 39 111
Change in accounts:
Receivables and deposits (22) (37)
Other assets 7 (40)
Accounts payable (169) (27)
Tenant security deposit liabilities 5 17
Accrued property taxes (26) 40
Other liabilities 17 18
Net cash provided by operating activities 933 1,178
Cash flows from investing activities:
Property improvements and replacements (656) (538)
Net withdrawals from (deposits to) restricted escrows 285 (110)
Advances to joint venture -- (3)
Net cash used in investing activities (371) (651)
Cash flows from financing activities:
Loan costs paid -- (10)
Payments on mortgage notes payable (102) (90)
Distributions to partners -- (1,000)
Net cash used in financing activities (102) (1,100)
Net increase (decrease) in cash and cash equivalents 460 (573)
Cash and cash equivalents at beginning of period 3,099 2,855
Cash and cash equivalents at end of period $ 3,559 $ 2,282
Supplemental disclosure of cash flow information:
Cash paid for interest $ 682 $ 694
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 consolidated financial statements of Angeles Income
Properties, Ltd. II (the "Partnership") 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 six month periods ended June 30, 1998, are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
1998. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Partnership's annual report on Form 10-KSB
for the fiscal year ended December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
Principles of Consolidation
The consolidated financial statements of the Partnership include its 99% limited
partnership interests in AIP II GP, LP and Georgetown AIP II, LP for the period
ended June 30, 1997. The Partnership had the ability to remove the general
partner of both AIP II GP, LP and Georgetown AIP II, LP; therefore, the
partnerships were controlled and consolidated by the Partnership. At December
31, 1997, AIP II Georgetown GP, L.L.C. was formed as a wholly-owned subsidiary
of the Partnership. AIP II GP LP's interest in Georgetown AIP II, LP was
transferred to this new subsidiary. Therefore, for the six month period ended
June 30, 1998, Georgetown AIP II LP was wholly owned by the Partnership. All
significant interpartnership balances have been eliminated.
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. Effective February 25, 1998, the Managing General
Partner became wholly-owned by Insignia Properties Trust ("IPT"), an affiliate
of Insignia Financial Group, Inc. ("Insignia"). On February 25, 1998, the
former owner of the Managing General Partner, MAE GP Corporation ("MAE GP"), an
affiliate of Insignia, was merged into IPT. 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 months ended June 30, 1998 and 1997 (in thousands):
1998 1997
Property management fees (included in operating
expenses) $172 $167
Reimbursements for services of affiliates (included
in general and administrative expenses) 86 73
In addition, construction services reimbursements of approximately $34,000 and
$16,000 were paid to an affiliate of the Managing General Partner during the six
months ended June 30, 1998 and 1997, respectively. Construction reimbursement
costs are included in operating expenses and investment properties.
Additionally, the Partnership paid approximately $6,000 during the six months
ended June 30, 1998 to an affiliate of the Managing General Partner for lease
commissions at the Partnership's commercial property. These lease commissions
are included in other assets and are amortized over the terms of the respective
leases.
For the period from January 1, 1997, to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner, but with an 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 was later acquired by the agent who placed the master policy. The
agent assumed the financial obligations to the affiliate of the Managing General
Partner which received payments on these obligations from the agent. The amount
of the Partnership's insurance premiums that accrued to the benefit of the
affiliate of the Managing General Partner by virtue of the agent's obligations
was not significant.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
September or October of 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the Managing General Partner of the
Partnership.
On April 24, 1998, an affiliate of Insignia commenced a tender offer for limited
partnership interests in the Partnership. The Purchaser offered to purchase up
to 40,000 of the outstanding units of limited partnership interest ("Units") in
the Partnership at a purchase price of $150 per Unit, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated April 24, 1998 (the "Offer to Purchase") and in the related Assignment of
Partnership Interest (which, together with any supplements or amendments,
collectively constitute the "Offer") per Schedule 14D-9 originally filed with
the Securities and Exchange Commission on April 24, 1998. Because of the
existing and potential future conflicts of interest (described in the
Partnership's Statements on Schedule 14D-9 filed with the Securities and
Exchange Commission), neither the Partnership nor the Managing General Partner
expressed any opinion as to the Offer to Purchase and made no recommendation as
to whether unit holders should tender their units in response to the Offer to
Purchase. On May 21, 1998, the tender offer was officially closed with 8,908
Limited Partner Units being acquired by the Purchaser.
Angeles Mortgage Investment Trust, ("AMIT"), a real estate investment trust,
provides 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 amount of $1,567,000. Interest
expense on the debt secured by the Joint Venture was $98,000 for each of the six
months ended June 30, 1998 and 1997. Accrued interest was $18,000 at June 30,
1998.
In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The
terms of the Class B Shares provide that they are convertible, in whole or in
part, into Class A Common Shares on the basis of one Class A Share for every 49
Class B Shares (however, in connection with the settlement agreement described
in the following paragraph, MAE GP has agreed not to convert the Class B Shares
so long as AMIT's option is outstanding). These Class B Shares entitle the
holder to receive 1% of the distributions of net cash distributed by AMIT
(however, in connection with the settlement agreement described in the following
paragraph, MAE GP agreed to waive its right to receive dividends and
distributions so long as AMIT's option is outstanding). The holder of the Class
B Shares is also entitled to vote on the same basis as the holders of Class A
Shares, providing the holder with approximately 39% of the total voting power of
AMIT (unless and until converted to Class A Shares, in which case the percentage
of the vote controlled represented by such shares would approximate 1.3% of the
total voting power of AMIT).
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B Shares owned by it. This option can be exercised
at the end of 10 years or when all loans made by AMIT to partnerships which were
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. In connection with
such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing
(which occurred April 14, 1995) as payment for the option. If and when the
option is exercised, AMIT will be required to remit to MAE GP an additional
$94,000.
Simultaneously with the execution of the option and as part of the settlement,
MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that
the holder of the Class B Shares is permitted to vote those 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. With respect to such matters, the trustees of AMIT are required to vote
(pursuant to the irrevocable proxy) the Class B Shares (as a single block) in
the same manner as a majority of the Class A Shares are voted (to be determined
without consideration of the votes of "Excess Class A Shares" (as defined in
Section 6.13 of AMIT's Declaration of Trust).
Between its acquisition of the Class B Shares (in November 1992) and March 31,
1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its
shares at the 1995 and 1996 annual meetings in connection with the election of
trustees and other matters. In February 1998, MAE GP was merged into IPT, and
in connection with that merger, MAE GP dividended all of the Class B Shares to
its sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a
result, MAE, as the holder of the Class B Shares, is now subject to the terms of
the settlement agreement, option and irrevocable proxy described in the two
preceding paragraphs. Neither MAE GP nor MAE has exerted or has any current
intention to exert any management control over or participate in the management
of AMIT. However, subject to the terms of the proxy described below, MAE may
choose to vote the Class B Shares or otherwise exercise its rights as a
shareholder of AMIT as it deems appropriate in the future.
Liquidity Assistance L.L.C., which is an affiliate of the Managing General
Partner, MAE and Insignia (which provides property management and partnership
administration services to the Partnership), owned 96,800 Class A Shares of AMIT
at June 30, 1998. These Class A Shares represent approximately 2.2% of the total
voting power of AMIT.
On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in
principle contemplating, among other things, a business combination of AMIT and
IPT, which was then owned 98% by Insignia and its affiliates. On July 18, 1997,
IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to
which (subject to shareholder approval and certain other conditions, including
the receipt by AMIT of a fairness opinion from its investment bankers) AMIT
would be merged with and into IPT, with each Class A Share and Class B Share
being converted into 1.625 and 0.0332 Common Shares of IPT, respectively. The
foregoing exchange ratios are subject to adjustment to account for dividends
paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1,
1997. It is anticipated that Insignia and its affiliates (including MAE) would
own approximately 57% of post-merger IPT if this transaction is consummated.
NOTE C - INVESTMENT IN JOINT VENTURE
The Partnership owns a 14.4% interest in the Joint Venture. The Partnership
accounts for its interest in the Joint Venture using the equity method of
accounting.
Condensed balance sheet information of the Joint Venture is as follows:
June 30, 1998
(in thousands)
Assets
Cash $ 292
Other assets 281
Investment property, net 2,043
Total $2,616
Liabilities and Partners' Capital
Note payable to AMIT (Note B) $1,567
Other liabilities 897
Partners' capital 152
Total $2,616
The condensed profit and loss statements of the Joint Venture are summarized as
follows:
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(in thousands) (in thousands)
Revenue $ 541 $ 545 $ 744 $ 741
Costs and expenses (364) (362) (681) (664)
Net income $ 177 $ 183 $ 63 $ 77
The Partnership's equity interest in the income of the Joint Venture was $9,000
and $11,000 for the six months ended June 30, 1998 and June 30, 1997,
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 phosphorous
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 had not given 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. Field work is in process, with skimmers
having been installed at three test wells on the site. These skimmers are in
place to detect any residual fuel that may still be in the ground. The expected
completion date of the compliance work should be sometime in 1999. The Joint
Venture originally recorded a liability of $199,000 for the costs of the clean-
up, subsequently, in 1997, the Joint Venture recorded an additional liability of
approximately $45,000 as an adjustment to estimated costs remaining to complete
the clean-up. At June 30, 1998, the balance in the liability for clean-up costs
is $54,000. Funds from the property will be used to pay the outstanding costs.
NOTE D - DISTRIBUTIONS TO PARTNERS
Subsequent to June 30, 1998, the Partnership paid a distribution from operations
of approximately $1,500,000. Of this amount, approximately $15,000 was paid to
the general partners and approximately $1,485,000 was paid to the limited
partners. During the six months ended June 30, 1997, the Partnership distributed
$1,000,000 from operations to the partners.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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, 1998 and June 30, 1997:
Average
Occupancy
Property 1998 1997
Atlanta Crossing Shopping Center 91% 90%
Montgomery, Alabama
Deer Creek Apartments 97% 96%
Plainsboro, New Jersey
Georgetown Apartments 95% 98%
South Bend, Indiana
Landmark Apartments 91% 91%
Raleigh, North Carolina
The Partnership's net income for the six months ended June 30, 1998, was
approximately $202,000 versus net income of approximately $190,000 for the six
months ended June 30, 1997. The Partnership recorded a net loss for the three
months ended June 30, 1998, of approximately $8,000 versus net income of
approximately $200,000 for the three months ended June 30, 1997. The increase
in net income for the six months ended June 30, 1998 is primarily due to an
increase in rental income, increased bad debt recoveries, and decreased losses
on disposal of property. Rental income increased primarily due to increased
occupancy and rental rates at Deer Creek Apartments and Atlanta Crossing
Shopping Center. Bad debt recoveries continue to be collected at Atlanta
Crossing Shopping Center from tenants from whom bad debt expenses were incurred
previously due to delinquencies. The Partnership recorded losses on disposal of
property of approximately $39,000 and $111,000 for the six months ended June 30,
1998 and 1997 respectively. The 1998 loss resulted from the write-off of siding
at Deer Creek Apartments, while the 1997 loss resulted from the write-off of
roofs at Deer Creek. Both of these write-offs were a result of assets not fully
depreciated at the time of replacement. Partially offsetting the increase in
net income for the six months ended June 30, 1998, was an increase in operating
expenses. Included in operating expense for the six months ended June 30, 1998,
is approximately $290,000 of major repairs and maintenance comprised primarily
of exterior building repairs and painting related to a renovation project at
Landmark Apartments. This renovation project includes the correction of
drainage problems and related foundation repairs along with exterior building
repairs and painting in order to improve the appearance of the property.
Included in operating expense for the six months ended June 30, 1997, is
approximately $80,000 of major repairs and maintenance primarily comprised of
exterior building repairs, parking lot repairs, landscaping, and exterior
painting.
While net income increased for the six months ended June 30, 1998, net income
for the three months ended June 30, 1998, decreased compared to the
corresponding period of 1997. This decrease is primarily attributable to
increased operating expenses resulting from the exterior building repairs at
Landmark Apartments, as described above, most of which occurred in the second
quarter of 1998.
The Partnership has a 14.4% investment in the Princeton Meadows Golf Course
Joint Venture. For the six months ended June 30, 1998, the Partnership realized
equity in income of the Joint Venture of approximately $9,000 as compared to
income of approximately $11,000 for the six months ended June 30, 1997. The
decrease in net income is primarily attributable to a decrease in revenue as a
result of poor weather conditions.
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, 1998, the Partnership had cash and cash equivalents of $3,559,000
versus $2,282,000 at June 30, 1997. The net increase in cash and cash
equivalents for the six months ended June 30, 1998, was approximately $460,000
compared to a decrease of approximately of $573,000 for the six months ended
June 30, 1997. Net cash provided by operating activities decreased primarily
due to an increase in cash used for accounts payable and accrued taxes due to
the timing of payments. Net cash used in investing activities decreased due to
an increase in net withdrawals from restricted escrows, partially offset by an
increase in property improvements and replacements. Net cash used in financing
activities decreased due to distributions to partners being made during the
second quarter of 1997.
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 properties 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. A major
vinyl siding and exterior lighting project totaling approximately $1,300,000 was
budgeted for 1998 at Deer Creek Apartments. Through June 30, 1998,
approximately $370,000 in costs have been capitalized with regard to this
project. The Partnership has mortgage notes payable totaling $18,100,000, net
of discounts, with various maturity dates and balloon payments due at maturity,
at which time the properties will be either refinanced or sold. The first
mortgages secured by Deer Creek Apartments and Landmark Apartments mature in
November 2003. The remaining debt, which is secured by Georgetown Apartments,
matures in October 2003. A distribution from operations totaling $1,000,000 was
paid in April 1997. Subsequent to June 30, 1998 a distribution from operations
in the amount of $1,500,000 was paid. Future cash distributions will depend on
the levels of net cash generated from operations, refinancings, property sales
and the availability of cash reserves.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed no
later than December 31, 1998, which is prior to any anticipated impact on its
operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance, or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and its affiliates of
interests in certain general partner entities, past tender offers by Insignia
affiliates to acquire limited partnership units, the management of partnerships
by Insignia affiliates as well as a recently announced agreement between
Insignia and AIMCO. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. The Managing General Partner
believes the action to be without merit, and intends to vigorously defend it.
On June 24, 1998, the Managing General Partner filed a motion seeking dismissal
of the action.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The General Partner of the Partnership believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition or operations of
the Partnership.
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:
No reports on form 8-K were filed during the quarter ended June 30,
1998.
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
Its Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President and Director
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: August 7, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Income Properties, Ltd. II 1998 Second Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
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<NAME> ANGELES INCOME PROPERTIES, LTD. II
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
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<DEPRECIATION> 25,268
<TOTAL-ASSETS> 16,800
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0
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<EPS-PRIMARY> 2.00<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
