FORM 10-QSB.--QUARTERLY 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
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-13309
ANGELES PARTNERS XII
(Exact name of small business issuer as specified in its charter)
California 95-3903623
(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) (Zip Code)
(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 PARTNERS XII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents:
Unrestricted $ 5,102
Restricted--tenant security deposits 939
Investment in, and advances of $149 to, Joint Venture 102
Accounts receivable, net of allowance for doubtful
accounts of $152 218
Escrows for taxes 774
Restricted escrows 1,297
Other assets 1,931
Investment properties
Land $ 10,341
Buildings and related personal property 89,017
99,358
Less accumulated depreciation (57,028) 42,330
$ 52,693
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 471
Tenant security deposits 942
Accrued taxes 1,093
Other liabilities 697
Mortgage notes payable, including $11,000,000 in default 72,592
Partners' Deficit
General partners $ (616)
Limited partners (44,718 units issued
and outstanding) (22,486) (23,102)
$ 52,693
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b) ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $ 4,899 $ 5,001
Other income 319 313
Total revenues 5,218 5,314
Expenses:
Operating 1,719 1,645
General and administrative 142 139
Maintenance 466 506
Depreciation 1,217 1,180
Interest 1,626 1,640
Property taxes 543 509
Bad debt recovery (30) (16)
Total expenses 5,683 5,603
Equity in loss of Joint Venture (47) (93)
Net loss $ (512) $ (382)
Loss allocated to general
partners (1%) $ (5) $ (4)
Loss allocated to limited
partners (99%) (507) (378)
Net loss $ (512) $ (382)
Net loss per limited partnership unit $ (11.34) $ (8.44)
See Accompanying Notes to Consolidated Financial Statements
c) ANGELES PARTNERS XII
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 44,773 $ 1 $ 44,773 $ 44,774
Partners' deficit at
December 31, 1996 44,718 $ (611) $ (21,979) $ (22,590)
Net loss for the three months
ended March 31, 1997 -- (5) (507) (512)
Partners' deficit at
March 31, 1997 44,718 $ (616) $ (22,486) $ (23,102)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (512) $ (382)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 1,217 1,180
Amortization of discounts, loan costs, and
leasing commissions 104 103
Bad debt recovery (30) (16)
Equity in loss of Joint Venture 47 93
Change in accounts:
Restricted cash (16) (26)
Accounts receivable (23) (51)
Escrows for taxes (56) (203)
Other assets (44) 12
Accounts payable (122) (57)
Tenant security deposit liabilities 19 25
Accrued taxes 61 16
Other liabilities (19) (32)
Net cash provided by operating activities 626 662
Cash flows from investing activities:
Property improvements and replacements (193) (263)
Deposits to restricted escrows (29) (35)
Withdrawals from restricted escrows 69 --
Advances to Joint Venture (6) (89)
Net cash used in investing activities (159) (387)
Cash flows used in financing activities:
Payments on mortgage notes payable (192) (176)
Net increase in unrestricted cash and cash equivalents 275 99
Unrestricted cash and cash equivalents at
beginning of period 4,827 3,643
Unrestricted cash and cash equivalents at
end of period $ 5,102 $ 3,742
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,529 $ 1,544
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
ANGELES PARTNERS XII
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 month period ended March 31, 1997, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1997. For
further information, refer to the financial statements and footnotes thereto
included in Angeles Partners XII (the "Partnership" or the "Registrant") annual
report on Form 10-KSB for the fiscal year ended December 31, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - INVESTMENT IN JOINT VENTURE
The Partnership owns a 44.5% interest in the Princeton Meadows Golf Course Joint
Venture ("Joint Venture"). The Partnership accounts for its interest in the
Joint Venture using the equity method of accounting.
The balance sheet of the Joint Venture is summarized as follows:
March 31, 1997
(in thousands)
Assets
Cash $ 125
Other assets 222
Investment property, net 1,889
$ 2,236
Liabilities and Partners' Deficit
Note payable to AMIT $ 1,567
Other liabilities 775
Partners' deficit (106)
$ 2,236
The statements of operations of the Joint Venture are summarized as follows:
Three Months Ended
March 31,
1997 1996
(in thousands)
Revenue $ 196 $ 115
Costs and expenses (302) (324)
Net loss $ (106) $ (209)
The Partnership's equity interest in the loss of the Joint Venture for the three
months ended March 31, 1997, and March 31, 1996, was $47,000 and $93,000,
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 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. The Joint Venture has recorded a
liability of $199,000 for the costs of the clean-up. The contracts have been
executed and field work has been completed with the expected completion date of
the compliance work to be sometime in late 1997. The Managing General Partner
believes the balance of $36,000 in the liability is sufficient to cover all
costs associated with this incident.
NOTE C - 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 for certain expenses incurred by
affiliates on behalf of the Partnership. The following amounts owed to the
Managing General Partner and affiliates for the three months ended March 31,
1997 and 1996, were paid or accrued:
1997 1996
(in thousands)
Property management fees $252 $253
Reimbursement for services of affiliates 103 104
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 was later acquired by the
agent who placed the current year's master policy. The current agent assumed
the financial obligations of 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.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
provides financing to the Joint Venture, which is secured by the Joint Venture's
sole investment property known as the Princeton Meadows Golf Course, in the
amount of $1,567,000 at March 31, 1997. Interest expense on the debt secured by
the Joint Venture was $49,000 and $52,000 for the three months ended March 31,
1997 and 1996, respectively. Accrued interest was $17,000 at March 31, 1997.
MAE GP Corporation ("MAE GP"), an affiliate of the Managing General Partner,
owns 1,675,113 Class B Shares of AMIT. The terms of the Class B Shares provide
that they are convertable, in whole or in part, into Class A Shares on the basis
of 1 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 MAE GP to receive 1% of the distributions of net cash
distributed by AMIT. These Class B Shares also entitle MAE GP to vote on the
same basis as Class A Shares, providing MAE GP 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 the shares held
by MAE GP would approximate 1.3% 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 and 1996
annual meetings 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, Insignia Properties,
L.P., ("IPLP"), an affiliate of the Managing General Partner and an affiliate of
Insignia Financial Group, Inc. ("Insignia"), which provides property management
and partnership administration services to the Partnership, owns 96,800 Class A
Shares of AMIT at March 31, 1997. These Class A Shares represent approximately
2.2% 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 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. 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 executed an irrevocable proxy in favor of AMIT, the result of which is
that MAE GP is permitted 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 is obligated to deliver 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).
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
Insignia Properties Trust, an entity owned 98% by Insignia and its affiliates
("IPT"). It is anticipated that the resulting combined entity would be owned
approximately 82% by Insignia and its affiliates and 18% by the pre-combination
AMIT shareholders (including MAE GP and IPLP). The proposed transaction is
contingent upon, among other things, satisfactory review of the business,
operations, properties and assets of AMIT and IPT, the negotiation and execution
of definitive agreements and the approval of the proposed transaction by the
trustees and shareholders of each of AMIT and IPT.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of nine apartment complexes and
one commercial complex. The following table sets forth the average occupancy of
the properties for the three months ended March 31, 1997 and 1996:
Average Occupancy
Property 1997 1996
Briarwood Apartments 95% 95%
Cedar Rapids, Iowa
Chambers Ridge Apartments (1) 85% 91%
Harrisburg, Pennsylvania
Gateway Gardens Apartments (2) 91% 94%
Cedar Rapids, Iowa
Hunters Glen - IV Apartments 94% 93%
Plainsboro, New Jersey
Hunters Glen - V Apartments 93% 95%
Plainsboro, New Jersey
Hunters Glen - VI Apartments 94% 96%
Plainsboro, New Jersey
Pickwick Place Apartments 93% 95%
Indianapolis, Indiana
Southpointe Apartments (3) 67% 84%
Bedford Heights, Ohio
Twin Lake Towers Apartments 95% 95%
Westmont, Illinois
Cooper Point Plaza (4) 60% 85%
Olympia, Washington
1)Chambers Ridge Apartments has been adversely affected by increased rental
rates, which resulted in decreased rentals and renewals. The Managing
General Partner plans to increase rental concessions in order to attract new
tenants.
2)Gateway Gardens Apartments has been adversely affected by an increase in home
buying in the area. Also, residents have left due to construction and
maintenance work at the property.
3)Southpointe Apartment's low occupancy is due to delays in renovations and the
poor condition of the property.
4)Cooper Point Plaza has been adversely affected by the moving out of several
small tenants. The Managing General Partner is in the process of making
several spaces "rent ready" and is also working to fill vacant spaces.
The Partnership incurred a net loss of $512,000 for the three months ended March
31, 1997, as compared to a net loss of $382,000 for the three months ended March
31, 1996. This increase in net loss is due to a slight decrease in rental income
and a slight increase in expenses, offset partially by a decrease in equity in
loss of the Joint Venture.
Rental revenue has decreased for the three months ended March 31, 1997, as
compared to the three months ended March 31, 1996, due to an overall decrease in
occupancy for the residential properties. Cooper Point Plaza, the Partnership's
only commercial property, also experienced a decrease in occupancy.
Total expenses increased due to increases in operating expense and depreciation
expense, partially offset by decreases in maintenance expense and bad debt
expense. Operating expenses increased primarily due to an increase in the number
of corporate units available at Hunters Glen Apartments - IV, V, and VI.
Although these units are very profitable, the expenses associated with operating
these units are higher since they are fully furnished and the utilities are
included. Also, a significant rate increase resulted in an increase in
electricity and gas bills at Twin Lake Towers Apartments. Depreciation expense
increased as a result of placing more assets in service in 1996. The decrease
in maintenance expense can be attributed to a decrease in major landscaping at
Twin Lake Towers Apartments. This property completed a major landscaping
project around the lake area at the property during 1996. Bad debt recovery for
the three months ended March 31, 1997, results from a reduction of the reserve
necessary at Cooper Point Plaza, based on a review of tenant accounts
receivable.
The Partnership has a 44.5% investment in the Princeton Meadows Golf Course
Joint Venture. For the three months ended March 31, 1997, the Partnership
realized equity in loss of the Joint Venture of $47,000, as compared to $93,000
for the three months ended March 31, 1996. The decreased loss at Princeton
Meadows Golf Course in 1997 can be attributed to an increase in revenue. These
revenue increases are the result of maintenance upgrades at the golf course that
have improved the appearance of the property. The completion of these upgrades
in 1996 lead to a decrease in expenses for the period ended March 31, 1997.
Included in maintenance expense at March 31, 1997, and March 31, 1996, is
$47,000 and $52,000, respectively, of major repairs and maintenance. At March
31, 1997, this is mainly comprised of major landscaping, parking lot repairs,
swimming pool repairs and window covering replacements. At March 31, 1996, this
is mainly comprised of major landscaping.
The Managing General Partner continues to monitor the rental market environment
at its investment properties to assess the feasibility of increasing rents, to
maintain or increase the occupancy level and to protect the Partnership from
increases in expense. The Managing General Partner expects to be able, at a
minimum, to continue protecting the Partnership from the burden of inflation-
related increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, rental concessions and rental reductions needed to
offset softening market conditions could affect the ability to sustain this
plan.
At March 31, 1997, the Partnership had unrestricted cash and cash equivalents of
$5,102,000, compared to $3,742,000 at March 31, 1996. Net cash provided by
operating activities remained consistent for the three months ended March 31,
1997, versus the three months ended March 31, 1996. Net cash used in investing
activities decreased as a result of decreased property improvements and
replacements, decreased advances to the Joint Venture and an increase in
withdrawals from restricted escrows during the first three months of 1997.
However, the Managing General Partner anticipates making significant capital
improvements to its investment properties during 1997. Net cash used in
financing activities resulted from principal payments made on the mortgage notes
payable for the three months ended March 31, 1997.
The Managing General Partner has been unsuccessful in attempts to refinance the
$11,000,000 mortgage indebtedness secured by Southpointe Apartments, which
matures July 1999 and carries a stated interest rate of 8.59%. This property
has increasing maintenance needs, yet the cash flow of the property does not
support incurring such expenditures to adequately maintain the property.
Subsequent to March 31, 1997, the mortgage is in default, due to non-payment of
the April 1997 debt-service payment. In the past, monthly payments of debt
service have usually been late, as the property rents for the current month are
used to pay the prior month's debt service. The Managing General Partner is
currently in negotiations with the lender regarding this indebtedness, however
there can be no assurances that such negotiations will be successful. In
February 1997, the tenants at Southpointe Apartments orchestrated a rent strike.
The tenants are demanding that until certain capital improvements are made at
the property, rents will be held in escrow. The Managing General Partner is
negotiating with the attorney for the tenants regarding the tenant complaints.
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. The
Partnership indebtedness amounts to $72,592,000, net of unamortized discounts,
with maturity dates ranging from July 1999 to September 2012, at which point
$63,821,000 of balloon payments will be due. Future cash distributions will
depend on the levels of net cash generated from operations, refinancings and
property sales. There were no cash distributions during the three months ended
March 31, 1997, or March 31, 1996.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is unaware of any pending or outstanding litigation that is not
of a routine nature. The Registrant believes that all such routine matters are
adequately covered by insurance and will be resolved without a material adverse
effect upon the Partnership's financial condition, results of operation or
liquidity.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27A is filed as an exhibit to this report.
b) Reports on Form 8-K:
None filed during the three months ended March 31, 1997.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS XII
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long
Robert D. Long
Vice President/CAO
Date: May 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners XII 1997 First Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000720392
<NAME> ANGELES PARTNERS XII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,102
<SECURITIES> 0
<RECEIVABLES> 218
<ALLOWANCES> 152
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 99,358
<DEPRECIATION> 57,028
<TOTAL-ASSETS> 52,693
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 72,592
0
0
<COMMON> 0
<OTHER-SE> (23,102)
<TOTAL-LIABILITY-AND-EQUITY> 52,693
<SALES> 0
<TOTAL-REVENUES> 5,218
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,626
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (512)
<EPS-PRIMARY> (11.34)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
