FORM 10-KSB-ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from __________to___________
Commission file number 0-13309
ANGELES PARTNERS XII
(Name of small business issuer in its charter)
California 95-3903623
(State or other jurisdiction of (I.R.S. 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
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.[]
State issuer's revenues for its most recent fiscal year. $21,291,000
State the aggregate market value of the voting partnership interests held by
nonaffiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of a specified date within the past 60 days. Market value
information for the Registrant's partnership interests is not available. Should
a trading market develop for these interests, it is the Managing General
Partner's belief that the aggregate market value of the voting partnership
interests would not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Angeles Partners XII (the "Partnership" or the "Registrant") is a publicly-held
limited partnership organized under the California Uniform Limited Partnership
Act pursuant to the amended Certificate and Agreement of Limited Partnership
(hereinafter referred to as the "Agreement") dated May 26, 1983. The
Partnership's managing general partner is Angeles Realty Corporation II ("ARC
II" or the "Managing General Partner"), a California corporation and wholly-
owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25, 1998,
MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate
of Insignia Financial Group, Inc. ("Insignia"). Thus the Managing General
Partner is now a wholly-owned subsidiary of IPT. The Elliott Accommodation
Trust and the Elliott Family Partnership, a California limited partnership, are
the Non-Managing General Partners. The Managing General Partner and the Non-
Managing General Partners are herein collectively referred to as the "General
Partners".
The Partnership, through its public offering of Limited Partnership Units, sold
44,773 units aggregating $44,773,000. The Managing General Partner contributed
capital in the amount of $1,000 for a 1% interest in the Partnership. The
Partnership was formed for the purpose of acquiring fee and other forms of
equity interests in various types of real property. The Partnership presently
owns ten investment properties and owns a general partnership interest in an
eleventh property. The Managing General Partner of the Partnership intends to
maximize the operating results and, ultimately, the net realizable value of each
of the Partnership's properties in order to achieve the best possible return for
the investors. Such results may best be achieved through property sales,
refinancings, debt restructurings or relinquishment of the assets. The
Partnership intends to evaluate each of its holdings periodically to determine
the most appropriate strategy for each of the assets. The Managing General
Partner's policy is to only commit cash from operations and financings secured
by the real property to support operations, capital improvements and repayment
of debt on a property specific basis.
The Partnership has no full time employees. The Managing General Partner is
vested with full authority as to the general management and supervision of the
business and affairs of the Partnership. Limited Partners and Non-Managing
General Partners have no right to participate in the management or conduct of
such business and affairs. Insignia Residential Group, L.P. provides day-to-day
management to all of the Partnership's investment properties.
The business in which the Partnership is engaged is highly competitive, and the
Partnership is not a significant factor in its industry. Each investment
property is located in or near a major urban area and, accordingly, competes for
rentals not only with similar properties in its immediate area but with hundreds
of similar properties throughout the urban area. Such competition is primarily
on the basis of location, rents, services and amenities. In addition, the
Partnership competes with significant numbers of individuals and organizations
(including similar partnerships, real estate investment trusts and financial
institutions) with respect to the sale of improved real properties, primarily on
the basis of the prices and terms of such transactions.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6.".
ITEM 2. DESCRIPTION OF PROPERTIES:
The following table sets forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
Briarwood Apartments 06/25/85 Fee ownership subject to Apartment
Cedar Rapids, Iowa first and second mortgages 73 units
Chambers Ridge Apartments 07/26/84 Fee ownership subject to Apartment
Harrisburg, Pennsylvania first and second mortgages 324 units
Cooper Point Plaza 12/14/84 Fee ownership subject to Retail Center
Olympia, Washington a first mortgage 103,473 sq.ft.
Gateway Gardens Apartments 12/21/84 Fee ownership subject to Apartment
Cedar Rapids, Iowa first and second mortgages 328 units
Hunters Glen Apartments - IV 01/31/85 Fee ownership subject to Apartment
Plainsboro, New Jersey a first mortgage 264 units
Hunters Glen Apartments - V 01/31/85 Fee ownership subject to Apartment
Plainsboro, New Jersey first and second mortgages 304 units
Hunters Glen Apartments - VI 01/31/85 Fee ownership subject to Apartment
Plainsboro, New Jersey first and second mortgages 328 units
Pickwick Place Apartments 05/11/84 Fee ownership subject to Apartment
Indianapolis, Indiana a first mortgage 336 units
Southpointe Apartments 06/12/85 Fee ownership subject to Apartment
Bedford Heights, Ohio a first mortgage 499 units
Twin Lake Towers Apartments 03/30/84 Fee ownership subject to Apartment
Westmont, Illinois first and second mortgages 399 units
The Partnership also has a 44.5% interest in Princeton Golf Course Joint Venture
("Joint Venture"). The Partnership entered into a General Partnership Agreement
with Angeles Income Properties, Ltd. II and Angeles Partners XI, both California
partnerships and affiliates of the Managing General Partner, to form the Joint
Venture. The property owned by the Joint Venture, as of December 31, 1997, is
summarized as follows:
Date of
Property Purchase Type of Ownership Use
Princeton Meadows Golf Course 07/26/91 Fee ownership subject to Golf Course
Princeton, New Jersey a first mortgage
The Joint Venture is carried on the Partnership's balance sheet on the equity
method of accounting and is included in "Investment in joint venture" see "Item
7.".
SCHEDULE OF PROPERTIES:
(dollar amounts in thousands)
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Briarwood Apartments $ 1,814 $ 1,124 5-40 yrs (1) $ 688
Chambers Ridge Apartments 9,703 6,355 5-40 yrs (1) 3,287
Cooper Point Plaza 8,865 5,052 5-40 yrs (1) 4,859
Gateway Gardens Apartments 7,561 4,915 5-40 yrs (1) 2,404
Hunters Glen Apartments-IV 11,199 6,280 5-40 yrs (1) 4,573
Hunters Glen Apartments-V 13,043 7,347 5-40 yrs (1) 5,279
Hunters Glen Apartments-VI 14,029 7,927 5-40 yrs (1) 5,596
Pickwick Place Apartments 9,230 5,410 5-40 yrs (1) 3,745
Southpointe Apartments 10,045 6,416 5-40 yrs (1) 3,284
Twin Lake Towers Apartments 15,130 9,803 5-40 yrs (1) 4,384
$ 100,619 $ 60,629 $ 38,099
(1) Straight line and accelerated
See "Note A" of the financial statements included in "Item 7." for a description
of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
(dollar amounts in thousands)
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1997 Rate Amortized Date Maturity
Briarwood Apartments
1st mortgage $ 1,557 7.83% 28.67 yrs 10/2003 $ 1,404
2nd mortgage 50 7.83% (1) 10/2003 50
Chambers Ridge Apartments
1st mortgage 5,380 7.83% 28.67 yrs 10/2003 4,849
2nd mortgage 174 7.83% (1) 10/2003 174
Cooper Point Plaza
1st mortgage 4,026 10.5% 28 yrs 09/2012 43
Gateway Gardens Apartments
1st mortgage 6,276 7.83% 28.67 yrs 10/2003 5,657
2nd mortgage 203 7.83% (1) 10/2003 203
Hunters Glen Apartments-IV
1st mortgage 8,345 8.43% 28.67 yrs 10/2003 7,787
Hunters Glen Apartments-V
1st mortgage 8,787 7.83% 28.67 yrs 10/2003 7,920
2nd mortgage 285 7.83% (1) 10/2003 285
Hunters Glen Apartments-VI
1st mortgage 9,146 7.83% 28.67 yrs 10/2003 8,243
2nd mortgage 297 7.83% (1) 10/2003 297
Pickwick Place Apartments
1st mortgage 6,451 9.1% 28 yrs 05/2005 5,775
Southpointe Apartments
1st mortgage (2) 11,000 8.59% (1) 01/2002 11,000
Additional borrowing (2) 23 9.00% (2) 01/2002 1
Twin Lake Towers Apartments
1st mortgage 10,854 7.83% 28.67 yrs 10/2003 9,782
2nd mortgage 352 7.83% (1) 10/2003 352
73,206 $ 63,822
Less unamortized discounts (1,101)
$ 72,105
(1)Interest only payments.
(2)The mortgage note secured by Southpointe Apartments was modified as of
December 31, 1997. The modification agreement extended the term of the
mortgage note from July 1999 to January 2002. The lender also agreed to
advance to the Partnership an amount up to $180,000 for the payment of real
estate taxes. The lender advanced approximately $23,000 to the Partnership
for this purpose in 1997. See "Capital Resources and Liquidity" in "Item
6." for more information.
Average annual rental rate and occupancy for 1997 and 1996 for each property:
Average Annual Average Annual
Rental Rates Occupancy
Property 1997 1996 1997 1996
Briarwood Apartments $6,485/unit $6,417/unit 96% 95%
Chambers Ridge Apartments (1) 6,874/unit 6,846/unit 91% 89%
Cooper Point Plaza (2) 11.40/s.f. 11.68/s.f. 53% 71%
Gateway Gardens Apartments 6,331/unit 6,205/unit 94% 93%
Hunters Glen Apartments - IV 8,702/unit 8,573/unit 96% 94%
Hunters Glen Apartments - V 8,831/unit 8,573/unit 96% 95%
Hunters Glen Apartments - VI 8,712/unit 8,464/unit 96% 94%
Pickwick Place Apartments (3) 6,805/unit 6,468/unit 91% 95%
Southpointe Apartments (4) 5,654/unit 5,535/unit 63% 80%
Twin Lake Towers Apartments 8,269/unit 7,914/unit 97% 96%
(1)Although occupancy improved, this investment property is subject to heavy
market competition.
(2)This investment property 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 also is working to fill vacant
spaces. Additionally, the Managing General Partner is planning major
renovations for signage, landscaping, parking lot repairs, and general
contract work in an effort to improve occupancy.
(3)Concessions have been offered at Pickwick Place Apartments in an effort
to increase occupancy.
(4)Southpointe Apartments' low occupancy is due to delays in renovations at
the property and the poor condition of the property. The mortgage
indebtedness encumbering this property was modified in December 1997. As
part of the agreement, the Partnership is required to advance $150,000 to
Southpointe Apartments for capital improvement projects. As of December
31, 1997, approximately $70,000 of the required improvements have been
completed (see "Item 7.").
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes and commercial buildings
in the area. The Managing General Partner believes that all of the properties
are adequately insured. The multi-family residential properties' lease terms are
for one year or less. No residential tenant leases 10% or more of the available
rental space.
The following is a schedule of the lease expirations for the Partnership's
commercial property for the years 1998-2007 (dollar amounts in thousands):
Number of Square Annual % of Gross
Expirations Feet Rent Annual Rent
Cooper Point Plaza
1998 2 2,400 $ 24 4.2%
1999 2 2,400 28 4.9%
2000 2 10,727 122 21%
2001 - -- -- --
2002 1 1,200 15 2.6%
2003 - -- -- --
2004 2 32,538 356 61.0%
2005 1 (*) 37 6.3%
2006 - -- -- --
2007 - -- -- --
(*) This expiration is a ground lease.
The following schedule reflects information on tenants occupying 10% or
more of the leasable square footage for each property:
Square Footage Annual Rent Lease
Nature of Business Leased Per Square Foot Expiration
Cooper Point Plaza
Drug Store 19,527 $ 7.27 08/31/04
Post Office 13,011 16.46 06/30/04
Real estate taxes and rates in 1997 for each property were:
1997 1997
Billing Rate
(in thousands)
Briarwood Apartments $ 73* 3.47%
Chambers Ridge Apartments 161 2.78%
Cooper Point Plaza 102 1.58%
Gateway Gardens Apartments 243** 3.13%
Hunters Glen Apartments - IV 277 2.45%
Hunters Glen Apartments - V 299 2.45%
Hunters Glen Apartments - VI 303 2.45%
Pickwick Place Apartments 196* 7.11%
Southpointe Apartments 235 5.86%
Twin Lake Towers Apartments 267* 5.59%
* Represents 1996 billing. Tax bills for 1997 not yet received.
** Represents a fiscal year ending June 30, 1997.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. Management of the Partnership 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Unit holders of the Partnership did not vote on any matter during the fiscal
year covered by this report.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
The Partnership, a publicly-held limited partnership, sold 44,773 Limited
Partnership Units during its offering period through February 13, 1985. As of
December 31, 1997, the Partnership had 3,971 Limited Partners of record and
44,718 Limited Partnership Units outstanding. During 1996, the number of
Limited Partnership Units decreased by 55 units due to limited partners
abandoning their Units. In abandoning his or her Limited Partnership Unit, a
limited partner relinquishes all right, title and interest in the Partnership as
of the date of abandonment. There is no intention to sell additional Limited
Partnership Units nor is there an established market for these units.
There were no distributions to the partners for the years ending December 31,
1996 and 1997. There are no material restrictions upon the Partnership's
present or future ability to make distributions in accordance with the
provisions of the Partnership Agreement. Future cash distributions will depend
on the levels of cash generated from operations, refinancings, property sales
and cash reserves.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
The Partnership incurred a net loss of approximately $2,025,000 for the year
ended December 31, 1997, as compared to a net loss of approximately $1,802,000
for the year ended December 31, 1996. This increase in net loss for the year
ended December 31, 1997, is due to a decrease in other income and an increase in
expenses, which is only partially offset by an increase in equity income of the
Joint Venture.
Total expenses for the year ended December 31, 1997 as compared to the year
ended December 31, 1996, increased due to increases in operating and
depreciation expenses, partially offset by a decrease in general and
administrative expenses and a recovery of bad debts. The increase in operating
expense can be attributed to increases in property, advertising, and maintenance
expenses. Property 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 contributing to the increase in property expenses is the
increase in maintenance salaries at Pickwick Place Apartments due to the need
for additional maintenance personnel during 1997. Advertising expense increased
at Pickwick Place Apartments due to concessions made in an effort to increase
occupancy. Maintenance expense increased as a result of ongoing improvement
projects at Southpointe Apartments, such as major parking lot repairs and
electrical work. There were also interior painting projects at Pickwick Place
Apartments and Twin Lake Towers Apartments and major landscaping expenditures at
Hunters Glen Apartments - IV. Depreciation expense increased partially as a
result of large siding and paving projects being capitalized at Pickwick Place
Apartments in 1996. In 1997, a full year of depreciation was taken on these
assets versus only a half year in 1996. The decrease in general and
administrative expenses can be attributed to a decrease in reimbursements for
services of affiliates.
Bad debt recovery for the year ended December 31, 1997, results from a reduction
of the reserve necessary at Cooper Point Plaza and Southpointe Apartments, based
on a review of their tenant accounts receivable.
The Partnership has a 44.5% investment in the Princeton Meadows Golf Course
Joint Venture. For the year ended December 31, 1997, the Partnership realized
equity in income of the Joint Venture of approximately $42,000, as compared to
equity in loss of the Joint Venture of approximately $67,000 for the year ended
December 31, 1996. The improved performance of this property can be attributed
to an increase in revenue. These revenue increases can be attributed to
maintenance upgrades at the golf course that have improved the appearance of the
property. The decrease in expense can be attributed to the use of leased
equipment which has lowered repairs and maintenance costs and the completion of
landscaping and repairs in 1996.
The $70,000 loss on disposal of assets for the year ended December 31, 1997, was
the result of roof, balcony and carport replacements at Twin Lake Towers
Apartments and Pickwick Place Apartments. The loss results from the assets not
being fully depreciated at time of disposal or replacement.
Included in operating expense for the year ended December 31, 1997, is
approximately $532,000 of major repairs and maintenance mainly comprised of
window covering replacements, exterior painting, parking lot repairs, exterior
building repairs and major landscaping. For the year ended December 31, 1996,
approximately $468,000 of major repairs and maintenance is included in operating
expense mainly comprised of exterior painting, parking lot repairs, interior
building repairs and major landscaping.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rent, 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.
CAPITAL RESOURCES AND LIQUIDITY
At December 31, 1997, the Partnership held cash and cash equivalents of
approximately $6,459,000, compared to approximately $4,827,000 at December 31,
1996. The increase in net cash for the years ended December 31, 1997 and 1996,
was approximately $1,632,000 and $1,184,000, respectively. Net cash provided by
operating activities increased for the year ended December 31, 1997, versus the
year ended December 31, 1996, despite an increased net loss. Contributing to
the increase in net cash provided by operating activities was a decrease in
receivables and deposits and an increase in other liabilities, partially offset
by an increase in other assets and a decrease in accounts payable. Receivables
and deposits decreased due to the collection of tenant accounts receivable and
the timing of property tax escrow payments at some of the investment properties.
Other liabilities increased due to the accrual of interest on the debt secured
by Southpointe Apartments, as discussed below. The increase in other assets for
the year ended December 31, 1997, versus the year ended December 31, 1996,
results from an increase in prepaid insurance premiums. Accounts payable
decreased primarily due to the paydown of accounts payable at Southpointe
Apartments. Net cash used in investing activities increased as a result of a
decrease in net receipts from restricted escrows, partially offset by decreased
advances to the Joint Venture during 1997. Net cash used in financing activities
resulted from principal payments made on the mortgage notes payable for the year
ended December 31, 1997.
The mortgage encumbering Southpointe Apartments was in default from April 1997
until December 31, 1997, due to non-payment of the monthly debt-service
requirements. This property has increasing maintenance needs, some of which have
been completed as of December 31, 1997. Historically, monthly payments of debt
service have been late, as the property rents for the current month are used to
pay the prior month's debt service. In February 1997, the tenants at Southpointe
Apartments orchestrated a rent strike. The tenants demanded that until certain
capital improvements were made at the property, rents would be held in escrow.
The Managing General Partner negotiated with the attorney for the tenants
regarding the tenant complaints. At December 31, 1997, certain improvements had
been made and the remaining rents were released from escrow. The Managing
General Partner had been unsuccessful in attempts to refinance the $11,000,000
mortgage indebtedness secured by Southpointe Apartments, which carried a
maturity date of July 1999 and a stated interest rate of 8.59%. However, a
modification was agreed upon at December 31, 1997, which extends the maturity
date of the loan until January 2002. The modification was contingent upon the
payment of all delinquent accrued interest, the installation of new boilers at
the property with a cost of approximately $70,000, approximately $80,000 in
capital improvements to be made over the next two years and a reduction in the
management fee taken by the management company from 5% of gross revenues to 3%
of gross revenues. In addition, in accordance with the mortgage agreement, the
lender advanced the Partnership an additional $23,000 to be used to pay real
estate taxes. This advance is secured by the mortgage agreement and accrues
interest at 9%. The advance matures January 2002. In January 1998, a payment
was made to the lender to satisfy all the accrued interest and secure the
modification. All other terms of the debt remain the same.
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 approximately $72,105,000, net of
unamortized discounts, with maturity dates ranging from January 2002 to
September 2012, at which point approximately $63,822,000 of balloon payments
will be due. There were no cash distributions during the years ending December
31, 1997 or 1996. There are no material restrictions upon the Partnership's
present or future ability to make distributions in accordance with the
provisions of the Partnership Agreement. Future cash distributions will depend
on the levels of cash generated from operations, refinancings, property sales
and 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
not 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 annual 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 annual report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or 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.
ITEM 7. FINANCIAL STATEMENTS
ANGELES PARTNERS XII
LIST OF FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Balance Sheet - December 31, 1997
Consolidated Statements of Operations - Years ended December 31, 1997 and 1996
Consolidated Statements of Changes in Partners' Deficit - Years ended December
31, 1997 and 1996
Consolidated Statements of Cash Flows - Years ended December 31, 1997 and 1996
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Angeles Partners XII
We have audited the accompanying consolidated balance sheet of Angeles Partners
XII as of December 31, 1997, and the related consolidated statements of
operations, changes in partners' deficit and cash flows for each of the two
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by the Partnership's management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Angeles Partners
XII at December 31, 1997, and the consolidated results of its operations and
its cash flows for each of the two years in the period ended December 31, 1997,
in conformity with generally accepted accounting principles.
/S/ ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 1998
ANGELES PARTNERS XII
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1997
Assets
Cash and cash equivalents $ 6,459
Receivables and deposits, net of allowance
for doubtful accounts of $39 1,674
Restricted escrows 1,305
Other assets 1,747
Investment in, and advances of $149
to, joint venture (Note F) 190
Investment properties (Notes B and E):
Land $ 10,341
Buildings and related personal
property 90,278
100,619
Less accumulated depreciation (60,629) 39,990
$ 51,365
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 532
Tenant security deposits 960
Accrued taxes 1,045
Other liabilities 1,338
Mortgage notes payable (Notes B and E) 72,105
Partners' Deficit
General partners $ (631)
Limited partners (44,718 units issued and
outstanding) (23,984) (24,615)
$ 51,365
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1997 1996
Revenues:
Rental income $ 20,007 $ 20,001
Other income 1,284 1,320
Total revenues 21,291 21,321
Expenses:
Operating 9,306 8,900
General and administrative 509 551
Depreciation 4,965 4,811
Interest 6,493 6,538
Property taxes 2,161 2,089
Bad debt (recovery) expense, net (146) 167
Loss on disposal of property 70 --
Total expenses 23,358 23,056
Equity in income (loss) of joint
venture (Note F) 42 (67)
Net loss $ (2,025) $ (1,802)
Net loss allocated to general partners (1%) $ (20) $ (18)
Net loss allocated to limited partners (99%) (2,005) (1,784)
Net loss $ (2,025) $ (1,802)
Net loss per limited partnership unit $ (44.83) $ (39.85)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 44,773 $ 1 $ 44,773 $ 44,774
Partners' deficit at
December 31, 1995 44,773 $ (593) $ (20,195) $ (20,788)
Net loss for the year
ended December 31, 1996 -- (18) (1,784) (1,802)
Abandonment of Limited
Partnership Units (Note H) (55) -- -- --
Partners' deficit at
December 31, 1996 44,718 (611) (21,979) (22,590)
Net loss for the year ended
December 31, 1997 -- (20) (2,005) (2,025)
Partners' deficit at
December 31, 1997 44,718 $ (631) $ (23,984) $ (24,615)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1997 1996
Cash flows from operating activities:
Net loss $ (2,025) $ (1,802)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 4,965 4,811
Amortization of discounts, loan costs, and
leasing commissions 427 415
Bad debt (recovery) expense, net (146) 167
Loss on disposal of asset 70 --
Equity in (income) loss of joint venture (42) 67
Change in accounts:
Receivables and deposits 278 (336)
Other assets (82) 17
Accounts payable (61) 91
Tenant security deposit liabilities 37 60
Accrued taxes 13 16
Other liabilities 622 (201)
Net cash provided by operating
activities 4,056 3,305
Cash flows from investing activities:
Property improvements and replacements (1,671) (1,648)
Advances to joint venture (5) (89)
Net receipts from restricted escrows 32 340
Net cash used in investing activities (1,644) (1,397)
Cash flows from financing activities:
Loan costs paid (15) --
Proceeds from mortgage advance 23 --
Payments on mortgage notes payable (788) (724)
Net cash used in financing activities (780) (724)
Net increase in cash and cash equivalents 1,632 1,184
Cash and cash equivalents at beginning of year 4,827 3,643
Cash and cash equivalents at end of year $ 6,459 $ 4,827
Supplemental disclosure of cash flow information:
Cash paid for interest $ 5,464 $ 6,093
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
Notes to Consolidated Financial Statements
December 31, 1997
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Angeles Partners XII (the "Partnership" or "Registrant") is a
California limited partnership organized on May 26, 1983, to acquire and operate
residential and commercial real estate properties. The Partnership's managing
general partner is Angeles Realty Corporation II ("ARC II" or the "Managing
General Partner"), an affiliate of Insignia Financial Group, Inc. ("Insignia")
and a wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective
February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"),
which is an affiliate of Insignia. Thus the Managing General Partner is now a
wholly-owned subsidiary of IPT. As of December 31, 1997, the Partnership
operates nine residential properties and one commercial property in or near
major urban areas in the United States and owns a general partner interest in a
golf course.
Principles of Consolidation: The consolidated financial statements of the
Partnership include its 99% limited partnership interest in Hunters Glen AP XII
LP, Hunters Glen Phase I AP XII LP, Hunters Glen GP LP, AP XII Associates LP,
and Pickwick Place AP XII LP. The Partnership may remove the General Partner of
these limited partnerships; therefore, these partnerships are controlled and
consolidated by the Partnership. All significant interpartnership balances have
been eliminated. Minority interest is immaterial and not shown separately in the
financial statements.
Cash and Cash Equivalents: Cash and cash equivalents includes cash on hand and
in banks, money market funds, and certificates of deposit with original
maturities of less than 90 days. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
Security Deposits: The Partnership requires security deposits from apartment
lessees for the duration of the lease and such deposits are included in
receivables and deposits. The security deposits are refunded when the tenant
vacates, provided the tenant has not damaged its space and is current on its
rental payments.
Loan Costs: Loan costs of approximately $2,734,000 are included in other assets
on the balance sheet and are being amortized on a straight-line basis over the
lives of the loans. Accumulated amortization is approximately $1,358,000 at
December 31, 1997, and is also included in other assets on the balance sheet.
Advertising Costs: Advertising costs of approximately $222,000 and
approximately $211,000 for the years ended December 31, 1997 and 1996,
respectively, are included in operating expense on the accompanying statements
of operations.
Restricted escrows:
CAPITAL IMPROVEMENT - At the time of the refinancings of the mortgages
encumbering Briarwood Apartments, Chambers Ridge Apartments, Gateway Gardens
Apartments, Hunters Glen Apartments and Twin Lake Towers Apartments, $1,610,000
of the proceeds were designated for "Capital Improvement Escrows" for certain
capital improvements. The balance in the Capital Improvement Escrows at
December 31, 1997, is $361,000.
REPLACEMENT RESERVE - In conjunction with the refinancing of the mortgage
encumbering Pickwick Place Apartments on April 17, 1995, a replacement reserve
was established to fund certain nonrecurring costs for interior and exterior
capital improvements at the property. The balance in this escrow account is
$156,000 at December 31, 1997.
GENERAL RESERVE - In addition to the Capital Improvement and Replacement Reserve
Escrows, General Escrow Accounts of approximately $711,000 were established in
conjunction with the refinancings. These funds were established to make
necessary repairs and replacements of existing improvements, debt service, out-
of-pocket expenses incurred for ordinary and necessary administrative tasks, and
payment of real property taxes and insurance premiums. The Partnership is
required to deposit net operating income (as defined in the mortgage note) from
the refinanced properties to the General Escrow Accounts until the reserve
account equals $400 per apartment unit or $808,000. The balance in the General
Escrow Accounts at December 31, 1997, is approximately $788,000.
Joint Venture: The Partnership accounts for its 44.5% investment in Princeton
Meadows Golf Course Joint Venture ("Joint Venture") using the equity method of
accounting (see "Note F"). Under the equity method, the Partnership records its
equity interest in earnings or losses of the Joint Venture; however, the
investment in the Joint Venture will be recorded at an amount less than zero (a
liability) to the extent of the Partnership's share of net liabilities of the
Joint Venture.
Investment Properties: Investment properties are stated at cost. Acquisition
fees are capitalized as a cost of real estate. The Partnership records
impairment losses on long-lived assets used in operations when events and
circumstances indicate that the assets might be impaired and the undiscounted
cash flows estimated to be generated by those assets are less than the carrying
amounts of those assets. For the years ended December 31, 1997 and 1996, no
adjustments for impairment of value were recorded.
Depreciation: Depreciation is computed utilizing accelerated and straight-line
methods over the estimated useful lives of the investment properties and related
personal property. For Federal income tax purposes, depreciation is computed by
using the straight-line method over an estimated life of 5 to 20 years for
personal property and 15 to 40 years for real property.
Allocations and Distributions to Partners: The Partnership will allocate all
profits, losses and distributions related to the operations of its investment
properties 1% to the General Partners and 99% to the Limited Partners. All
profits, losses and distributions related to the sales and/or refinancing of its
investment properties will be allocated in accordance with the Agreement.
Except as discussed below, the Partnership will allocate distributions 1% to the
General Partners and 99% to the Limited Partners.
Upon the sale or other disposition, or refinancing, of any asset of the
Partnership, the distributable net proceeds shall be distributed as follows:
(i) to the Partners in proportion to their interests until the Limited Partners
have received cumulative distributions equal to their original capital
contributions reduced by the amount of any previous distributions; (ii) to the
Partners until the Limited Partners have received distributions from all sources
equal to their 6% cumulative distribution; (iii) to the Managing General Partner
until it has received an amount equal to 3% of the aggregate Disposition Prices
of all properties or other investments sold or otherwise disposed of, or
refinanced; (iv) to the Partners in proportion to their interests until the
Limited Partners have received cumulative distributions from all sources equal
to 150% of the Capital Contribution of the Limited Partners; (v) to the Managing
General Partner until it has received an amount equal to 17.6% of the
distributions made pursuant to (iv); and (vi) 85% to the Limited Partners and
non-Managing General Partners in proportion to their interests and 15%
("Incentive Interest") to the Managing General Partner.
Lease Commissions: Lease commissions are being amortized using the straight-
line method over the term of the respective leases.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. Commercial building lease terms are from twelve months to ten years.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Fair Value: The Partnership believes that the carrying amount of its financial
instruments (except for long term debt) approximates their fair value due to the
short term maturity of these instruments. The fair value of the Partnership's
aggregate mortgage notes payable, after discounting the scheduled loan payments
based on estimated borrowing rates currently available to the Partnership,
approximates its carrying balance.
Reclassifications: Certain reclassifications have been made to the 1996
balances to conform to the 1997 presentation.
NOTE B - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows:
(dollar amounts in thousands)
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1997 Interest Rate Date Maturity
Briarwood Apartments
1st mortgage $ 1,557 $ 12 7.83% 10/2003 $ 1,404
2nd mortgage 50 (1) 7.83% 10/2003 50
Chambers Ridge Apartments
1st mortgage 5,380 41 7.83% 10/2003 4,849
2nd mortgage 174 1 7.83% 10/2003 174
Cooper Point Plaza
1st mortgage 4,026 45 10.5% 09/2012 43
Gateway Gardens Apartments
1st mortgage 6,276 48 7.83% 10/2003 5,657
2nd mortgage 203 1 7.83% 10/2003 203
Hunters Glen Apartments-IV
1st mortgage 8,345 65 8.43% 10/2003 7,787
Hunters Glen Apartments-V
1st mortgage 8,787 67 7.83% 10/2003 7,920
2nd mortgage 285 2 7.83% 10/2003 285
Hunters Glen Apartments-VI
1st mortgage 9,146 70 7.83% 10/2003 8,243
2nd mortgage 297 2 7.83% 10/2003 297
Pickwick Place Apartments
1st mortgage 6,451 54 9.1% 05/2005 5,775
Southpointe Apartments
1st mortgage 11,000 79 8.59% 01/2002 11,000
Additional borrowing (2) 23 1 9.00% 01/2002 1
Twin Lake Towers Apartments
1st mortgage 10,854 83 7.83% 10/2003 9,782
2nd mortgage 352 2 7.83% 10/2003 352
73,206
Less unamortized
discounts at a
rate of 8.13% (1,101)
Total $ 72,105 $ 573 $ 63,822
(1) Monthly payment is less than $1000
(2) The mortgage note secured by Southpointe Apartments was modified as of
December 31, 1997. The modification agreement extended the term of the
mortgage notes from July 1999 to January 2002. The lender also agreed to
advance to the Partnership an amount up to $180,000 for the payment of real
estate taxes. The lender advanced approximately $23,000 to the Partnership
for this purpose in 1997. See "Capital Resources and Liquidity" in "Item 6."
for more information.
The mortgage notes payable are nonrecourse and are secured by pledge of certain
of the Partnership's investment properties and by pledge of revenues from the
respective investment properties. Certain of the notes impose prepayment
penalties if repaid prior to maturity.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1997, are as follows (in thousands):
1998 $ 866
1999 941
2000 1,023
2001 1,112
2002 12,205
Thereafter 57,059
$ 73,206
NOTE C - INCOME TAXES
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
The following is a reconciliation of reported net loss and Federal taxable loss:
1997 1996
(in thousands, except unit data)
Net loss as reported $ (2,025) $ (1,802)
Add (deduct):
Depreciation differences 1,162 566
Unearned income 97 (197)
Discounts on mortgage
notes payable 25 19
Other 24 40
Federal taxable loss $ (717) $ (1,374)
Federal taxable loss per
limited partnership unit $ (15.87) $ (30.38)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net liabilities $ (24,615)
Land and buildings 8,886
Accumulated depreciation (10,777)
Syndication and distribution costs 6,093
Other 166
Net liabilities - Federal tax basis $ (20,247)
NOTE D - 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 certain payments
to affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following amounts owed to the
Managing General Partner and affiliates for the years ended December 31, 1997
and 1996, were paid or accrued:
1997 1996
(in thousands)
Property management fees (included in
operating expenses) $1,029 $ 1,033
Reimbursement for services of affiliates
(included in operating and general and
administrative expenses and investment
property) 431 453
Included in reimbursements for services of affiliates for the year ended
December 31, 1997 and 1996, is approximately $70,000 and $33,000, respectively,
of construction oversight reimbursements.
For the period from January 1, 1996, to August 31, 1997, the Partnership insured
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 master
policy. The 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 that accrued to the
benefit of the affiliate of the Managing General Partner by virtue of the
agent's obligations was not significant.
The Partnership may make advances to the Joint Venture as deemed appropriate by
the Managing General Partner. These advances do not bear interest and do not
have stated terms of repayment. At December 31, 1997, the amount of advances
receivable from the Joint Venture was approximately $149,000.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
holds a note receivable from 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 approximately $1,567,000 at December 31, 1997. Interest
expense on the debt secured by the Joint Venture was approximately $196,000 and
$200,000 for the years ended December 31, 1997 and 1996, respectively.
In November 1992, MAE GP Corporation ("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 of AMIT 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
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 grant 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 Insignia
Properties Trust, 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 and intends
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 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 December 31, 1997. 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
Insignia Properties Trust, an entity then owned 98% by Insignia and its
affiliates ("IPT"). 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 when this transaction is consummated.
NOTE E - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
Initial Cost
To Partnership
(in thousands)
Cost
Buildings Capitalized
and Related (Removed)
Personal Net Subsequent
Description Encumbrances Land Property to Acquisition
Investment Properties
Briarwood Apartments $ 1,607 $ 136 $ 1,409 $ 269
Chambers Ridge Apartments 5,554 527 7,823 1,353
Cooper Point Plaza 4,026 1,689 5,319 1,857
Gateway Gardens Apartments 6,479 255 6,206 1,100
Hunters Glen Apartments-IV 8,345 1,552 8,324 1,323
Hunters Glen Apartments-V 9,072 1,820 9,759 1,464
Hunters Glen Apartments-VI 9,443 1,981 10,620 1,428
Pickwick Place Apartments 6,451 603 6,552 2,075
Southpointe Apartments 11,023 663 8,616 766
Twin Lake Towers Apartments 11,206 1,115 12,806 1,209
Totals $ 73,206 $10,341 $77,434 $ 12,844
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1997
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C>
Briarwood Apartments $ 136 $ 1,678 $ 1,814 $ 1,124 06/25/85 10-20
Chambers Ridge Apartments 527 9,176 9,703 6,355 07/26/84 10-20
Cooper Point Plaza 1,689 7,176 8,865 5,052 12/14/84 10-20
Gateway Gardens Apartments 255 7,306 7,561 4,915 12/21/84 10-20
Hunters Glen Apartments - IV 1,552 9,647 11,199 6,280 01/31/85 10-40
Hunters Glen Apartments - V 1,820 11,223 13,043 7,347 01/31/85 10-40
Hunters Glen Apartments - VI 1,981 12,048 14,029 7,927 01/31/85 10-40
Pickwick Place Apartments 603 8,627 9,230 5,410 05/11/84 10-20
Southpointe Apartments 663 9,382 10,045 6,416 06/12/85 10-20
Twin Lake Towers Apartments 1,115 14,015 15,130 9,803 03/30/84 10-20
Totals $10,341 $90,278 $100,619 $ 60,629
</TABLE>
The depreciable lives included above are for the buildings and components.
The depreciable lives for related personal property are for 5 to 7 years.
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1997 1996
(in thousands)
Investment Properties
Balance at beginning of year $ 99,165 $ 97,572
Property improvements 1,671 1,648
Disposal of assets (217) (55)
Balance at end of year $100,619 $ 99,165
Accumulated Depreciation
Balance at beginning of year $ 55,811 $ 51,033
Additions charged to expense 4,965 4,811
Disposal of assets (147) (33)
Balance at end of year $ 60,629 $ 55,811
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996, is $109,505,000 and $107,834,000 respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1997 and 1996, is $71,406,000 and $67,603,000, respectively.
NOTE F - INVESTMENT IN JOINT VENTURE
Condensed balance sheet information of the Joint Venture at December 31, 1997,
is as follows (in thousands):
Assets
Cash $ 167
Other assets 175
Investment properties, net 2,011
Total $ 2,353
Liabilities and Partners' Capital
Note payable to AMIT (Note D) $ 1,567
Other liabilities 693
Partners' capital 93
Total $ 2,353
The condensed statements of operations of the Joint Venture for the years ended
December 31, 1997 and 1996, are summarized as follows:
Years Ended
December 31,
1997 1996
(in thousands)
Revenue $ 1,628 $ 1,417
Costs and expenses (1,535) (1,567)
Net income (loss) $ 93 $ (150)
The Partnership realized equity income of approximately $42,000 and equity loss
of approximately $67,000 in the Joint Venture for the years ended December 31,
1997 and 1996, 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 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. 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 field work should be sometime in 1999. The Joint Venture
originally recorded a liability of $199,000 for the costs of the clean-up. For
the year ended December 31, 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 December 31, 1997, the balance in the liability
for clean-up costs is $60,000. Funds from the property will be used to cover
this excess.
NOTE G - OPERATING LEASES
Tenants of the commercial property are responsible for their own utilities and
maintenance of their space, and payment of their proportionate share of common
area maintenance, utilities, insurance and real estate taxes. Tenants are
generally not required to pay a security deposit. Bad debt expense has been
within the Managing General Partner's expectations.
As of December 31, 1997, the Partnership had minimum future rentals under
noncancellable leases with terms in excess of one year (in thousands):
1998 $ 580
1999 564
2000 491
2001 428
2002 419
Thereafter 689
$ 3,171
NOTE H - ABANDONED LIMITED PARTNERSHIP UNITS
In 1996, the number of Limited Partnership Units decreased by 55 units, due to
limited partners abandoning their units. In abandoning his or her Limited
Partnership Unit, a limited partner relinquishes all right, title and interest
in the Partnership as of the date of abandonment. However, during the year of
abandonment, the Limited Partner will still be allocated his or her share of the
income or loss. The loss per Limited Partnership Unit in the accompanying
Consolidated Statements of Operations is calculated based on the number of units
outstanding at the beginning of the year.
NOTE I - OTHER ITEMS
During October 1997, there was a fire on the balcony of a unit at Pickwick Place
Apartments. The fire caused smoke and water damage to four units in the
building. Expected insurance proceeds to be received as a result of this
casualty approximate the estimated repair costs of $60,000.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL
DISCLOSURES
There were no disagreements with Ernst & Young, LLP regarding the 1997 or 1996
audits of the Partnership's financial statements.
PART III
ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
Angeles Realty Corporation II ("ARC II" or the "Managing General Partner"), is a
wholly-owned subsidiary of MAE GP Corporation (MAE GP).
Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust
("IPT"), which is an affiliate of Insignia Financial Group, Inc. ("Insignia").
Thus the Managing General Partner is now a wholly-owned subsidiary of IPT.
The names of the directors and executive officers of ARC II, their ages and the
nature of all positions with ARC II presently held by them are as follows:
Name Age Position
Carroll D. Vinson 57 President and Director
Robert D. Long, Jr. 30 Vice President and
Chief Accounting Officer
William H. Jarrard, Jr. 51 Vice President
Daniel M. LeBey 32 Secretary
Kelley M. Buechler 40 Assistant Secretary
Carroll D. Vinson has been President and Director of the Managing General
Partner and President of Metropolitan Asset Enhancement, L.P. ("MAE"), and
subsidiaries since August 1994. He has acted as Chief Operating Officer of IPT,
since May 1997. During 1993 to August 1994, Mr. Vinson was affiliated with
Crisp, Hughes & Co. (regional CPA firm) and engaged in various other investment
and consulting activities which included portfolio acquisitions, asset
dispositions, debt restructurings and financial reporting. Briefly, in early
1993, Mr. Vinson served as President and Chief Executive Officer of Angeles
Corporation, a real estate investment firm. From 1991 to 1993, Mr. Vinson was
employed by Insignia in various capacities including Managing Director -
President during 1991.
Robert D. Long, Jr. has been Vice President of the Managing General Partner
since August 1994. Mr. Long joined MAE in September 1993. Since 1994 he has
acted as Vice President and Chief Accounting Officer of the MAE subsidiaries.
Mr. Long was an accountant for Insignia until joining MAE in 1993. Prior to
joining Insignia, Mr. Long was an auditor for the State of Tennessee and was
associated with the accounting firm of Harsman Lewis and Associates.
William H. Jarrard, Jr. has been Vice President of the Managing General Partner
since December 1992. He has acted as Senior Vice President of IPT since May
1997. Mr. Jarrard previously acted as Managing Director - Partnership
Administration of Insignia from January 1991 through September 1997 and served
as Managing Director - Partnership Administration and Asset Management from July
1994 until January 1996.
Daniel M. LeBey has been Secretary of the Managing General Partner since January
29, 1998 and Insignia's Assistant Secretary since April 30, 1997. Since July
1996 he has also served as Insignia's Associate General Counsel. From September
1992 until June 1996, Mr. LeBey was an attorney with the law firm of Alston &
Bird LLP, Atlanta, Georgia.
Kelley M. Buechler has been Assistant Secretary of the Managing General Partner
since December 1992 and Assistant Secretary of Insignia since 1991.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of ARC II. The Partnership has no plan, nor does the
Partnership presently propose a plan, which will result in any remuneration
being paid to any officer or director upon termination of employment. However,
certain fees and other payments have been made to the Partnership's Managing
General Partner and its affiliates, as described in "Item 12.", which is
incorporated herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1997, no person owned of record more than 5% of Limited
Partnership Units of the Partnership nor was any person known by the Partnership
to own of record and beneficially, or beneficially only, more than 5% of such
securities.
The Partnership knows of no contractual arrangements, the operation of the terms
of which may at a subsequent date result in a change in control of the
Partnership, except for: Article 12.1 of the Agreement, which provides that
upon a vote of the Limited Partners holding more than 50% of the then
outstanding Limited Partnership Units the General Partners may be expelled from
the Partnership upon 90 days written notice. In the event that successor
general partners have been elected by Limited Partners holding more than 50% of
the then outstanding Limited Partnership Units and if said Limited Partners
elect to continue the business of the Partnership, the Partnership is required
to pay in cash to the expelled Managing General Partner an amount equal to the
accrued and unpaid management fee described in Article 10 of the Agreement and
to purchase the General Partners' interest in the Partnership on the effective
date of the expulsion, which shall be an amount equal to the difference between
(i) the balance of the General Partners' capital account and (ii) the fair
market value of the share of Distributable Net Proceeds to which the General
Partners would be entitled. Such determination of the fair market value of the
share of Distributable Net Proceeds is defined in Article 12.2(ii) of the
Agreement.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No transactions have occurred between the Partnership and any officer or
director of ARC II.
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 certain payments
to affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following amounts owed to the
Managing General Partner and affiliates for the years ended December 31, 1997
and 1996, were paid or accrued:
1997 1996
(in thousands)
Property management fees $1,029 $ 1,033
Reimbursement for services of affiliates 431 453
Included in reimbursements for services of affiliates for the year ended
December 31, 1997 and 1996, is approximately $70,000 and $33,000, respectively,
of construction oversight reimbursements.
For the period from January 1, 1996, to August 31, 1997, the Partnership insured
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 master
policy. The 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 that accrued to the
benefit of the affiliate of the Managing General Partner by virtue of the
agent's obligations was not significant.
The Partnership may make advances to the Joint Venture as deemed appropriate by
the Managing General Partner. These advances do not bear interest and do not
have stated terms of repayment. At December 31, 1997, the amount of advances
receivable from the Joint Venture was approximately $149,000.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
holds a note receivable from 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 approximately $1,567,000 at December 31, 1997. Interest
expense on the debt secured by the Joint Venture was approximately $196,000 and
$200,000 for the year ended December 31, 1997 and 1996, respectively.
In November 1992, MAE GP Corporation ("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 of AMIT 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
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 grant 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 Insignia
Properties Trust, 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 and intends
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 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 December 31, 1997. 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
Insignia Properties Trust, an entity then owned 98% by Insignia and its
affiliates ("IPT"). 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 when this transaction is consummated.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) No reports on Form 8-K were filed during the fourth quarter of 1997.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Angeles Partners XII
(A California Limited Partnership)
(Registrant)
By: Angeles Realty Corporation II
Managing General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President, Director
Date: March 13, 1998
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities on the dates
indicated.
/s/ Carroll D. Vinson President and Director
Carroll D. Vinson
/s/ Robert D. Long, Jr. Vice-President and Chief
Robert D. Long, Jr. Accounting Officer
EXHIBIT INDEX
Exhibit Number Description of Exhibit
3.1 Amended Certificate and Agreement of Limited Partnership
dated May 26, 1983 filed in Form S-11 dated June 2, 1983 and
is incorporated herein by reference.
10.1 Purchase and Sale Agreement with Exhibits - Twin Lake Towers
Apartments filed in Form 8K dated March 30, 1984, incorporated
herein by reference.
10.2 Purchase and Sale Agreement with Exhibits - Pickwick Place
Apartments filed in Form 8K dated May 11, 1984, incorporated
herein by reference.
10.3 Purchase and Sale Agreement with Exhibits - Chambers Ridge
Apartments filed in Form 8K dated July 26, 1984, incorporated
herein by reference.
10.4 Purchase and Sale Agreement with Exhibits - Park Village Plaza
filed in Form 8K dated December 21, 1984, incorporated herein by
reference.
10.5 Purchase and Sale Agreement with Exhibits - Gateway Gardens
Apartments filed in Form 8K dated December 21, 1984, incorporated
herein by reference.
10.6 Purchase and Sale Agreement with Exhibits - Hunters Glen
Apartments I, II, III filed in Form 8K dated February 1, 1985,
incorporated herein by reference.
10.7 Purchase and Sale Agreement with Exhibits - Meadows Apartments
filed in Form 8K dated June 12, 1985, incorporated herein by
reference.
10.8 Purchase and Sale Agreement with Exhibits - Briarwood Apartments
filed in Form 8K dated June 25, 1985, incorporated herein by
reference.
10.9 Purchase and Sale Agreement with Exhibits - dated July 26, 1992
between Princeton Golf Course Joint Venture and Lincoln Property
Company No. 199 filed in Form 10Q dated August 13, 1992,
incorporated herein by reference.
10.10 Princeton Golf Course Joint Venture Agreement with Exhibits -
dated August 21, 1991 between the Partnership, Angeles Partners
XI and Angeles Income Properties, Ltd. II filed in Form 10Q dated
August 13, 1992, incorporated herein by reference.
10.11 Stock Purchase Agreement dated November 24, 1992 showing the
purchase of 100% of the outstanding stock of Angeles Realty
Corporation II by IAP GP Corporation, a subsidiary of MAE GP
Corporation, filed in Form 8-K dated December 31, 1992, which is
incorporated herein by reference.
10.12 Contracts related to refinancing of debt
(a) First Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Briarwood.
(b) Second Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Briarwood.
(c) First Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Briarwood.
(d) Second Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Briarwood.
(e) First Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Briarwood.
(f) Second Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Briarwood.
10.13 Contracts related to refinancing of debt
(a) First Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Twin Lake Towers.
(b) Second Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Twin Lake Towers.
(c) First Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Twin Lake Towers.
(d) Second Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Twin Lake Towers.
(e) First Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Twin Lake Towers.
(f) Second Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Twin Lake Towers.
10.14 Contracts related to refinancing of debt
(a) First Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Hunters Glen.
(b) Second Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Hunters Glen.
(c) First Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Hunters Glen.
(d) Second Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Hunters Glen.
(e) First Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Hunters Glen.
(f) Second Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Hunters Glen.
10.15 Contracts related to refinancing of debt.
(a) First Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Chambers Ridge.
(b) Second Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Chambers Ridge.
(c) First Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Chambers Ridge.
(d) Second Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Chambers Ridge.
(e) First Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Chambers Ridge.
(f) Second Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Chambers Ridge.
10.16 Contracts related to refinancing of debt
(a) First Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Gateway Gardens.
(b) Second Deeds of Trust and Security Agreements dated September 30,
1993 between AP XII Associates Limited Partnership, a South
Carolina Limited Partnership and Lexington Mortgage Company, a
Virginia Corporation, securing Gateway Gardens.
(c) First Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Gateway Gardens.
(d) Second Assignments of Leases and Rents dated September 30, 1993
between AP XII Associates Limited Partnership, a South Carolina
Limited Partnership and Lexington Mortgage Company, a Virginia
Corporation, securing Gateway Gardens.
(e) First Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Gateway Gardens.
(f) Second Deeds of Trust Notes dated September 30, 1993 between AP
XII Associates Limited Partnership, a South Carolina Limited
Partnership and Lexington Mortgage Company, a Virginia
Corporation securing Gateway Gardens.
10.17 Reinstatement and Modification Agreement dated December 31, 1997,
between Angeles Partners XII, a California limited partnership,
and Chase Manhattan Bank, successor by merger to Chemical Bank.
16.1 Letter from the Registrant's former independent accountant
regarding its concurrence with the statements made by the
Registrant is incorporated by reference to the Exhibit filed with
Form 8-K dated September 1, 1993.
27 Financial Data Schedule is filed as an Exhibit to this
report.
99.1 Agreement of Limited Partnership for Angeles Partners XII GP
Limited Partnership and Angeles Partners XII entered into
September 9, 1993.
99.2 Agreement of Limited Partnership for AP XII Associates Limited
Partnership and Angeles Partners XII entered into September 9,
1993.
99.3 Agreement of Limited Partnership for Hunters Glen AP XII Limited
Partnership and Angeles Partners XII entered into September 17,
1993.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners XII 1997 Year-End 10-KSB and is qualified in its entirety by reference
to such 10-KSB filing.
</LEGEND>
<CIK> 0000720392
<NAME> ANGELES PARTNERS XII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,459
<SECURITIES> 0
<RECEIVABLES> 1,674
<ALLOWANCES> 39
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 100,619
<DEPRECIATION> 60,629
<TOTAL-ASSETS> 51,365
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 72,105
0
0
<COMMON> 0
<OTHER-SE> (24,615)
<TOTAL-LIABILITY-AND-EQUITY> 51,365
<SALES> 0
<TOTAL-REVENUES> 21,291
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 23,358
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,493
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,025)
<EPS-PRIMARY> (44.83)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
REINSTATEMENT AND MODIFICATION AGREEMENT
Loan No. 700144
THIS REINSTATEMENT AND MODIFICATION AGREEMENT (this "Agreement"), dated as
of December 31, 1997, is made by and between ANGELES PARTNERS XII, a California
limited partnership ("Borrower"); and CHASE MANHATTAN BANK, successor by merger
to Chemical Bank, as Trustee under that certain Pooling and Servicing Agreement
dated November 1, 1993, for Commercial/Multifamily Mortgage Pass-Through
Certificates, Series 1993-1 ("Lender").
RECITALS
Lender is the owner and holder of a loan from Phoenix Mutual Life Insurance
Company ("Original Lender") to Borrower in the amount of $11,000,000.00 (the
"Loan"), secured by certain property located in the City of Bedford Heights,
Cuyahoga County, Ohio, commonly known as Southpointe Apartments. The Loan is
evidenced by that certain Ohio Promissory Note, dated June 30, 1989, from
Borrower to the order of Original Lender in the original principal amount of
$11,000,000.00 (the "Note"). The Loan is secured by, among other things, (i)
that certain Mortgage and Security Agreement, dated June 30, 1989, from Borrower
in favor of Original Lender, recorded in Volume 89-3211, page 1, Cuyahoga
County, Ohio records (the "Mortgage"), (ii) those certain UCC Financing
Statements No. 1134666 and 1134667, having Borrower, as Debtor, and Original
Lender, as Secured Party, filed June 30, 1989, in the aforesaid records and by
those certain UCC Financing Statements No. AB0018724 and AB0018725, filed
July 3, 1989, with the Secretary of State of Ohio (the "Financing Statements"),
and (iii) that certain Assignment of Lessor's Interests in Lease(s), dated
June 30, 1989, from Borrower in favor of Original Lender, recorded in
Volume 89-3211, page 35, Cuyahoga County, Ohio, records (the "Assignment of
Leases"). Borrower also indemnified Original Lender with respect to certain
environmental hazards pursuant to that certain Indemnity Agreement, dated as of
July __, 1989 (the "Indemnity;" and the Note, the Mortgage, the Financing
Statements, the Assignment of Leases, the Indemnity and any and all other
documents evidencing, securing or in any matter relating to the Loan are
hereinafter referred to collectively as the "Loan Documents"). The real and
personal property encumbered by the Mortgage, the Assignment of Leases and the
Financing Statements is hereinafter referred to as the "Property."
Borrower defaulted on the Loan by, among other things, failing to make the
April, May, June, July, August, September and October, 1997, payments on the
Loan when the same became due (the "Payment Defaults"). In addition, Borrower
defaulted under the Loan Documents by failing to pay certain real estate taxes
on the Property when the same became due and payable (the "Taxes Default").
Following the Taxes Default, Lender funded the amount of $22,756.62 as a
protective advance pursuant to the Mortgage (the "Existing Protective Advance")
for the purpose of paying past due real estate taxes on the Property.
Borrower and Lender have agreed that Borrower will cure the Payment
Defaults and the Taxes Default, that Lender will reinstate the Loan, and that
Borrower and Lender will modify the Loan and the Loan Documents in certain
respects, all on and subject to all of the terms and conditions set forth in
this Agreement and in those certain other documents and instruments listed on
Exhibit "A" attached hereto and made a part hereof (collectively, the
"Modification Documents").
AGREEMENT
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) in hand
paid, the mutual covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Lender hereby agree as follows:
1. Cure of Defaults. Borrower acknowledges the occurrence of the Payment
Defaults and the Taxes Default, and covenants and agrees that, simultaneously
with the execution and delivery of this Agreement, (a) Borrower shall cure the
Payment Defaults under the Loan by paying to Lender past due interest in the
total amount of $629,933.36 (the "Cure Amount"), (b) Borrower shall pay
$6,150.00 in attorneys' fees and other expenses incurred by Lender in connection
with the Payment Defaults and the negotiation, execution and delivery of this
Agreement, and (c) Borrower shall cure the Taxes Default by covenanting to repay
the Existing Protective Advance to Lender in accordance with paragraph 5, below.
2. Reinstatement of Loan. By virtue of the payment by Borrower of the
Cure Payment in accordance with this Agreement and the covenants made by
Borrower in this Agreement to repay the Existing Protective Advance, the
existing Payment Defaults and the Taxes Default shall be deemed cured; and
Lender hereby reinstates the Loan and the Loan Documents as of the date of this
Agreement. Notwithstanding the foregoing, however, nothing in this Agreement
shall be deemed a waiver by Lender of any of Lender's rights and remedies with
respect to any other defaults, "Defaults," events of default or "Events of
Default" which may now or hereafter exist under the Note, the Mortgage or any of
the other Loan Documents, including, without limitation, the right to accelerate
the indebtedness outstanding under the Loan as a result thereof, all of which
rights and remedies are hereby expressly reserved.
3. Status of Loan and Loan Documents. Borrower acknowledges and agrees
(a) that Lender is the owner and holder of the Loan and the Loan Documents, and
(b) that, as of the date of this Agreement and following payment of the Cure
Amount pursuant to paragraph 1, above, (i) the unpaid principal balance of the
Note is $11,000,000.00, (ii) the interest rate presently in effect under the
Note, being the "Revised Rate" defined therein, is 8.59% per annum,
(iii) interest has accrued and remains unpaid under the Note for the month of
December, 1997, through the date of this Agreement, and (iv) the next monthly
payment under the Note becomes due and payable on January 1, 1998. Borrower
further acknowledges, agrees and reaffirms that the Loan Documents, as
reinstated by this Agreement and as modified by this Agreement and the other
Modification Documents, constitute valid and legally binding obligations of
Borrower and are enforceable against Borrower and the Property in accordance
with their terms. Borrower further acknowledges and agrees that, except as
expressly provided herein, this Agreement is not intended to be, and shall not
be deemed or construed to be, a waiver or release by Lender of any of Lender's
rights and remedies under the Loan or the Loan Documents, or any of them.
4. Capital Improvements. Borrower warrants and represents to Lender that
during calendar year 1997, Borrower has installed new boilers in the Property at
a cost to Borrower of $69,950, which cost Borrower has already paid in full from
unborrowed funds. Contemporaneously with the execution and delivery of this
Agreement, Borrower has provided to Lender evidence satisfactory to Lender that
such boilers have been installed and such expense has been paid. Borrower
further warrants and represents to Lender, and Borrower covenants and agrees,
that between the date of this Agreement and the date which is two (2) years
following the date of this Agreement, Borrower shall invest (from unborrowed
funds of Borrower) an additional $80,050 for capital improvements at the
Property, and shall deliver to Lender evidence satisfactory to Lender that such
improvements have been made and such funds have been invested. For purposes of
this Agreement, "capital improvements" shall mean physical or structural
additions, alterations, installations or replacements the expenditures for which
would be capital in nature, and shall exclude ordinary maintenance and repair,
routine and scheduled replacements, and the purchase of movables or other
personal property, intangibles, and other items the expenditure for which would
ordinarily be expensed.
5. Protective Advances for Real Estate Taxes.
(a) Existing Protective Advance. Borrower acknowledges that Lender
has heretofore funded the Existing Protective Advance directly to the taxing
authorities of Cuyahoga County, Ohio, for the payment of past due real estate
taxes on the Property, and Borrower acknowledges and agrees that such Existing
Protective Advance was duly and validly made by Lender as a protective advance
pursuant to Section 3.1 of the Mortgage, and constitutes indebtedness which is
secured by the Mortgage. Notwithstanding anything to the contrary in the
Mortgage, Lender and Borrower have agreed that interest shall accrue on the
Existing Protective Advance at the rate of 9% per annum from the date of the
Existing Protective Advance until full repayment. Simultaneously with the
execution and delivery of this Agreement, Borrower shall pay to Lender the sum
of $1,897.57, which sum is comprised of (i) the interest having accrued on the
Existing Protective Advance at the rate of 9% per annum from July 8, 1997,
through and including August 31, 1997, and (ii) an amount equal to three (3)
times the "Protective Advances Installment Amount" (defined in paragraph 5(d),
below) calculated as of October 1, 1997. In addition, Borrower covenants and
agrees that on the first day of each calendar month hereafter, beginning
November 1, 1997, and continuing through and including January 1, 2002, Borrower
shall pay to Lender (in addition to all other payments due to Lender under the
Loan Documents) a payment in an amount equal to the "Protective Advances
Installment Amount" (defined in paragraph 5(d), below) calculated as of such
payment date.
(b) Additional Protective Advances. Borrower has represented to
Lender that Borrower may not have sufficient funds to pay future real estate
taxes which will come due on the Property as and when the same become due.
Lender agrees that in the event Borrower cannot make any such payment in full
when due, Lender will make an additional protective advance (an "Additional
Protective Advance") under the Mortgage sufficient to cause such payment to be
made in full, provided, however, (i) that Lender shall not be obligated to
advance in the aggregate more than $157,243.38 in Additional Protective Advances
pursuant to this paragraph 5(b), (ii) that Lender shall not be obligated to make
any Additional Protective Advance if any default shall hereafter occur under
this Agreement or any of the other Loan Documents, (iii) that Borrower shall
comply with the advances request procedures set forth below, and (iv) that
Borrower shall repay any and all Additional Protective Advances, with interest,
in the manner provided in paragraph 5(d), below. In the event that Borrower
believes that Borrower will not be able to make any real estate tax payment
which hereafter becomes due on the Property, Borrower shall deliver to Lender at
least sixty (60) days prior to the date on which such payment is to become due
(a "Due Date") a copy of the tax bill showing the amount and Due Date of such
payment, together with a written request by Borrower that Lender make an
Additional Protective Advance, which request shall state the amount that
Borrower will be able to pay (the "Borrower's Share") and the amount of the
requested Additional Protective Advance. Provided that such requested
Additional Protective Advance, if made, would not cause the sum of all
Additional Protective Advances made by Lender to exceed $157,243.38 (the
"Protective Advances Limit"), Lender shall, upon receipt by Lender from Borrower
of the Borrower's Share in cash, cashier's check or wired funds at least fifteen
(15) business days prior to the Due Date, make the requested Additional
Protective Advance and cause the subject taxes to be paid in full on or before
the Due Date. Lender acknowledges that Borrower's failure to pay real estate
taxes on the Property shall not constitute a default under the Loan Documents,
provided Borrower requests Additional Protective Advances in accordance with the
terms of this paragraph 5(b). Borrower acknowledges and agrees, however, that
from and after such time, if any, as Lender has advanced Additional Protective
Advances in an aggregate amount equaling or exceeding the Protective Advances
Limit, Borrower's failure to pay real estate taxes on the Property as and when
the same become due and payable strictly in accordance with the terms of the
Mortgage shall be an Event of Default under the terms of the Mortgage.
(c) Interest on Protective Advances. Borrower and Lender acknowledge
and agree that the "Interest Rate for Advances" (as such term is defined in the
Mortgage) is and shall be 9% per annum, and, accordingly, the Existing
Protective Advance and any and all Additional Protective Advances made by Lender
to or for the benefit of Borrower pursuant to this Agreement shall accrue
interest daily at such rate. Borrower further acknowledges and agrees that such
advances and all of such interest accruing thereon shall constitute indebtedness
under the Loan Documents, shall be secured by the Mortgage, and, following the
occurrence of a default under the Loan Documents, may be accelerated by Lender
together with all other indebtedness outstanding under the Loan Documents.
(d) Repayment of Protective Advances. Borrower covenants and agrees
that beginning on October 1, 1997, and continuing on the first day of each
calendar month thereafter through and including January 1, 2002, Borrower shall
pay to Lender, in addition to all other payments due under the Loan Documents,
an amount equal to the "Protective Advances Installment Amount" (defined below)
calculated as of the date of such payment. For purposes of this Agreement, the
"Protective Advances Installment Amount" as of a particular date shall mean the
amount of the constant monthly payment which would fully amortize the
"Protective Advances Balance" (defined below) as of such date over the number of
full calendar months remaining between such date and January 1, 2002, at an
interest rate of 9% per annum. The "Protective Advances Balance" as of a
particular date shall mean the sum of the Existing Protective Advance and all
Additional Protective Advances theretofore made by Lender, minus the sum of the
principal portions of all of such advances that have theretofore been repaid to
Lender prior to the last date, if any, upon which Lender has made an Additional
Protective Advance. Within thirty (30) days following the date of any
Additional Protective Advance by Lender, Lender shall deliver to Borrower a
recalculation of the Protective Advances Balance, the Protective Advances
Installment Amount, and the new amortization schedule corresponding thereto.
(e) Tax and Assessments Escrow. Lender agrees that, notwithstanding
any provision of the Loan Documents to the contrary, Borrower shall not be
obligated to make monthly payments to Lender to fund a real estate taxes and
assessments escrow account until the earliest to occur of the following dates:
(i) the date upon which any default occurs under this Agreement or any of the
other Loan Documents, or (ii) the earliest date upon which Lender has funded
Additional Protective Advances in the aggregate equaling or exceeding the
Protective Advances Limit, or (iii) the date which is two (2) years following
the date of this Agreement. From and after the earliest to occur of such dates,
Borrower shall be obligated to make monthly payments to Lender to fund a real
estate taxes and assessments account, strictly in accordance with the terms of
the Loan Documents.
6. Modifications of Loan Documents.
(a) Modification of Note. Borrower and Lender agree that the Note
shall be modified and amended, and is hereby modified and amended, by deleting
the words "July 1, 1999" from the first paragraph of the Note in each instance
in which they appear, and by substituting in lieu thereof in each such instance
the words "January 1, 2002." An intended effect of this modification and
amendment is to extend the scheduled maturity date of the Note to January 1,
2002. Borrower and Lender further agree that all of the other Loan Documents
shall be modified and amended, and are hereby modified and amended, so that from
and after the date of this Agreement any reference in any such other Loan
Document to the Note shall be deemed a reference to the Note as modified and
amended by this Agreement.
(b) Other Modification Documents. Simultaneously with the execution
and delivery of this Agreement, Borrower and Lender have executed and delivered
the other Modification Documents listed on Exhibit "A" attached hereto and made
a part hereof, which modify the Loan Documents in certain respects.
(c) Defaults Under This Agreement. Borrower acknowledges and agrees
that this Agreement shall constitute one of the Loan Documents, and that any
breach by Borrower of Borrower's warranties or representations in this Agreement
and any default by Borrower under any of Borrower's obligations in this
Agreement shall constitute a default hereunder and under the Note, and an "Event
of Default" under the Mortgage.
(d) Terminated Escrow Agreement. Borrower and Lender hereby
acknowledge and agree that that certain Escrow Agreement dated June 30, 1989,
among Borrower, Prior Lender and W. Lyman Case & Company has been terminated and
is of no further force or effect, that no amounts remain escrowed thereunder,
and that no party has any further obligations thereunder or with respect
thereto.
7. Management; Management Fees. Borrower represents to Lender that
Insignia Residential Group, L.P. (the "Management Company") is presently
managing the Property pursuant to that certain Management Agreement, dated
November 25, 1992 (the "Management Agreement"). Borrower represents to and
covenants and agrees with Lender that, notwithstanding anything to the contrary
in the Management Agreement or in any subsequent management agreement or other
agreement (written or oral), Borrower shall not pay to the Management Company or
to any other manager or management company in or with respect to any calendar
month management fees in excess of three percent (3%) of gross revenues from the
operation of the Property in such calendar month, without the prior written
consent of Lender.
8. Release of Lender. Borrower, for itself, its successors and assigns,
does hereby remise, release, acquit, waive, satisfy and forever discharge Lender
from and with respect to any and all manner of debts, accountings, bonds,
warranties, representations, covenants, promises, contracts, controversies,
agreements, liabilities, obligations, expenses, damages, judgments, executions,
objections, defenses, setoffs, actions, claims, demands and causes of action of
any nature whatsoever, whether at law or in equity, whether known or unknown,
either now accrued or hereafter maturing, which Borrower now has or hereafter
can, shall or may have by reason of any matter, cause or thing, from the
beginning of the world to and including the date of this Agreement, including
specifically, but without limitation, matters arising out of or relating to the
Loan, the Loan Documents or the indebtedness evidenced and secured thereby, the
Property or the development, financing and operation thereof, or any other
agreement or transaction between Borrower and Lender; and Borrower for itself,
its successors and assigns, does hereby covenant and agree never to institute or
cause to be instituted or continue prosecution of any suit or other form of
action or proceeding of any kind or nature whatsoever against Lender by reason
of or in connection with any of the foregoing matters, claims or causes of
action. Lender acknowledges and agrees that the foregoing release and covenant
not to sue does not apply to any claims or causes of action arising out of or
resulting from any breach by Lender of any of Lender's obligations under this
Agreement.
9. Cooperation With Lender Following Default. Borrower acknowledges,
represents, reaffirms, covenants and agrees that, following the occurrence of
any default hereunder or under the Note, or any "Event of Default" under the
Mortgage:
(a) Covenant of Non-Interference. Borrower shall not take any action
of any kind or nature whatsoever, either directly or indirectly, to oppose,
impede, obstruct, hinder, enjoin or otherwise interfere with the exercise by
Lender of any of Lender's rights and remedies against or with respect to the
Property, or any other rights or remedies of Lender with respect to the Loan,
this Agreement, or any of the other Loan Documents.
(b) Consent to Receiver. If Lender elects to seek the appointment of
a receiver for the Property, Borrower shall consent to such appointment and
shall otherwise use Borrower's best efforts to cooperate with Lender's attempt
to obtain such receiver. Following the appointment of any such receiver,
Borrower shall cooperate with Lender and such receiver in effecting a smooth and
efficient transition of possession and operation of the Property to the
receiver. Specifically, but without limitation of the foregoing, Borrower shall
deliver to any such receiver the originals of all tenant leases, plans,
specifications, books, records, and other items relating to ownership and
operation of the Property which are in the possession or control of Borrower,
and shall deliver to such receiver all sums then held by Borrower which were
generated from, or with respect to, the Property (including, without limitation,
all tenant security deposits) and shall thereafter deliver to such receiver,
promptly upon receipt thereof, any income or other proceeds relating in any way
to the Property which may thereafter come into the possession of Borrower. This
paragraph 9(b) shall be in addition to, and not in lieu of, Lender's rights
under Section 6.6 of the Mortgage.
(c) Cooperation with Foreclosure. In the event Lender elects to
institute foreclosure proceedings with respect to the Property, Borrower shall
use Borrower's reasonable efforts to cooperate with Lender in such proceedings,
and shall use Borrower's reasonable efforts to cooperate with Lender and any
third-party purchaser at any foreclosure sale resulting therefrom, to effect a
smooth and efficient transition of possession of the Property to the successful
purchaser at such sale, as of the date of such sale. Specifically, but without
limitation of the foregoing, Borrower shall deliver to Lender all cash and cash
deposits held by or on behalf of Borrower as of the date of such sale, together
with a cash payment equal in amount to all other gross income, if any,
theretofore received by Borrower from or on account of the Property and not
theretofore expended by Borrower in connection with the ownership, operation and
protection of the Property or paid to Lender or any receiver of the Property,
and shall deliver to such purchaser at such sale the originals of all tenant
leases, plans, specifications, books, records and other items relating to the
Property which are in the possession of Borrower.
10. Bankruptcy. Borrower warrants and represents to Lender, and covenants
and agrees with Lender, as follows:
(a) No Bankruptcy Intent. Borrower warrants and represents to Lender
that Borrower does not have any intent (i) to file any voluntary petition in
bankruptcy under any Chapter of the United States Bankruptcy Code, Title 11
U.S.C.A. (the "Bankruptcy Code") or in any manner to seek relief, protection,
reorganization, liquidation, dissolution or similar relief for debtors under any
local, state, federal or other insolvency laws or laws providing for relief of
debtors, or in equity, either at the present time, or at any time hereafter, or
(ii) directly or indirectly to cause any involuntary petition under any Chapter
of the Bankruptcy Code to be filed against Borrower or directly or indirectly to
cause Borrower to become the subject of any proceedings pursuant to local,
state, federal, or other insolvency laws or laws providing for relief of
debtors, or in equity, either at the present time, or at any time hereafter, or
(iii) directly or indirectly to cause the Property or any portion thereof or any
interest of Borrower in the Property to become the property of any bankruptcy
estate or the subject of any local, state, federal or other bankruptcy,
dissolution, liquidation or insolvency proceedings, either at the present time
or at any time hereafter.
(b) If a Bankruptcy Occurs. Borrower covenants and agrees that, in
the event Borrower or the Property, or any portion thereof, shall be or become
the subject of any bankruptcy proceeding or the property of any bankruptcy
estate, Lender shall be entitled to obtain upon ex parte application therefor,
and without further notice or action of any kind or nature whatsoever, (i) an
order from the Bankruptcy Court prohibiting the use of Lender's "cash
collateral" (as such term is defined in Section 363 of the Bankruptcy Code) in
connection with the Loan, and (ii) an order from the Bankruptcy Court granting
immediate relief from the automatic stay pursuant to Section 362 of the
Bankruptcy Code so as to permit Lender to exercise all of its rights and
remedies pursuant to this Agreement, the other Loan Documents, and at law and in
equity. Borrower further covenants not to directly or indirectly oppose or
otherwise defend against Lender's effort to obtain relief from the stay and
covenants and agrees that Lender shall be entitled to the lifting of the stay
without the necessity of an evidentiary hearing and without the necessity of
requirement that Lender establish or prove the value of the Property, the lack
of adequate protection of Lender's interest in the Property, the lack of any
reasonable prospect of reorganization with respect either to Borrower or the
Property, or Borrower's lack of equity in the Property.
11. Governing Law. This Agreement is made pursuant to, and shall be
construed under and governed by, the laws of the State of Ohio, except to the
extent that the applicability of any such laws may now or hereafter be preempted
by Federal law, in which case such Federal law shall so govern and be
controlling. If any paragraph, clause or provision of this Agreement is
construed or interpreted by a court of competent jurisdiction to be void,
invalid or unenforceable, such decision shall affect only those paragraphs,
clauses or provisions so construed or interpreted and shall not affect the
remaining paragraphs, clauses and provisions of this Agreement.
12. No Admissions, Waivers or Limitation of Remedies. Borrower expressly
acknowledges and agrees that the waivers, estoppels and releases made by
Borrower in this Agreement shall not be construed as an admission of wrongdoing,
liability or culpability on the part of Lender, or as an admission by Lender of
the existence of any claims of Borrower against Lender. Except as specifically
and expressly set forth in this Agreement and the other Modification Documents,
nothing contained in this Agreement or the other Modification Documents shall
constitute a waiver of any rights or remedies of Lender under the Loan Documents
or at law or in equity. No delay or failure on the part of any party hereto or
to any of the other Modification Documents in the exercise of any right or
remedy hereunder or thereunder shall operate as a waiver thereof, and no single
or partial exercise of any right or remedy hereunder or thereunder shall
preclude other or further exercise thereof or the exercise of any other right or
remedy. No action or forbearance by any party contrary to the provisions of
this Agreement or of any of the other Modification Documents shall be construed
to constitute a waiver of any of the express provisions hereof or thereof. Any
party may in writing expressly waive any of such party's rights under this
Agreement or under any of the other Modification Documents without invalidating
this Agreement or any of the other Modification Documents or any portion hereof
or thereof. No right, power or remedy conferred upon or reserved to or by
Lender in this Agreement is intended to be exclusive of any other right, power
or remedy conferred upon or reserved to or by Lender hereunder, under the other
Modification Documents, or under the Loan Documents or at law or in equity, but
each and every remedy shall be cumulative and concurrent, and shall be in
addition to each and every other right, power and remedy given hereunder, under
the other Modification Documents, under the Loan Documents or now or hereafter
existing at law or in equity.
13. Notices. Borrower and Lender acknowledge and agree that, as of the
date of this Agreement, the addresses for notices under the Loan Documents,
subject to change as provided in the Loan Documents, are as follows:
Chase Manhattan Bank, as Trustee
c/o Phoenix Home Life Mutual Insurance Company
38 Prospect Street
Hartford, CT 06103
and, if given to Borrower, must be addressed as follows, subject to change as
provided hereinabove:
P.O. Box 1089
Greenville, SC 29602
Attn: Asset Management Department
14. WAIVER OF TRIAL BY JURY. AS PART OF THE CONSIDERATION FOR NEW
VALUE THIS DAY GIVEN BY LENDER AND RECEIVED BY BORROWER, BORROWER HEREBY
EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF
THE OTHER MODIFICATION DOCUMENTS OR THE LOAN DOCUMENTS.
15. Future Negotiations. Borrower acknowledges and agrees that
(i) Lender has no obligation whatsoever to discuss, negotiate or to agree to any
restructuring of the Loan, or any modification, amendment, restructuring or
reinstatement of the Loan Documents or to forbear from exercising its rights and
remedies under the Loan Documents; (ii) that if there are any future discussions
among Lender and Borrower concerning any such restructuring, modification,
amendment or reinstatement, then no restructuring, modification, amendment,
reinstatement, compromise, settlement, agreement or understanding with respect
to the Loan, the Loan Documents, the Property or any aspect thereof, shall
constitute a legally binding agreement or contract or have any force or effect
whatsoever unless and until reduced to writing and signed by authorized
representatives of the parties hereto, and that none of the parties hereto shall
assert or claim in any legal proceedings or otherwise that any such agreement
exists except in accordance with the terms of this section.
16. Modifications. The terms of this Agreement and the other
Modification Documents and the Loan Documents may not be changed, modified,
waived, discharged or terminated orally, but only by an instrument or
instruments in writing, signed by the party against whom the enforcement of the
change, modification, waiver, discharge or termination is asserted.
17. Miscellaneous. In this Agreement, the singular includes the plural
and the plural includes the singular. The headings of the paragraphs and
sections of this Agreement are for the convenience of reference only, are not to
be considered a part hereof, and shall not limit or otherwise affect any of the
terms hereof or thereof. This Agreement shall not in any respect be interpreted,
deemed or construed as making Lender a partner or joint venturer with Borrower,
nor shall it be interpreted, deemed or construed as making Lender the agent or
representative of Borrower. In no event shall Lender be liable for debts or
claims accruing or arising against the Borrower. The relationship of Lender to
Borrower is that of "lender" and "borrower." Time is of the essence of this
Agreement. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all such counterparts together shall
constitute one and the same instruments. This Agreement applies to, inures to
the benefit of, and binds Borrower and Lender and their respective heirs,
legatees, devisees, administrators, executors, successors and assigns. Except
as expressly herein provided, the covenants, acknowledgments, representations,
agreements and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BORROWER:
ANGELES PARTNERS XII, a
California limited partnership
By: Angeles Realty Corporation II, a California
corporation, its Managing General Partner
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President
(CORPORATE SEAL)
LENDER:
CHASE MANHATTAN BANK, successor by merger to
Chemical Bank, As Trustee under that certain
Pooling and Servicing Agreement dated November 1,
1993, for Commercial/Multifamily Mortgage Pass-
Through Certificates, Series 1993-1
By: Lennar Partner, Inc., a Florida corporation,
as attorney-in-fact
By: /s/ Ronald E. Schrager
Title: Vice President
(CORPORATE SEAL)
EXHIBIT A
LIST OF MODIFICATION DOCUMENTS
The Modification Documents are the following documents and instruments,
all dated of even date with this Agreement:
1. This Agreement
2. Modification of Mortgage and Security Agreement and Assignment of
Lessor's Interest in Lease(s), between Borrower and Lender
3. Closing Statement, between Borrower and Lender
CONSENT AND JOINDER
The undersigned Insignia Residential Group, L.P., being the "Management
Company" referenced in paragraph 7 of the Reinstatement and Modification
Agreement to which this Consent and Joinder is attached, hereby executes and
delivers this Consent and Joinder and joins in said Reinstatement and
Modification Agreement for the purpose of consenting to and agreeing to be bound
by the provisions of said paragraph 7 of said Reinstatement and Modification
Agreement, and solely for such purpose.
INSIGNIA RESIDENTIAL GROUP, L.P.
By: Insignia Residential Corporation
By: /s/ John Lines
Title: Vice President & Secretary
December 31, 1997
