FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from.........to.........
Commission file number 0-13309
ANGELES PARTNERS XII
(Exact name of small business issuer as specified in its charter)
California 95-3903623
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES PARTNERS XII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1998
Assets
Cash and cash equivalents $ 6,891
Receivables and deposits, net of allowance for doubtful
accounts of $14 1,828
Restricted escrows 1,205
Other assets 1,506
Investment in, and advances of $149 to, joint venture 218
Investment properties:
Land $ 10,341
Buildings and related personal property 91,033
101,374
Less accumulated depreciation (63,099) 38,275
$ 49,923
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 500
Tenant security deposit liabilities 995
Accrued property taxes 1,078
Other liabilities 745
Mortgage notes payable 71,736
Partners' Deficit
General partners $ (636)
Limited partners (44,718 units issued and
outstanding) (24,495) (25,131)
$ 49,923
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Rental income $ 5,119 $ 4,990 $ 10,195 $ 9,852
Other income 345 286 675 605
Total revenues 5,464 5,276 10,870 10,457
Expenses:
Operating 2,190 2,441 4,277 4,589
General and administrative 155 111 310 253
Depreciation 1,241 1,227 2,470 2,444
Interest 1,605 1,696 3,219 3,322
Property taxes 565 503 1,138 1,046
Bad debt recovery, net -- (27) -- (57)
Total expenses 5,756 5,951 11,414 11,597
Equity in income of joint venture 79 81 28 34
Net loss $ (213) $ (594) $ (516) $ (1,106)
Net loss allocated to
general partners (1%) $ (2) $ (6) $ (5) $ (11)
Net loss allocated to
limited partners (99%) (211) (588) (511) (1,095)
Net loss $ (213) $ (594) $ (516) $ (1,106)
Net loss per limited
partnership unit $ (4.72) $(13.15) $ (11.43) $ (24.49)
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(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, 1997 44,718 $(631) $(23,984) $(24,615)
Net loss for the six months
Ended June 30, 1998 -- (5) (511) (516)
Partners' deficit at
June 30, 1998 44,718 $(636) $(24,495) $(25,131)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Net loss $ (516) $(1,106)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 2,470 2,444
Amortization of discounts, loan costs, and
leasing commissions 213 208
Bad debt recovery, net -- (57)
Equity in income of joint venture (28) (34)
Casualty loss 12 --
Change in accounts:
Receivables and deposits (154) 236
Other assets 85 (145)
Accounts payable (30) (57)
Tenant security deposit liabilities 35 18
Accrued property taxes 33 (115)
Other liabilities (593) 311
Net cash provided by operating activities 1,527 1,703
Cash flows from investing activities:
Property improvements and replacements (755) (600)
Net receipts from (deposits to) restricted escrows 100 (33)
Advances to joint venture -- (6)
Net payments related to casualty loss (14) --
Net cash used in investing activities (669) (639)
Cash flows used in financing activities:
Payments on mortgage notes payable (426) (387)
Net increase in cash and cash equivalents 432 677
Cash and cash equivalents at beginning of period 6,459 4,827
Cash and cash equivalents at end of period $ 6,891 $ 5,504
Supplemental information:
Cash paid for interest $ 3,650 $ 2,817
Supplemental disclosure of non-cash activity:
At June 30, 1998, in connection with a fire at Pickwick Place Apartments,
accounts payable was adjusted by approximately $2,000 for non-cash activity.
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Angeles Partners
XII (the "Partnership") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of Angeles Realty Corporation II (the "Managing General Partner"), all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and six
month periods ended June 30, 1998, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1998. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
NOTE B - INVESTMENT IN JOINT VENTURE
The Partnership owns a 44.5% interest in the Princeton Meadows Golf Course Joint
Venture ("Joint Venture"). The Partnership accounts for its interest in the
Joint Venture using the equity method of accounting.
Condensed balance sheet information of the Joint Venture is summarized as
follows:
June 30, 1998
(in thousands)
Assets
Cash $ 292
Other assets 282
Investment property, net 2,042
Total $ 2,616
Liabilities and Partners' Capital
Note payable to AMIT $ 1,567
Other liabilities 897
Partners' capital 152
Total $ 2,616
The condensed statements of operations of the Joint Venture are summarized as
follows:
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(in thousands) (in thousands)
Revenue $ 541 $ 545 $ 744 $ 741
Costs and expenses (364) (362) (681) (664)
Net income $ 177 $ 183 $ 63 $ 77
The Partnership realized equity income of approximately $28,000 and $34,000 in
the Joint Venture for the six months ended June 30, 1998, and June 30, 1997,
respectively.
The Princeton Meadows Golf Course property had an underground fuel storage tank
that was removed in 1992. This fuel storage tank caused contamination to the
area. Management installed monitoring wells in the area where the tank was
formerly buried. Some samples from these wells indicated lead and phosphorous
readings that were higher than the range prescribed by the New Jersey Department
of Environmental Protection ("DEP"). The Joint Venture notified DEP of the
findings when they were first discovered. However, DEP had not given any
directives as to corrective action until late 1995.
In November 1995, representatives of the Joint Venture and the New Jersey DEP
met and developed a plan of action to clean-up the contamination site at
Princeton Meadows Golf Course. The Joint Venture has engaged an engineering
firm to conduct consulting and compliance work and a second firm to perform the
field work necessary for the clean-up. Field work is in process, with skimmers
having been installed at three test wells on the site. These skimmers are in
place to detect any residual fuel that may still be in the ground. The expected
completion date of field work should be sometime in 1999. The Joint Venture
originally recorded a liability of $199,000 for the costs of the clean-up.
Subsequently, in 1997, the Joint Venture recorded an additional liability of
approximately $45,000 as an adjustment to estimated costs remaining to complete
the clean-up. At June 30, 1998, the balance in the liability for clean-up costs
is $54,000. Funds from the property will be used to cover this excess.
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Managing General Partner is a wholly-owned
subsidiary of Insignia Properties Trust ("IPT"), an affiliate of Insignia
Financial Group, Inc. ("Insignia"). The Partnership Agreement provides for
payments to affiliates for services and as reimbursement for certain expenses
incurred by affiliates on behalf of the Partnership. The following amounts owed
to the Managing General Partner and affiliates for the six months ended June 30,
1998 and 1997, were paid or accrued:
1998 1997
(in thousands)
Property management fees (included in operating $515 $510
expenses)
Reimbursement for services of affiliates
(included in general and administrative
expenses) 219 168
Construction oversight reimbursements, included in investment properties and
operating expense, were approximately $28,000 and $30,000 for the periods ended
June 30, 1998 and June 30, 1997, respectively.
For the period from January 1, 1997 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner with an insurer unaffiliated with the Managing General
Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the current year's
master policy. The agent assumed the financial obligations of the affiliate of
the Managing General Partner which 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 June 30, 1998, 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 June 30, 1998. Interest expense on
the debt secured by the Joint Venture was approximately $98,000 for both the six
months ended June 30, 1998 and 1997.
In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The
terms of the Class B Shares provide that they are convertible, in whole or in
part, into Class A Common Shares on the basis of one Class A Share for every 49
Class B Shares (however, in connection with the settlement agreement described
in the following paragraph, MAE GP has agreed not to convert the Class B Shares
so long as AMIT's option is outstanding). These Class B Shares entitle the
holder to receive 1% of the distributions of net cash distributed by AMIT
(however, in connection with the settlement agreement described in the following
paragraph, MAE GP agreed to waive its right to receive dividends and
distributions so long as AMIT's option is outstanding). The holder of the Class
B Shares is also entitled to vote on the same basis as the holders of Class A
Shares, providing the holder with approximately 39% of the total voting power of
AMIT (unless and until converted to Class A Shares, in which case the percentage
of the vote controlled represented by such shares would approximate 1.3% of the
total voting power of AMIT).
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B Shares owned by it. This option can be exercised
at the end of 10 years or when all loans made by AMIT to partnerships which were
affiliated with MAE GP as of November 9, 1994 (which is the date of execution of
a definitive Settlement Agreement) have been paid in full. In connection with
such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing
(which occurred April 14, 1995) as payment for the option. If and when the
option is exercised, AMIT will be required to remit to MAE GP an additional
$94,000.
Simultaneously with the execution of the option and as part of the settlement,
MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that
the holder of the Class B Shares is permitted to vote those shares on all
matters except those involving transactions between AMIT and MAE GP affiliated
borrowers or the election of any MAE GP affiliate as an officer or trustee of
AMIT. With respect to such matters, the trustees of AMIT are required to vote
(pursuant to the irrevocable proxy) the Class B Shares (as a single block) in
the same manner as a majority of the Class A Shares are voted (to be determined
without consideration of the votes of "Excess Class A Shares" (as defined in
Section 6.13 of AMIT's Declaration of Trust)).
Between its acquisition of the Class B Shares (in November 1992) and March 31,
1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its
shares at the 1995 and 1996 annual meetings in connection with the election of
trustees and other matters. In February 1998, MAE GP was merged into IPT, and in
connection with that merger, MAE GP dividended all of the Class B Shares to its
sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a result,
MAE, as the holder of the Class B Shares, is now subject to the terms of the
settlement agreement, option and irrevocable proxy described in the two
preceding paragraphs. Neither MAE GP nor MAE has exerted or has any current
intention to exert any management control over or participate in the management
of AMIT. However, subject to the terms of the proxy described below, MAE may
choose to vote the Class B Shares or otherwise exercise its rights as a
shareholder of AMIT as it deems appropriate in the future.
Liquidity Assistance L.L.C., which is an affiliate of the Managing General
Partner, MAE and Insignia (which provides property management and partnership
administration services to the Partnership), owned 96,800 Class A Shares of AMIT
at June 30, 1998. These Class A Shares represent approximately 2.2% of the total
voting power of AMIT.
On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in
principle contemplating, among other things, a business combination of AMIT and
IPT, which was then owned 98% by Insignia and its affiliates. On July 18, 1997,
IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to
which (subject to shareholder approval and certain other conditions, including
the receipt by AMIT of a fairness opinion from its investment bankers) AMIT
would be merged with and into IPT, with each Class A Share and Class B Share
being converted into 1.625 and 0.0332 Common Shares of IPT, respectively. The
foregoing exchange ratios are subject to adjustment to account for dividends
paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1,
1997. It is anticipated that Insignia and its affiliates (including MAE) would
own approximately 57% of post-merger IPT if this transaction is consummated.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
September or October 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the Managing General Partner of the
Partnership.
On April 14, 1998, an Insignia affiliate (the "Purchaser") commenced tender
offers for limited partnership interests in the Partnership. The Purchaser
offered to purchase up to 18,500 of the outstanding units of limited partnership
interest in the Partnership, at $500 per Unit, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated April 14, 1998 (the "Offer to Purchase") and the related
Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2),
respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed
with the Securities and Exchange Commission on April 14, 1998. Because of the
existing and potential future conflicts of interest (described in the
Partnership's Statements on Schedule 14D-9 filed with the Securities and
Exchange Commission), neither the Partnership nor the Managing General Partner
expressed any opinion as to the Offer to Purchase and made no recommendation as
to whether unit holders should tender their units in response to the Offer to
Purchase. In addition, because of these conflicts of interest, including as a
result of the Purchaser's affiliation with various Insignia affiliates that
provide property management services to the Partnership's properties, the manner
in which the Purchaser votes its limited partner interest in the Partnership may
not always be consistent with the best interests of the other limited partners.
In connection with this tender offer, the Purchaser acquired 8,002 units.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of nine apartment complexes and
one commercial complex. The following table sets forth the average occupancy of
the properties for the six months ended June 30, 1998 and 1997:
Average Occupancy
Property 1998 1997
Briarwood Apartments 97% 95%
Cedar Rapids, Iowa (1)
Chambers Ridge Apartments (1) 93% 89%
Harrisburg, Pennsylvania
Gateway Gardens Apartments (1) 97% 91%
Cedar Rapids, Iowa
Hunters Glen - IV Apartments (1) 97% 95%
Plainsboro, New Jersey
Hunters Glen - V Apartments (1) 98% 94%
Plainsboro, New Jersey
Hunters Glen - VI Apartments (1) 97% 95%
Plainsboro, New Jersey
Pickwick Place Apartments 94% 92%
Indianapolis, Indiana
Southpointe Apartments (2) 65% 65%
Bedford Heights, Ohio
Twin Lake Towers Apartments (4) 98% 95%
Westmont, Illinois
Cooper Point Plaza (3) 53% 57%
Olympia, Washington
1)The occupancy at these investment properties has increased due to the
improvement of the markets in the Harrisburg, Cedar Rapids and Plainsboro
areas.
2)The mortgage indebtedness encumbering this property was modified in December
1997. As part of the agreement, the Partnership was required to advance funds
to Southpointe Apartments for capital improvement projects. As of June 30,
1998, all of the improvements have been completed. Southpointe Apartment's
low occupancy is due to delays in renovations and the past poor condition of
the property. The Managing General Partner expects the occupancy to improve
as a result of the completion of the above mentioned improvements.
3)Cooper Point Plaza has been adversely affected by the moving out of several
small tenants. The Managing General Partner has entered into a contract with
a potential buyer for Cooper Point Plaza subsequent to June 30, 1998. The
contract is subject to due diligence and the Managing General Partner cannot
assure that the sale will be consummated.
4)As a result of rapid population growth in Westmont, Illinois, there is a lack
of housing in the area. Consequently, Twin Lake Towers Apartments occupancy
has increased.
The Partnership incurred net losses of approximately $213,000 and $516,000 for
the three and six months ended June 30, 1998, as compared to net losses of
approximately $594,000 and $1,106,000 for the three and six months ended June
30, 1997. This decrease in net loss for the three and six month periods ended
June 30, 1998, is primarily due to an increase in revenues and a decrease in
total expenses.
Rental revenue has increased for the six months ended June 30, 1998, as compared
to the six months ended June 30, 1997, due to average occupancy increasing or
remaining consistent at all of the Partnership's residential investment
properties. Cooper Point Plaza, the Partnership's only commercial property,
experienced a decrease in occupancy, which is discussed above. Also
contributing to the increase in rental revenue is an increase in average annual
rental rates at eight of the ten investment properties.
Total expenses decreased due to decreases in operating expense and interest
expense. Operating expenses decreased at Hunters Glen Apartments - IV, V, and VI
primarily as a result of the decrease in the number of corporate units
available. The expenses associated with operating these units are higher
because they are fully furnished and utilities are included. Also contributing
to the decrease in operating expenses was the completion of a landscaping
project and less interior painting at Hunters Glen Apartments - IV, V and VI.
As occupancy has increased at this investment property, fewer tenants have
vacated their units resulting in less interior painting. Also, at Gateway
Gardens Apartments an exterior painting project was completed during 1997.
Interest expense decreased primarily due to the modification of the mortgage
encumbering Southpointe Apartments. This mortgage was in default from April 1997
until December 1997 during which time interest was accruing at the default rate
of 10.59% (see discussion below). Partially offsetting these decreases was an
increase in general and administrative expense primarily due to an increase in
expense reimbursements.
Bad debt recovery for the six months ended June 30, 1997, results from a
reduction of the reserve necessary at Cooper Point Plaza and Southpointe
Apartments, based on a review of their tenants accounts receivable.
A casualty loss of approximately $12,000 has been included in operating expense
at June 30, 1998, as a result of fires at Pickwick Place Apartments, Hunters
Glen - V, and Hunters Glen - VI. There was also water damage at Southpointe
Apartments. The estimated costs to be incurred to repair the damages
approximate the estimated insurance proceeds expected to be received.
The Partnership has a 44.5% investment in the Princeton Meadows Golf Course
Joint Venture. For the period ended June 30, 1998, the Partnership realized
equity in income of the Joint Venture of approximately $28,000, as compared to
equity in income of the Joint Venture of approximately $34,000 for the period
ended June 30, 1997.
Included in operating expense for the six months ended June 30, 1998, is
approximately $216,000 of major repairs and maintenance mainly comprised of
major landscaping, exterior building repairs, and window covering replacements.
For the six months ended June 30, 1997, approximately $205,000 of major repairs
and maintenance is included in operating expense mainly comprised of major
landscaping, parking lot repairs, window covering replacements and exterior
painting.
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.
At June 30, 1998, the Partnership had cash and cash equivalents of approximately
$6,891,000, compared to approximately $5,504,000 at June 30, 1997. Cash and
cash equivalents increased approximately $432,000 and $677,000 for the periods
ended June 30, 1998 and 1997, respectively. Net cash provided by operating
activities decreased for the six months ended June 30, 1998, versus the six
months ended June 30, 1997. This decrease is primarily due to a decrease in
other liabilities and an increase in receivables and deposits, but was partially
offset by a decrease in other assets and the decrease in net loss, as previously
explained. The decrease in other liabilities is due to the payment made to the
lender of the Southpointe mortgage to satisfy all of the accrued interest and
secure the modification of the note, as explained below. The increase in
receivables and deposits and decrease in other assets is due to the timing of
tax and insurance payments at some of the Partnership's investment properties.
Net cash used in investing activities increased slightly due to an increase in
property improvements and replacements, partially offset by an increase in
receipts from restricted escrows. Net cash used in financing activities
resulted from principal payments made on the mortgage notes payable for the six
months ended June 30, 1998.
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 had increasing maintenance needs, which have been
completed as of June 30, 1998. Historically, monthly payments of debt service
had been late, as the property rents for the current month were 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 $71,736,000, net of
unamortized discounts, with maturity dates ranging from January 2002 to
September 2012, at which point $63,822,000 of balloon payments will be due.
There were no cash distributions during the six months ended June 30, 1998, or
June 30, 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 net 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 quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates 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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA
FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California
for the County of San Mateo. The Plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and its affiliates of interests in certain general partner
entities, past tender offers by Insignia affiliates to acquire limited
partnership units, the management of partnerships by Insignia affiliates as well
as a recently announced agreement between Insignia and Apartment Investment and
Management Company. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. The Managing General Partner
believes the action to be without merit, and intends to vigorously defend it.
On June 24, 1998, the Managing General Partner filed a motion seeking dismissal
of the action.
In July 1998, a limited partner of the Partnership commenced an action in the
Circuit Court for Jackson County, Missouri entitled BOND PURCHASE LLC V. ANGELES
PARTNERS XII, ET AL. The complaint claims that the Partnership and an affiliate
of the Managing General Partner breached certain contractual and fiduciary
duties allegedly owed to the claimant and seeks damages and injunctive relief.
The Managing General Partner believes the claims to be without merit and intends
to vigorously defend the claims.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Managing General Partner believes that all such
pending or outstanding litigation will be resolved without a material adverse
effect upon the business, financial condition or operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27 is filed as an exhibit to this report.
b) Reports on Form 8-K:
None filed during the six months ended June 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS XII
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President/Director
By: /s/Robert D. Long
Robert D. Long
Vice President/CAO
Date: August 6, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Partners XII 1998 Second Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000720392
<NAME> ANGELES PARTNERS XII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 6,891
<SECURITIES> 0
<RECEIVABLES> 1,828
<ALLOWANCES> 14
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 101,374
<DEPRECIATION> (63,099)
<TOTAL-ASSETS> 49,923
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 71,736
0
0
<COMMON> 0
<OTHER-SE> (25,131)
<TOTAL-LIABILITY-AND-EQUITY> 49,923
<SALES> 0
<TOTAL-REVENUES> 10,870
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,414
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,219
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (516)
<EPS-PRIMARY> (11.43)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
