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, 1998
[ ] 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.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
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.X]
State issuer's revenues for its most recent fiscal year. $22,411,000
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 December 31, 1998. No market exists for the limited
partnership interests of the Registrant, and, therefore, no aggregate market
value can be determined.
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 on 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 was an affiliate of Insignia Financial Group, Inc. ("Insignia").
Effective February 26, 1999, IPT was merged into Apartment Investment and
Management Company ("AIMCO"). Thus the Managing General Partner is now a
wholly-owned subsidiary of AIMCO. The Elliott Accommodation Trust and the
Elliott Family Partnership, a California limited partnership, were the Non-
Managing General Partners. Effective December 31, 1997, the Elliott Family
Partnership, Ltd., acquired the Elliott Accommodation Trust's general partner
interest in the Registrant. The Managing General Partner and the Non-Managing
General Partner are herein collectively referred to as the "General Partners".
The Partnership Agreement provides that the Partnership is to terminate on
December 31, 2035 unless terminated prior to such date.
Commencing May 26, 1983, the Registrant offered pursuant to a Registration
Statement filed with the Securities and Exchange Commission up to 80,000 Units
of Limited Partnership Interest at a purchase price of $1,000 per Unit with a
minimum purchase of 5 Units. The Managing General Partner contributed capital
in the amount of $1,000 for a 1% interest in the Partnership. The offering
terminated on February 13, 1985. Upon termination of the offering, the
Registrant had sold 44,773 units aggregating $44,773,000.
The Registrant is engaged in the business of operating and holding real
properties for investment. In 1984 and 1985 during its acquisition phase, the
Registrant acquired ten existing apartment properties and one existing
commercial property. During 1991, the Registrant acquired a 44.5% general
partnership interest in a joint venture along with two other related limited
partnerships. In 1990, the Registrant lost one of its apartment properties to
foreclosure. As of December 31, 1998, the Partnership continues to own and
operate ten investment properties and a general partnership interest in an
eleventh property. On January 4, 1999, subsequent to the Partnership's fiscal
year end, the Partnership sold its only commercial property to an unaffiliated
third party. The Partnership also had a 44.5% investment in Princeton Meadows
Golf Course Joint Venture ("Joint Venture"). On February 26, 1999, the Joint
Venture sold its only investment property, Princeton Meadows Golf Course, to an
unaffiliated third party (See "Subsequent Events" below and "Item 2, Description
of Properties").
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 Registrant 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 the Non-Managing
General Partner have no right to participate in the management or conduct of
such business and affairs. An affiliate of the Managing General Partner
provides property management services for the Partnership's residential
properties and the Partnership's commercial property until October 1, 1998.
Effective October 1, 1998, property management services were performed at the
Partnership's commercial property by an unrelated party.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential and commercial properties within the
market area of the Registrant's properties. The number and quality of
competitive properties, including those which may be managed by an affiliate of
the Managing General Partner in such market area, could have a material effect
on the rental market for apartments and commercial space owned by the Registrant
and the rents that may be charged for such apartments and space. While the
Managing General Partner and its affiliates are a significant factor in the
United States in the apartment industry, competition for the apartments is
local. In addition, various limited partnerships have been formed by the
Managing General Partner and/or affiliates to engage in business which may be
competitive with the Registrant.
Both the income and expenses of operating the remaining properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
an oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential and
commercial properties because such properties are susceptible to the impact of
economic and other conditions outside of the control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases, environmental testing has been performed which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site. However, the Joint Venture, in which the
partnership had an equity interest, was responsible for an environmental clean-
up. Upon the sale of the Princeton Meadows Golf Course, the Joint Venture
received documents from the purchaser releasing the Joint Venture from any
further responsibility or liability with respect to the clean-up (see "Item 7.
Financial Statements _ Note G").
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6." of this 10-
KSB.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100%
ownership interest in Insignia Properties Trust ("IPT"), the entity which
controls the Managing General Partner. The Managing General Partner does not
believe that this transaction will have a material effect on the affairs and
operations of the Partnership.
Subsequent Events
On January 4, 1999, the Registrant sold Cooper Point Plaza to an unaffiliated
third party for net sales proceeds of approximately $2,011,000 after payment of
closing costs. The Registrant realized a gain of approximately $2,400,000 on
the sale and a related $556,000 extraordinary loss on early extinguishment of
debt.
On February 26, 1999, the Joint Venture sold the Princeton Meadows Golf Course
to an unaffiliated third party for gross sale proceeds of $5,100,000. The Joint
Venture received net proceeds of $3,452,000 after payment of closing costs,
resulting in a gain on sale of approximately $2,932,000. The Partnership's 1999
pro-rata share of this gain is expected to be approximately $1,305,000.
Furthermore, as a result of the sale, unamortized loan costs in the amount of
$6,500 were written off. This resulted in an extraordinary loss on early
extinguishment of debt of approximately $6,500. The Partnership's 1999 pro-rata
share of this extraordinary loss is expected to be approximately $3,000.
ITEM 2. DESCRIPTION OF PROPERTIES:
The following table sets forth the Registrant's investments in properties as of
December 31, 1998:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Briarwood Apartments 06/25/85 Fee ownership subject to Apartment
Cedar Rapids, Iowa first and second mortgages (2)73 units
Chambers Ridge Apartments 07/26/84 Fee ownership subject to Apartment
Harrisburg, Pennsylvania first and second mortgages (2)324 units
Cooper Point Plaza (1) 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 (2)328 units
Hunters Glen Apartments - IV 01/31/85 Fee ownership subject to Apartment
Plainsboro, New Jersey a first mortgage (2) 264 units
Hunters Glen Apartments - V 01/31/85 Fee ownership subject to Apartment
Plainsboro, New Jersey first and second mortgages (2)304 units
Hunters Glen Apartments - VI 01/31/85 Fee ownership subject to Apartment
Plainsboro, New Jersey first and second mortgages (2)328 units
Pickwick Place Apartments 05/11/84 Fee ownership subject to Apartment
Indianapolis, Indiana a first mortgage (2) 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 (2)399 units
</TABLE>
(1)On January 4, 1999, Cooper Point Plaza was sold to an unaffiliated third
party. (See "Note J" of the Financial Statements included in "Item 7.").
(2)Property is held by a Limited Partnership which the Registrant ultimately
owns a 100% interest in.
The Partnership also had 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. On February 26, 1999, the Joint Venture sold its only investment
property, Princeton Meadows Golf Course, to an unaffiliated third party. (See
"Note J" of the Financial Statements included in "Item 7.") The property owned
by the Joint Venture, as of December 31, 1998, 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:
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
Briarwood Apartments $ 1,867 $ 1,190 5-40 yrs (1) $ 664
Chambers Ridge Apartments 9,986 6,796 5-40 yrs (1) 3,257
Cooper Point Plaza 8,865 5,406 5-40 yrs (1) 4,588
Gateway Gardens Apartments 7,816 5,358 5-40 yrs (1) 2,330
Hunters Glen Apartments-IV 11,290 6,846 5-40 yrs (1) 4,240
Hunters Glen Apartments-V 13,132 7,991 5-40 yrs (1) 4,874
Hunters Glen Apartments-VI 14,168 8,607 5-40 yrs (1) 5,204
Pickwick Place Apartments 9,626 5,712 5-40 yrs (1) 3,663
Southpointe Apartments 10,138 6,890 5-40 yrs (1) 3,007
Twin Lake Towers Apartments 15,525 10,479 5-40 yrs (1) 4,241
$ 102,413 $ 65,275 $ 36,068
(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 PROPERTY INDEBTEDNESS:
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1998 Rate Amortized Date Maturity (3)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Briarwood Apartments
1st mortgage $ 1,535 7.83% 28.67 yrs 10/2003 $ 1,404
2nd mortgage 50 7.83% (1) 10/2003 50
Chambers Ridge Apartments
1st mortgage 5,304 7.83% 28.67 yrs 10/2003 4,849
2nd mortgage 174 7.83% (1) 10/2003 174
Cooper Point Plaza
1st mortgage 3,906 10.5% 28 yrs 09/2012 43
Gateway Gardens Apartments
1st mortgage 6,187 7.83% 28.67 yrs 10/2003 5,657
2nd mortgage 203 7.83% (1) 10/2003 203
Hunters Glen Apartments-IV
1st mortgage 8,267 8.43% 28.67 yrs 10/2003 7,787
Hunters Glen Apartments-V
1st mortgage 8,662 7.83% 28.67 yrs 10/2003 7,920
2nd mortgage 285 7.83% (1) 10/2003 285
Hunters Glen Apartments-VI
1st mortgage 9,016 7.83% 28.67 yrs 10/2003 8,243
2nd mortgage 297 7.83% (1) 10/2003 297
Pickwick Place Apartments
1st mortgage 6,383 9.1% 28 yrs 05/2005 5,775
Southpointe Apartments
1st mortgage (in default)(2) 11,000 8.59% (1) 01/2002 11,000
Additional borrowing
(in default)(2) 17 9.00% (2) 01/2002 1
Twin Lake Towers Apartments
1st mortgage 10,700 7.83% 28.67 yrs 10/2003 9,782
2nd mortgage 352 7.83% (1) 10/2003 352
72,338 $ 63,822
Less unamortized discounts (987)
$ 71,351
</TABLE>
(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.
(3) See "Item 7. Financial Statements _ Note C" for information with respect to
the Registrant's ability to prepay these loans and more specific details as
to the terms of the loans.
RENTAL RATES AND OCCUPANCY:
Average annual rental rate and occupancy for 1998 and 1997 for each property:
Average Annual Average Annual
Rental Rates Occupancy
Property 1998 1997 1998 1997
Briarwood Apartments $6,638/unit $6,485/unit 97% 96%
Chambers Ridge Apartments 6,928/unit 6,874/unit 92% 91%
Cooper Point Plaza (3) 11.40/s.f. 11.40/s.f. 53% 53%
Gateway Gardens Apartments 6,507/unit 6,331/unit 96% 94%
Hunters Glen Apartments - IV 8,950/unit 8,702/unit 97% 96%
Hunters Glen Apartments - V 8,995/unit 8,831/unit 97% 96%
Hunters Glen Apartments - VI 8,846/unit 8,712/unit 96% 96%
Pickwick Place Apartments (1) 6,947/unit 6,805/unit 95% 91%
Southpointe Apartments (2) 5,726/unit 5,654/unit 70% 63%
Twin Lake Towers Apartments 8,635/unit 8,269/unit 97% 97%
(1) Occupancy increased at Pickwick Place Apartments due to rental concessions
which have been offered in an effort to increase occupancy.
(2) The mortgage indebtedness encumbering this property was modified in
December 1997. As part of the agreement, the Partnership was required to
advance funds of $150,000 to Southpointe Apartments for capital improvement
projects. As of December 31, 1998, all of the improvements to be covered
by this advance have been completed. Southpointe Apartments' low occupancy
is due to delays in renovations and the past poor condition of the
property. There continues to be extensive renovations that need to be
completed at the property, however, there is not enough cash flow to
complete these renovations. During March 1999 the property notified the
mortgage lender that it would not be making the required monthly interest
payments due to cash flow problems. The Managing General Partner is
currently evaluating its options with respect to this property, however, no
additional funds from the Partnership will be committed to the property at
this time.
(3) On January 4, 1999, the Registrant sold it's only commercial property,
Cooper Point Plaza to an unaffiliated third party for net sales proceeds of
$2,011,000 after payment of closing costs. The Registrant realized a gain
of approximately $2,400,000 on the sale and a related $556,000
extraordinary loss on early extinguishment of debt.
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 residential properties are apartment complexes
which lease units for terms of one year or less. As of December 31, 1998, no
residential or commercial tenant leases 10% or more of the available rental
space. All of the properties, except Southpointe Apartments, are in good
physical condition subject to normal depreciation and deterioration as is
typical for assets of this type and age. As noted above Southpointe is in need
of extensive renovations, however, future levels of cash flow are not
anticipated to be sufficient to complete all of the renovations.
REAL ESTATE TAXES AND RATES:
Real estate taxes and rates in 1998 for each property were:
1998 1998
Billing Rate
(in thousands)
Briarwood Apartments $ 77* 3.48%
Chambers Ridge Apartments 161 2.78%
Cooper Point Plaza 104 1.55%
Gateway Gardens Apartments 257** 3.07%
Hunters Glen Apartments _ IV 296 2.62%
Hunters Glen Apartments _ V 320 2.62%
Hunters Glen Apartments _ VI 324 2.62%
Pickwick Place Apartments 204* 7.39%
Southpointe Apartments 237 5.93%
Twin Lake Towers Apartments 272* 5.52%
* Represents 1997 billing. Tax bills for 1998 not yet received.
** Represents a fiscal year ending June 30, 1998. Since the properties fiscal
year end is different than the tax year end the actual tax expense for this
property for its fiscal year ended June 30, 1998 is partially based on 1997
calendar year rates which may be slightly different from 1998 rates.
CAPITAL IMPROVEMENTS:
Briarwood Apartments completed approximately $54,000 in capital expenditures for
the year ended December 31, 1998, consisting primarily of building improvements
and appliance replacements. These improvements were funded primarily from cash
flow. Based on a report received from an independent third party consultant
analyzing necessary exterior improvements and estimates made by the Managing
General Partner on interior improvements, it is estimated that the property
requires approximately $66,000 of capital improvements over the near term. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $82,000 for 1999 consisting primarily of structural repairs and
other small projects.
Chambers Ridge Apartments completed approximately $400,000 in capital
expenditures for the year ended December 31, 1998, consisting primarily of a
roof replacement project, building improvements, carpet replacements, electrical
repairs and upgrades to HVAC condensing units. These improvements were funded
primarily from cash flow. Based on a report received from an independent third
party consultant analyzing necessary exterior improvements and estimates made by
the Managing General Partner on interior improvements, it is estimated that the
property requires approximately $2,264,000 of capital improvements over the near
term. The Partnership has budgeted, but is not limited to, approximately
$1,544,000 for 1999 consisting primarily of landscaping, parking lot and pool
repairs and HVAC condensing unit replacements.
Cooper Point Plaza did not have any capital expenditures for the year ended
December 31, 1998. This property was sold on January 4, 1999 (see "Note J" of
the financial statements included in "Item 7").
Gateway Gardens Apartments completed approximately $255,000 in capital
expenditures for the year ended December 31, 1998, consisting primarily of HVAC
condensing units, carpet replacements and new refrigerators. These improvements
were funded primarily from cash flow. Based on a report received from an
independent third party consultant analyzing necessary exterior improvements and
estimates made by the Managing General Partner on interior improvements, it is
estimated that the property requires approximately $332,000 of capital
improvements over the near term. The Partnership has budgeted, but is not
limited to, capital improvements of approximately $400,000 for 1999 consisting
primarily of heating and air conditioning improvements along with electrical and
flooring repairs.
Hunters Glen Apartments IV completed approximately $90,000 in capital
expenditures for the year ended December 31, 1998, consisting primarily of HVAC
condensing units, carpet replacements and cabinet replacements. These
improvements were funded primarily from cash flow. Based on a report received
from an independent third party consultant analyzing necessary exterior
improvements and estimates made by the Managing General Partner on interior
improvements, it is estimated that the property requires approximately
$1,022,000 of capital improvements over the near term. The Partnership has
budgeted, but is not limited to, capital improvements of approximately
$1,071,000 for 1999 consisting primarily of landscaping and irrigation, HVAC
condensing unit replacement and parking lot and pool repairs.
Hunters Glen Apartments V completed approximately $89,000 in capital
expenditures for the year ended December 31, 1998, consisting primarily of HVAC
condensing units, carpet replacements, cabinet replacements and new vinyl
flooring. These improvements were funded primarily from cash flow. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the Managing General Partner on
interior improvements, it is estimated that the property requires approximately
$1,163,000 of capital improvements over the near term. The Partnership has
budgeted, but is not limited to, capital improvements of approximately
$1,216,000 for 1999 consisting primarily of balcony and stairwell repairs,
landscaping and parking lot repairs.
Hunters Glen Apartments VI completed approximately $139,000 in capital
expenditures for the year ended December 31, 1998, consisting primarily of HVAC
condensing units, carpet replacements, cabinet replacements, new vinyl flooring
and various other building improvements. These improvements were funded
primarily from cash flow. Based on a report received from an independent third
party consultant analyzing necessary exterior improvements and estimates made by
the Managing General Partner on interior improvements, it is estimated that the
property requires approximately $1,245,000 of capital improvements over the near
term. The Partnership has budgeted, but is not limited to, capital improvements
of approximately $1,302,000 for 1999 consisting primarily of exterior painting,
landscaping and irrigation improvements and parking lot repairs.
Pickwick Place Apartments completed approximately $682,000 in capital
expenditures for the year ended December 31, 1998, consisting primarily of
balcony replacements, carpet replacements, a roof replacement project, and
repairs to 12 units damaged in a fire at the property in June of 1998 (see "Item
7. Financial Statements _ Note I"). With the exception of the insurance
proceeds relating to the June 1998 fire, the improvements were funded primarily
from cash flow. Based on a report received from an independent third party
consultant analyzing necessary exterior improvements and estimates made by the
Managing General Partner on interior improvements, it is estimated that the
property requires approximately $319,000 of capital improvements over the near
term. The Partnership has budgeted, but not limited to, capital improvements of
approximately $524,000 in 1999 consisting primarily of roof, plumbing,
electrical and balcony repairs.
Southpointe Apartments completed approximately $93,000 in capital expenditures
for the year ended December 31, 1998, consisting primarily of carpet replacement
and new appliances. These improvements were funded primarily from cash flow.
Based on a report received from an independent third party consultant analyzing
necessary exterior improvements and estimates made by the Managing General
Partner on interior improvements, it is estimated that the property requires
approximately $614,000 of capital improvements over the near term. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $239,000 in 1999 consisting primarily of roof repairs, HVAC
condensing unit replacement and parking lot repairs.
Twin Lake Towers Apartments completed approximately $479,000 in capital
expenditures for the year ended December 31, 1998, consisting primarily of a
roof replacement project, balcony replacements, new siding and HVAC condensing
units. These improvements were funded primarily from cash flow. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the Managing General Partner on
interior improvements, it is estimated that the property requires approximately
$3,078,000 of capital improvements over the near term. The Partnership has
budgeted, but is not limited to, capital improvements of approximately
$3,075,000, in 1999 consisting primarily of HVAC condensing unit replacement,
parking lot repairs and landscaping.
The capital improvements planned for 1999 at the Partnership's properties will
be made only to the extent of cash available from operations and Partnership
reserves.
ITEM 3. 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 entities which were, at one time, affiliates of Insignia
("Insignia 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. On June 25, 1998, the Managing General
Partner filed a motion seeking dismissal of the action. In lieu of responding to
the motion, the plaintiffs have filed an amended complaint. The Managing
General Partner has filed demurrers to the amended complaint which were heard
during February 1999. No ruling on such demurrers has been received. The
Managing General Partner does not anticipate that costs associated with this
case, if any, to be material to the Partnership's overall operations.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled EVEREST PROPERTIES, LLC. V.
INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of
California, county of Los Angeles. The action involves 44 real estate limited
partnership (including the Partnership) in which the plaintiffs allegedly own
interests and which Insignia Affiliates allegedly manage or control (the
"Subject Partnerships"). This case was settled on March 3, 1999. The
Partnership is responsible for a portion of the settlement costs. The expense
will not have a material effect on the Partnership's operations.
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 claim. The Managing General Partner is unable to
determine the costs associated with this claim at this time.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
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
quarter ended December 31, 1998.
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, 1998, the Partnership had 2,571 Limited Partners of record and
44,718 Limited Partnership Units outstanding. As of December 31, 1998,
affiliates of the Managing General Partner own 16,595 limited partnership units
or 37.109% of the outstanding Partnership Units. No public trading market has
developed for the Units, and it is not anticipated that such a market will
develop in the future.
During the year ended December 31, 1998, a distribution of $650,000 ($14.54 per
limited partnership unit) was declared and paid during January 1999 from surplus
funds. There were no distributions to the partners for the year ending December
31, 1997. In February, 1999, a distribution of $2,500,000 was paid to partners
of which $489,000 ($10.82 per limited partnership unit) was paid from operations
and $2,011,000 ($44.97 per limited partnership unit) was paid from surplus
funds. The Registrant's distribution policy will be reviewed on a quarterly
basis. Future cash distributions will depend on the levels of net cash
generated from operations, refinancings, property sales and the availability of
cash reserves. There can be no assurance, however, that the Partnership will
generate sufficient funds from operations, after required capital expenditures,
to permit any additional distributions to its partners in 1999 or subsequent
periods.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the forward-
looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
RESULTS OF OPERATIONS
The Partnership incurred a net loss of approximately $684,000 for the year ended
December 31, 1998, as compared to a net loss of approximately $2,025,000 for the
year ended December 31, 1997. (See "Note D" of the financial statements for a
reconciliation of these amounts to the Registrant's federal taxable losses).
The decrease in net loss for the year ended December 31, 1998, is due to an
increase in total revenues and a decrease in total expenses, which is partially
offset by a decrease in equity income of the Joint Venture. Total revenues
increased primarily due to an increase in rental income and, to a lesser extent,
an increase in other income and the recognition of a casualty gain. Rental
income increased primarily due to the increase in average rental rates of eight
of the nine residential investment properties. Occupancy and average rental
rates remained unchanged from 1997 at Cooper Point Plaza, the Partnership's only
commercial property. Also contributing to the increase in rental revenue was the
increase in occupancy in seven of the ten investment properties of the
Partnership. Occupancy at the other three properties remained constant. Other
income increased mainly due to an increase in lease cancellation fees at Gateway
Gardens, Hunters Glen VI and Pickwick Place. Also, there was an increase in
clubhouse rentals at Hunters Glen IV, V, and VI.
A net casualty gain of $352,000 has been recorded in 1998 due to fires at
Pickwick Place and Hunters Glen V and VI and water damage at Southpointe. In
June 1998, a fire at Pickwick Place extensively damaged 12 apartment units. The
undepreciated value of the units of approximately $80,000 was written off and
netted with the insurance proceeds received of approximately $449,000, for a net
casualty gain of $369,000. In May 1998, there were two smaller fires at Hunters
Glen V and VI which resulted in damages of approximately $3,000 and $4,000,
respectively. Finally, in February, 1998, there was some water damage at
Southpointe which resulted in a net loss of $10,000 after the receipt of
insurance proceeds.
Total expenses decreased for the year ended December 31, 1998 as compared to the
year ended December 31, 1997 due to decreases in operating and interest expense,
which were offset by increases in general and administrative expense,
depreciation expense and property tax expense. Operating expense decreased
primarily as a result of the decrease in the number of corporate units available
at Hunters Glen IV, V, and VI. The expenses associated with operating these
units are higher because they are fully furnished and utilities are included.
There was also a reduction in utility costs at Gateway Gardens, Chambers Ridge,
and Twin Lake Towers. In addition, operating expense decreased due to the
completion of a number of building improvement projects at the properties in
1997. These include exterior painting at Gateway Gardens, parking lot
improvements at Southpointe, interior painting at Hunters Glen IV, V, and VI,
Pickwick Place and Southpointe, exterior building renovations at Twin Lake
Towers, and window covering replacements at Hunters Glen IV, V, and VI and Twin
Lake Towers. 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%. Partially offsetting these decreases was an increase in
general and administrative expense primarily due to an increase in expense
reimbursements to affiliates of the Managing General Partner and management fees
of $135,000 accrued to the Managing General Partner. This fee was accrued for
executive and administrative management services and was equal to 7.5% of net
cash flow from operations as defined in the Partnership Agreement. Included in
general and administrative expenses at both December 31, 1998 and 1997 are
reimbursements to the Managing General Partner allowed under the Partnership
Agreement associated with its management of the Partnership. Costs associated
with the quarterly and annual communications with investors and regulatory
agencies and the annual audit required by the Partnership Agreement are also
included. Depreciation expense increased due to the completion of capital
improvements at all the Partnership's residential properties. Property taxes
increased due to increased assessments at a number of the Partnership's
residential properties.
The Partnership has a 44.5% investment in the Princeton Meadows Golf Course
Joint Venture. For 1998, the Partnership realized equity in loss of the Joint
Venture of approximately $6,000 versus equity in income of the Joint Venture of
approximately $42,000 in 1997 (see "Item 7." "Note G - Investment in Joint
Venture"). The decrease in net income for the year ended December 31, 1998,
versus the year ended December 31, 1997, can be attributed to an increase in
expenses partially offset by a slight increase in income. In an effort to
attract new customers, management completed major landscaping projects and
renovations to its clubhouse in 1998 to improve the overall appearance of the
golf course. On February 26, 1999, the Joint Venture sold Princeton Meadows
Golf Course to an unaffiliated third party. (See "Note J" of the Financial
Statements included in "Item 7.").
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 Registrant from increases in expense. As part of this
plan, the Managing General Partner attempts to protect the Registrant 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.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998 the Registrant held cash and cash equivalents of
approximately $7,611,000, compared to approximately $6,459,000 at December 31,
1997. The increase in cash and cash equivalents is due to $3,835,000 of cash
provided by operating activities, which was partially offset by $1,815,000 of
cash used in investing activities and $868,000 of cash used in financing
activities. Cash used in investing activities consisted of property
improvements and replacements, offset by net withdrawals from restricted escrows
maintained by the mortgage lender and net insurance proceeds relating to the
casualties at Pickwick Place and Southpointe. Cash used in financing activities
consisted of payments of principal made on the mortgages encumbering the
Registrant's properties. The Registrant invests its working capital reserves in
a money market account.
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, 1998. 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. In March 1999 the
Partnership notified the lender that it would not be making the required monthly
interest payments on this mortgage due to cash flow problems, thus putting the
debt in default. The Managing General Partner is currently in discussions with
the lender with respect to the status of this 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 Registrant and to comply with
federal, state, local, legal and regulatory requirements. The Registrant has
budgeted, but is not limited to, approximately $9,453,000 for all of the
Registrant's properties in 1999. Budgeted capital improvements planned for
Briarwood Apartments include structural repairs and other small projects.
Budgeted capital improvements planned for Chambers Ridge Apartments include
landscaping, parking lot and pool repairs and HVAC condensing unit replacements.
Budgeted capital improvements planned for Gateway Gardens apartments include
heating and air conditioning improvements and electrical and flooring repairs.
Budgeted capital improvements planned for Hunters Glen Apartments IV include
landscaping and irrigation, HVAC condensing unit replacements and parking lot
and pool repairs. Budgeted capital improvements planned for Hunters Glen
Apartments V include balcony and stairwell repairs, landscaping and parking lot
repairs. Budgeted capital improvements planned for Hunters Glen Apartments VI
include exterior painting, landscaping and irrigation improvements and parking
lot repairs. Budgeted capital improvements planned for Pickwick Place
Apartments include roof, plumbing, electrical and balcony repairs. Budgeted
capital improvements planned for Southpointe Apartments include roof repairs,
HVAC condensing unit replacements and parking lot repairs. Budgeted capital
improvements planned for Twin Lake Towers apartments include HVAC condensing
unit replacements, parking lot repairs and landscaping. The capital
expenditures will be incurred only if cash is available from operations, capital
reserve accounts or from partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The Registrant's
mortgage indebtedness encumbering its properties amounts to approximately
$71,351,000, net of unamortized discounts, with maturity dates ranging from
January 2002 to September 2012, during which time balloon payments totaling
$63,822,000 are due. The Managing General Partner may attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such properties through foreclosure.
During the year ended December 31, 1998, a distribution of $650,000 ($14.54 per
limited partnership unit) was declared and paid during January 1999 from surplus
funds. There were no cash distributions during the year ended December 31, 1997.
In February 1999, a distribution of $2,500,000 was paid to partners, of which
$489,000 ($10.82 per limited partnership unit) was paid from operations and
$2,011,000 ($44.97 per limited partnership unit) was paid from surplus funds.
Future cash distributions will depend on the levels of net cash generated from
operations, refinancings, the sale of the properties or joint venture and the
availability of cash reserves. The Partnership's distribution policy will be
reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures, to permit any additional distributions to its partners in
1999 or subsequent periods.
Year 2000 Compliance
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.
The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.
Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase
Computer Hardware:
During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.
The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.
Computer software:
The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.
During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.
The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.
Operating Equipment:
The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.
Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.
The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.
The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.
The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.
The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.
Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
ITEM 7. FINANCIAL STATEMENTS
ANGELES PARTNERS XII
LIST OF FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Balance Sheet - December 31, 1998
Consolidated Statements of Operations - Years ended December 31, 1998 and 1997
Consolidated Statements of Changes in Partners' Deficit - Years ended December
31, 1998 and 1997
Consolidated Statements of Cash Flows - Years ended December 31, 1998 and 1997
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, 1998, 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, 1998. 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, 1998, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
March 3, 1999
ANGELES PARTNERS XII
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1998
Assets
Cash and cash equivalents $ 7,611
Receivables and deposits, net of allowance
for doubtful accounts of $9 1,985
Restricted escrows 1,269
Other assets 1,356
Investment in, and advances of $149
to, joint venture (Note G) 184
Investment properties (Notes C and F):
Land $ 10,341
Buildings and related personal
property 92,072
102,413
Less accumulated depreciation (65,275) 37,138
$ 49,543
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 555
Tenant security deposit liabilities 959
Accrued taxes 1,085
Distribution payable 650
Other liabilities 892
Mortgage notes payable, including $11,017 in
default (Notes C and F) 71,351
Partners' Deficit
General partners $ (638)
Limited partners (44,718 units issued and
outstanding) (25,311) (25,949)
$ 49,543
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1998 1997
Revenues:
Rental income $ 20,639 $ 19,832
Other income 1,420 1,284
Casualty gain 352 --
Total revenues 22,411 21,116
Expenses:
Operating 8,571 9,132
General and administrative 760 509
Depreciation 4,995 4,965
Interest 6,414 6,492
Property taxes 2,291 2,161
Bad debt recovery -- (146)
Loss on disposal of property 58 70
Total expenses 23,089 23,183
Equity in (loss) income of joint venture (Note G) (6) 42
Net loss $ (684) $ (2,025)
Net loss allocated to general partners (1%) $ (7) $ (20)
Net loss allocated to limited partners (99%) (677) (2,005)
Net loss $ (684) $ (2,025)
Net loss per limited partnership unit $ (15.14) $ (44.83)
Distributions per limited partnership unit $ 14.54 $ --
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, 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)
Net loss for the year ended
December 31, 1998 -- (7) (677) (684)
Distributions to Partners -- (650) (650)
Partners' deficit at
December 31, 1998 44,718 $ (638) $ (25,311) $ (25,949)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997
Cash flows from operating activities:
Net loss $ (684) $ (2,025)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 4,995 4,965
Amortization of discounts, loan costs, and
leasing commissions 414 427
Bad debt recovery -- (146)
Casualty gain (352) --
Loss on disposal of asset 58 70
Equity in loss (income) of joint venture 6 (42)
Change in accounts:
Receivables and deposits (311) 278
Other assets 91 (82)
Accounts payable 25 (61)
Tenant security deposit liabilities (1) 37
Accrued taxes 40 13
Other liabilities (446) 622
Net cash provided by operating activities 3,835 4,056
Cash flows from investing activities:
Property improvements and replacements (2,281) (1,671)
Advances to joint venture -- (5)
Net withdrawals from restricted escrows 36 32
Net insurance proceeds related to casualty gain 430 --
Net cash used in investing activities (1,815) (1,644)
Cash flows from financing activities:
Loan costs paid -- (15)
Proceeds from mortgage advance -- 23
Payments on mortgage notes payable (868) (788)
Net cash used in financing activities (868) (780)
Net increase in cash and cash equivalents 1,152 1,632
Cash and cash equivalents at beginning of year 6,459 4,827
Cash and cash equivalents at end of year $ 7,611 $ 6,459
Supplemental disclosure of cash flow information:
Cash paid for interest $ 6,651 $ 5,464
Supplemental disclosure of non-cash activity:
At December 31, 1998, distributions payable and partners' deficit were adjusted
by $650,000 for unpaid distributions.
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
Notes to Consolidated Financial Statements
December 31, 1998
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: 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 was an affiliate
of Insignia Financial Group, Inc. ("Insignia"). Effective February 26, 1999,
IPT was merged into Apartment Investment and Management Company ("AIMCO"). Thus
the Managing General Partner is now a wholly-owned subsidiary of AIMCO. The
Elliott Accommodation Trust and the Elliott Family Partnership, a California
limited partnership, were the Non-Managing General Partners. Effective December
31, 1997, the Elliott Family Partnership, Ltd., acquired the Elliott
Accommodation Trust's general partner interest in the Registrant. The Managing
General Partner and the Non-Managing General Partner are herein collectively
referred to as the "General Partners". The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2035 unless terminated prior to
such date. As of December 31, 1998, 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: For the year ended December 31, 1997, the
consolidated financial statements of the Partnership included 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. During 1998, the 1% general partner interests in AP XII Associates
LP, Hunters Glen Phase I AP XII, LP and Hunters Glen AP XII LP were transferred
to AP XII Associates GP, LLC, Hunters Glen Phase I GP, LLC and Hunters Glen
Phase V GP, LLC, respectively, single member limited liability corporations,
which are wholly-owned by the Registrant. Also, the 1% general partner interest
in Hunters Glen AP XII, LP was transferred to Hunters Glen Phase V GP, LLC, a
single member limited liability corporation wholly-owned by the Registrant. The
1% General Partner of Hunters Glen GP, LP withdrew from the Partnership and its
interest was transferred to the 99% limited partner, the Registrant. As a
result, Hunters Glen GP, LP was left with only a single partner and was
effectively terminated. All significant interpartnership balances have been
eliminated. Minority interest is immaterial and not shown separately in the
financial statements.
Allocation of Profits, Gains, and losses: 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 Partner in proportion to their interests and 15%
("Incentive Interest") to the Managing General Partner.
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.
Cash and Cash Equivalents: Cash and cash equivalents includes cash on hand and
in banks, money market accounts, 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 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
and are being amortized on a straight-line basis over the lives of the loans.
Accumulated amortization is approximately $1,642,000 at December 31, 1998, and
is also included in other assets.
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, 1998, is $364,000.
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 $81,000 at December 31, 1998.
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, 1998, is approximately $824,000.
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 G"). 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 consist of nine apartment
complexes and one commercial property which are stated at cost. Acquisition
fees are capitalized as a cost of real estate. In accordance with Financial
Accounting Statements Board Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," 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, 1998 and
1997, 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.
Lease Commissions: Lease commissions are being amortized using the straight-
line method over the term of the respective leases and are included in operating
expense.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. Commercial building lease terms are from twelve months to ten years.
In addition, the Managing General Partner's policy is to offer rental
concessions during particularly slow months or in response to heavy competition
from other similar complexes in the area. Concessions are charged against
rental income as incurred.
Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value
is defined in the SFAS as the amount at which the instruments could be exchanged
in a current transaction between willing parties, other than in a forced or
liquidation sale. 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 long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying value.
Segment Reporting: In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" ("Statement 131"), which is
effective for years beginning after December 15, 1997. Statement 131
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
(See "Note K" for detailed disclosures of the Partnership's segment.)
Advertising Costs: The Partnership expenses the costs of advertising as
incurred. Advertising costs of approximately $214,000 and approximately $222,000
for the years ended December 31, 1998 and 1997, respectively, are included in
operating expense on the accompanying statements of operations.
Reclassifications: Certain reclassifications have been made to the 1997
balances to conform to the 1998 presentation.
NOTE B - TRANSFER OF CONTROL
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100%
ownership interest in Insignia Properties Trust ("IPT"), the entity which
controls the Managing General Partner. The Managing General Partner does not
believe that this transaction will have a material effect on the affairs and
operations of the Partnership.
NOTE C - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1998 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Briarwood Apartments
1st mortgage $ 1,535 $ 12 7.83% 10/2003 $ 1,404
2nd mortgage 50 (*) 7.83% 10/2003 50
Chambers Ridge Apartments
1st mortgage 5,304 41 7.83% 10/2003 4,849
2nd mortgage 174 1 7.83% 10/2003 174
Cooper Point Plaza
1st mortgage (2) 3,906 45 10.5% 09/2012 43
Gateway Gardens Apartments
1st mortgage 6,187 48 7.83% 10/2003 5,657
2nd mortgage 203 1 7.83% 10/2003 203
Hunters Glen Apartments-IV
1st mortgage 8,267 65 8.43% 10/2003 7,787
Hunters Glen Apartments-V
1st mortgage 8,662 67 7.83% 10/2003 7,920
2nd mortgage 285 2 7.83% 10/2003 285
Hunters Glen Apartments-VI
1st mortgage 9,016 70 7.83% 10/2003 8,243
2nd mortgage 297 2 7.83% 10/2003 297
Pickwick Place Apartments
1st mortgage 6,383 54 9.1% 05/2005 5,775
Southpointe Apartments
1st mortgage, in default (1) 11,000 79 8.59% 01/2002 11,000
Additional borrowing, in
default (1) 17 1 9.00% 01/2002 1
Twin Lake Towers Apartments
1st mortgage 10,700 83 7.83% 10/2003 9,782
2nd mortgage 352 2 7.83% 10/2003 352
72,338
Less unamortized
discounts (987)
Total $ 71,351 $ 573 $ 63,822
</TABLE>
(*) Monthly payment is less than $1,000
(1) 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. In March 1999, the Partnership notified the
lender that it would not be making the required monthly interest payments
due to cash flow problems, thus putting the debt in default.
(2) On January 4, 1999, Cooper Point Plaza was sold to an unaffiliated third
party. Upon closing, the Partnership was required to pay approximately
$78,000 in prepayment penalties to pay off the mortgage encumbering the
property.
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. Further, the properties may
not be sold subject to existing indebtedness.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1998, are as follows (in thousands):
1999 $ 11,941
2000 1,023
2001 1,112
2002 1,203
2003 48,055
Thereafter 9,004
$ 72,338
NOTE D - INCOME TAXES
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, taxable income or loss of the Partnership is reported in the income
tax returns of its partners and 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
income (loss) (in thousands, except per unit data):
1998 1997
Net loss as reported $ (684) $ (2,025)
Add (deduct):
Depreciation differences 1,081 1,162
Unearned income 62 97
Discounts on mortgage
notes payable (7) 25
Casualty (259)
Other 271 24
Federal taxable income (loss) $ 464 $ (717)
Federal taxable income (loss) per
limited partnership unit $ 10.27 $ (15.87)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net liabilities $ (25,949)
Land and buildings 8,976
Accumulated depreciation (10,046)
Syndication and distribution costs 6,093
Investment in Joint Venture 610
Dividends payable 650
Other (121)
Net liabilities _ Federal tax basis $ (19,787)
NOTE E - 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 (i) certain
payments to affiliates for services and (ii) 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,
1998 and 1997, were paid or accrued:
1998 1997
(in thousands)
Property management fees (included in
Operating expenses) $1,034 $ 1,029
Partnership management fee (included in
general and administrative expense) (1) 135 --
Reimbursement for services of affiliates
(included in operating and general and
Administrative expenses and investment
Property) 504 431
(1) The Partnership Agreement provides for a fee equal to 7.5% of "net cash
flow from operations", as defined in the Partnership Agreement to be paid
to the Managing General Partner for executive and administrative management
services.
Included in reimbursements for services of affiliates for the year ended
December 31, 1998 and 1997, is approximately $56,000 and $70,000, respectively,
of construction oversight reimbursements.
During the years ended December 31, 1998 and 1997 affiliates of the Managing
General Partner, were entitled to receive 5% of the gross receipts from all of
the Registrant's properties (except Southpointe which is 3%) as compensation for
providing property management services. The Registrant paid to such affiliates
$1,016,000 and $1,006,000 for the years ended December 31, 1998 and 1997
respectively. During the year ended December 31, 1997 and for the nine months
ended September 30, 1998, affiliates of the Managing General Partner were
entitled to varying percentages of gross receipts from the Registrant's
commercial property as compensation for providing management services. These
services were performed by affiliates of the Managing General Partner during
1997 and for the nine months ended September 30, 1998. The Registrant paid to
such affiliates $18,000 and $23,000 for the nine months ended September 30, 1998
and for the year ended December 31, 1997, respectively. Effective October 1,
1998 (the effective date of the Insignia Merger), these services for the
commercial property were performed by an unrelated party.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $504,000 and $431,000 for
the years ended December 31, 1998 and 1997, respectively.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
provides financing (the "AMIT Loans") to the Princeton Meadows Golf Course
Joint Venture. The AMIT Loan had a principal balance of $1,567,000 at December
31, 1998, accrues interest at a rate of 12.5% per annum and matures on September
1, 2000, at which time the outstanding balance and any unpaid interest is due.
Interest expense on the debt secured by the Joint Venture was approximately
$196,000 for both of the years ended December 31, 1998 and 1997, respectively.
Accrued interest was $18,000 at December 31, 1998. Pursuant to a series of
transactions, affiliates of the Managing General Partner acquired ownership
interests in AMIT. On September 17, 1998, AMIT was merged with and into Insignia
Properties Trust ("IPT"), the entity which controlled the Managing General
Partner. Effective February 26, 1999, IPT was merged into AIMCO. As a result,
AIMCO is the current holder of the AMIT Loan.
On February 26, 1999, Princeton Meadows Golf Course was sold to an unaffiliated
third party. Upon closing, the AMIT principal balance of $1,567,000 plus accrued
interest of approximately $17,000 was paid off.
The Partnership was permitted to make advances to the Joint Venture as deemed
appropriate by the Managing General Partner. These advances did not bear
interest and did not have stated terms of repayment. At December 31, 1998, the
amount of advances receivable from the Joint Venture was approximately $149,000.
On April 14, 1998, an affiliate of the Managing General Partner (the
"Purchaser") commenced a tender offer 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. The Purchaser acquired 8,002 units at $500 per Unit
pursuant to this tender offer or 17.894% of the outstanding limited partnership
units. On August 13, 1998, the purchaser commenced a second tender offer for
limited partnership interests in the Partnership. The Purchaser offered
to purchase up to 12,000 of the outstanding units of limited partnership
interest in the Partnership at $600 per Unit, net to the seller in cash.
In connection with this tender offer, the Purchaser acquired 4,607 units at
$600 per Unit or 10.302% of the outstanding limited partnership units.
As a result of these purchases, AIMCO currently owns, through its affiliates,
a total of 16,595 limited partnership units or 37.109% of the outstanding
limited partnership units. Consequently, AIMCO could be in a position to
significantly influence all voting decisions with respect to the Registrant.
Under the Partnership Agreement, unitholders holding a majority of the Units
are entitled to take action with respect to a variety of matters. When voting
on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
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.
NOTE F - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Removed)
Personal Net Subsequent
Description Encumbrances Land Property to Acquisition
(in thousands)
Investment Properties
Briarwood Apartments $ 1,585 $ 136 $ 1,409 $ 322
Chambers Ridge Apartments 5,478 527 7,823 1,636
Cooper Point Plaza 3,906 1,689 5,319 1,857
Gateway Gardens Apartments 6,390 255 6,206 1,355
Hunters Glen Apartments-IV 8,267 1,552 8,324 1,414
Hunters Glen Apartments-V 8,947 1,820 9,759 1,553
Hunters Glen Apartments-VI 9,313 1,981 10,620 1,567
Pickwick Place Apartments 6,383 603 6,552 2,471
Southpointe Apartments 11,017 663 8,616 859
Twin Lake Towers Apartments 11,052 1,115 12,806 1,604
Totals $ 72,338 $10,341 $77,434 $ 14,638
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1998
(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 $ 1,731 $ 1,867 $ 1,190 06/25/85 10-20
Chambers Ridge Apartments 527 9,459 9,986 6,796 07/26/84 10-20
Cooper Point Plaza 1,689 7,176 8,865 5,406 12/14/84 10-20
Gateway Gardens Apartments 255 7,561 7,816 5,358 12/21/84 10-20
Hunters Glen Apartments - IV 1,552 9,738 11,290 6,846 01/31/85 10-40
Hunters Glen Apartments - V 1,820 11,312 13,132 7,991 01/31/85 10-40
Hunters Glen Apartments - VI 1,981 12,187 14,168 8,607 01/31/85 10-40
Pickwick Place Apartments 603 9,023 9,626 5,712 05/11/84 10-20
Southpointe Apartments 663 9,475 10,138 6,890 06/12/85 10-20
Twin Lake Towers Apartments 1,115 14,410 15,525 10,479 03/30/84 10-20
Totals $10,341 $92,072 $102,413 $ 65,275
</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,
1998 1997
(in thousands)
Investment Properties
Balance at beginning of year $100,619 $ 99,165
Property improvements 2,281 1,671
Disposal of assets (487) (217)
Balance at end of year $102,413 $100,619
Accumulated Depreciation
Balance at beginning of year $ 60,629 $ 55,811
Additions charged to expense 4,995 4,965
Disposal of assets (349) (147)
Balance at end of year $ 65,275 $ 60,629
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997, is $111,389,000 and $109,505,000 respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1998 and 1997, is $75,321,000 and $71,406,000, respectively.
NOTE G - INVESTMENT IN JOINT VENTURE
Condensed balance sheet information of the Joint Venture at December 31, 1998,
is as follows (in thousands):
Assets
Cash $ 118
Other assets 169
Investment properties, net 2,036
Total $ 2,323
Liabilities and Partners' Capital
Note payable to AMIT (Note E) $ 1,567
Other liabilities 671
Partners' capital 85
Total $ 2,323
The condensed statements of operations of the Joint Venture for the years ended
December 31, 1998 and 1997, are summarized as follows:
Years Ended
December 31,
1998 1997
(in thousands)
Revenue $ 1,667 $ 1,628
Costs and expenses (1,681) (1,535)
Net (loss) income $ (14) $ 93
The Partnership recognized its 44.5% equity loss of approximately $6,000 and
equity income of approximately $42,000 in the Joint Venture for the years ended
December 31, 1998 and 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 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 was to 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, 1998, the balance in the liability
for clean-up costs is $54,000. Upon sale of the Golf Course, as noted below, the
Joint Venture received documents from the Purchaser releasing the Joint Venture
from any further responsibility or liability with respect to the clean-up.
On February 26, 1999, the Joint Venture sold the Princeton Meadows Golf Course
to an unaffiliated third party for gross sale proceeds of $5,100,000. The Joint
Venture received net proceeds of $3,452,000 after payment of closing costs,
resulting in a gain on sale of approximately $2,932,000. The Partnership's 1999
pro-rata share of this gain is expected to be approximately $1,305,000.
Furthermore, as a result of the sale, unamortized loan costs in the amount of
$6,500 were written off. This resulted in an extraordinary loss on early
extinguishment of debt of approximately $6,500. The Partnership's 1999 pro-rata
share of this extraordinary loss is expected to be approximately $3,000.
NOTE H - CASUALTIES
A net casualty gain of $352,000 has been recorded in 1998 due to fires at
Pickwick Place and Hunters Glen V and VI and water damage at Southpointe. In
June, 1998, a fire at Pickwick Place extensively damaged 12 apartment units. The
undepreciated value of the units of approximately $80,000 was written off and
netted with the insurance proceeds received of approximately $449,000, for a net
casualty gain of $369,000. In May, 1998, there were two smaller fires at
Hunters Glen V and VI which resulted in damages of approximately $3,000 and
$4,000, respectively. Finally, in February, 1998, there was some water damage
at Southpointe which resulted in a net loss of $10,000 after the receipt of
insurance proceeds.
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, resulting in no gain
or loss being recorded.
NOTE I _ LOSS ON DISPOSAL OF PROPERTIES
For the year ended December 31, 1998, a loss on disposal of properties was
recorded at Chambers Ridge Apartments and Twin Lake Towers Apartments for
approximately $35,000 and $23,000, respectively, as the result of re-roofing
projects at both investment properties. The losses occurred due to the write-
off of the old roofs that were not fully depreciated upon completion of the new
roofing projects.
For the year ended December 31, 1997, a loss on disposal of properties of
approximately $70,000 was recorded as the result of balcony replacements at Twin
Lake Towers and carport replacements at Pickwick Place for approximately $37,000
and $33,000, respectively.
NOTE J _ SUBSEQUENT EVENTS
On January 4, 1999, the Registrant sold Cooper Point Plaza to an unaffiliated
third party for net sales proceeds of approximately $2,011,000 after payment of
closing costs. The Registrant realized a gain of approximately $2,400,000 on
the sale and a related $556,000 extraordinary loss on early extinguishment of
debt.
On February 26, 1999, the Joint Venture sold the Princeton Meadows Golf Course
to an unaffiliated third party for gross sale proceeds of $5,100,000. The Joint
Venture received net proceeds of $3,452,000 after payment of closing costs,
resulting in a gain on sale of approximately $2,932,000. The Partnership's 1999
pro-rata share of this gain is expected to be approximately $1,305,000.
Furthermore, as a result of the sale, unamortized loan costs in the amount of
$6,500 were written off. This resulted in an extraordinary loss on early
extinguishment of debt of approximately $6,500. The Partnership's 1999 pro-rata
share of this extraordinary loss is expected to be approximately $3,000.
NOTE K _ SEGMENT REPORTING
Description of the types of products and services from which the reportable
segment derives its revenues:
As defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", the Partnership has one reportable segment: residential
properties. This segment consists of nine apartment complexes located in six
states in the United States. The Partnership rents apartment units to people
for terms that are typically less than twelve months.
Measurement of segment profit or loss:
The Partnership evaluates performance based on net income. The accounting
policies of the reportable segment are the same as those described in the
summary of significant accounting policies.
Factors management used to identify the Partnership's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the years 1998 and 1997 is shown in the tables below.
The "Other" column includes partnership administration related items and income
and expense not allocated to the reportable segment.
1998 RESIDENTIAL OTHER TOTALS
(in thousands)
Rental income $19,902 $ 737 $20,639
Other income 1,170 250 1,420
Interest expense 5,964 450 6,414
Depreciation 4,641 354 4,995
General and administrative expense -- 760 760
Casualty gain 352 -- 352
Loss on disposal of property (58) -- (58)
Equity in loss of JV -- (6) (6)
Segment profit (loss) 277 (961) (684)
Total assets 39,066 10,477 49,543
Capital expenditures for
investment properties 2,281 -- 2,281
RESIDENTIAL OTHER TOTALS
1997 (in thousands)
Rental income $19,030 $ 802 $19,832
Other income 1,068 216 1,284
Interest expense 6,030 462 6,492
Depreciation 4,584 381 4,965
General and administrative expense -- 509 509
Loss on disposal of property (70) -- (70)
Equity in income of JV -- 42 42
Segment loss (1,320) (705) (2,025)
Total assets 41,112 10,253 51,365
Capital expenditures (write-offs)
for investment properties 1,687 (16) 1,671
NOTE L _ 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 entities which were, at one time, affiliates of Insignia
("Insignia 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. On June 25, 1998, the Managing General
Partner filed a motion seeking dismissal of the action. In lieu of responding to
the motion, the plaintiffs have filed an amended complaint. The Managing
General Partner has filed demurrers to the amended complaint which were heard
during February 1999. No ruling on such demurrers has been received. The
Managing General Partner does not anticipate that costs associated with this
case, if any, to be material to the Partnership's overall operations.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled EVEREST PROPERTIES, LLC. V.
INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of
California, county of Los Angeles. The action involves 44 real estate limited
partnership (including the Partnership) in which the plaintiffs allegedly own
interests and which Insignia Affiliates allegedly manage or control (the
"Subject Partnerships"). This case was settled on March 3, 1999. The
Partnership is responsible for a portion of the settlement costs. The expense
will not have a material effect on the Partnership's operations.
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 claim to be without merit and intends
to vigorously defend the claim. The Managing General Partner is unable to
determine the costs associated with this claim at this time.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND
FINANCIAL DISCLOSURES
There were no disagreements with Ernst & Young, LLP regarding the 1998 or 1997
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 was an affiliate of Insignia Financial Group, Inc. ("Insignia").
Effective, October 1, 1998 and February 26, 1999, Insignia and IPT were
respectively merged into Apartment Investment and Management Company ("AIMCO").
Thus the Managing General Partner is now a wholly-owned subsidiary of AIMCO.
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
Patrick J. Foye 41 Executive Vice President and Director
Timothy R. Garrick 42 Vice President _ Accounting and Director
Patrick J. Foye has been Executive Vice President and Director of the Managing
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice
President-Accounting and Director of the Managing General Partner since October
1, 1998. Prior to that date, Mr. Garrick served as Vice President-Accounting
Services of Insignia Financial Group since June of 1997. From 1992 until June of
1997, Mr. Garrick served as Vice President of Partnership Accounting and from
1990 to 1992 as an Asset Manager for Insignia Financial Group. From 1984 to
1990, Mr. Garrick served in various capacities with U.S. Shelter Corporation.
From 1979 to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney.
Mr. Garrick received his B.S. Degree from the University of South Carolina and
is a Certified Public Accountant.
ITEM 10. EXECUTIVE COMPENSATION
None of the directors and officers of the Managing General Partner received any
renumeration from the Registrant.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership units of the
Registrant as of December 31, 1998.
Number of
Entity Units Percentages
Cooper River Properties LLC
(an affiliate of AIMCO) 4,607 10.302%
Broad River Properties LLC
(an affiliate of AIMCO) 8,002 17.894%
Insignia Properties, LP
(an affiliate of AIMCO) 1,804 4.034%
AIMCO Properties LP
(an affiliate of AIMCO) 2,182 4.879%
Cooper River Properties LLC, Broad River Properties, Insignia Properties LP and
AIMCO Properties LP are indirectly ultimately owned by AIMCO. The business
address for all except AIMCO Properties LP is 55 Beattie Place, Greenville, SC
29602. The business address for AIMCO Properties LP is 1873 South Bellaire
Street, 17th Floor, Denver, Colorado 80222.
On October 1, 1998, Insignia Financial Group, Inc. merged into AIMCO, a real
estate investment trust, whose Class A Common Shares are listed on the New York
Stock Exchange. As a result of such merger, AIMCO and AIMCO Properties, L.P., a
Delaware limited partnership and the operating partnership of AIMCO ("AIMCO OP")
acquired indirect control of the Managing General Partner. AIMCO and its
affiliates currently own 37.109% of the limited partnership interests in the
Partnership. AIMCO is presently considering whether it will engage in an
exchange offer for additional limited partnership interests in the Partnership.
There is a substantial likelihood that, within a short period of time, AIMCO OP
will offer to acquire limited partnership interests in the Partnership for cash
or preferred units or common units of limited partnerships interests in AIMCO
OP. While such an exchange offer is possible, no definite plans exist as to when
or whether to commence such an exchange offer, or as to the terms of any such
exchange offer, and it is possible that none will occur.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Form 10-KSB shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.
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 (i) certain
payments to affiliates for services and (ii) 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,
1998 and 1997, were paid or accrued:
1998 1997
(in thousands)
Property management fees (included in
Operating expenses) $1,034 $ 1,029
Partnership management fee (included in
general and administrative expense) (1) 135 --
Reimbursement for services of affiliates
(included in operating and general and
Administrative expenses and investment
Property) 504 431
(1) The Partnership Agreement provides for a fee equal to 7.5% of "net cash
flow from operations", as defined in the Partnership Agreement to be paid
to the Managing General Partner for executive and administrative management
services.
Included in reimbursements for services of affiliates for the year ended
December 31, 1998 and 1997, is approximately $56,000 and $70,000, respectively,
of construction oversight reimbursements.
During the years ended December 31, 1998 and 1997 affiliates of the Managing
General Partner, were entitled to receive 5% of the gross receipts from all of
the Registrant's properties (except Southpointe which is 3%) as compensation for
providing property management services. The Registrant paid to such affiliates
$1,016,000 and $1,006,000 for the years ended December 31, 1998 and 1997
respectively. During the year ended December 31, 1997 and for the nine months
ended September 30, 1998, affiliates of the Managing General Partner were
entitled to varying percentages of gross receipts from the Registrant's
commercial property as compensation for providing management services. These
services were performed by affiliates of the Managing General Partner during
1997 and for the nine months ended September 30, 1998. The Registrant paid to
such affiliates $18,000 and $23,000 for the nine months ended September 30, 1998
and for the year ended December 31, 1997, respectively. Effective October 1,
1998 (the effective date of the Insignia Merger), these services for the
commercial property were performed by an unrelated party.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $504,000 and $431,000 for
the years ended December 31, 1998 and 1997, respectively.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
provides financing (the "AMIT Loans") to the Princeton Meadows Golf Course
Joint Venture. The AMIT Loan had a principal balance of $1,567,000 at December
31, 1998, accrues interest at a rate of 12.5% per annum and matures on September
1, 2000, at which time the outstanding balance and any unpaid interest is due.
Interest expense on the debt secured by the Joint Venture was approximately
$196,000 for both of the years ended December 31, 1998 and 1997, respectively.
Accrued interest was $18,000 at December 31, 1998. Pursuant to a series of
transactions, affiliates of the Managing General Partner acquired ownership
interests in AMIT. On September 17, 1998, AMIT was merged with and into
Insignia Properties Trust ("IPT"), the entity which controlled the Managing
General Partner. Effective February 26, 1999, IPT was merged into AIMCO. As a
result, AIMCO is the current holder of the AMIT Loan.
On February 26, 1999, Princeton Meadows Golf Course was sold to an unaffiliated
third party. Upon closing, the AMIT principal balance of $1,567,000 plus accrued
interest of approximately $17,000 was paid off.
The Partnership was permitted to make advances to the Joint Venture as deemed
appropriate by the Managing General Partner. These advances did not bear
interest and did not have stated terms of repayment. At December 31, 1998, the
amount of advances receivable from the Joint Venture was approximately $149,000.
On April 14, 1998, an affiliate of the Managing General Partner (the
"Purchaser") commenced a tender offer 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. The Purchaser acquired 8,002 units at $500 per Unit
pursuant to this tender offer or 17.894% of the outstanding limited partnership
units. On August 13, 1998, the purchaser commenced a second tender offer for
limited partnership interests in the Partnership. The Purchaser offered up to
12,000 of the outstanding units of limited partnership interest in the
Partnership at $600 per Unit, net to the seller in cash. In connection with this
tender offer, the Purchaser acquired 4,607 units at $600 per Unit or 10.302% of
the outstanding limited partnership units. As a result of these purchases,
AIMCO currently owns, through its affiliates, a total of 16,595 limited
partnership units or 37.109% of the outstanding limited partnership units.
Consequently, AIMCO could be in a position to significantly influence all voting
decisions with respect to the Registrant. Under the Partnership Agreement,
unitholders holding a majority of the Units are entitled to take action with
respect to a variety of matters. When voting on matters, AIMCO would in all
likelihood vote the Units it acquired in a manner favorable to the interest of
the Managing General Partner because of their affiliation with the Managing
General Partner.
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.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K filed during the fourth quarter of 1997.
Current Report on Form 8-K dated October 1, 1998 filed on October
16, 1998 disclosing Change in Control of Registrant from Insignia
Financial Group, Inc. to AIMCO.
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/ Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
Date: March 31, 1999
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 and on the
date indicated.
/s/ Patrick J. Foye Executive Vice President Date: March 31, 1999
Patrick J. Foye and Director
/s/ Timothy R. Garrick Vice President _ Accounting Date: March 31, 1999
Timothy R. Garrick and Director
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.
10.18 Purchase and Sale Agreement dated January 4, 1999, between Cooper
Point Plaza, LLC and Angeles Partners XII for sale of Cooper Pointe
Plaza filed with Form 10-KSB for the year ended December 31, 1998.
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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners XII 1998 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-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 7,611
<SECURITIES> 0
<RECEIVABLES> 1,985
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 102,413
<DEPRECIATION> (65,275)
<TOTAL-ASSETS> 49,543
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 71,351
0
0
<COMMON> 0
<OTHER-SE> (25,949)
<TOTAL-LIABILITY-AND-EQUITY> 49,543
<SALES> 0
<TOTAL-REVENUES> 22,411
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 23,089
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,414
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (684)
<EPS-PRIMARY> (15.14)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registran has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
CONTRACT OF SALE
(COOPER POINT PLAZA)
THIS CONTRACT OF SALE (this "Contract") is made and entered into by and
between ANGELES PARTNERS XII, a California limited partnership ("Seller"), and
COOPER POINT PLAZA, LLC, a Utah limited liability company ("Purchaser").
ARTICLE I.
SALE OF THE PROPERTY
1.1 Property. For the consideration and upon and subject to the terms,
provisions and conditions of this Contract, Seller agrees to sell to Purchaser,
and Purchaser agrees to purchase from Seller, all of the following described
property (collectively, the "Property"):
(a) That certain tract or parcel of land (the "Land") located in Thurston
County, Washington, more particularly described on Exhibit A attached hereto and
made a part hereof for all purposes, together with all improvements, structures
and fixtures, if any, located on the Land (the "Improvements"), and all rights,
titles and interests of Seller appurtenant to the Land and Improvements,
including, without limitation, appurtenant easements, adjacent roads, highways
and rights-of-way;
(b) All tangible personal property of any kind (the "Personalty") owned by
Seller and attached to or located on the Land or Improvements, including,
without limitation, those items of tangible personal property set forth on the
Personal Property Schedule attached hereto as Schedule 1.1(b);
(c) All of Seller's rights, titles and interests (as lessor) under any
leases or other agreements demising space in or providing for the use or
occupancy of the Improvements or Land listed on Schedule 1.1(c) hereto (which,
together with any other leases which may be entered into between the Effective
Date and the Closing Date, are herein collectively referred to as the "Tenant
Leases"), and all unapplied deposits, whether security or otherwise
("Deposits"), paid by tenants ("Tenants") under the Tenant Leases; and
(d) All of Seller's rights, titles and interests in and to all warranties,
guaranties and bonds in effect at Closing, and in and to all service,
management, maintenance and similar contracts listed on Schedule 1.1(d) hereto
and other service contracts entered into in accordance with the terms of this
Contract (collectively, the "Service Contracts") that Purchaser is required to
assume as contemplated by Section 5.2 hereof, relating to the Land, the
Improvements or the Personalty, to the extent the same are assignable (the
"Contracts").
ARTICLE II.
PURCHASE PRICE
2.1 Purchase Price. The total Purchase Price (herein so called) to be
paid by Purchaser to Seller for the Property shall be an amount equal to Six
Million Two Hundred Thousand and No/100 Dollars ($6,200,000.00). The Purchase
Price shall be payable in cash or Current Funds (defined below) at the Closing
(hereinafter defined).
ARTICLE III.
EARNEST MONEY DEPOSIT
3.1 Amount and Timing. Within two (2) business days after the Effective
Date (hereinafter defined), Purchaser shall deliver to Thurston County Title
Company, located at 105 E. 8th Avenue, Olympia, Washington 98501 (the "Title
Company"), Twenty-Five Thousand and No/100 Dollars ($25,000.00) (the "Initial
Deposit") in cash or Current Funds, to be held by the Title Company in escrow to
be applied or disposed of by the Title Company as is provided in this Contract.
In the event Purchaser fails to deposit the Initial Deposit with the Title
Company as herein provided, Seller may, at its option, terminate this Contract
prior to the making of the Initial Deposit, in which event neither Seller nor
Purchaser shall have any further obligations hereunder except for provisions of
this Contract which expressly survive the termination of this Contract. Not
later than twenty (20) days after the expiration of the Inspection Period (as
hereinafter defined), Purchaser shall deposit with the Title Company an
additional earnest money deposit in the amount of One Hundred Twenty-Five
Thousand and No/100 Dollars ($125,000.00) (the "Subsequent Deposit") in cash or
Current Funds to be held by the Title Company in escrow to be applied or
disposed of by the Title Company as provided in this Contract. If the Purchaser
does not terminate this Contract pursuant to Section 5.2 hereof and fails to
deposit the Subsequent Deposit on or before the twentieth (20th) day after the
end of the Inspection Period, then Seller may, at its option, terminate this
Contract prior to the making of such Subsequent Deposit, in which event the
Title Company shall pay the Initial Deposit to Seller and thereafter neither
Seller nor Purchaser shall have any further rights or obligations hereunder
except for provisions of this Contract which expressly survive the termination
of this Contract. The term "Earnest Money Deposit", as used in this Contract,
shall mean (i) the Initial Deposit prior to deposit of the Subsequent Deposit,
and (ii) both the Initial Deposit and the Subsequent Deposit combined after the
deposit of the Subsequent Deposit, in each case, together with all interest
earned thereon. As used in this Contract, the term "Current Funds" shall mean
wire transfers, certified funds or a cashier's check in a form acceptable to the
Title Company which would permit the Title Company to immediately disburse such
funds.
3.2 Application and Interest. If the purchase and sale hereunder is
consummated, then the Earnest Money Deposit shall be applied to the Purchase
Price at Closing. In all other events, the Earnest Money Deposit shall be
disposed of by the Title Company as provided in this Contract. The Earnest
Money Deposit shall be invested in an interest-bearing account with a financial
institution and in a manner, reasonably acceptable to Purchaser. All interest
earned on the Earnest Money Deposit is part of the Earnest Money Deposit, to be
applied or disposed of in the same manner as the Earnest Money Deposit under
this Contract.
ARTICLE IV.
TITLE AND SURVEY
4.1 Title Commitment. Not later than fifteen (15) days after the
Effective Date, Purchaser shall have obtained and furnished to Seller a current
Commitment for Title Insurance for the Land and Improvements (the "Title
Commitment") issued by the Title Company. The Title Commitment shall set forth
the state of title to the Property, including a list of conditions or exceptions
to title affecting the Property that would appear in an Owner's Policy of Title
Insurance, if one were issued. The Title Commitment shall contain the expressed
commitment of the Title Company to issue the Title Policy (hereinafter defined)
to Purchaser in the amount of the Purchase Price, insuring the title to the
Property specified in the Title Commitment. At such time as the Title
Commitment is furnished to Purchaser, the Title Company also shall furnish to
Purchaser copies of instruments or documents (the "Exception Documents") that
create or evidence conditions or exceptions to title affecting the Property, as
described in the Title Commitment.
4.2 Survey. Seller has previously provided to Purchaser a copy of the
latest survey of the Land and Improvements in Seller's possession (the "Seller's
Survey"). Purchaser shall, not later than five (5) days after the Effective
Date, order and promptly after receipt thereof deliver to Seller, a survey of
the Property that is otherwise sufficient for Purchaser and the Title Company,
and that is certified to Seller, Purchaser and the Title Company (the
"Purchaser's Survey"). Purchaser shall pay all fees, costs and expenses of
preparation and delivery of the Purchaser's Survey. For purposes of Section 4.3
below, Purchaser's Survey shall be deemed received on the earlier of (i) the
date it is delivered to Purchaser or (ii) twenty (20) days after the Effective
Date.
4.3 Review of Title and Survey. Purchaser shall have until twenty (20)
days after receipt of the last of the Title Commitment, Exception Documents,
copies of the Tenant Leases listed on Schedule 1.1(c), and Purchaser's Survey in
which to notify Seller in writing (the "Title Objection Notice") of any
objections Purchaser has to any matters shown or referred to in the Title
Commitment, the Exception Documents or on the Purchaser's Survey; provided, that
Purchaser shall not object to current real estate taxes and assessments, all of
which shall be Permitted Exceptions hereunder. Any title encumbrances,
exceptions or other matters which are set forth in the Title Commitment, the
Exception Documents or on the Purchaser's Survey, and to which Purchaser does
not object within the aforementioned twenty (20) day period, shall be deemed to
be permitted exceptions to the status of Seller's title (such encumbrances,
exceptions or other acceptable matters, together with such other matters
concerning title to the Property or matters shown on the Purchaser's Survey
included pursuant to other provisions of this Contract, shall be referred to as
the "Permitted Exceptions").
4.4 Objections to Status of Title and Survey. If Purchaser properly
objects to any item shown or referred to in the Title Commitment, Exception
Documents, or Purchaser's Survey within the twenty (20) day period set forth in
Section 4.3, Seller shall be given until ten (10) days after receipt of the
Title Objection Notice to notify Purchaser whether or not Seller will cure,
prior to Closing and at Seller's option and sole discretion but without any
obligation to do so, any objection to the condition of title raised by
Purchaser. If Seller notifies Purchaser that it elects not to cure any such
objections or fails to notify Purchaser within such time period, then Purchaser
may, at its option exercisable within the earlier of (i) five (5) days following
the date of receipt by Purchaser of written notice from Seller stating that
Seller is unable or unwilling to cure such objections, or (ii) five (5) days
after the end of Seller's ten (10) day response period, either (a) accept such
title as Seller can deliver, in which case all exceptions to title set forth in
the Title Commitment, Exception Documents, and Purchaser's Survey which are not
removed or which Seller has not agreed to remove shall be deemed to be Permitted
Exceptions, or (b) terminate this Contract by notice in writing to Seller in
which event the Title Company shall return the Earnest Money Deposit to
Purchaser and neither party shall have any further rights, duties or obligations
hereunder, except for provisions of this Contract which expressly survive
termination of this Contract. In the event Purchaser fails to notify Seller,
within such applicable five (5) day period, that Purchaser has elected to
proceed under either subpart (a) or (b) of the immediately preceding sentence,
Purchaser shall be deemed to have elected to proceed under subpart (b), and this
Contract shall terminate as provided in such subpart (b). If Seller notifies
Purchaser that it elects to cure any such objections it will use reasonable
efforts to do so, but shall not be obligated to cure such objections; provided,
that if Seller is unable to cure by Closing any objections which it has notified
Purchaser that it will cure, then Purchaser may, at its option, either (x)
accept such title as Seller can deliver in which case the parties shall proceed
with Closing and all exceptions to title set forth in the Title Commitment,
Exception Documents and Purchaser's Survey which are not removed shall be deemed
to be Permitted Exceptions, or (y) terminate this Contract by notice in writing
to Seller at Closing, in which event the Title Company shall return the Earnest
Money Deposit to Purchaser and neither party shall have any further rights,
duties or obligations hereunder except for provisions of this Contract which
expressly survive termination of this Contract.
4.5 Other Permitted Exceptions. The Permitted Exceptions shall include
those matters shown in the Title Commitment and the Survey which become
Permitted Exceptions pursuant to sections 4.3 and 4.4 above and, in addition,
the following: (a) the Tenant Leases; (b) real property taxes and assessments
for the year in which Closing occurs and subsequent years; and (c) liens and
encumbrances arising after the date hereof to which Purchaser consents in
writing. Notwithstanding anything else to the contrary herein, Seller covenants
to remove, at its expense, all monetary liens encumbering the Property which
have been created by Seller on or before Closing.
ARTICLE V.
INSPECTION BY PURCHASER
5.1 Inspection Period. Purchaser shall have a period of time commencing
on the Effective Date and expiring at 5:00 p.m., Olympia, Washington, time on
the sixtieth (60th) day thereafter (the "Inspection Period") within which to
examine the Property and to conduct its feasibility study thereof. The
Inspection Period shall be inclusive of the Effective Date. Seller agrees that,
during the Inspection Period, Seller will provide Purchaser and Purchaser's
agents access to any of Seller's books and records regarding the Property (which
shall not include partnership data or materials relating to partnership issues)
which are located at Seller's offices in Federal Way, Washington, and to the
Property during normal business hours to conduct soil and engineering, hazardous
waste, marketing, feasibility, zoning and other studies or tests and to
otherwise determine the feasibility of the Property for Purchaser's intended
use. From and after the Effective Date, Seller will permit Purchaser to contact
Tenants, provided, that (i) Purchaser shall give Seller advance notice prior to
contacting Tenants, (ii) Seller shall have the right to approve any
correspondence to any Tenants, (iii) Seller shall be provided with all
correspondence and information from Tenants to Purchaser, and (iv) Purchaser
covenants not to disrupt Tenants or the business operations of any Tenants
(other than to a de minimis extent. Notwithstanding the foregoing, (a) the
costs and expenses of Purchaser's investigation shall be borne solely by
Purchaser, (b) prior to the expiration of the Inspection Period, Purchaser shall
restore the Property to the condition which existed prior to Purchaser's entry
thereon and investigation thereof to the extent the condition of the Property
was affected by or as a result of the actions of Purchaser or its agents,
contractors or representatives, (c) Purchaser shall not interfere, interrupt or
disrupt the operation of Seller's business on the Property and, further, such
access by Purchaser and/or its agents shall be subject to the rights of Tenants
under Tenant Leases, (d) in the event the transaction contemplated by this
Contract does not close for any reason, Purchaser shall deliver to Seller a
descriptive listing of all tests, reports and inspections conducted by Purchaser
with respect to the Property and, if Seller pays Purchaser the cost of
preparation of such reports, will deliver copies thereof to Seller, (e)
Purchaser shall not permit any mechanic's or materialman's liens or any other
liens to attach to the Property by reason of the performance of any work or the
purchase of any materials by Purchaser or any other party in connection with any
studies or tests conducted pursuant to this Section 5.1, (f) Purchaser shall
give notice to Seller a reasonable time prior to entry onto the Property and
shall permit Seller to have a representative present during all investigations
and inspections conducted with respect to the Property, and (g) Purchaser shall
take all reasonable actions and implement all protections necessary to ensure
that all actions taken in connection with the investigations and inspections of
the Property, and all equipment, materials and substances generated, used or
brought onto the Property pose no material threat to the safety of persons or
the environment and cause no damage to the Property or other property of Seller
or other persons. All information made available by Seller to Purchaser in
accordance with this Contract or obtained by Purchaser in the course of its
investigations shall be treated as confidential information by Purchaser, and,
prior to the purchase of the Property by Purchaser, Purchaser shall use its best
efforts to prevent its agents and employees from divulging such information to
any unrelated third parties except as reasonably necessary to third parties
engaged by Purchaser for the limited purpose of analyzing and investigating such
information for the purpose of consummating the transaction contemplated by this
Contract, including Purchaser's attorneys and representatives, prospective
lenders and engineers. Purchaser shall indemnify, defend and hold Seller
harmless for, from and against any and all claims, liabilities, causes of
action, damages, liens, losses, costs and expenses (including, without
limitation, attorneys' fees) incident to, resulting from or in any way arising
out of any of Purchaser's and its agents', contractors and representatives
activities on the Property, including, without limitation, any tests or
inspections conducted by Purchaser or its agents, contractors or representatives
on the Property; provided, that Purchaser shall not be obligated to Seller for
any economic losses suffered by Seller solely as a result of Purchaser's
discovery of pre-existing conditions on the Property. The agreements contained
in this Section 5.1 shall survive the Closing and not be merged therein and
shall also survive any termination of this Contract.
5.2 Approval of Inspections. If Purchaser determines, in its sole and
absolute discretion, at any time prior to the expiration of the Inspection
Period, that the Property (including the Tenant Leases) is satisfactory to
Purchaser, then Purchaser may deliver, within such Inspection Period, written
notice to Seller and the Title Company that the Property is acceptable to
Purchaser, such notice to be given in accordance with the provisions of Section
13.1 hereof, in which event this Contract shall continue in full force and
effect. If Purchaser does not timely deliver written notice of acceptance
within such Inspection Period, Purchaser shall be deemed to have disapproved the
condition of the Property, thereby terminating this Contract pursuant to this
Section 5.2, in which event the Title Company shall return the Earnest Money
Deposit to Purchaser and neither party shall have any further rights,
liabilities or obligations hereunder, except for provisions of this Contract
which by their terms expressly survive the termination of this Contract as
aforesaid. Prior to the end of the Inspection Period, Purchaser shall deliver
written notice (the "Service Contract Termination Notice") to Seller of any
Service Contracts which Purchaser does not wish to assume; provided, that
Purchaser shall be required to assume any Service Contracts (other than Service
Contracts with entities, controlling, controlled by, or under common control
with Seller) which are not terminable by notice within the time between Seller's
receipt of such Service Contract Termination Notice and the Closing Date
(hereinafter defined). Any Service Contracts which Purchaser does not specify
be terminated in the Service Contract Termination Notice delivered prior to the
end of the Inspection Period, and any Service Contracts (other than Service
Contracts with entities controlling, controlled by or under common control with
Seller) specified in the Service Contract Termination Notice which cannot be
terminated without penalty prior to the Closing Date, shall be deemed approved
by Purchaser and shall be assumed by Purchaser at Closing; provided, however,
that if Purchaser requests in the Service Contract Termination Notice the
termination of any Service Contracts which cannot be terminated prior to the
Closing Date, then Seller shall deliver notice of termination, subject to any
requirement of notice under such Service Contracts, promptly after its receipt
of the Service Contract Termination Notice and Purchaser shall assume such
Service Contracts, subject to such notice of termination, at Closing.
5.3 Matters to be Delivered by Seller. Seller has previously delivered to
Purchaser or, no later than ten (10) days from the Effective Date, Seller shall
deliver to Purchaser, the following items (collectively, the "Submission
Matters"):
(a) A current rent roll for the Property;
(b) A copy of all Tenant Leases with respect to the Property, including
all amendments thereto;
(c) Copies of any and all Service Contracts or other Contracts in Seller's
possession relating to the ownership and operation of the Property;
(d) Copies of the most recent real estate and personal property tax
statements in Seller's possession with respect to the Property;
(e) Any environmental studies regarding the Property which Seller has in
its possession or is reasonably available to Seller at a minimal charge; and
(f) Either copies of insurance policies maintained by Seller with respect
to the Property or certificates or other evidence of insurance indicating the
coverage available under such policies.
From the Effective Date through the Closing Date, Purchaser shall have
reasonable access, during normal business hours, to books and records relating
to the Property.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES; DISCLAIMERS AND WAIVERS
6.1 Representations and Warranties of Purchaser. Purchaser and each of
the persons executing this Contract on its behalf represents and warrants to
Seller as of the date hereof and as of the Closing Date as follows (which
representations and warranties shall survive the Closing for a period of 180
days): (a) Purchaser is a limited liability company duly organized and validly
existing under the laws of the State of Utah; (b) Purchaser has full right and
authority to enter into this Contract and to consummate the transactions
contemplated herein; (c) each of the persons executing this Contract on behalf
of Purchaser is authorized to do so; and (d) this Contract constitutes a valid
and legally binding obligation of Purchaser, enforceable in accordance with its
terms.
6.2 Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as of the date hereof and as of the Closing Date as
follows: (a) Seller is a limited partnership validly existing and duly
organized under the laws of the State of California; b) Seller has full right
and authority to enter into this Contract and to consummate the transactions
contemplated herein; (c) each of the persons executing this Contract on behalf
of Seller is authorized to do so; (d) this Contract constitutes a valid and
legally binding obligation of Seller, enforceable in accordance with its terms;
and (e) Seller has no current actual knowledge of litigation, administrative or
other proceeding (including any bankruptcy proceeding), order or judgment
pending or outstanding, or threatened against the Property or Seller. The
representations and warranties of Seller hereunder shall survive the Closing for
a period of one hundred eighty (180) days.
As used herein, the term Seller's "current actual knowledge" shall mean and
refer to only the current actual knowledge of the Designated Representative (as
hereinafter defined) of the Seller and shall not be construed to refer to the
knowledge of any other partner, officer, director, agent, employee or
representative of the Seller, or any affiliate of the Seller, or to impose upon
such Designated Representative any duty to investigate the matter to which such
actual knowledge or the absence thereof pertains, or to impose upon such
Designated Representative any individual personal liability. As used herein,
the term "Designated Representative" shall refer to Suzanne Milat.
6.3 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES OF SELLER. PURCHASER
ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SPECIFIED IN SECTION 6.2 OF
THIS CONTRACT OR THE DEED TO BE DELIVERED AT CLOSING, SELLER HAS NOT MADE, AND
SELLER HEREBY SPECIFICALLY DISCLAIMS, ANY WARRANTY, GUARANTY OR REPRESENTATION,
ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, OR CONCERNING, (a) THE
NATURE AND CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER,
SOIL AND GEOLOGY, AND THE SUITABILITY THEREOF AND OF THE PROPERTY FOR ANY AND
ALL ACTIVITIES AND USES WHICH PURCHASER MAY ELECT TO CONDUCT THEREON; (b) THE
EXISTENCE, NATURE AND EXTENT OF ANY RIGHT-OF-WAY, LEASE, RIGHT TO POSSESSION OR
USE, LIEN, ENCUMBRANCE, LICENSE, RESERVATION, CONDITION OR OTHER MATTER
AFFECTING TITLE TO THE PROPERTY; OR (c) WHETHER THE USE OR OPERATION OF THE
PROPERTY COMPLIES WITH ANY AND ALL LAWS, ORDINANCES OR REGULATIONS OF ANY
GOVERNMENT OR OTHER REGULATORY BODY. PURCHASER AGREES TO ACCEPT THE PROPERTY
AND ACKNOWLEDGES THAT THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE BY
SELLER, ON AN "AS IS, WHERE IS, AND WITH ALL FAULTS" BASIS. PURCHASER EXPRESSLY
ACKNOWLEDGES THAT EXCEPT AS OTHERWISE EXPRESSLY SPECIFIED IN SECTION 6.2 OF THIS
CONTRACT AND EXCEPT FOR ANY WARRANTY OF TITLE CONTAINED IN THE DEED TO BE
DELIVERED BY SELLER TO PURCHASER AT CLOSING, SELLER MAKES NO REPRESENTATION OR
WARRANTY OF ANY KIND, ORAL OR WRITTEN, EXPRESS OR IMPLIED, OR ARISING BY
OPERATION OF LAW, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, TITLE (OTHER THAN SELLER'S WARRANTY OF TITLE TO BE SET
FORTH IN THE DEED), ZONING, TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL
CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL
APPROVALS, THE COMPLIANCE OF THE PREMISES WITH GOVERNMENTAL LAWS, THE TRUTH,
ACCURACY OR COMPLETENESS OF ANY INFORMATION (INCLUDING, WITHOUT LIMITATION, THE
SUBMISSION MATTERS) PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY
OTHER MATTER OR THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES THAT
EXCEPT AS EXPRESSLY SPECIFIED IN ANY WRITTEN INSTRUMENT DELIVERED BY SELLER TO
PURCHASER, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, ORAL OR
WRITTEN, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW REGARDING OR WITH
RESPECT TO ANY SUCH INFORMATION (INCLUDING, WITHOUT LIMITATION, THE SUBMISSION
MATTERS) PROVIDED OR TO BE PROVIDED BY SELLER REGARDING THE PROPERTY.
FURTHER, AND WITHOUT IN ANY WAY LIMITING ANY OTHER PROVISION OF THIS
CONTRACT, SELLER HAS MADE AND MAKES NO REPRESENTATION, WARRANTY OR GUARANTY, AND
HEREBY SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR
WRITTEN, PAST, PRESENT OR FUTURE, WITH RESPECT TO THE PRESENCE OR DISPOSAL ON OR
BENEATH THE PROPERTY (OR ANY PARCEL IN PROXIMITY THERETO) OF HAZARDOUS
SUBSTANCES OR MATERIALS WHICH ARE CATEGORIZED AS HAZARDOUS OR TOXIC UNDER ANY
LOCAL, STATE OR FEDERAL LAW, STATUTE, ORDINANCE, RULE OR REGULATION PERTAINING
TO ENVIRONMENTAL OR SUBSTANCE REGULATION, CONTAMINATION, CLEANUP OR DISCLOSURE
(INCLUDING, WITHOUT LIMITATION, ASBESTOS) AND SHALL HAVE NO LIABILITY TO
PURCHASER THEREFOR. WITHOUT LIMITATION OF THE PRECEDING SENTENCE, SELLER
SPECIFICALLY DISCLAIMS ANY REPRESENTATION, WARRANTY OR GUARANTY REGARDING THE
ACCURACY OF ANY ENVIRONMENTAL REPORTS WHICH MAY BE INCLUDED WITHIN THE
SUBMISSION MATTERS. BY ACCEPTANCE OF THIS CONTRACT AND THE DEED TO BE DELIVERED
BY SELLER AT THE CLOSING, PURCHASER ACKNOWLEDGES THAT PURCHASER'S OPPORTUNITY
FOR INSPECTION AND INVESTIGATION OF THE PROPERTY (AND OTHER PARCELS IN PROXIMITY
THERETO) WILL BE ADEQUATE TO ENABLE PURCHASER TO MAKE PURCHASER'S OWN
DETERMINATION WITH RESPECT TO THE PRESENCE OR DISPOSAL ON OR BENEATH THE
PROPERTY (AND OTHER PARCELS IN PROXIMITY THERETO) OF SUCH HAZARDOUS SUBSTANCES
OR MATERIALS, AND PURCHASER ACCEPTS THE RISK OF THE PRESENCE OR DISPOSAL OF ANY
SUCH SUBSTANCES OR MATERIALS. PURCHASER AGREES THAT SHOULD ANY CLEANUP,
REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS
ON THE PROPERTY BE REQUIRED AFTER THE DATE OF CLOSING, SUCH CLEAN-UP, REMOVAL OR
REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE
COST AND EXPENSE OF PURCHASER.
PURCHASER, AND ANYONE CLAIMING, BY, THROUGH OR UNDER PURCHASER, HEREBY
FULLY RELEASES, DISCHARGES, AND HOLDS HARMLESS SELLER, ITS EMPLOYEES, OFFICERS,
DIRECTORS, PARTNERS, REPRESENTATIVES AND AGENTS, AND THEIR RESPECTIVE PERSONAL
REPRESENTATIVES, HEIRS, SUCCESSORS AND ASSIGNS FROM ANY COST, LOSS, LIABILITY,
DAMAGE, EXPENSE, DEMAND, ACTION OR CAUSE OF ACTION ARISING FROM OR RELATED TO
ANY CONSTRUCTION DEFECTS, ERRORS, OMISSION, OR OTHER CONDITIONS AFFECTING THE
PROPERTY; PROVIDED, THAT THIS SHALL NOT RELEASE SELLER FROM CLAIMS ARISING, IF
ANY, AS A RESULT OF ANY WRITTEN REPRESENTATION OR WARRANTY OF SELLER BEING FALSE
WHEN MADE. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THIS RELEASE SHALL BE
GIVEN FULL FORCE AND EFFECT ACCORDING TO EACH OF ITS EXPRESSED TERMS AND
PROVISIONS, INCLUDING, BUT NOT LIMITED TO, THOSE RELATING TO UNKNOWN AND
SUSPECTED CLAIMS, DAMAGES AND CAUSES OF ACTION. THIS COVENANT RELEASING SELLER
SHALL BE BINDING UPON PURCHASER, ITS PERSONAL REPRESENTATIVES, HEIRS, SUCCESSORS
AND ASSIGNS.
THE PROVISIONS OF THIS SECTION 6.3 (INCLUDING, WITHOUT LIMITATION, THE
WAIVER AND RELEASE OF CLAIMS CONTAINED HEREIN) SHALL SURVIVE THE CLOSING OR
EARLIER TERMINATION OF THIS CONTRACT.
6.4 No Reliance on Documents. Except as expressly stated in Section 6.2
hereof or in any written instrument delivered by Seller to Purchaser in
connection herewith, Seller makes no representation or warranty as to the truth,
accuracy or completeness of any materials, data or information (including,
without limitation, the Submission Matters) delivered by Seller to Purchaser in
connection with the transaction contemplated hereby.
ARTICLE VII.
CONDITIONS PRECEDENT TO PURCHASER'S AND
SELLER'S PERFORMANCE
7.1 Conditions to Purchaser's Obligations. Purchaser's obligation under
this Contract to purchase the Property is subject to the fulfillment of each of
the following conditions (any or all of which may be waived by Purchaser):
(a) The representations and warranties of Seller contained herein shall be
true, accurate and correct as of the Closing Date;
(b) Seller shall be ready, willing and able to deliver title to the
Property in accordance with the terms and conditions of this Contract;
(c) The obligations of Seller specified in Section 7.3 hereof shall have
been satisfied;
(d) Seller shall have delivered all the documents and other items required
pursuant to Section 8.2(a), and shall have performed, in all material respects,
all other covenants, undertakings and obligations, and complied with all
conditions required by this Contract to be performed or complied with by Seller
at or prior to the Closing;
(e) The Title Company is in a position to issue to Purchaser the Title
Policy with all endorsements available within the State of Washington which are
required by Purchaser; and
(f) Seller shall have delivered the Estoppel Certificates (hereinafter
defined) in accordance with Section 7.3 hereof, which shall be in full force and
effect as of Closing.
7.2 Conditions to Seller's Obligations. Seller's obligation under this
Contract to sell the Property to Purchaser is subject to the fulfillment of each
of the following conditions (all or any of which may be waived by Seller):
(a) the representations and warranties of Purchaser contained herein shall
be true, accurate and correct as of the Closing Date; and
(b) Purchaser shall have delivered the funds required hereunder and all
the documents to be executed by Purchaser set forth in Section 8.2(b) and shall
have performed, in all material respects, all other covenants, undertakings and
obligations, and complied with all conditions required by this Contract to be
performed or complied with by Purchaser at or prior to Closing.
7.3 Estoppel Certificates. Seller shall use reasonable efforts to obtain
and deliver to Purchaser promptly upon receipt thereof, Estoppel Certificates
(herein so called), in the form attached hereto as Exhibit F, with such changes
thereto as are reasonably requested by or acceptable to Purchaser, from all
Tenants. In the event that Seller is unable to obtain Estoppel Certificates
from PAPA Associates and Western Drug Distributors, Inc. d/b/a Drug Emporium
(collectively, the "Major Tenants"), then Purchaser may, during the ten (10) day
period following Seller's notification to Purchaser of Seller's failure to
secure said Estoppel Certificate(s), terminate this Contract and the Earnest
Money Deposit shall thereupon be returned to Purchaser as its sole remedy;
provided, however, that the presence of non-material (in Purchaser's reasonable
opinion) exceptions, qualifications or modifications in any Estoppel Certificate
delivered by any of the Major Tenants, shall not permit Purchaser to terminate
this Contract. In the event that Purchaser so terminates this Contract, neither
party shall have any further rights, duties or obligations hereunder except for
provisions of this Contract which expressly survive the termination of this
Contract. If any Tenants, other than Major Tenants, do not execute and deliver
the Estoppel Certificates contemplated hereunder on or before the Closing Date,
then, at Closing, at Purchaser's election, Seller shall provide Purchaser with a
certificate (herein called the "Seller's Certificate"), setting forth Seller's
certification that, with respect to each of the Leases for which a Tenant other
than a Major Tenant did not deliver an Estoppel Certificate, (i) the copy of
such Lease (and all amendments and modifications thereto) previously provided by
Seller to Purchaser is true, correct and complete, (ii) Seller has not received
any rent thereunder for more than one month in advance, and (iii) Seller has
neither received nor given any written notice of default under such Lease (or,
if so, describing the nature thereof).
ARTICLE VIII.
CLOSING
8.1 Time and Place. The consummation of the purchase and sale of the
Property (the "Closing") shall take place at the office of the Title Company (it
being contemplated that the Closing will occur by the delivery of Closing
documents into escrow with the Title Company) on the thirtieth (30th) day after
the end of the Inspection Period, or at such earlier date and time as Purchaser
and Seller may mutually agree (the "Closing Date").
8.2 Items to be Delivered at the Closing.
(a) Seller. At the Closing, Seller shall deliver, or cause to be
delivered, to the Title Company for recording or delivery to Purchaser, as
applicable, each of the following items:
(i) An extended coverage form ALTA Owner Policy of Title Insurance,
together with all endorsements requested by Purchaser which are legally
available in the State of Washington and are available with respect to the
Property, dated no earlier than the date of the filing of the deed described in
Section 8.2(a)(ii) hereof, issued by the Title Company, and insuring Purchaser's
title in the amount of the Purchase Price, subject only to the Permitted
Exceptions (the "Title Policy").
(ii) A Bargain and Sale Deed duly executed and acknowledged by Seller in
the form attached hereto as Exhibit B and made a part hereof for all purposes
(with such reasonable changes thereto as may be required by the Title Company in
order to comply with the laws of the State of Washington) sufficient to convey
to Purchaser good and marketable title to the Land and Improvements free and
clear of all liens and encumbrances except for the Permitted Exceptions (and
none of the Permitted Exceptions shall be deemed to render title unmarketable).
(iii) An Assignment and Assumption of Leases (the "Assignment of
Leases") duly executed and acknowledged by Seller in the form attached hereto as
Exhibit C and made a part hereof for all purposes.
(iv) A Blanket Conveyance, Bill of Sale and Assignment ("Bill of Sale")
duly executed by Seller in the form attached hereto as Exhibit D and made a part
hereof for all purposes, to which is attached an itemized list of all material
items of tangible personal property owned by Seller and attached to or used in
connection with the Land or Improvements (the "Personal Property Schedule").
(v) The Estoppel Certificates and/or Seller's Certificate as required
pursuant to Section 7.3 hereof.
(vi) All original Tenant Leases that are in Seller's possession and copies
of all Tenant Leases with respect to which Seller does not have originally
executed counterparts in its possession, which shall be certified by Seller as
being all Tenant Leases then in effect with respect to the Property, together
with related Tenant files and records, together with letters addressed to the
Tenants of the Property (the "Notice Letters") in the form attached hereto as
Exhibit G and made a part hereof for all purposes, or in such other form as may
be mutually agreed upon by Seller and Purchaser.
(vii) Original counterparts of all Contracts that are in Seller's
possession and which are to be assumed by Purchaser, together with letters
addressed to the service providers thereunder in the form attached hereto as
Exhibit H (the "Service Contract Notice Letters"), duly executed by Seller.
(viii) A Non-Foreign Affidavit in the form attached hereto as Exhibit E
and made a part hereof for all purposes.
(ix) All amounts owing to Purchaser by Seller under Article IX hereof.
(x) Evidence satisfactory to Purchaser and the Title Company that the
person or persons executing this Contract and the closing documents on behalf of
Seller have full right, power and authority to do so.
(xi) A rent roll prepared with respect to the Property in the form normally
prepared by Seller which shall be certified, to Seller's knowledge, as being
true and correct in all material respects as of a date not more than ten (10)
business days prior to Closing.
(xii) Other items reasonably requested by the Title Company for the
sale of the Property in accordance with this Contract or for administrative
requirements for consummating the Closing.
(b) Purchaser. At the Closing, Purchaser shall deliver to the Title
Company, for recording or delivery to Seller, as applicable, each of the
following items:
(i) The Purchase Price in Current Funds.
(ii) The Assignment of Leases, duly executed and acknowledged by Purchaser.
(iii) The Bill of Sale, duly executed by Purchaser.
(iv) Such additional funds in cash or Current Funds, as may be necessary to
cover Purchaser's share of the closing costs and prorations hereunder.
(v) Evidence satisfactory to Seller and the Title Company that the person
or persons executing this Contract and the closing documents on behalf of
Purchaser have full right, power and authority to do so.
(vi) The Notice Letters duly executed by Purchaser.
(vii) Other items reasonably requested by the Title Company for the
sale of the Property in accordance with this Contract or for administrative
requirements for consummating the Closing.
(viii) A Certificate, in form reasonably satisfactory to Seller (but not
to be recorded or in recordable form), confirming that the matters specified in
Section 6.3 hereof shall survive the Closing and filing of the Bargain and Sale
Deed hereunder.
8.3 Costs of Closing. Seller shall pay (i) the cost of providing standard
ALTA coverage with respect to the Title Policy, and (ii) all excise taxes,
transfer taxes or similar taxes, fees or assessments to be paid in connection
with the conveyance of the Property to Purchaser. Purchaser shall pay (a) any
costs, including, without limitation, recording costs, loan fees and attorneys'
fees, relating to (i) any financing obtained by the Purchaser for the purchase
of the Property, and/or (ii) any documentary stamp taxes, deed taxes, transfer
taxes, intangible taxes, mortgage taxes or other similar taxes, fees or
assessments incurred in connection with any such financing, and (b) the cost of
obtaining extended coverage and any endorsements with respect to the ALTA Title
Policy, if Purchaser elects to obtain such extended coverage and/or
endorsements. The Seller and Purchaser shall each pay one-half of all escrow
fees of the Title Company and recording costs with respect to recordation of the
documents required to convey the Property to Purchaser. All other expenses
incurred by Seller and Purchaser with respect to the Closing, including, but not
limited to, the attorneys fees and costs and expenses incurred in connection
with negotiating, preparing and closing the transaction contemplated by this
Contract, shall be borne and paid exclusively by the party incurring same,
unless otherwise expressly provided in this Contract.
8.4 Prorations. All normal and customarily proratable items, including,
without limitation, rents (including, without limitation, base rents, additional
rents, percentage rents and common area maintenance charges), operating
expenses, tenant improvement costs and leasing commissions, personal property
taxes, other operating expenses and fees, and payments relating to any
agreements affecting the Property which survive the Closing, shall be prorated
as of the Closing Date, Seller being charged and credited for all of same
attributable to the period up to the Closing Date (and credited for any amounts
paid by Seller attributable to the period on or after the Closing Date) and
Purchaser being responsible for, and credited or charged, as the case may be,
for all of same attributable to the period on and after the Closing Date. All
unapplied Deposits under Tenant Leases, if any, shall be transferred by Seller
to Purchaser at the Closing. Any real estate ad valorem or similar taxes for
the Property, or any installment of assessments payable in installments which
installment is payable in the year of Closing, shall be prorated to the date of
Closing, based upon actual days involved. In connection with the proration of
real property taxes or installments of assessments, such proration shall be
based upon the assessed valuation and tax rate figures for the year in which the
Closing occurs to the extent the same are available; provided, that in the event
that actual figures (whether for the assessed value of the Property or for the
tax rate) for the year of Closing are not available at the Closing Date, the
proration shall be made using figures from the preceding year for the figures
which are unavailable for the year of Closing. The proration shall be final and
unadjustable except as provided in the following paragraph. The provisions of
this Section 8.4 shall survive the Closing.
If any of the items subject to proration under the foregoing provisions of
this Section 8.4 cannot be prorated at the Closing because of the unavailability
of the information necessary to compute such proration, or if any errors or
omissions in computing prorations at the Closing are discovered subsequent to
the Closing, then such item shall be reapportioned and such errors and omissions
corrected as soon as practicable after the Closing Date and the proper party
reimbursed, which obligation shall survive the Closing for a period (the
"Proration Period") from the Closing Date until one (1) year after the Closing
Date. Neither party hereto shall have the right to require a recomputation of a
Closing proration or a correction of an error or omission in a Closing proration
unless within the Proration Period one of the parties hereto (i) has obtained
the previously unavailable information or has discovered the error or omission,
and (ii) has given notice thereof to the other party together with a copy of its
good faith recomputation of the proration and copies of all substantiating
information used in such recomputation. The failure of a party to obtain any
previously unavailable information or discover an error or omission with respect
to an item subject to proration hereunder and to give notice thereof as provided
above within the Proration Period shall be deemed a waiver of its right to cause
a recomputation or a correction of an error or omission with respect to such
item after the Closing Date. Any base rents, common area maintenance charges
and other rent items that have accrued, but have not yet been paid shall be
prorated in accordance with estimates based upon the prior years' information
(or reasonable estimates of Seller if no such prior years' information is
available), and shall be subsequently readjusted and reapportioned upon receipt.
Purchaser shall pay Seller for percentage rents, common area maintenance charges
and other rent items that have accrued, but are not yet due and payable, at
Closing.
8.5 Possession and Closing. Possession of the Property shall be delivered
to Purchaser by Seller at the Closing, subject to the Permitted Exceptions and
the rights of the Tenants under their Tenant Leases, and shall circulate the
Service Contract Notice Letters which have not been forwarded previously by
Seller prior to Closing. Purchaser shall make its own arrangements for the
provision of public utilities to the Property and Seller shall terminate its
contracts with such utility companies that provide services to the Property.
8.6 Delinquent Rent.
(a) Application of Delinquent Rent. If on the Closing Date any Tenant is
in arrears in the payment of any rent under any Tenant Lease (the "Delinquent
Rent") payable by it, any Delinquent Rent received by Purchaser and Seller from
such Tenant after the Closing shall be applied to amounts due and payable by
such Tenant during the following periods in the following order of priority: (A)
first, to the period of time after the Closing Date, and (B) second, to the
period of time before the Closing Date. If Delinquent Rent or any portion
thereof received by Seller or Purchaser after the Closing are due and payable to
the other party by reason of this allocation, the appropriate sum, less a
proportionate share of any reasonable attorneys' fees and costs and expenses
expended in connection with the collection thereof, shall be promptly paid to
the other party. The provisions of this Section 8.6(a) shall survive the
Closing.
(b) Collection of Delinquent Rent. After the Closing, Seller shall
continue to have the right, in its own name, to demand payment of and to collect
Delinquent Rent owed to Seller by any Tenant, which right shall include, without
limitation, the right to continue or commence legal actions or proceedings
against any Tenant (provided, that Seller shall not commence any legal actions
or proceedings against any Tenant which continues as a Tenant at the Property
after Closing without the prior consent of Purchaser, which will not be
unreasonably withheld or delayed), and the delivery of the Assignment of Leases
[as defined in Section 8.2(a)(iii)] shall not constitute a waiver by Seller of
such right. Purchaser agrees to cooperate with Seller at no cost or liability
to Purchaser in connection with all efforts by Seller to collect such Delinquent
Rent and to take all steps, whether before or after the Closing Date, as may be
necessary to carry out the intention of the foregoing, including, without
limitation, the delivery to Seller, upon demand, of any relevant books and
records (including, without limitation, rent statements, receipted bills and
copies of tenant checks used in payment of such rent), the execution of any and
all consents or other documents, and the undertaking of any act reasonably
necessary for the collection of such Delinquent Rent by Seller; provided,
however, that Purchaser's obligation to cooperate with Seller pursuant to this
sentence shall not obligate Purchaser to terminate any Tenant Lease with an
existing Tenant or evict any existing Tenant from the Property. The provisions
of this Section 8.6(b) shall survive the Closing.
ARTICLE IX.
CONDEMNATION OR CASUALTY
9.1 Condemnation.
(a) In the event that all or any substantial portion of the Property is
condemned or taken by eminent domain or conveyed by deed in lieu thereof, or if
any condemnation proceeding is commenced for all or any substantial portion of
the Property, prior to Closing, Purchaser may elect to terminate this Contract
by written notice thereof to Seller within fifteen (15) days after Seller
notifies Purchaser of, or Purchaser learns of, the condemnation, threat of
condemnation, taking or deed in lieu or institution of such condemnation
proceeding. Seller agrees to provide Purchaser with notice of any condemnation
or eminent domain action with respect to the Property promptly after Seller
receives notice thereof. If Purchaser does not terminate this Contract as
aforesaid, then both parties shall proceed to close the transaction contemplated
herein pursuant to the terms hereof, in which event Seller shall, except as
limited in Section 9.1(b) hereof, deliver to Purchaser at the Closing any
proceeds actually received or entitled to be received by Seller attributable to
the Property from such condemnation, eminent domain proceeding or deed in lieu
thereof and assign its interest in and to any such proceeds, and there shall be
no reduction in the Purchase Price.
(b) For the purpose of this Section 9.1(a), a "substantial portion" of the
Property shall be deemed to be any portion of the Property with either a fair
market value or replacement cost in an amount equal to or greater than
$300,000.00. The foregoing provision shall survive the Closing.
9.2 Casualty.
(a) In the event that all or any substantial portion of the Property shall
be damaged or destroyed by fire or other casualty prior to Closing, Purchaser
may terminate this Contract by written notice thereof to Seller within fifteen
(15) days after Seller notifies Purchaser of the casualty. Seller agrees to
provide Purchaser with notice of any casualty with respect to any substantial
portion of the Property promptly after Seller receives notice thereof. If
Purchaser does not terminate this Contract as aforesaid, then both parties shall
proceed to close the transaction contemplated herein pursuant to the terms
hereof, in which event Seller shall, except as limited in Section 9.2(b) hereof,
deliver to Purchaser at the Closing any insurance proceeds actually received by
Seller attributable to the Property from such casualty (except for proceeds
previously used to repair the Property) and assign to Purchaser all of Seller's
right, title and interest in and to any claims which Seller may have under the
insurance policies covering the Property, and there shall be no reduction in the
Purchase Price, but Purchaser shall receive a credit at Closing in the amount of
any deductible amount under Seller's insurance policy applicable with respect to
such casualty which Seller has not expended toward repairs with respect to such
casualty. In the event less than a substantial portion of the Property shall be
damaged or destroyed by fire or other casualty prior to Closing, then the
parties shall proceed in accordance with the third sentence in this Section
9.2(a).
(b) For the purposes of Section 9.2(a), a "substantial portion" of the
Property shall be deemed to be any portion of the Property with either a fair
market value or replacement cost in an amount equal to or greater than
$300,000.00. The foregoing provision shall survive the Closing.
ARTICLE X.
DEFAULTS AND REMEDIES
10.1 Default by Purchaser. IF SELLER SHALL NOT BE IN DEFAULT HEREUNDER AND
PURCHASER REFUSES OR FAILS TO CONSUMMATE THE CLOSING UNDER THIS CONTRACT FOR
REASONS OTHER THAN AS EXPRESSLY SET FORTH IN SECTION 4.4, SECTION 5.2 OR ARTICLE
IX HEREOF OR OTHER THAN DUE TO A FAILURE OF A CONDITION PRECEDENT TO PURCHASER'S
OBLIGATION TO CLOSE AS SET FORTH IN SECTION 7.1 HEREOF, SELLER SHALL, AS ITS
SOLE AND EXCLUSIVE REMEDY, TERMINATE THIS CONTRACT IN WHICH EVENT NEITHER PARTY
SHALL HAVE ANY FURTHER RIGHTS, DUTIES, OR OBLIGATIONS HEREUNDER EXCEPT FOR
PROVISIONS OF THIS CONTRACT WHICH EXPRESSLY SURVIVE THE TERMINATION HEREOF, AND
SELLER SHALL BE ENTITLED TO RECEIVE AND RETAIN THE EARNEST MONEY DEPOSIT AS
LIQUIDATED DAMAGES (SELLER AND PURCHASER HEREBY ACKNOWLEDGING THAT THE AMOUNT OF
DAMAGES IN THE EVENT OF PURCHASER'S DEFAULT IS DIFFICULT OR IMPOSSIBLE TO
ASCERTAIN BUT THAT SUCH AMOUNT IS A FAIR ESTIMATE OF SUCH DAMAGE).
NOTWITHSTANDING ANYTHING CONTAINED IN THIS SECTION TO THE CONTRARY, IN THE EVENT
OF ANY OTHER DEFAULT BY PURCHASER UNDER THIS CONTRACT WHICH SURVIVES THE CLOSING
OR TERMINATION OF THIS CONTRACT, INCLUDING, WITHOUT LIMITATION, BREACH OF ANY
COVENANT, REPRESENTATION OR INDEMNITY, SELLER SHALL HAVE ANY AND ALL RIGHTS AND
REMEDIES AVAILABLE AT LAW OR IN EQUITY BY REASON OF SUCH DEFAULT.
BY INITIALING IN THE SPACE PROVIDED BELOW, SELLER AND PURCHASER EXPRESSLY
ACKNOWLEDGE THAT THEY HAVE READ, UNDERSTOOD AND AGREED TO THE FOREGOING, THAT
THEY HAVE BEEN ADVISED BY LEGAL COUNSEL OF THEIR CHOICE OF THE LEGAL EFFECT OF
THE FOREGOING, AND THAT THEY HAVE AGREED THAT THE TERMS OF THE FOREGOING ARE
EQUITABLE AND FAIR.
SELLER: PURCHASER:
____________ [PLEASE INITIAL] ____________
10.2 Default by Seller. If Purchaser shall not be in default of its
obligations under Section 8.2(b) hereof and if Seller refuses or fails to
consummate the Closing under this Contract other than due to a termination
permitted hereunder or a failure of a condition precedent to Seller's obligation
to close as set forth in Section 7.2 hereof, Purchaser may, at Purchaser's sole
option, as its sole and exclusive remedies, either (a) terminate this Contract
in which event neither party shall have any further rights, duties or
obligations hereunder except for provisions of this Contract which expressly
survive the termination hereof, and Purchaser shall be entitled to a refund of
the Earnest Money Deposit, or (b) enforce specific performance of this Contract
against Seller. In no event shall Seller be liable to Purchaser for any
damages, including, without limitation, any actual, punitive, speculative or
consequential damages or damages for loss of opportunity or lost profit.
10.3 Attorneys Fees. If it shall be necessary for either Purchaser or
Seller to employ an attorney to enforce its rights pursuant to this Contract,
the non-prevailing party shall reimburse the prevailing party for its reasonable
attorneys fees.
ARTICLE XI.
BROKERAGE COMMISSIONS
11.1 Brokerage Commission. Seller and Purchaser represent each to the
other that each has had no dealings with any broker, finder or other party
concerning the purchase of the Property except Insignia Retail Group, Inc. (the
"Broker"). Seller hereby agrees to pay at Closing commissions due to Broker
arising out of any agreement executed by Seller; provided, however, that
Seller's obligation to pay, and Broker's right to receive, this commission or
any other amount with respect to this Contract or the Property is expressly
conditioned upon Closing the sale of the Property and Seller's receipt of the
Purchase Price under this Contract. Broker shall have no right to receive this
commission or any other amount with respect to this Contract or the Property
unless and until Closing shall be final and fully consummated and the Purchase
Price has been paid as provided in this Contract. Seller agrees to indemnify
Purchaser and hold Purchaser harmless from any loss, liability, damage, cost or
expense (including, without limitation, reasonable attorneys fees) arising out
of any claim to any broker's, finder, or other fee in connection with this
transaction by any party claiming by, through or under Seller (including,
without limitation, the Broker). Purchaser agrees to indemnify Seller and hold
Seller harmless from any loss, liability, damage, cost or expense (including,
without limitation, reasonable attorneys fees) arising out of any claim to any
broker's, finder, or other fee in connection with this transaction by any party
claiming by, through or under Purchaser. Notwithstanding anything to the
contrary contained herein, the indemnities set forth in this Article XI shall
survive the Closing.
ARTICLE XII.
OPERATION OF THE PROPERTY PRIOR TO THE CLOSING
Between the Effective Date and the Closing Date, Seller shall (a) operate
and manage the Property in the same manner done by Seller prior to the date
hereof, and, without the prior written consent of Purchaser, Seller shall not
(i) enter into any Service Contract that cannot be terminated with thirty (30)
days notice, (ii) enter into any lease or other agreement concerning use of or
rights in the Property, (iii) amend or agree to terminate any Tenant Lease, or
(iv) mortgage or encumber the Property; (b) advise Purchaser of the commencement
of, or notice received regarding, any litigation, condemnation or other judicial
or administrative proceedings affecting the Property of which Seller has current
actual knowledge; and (c) maintain insurance on the Property with commercially
reasonable coverages and amounts. Seller agrees to cooperate with Purchaser, at
no cost to Seller, in order for Purchaser to procure a waiver of the furniture
use provision covering Building 600. Furthermore, Seller agrees to cooperate
with Purchaser, at no cost to Seller, to procure certain entitlements issued by
governmental entities with respect to the Property, including execution of
documents by Seller requested by Purchaser for Purchaser's procurement of such
entitlements necessary for Purchaser use, rehabilitation and remodeling of the
Property in connection with permits or approvals to be issued by such
governmental authorities including execution of documents and applications which
are reasonably acceptable to Seller in connection therewith; provided, that no
entitlements shall become effective until Closing.
ARTICLE XIII.
MISCELLANEOUS
13.1 Notices. Any notice provided or permitted to be given under this
Contract must be in writing and may be served by (a) depositing same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (b) delivering the same
in person to such party via a hand delivery service, Federal Express or any
other nationally recognized courier service that provides a return receipt
showing the date of actual delivery of same to the addressee thereof, or (c)
facsimile transmission with confirmation of receipt to the party sending same,
if a copy is deposited in the United States Mail as provided in 13.1(a) above.
Notice given in accordance herewith shall be effective upon receipt at the
address of the addressee. For purposes of notice, the addresses of the parties
shall be as follows:
If to Seller: Angeles Partners XII
c/o Insignia Financial Group, Inc.
One Insignia Financial Plaza
Greenville, South Carolina 29602
Attention: James A. Gray
Facsimile No.: 864/239-1066
Telephone No.: 864/239-1369
With a copy to:Insignia Retail Group, Inc.
130 Newport Center Drive, Suite 130
Newport Beach, California 92660
Attention: Cody M. Small
Facsimile No.: 949/644-1088
Telephone No.: 949/644-3420
And a copy to: Liechty & McGinnis, P.C.
10440 North Central Expressway, Suite 1100
Dallas, Texas 75231
Attention: Lorne O. Liechty, Esq.
Facsimile No.: 214/265-0615
Telephone No.: 214/265-0008
If to Purchaser:Cooper Point Plaza, LLC
433 North Camden Drive, Suite 1070
Beverly Hills, California 90210
Attention: Sam Rosenwald
Facsimile No.: 310/274-4017
Telephone No.: 310/278-5333
With a copy to:Cerruti & Adams, a limited company
139 E. South Temple, Suite 520
Salt Lake City, Utah 84111-1171
Attention: Thomas E. K. Cerruti
Facsimile No.: 801/359-1980
Telephone No.: 801/359-1986
If to Title
Company: Thurston County Title Company
105 E. 8th Avenue
Olympia, Washington 98501
Attention: Scott Euteneier
Facsimile No.: 360/786-9315
Telephone No.: 360/943-7300
13.2 GOVERNING LAW. THIS CONTRACT IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED IN, THE STATE OF WASHINGTON, AND THE LAWS OF SUCH STATE
SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS
CONTRACT.
13.3 Entirety and Amendments. This Contract embodies the entire agreement
between the parties and supersedes all prior agreements and understandings, if
any, relating to the transaction described herein, and may be amended or
supplemented only by an instrument in writing executed by the party against whom
enforcement is sought.
13.4 Parties Bound. Subject to the provisions of Section 13.5 hereof, this
Contract shall be binding upon and inure to the benefit of Seller and Purchaser,
and their respective heirs, personal representatives, successors and assigns.
13.5 Assignment. This Contract may be assigned by Purchaser to any person
or entity controlling, controlled by or under common control with Purchaser
without the prior written consent of Seller. Any assignment of this Contract by
Purchaser other than as provided foregoing shall, at Seller's option, be null
and void and of no effect. In the event Seller consents to an assignment of
this Contract by Purchaser, Purchaser shall not be released from any liability
or obligations hereunder.
13.6 Headings. Headings used in this Contract are used for reference
purposes only and do not constitute substantive matter to be considered in
construing the terms of this Contract.
13.7 Survival. Except as otherwise expressly provided herein, no
representations, warranties, covenants, acknowledgments or agreements contained
in this Contract shall survive the Closing of this Contract and the delivery of
the Bargain and Sale Deed by Seller to Purchaser.
13.8 Interpretation. The parties acknowledge that each party and its
counsel have reviewed this Contract, and the parties hereby agree that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Contract or any amendments or exhibits hereto. In case any one or more
of the provisions contained in this Contract shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof, and this Contract
shall be construed as if such invalid, illegal or unenforceable provisions had
never been contained herein. When the context in which words are used in this
Contract indicates that such is the intent, words in the singular number shall
include the plural and vice versa, and words in the masculine gender shall
include the feminine and neuter genders and vice versa.
13.9 Exhibits. All references to "Exhibits" contained herein are
references to exhibits attached hereto, all of which are hereby made a part
hereof for all purposes.
13.10 Time of Essence. It is expressly agreed by the parties hereto
that time is of the essence with respect to this Contract and Closing hereunder.
13.11 Multiple Counterparts. This Contract may be executed in a number
of identical counterparts. If so executed, each of such counterparts is to be
deemed an original for all purposes, and all such counterparts shall,
collectively, constitute one agreement, but, in making proof of this Contract,
it shall not be necessary to produce or account for more than one such
counterpart.
13.12 Risk of Loss. Risk of loss or damage to the Property, or any
part thereof, by fire or any other casualty from the date this Contract is fully
executed up to the time of Closing will be on the Seller and, thereafter, will
be on the Purchaser.
13.13 Effective Date. As used herein, the term "Effective Date" shall
mean for all purposes in this Contract the date on which the Title Company
acknowledges receipt of an original of the Contract executed by Purchaser and
Seller with all changes, if any, to the printed portion of this Contract
initialed by Purchaser and Seller.
13.14 Business Days. All references to "business days" contained
herein are references to normal working business days, i.e., Monday through
Friday of each calendar week, exclusive of federal and national bank holidays.
In the event that any event hereunder is to occur, or a time period is to
expire, on a date which is not a business day, such event shall occur or such
time period shall expire on the next succeeding business day.
13.15 No Recordation of Contract. In no event shall this Contract or
any memorandum hereof be recorded in the public records of the place in which
the Property is situated, and any such recordation or attempted recordation
shall constitute a breach of this Contract by the party responsible for such
recordation or attempted recordation.
13.16 Section 1031 Exchange. Purchaser's acquisition of the Property
may be the acquisition of replacement property in a qualifying exchange of like-
kind property under Section 1031 of the Internal Revenue Code, as amended (the
"Exchange"), pursuant to Purchaser's separate exchange agreement with a
qualified intermediary (the "Intermediary"). Seller agrees to cooperate with
Purchaser (without liability or cost to Seller) in the completion of the
Exchange. Such cooperation shall include (i) the assignment of this Contract by
Purchaser to the Intermediary, and the acknowledgment of such assignment by
Seller, (ii) the acceptance of the Purchase Price from the Intermediary, (iii)
the conveyance of the Property to Purchaser pursuant to a written direction of
the Intermediary, and (iv) the reassignment of this Contract to Purchaser from
the Intermediary immediately following the completion of the Exchange, and the
acknowledgment by Seller of such reassignment. In consideration for the
cooperation of Seller, Seller shall not be liable for any acts or omissions
(except for its willful misconduct) arising from its relationship with the
Intermediary in accordance with this Contract. Upon receipt of title to the
Property by Purchaser and payment of the consideration payable to the Seller or
for its benefit, under this Contract, Seller shall not have any further
obligations or responsibilities under this paragraph and Purchaser agrees to
fully indemnify Seller from any resulting liability to third parties (including,
but not limited to, the Intermediary) which indemnity shall be effective from
and after the date of this Contract, shall not merge with the Bargain and Sale
Deed and shall survive the Closing of this transaction.
Purchaser shall in all events be responsible for all costs and expenses
related to the Section 1031 exchange and shall fully indemnify, defend and hold
Seller harmless for, from and against any and all liability, claims, damages,
expenses (including, without limitation, reasonable attorneys and paralegal fees
other than those incurred prior to Closing to review documents to facilitate the
Section 1031 exchange), taxes, fees, proceedings and causes of action of any
kind or nature whatsoever arising out of, connected with or in any manner
related to such Section 1031 exchange that would not have been incurred by
Seller if the transaction did not involve a Section 1031 Exchange. The
provisions of the immediately preceding sentence shall survive Closing and the
sale of the Property to Purchaser. Any Section 1031 exchange shall be
consummated on behalf of Purchaser in such a manner that Seller shall not be
required to acquire title to any real property in connection therewith.
13.17 Disclaimer. PURCHASER HEREBY ACKNOWLEDGES THAT PURCHASER IS AND
SHALL BE SOLELY RESPONSIBLE FOR COMPLIANCE WITH ALL LAWS, RULES AND REGULATIONS
RELATED TO THE EXCHANGE. FURTHER, PURCHASER ACKNOWLEDGES THAT NEITHER SELLER
NOR ANY OF ITS AGENTS, REPRESENTATIVES OR AFFILIATES HAS ADVISED PURCHASER, AND
NO SUCH PERSON OR ENTITY HAS ANY OBLIGATION OR DUTY TO ADVISE PURCHASER, WITH
RESPECT TO WHETHER THE TRANSACTION CONTEMPLATED BY THIS CONTRACT COMPLIES WITH
THE LAWS, RULES AND REGULATIONS APPLICABLE TO THE EXCHANGE. FURTHER, PURCHASER
ACKNOWLEDGES THAT IT HAS RELIED UPON ITS OWN TAX AND LEGAL COUNSEL IN
DETERMINING COMPLIANCE WITH ALL LAWS, RULES AND REGULATIONS APPLICABLE TO THE
EXCHANGE. THE PROVISIONS OF THIS SECTION 13.17 SHALL SURVIVE THE CLOSING OR
TERMINATION OF THIS CONTRACT.
IN WITNESS WHEREOF, the undersigned have executed this Contract effective
as of the Effective Date.
SELLER:
ANGELES PARTNERS XII,
a California general partnership
By: Angeles Realty Corporation II,
a California corporation,
its general partner
By: Robert D. Long, Jr.
Its: Vice President
Dated:July 28, 1998
PURCHASER:
COOPER POINT PLAZA, LLC,
a Utah limited liability company
By:_____________________________________
Its:_____________________________________
Dated:__________________________________
