FORM 10-QSB-QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-13309
ANGELES PARTNERS XII
(Exact name of small business issuer as specified in its charter)
California 95-3903623
(State or other jurisdiction of (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)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES PARTNERS XII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2000
Assets
Cash and cash equivalents $ 6,154
Receivables and deposits (net of allowance for
doubtful accounts of $686) 1,053
Restricted escrows 602
Other assets 1,064
Investment in joint venture 4
Investment properties:
Land $ 7,989
Buildings and related personal property 85,048
93,037
Less accumulated depreciation (58,631) 34,406
$ 43,283
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 972
Tenant security deposit liabilities 888
Accrued property taxes 1,098
Other liabilities 613
Mortgage notes payable 55,963
Partners' Capital (Deficit)
General partners $ 116
Limited partners (44,718 units issued and
outstanding) (16,251)
(16,367)
$ 43,283
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2000 1999
Revenues:
Rental income $ 4,727 $ 5,089
Other income 313 354
Casualty gain 380 --
Gain on sale of investment property -- 2,362
Total revenues 5,420 7,805
Expenses:
Operating 1,678 1,978
General and administrative 142 164
Depreciation 1,343 1,182
Interest 1,199 1,516
Property taxes 591 591
Total expenses 4,953 5,431
Income before equity in income of
joint venture and extraordinary items 467 2,374
Equity in income of joint venture -- 1,239
Income before extraordinary items 467 3,613
Equity in extraordinary loss on the
extinguishment of debt of joint
venture (Note C) -- (3)
Extraordinary loss on early extinguishment
of debt (Note E) -- (556)
Net income $ 467 $ 3,054
Net income allocated to general partners $ 5 $ 31
Net income allocated to limited partners 462 3,023
$ 467 $ 3,054
Net income (loss) per limited partnership unit:
Income before extraordinary items $ 10.33 $ 79.99
Extraordinary items -- (12.38)
$ 10.33 $ 67.61
Distributions per limited partnership unit $ -- $ 55.79
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
c)
ANGELES PARTNERS XII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 44,773 $ 1 $ 44,773 $ 44,774
Partners' capital (deficit) at
December 31, 1999 44,718 $ 111 $(16,829) $ (16,718)
Net income for the three months
ended March 31, 2000 -- 5 462 467
Partners' capital (deficit)
at March 31, 2000 44,718 $ 116 $(16,367) $ (16,251)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d)
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 467 $ 3,054
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,343 1,182
Amortization of discounts, loan costs, and
leasing commissions 69 90
Equity in extraordinary loss on extinguishment of
debt of joint venture -- 3
Gain on disposal of investment properties -- (2,362)
Extraordinary loss on extinguishment of debt -- 556
Equity in income of joint venture -- (1,239)
Casualty gain (380) --
Change in accounts:
Receivables and deposits 811 17
Other assets (149) (124)
Accounts payable 250 (29)
Tenant security deposit liabilities (7) (19)
Accrued property taxes 309 (42)
Other liabilities 6 (74)
Net cash provided by operating activities 2,719 1,013
Cash flows from investing activities:
Property improvements and replacements (3,140) (422)
Net receipts from restricted escrows 24 22
Proceeds from sale of investment properties -- 5,995
Net cash (used in) provided by investing activities (3,116) 5,595
Cash flows from financing activities:
Payments on mortgage notes payable (220) (197)
Repayment of loans -- (3,905)
Distributions to partners (120) (3,177)
Debt extinguishment costs -- (78)
Net cash used in financing activities (340) (7,357)
Net decrease in cash and cash equivalents (737) (749)
Cash and cash equivalents at beginning of period 6,891 7,611
Cash and cash equivalents at end of period $ 6,154 $ 6,862
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,130 $ 1,363
At December 31, 1999 accounts payable and property improvements and replacements
were adjusted by $1,124,000 for non-cash activity.
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
ANGELES PARTNERS XII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles Partners
XII (the "Partnership" or "Registrant") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of Angeles Realty Corporation II (the "Managing General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 2000, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2000. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1999.
Principles of Consolidation
The consolidated financial statements of the Partnership include its 99.99%
limited partnership interest in Pickwick Place AP XII LP. Because the
Partnership may remove the general partner of Pickwick Place AP XII LP, this
partnership is controlled and consolidated by the Partnership. The consolidated
financial statements also include the Partnership's interests in AP XII
Associate GP, LLC, Hunters Glen Phase I GP, LLC and Hunters Glen Phase V GP,
LLC, single member limited liability corporations, which are wholly-owned by the
Registrant. All significant inter-entity balances have been eliminated. Minority
interest is immaterial and not shown separately in the financial statements.
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
("IPT") 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 acquired 100% ownership
interest in the Managing General Partner. The Managing General Partner does not
believe that this transaction has had or will have a material effect on the
affairs and operations of the Partnership.
Note C - Investment in Joint Venture
The Partnership has a 44.5% investment in Princeton 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. The sale resulted in net proceeds of approximately $3,411,000 after
payment of closing costs and repayment of mortgage principal and accrued
interest. As of March 31, 1999, the Joint Venture recorded a gain on sale of
approximately $2,885,000 after the write-off of undepreciated fixed assets.
Subsequent to March 31, 1999, in connection with the sale, a commission of
approximately $153,000 was paid to the Joint Venture's managing general partner
in accordance with the Joint Venture Agreement. The Partnership's 1999 pro-rata
share of this gain at March 31, 1999 is approximately $1,284,000 and its equity
in loss on operations of the Joint Venture at March 31, 1999 amounted to
approximately $45,000. The Joint Venture also recognized an extraordinary loss
on early extinguishment of debt of approximately $7,000 as a result of
unamortized loan costs being written off. The Partnership's pro-rata share of
this extraordinary loss is approximately $3,000.
Condensed balance sheet information of the Joint Venture at March 31, 2000, is
as follows (in thousands):
Assets
Cash $ 17
Total $ 17
Liabilities and Partners' Capital
Other liabilities $ 7
Partners' capital 10
Total $ 17
The condensed statements of operations of the Joint Venture for the three months
ended March 31, 2000 and 1999 are summarized as follows (in thousands):
Three Months Ended
March 31,
2000 1999
Revenues $ -- $ 30
Costs and expenses -- (131)
Loss before gain on sale of
investment property and extraordinary
loss on extinguishment of debt -- (101)
Gain on sale of investment property -- 2,885
Extraordinary loss on extinguishment
of debt -- (7)
Net income $ -- $ 2,777
The Partnership recognized its 44.5% equity income of approximately $1,239,000
in the Joint Venture for the three months ended March 31, 1999. The Partnership
also recognized equity in the extraordinary loss on extinguishment of debt of
approximately $3,000 for the three months ended March 31, 1999. Due to the sale
of Princeton Meadows Golf Course in February 1999, the Joint Venture had no
operations during the three months ended March 31, 2000. In addition, the
Partnership anticipates that after filing the final tax return of the Joint
Venture during the second quarter of 2000, all remaining assets and liabilities
of the Joint Venture will be liquidated.
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 the DEP of the
findings when they were first discovered. However, the 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 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 was in process, with skimmers having
been installed at three test wells on the site. These skimmers were in place to
detect any residual fuel that may still be in the ground. Upon the sale of the
golf course, as noted above, the Joint Venture was released from any further
responsibility or liability with respect to the clean-up.
Note D - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) payments to
affiliates for services and (ii) reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following payments owed to the Managing General Partner and its affiliates
during the three months ended March 31, 2000 and 1999 were paid or accrued:
2000 1999
(in thousands)
Property management fees (included in
operating expense) $251 $259
Reimbursement for services of affiliates (included
in investment properties; operating and general and
administrative expenses) 142 114
During the three months ended March 31, 2000 and 1999, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from all
of the Registrant's residential properties (except Southpointe which was 3%) as
compensation for providing property management services. The Registrant paid to
such affiliates approximately $251,000 and $259,000 for the three months ended
March 31, 2000 and 1999, respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $142,000 and $114,000 for the
three months ended March 31, 2000 and 1999, respectively. Included in these
amounts is approximately $56,000 of construction oversight reimbursements for
the three months ended March 31, 2000. There were no such costs incurred during
the three months ended March 31, 1999.
Pursuant to the Partnership Agreement, the Managing General Partner is entitled
to receive a distribution equal to 3% of the aggregate disposition price of sold
properties. During the second quarter of 1999, the Partnership paid a
distribution of $186,000 to the Managing General Partner related to the sale of
Cooper Point Plaza in January 1999. This distribution is subordinate to the
limited partners receiving their original capital contributions plus a
cumulative preferred return of 6% per annum of their adjusted capital
investment, as defined in the Partnership Agreement. If the limited partners
have not received these returns when the Partnership terminates, the Managing
General Partner will return this amount to the Partnership.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
provided financing (the "AMIT Loan") to the Princeton Meadows Golf Course Joint
Venture (see "Note C"). 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 IPT, the entity which controlled the
Managing General Partner. Effective February 26, 1999, IPT was merged into
AIMCO. As a result, AIMCO became 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 nor have stated terms of repayment. At March 31, 1999, the amount of
advances receivable from the Joint Venture was approximately $149,000. This
amount was repaid by the Joint Venture in June 1999.
AIMCO and its affiliates currently own 26,651 limited partnership units in the
Partnership representing 59.598% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 59.598% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. 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.
Note E - Sale of Investment Property
On January 4, 1999, the Partnership sold its only commercial property, Cooper
Point Plaza, to an unaffiliated third party for net sales proceeds of
approximately $5,995,000 after payment of closing costs. The Partnership
realized a gain of approximately $2,362,000 on the sale. In addition, the
Partnership recorded an extraordinary loss on early extinguishment of debt of
approximately $556,000 as a result of unamortized loan costs being written off
and the payment of a prepayment penalty of approximately $78,000 relating to the
prepayment of the mortgage encumbering the property. In conjunction with the
sale, a distribution of approximately $186,000 was paid to the Managing General
Partner in accordance with the Partnership Agreement (see "Note D"). In February
1999, the Partnership made a distribution of approximately $2,032,000
representing proceeds from the sale of Cooper Point Plaza.
Note F - Casualty Gain
During the three months ended March 31, 2000, a net casualty gain of
approximately $380,000 was recorded at Pickwick Place Apartments. The casualty
gain related to a fire that destroyed the indoor tennis courts and nearby
maintenance shed in August 1999. The gain was the result of insurance proceeds
of approximately $380,000. The destroyed property was fully depreciated.
Note G - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties consisting of
eight apartment complexes located in six states - Iowa (2 properties),
Pennsylvania (1 property), New Jersey (3 properties), Illinois (1 property), and
Washington (1 property). The Partnership rents apartment units to tenants for
terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies in the
Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999.
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 three month periods ended March 31, 2000 and 1999 is
shown in the tables below (in thousands). The "Other" column includes
Partnership administration related items and income and expense not allocated to
the reportable segment.
2000 Residential Other Totals
Rental income $ 4,727 $ -- $ 4,727
Other income 278 35 313
Interest expense 1,199 -- 1,199
Depreciation 1,343 -- 1,343
General and administrative expense -- 142 142
Casualty gain 380 -- 380
Segment profit (loss) 574 (107) 467
Total assets 41,039 2,244 43,283
Capital expenditures for
investment properties 2,016 -- 2,016
1999 Residential Other Totals
Rental income $ 5,078 $ 11 $ 5,089
Other income 291 63 354
Interest expense 1,510 6 1,516
Depreciation 1,182 -- 1,182
General and administrative expense -- 164 164
Gain on sale of investment property -- 2,362 2,362
Equity in income of joint venture -- 1,239 1,239
Extraordinary loss on the
extinguishment of debt -- (556) (556)
Equity in extraordinary loss on early
extinguishment of debt of joint
venture -- (3) (3)
Segment profit 114 2,940 3,054
Total assets 38,405 7,243 45,648
Capital expenditures for
investment properties 422 -- 422
Note H - 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 action 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 and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek 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 filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement, settling claims, subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999. Prior to the December 10, 1999 hearing the Court received various
objections to the settlement, including a challenge to the Court's preliminary
approval based upon the alleged lack of authority of class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. The
Managing General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
Yanesh Brothers Construction has commenced an action entitled Yanesh Brothers
Construction Company, Inc. v. Insignia Residential Group, L.P., AIMCO Management
Company, et al. in the Court of Common Pleas in Lake County, Ohio in which the
Partnership is also named as a defendant. The plaintiff was hired by AIMCO on
behalf of the Partnership to perform repairs at Southpointe Apartments from a
fire that occurred in October 1998 and is seeking $330,000 in damages from the
amount of the work it performed at this property. Although the property damage
insurance company may be liable for the amount owed to the plaintiff, it has
refused to pay, and the plaintiff is seeking recovery, in the alternative, from
the owner and manager of the property. The property damage insurance broker and
the property damage insurer were recently added as third party defendants to the
claim. The Partnership has also brought suit against the property damage
insurance broker and the property damage insurer for payment of this claim, plus
damages and other losses. The Partnership has recorded a reserve for $330,000,
which is the amount of the claim. The Managing General Partner does not
anticipate that the Partnership will incur material costs in excess of the
reserve in connection with this litigation.
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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB 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.
The Partnership's investment properties consist of eight apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended March 31, 2000 and 1999:
Average Occupancy
Property 2000 1999
Hunters Glen - IV Apartments 97% 97%
Plainsboro, New Jersey
Hunters Glen - V Apartments 97% 98%
Plainsboro, New Jersey
Hunters Glen - VI Apartments 98% 98%
Plainsboro, New Jersey
Gateway Gardens Apartments (1) 94% 97%
Cedar Rapids, Iowa
Chambers Ridge Apartments 95% 95%
Harrisburg, Pennsylvania
Briarwood Apartments 99% 99%
Cedar Rapids, Iowa
Twin Lake Towers Apartments 98% 99%
Westmont, Illinois
Pickwick Place Apartments (2) 90% 87%
Indianapolis, Indiana
(1) The occupancy at Gateway Gardens has decreased due to increased rental
rates at the property.
(2) The occupancy at Pickwick Place Apartments has increased due to increased
marketing efforts at the property.
Results from Operations
The Partnership's net income for the three months ended March 31, 2000 was
approximately $467,000 compared to net income of approximately $3,054,000 for
the corresponding period in 1999. The decrease in net income is primarily due to
the decrease in total revenues resulting from the gain on sale of Cooper Point
Plaza and the equity in income from the sale of the Princeton Meadows Golf
Course in the first quarter of 1999.
<PAGE>
On January 4, 1999, the Partnership sold its only commercial property, Cooper
Point Plaza, to an unaffiliated third party for net sales proceeds of
approximately $5,995,000 after payment of closing costs. The Partnership
realized a gain of approximately $2,362,000 on the sale. In addition, the
Partnership recorded an extraordinary loss on early extinguishment of debt of
approximately $556,000 as a result of unamortized loan costs being written off
and the payment of a prepayment penalty of approximately $78,000 relating to the
prepayment of the mortgage encumbering the property.
The Partnership has a 44.5% investment in Princeton Meadows Golf Course Joint
Venture. 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 $3,411,000 after payment of closing
costs, and repayment of mortgage principal and accrued interest. As of March 31,
1999, the Joint Venture recorded a gain on sale of approximately $2,885,000
after the write-off of undepreciated fixed assets. For the three months ended
March 31, 1999 the Partnership realized equity in income of the Joint Venture of
approximately $1,239,000, which included its equity in the gain on disposal of
Princeton Meadows Golf Course of $1,284,000 and the equity in loss on operations
of $45,000. For the three months ended March 31, 2000, Princeton Meadows Golf
Course did not have any operations, therefore, the Partnership did not recognize
any equity from the Joint Venture.
Excluding the impact of the sale of Cooper Point Plaza, Southpointe Apartments
(which was sold August 6, 1999) and the Princeton Meadows Golf Course, net
income increased approximately $221,000 for the three month period ended March
31, 2000, compared to the corresponding period in 1999. This increase was due to
an increase in total revenues partially offset by an increase in total expenses.
The increase in total revenues was primarily attributable to the recognition of
a net casualty gain at Pickwick Apartments and, to a lesser extent, an increase
in rental income. The casualty gain at Pickwick Place related to a fire which
destroyed the indoor tennis courts and nearby maintenance shed. The gain
represents the insurance proceeds received. Rental income increased as a result
of increases in average rental rates at all of the Partnership's properties as
well as an increase in the average occupancy at Pickwick Place Apartments, which
more than offset the decreases in occupancy at Hunters Glen V, Gateway Gardens
and Twin Lake Towers.
The increase in total expenses was primarily the result of an increase in
depreciation expense partially offset by a decrease in interest expense.
Depreciation expense increased due to increased property improvements and
replacements at the properties during the year ended December 31, 1999 and the
first quarter of 2000. Interest expense decreased as a result of scheduled
principal payments made on the properties' first mortgages.
Included in general and administrative expenses for both of the three month
periods ended March 31, 2000 and 1999 are reimbursements to the Managing General
Partner allowed under the Partnership Agreement. In addition, 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.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment at its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the Managing General Partner attempts to protect the Partnership from
the burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At March 31, 2000, the Partnership had cash and cash equivalents of
approximately $6,154,000 as compared to approximately $6,862,000 at March 31,
1999. Cash and cash equivalents decreased approximately $737,000 for the three
months ended March 31, 2000 from the Registrant's year ended December 31, 1999.
The decrease is primarily due to approximately $3,116,000 of cash used in
investing activities and approximately $340,000 of cash used in financing
activities, which was partially offset by approximately $2,719,000 of cash
provided by operating activities. Cash used in investing activities consisted
primarily of property improvements and replacements, which was slightly offset
by insurance proceeds received related to a casualty at Pickwick Place
Apartments and net receipts from restricted escrows maintained by the mortgage
lender. Cash used in financing activities consisted of payments of principal
made on the mortgages encumbering the Registrant's properties and distributions
to partners. The Registrant invests its working capital reserves in a money
market account.
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, and local legal and regulatory requirements. Capital
improvements planned for each of the Registrant's properties are detailed below.
Hunters Glen Apartments IV
The Partnership has budgeted for the year 2000 approximately $86,000 in capital
improvements at Hunters Glen Apartments IV consisting primarily of carpet and
vinyl replacements, new appliances and cabinets. As of March 31, 2000 the
Partnership has spent approximately $49,000 consisting primarily of appliance
replacement, parking lot upgrades and major landscaping. These improvements were
funded primarily from operating cash flow.
Hunters Glen Apartments V
The Partnership has budgeted for the year 2000 approximately $99,000 in capital
improvements at Hunters Glen Apartments V consisting primarily of carpet and
vinyl replacements, new appliances and cabinets. As of March 31, 2000 the
Partnership has spent approximately $30,000 consisting primarily of major
landscaping, parking lot upgrades and cabinet replacements. These improvements
were funded primarily from operating cash flow and replacement reserves.
Hunters Glen Apartments VI
The Partnership has budgeted for the year 2000 approximately $107,000 in capital
improvements at Hunters Glen Apartments VI consisting primarily of carpet
replacements, new appliances and cabinets. As of March 31, 2000 the Partnership
has spent approximately $56,000 consisting primarily of major landscaping,
interior decoration, parking lot upgrades, air conditioning improvements and
cabinet replacements. These improvements were funded primarily from operating
cash flow.
Gateway Gardens Apartments
The Partnership has budgeted for the year 2000 approximately $98,000 in capital
improvements at Gateway Gardens Apartments consisting primarily of carpet
replacements, new appliances and heating and air conditioning upgrades. As of
March 31, 2000 the Partnership has spent approximately $59,000 consisting
primarily of carpet replacement, recreational facility upgrades and interior
decoration. These improvements were funded primarily from operating cash flow.
Chambers Ridge Apartments
The Partnership is currently modifying the 2000 capital improvement budget for
Chambers Ridge Apartments. The budget is anticipated to include amounts to cover
the following capital improvement needs at the property: clubhouse renovations,
parking lot and plumbing upgrades, carpet and tile replacements, appliances and
interior building improvements. As of March 31, 2000 the Partnership has spent
approximately $207,000 consisting primarily of heating upgrades, structural
improvements, carpet and vinyl replacement, new appliances, parking lot and
plumbing upgrades and interior decoration. These improvements were funded
primarily from operating cash flow.
Briarwood Apartments
The Partnership has budgeted for the year 2000 approximately $22,000 in capital
improvements at Briarwood Apartments consisting primarily of carpet and vinyl
replacements and air conditioning improvements. As of March 31, 2000 the
Partnership has spent approximately $5,000 consisting primarily of carpet and
vinyl replacement and HVAC condensing units. These improvements were funded
primarily from operating cash flow.
Twin Lake Towers Apartments
The Partnership is currently modifying the 2000 capital improvement budget for
Twin Lake Towers Apartments. The budget is anticipated to include amounts to
cover the following capital improvement needs at the property: recreational
facility upgrades, structural improvements, heating and air system upgrades,
sprinkler system improvements, carpet and flooring replacements and appliances.
As of March 31, 2000 the Partnership has spent approximately $979,000 consisting
primarily of appliance replacement, heating and air conditioning upgrades,
sprinkler system improvements, cabinet replacements and other building and
structural improvements. These improvements were funded primarily from operating
cash flow.
Pickwick Place Apartments
The Partnership has budgeted for the year 2000 approximately $152,000 in capital
improvements at Pickwick Place Apartments consisting primarily of carpet and
vinyl replacements, new appliances, parking lot upgrades and structural
improvements. As of March 31, 2000 the Partnership has spent approximately
$80,000 consisting primarily of carpet and vinyl replacement and new appliances.
These improvements were funded primarily from operating cash flow. In addition
approximately $551,000 was capitalized during the three months ended March 31,
2000 associated with reconstruction of the property's indoor tennis court and
nearby maintenance shed which were destroyed by a fire in August 1999. These
improvements were funded by operating cash flow and insurance proceeds.
The additional 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
$55,963,000, net of unamortized discounts, with maturity dates ranging from
October 2003 to May 2005, during which time balloon payments totaling
$52,778,000 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 three months ended March 31, 2000, the Partnership paid a
distribution of approximately $120,000 ($119,000 paid to limited partners or
$2.66 per limited partnership unit) relating to a distribution payable from
operations declared at December 31, 1999. During the three months ended March
31, 1999, a distribution of $2,527,000 was paid to partners, of which $495,000
($10.82 per limited partnership unit) was paid from operations and $2,032,000
($44.97 per limited partnership unit) was paid from surplus funds. In addition,
the Partnership paid a distribution of approximately $650,000 to limited
partners ($14.54 per limited partnership unit) relating to a distribution
payable from surplus cash declared at December 31, 1998. Future cash
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves and the timing of the debt maturities,
refinancings and/or property sales. The Partnership's distribution policy is
reviewed on a semi-annual basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations, after required
capital improvement expenditures, to permit further distributions to its
partners during the remainder of 2000 or subsequent periods.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action 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 and the Insignia Merger (see
"Part I - Financial Information, Item 1. Financial Statements, Note B - Transfer
of Control"). The plaintiffs seek 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 filed demurrers to the amended complaint which were
heard February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement, settling claims, subject to final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the Managing General Partner and its
affiliates terminated the proposed settlement. Certain plaintiffs have filed a
motion to disqualify some of the plaintiffs' counsel in the action. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
Yanesh Brothers Construction has commenced an action entitled Yanesh Brothers
Construction Company, Inc. v. Insignia Residential Group, L.P., AIMCO Management
Company, et al. in the Court of Common Pleas in Lake County, Ohio in which the
Partnership is also named as a defendant. The plaintiff was hired by AIMCO on
behalf of the Partnership to perform repairs at Southpointe Apartments from a
fire that occurred in October 1998 and is seeking $330,000 in damages from the
amount of the work it performed at this property. Although the property damage
insurance company may be liable for the amount owed to the plaintiff, it has
refused to pay, and the plaintiff is seeking recovery, in the alternative, from
the owner and manager of the property. The property damage insurance broker and
the property damage insurer were recently added as third party defendants to the
claim. The Partnership has also brought suit against the property damage
insurance broker and the property damage insurer for payment of this claim, plus
damages and other losses. The Partnership has recorded a reserve for $330,000,
which is the amount of the claim. The Managing General Partner does not
anticipate that the Partnership will incur material costs in excess of the
reserve in connection with this litigation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27 is filed as an exhibit to this report.
b) Reports on Form 8-K filed during the quarter ended March 31,
2000:
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS XII
By: Angeles Realty Corporation II
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: May 15, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners XII 2000 First Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000720392
<NAME> Angeles Partners XII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,154
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 93,037
<DEPRECIATION> 58,631
<TOTAL-ASSETS> 43,283
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 55,963
0
0
<COMMON> 0
<OTHER-SE> (16,251)
<TOTAL-LIABILITY-AND-EQUITY> 43,283
<SALES> 0
<TOTAL-REVENUES> 5,420
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,953
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,199
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 467
<EPS-BASIC> 10.33 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
