March 30, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Angeles Partners XII
Form 10-KSB
File No. 0-13309
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
Managing General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
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, 1999
[ ] 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, PO 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 the registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $32,144,000
State the aggregate market value of the voting partnership interests held by
non-affiliates 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, 1999. 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 "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. ARC II was 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 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, 1998, 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 estate
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
partnerships. In 1990, the Registrant lost one of its apartment properties to
foreclosure. On January 4, 1999, the Partnership sold its only commercial
property to an unaffiliated third party. The Partnership also has 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. In addition, the
Partnership sold Southpointe Apartments to an unaffiliated third party on August
6, 1999. As of December 31, 1999 the Partnership continues to own and operate
eight apartment complexes. (see "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
until October 1, 1998 for the Partnership's commercial property. 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 properties within the market area of
the Partnership'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 the apartments at the Registrant's properties and the rents that may be
charged for such apartments. While the Managing General Partner and its
affiliates own and/or control a significant number of apartment units in the
United States, such units represent an insignificant percentage of total
apartment units in the United States and competition for apartments is local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the 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 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 and IPT merged into AIMCO, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO acquired a 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.
Item 2. Description of Property:
The following table sets forth the Registrant's investments in properties as of
December 31, 1999:
<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 7/26/84 Fee ownership subject to Apartment
Harrisburg, Pennsylvania first and second mortgages(2) 324 units
Gateway Gardens 12/21/84 Fee ownership subject to Apartment
Apartments first and second mortgages(2) 328 units
Cedar Rapids, Iowa
Hunters Glen Apts - IV 01/31/85 Fee ownership subject to Apartment
Plainsboro, New Jersey a first mortgage (1) 264 units
Hunters Glen Apts - V 01/31/85 Fee ownership subject to Apartment
Plainsboro, New Jersey first and second mortgages(2) 304 units
Hunters Glen Apts - 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
Twin Lake Towers
Apartments 03/30/84 Fee ownership subject to Apartments
Westmont, Illinois first and second mortgages(1) 399 units
</TABLE>
(1) Property is held by a Limited Partnership in which the Registrant
ultimately owns a 100% interest.
(2) Properties are held by limited liability corporations of which the
Registrant is the sole member.
The Partnership also has a 44.5% investment in Princeton Meadows 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 G" of the consolidated financial statements included in
"Item 7. Financial Statements").
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.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Briarwood Apartments $ 1,949 $ 1,303 5-40 yrs (1) $ 660
Chambers Ridge Apts 11,938 7,350 5-40 yrs (1) 4,708
Gateway Gardens Apts 8,234 5,842 5-40 yrs (1) 2,444
Hunter Glen Apts-IV 11,697 7,397 5-40 yrs (1) 4,196
Hunter Glen Apts-V 13,590 8,621 5-40 yrs (1) 4,803
Hunter Glen Apts-VI 14,673 9,283 5-40 yrs (1) 5,141
Pickwick Place Apts 10,310 6,226 5-40 yrs (1) 3,803
Twin Lake Towers Apts 18,630 11,266 5-40 yrs (1) 6,685
$91,021 $57,288 $32,440
</TABLE>
(1) Straight line and accelerated
See "Note A" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation policy
and "Note M - Change in Accounting Principle".
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 1999 Rate Amortized Date (2) Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Briarwood Apartments
1st mortgage $ 1,511 7.83% 28.67 yrs 10/2003 $ 1,404
2nd mortgage 50 7.83% (1) 10/2003 50
Chambers Ridge Apts
1st mortgage 5,221 7.83% 28.67 yrs 10/2003 4,849
2nd mortgage 174 7.83% (1) 10/2003 174
Gateway Gardens
1st mortgage 6,092 7.83% 28.67 yrs 10/2003 5,657
2nd mortgage 203 7.83% (1) 10/2003 203
Hunters Glen Apts IV
1st mortgage 8,181 8.43% 28.67 yrs 10/2003 7,787
Hunters Glen Apts V
1st mortgage 8,528 7.83% 28.67 yrs 10/2003 7,920
2nd mortgage 285 7.83% (1) 10/2003 285
Hunters Glen Apts VI
1st mortgage 8,877 7.83% 28.67 yrs 10/2003 8,243
2nd mortgage 297 7.83% (1) 10/2003 297
Pickwick Place Apts
1st mortgage 6,309 9.10% 28 yrs 05/2005 5,775
Twin Lake Towers Apts
1st mortgage 10,534 7.83% 28.67 yrs 10/2003 9,782
2nd mortgage 352 7.83% (1) 10/2003 352
56,614 $52,778
Less unamortized
discounts (447)
$56,167
</TABLE>
(1) Interest only payments.
(2) 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 1999 and 1998 for each property
were as follows:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
Briarwood Apartments $ 6,778 $ 6,638 98% 97%
Chambers Ridge Apartments (1) 6,967 6,928 95% 92%
Gateway Gardens Apartments 6,712 6,507 97% 96%
Hunters Glen Apartments - IV 9,415 8,950 97% 97%
Hunters Glen Apartments - V 9,520 8,995 97% 97%
Hunters Glen Apartments - VI 9,341 8,846 96% 96%
Pickwick Place Apartments(2) 7,355 6,947 91% 95%
Twin Lake Towers Apartments 9,027 8,635 98% 97%
(1) Occupancy at Chambers Ridge Apartments increased due to the completion of
a major improvement project in 1998 which made the property more
marketable.
(2) Occupancy decreased at Pickwick Place Apartments due to increased
competition in the local market.
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 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, 1999, no residential tenant leases 10% or
more of the available rental space. All of the properties, are in good physical
condition subject to normal depreciation and deterioration as is typical for
assets of this type and age.
Real Estate Taxes and Rates:
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
Briarwood Apartments $ 79 3.46%
Chambers Ridge Apartments 167 2.88%
Gateway Gardens Apartments 265 3.16%
Hunters Glen Apartments-IV 301 2.67%
Hunters Glen Apartments-V 325 2.67%
Hunters Glen Apartments-VI 329 2.67%
Pickwick Place Apartments 213 7.73%
Twin Lake Towers Apartments 282 5.58%
Capital Improvements:
Briarwood Apartments: The Partnership completed approximately $82,000 in capital
expenditures at Briarwood Apartments as of December 31, 1999 consisting
primarily of air conditioning upgrades, carpet and vinyl replacement, electrical
work, exterior painting and structural improvements. These improvements were
funded from replacement reserves and cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $21,900.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Chambers Ridge Apartments: The Partnership completed approximately $1,952,000 in
capital expenditures at Chambers Ridge as of December 31, 1999 consisting
primarily of a roof replacement project, swimming pool improvements, parking lot
upgrades, water heater replacement, flooring and appliance replacements,
equipment purchases, exterior painting, and plumbing upgrades. These
improvements were funded from cash flow and replacement reserves. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $97,200. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
Gateway Gardens: The Partnership completed approximately $417,000 in capital
expenditures at Gateway Gardens as of December 31, 1999 consisting primarily of
interior improvements, electrical and heating improvements, flooring
replacements, major landscaping, and new appliances. These improvements were
funded primarily from cash flow and replacement reserves. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $98,400. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Hunters Glen IV: The Partnership completed approximately $407,000 in capital
expenditures at Hunters Glen IV as of December 31, 1999 consisting primarily of
interior improvements, parking lot upgrades, air conditioning upgrades and
grounds lighting. These improvements were funded primarily from cash flow and
replacement reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $79,200. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
Hunters Glen V: The Partnership completed approximately $458,000 in capital
expenditures at Hunters Glen V as of December 31, 1999 consisting primarily of
air conditioning upgrades, grounds lighting, parking lot upgrades, swimming pool
improvements, and interior improvements. These improvements were funded
primarily from cash flow and replacement reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $91,200.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Hunters Glen VI: The Partnership completed approximately $504,000 in capital
expenditures at Hunters Glen VI as of December 31, 1999 consisting primarily of
air conditioning upgrades, interior improvements, parking lot upgrades, grounds
lighting and swimming pool improvements. These improvements were funded
primarily from cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $98,400. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
Pickwick Place Apartments: The Partnership completed approximately $685,000 in
capital expenditures at Pickwick Place Apartments as of December 31, 1999
consisting primarily of flooring, roof replacements, renovations to its
recreational facilities, fencing upgrades, new appliances and replacement of
property due to a fire in June 1998 and August 1999. These improvements were
funded primarily from cash flow and replacement reserves and insurance proceeds.
The Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $100,800. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
Southpointe Apartments: The Partnership completed approximately $365,000 of
capital expenditures at Southpointe Apartments prior to its sale on August 6,
1999. The expenditures consisted of building improvements, carpet replacements
and new appliances and were funded from cash flow and replacement reserves.
Twin Lake Towers Apartments: The Partnership completed approximately $3,105,000
in capital expenditures at Twin Lake Towers as of December 31, 1999 consisting
primarily of HVAC condensing unit replacement, carpet replacement, elevator
upgrades, cabinet replacements, plumbing and electrical upgrades and structural
improvements. These improvements were funded primarily from cash flow and
replacement reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $119,700. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
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 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
"Item 7. 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.
The Partnership is unaware of any other pending or outstanding litigation that
is expected to have a material effect on the Partnership.
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, 1999.
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, 1999, the Partnership had 1,696 Limited Partners of record and
44,718 Limited Partnership Units outstanding. As of December 31, 1999,
affiliates of the Managing General Partner own 25,685 limited partnership units
or 57.437% 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.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999, as well as for the subsequent period
from January 1, 2000 to January 31, 2000 (see Item 6. Management's Discussion
and Analysis or Plan of Operation" for further details):
Distributions
Per Limited
Aggregate Partnership Unit
1998 $ 650,000 (1) $14.54
1999 3,165,000 (2) 65.79
1/1/00 - 1/31/00 120,000 (3) 2.66
(1) Distribution was made from surplus funds.
(2) Consists of $495,000 cash from operations and $2,670,000 of surplus funds.
(3) Distribution was declared in December 1999 and paid in January 2000. It
consists of cash from operations.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of 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 expenditures, to permit any additional distributions to its partners in
2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these tender offers, AIMCO and its affiliates currently own 25,685
limited partnership units in the Partnership representing 57.437% of the
outstanding units. 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. Consequently, AIMCO is in a position to 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.
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 operations. 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's net income for the year ended December 31, 1999 was
approximately $12,516,000 compared to a net loss of approximately $684,000 for
the corresponding period in 1998. The increase in net income for the year ended
December 31, 1999 compared to the year ended December 31, 1998 was primarily due
to an increase in total revenues resulting from the gain on sale of Cooper Point
Plaza and Southpointe Apartments, and to a lesser extent, the equity in income
from the sale of the Princeton Meadows Golf Course Joint Venture.
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 $2,363,000 on the sale as a result of the
undepreciated value of the property being written off and the payment of closing
costs. In addition, the Partnership recorded an extraordinary loss on early
extinguishment of debt of approximately $556,000 as a result of unamortized debt
discount 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 (see "Item 7. Financial Statements -
Note E").
On August 6, 1999, the Partnership sold Southpointe Apartments to an
unaffiliated third party. Upon closing, the purchaser agreed to assume the
mortgage note payable and other liabilities encumbering the property of
approximately $11,017,000 and to pay the related accrued interest of
approximately $487,000 and outstanding property taxes and other liabilities of
approximately $199,000. Consequently, the Registrant received no proceeds
relating to this transaction. The Partnership realized a gain of approximately
$8,528,000 on the sale.
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 the mortgage principal and accrued interest. The Joint
Venture recorded a gain on sale of approximately $3,090,000 after the write-off
of undepreciated fixed assets. For the year ended December 31, 1999 the
Partnership realized equity in income of the Joint Venture of approximately
$1,295,000, which included its equity in the gain on disposal of Princeton
Meadows Golf Course of $1,375,000 and the equity in loss on operations of
$80,000, as compared to equity in loss of the Joint Venture of approximately
$6,000 for the year ended December 31, 1998.
Excluding the impact of the sale of Cooper Point Plaza, Southpointe Apartments
and the Princeton Meadows Golf Course, net income increased approximately
$646,000 for the year ended December 31, 1999 as compared to the corresponding
period in 1998. The increase was the result of an increase in total revenues and
a decrease in total expenses. The increase in total revenues was primarily due
to an increase in rental income. Rental revenues increased as a result of
increases in average rental rates at all the Partnership's remaining properties
as well as increases in occupancy at Briarwood, Chambers Ridge, Gateway Gardens
and Twin Lake Towers which more than offset the decrease in occupancy at
Pickwick Place. The decrease in total expenses is primarily due to a decrease in
both operating and general and administrative expenses, which were partially
offset by an increase in depreciation expense. Operating expense decreased
primarily due to decreases in maintenance and insurance expense. The decrease in
maintenance expense is primarily due to the completion of the following major
improvement projects during the year ended December 31, 1998: a parking lot
project and interior and exterior building improvements at Chambers Ridge;
swimming pool repairs and interior building renovations at Hunters Glen IV, V,
and VI. The decrease in insurance expense is due to lower premiums as a result
of a change in insurance carriers late in 1998. Depreciation expense increased
primarily due to increased property improvements and replacements at all of the
properties during the year ended year ended December 31, 1999.
The decrease in general and administrative expense is due to a decrease in
general partner reimbursements and the decrease in management fees allowed to be
paid to the Managing General Partner based on a percentage of net cash flow from
operations. Included in general and administrative expense for the years ended
December 31, 1999 and 1998, are reimbursements to the Managing General Partner
allowed under the Partnership Agreement associated with its management of the
Partnership. 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.
During the year ended December 31, 1999, a casualty loss of approximately
$160,000 was recorded at Southpointe Apartments. The casualty loss resulted from
the write-off of assets that were replaced in 1999 as a result of damage caused
by a fire at the property in October 1998.
A net casualty gain of $352,000 was 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 receipts of insurance premiums.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. The effect of the change in 1999 was
to increase net income by $203,000 ($4.49 per limited partnership unit). The
cumulative effect, had this change been applied to prior periods, is not
material. The accounting principle change will not have an effect on cash flow,
funds available for distribution or fees payable to the Managing General Partner
and affiliates.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment property to
assess the feasibility of increasing rent, 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 December 31, 1999, the Partnership had cash and cash equivalents of
approximately $6,891,000, compared to approximately $7,611,000 at December 31,
1998. The decrease in cash and cash equivalents of approximately $720,000 is due
to approximately $8,600,000 of cash used in financing activities, which was
partially offset by approximately $6,620,000 of cash provided by operating
activities and, to a lesser extent, approximately $1,260,000 of cash provided by
investing activities. Cash provided by investing activities consisted primarily
of net proceeds from the sale of Cooper Point Plaza and distributions received
from the Princeton Meadows Joint Venture and net receipts from restricted
escrows maintained by the mortgage lender and repayment of an advance to the
Joint Venture which were partially offset by property improvements and
replacements. Cash used in financing activities consisted primarily of
distributions to partners and the repayment of mortgage principal upon the sale
of Cooper Pointe Plaza and, to a lesser extent, payments of principal made on
the mortgages encumbering the Registrant's properties and debt extinguishment
costs. The Registrant invest 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. The Partnership is
currently evaluating the capital improvement needs of the properties for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $706,800. Additional improvements may be considered and will depend on the
physical condition of the properties as well as anticipated cash flow generated
by the properties. The capital expenditures will be incurred only if cash is
available from operations or Partnership reserves. To the extent that such
budgeted capital improvements are completed, the Partnership'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
$56,167,000, 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 year ended December 31, 1999, distributions of approximately
$3,165,000 were declared and paid to partners, of which approximately $495,000
was paid from operations, ($484,000 paid to limited partners or $10.82 per
limited partnership unit) and $2,670,000 was paid from surplus funds ($2,458,000
paid to limited partners or $54.97 per limited partnership unit). Also, in
January 1999, 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 funds as of December 31, 1998. In addition, in
December 1999 a distribution of $120,000 ($119,000 paid to limited partners or
$2.66 per limited partnership unit) was declared and paid in January 2000 from
operations. There were no distributions paid during the year ended 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 2000 or subsequent periods.
Tender Offer
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these tender offers, AIMCO and its affiliates currently own 25,685
limited partnership units in the Partnership representing 57.437% of the
outstanding units. 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. Consequently, AIMCO is in a position to 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.
Year 2000 Compliance
General Description
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 Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted 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.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
ANGELES PARTNERS XII
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young, LLP Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and
1998
Consolidated Statement of Changes in Partners' Capital (Deficit) - Years
ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and
1998
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, 1999, and the related consolidated statements of
operations, changes in partners' capital (deficit) and cash flows for each of
the two years in the period ended December 31, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
As discussed in Note M to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
ANGELES PARTNERS XII
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents $ 6,891
Receivables and deposits, net of allowance for
doubtful accounts of $686 1,484
Restricted escrows 626
Other assets 968
Investment in joint venture (Note G) 4
Investment properties (Notes C and F):
Land $ 7,989
Buildings and related personal property 83,032
91,021
Less accumulated depreciation (57,288) 33,733
$ 43,706
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 1,846
Tenant security deposit liabilities 895
Accrued property taxes 789
Distribution payable 120
Other liabilities 607
Mortgage notes payable (Notes C and F) 56,167
Partners' Capital (Deficit)
General partner $ 111
Limited partners (44,718 units issued and
outstanding) (16,829) (16,718)
$ 43,706
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended
December 31,
1999 1998
Revenues:
Rental income $ 19,778 $ 20,639
Other income 1,475 1,420
Casualty gain -- 352
Gain on sale of investment
properties (Note J) 10,891 --
Total revenues 32,144 22,411
Expenses:
Operating 7,624 8,571
General and administrative 592 760
Depreciation 4,586 4,995
Interest 5,496 6,414
Property taxes 1,906 2,291
Loss on disposal of property -- 58
Casualty loss 160 --
Total expenses 20,364 23,089
Income (loss) before equity in income of
joint venture and extraordinary items 11,780 (678)
Equity in income (loss) of joint venture 1,295 (6)
Income (loss) before extraordinary items 13,075 (684)
Equity in extraordinary loss on the
extinguishment of debt of joint venture (Note G) (3) --
Extraordinary loss on extinguishment of debt (Note J) (556) --
Net income (loss) $ 12,516 $ (684)
Net income (loss) allocated to general partners $ 973 $ (7)
Net income (loss) allocated to limited partners 11,543 (677)
$ 12,516 $ (684)
Net income (loss) per limited partnership unit:
Income (loss) before extraordinary items $ 270.50 $ (15.14)
Extraordinary items (12.37) --
$ 258.13 $ (15.14)
Distributions per limited partnership unit $ 68.45 $ 14.54
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES PARTNERS XII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 44,773 $ 1 $ 44,773 $ 44,774
Partners' deficit
at December 31, 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)
Net income for the year
ended December 31, 1999 -- 973 11,543 12,516
Distributions to Partners -- (224) (3,061) (3,285)
Partners' capital (deficit)
at December 31, 1999 44,718 $ 111 $(16,829) $(16,718)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended
December 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 12,516 $ (684)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 4,586 4,995
Amortization of discounts, loan costs, and
leasing commissions 319 414
Equity in extraordinary loss on extinguishment of
debt of joint venture 3 --
Extraordinary loss on extinguishment of debt 556 --
Gain on sale of investment properties (10,891) --
Equity in (income) loss of joint venture (1,295) 6
Loss on disposal of asset -- 58
Casualty loss (gain) 160 (352)
Change in accounts:
Receivables and deposits 501 (311)
Other assets (43) 91
Accounts payable 167 25
Tenant security deposit liabilities (64) (1)
Accrued property taxes (161) 40
Other liabilities 266 (446)
Net cash provided by operating activities 6,620 3,835
Cash flows from investing activities:
Property improvements and replacements (6,850) (2,281)
Net receipts from restricted escrows 643 36
Repayment of advance to joint venture 149 --
Net insurance proceeds related to casualty gain -- 430
Proceeds from sale of investment properties 5,995 --
Distributions from joint venture 1,323 --
Net cash provided by (used in) investing activities 1,260 (1,815)
Cash flows from financing activities:
Payments on mortgage notes payable (802) (868)
Repayment of mortgage note (3,905) --
Distributions to partners (3,815) --
Debt extinguishment costs (78) --
Net cash used in financing activities (8,600) (868)
Net increase in cash and cash equivalents (720) 1,152
Cash and cash equivalents at beginning of period 7,611 6,459
Cash and cash equivalents at end of period $ 6,891 $ 7,611
Supplemental disclosure of cash flow information:
Cash paid for interest $ 5,294 $ 6,651
Supplemental disclosure of non-cash flow information:
Property improvements and replacements included
in accounts payable $ 1,124 $ --
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
ANGELES PARTNERS XII
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(in thousands)
Supplemental disclosure of non-cash activities:
In August 1999, Southpointe Apartments was sold to an unaffiliated third party.
Upon closing, the purchaser agreed to assume the mortgage note payable
encumbering the property and to pay the related accrued interest and outstanding
property taxes, resulting in no proceeds being received by the Partnership. In
connection with the sale, investment properties, mortgage notes payable and
other liabilities were adjusted by approximately $3,175,000, $11,017,000 and
$686,000, respectively, for non-cash activity for the year ended December 31,
1999.
At December 31, 1999 and 1998 distributions payable was adjusted by $120,000 and
$650,000 for unpaid distributions.
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Angeles Partners XII (the "Partnership" or "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 (herein 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. ARC II was 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 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, 1999, the Partnership operates eight residential
properties in or near major urban areas in the United States.
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.
Allocations 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) fourth, 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 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, and money market accounts. At certain times, the amount of cash
deposited at a bank may exceed the limit on insured deposits. Cash balances
include approximately $814,000 at December 31, 1999 that are maintained by the
affiliated management company on behalf of affiliated entities in a cash
concentration account.
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 $2,116,000 are included in other assets
and are being amortized on a straight-line basis over the lives of the loans.
Accumulated amortization is approximately $1,282,000 at December 31, 1999, 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 IV, V and VI 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, 1999, is approximately
$18,000.
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 approximately $11,000 at December 31, 1999.
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 a minimum of
$200 or a maximum of $400 per apartment unit or $404,000 to $808,000. The
balance in the General Reserve Account at December 31, 1999, is
approximately $597,000.
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 eight apartment
complexes which are stated at cost. Acquisition fees are capitalized as a cost
of real estate. In accordance with Financial Accounting Standards 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, 1999 and 1998, 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
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.
Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (see Note M).
Leases: The Partnership generally leases apartment units for twelve month terms
or less. 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: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" 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
segments).
Advertising Costs: The Partnership expenses the costs of advertising as
incurred. Advertising costs of approximately $222,000 and $214,000 for the years
ended December 31, 1999 and 1998, respectively, are included in operating
expense.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and IPT merged into AIMCO, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO acquired a 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 - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Standard Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
Briarwood Apartments
<S> <C> <C> <C> <C> <C>
1st mortgage $ 1,511 $ 12 7.83% 10/2003 $ 1,404
2nd mortgage 50 (*) 7.83% 10/2003 50
Chambers Ridge Apts
1st mortgage 5,221 41 7.83% 10/2003 4,849
2nd mortgage 174 1 7.83% 10/2003 174
Gateway Gardens
1st mortgage 6,092 48 7.83% 10/2003 5,657
2nd mortgage 203 1 7.83% 10/2003 203
Hunters Glen Apts IV
1st mortgage 8,181 65 8.43% 10/2003 7,787
Hunters Glen Apts V
1st mortgage 8,528 67 7.83% 10/2003 7,920
2nd mortgage 285 2 7.83% 10/2003 285
Hunters Glen Apts VI
1st mortgage 8,877 70 7.83% 10/2003 8,243
2nd mortgage 297 2 7.83% 10/2003 297
Pickwick Place Apts
1st mortgage 6,309 54 9.1% 05/2005 5,775
Twin Lake Towers Apts
1st mortgage 10,534 83 7.83% 10/2003 9,782
2nd mortgage 352 2 7.83% 10/2003 352
56,614 $448 $52,778
Less unamortized
discounts (447)
$56,167
</TABLE>
(*) Monthly payment is less than $1,000
The mortgage notes payable are nonrecourse and are secured by pledge 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, 1999, are as follows (in thousands):
2000 $ 869
2001 941
2002 1,019
2003 47,851
2004 117
Thereafter 5,817
$56,614
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 income (loss) and Federal
taxable income (in thousands, except unit data):
1999 1998
Net income (loss) as reported $ 12,516 $ (684)
Add (deduct):
Depreciation differences 719 1,081
Gain on disposition of investment
property (884) --
Unearned income 107 62
Equity in income of joint venture (614) --
Early extinguishment of debt 512 --
Discounts on mortgage notes payable (27) (7)
Casualty -- (259)
Other (116) 271
Federal taxable income $ 12,213 464
Federal taxable income
per limited partnership unit $ 253.89 $ 10.27
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net liabilities $(16,718)
Land and buildings 8,466
Accumulated depreciation (9,634)
Syndication and distribution costs 6,093
Investment in Joint Venture (4)
Distributions payable 120
Other 296
Net liabilities - Federal tax basis $ (11,381)
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 expenses owed
to the Managing General Partner and affiliates for the years ended December 31,
1999 and 1998 were paid or accrued:
1999 1998
(in thousands)
Property management fees (included in operating expense) $1,036 $1,034
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) 931 504
(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. No fee was due for 1999.
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner, were entitled to receive 5% of gross receipts from all of the
Registrant's residential properties as compensation for providing property
management services. The Registrant paid to such affiliates $1,036,000 and
$1,016,000 for the years ended December 31, 1999 and 1998, respectively. Also,
during 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. The Registrant paid to such affiliates $18,000 for the nine months
ended September 30, 1998. Effective October 1, 1999 (the effective date of the
Insignia Merger), these services for the commercial property were performed by
an unrelated party.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $931,000 and
$504,000 for the years ended December 31, 1999 and 1998, respectively. Included
in these amounts is approximately $570,000 and $56,000 of construction oversight
reimbursements for the years ended December 31, 1999 and 1998, respectively.
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. The Partnership paid a distribution of $186,000 to the Managing
General Partner related to the sale of Cooper Point Plaza in 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 Loans") to the Princeton Meadows Golf Course Joint
Venture. 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 was 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.
In addition, the Partnership made 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. In June 1999, the advance
receivable from the Joint Venture of approximately $149,000 was paid off from
the proceeds of the sale of the golf course.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these tender offers, AIMCO and its affiliates currently own 25,685
limited partnership units in the Partnership representing 57.437% of the
outstanding units. 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. Consequently, AIMCO is in a position to 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.
Note F - Investment Properties and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent
Description Encumbrances Land Property to Acquisition
(in thousands) (in thousands)
Investment Properties
Briarwood Apartments $ 1,561 $ 136 $ 1,409 $ 404
Chambers Ridge Apts 5,395 527 7,823 3,588
Gateway Gardens Apts 6,295 255 6,206 1,773
Hunters Glen Apts IV 8,181 1,552 8,324 1,821
Hunters Glen Apts V 8,813 1,820 9,759 2,011
Hunters Glen Apts VI 9,174 1,981 10,620 2,072
Pickwick Place Apts 6,309 603 6,552 3,155
Twin Lake Towers Apts 10,886 1,115 12,806 4,709
Totals $56,614 $7,989 $63,499 $19,533
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Buildings
And
Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Briarwood Apts $ 136 $ 1,813 $ 1,949 $ 1,303 06/25/85 10-20
Chambers Ridge Apts 527 11,411 11,938 7,350 07/26/84 10-20
Gateway Gardens Apt 255 7,979 8,234 5,842 12/21/84 10-20
Hunters Glen Apt IV 1,552 10,145 11,697 7,397 01/31/85 10-40
Hunters Glen Apt V 1,820 11,770 13,590 8,621 01/31/85 10-40
Hunters Glen Apt VI 1,981 12,692 14,673 9,283 01/31/85 10-40
Pickwick Place Apts 603 9,707 10,310 6,226 05/11/84 10-20
Twin Lake Towers Apt 1,115 17,515 18,630 11,266 03/30/84 10-20
Totals $7,989 $83,032 $91,021 $57,288
</TABLE>
The depreciable lives included above are for the building 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,
1999 1998
(in thousands)
Investment Properties
Balance at beginning of year $102,413 $100,619
Property improvements 7,975 2,281
Dispositions of assets (19,367) (487)
Balance at end of year $ 91,021 $102,413
Accumulated Depreciation
Balance at beginning of year $ 65,275 $ 60,629
Additions charged to expense 4,586 4,995
Disposal of assets (12,573) (349)
Balance at end of year $ 57,288 $ 65,275
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is $99,363,000 and $111,389,000 respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1999 and 1998, is $66,923,000 and $75,321,000, respectively.
Note G - Investment in Joint Venture
The Partnership has 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. The sale resulted in net proceeds of approximately $3,411,000 after
payment of closing costs, and repayment of mortgage principal and accrued
interest. The Joint Venture recorded a gain on sale of approximately $3,090,000
after the write-off of undepreciated fixed assets. 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 is approximately $1,375,000 and
its equity in loss on operations of the Joint Venture amounted to approximately
$80,000. 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.
Condensed balance sheet information of the Joint Venture at December 31, 1999,
is as follows (in thousands):
Assets
Cash $ 17
Total $ 17
Liabilities and Partners' Capital
Other liabilities $ 7
Partners' capital 10
Total $ 17
The condensed statement of operations of the Joint Venture for the years ended
December 31, 1999 and 1998, are summarized as follows (in thousands):
Years Ended
December 31,
1999 1998
Revenues $ 104 $ 1,667
Costs and expenses (283) (1,681)
Loss before gain on sale of
investment property and extraordinary
loss on extinguishment of debt (179) (14)
Gain on sale of investment property 3,090 --
Extraordinary loss on extinguishment
of debt (7) --
Net income (loss) $2,904 $ (14)
The Partnership recognized its 44.5% equity income of approximately $1,295,000
and equity loss of approximately $6,000 in the Joint Venture for the years ended
December 31, 1999 and 1998, respectively. The Partnership also recognized an
extraordinary loss on extinguishment of debt of $3,000 for the year ended
December 31, 1999.
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 commenced with skimmers 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 H - Casualties
During the year ended December 31, 1999, a net casualty loss of approximately
$160,000 was recorded at Southpointe Apartments. The casualty loss resulted from
the write-off of assets that were replaced in 1999 as a result of damage caused
by a fire at the property in October 1998.
A net casualty gain of $352,000 was 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.
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.
Note J - Sale of Properties
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 $2,363,000 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 debt discount 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 (see Note E). In February 1999, the Partnership made a distribution of
approximately $2,032,000 representing proceeds from the sale of Cooper Point
Plaza. Revenues from Cooper Pointe Plaza included in the accompanying
consolidated statements of operations were $0 and $738,000 for the years ended
December 31, 1999 and 1998, respectively.
On August 6, 1999, the Partnership sold Southpointe Apartments to an
unaffiliated third party. Upon closing, the purchaser agreed to assume the
mortgage note payable and other liabilities encumbering the property of
approximately $11,017,000 and to pay the related accrued interest of
approximately $487,000 and outstanding property taxes and other liabilities of
approximately $199,000. Consequently, the Registrant received no proceeds
relating to this transaction. The Partnership realized a gain of approximately
$8,528,000 on the sale. Revenues from Southpointe Apartments included in the
accompanying consolidated statements of operations were $1,227,000 and
$2,057,000 for the years ended December 31, 1999 and 1998, respectively.
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 eight apartment complexes located in five
states in the United States Iowa (2), Pennsylvania (1), New Jersey (3), Indiana
(1), and Illinois (1). The Partnership rents apartment units to tenants for
terms that are typically less than twelve months.
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.
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 1999 and 1998 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.
1999 Residential Other Totals
Rental income (loss) $19,778 $ -- $19,778
Other income 1,243 232 1,475
Interest expense 5,490 6 5,496
Depreciation 4,586 -- 4,586
General and administrative expense -- 592 592
Casualty loss (160) -- (160)
Gain on sale of investment
properties 8,528 2,363 10,891
Equity in income of Joint Venture -- 1,295 1,295
Extraordinary loss on the
extinguishment of debt -- (556) (556)
Equity in extraordinary loss on
debt extinguishment of Joint
Venture -- (3) (3)
Segment profit 9,804 2,712 12,516
Total assets 40,479 3,227 43,706
Capital expenditures for investment
properties 7,975 -- 7,975
1998 Residential Other Totals
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 income of Joint Venture -- (6) (6)
Segment loss 277 (961) (684)
Total assets 39,066 10,477 49,543
Capital expenditures
for investment properties 2,281 -- 2,281
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 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.
The Partnership is unaware of any other pending or outstanding litigation that
is expected to have a material effect on the Partnership.
Note M - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. The effect of the change in 1999 was
to increase net income by $203,000 ($4.49 per limited partnership unit). The
cumulative effect, had this change been applied to prior periods, is not
material. The accounting principle change will not have an effect on cash flow,
funds available for distribution or fees payable to the Managing General Partner
and affiliates.
Item 8. Changes in and Disagreements with Accountant on Accounting and Financial
Disclosures
None.
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"), was
a wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February
25, 1998, MAE GP 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 42 Executive Vice President and Director
Martha L.Long 40 Senior Vice President and Controller
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.
Martha L. Long has been Senior Vice President and Controller of the Managing
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO and its joint filers failed to timely file a Form 4 with respect to its
acquisition of Units.
Item 10. Executive Compensation
None of the directors and officers of the Managing General Partner received any
remuneration 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 Partner Units of the Registrant
as of December 31, 1999.
Entity Number of Units Percentages
Cooper River Properties LLC
(an affiliate of AIMCO) 4,607 10.302%
Broad River Properties
(an affiliate of AIMCO) 8,002 17.894%
Insignia Properties, LP
(an affiliate of AIMCO) 1,824 4.079%
AIMCO Properties, LP
(an affiliate of AIMCO) 11,252 25.162%
Cooper River Properties, LLC, Broad River Properties and Insignia Properties LP
are indirectly ultimately owned by AIMCO. The business address for all except
AIMCO Properties LP is 55 Beattie Place, Greenville, SC 29602. AIMCO Properties,
LP is indirectly ultimately controlled by AIMCO. Its business address is 2000
South Colorado Blvd., Denver, Colorado 80222.
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 Partner's 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 expenses owed
to the Managing General Partner and affiliates for the years ended December 31,
1999 and 1998 were paid or accrued:
1999 1998
(in thousands)
Property management fees $1,036 $1,034
Partnership management fee (1) -- 135
Reimbursement for services of affiliates 931 504
(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. No fee was due for 1999.
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner, were entitled to receive 5% of gross receipts from all of the
Registrant's residential properties as compensation for providing property
management services. The Registrant paid to such affiliates $1,036,000 and
$1,016,000 for the years ended December 31, 1999 and 1998, respectively. Also,
during 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. The Registrant paid to such affiliates $18,000 for the nine months
ended September 30, 1998. Effective October 1, 1999 (the effective date of the
Insignia Merger), these services for the commercial property were performed by
an unrelated party.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $931,000 and
$504,000 for the years ended December 31, 1999 and 1998, respectively. Included
in these amounts is approximately $570,000 and $56,000 of construction oversight
reimbursements for the years ended December 31, 1999 and 1998, respectively.
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. The Partnership paid a distribution of $186,000 to the Managing
General Partner related to the sale of Cooper Point Plaza in 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 Loans") to the Princeton Meadows Golf Course Joint
Venture. 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.
In addition, the Partnership made 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. In June 1999, the advance
receivable from the Joint Venture of approximately $149,000 was paid off from
the proceeds of the sale of the golf course.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these tender offers, AIMCO and its affiliates currently own 25,685
limited partnership units in the Partnership representing 57.437% of the
outstanding units. 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. Consequently, AIMCO is in a position to 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.
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for
Change in Accounting Principle, is filed as an exhibit to this
report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
(b) Reports on Form 8-K filed during the fourth quarter of 1999:
None.
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/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: March 30, 2000
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities on the date
indicated.
/s/Patrick J. Foye Executive Vice President Date: March 30, 2000
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date: March 30, 2000
Martha L. Long and Controller
ANGELES PARTNERS XII
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 8-K dated March 30, 1984,
incorporated herein by reference.
10.2 Purchase and Sale Agreement with Exhibits - Pickwick Place
Apartments filed in Form 8-K dated May 11, 1984, incorporated
herein by reference.
10.3 Purchase and Sale Agreement with Exhibits - Chambers Ridge
Apartments filed in Form 8-K dated July 26, 1984, incorporated
herein by reference.
10.4 Purchase and Sale Agreement with Exhibits - Park Village Plaza
filed in Form 8-K dated December 21, 1984, incorporated herein
by reference.
10.5 Purchase and Sale Agreement with Exhibits - Gateway Gardens
Apartments filed in Form 8-K 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 8-K dated February 1,
1985, incorporated herein by reference.
10.7 Purchase and Sale Agreement with Exhibits - Meadows Apartments
filed in Form 8-K dated June 12, 1985, incorporated herein by
reference
10.8 Purchase and Sale Agreement with Exhibits - Briarwood
Apartments filed in Form 8-K 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 10-Q 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,
1998, 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, 1999.
10.19 Purchase and Sale Agreement between Registrant and K&D
Enterprises, Inc., an Ohio corporation, dated August 5, 1999
filed with Form 8-K dated August 20, 1999 and filed August 20,
1999.
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.
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.
27 Financial Data Schedule is filed as an Exhibit to this report.
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Angeles Realty Corporation II
Managing General Partner of Angeles Partners XII
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note M of Notes to the Consolidated Financial Statements of Angeles Partners XII
included in its Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. You have
advised us that you believe that the change is to a preferable method in your
circumstances because it provides a better matching of expenses with the related
benefit of the expenditures and is consistent with policies currently being used
by your industry and conforms to the policies of the Managing General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners XII 1999 Fourth Quarter 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 6,891
<SECURITIES> 0
<RECEIVABLES> 1,484
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 91,021
<DEPRECIATION> 57,288
<TOTAL-ASSETS> 43,706
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 56,167
0
0
<COMMON> 0
<OTHER-SE> (16,718)
<TOTAL-LIABILITY-AND-EQUITY> 43,706
<SALES> 0
<TOTAL-REVENUES> 32,144
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,364
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,496
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (556)
<CHANGES> 0
<NET-INCOME> 12,516
<EPS-BASIC> 258.13 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
