FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-13192
ANGELES INCOME PROPERTIES LTD. III
(Exact name of small business issuer as specified in its charter)
California 95-3903984
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
(864) 239-1000
Issuer's telephone number
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES INCOME PROPERTIES. LTD. III
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents:
Unrestricted $ 1,356
Restricted--tenant security deposits 45
Investment in joint venture 1,059
Accounts receivable, less allowance for
doubtful accounts of $17 29
Escrow for taxes 139
Other assets 260
Restricted escrows 219
Investment properties:
Land
Buildings and related personal property $ 1,527
12,844
14,371
Less accumulated depreciation (8,915) 5,456
$ 8,563
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 68
Tenant security deposits 47
Accrued taxes 22
Other liabilities 55
Mortgage note payable 3,777
Partners' (Deficit) Capital
General partners $ (330)
Limited partners capital (86,778
units issued and outstanding) 4,924 4,594
$ 8,563
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b) ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 386 $ 451 $ 895 $ 851
Other income 17 33 31 46
Total revenues 403 484 926 897
Expenses:
Operating 103 103 207 213
General and administrative 30 67 91 123
Maintenance 127 43 159 80
Depreciation 168 162 331 323
Interest 91 109 182 215
Bad debt expense -- 12 -- 23
Property taxes 39 41 80 63
Total expenses 558 537 1,050 1,040
Loss before equity in income
(loss) of joint venture (155) (53) (124) (143)
Equity in income (loss) of
joint venture (Note B) 7,203 (285) 6,968 (526)
Net income (loss) $ 7,048 $ (338) $ 6,844 $ (669)
Net income (loss) allocated
to general partners (1%) $ 70 $ (3) $ 68 $ (7)
Net income (loss) allocated
to limited partners (99%) 6,978 (335) 6,776 (662)
Net income (loss) $ 7,048 $ (338) $ 6,844 $ (669)
Net income (loss) per
limited partnership unit $ 80.41 $ (3.86) $ 78.08 $ (7.63)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 86,920 $ 1 $ 43,460 $ 43,461
Partners' deficit at
December 31, 1996 86,778 $ (398) $ (1,852) $ (2,250)
Net income for the six months
ended June 30, 1997 -- 68 6,776 6,844
Partners' (deficit) capital
at June 30, 1997 86,778 $ (330) $ 4,924 $ 4,594
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Net income (loss) $ 6,844 $ (669)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Equity in (income) loss of joint venture (6,968) 526
Depreciation 331 323
Amortization of loan costs and
leasing commissions 21 42
Bad debt expense -- 23
Change in accounts:
Restricted cash 3 (1)
Accounts receivable (18) (28)
Escrows for taxes (25) (71)
Other assets 22 4
Accounts payable 41 (1)
Tenant security deposit liabilities (1) 1
Property taxes (19) (25)
Other liabilities (5) (20)
Net cash provided by operating
activities 226 104
Cash flows from investing activities:
Property improvements and replacements (209) (50)
Advances to joint venture -- (612)
Deposits to restricted escrows (12) --
Net cash used in investing activities (221) (662)
Cash flows from financing activities:
Payments on mortgage notes payable (20) (27)
Loan costs paid -- (37)
Net cash used in financing activities (20) (64)
Net decrease in unrestricted cash
and cash equivalents (15) (622)
Unrestricted cash and cash equivalents at
beginning of period 1,371 1,888
Unrestricted cash and cash equivalents at
end of period $ 1,356 $ 1,266
Supplemental disclosure of cash flow information:
Cash paid for interest $ 174 $ 189
See Accompanying Notes to Consolidated Financial Statements
e) ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Angeles Income Properties,
Ltd. III (the "Partnership" or "Registrant") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of Angeles Realty Corporation II, (the "Managing General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six month periods ended June 30, 1997, are not necessarily indicative
of the results that may be expected for the fiscal year ended December 31, 1997.
For further information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-KSB for the fiscal year
ended December 31, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - INVESTMENT IN JOINT VENTURE
The Partnership has a 33.3% investment in Northtown Mall Partners ("Northtown")
which is shown as "Investment in joint venture" on the balance sheet. The
investment property, Northtown Mall, was sold in May 1997, but effective April
1, 1997. The condensed balance sheet information as of June 30, 1997, for
Northtown is as follows:
Northtown
(in thousands)
Assets
Cash $ 1,524
Total Assets $ 1,524
Liabilities
Liabilities $ 1,524
Total Liabilities $ 1,524
The condensed profit and loss statements for the three and six months ended June
30, 1997 and 1996, for Northtown are as follows:
(in thousands)
Three Months Ended
June 30,
1997 1996
Revenue $ 31 $ 2,417
Costs and expenses (122) (3,271)
Gain on sale of investment property 23,632 --
Net income (loss) $ 23,541 $ (854)
(in thousands)
Six Months Ended
June 30,
1997 1996
Revenue $ 2,727 $ 4,990
Costs and expenses (3,521) (6,564)
Gain on sale of investment property 23,632 --
Net income (loss) $ 22,838 $ (1,574)
The Partnership realized equity income from Northtown of $6,968,000 for the six
months ended June 30, 1997 and realized equity loss of $526,000 for the six
months ended June 30, 1996.
The Partnership accounts for its 33.3% investment in Northtown using the equity
method of accounting. Under the equity method, the Partnership records its
equity interest in income and 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 (See "Note D" for information regarding the sale of this
investment property).
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following expenses owed to the Managing General Partner and affiliates
during the six months ended June 30, 1997 and June 30, 1996, were paid or
accrued:
1997 1996
(in thousands)
Property management fees $35 $32
Reimbursement for services of affiliates 62 88
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Managing General Partner. An affiliate of the
Managing General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency which was later acquired by the
agent who placed the current year's master policy. The current agent assumed
the financial obligations to the affiliate of the Managing General Partner who
receives payments on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
Managing General Partner by virtue of the agent's obligations is not
significant.
NOTE D - SALE OF NORTHTOWN MALL
On May 12, 1997, the Partnership sold Northtown Mall to an affiliate of the
lender. The sale resulted in net proceeds of approximately $1,200,000 after
payment of closing costs, and the gain on the sale amounted to approximately
$23,632,000. The economic closing of the sale of Northtown Mall was as of April
1, 1997, at which time the Partnership was released from the mortgage note
secured by this property in the amount of approximately $51,326,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of one apartment complex and one
commercial property. The following table sets forth the average occupancy of
the properties for the six months ended June 30, 1997 and 1996:
Average Occupancy
1997 1996
Lake Forest Apartments
Brandon, Mississippi (1) 91% 89%
Poplar Square Shopping Center
Medford, Oregon 93% 94%
(1) This property is competing against new complexes in the area and also has
physical deficiencies that are being addressed. The Managing General
Partner is optimistic that occupancy will increase.
The Partnership realized net income of $7,048,000 and $6,844,000, respectively,
for the three and six months ended June 30, 1997, as compared to net losses of
$338,000 and $669,000, respectively, for the three and six months ended June 30,
1996. The net income for the three and six months ended June 30, 1997, is due to
the equity in income of the joint venture, as a result of the gain realized on
the sale of Northtown in the second quarter of 1997 (see "Note D"). For the six
months ended June 30, 1997, versus 1996, loss before equity in income (loss) of
the joint venture decreased due to an overall increase in total revenues, which
was only partially offset by an increase in total expenses.
Rental income increased during the six months ended June 30, 1997, as compared
to the six months ended June 30, 1996, due to the increase in occupancy and
average annual rental rates at Lake Forest Apartments. Although, for the three
months ended June 30, 1997, versus the same period in 1996, there was a decrease
in rental income due to a slight decrease in occupancy at Lake Forest Apartments
during the second quarter of 1997. Other income decreased during the six months
ended June 30, 1997, as compared to the six months ended June 30, 1996, due to a
decrease in interest income as a result of a decrease in cash investments. The
Partnership began the 1996 year with over $1,800,000 in cash and was able to
invest a significant portion of this cash until it was advanced to Northtown
(See discussion below). Partially offsetting the overall increase in income was
an increase in property tax expense and an increase in maintenance expense.
Property tax expense increased due to a refund in January 1996 for an
overpayment of 1995 property taxes relating to Poplar Square Shopping Center.
Maintenance expense increased at Lake Forest Apartments due to an exterior
painting project and other various exterior building improvements undertaken in
an effort to improve the appearance of the property. Partially offsetting this
increase in overall expenses was a decrease in general and administrative
expenses due to a decrease in professional services, combined with a decrease in
reimbursements for services of affiliates. Also, interest expense decreased due
to the refinancing of the mortgage debt secured by Poplar Square Shopping Center
in November 1996. This debt was refinanced at a lower interest rate.
Bad debt expense for the three and six months ended June 30, 1996, was a result
of an increase in the reserve required based on a review of tenants' accounts at
the Poplar Square Shopping Center. No such reserve was required during the six
months ended June 30, 1997.
On May 12, 1997, the Partnership sold Northtown Mall to an affiliate of the
lender. The sale resulted in net proceeds of approximately $1,200,000 after
payment of closing costs, and the gain on the sale amounted to approximately
$23,632,000. The Partnership's pro-rata share of this gain is included in
equity in income of the joint venture. The economic closing of the sale of
Northtown Mall is as of April 1, 1997, at which time the Partnership was
released from the mortgage note of approximately $51,326,000.
Included in maintenance expense for the six months ended June 30, 1997, is
$82,000 of major repairs and maintenance comprised of parking lot seal-coating
and repairs, exterior building improvements, and exterior painting. For the six
months ended June 30, 1996, $4,000 of major repairs and maintenance, comprised
of exterior building improvements, is included in maintenance expense.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expenses. As part of this plan, the Managing General Partner attempts to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Managing General Partner will be able to sustain
such a plan.
At June 30, 1997, the Partnership had unrestricted cash and cash equivalents of
$1,356,000 compared to $1,266,000 at June 30, 1996. Net cash provided by
operating activities increased primarily as a result of the timing of payment of
operating expenses out of accounts payable and also due to a lesser increase in
tax escrows. Net cash used in investing activities decreased due to the
decrease in advances to joint venture. Prior to the sale of the property, the
Northtown Mall property had continued to experience cash shortfalls and had been
dependent upon the Partnership and Angeles Income Properties, Ltd. IV (the 66.7%
owner of Northtown) to cover such shortfalls in order to meet operating and debt
service requirements for this property (see discussion at "Note D" regarding
this investment property). During the six months ended June 30, 1996, the
Partnership advanced $612,000 to Northtown. There were no advances to Northtown
during the six months ended June 30, 1997. Partially offsetting the decrease in
advances to joint venture was an increase in cash used for property improvements
and replacements at Lake Forest Apartments. Net cash used in financing
activities decreased due to the loan costs incurred in 1996 in an effort to
refinance the mortgage indebtedness secured by the Poplar Square Shopping
Center. This mortgage indebtedness was refinanced in November 1996. As a
result of the refinance, the monthly payments to service this debt decreased
causing a decrease in payments on the mortgage note payable.
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 properties to adequately maintain the physical
assets and other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of $3,777,000, which is secured by the Poplar Square
Shopping Center investment property, carries a stated interest rate of 9.2% and
matures in November 2006. Future cash distributions will depend on the levels of
net cash generated from operations, property sales and the availability of cash
reserves.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 10.16 Sales Agreement among Northtown Mall Partners, a
California general partnership, Northtown Associates, a
Delaware general partnership, and State of Wisconsin
Investment Board, an independent state agency, and
Northtown LLP, a Minnesota limited liability partnership
dated May 5, 1997.
Exhibit 10.17 General Conveyance by Northtown Mall Partners, a
California general partnership, dated May 5, 1997.
Exhibit 10.18 Termination of Agreements and Assignment of Accounts
between Northtown Mall Partners, a California general
partnership and Northtown Associates, a Delaware general
partnership and State of Wisconsin Investment Board, an
independent state agency, made as of May 5, 1997.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
No reports on form 8-K were filed during the three months ended
June 30, 1997.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES INCOME PROPERTIES, LTD. III
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long
Robert D. Long
Vice President/CAO
Date: August 5, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties Ltd. III 1997 Second Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000720460
<NAME> ANGELES INCOME PROPERTIES LTD. III
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,356
<SECURITIES> 0
<RECEIVABLES> 29
<ALLOWANCES> 17
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,371
<DEPRECIATION> 8,915
<TOTAL-ASSETS> 8,563
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 3,777
0
0
<COMMON> 0
<OTHER-SE> 4,594
<TOTAL-LIABILITY-AND-EQUITY> 8,563
<SALES> 0
<TOTAL-REVENUES> 926
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,050
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 182
<INCOME-PRETAX> 6,844
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,844
<EPS-PRIMARY> 78.08<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
AGREEMENT
THIS AGREEMENT, made this 5th day of May, 1997, among Northtown Mall
Partners, a California general partnership ("Seller"), Northtown Associates, a
Delaware general partnership, and state of Wisconsin Investment Board, an
independent state agency created pursuant to the laws of the state of Wisconsin
(collectively, "Lender"), and Northtown LLP, a Minnesota limited liability
partnership in which the sole partners are Lender ("Buyer").
RECITALS
Seller owns the Northtown Mall Shopping Center in the City of Blaine,
Anoka County, Minnesota (the "Shopping Center").
Lender and Seller are parties to (i) a Loan Agreement dated March 15,
1991, between Lender, as lender, and Seller, as borrower, providing for a loan
(the "Loan") of up to $58,000,000 (the "Loan Agreement"); (ii) a $58,000,000
promissory note dated March 15, 1991, between Seller, as maker, and Lender, as
payee (the "Note") which evidences the Loan; (iii) a Combination Mortgage,
Security Agreement and Fixture Financing Statement dated March 15, 1991, between
Seller, as mortgagor, and Lender, as mortgagee, mortgaging the Shopping Center
as security for the Note (the "Mortgage"); (iv) a Collateral Assignment of Rents
and Leases dated March 15, 1991, between Seller, as assignor, and Lender, as
assignee, assigning leases and rents and other income from the Shopping Center
as additional security for the Note (the "Assignment of Rents:); (v) a
Collateral Assignment of Licenses and contracts dated march 15, 1991, between
Seller, as assignor, and Lender, as assignee, assigning licenses, contracts and
other items as additional security for the Note (the "Collateral Assignment");
(vi) a Tax and Insurance Premium Deposit Agreement dated March 15, 1991, among
Seller, Lender and Norwest Bank Minnesota (the "Tax Deposit Agreement"),
providing for the creation and funding of a tax and insurance escrow account
which has been established and is being maintained as Norwest Bank account
#12628300 (the "Tax Account"); (vii) a Reserve Account Deposit Agreement dated
March 15, 1991, among Seller, Lender and Norwest Bank Minnesota (the
"Improvement Deposit Agreement"), providing, among other things, for the
creation, investment and distribution of a "5% Reserve Account" which has been
established and is being maintained as Norwest Bank account #12628400 (the
"Reserve Account"); (viii) an Option Agreement dated March 15, 1991, between
Seller, as optionor, and Lender, as optionee, granting Lender an option to
purchase the Shopping Center (the "Option Agreement"); (ix) a Grant of Right of
First Refusal and Restriction on Transfer dated March 15, 1991, between Seller
and Lender, granting Lender a right of first refusal to purchase the Shopping
Center (the "First Refusal Agreement"); and (x) a Collateral Assignment of Real
Estate Management Agreement dated March 15, 1991, between Seller and Lender,
collaterally assigning to Lender seller's interest under the management
agreement for the Shopping Center (the "Management Agreement Assignment"). The
Note, Mortgage, Assignment of Rents, Collateral Assignment, Option Agreement,
First Refusal Agreement and Management Agreement Assignment are called
collectively the "Loan Documents".
Because the contractor for the improvement of the HomePlace space in
the Shopping Center has not been paid in full, the mechanics liens listed on
Exhibit A hereto (the "Liens") have been filed against the Shopping Center by
the contractor and some of its subcontractors. In addition, the leasing
commission payable to Madison Marquette Realty Services and co-broker in the
amount of $207,192.00 (the "HomePlace Commission") with respect to the HomePlace
lease has not been paid. An action to foreclose the Liens captioned C.F. Haglin
& Sons, Inc. vs. Northtown Mall Partners, et. al., Court File No. C1-97-898 (the
"Action") has been commenced in the district court for the Tenth Judicial
District of Minnesota.
Lender has exercised its option to purchase the Shopping Center
pursuant to the Option Agreement, with a May 12, 1997, closing date established
by Lender's notice of exercise, and has assigned its purchase right to Buyer.
The unpaid balance of the Note is about $51,500.000. The Purchase price for the
Shopping Center as determined pursuant to the procedure established by the
Option Agreement is $43,000,000. Since the principal balance of the Note
exceeds the purchase price under the Option Agreement, no cash is payable to
Seller under the Option Agreement. However, based upon negotiations prompted by
Lender's desire to close its purchase of the Shopping Center before May 12 and
by certain claims made by Seller for reimbursement of HomePlace costs, the
parties have discussed a $1,200,000 payment to Seller at closing of the Shopping
Center sale on the following terms:
(i) the Shopping Center will be conveyed to Buyer concurrently with
execution and delivery of this Agreement, with the conveyance
on and subject to the terms of the Option Agreement except as
modified or supplemented by this Agreement;
(ii) Buyer will pay Seller $1,200,000 at closing in wired funds;
(iii) Seller may retain the balance in First Bank, Account #0002 01
031 00, (the "Cash Account"), which represents cash on hand
from Shopping Center operations.
(iv) Buyer will pay the transfer tax, if any, payable with respect
to the sale of the Shopping Center to Buyer;
(v) Seller will not be required to pay or provide a credit for any
real estate taxes or special assessments relating to the
Shopping Center or any accrued and unpaid interest on the Note;
(vi) the Tax Account, the Reserve Account, any real estate tax
refunds less payments now or hereafter owing to Marvin F. Poer,
Inc. and any insurance premium refunds to which seller may be
or become entitled will be transferred to Buyer;
(vii) Buyer will pay the Liens and the HomePlace Commission, and
secure dismissal of the Action;
(viii)Seller will pay all accounts payable relating to operation or
maintenance of the Shopping Center other than (a) the Liens and
the HomePlace Commission and (b) accounts payable relating to
operation and maintenance of the Shopping Center after March
31, 1997;
(ix) the economic closing of the sale of the Shopping Center to
Buyer shall be as of April 1, 1997, i.e., the April Mortgage
payment and all other April expenses would be paid from April
rents, and any excess would go to Buyer;
(x) all tenant payments received by Buyer and all tenant payments
received by Seller after March 31, 1997 (collectively "Post-
March Tenant Payments") shall be retained by Buyer or paid by
Seller to Buyer, as the case may be, even if they represent
rents or reimbursement payments attributable to the period
before closing, and Seller shall at Buyer's option either
dismiss or substitute Buyer as plaintiff in actions relating to
the Premises or the leases;
(xi) the Loan Agreement, Tax Deposit Agreement and Improvement
Deposit Agreement will be terminated, but the Loan Documents
will remain outstanding;
(xii) Seller will be released by Lender and Buyer from all
indebtedness, claims and liability under the Loan Agreement,
Tax Deposit Agreement, Improvement Deposit Agreement and Loan
Documents and all other claims and liability except for claims
arising from third party claims and claims arising under this
Agreement or instruments or agreements executed and delivered
by Seller pursuant to this Agreement or the Option Agreement;
and
(xiii) Buyer and Lender will be released by seller from all claims and
liability under the Loan Agreement, Tax Deposit Agreement,
Improvement Deposit Agreement and Loan Documents and all other
claims and liabilities except for claims arising from third
party claims and claims arising under this Agreement or
instruments or agreements executed and delivered pursuant to
this Agreement or the Option Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Closing of Sale. Concurrently with execution and delivery of
this Agreement, Seller and Buyer are closing the sale of the Shopping Center to
Buyer (the "Closing") in accordance with the terms of the Option Agreement
except as it is modified or supplemented by this Agreement. The parties agree
that the purchase price under the Option Agreement is $43,000,000.
2. Implementation of Additional Provisions. Concurrent with the
Closing, (a) Buyer is paying Seller $1,200,000 in wired funds, (b) pursuant to
instructions from Seller and Lender, Norwest Bank is transferring the Reserve
Account to the title insurance company conducting the Closing, and the funds
from that account are being used to pay the Liens and HomePlace Commission and
to obtain a dismissal of the Action, with any excess paid to Buyer, (c) the Tax
Reserve Account is being transferred to Buyer, with the proceeds thereof wired
directly from Norwest Bank to Buyer, (d) Seller is transferring its rights to
any real estate tax refunds and contests and insurance premium refunds to Buyer
less any payments now or hereafter owing to Marvin F. Poer, Inc., (e) to the
extent not already paid, Seller is paying the accounts payable for which it is
responsible as set forth in the Recitals, (f) the Loan Agreement, Tax Deposit
Agreement and Improvement Deposit Agreement are being terminated, (g) Seller is
executing and delivering a release to Lender and buyer, and (h) Lender and Buyer
are executing and delivering a release to Seller.
3. Closing Statement; Transfer Tax. The closing statement or
statements delivered by the parties at the Closing reflect the provisions of
this Agreement, including the Recitals. Buyer agrees to indemnify, defend and
hold harmless Seller with respect to any transfer tax (plus any penalty and
interest thereon) payable by reason of the transfer of the Shopping Center to
Buyer.
4. Cash Account. Lender and Buyer hereby waive and release any and
all claims to the Cash Account.
5. Post-March Tenant Payments. Seller hereby assigns to Buyer all
of its right, title and interest in and to all Post-March Tenant Payments.
6. No Merger. The Loan Documents shall not merge in Buyer's title
or be discharged, merged or released by any other matter or thing other than
instruments of discharge duly signed by Lender.
7. Due Authorization, Etc. Lender and buyer, on the one hand, and
Seller, on the other, each represents to the other that it has full power to
execute, deliver and carry out the terms of the Option Agreement and this
Agreement and has taken all steps necessary to authorize the execution, delivery
and performance of this Agreement and the performance of the Option Agreement,
and that the individual or individuals executing this Agreement and the
agreements delivered pursuant hereto on behalf of Lender, Buyer or Seller, as
the case may be, is duly authorized to do so.
8. Entire Agreement. This Agreement and the Agreements delivered
pursuant hereto constitute the entire agreement of the parties dealing with the
subject matter hereof.
9. Governing Law. This Agreement is governed by Minnesota law.
10. Attorney's Fees. In any action arising under or based upon this
Agreement, the party which does not prevail in the action shall pay the
attorney's fees and costs incurred by the prevailing party in the action.
11. Counterparts. This Agreement may be signed in separate
counterparts which, taken together, constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused these presents to
be made as of the day and year first above stated.
NORTHTOWN MALL PARTNERS
By Angeles Income Properties, Ltd. III, a
California limited partnership, its general
partner
By Angeles Realty Corporation II, its
general partner
By /s/ Robert D. Long, Jr.
Its Vice President
And Angeles Income Properties, Ltd. IV, a
California limited partnership, its general
partner
By Angeles Realty Corporation II, its
general partner
By /s/ Robert D. Long, Jr.
Its Vice President
And Angeles Realty Corporation II, its general
partner
By /s/ Robert D. Long, Jr.
Its Vice President
NORTHTOWN ASSOCIATES, a Delaware
general partnership
By Northtown Mall I, B.V., its partner
By US Alpha, Inc., its agent and attorney
in fact
By /s/ Raymond H. Bottorf
Its President
And Northtown Mall II, B.V., its partner
By US Alpha, Inc., its agent and attorney
in fact
By /s/ Raymond H. Bottorf
Its President
STATE OF WISCONSIN INVESTMENT
BOARD
By /s/ Charles R. Carpenter
Assistant Investment Director
Real Estate & Mortgages
NORTHTOWN LLP, a Minnesota limited liability
partnership,
By State of Wisconsin Investment Board, its
partner
By /s/ Charles R. Carpenter
Assistant Investment Director
Real Estate & Mortgages
And Northtown Associates, its partner
By Northtown Mall I, B.V., its partner
By US Alpha, Inc., its agent and
attorney in fact
By /s/ Raymond H. Bottorf
Its President
And Northtown Mall II, B.V., its partner
By US Alpha, Inc., its agent and
attorney in fact
By Raymond H. Bottorf
Its President
GENERAL CONVEYANCE
THIS GENERAL CONVEYANCE is made as of the 5th day of May, 1997 by
Northtown Mall Partners, a California general partnership ("Assignor").
RECITALS
Concurrently with the execution and delivery hereof, Assignor is
conveying to Northtown LLP, a Minnesota limited liability partnership
("Assignee") the Northtown Mall Shopping Center in Blaine, Minnesota (the
Property"). In connection with the conveyance of the Property, Assignor desires
to assign to Assignee certain tangible and intangible personal property relating
to the Property.
NOW THEREFORE, Assignor agrees as follows:
1. Assignment.
Assignor does hereby sell, assign, transfer, set-over and deliver
unto Assignee, its successors and assigns, all of the following:
a. all furniture, fixtures, equipment and other personal
property owned by Assignor placed in, attached to or used in connection with or
in the operation of the Property;
b. Assignor's interest in all licenses, permits and
authorizations, including, without limitation, sewer rights and permits,
presently issued in connection with the operation of all or any part of the
Property except those issued or given to tenants;
c. all warranties, if any, issued to Assignor by any
manufacturers or contractors in connection with the Property;
d. all books and records relating to the Property or its
maintenance or operation and all Documents, as defined in that certain Option
Agreement relating to the property dated March 15, 1991, between Assignor and
State of Wisconsin Investment Board and Northtown Associates, except for
"Contracts", as therein defined;
e. all trademarks, tradenames, assumed names, copyrights and
the like relating to the Property or its operations, including without
limitation the right to the name and designations "Northtown Mall" and
"Northtown Mall Shopping Center";
f. the Real Estate Management Agreement dated March 1, 1991,
between Assignor and Marquette Partners, Inc., providing for management of the
Property and all service, equipment rental and other contracts relating to the
Property listed on Exhibit A hereto (collectively, the "Contracts");
g. all leases of space in the Property ("Leases"); and
h. all rent and other amounts paid by department store site
owners, tenants or former tenants of the property after March 31, 1997,
regardless of the period to which they relate, including without limitation the
causes of action and bankruptcy claims listed on Exhibit B hereto.
TO HAVE AND TO HOLD the items assigned hereby (collectively, the
"Assigned Property") unto Assignee, its successors and assigns, forever.
2. Representation and Warranty.
Assignor represents and warrants that it owns the Assigned
Property free and clear of all liens, claims or encumbrances except for the
exceptions listed in Assignor's deed of the Property to Assignee. Assignor
further represents, covenants and warrants that Assignor has the full right,
power and authority to execute this General Conveyance.
3. Assumption by Assignee.
Assignee by acceptance of delivery of this Assignment hereby
assumes all obligations of Assignor arising after the date hereof under (a) the
Contracts, and (b) those Leases true, full and correct copies of which have been
delivered to Assignee or its partners or L.J. Melody. Assignor shall remain
liable for all liabilities and claims arising under the Contracts or the Leases
prior to the date hereof.
4. Further Assurances.
Assignor agrees that assignor will make, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, assignments,
notices of assignments, transfers and assurances as Assignor shall from time to
time reasonably require, for the better assuring, conveying, assigning,
transferring and confirming unto Assignee the Assigned property, and the rights
hereby conveyed or assigned or intended now or hereafter to be conveyed or
assigned to Assignee.
IN WITNESS WHEREOF, Assignor has caused this General conveyance to be
executed as of the date first written above.
NORTHTOWN MALL PARTNERS
By Angeles Income Properties, Ltd. III,
a California limited partnership, its
general partner
By Angeles Realty Corporation II,
its general partner
By /s/ Robert D. Long, Jr.
Its Vice President
And Angeles Income Properties, Ltd. IV, a
California limited partnership, its
general partner
By Angeles Realty Corporation II,
its general partner
By /s/ Robert D. Long, Jr.
Its Vice President
And Angeles Realty Corporation, II, its general
partner
By /s/ Robert D. Long, Jr.
Its Vice President
TERMINATION OF AGREEMENTS
AND ASSIGNMENT OF ACCOUNTS
THIS TERMINATION OF AGREEMENTS, made as of the 5th day of May, 1997
between Northtown Mall Partners, a California general partnership ("Borrower")
and Northtown Associates, a Delaware general partnership and State of Wisconsin
Investment Board, an independent state agency created pursuant to the laws of
Wisconsin (collectively, "Lender").
RECITALS
Borrower and Lender are parties to (i) a Loan agreement dated March
15, 1991, between Borrower and Lender, providing for a loan of up to $58,000,000
to Borrower (the "Loan Agreement"), (ii) a Tax and Insurance Premium Deposit
Agreement dated March 15, 1991, among Norwest Bank Minnesota ("Agent"), Lender
and Borrower, providing for a tax and insurance escrow (the "tax Escrow
Agreement"), and (iii) a Reserve Account Deposit Agreement dated March 15, 1991,
among Agent, Lender and Borrower, providing for deposit with Agent of certain
monies (the "Deposit Agreement"). The account created pursuant to the Tax
Escrow Agreement is Norwest Bank account #12628300 (the "Tax Account"). The
account created pursuant to the Deposit Agreement is Norwest Bank account
#12628400 (the "Reserve Account").
The parties have agreed to terminate the Loan Agreement, Tax Escrow
Agreement and Deposit Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. The Loan Agreement, Tax Escrow Agreement and Deposit Agreement
are hereby terminated. The December 19, 1996, letter from William McCarthy on
behalf of Borrower, instructing Agent not to make disbursements from the Reserve
Account, is revoked.
2. All of Borrower's right, title and interest in the Tax Account
and the Reserve Account are assigned to Lender. Agent is authorized and
instructed to (i) wire all funds in the Reserve Account to the account
designated on Exhibit A hereto, and (ii) wire all funds in the Tax Account to an
account (the "New Tax Account") established for Lender or Northtown LLP, a
Minnesota limited liability partnership in which the sole partners are Lender,
with the New Tax Account to be identified to Agent by statement from Faegre &
Benson. All interest earned on but not posted to the Tax Account or the Reserve
Account when the aforesaid wirings are made shall be wired to the New Tax
Account when it is posted by Agent.
3. Prior to the wiring referred to in the first sentence of Section
2 hereof, Agent may deduct from the Tax Account and the Reserve Account its
final fees relating to those accounts.
4. This Agreement may be signed in separate counterparts which,
taken together, constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused these presents to
be made as of the day and year first above stated.
NORTHTOWN MALL PARTNERS
By Angeles Income Properties, Ltd. III,
a California limited partnership, its
general partner
By Angeles Realty Corporation II,
its general partner
By /s/ Robert D. Long, Jr.
Its Vice President
And Angeles Income Properties, Ltd. IV, a
California limited partnership, its
general partner
By Angeles Realty Corporation II,
its general partner
By /s/ Robert D. Long, Jr.
Its Vice President
And Angeles Realty Corporation II, its general
partner
By /s/ Robert D. Long, Jr.
Its Vice President
NORTHTOWN ASSOCIATES, a Delaware
general partnership
By Northtown Mall I, B.V., its partner
By US Alpha, Inc., its agent and
attorney in fact
By /s/ Raymond H. Bottorf
Its President
And Northtown Mall II, B.V., its partner
By US Alpha, Inc., its agent and
attorney in fact
By Raymond H. Bottorf
Its President
STATE OF WISCONSIN INVESTMENT
BOARD
By /s/ Charles R. Carpenter
Assistant Investment Director
Real Estate & Mortgages
