FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the transition period from.........to.........
Commission file number 0-13192
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.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1998
Assets
Cash and cash equivalents $ 1,236
Receivables and deposits (net of allowance
for doubtful accounts of $43) 284
Other assets 247
Restricted escrows 254
Investment properties:
Land $ 1,527
Buildings and related personal property 13,011
14,538
Less accumulated depreciation (9,765) 4,773
$ 6,794
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 9
Tenant security deposit liabilities 48
Accrued property taxes 57
Other liabilities 86
Mortgage note payable 3,721
Partners' (Deficit) Capital
General partners $ (347)
Limited partners (86,778 units issued
and outstanding) 3,220 2,873
$ 6,794
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Rental income $ 465 $ 424 $1,346 $1,315
Other income 19 27 55 58
Total revenues 484 451 1,401 1,373
Expenses:
Operating 132 206 395 568
General and administrative 44 75 123 166
Depreciation 170 169 510 500
Interest 90 91 270 273
Property taxes 37 25 116 105
Total expenses 473 566 1,414 1,612
Income (loss) before equity in
income and extraordinary gain
on debt extinguishment of
joint venture 11 (115) (13) (239)
Equity in income of
joint venture (Note B) -- 2 -- 4,511
Income (loss) before equity
in extraordinary gain on
debt extinguishment of
joint venture 11 (113) (13) 4,272
Equity in extraordinary gain
on debt extinguishment (Note B) -- -- -- 2,459
Net income (loss) $ 11 $ (113) $ (13) $6,731
Net income (loss) allocated
to general partners (1%) $ -- $ (1) $ -- $ 67
Net income (loss) allocated
to limited partners (99%) 11 $ (112) (13) 6,664
Net income (loss) $ 11 $ (113) $ (13) $6,731
Net income (loss) per
limited partnership unit $ .13 $(1.29) $ (.15) $76.79
Operating distributions per
limited partnership unit $ -- $ -- $ .02 $ --
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 86,920 $ 1 $43,460 $43,461
Partners' (deficit) capital
at December 31, 1997 86,778 $ (347) $ 3,235 $ 2,888
Distribution to partners -- -- (2) (2)
Net loss for the nine months
ended September 30, 1998 -- -- (13) (13)
Partners' (deficit) capital
at September 30, 1998 86,778 $ (347) $ 3,220 $ 2,873
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1998 1997
Cash flows from operating activities:
Net (loss) income $ (13) $ 6,731
Adjustments to reconcile net (loss) income to
net cash provided by operating activities
Equity in income of joint venture -- (4,511)
Equity in extraordinary gain on debt
extinguishment of joint venture -- (2,459)
Depreciation 510 500
Amortization of loan costs and leasing
commissions 28 30
Change in accounts:
Receivables and deposits (95) (48)
Other assets 44 29
Accounts payable (14) (17)
Tenant security deposit liabilities -- 1
Accrued property taxes 19 21
Other liabilities 25 (30)
Net cash provided by operating
activities 504 247
Cash flows from investing activities:
Property improvements and replacements (48) (247)
Collection on advances from joint venture -- 1,066
Net deposits to restricted escrows (20) (17)
Net cash (used in) provided by
investing activities (68) 802
Cash flows from financing activities:
Payments on mortgage note payable (34) (31)
Distribution to partners (247) --
Net cash used in financing activities (281) (31)
Net increase in cash and cash equivalents 155 1,018
Cash and cash equivalents at beginning of
period 1,081 1,371
Cash and cash equivalents at end of period $1,236 $ 2,389
Supplemental disclosure of cash flow information:
Cash paid for interest $ 258 $ 261
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 consolidated financial statements of Angeles Income
Properties, Ltd. III (the "Partnership") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of Angeles Realty Corporation II, (the "Managing General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine month periods ended September 30, 1998, are not necessarily
indicative of the results that may be expected for the fiscal year ended
December 31, 1998. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Partnership's annual report on
Form 10-KSB for the fiscal year ended December 31, 1997.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Partnership include its 99% limited
partnership interests in Poplar Square AIP III, L.P. and Poplar Square GP LP.
The Partnership may remove the General Partner of both Poplar Square AIP III,
L.P. and Poplar Square GP LP; therefore, the partnerships are controlled and
consolidated by the Partnership. All significant interpartnership balances have
been eliminated.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
NOTE B - INVESTMENT IN JOINT VENTURE
The Partnership had a 33.3% investment in Northtown Mall Partners ("Joint
Venture"). On May 12, 1997, the Joint Venture sold its only investment property,
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 $16,243,000. As a result of the
sale, mortgage debt in the amount of approximately $8,711,000 was forgiven and
unamortized loan costs in the amount of approximately $1,327,000 were written
off. This resulted in an extraordinary gain on extinguishment of debt of
approximately $7,384,000. 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 of approximately $51,326,000. The Joint Venture was liquidated in
December 1997.
The condensed profit and loss statements for the three and nine months ended
September 30, 1997, for the Joint Venture are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1997
(in thousands)
Revenue $ 12 $ 2,738
Costs and expenses (6) (3,529)
Income (loss) before (loss) gain on sale of
investment property and extraordinary
gain on extinguishment of debt 6 (791)
(Loss) gain on sale of investment
property (5) 16,243
Extraordinary gain on extinguishment
of debt -- 7,384
Net income $ 1 $22,836
The Partnership realized equity income from Northtown of approximately $2,000
and $4,511,000 for the three and nine months ended September 30, 1997,
respectively. Equity in extraordinary gain on debt extinguishment of
approximately $2,459,000 was realized for the nine months ended September 30,
1997.
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's partnership agreement provides for
certain payments to affiliates for services and as reimbursement of certain
expenses incurred by affiliates on behalf of the Partnership. The following
payments were made to the Managing General Partner and affiliates during the
nine months ended September 30, 1998 and 1997:
1998 1997
(in thousands)
Property management fees (included
in operating expenses) $ 54 $ 52
Reimbursement for services of
affiliates (included in general and
administrative expenses and
other assets) 71 151
Included in "Reimbursement for Services of Affiliates" for the periods ended
September 30, 1998 and 1997, is approximately $4,000 and $24,000, respectively,
in leasing commissions paid to an affiliate of the Managing General Partner. In
addition, during the nine months ended September 30, 1997, the Partnership paid
approximately $27,000 in construction oversight reimbursements.
For the period January 1, 1997 to August 31, 1997, the Partnership insured its
properties under a master policy through an agency affiliated with the Managing
General Partner with an insurer unaffiliated with the Managing General Partner.
An affiliate of the Managing General Partner acquired, in the acquisition of a
business, certain financial obligations from an insurance agency which was later
acquired by the agent who placed the master policy. The agent assumed the
financial obligations to the affiliate of the Managing General Partner which
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 was not
significant.
On August 12, 1998, an affiliate of the Managing General Partner (the
"Purchaser") commenced a tender offer for limited partnership interests in the
Partnership. The Purchaser offered to purchase up to 30,000 of the outstanding
units of limited partnership interest in the Partnership at $75 per Unit, net to
the seller in cash. The expiration date for the tender offer has been extended
to November 16, 1998.
NOTE D - TRANSFER OF CONTROL; SUBSEQUENT EVENT
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired approximately
51% of the outstanding common shares of beneficial interest of Insignia
Properties Trust ("IPT"), the entity which controls the Managing General
Partner. Also, effective October 1, 1998 IPT and AIMCO entered into an Agreement
and plan of Merger pursuant to which IPT is to be merged with and into AIMCO or
a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the approval
of the holders of a majority of the outstanding IPT Shares. AIMCO has agreed to
vote all of the IPT Shares owned by it in favor of the IPT Merger and has
granted an irrevocable limited proxy to unaffiliated representatives of IPT to
vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the IPT
Merger. As a result of AIMCO's ownership and its agreement, the vote of no
other holder of IPT is required to approve the merger. The Managing General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Partnership.
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 nine months ended September 30, 1998 and 1997:
Average Occupancy
1998 1997
Lake Forest Apartments
Brandon, Mississippi 93% 92%
Poplar Square Shopping Center
Medford, Oregon 95% 93%
The Partnership realized net income of approximately $11,000 and a net loss of
approximately $13,000 for the three and nine months ended September 30, 1998,
respectively, as compared to a net loss of approximately $113,000 and net income
of approximately $6,731,000 for the three and nine months ended September 30,
1997, respectively. The decrease in net income for the nine months ended
September 30, 1998, is due to the equity in income and extraordinary gain on
debt extinguishment of the joint venture, resulting from the gains realized on
the sale of Northtown Mall in the second quarter of 1997 (see "Note B" of the
financial statements included in Item 1). The Partnership's income (loss) before
equity in income and extraordinary gain on debt extinguishment of the joint
venture, however, was $11,000 and ($13,000) for the three and nine months ended
September 30, 1998 as compared to losses of ($115,000) and ($239,000) for the
comparable periods in 1997. These improvements in operations were primarily the
result of increases in rental income and decreases in operating and general and
administrative expenses, which more than offset an increase in property taxes.
Rental income increased during the three and nine months ended September 30,
1998, as compared to the three and nine months ended September 30, 1997, due to
the combined increase in occupancy and rental rates at the Partnership's
remaining properties. The decrease in total expenses for the three and nine
months ended September 30, 1998, is the result of a decrease in operating
expense partially due to the conversion of ten administrative units into tenant
apartments at Lake Forest Apartments. The complex had ten administrative units
during 1997 and is currently renting them to tenants in 1998. Also during 1997
there was a painting project which was completed and various exterior building
improvements were undertaken in an effort to improve the curb appeal at the
property. General and administrative expense decreased during the nine months
ended September 30, 1998, due to a decrease in expense reimbursements paid to an
affiliate of the Managing General Partner as a result of the sale of Northtown
Mall in 1997.
On May 12, 1997, the Joint Venture in which the Partnership owned a 33.3%
interest sold Northtown Mall, its only investment property, to an affiliate of
the lender (see Note B). The economic closing of the sale of Northtown Mall was
as of April 1, 1997, at which time the joint venture was released from the
mortgage note of approximately $51,326,000. For the nine months ended September
30, 1997, the Partnership realized equity in income of the joint venture of
approximately $4,511,000 and equity in extraordinary gain on debt extinguishment
of approximately $2,459,000.
Included in operating expenses for the nine months ended September 30, 1998 is
approximately $3,000 of major repairs and maintenance comprised primarily of
office equipment. Included in operating expenses for the nine months ended
September 30, 1997 is approximately $165,000 of major repairs and maintenance,
comprised primarily of parking lot seal-coating and repairs, exterior building
repairs, and exterior painting.
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 September 30, 1998, the Partnership had cash and cash equivalents of
approximately $1,236,000 compared to approximately $2,389,000 at September 30,
1997. Cash and cash equivalents increased approximately $155,000 and
approximately $1,018,000 for the periods ended September 30, 1998 and 1997,
respectively. Net cash provided by operating activities increased as a result
of a decrease in other assets and other liabilities offset by an increase in
receivables and deposits. The decrease in other assets and the increase in
receivables and deposits is due to the timing of the payment of property taxes.
Net cash provided by investing activities for the nine months ended September
30, 1998 decreased as a result of the collection on advances from the joint
venture in the same period in the prior year. Net cash used in financing
activities decreased as a result of a distribution paid to partners during the
nine months ended September 30, 1998.
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 and to comply with federal,
state and local legal and regulatory requirements. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
Managing General Partner is currently assessing the need for capital
improvements at each of the Partnership's properties. To the extent that
additional capital improvements are required, the Partnership's distributable
cash flow, if any, may be adversely affected at least in the short term. The
mortgage indebtedness of approximately $3,721,000, which is secured by the
Poplar Square Shopping Center investment property matures in November 2006. The
Managing General Partner will attempt to refinance such indebtedness or sell the
property prior to such maturity date. If the property cannot be refinanced or
sold for a sufficient amount, the Partnership will risk losing such property
through foreclosure. A cash distribution from operations of approximately
$247,000 was made during the nine months ended September 30, 1998, with $245,000
of this amount being used to satisfy the liability at December 31, 1997. No cash
distributions were made during the nine months ended September 30, 1997. Future
cash distributions will depend on the levels of net cash from operations,
refinancings, property sales and the availability of cash reserves. The
Partnership's distribution policy will be reviewed on a quarterly basis. There
can be no assurance, however, that the Partnership will generate sufficient
funds from operations to permit distributions to its partners in 1998 or
subsequent periods.
Transfer of Control; Subsequent Event
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
Insignia Properties Trust ("IPT"), the entity which controls the Managing
General Partner. Also, effective October 1, 1998 IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares. AIMCO has
agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger and
has granted an irrevocable limited proxy to unaffiliated representatives of IPT
to vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the
IPT Merger. As a result of AIMCO's ownership and its agreement, the vote of no
other holder of IPT is required to approve the merger. The Managing General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Partnership.
Year 2000
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four 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 computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
The Managing Agent has determined that it will be required to modify or replace
significant portions of its software and certain hardware so that those systems
will properly utilize dates beyond December 31, 1999. The Managing Agent
presently believes that with modifications or replacements of existing software
and certain hardware, the Year 2000 Issue can be mitigated. However, if such
modifications and replacements are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the Managing
Agent and the Partnership.
Status of Progress in Becoming Year 2000 Compliant
The Managing Agent's plan to resolve the Year 2000 Issue involves the following
four phases: assessment, remediation, testing and implementation. To date, the
Managing Agent has fully completed its assessment of all information systems
that could be significantly affected by the Year 2000, and has begun the
remediation, testing and implementation phase on both hardware and software
systems. Assessments are continuing in regards to embedded systems in operating
equipment. The Managing Agent anticipates having all phases complete by June 1,
1999.
In addition to the areas the Partnership is relying on the Managing Agent to
verify compliance with, the Partnership has certain operating equipment,
primarily at the property sites, which needed to be evaluated for Year 2000
compliance. The focus of the Managing General Partner was to the security
systems, elevators, heating-ventilation-air-conditioning systems, telephone
systems and switches, and sprinkler systems. The Managing General Partner is
currently engaged in the identification of all non-compliant operational
systems, and is in the process of estimating the costs associated with any
potential modifications or replacements needed to such systems in order for them
to be Year 2000 compliant. It is not expected that such costs would have a
material adverse affect upon the operations of the Partnership.
Risk Associated with the Year 2000
The Managing General Partner believes that the Managing Agent has an effective
program in place to resolve the Year 2000 issue in a timely manner and has
appropriate contingency plans in place for critical applications that could
affect the Partnership's operations. To date, the Managing General Partner is
not aware of any external agent with a Year 2000 issue that would materially
impact the Partnership's results of operations, liquidity or capital resources.
However, the Managing General Partner has no means of ensuring that external
agents will be Year 2000 compliant. The Managing General Partner does not
believe that the inability of external agents to complete their Year 2000
resolution process in a timely manner will have a material impact on the
financial position or results of operations of the Partnership. However, the
effect of non-compliance by external agents is not readily determinable.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and as such may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Partnership to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
forward-looking statements speak only as of the date of this quarterly report.
The Partnership expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in the Partnership's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA
FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates as well as a recently
announced agreement between Insignia and Apartment Investment and Management
Company. The complaint seeks monetary damages and equitable relief, including
judicial dissolution of the Partnership. On June 25, 1998, the Managing General
Partner filed a motion seeking dismissal of the action. In lieu of responding to
the motion, the plaintiffs have filed an amended complaint. The Managing
General Partner has filed demurrers to the amended complaint which are schedule
to be heard on January 8, 1999. The Managing General Partner believes this
action to be without merit, and intends to vigorously defend it.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled EVEREST PROPERTIES, LLC. V.
INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of
California, county of Los Angeles. The action involves 44 real estate limited
partnership (including the Partnership) in which the plaintiffs allegedly own
interests and which Insignia Affiliates allegedly manage or control (the
"Subject Partnerships"). The complaint names as defendants Insignia, several
Insignia Affiliates alleged to be managing partners of the Subject Partnerships,
the Partnership and the Managing General Partner. Plaintiffs allege that they
have requested from, but have been denied by each of the Subject Partnerships,
lists of their respective limited partners for the purpose of making tender
offers to purchase up to 4.9% of the limited partner units of each of the
Subject Partnerships. The complaint also alleges that certain of the defendants
made tender offers to purchase limited partner units in many of the Subject
Partnerships, with the alleged result that plaintiffs have been deprived of the
benefits they would have realized from ownership of the additional units. The
plaintiffs assert eleven causes of action, including breach of contract, unfair
business practices, and violations of the partnership statutes of the states in
which the Subject Partnerships are organized. Plaintiffs seek compensatory,
punitive and treble damages. The Managing General Partner filed an answer to the
complaint on September 15, 1998. The Managing General Partner believes the
claims to be without merit and intends to defend the action vigorously.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Managing General Partner believes that all such
pending or outstanding litigation will be resolved without a material adverse
effect upon the business, financial condition or operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, 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 nine months ended
September 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES INCOME PROPERTIES, LTD. III
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Patrick Foye
Patrick Foye
Executive Vice President
By: /s/Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
(Duly Authorized Officer)
Date: November 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Income Properties, Ltd. III 1998 Third 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,236
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,538
<DEPRECIATION> (9,765)
<TOTAL-ASSETS> 6,794
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 3,721
0
0
<COMMON> 0
<OTHER-SE> 2,873
<TOTAL-LIABILITY-AND-EQUITY> 6,794
<SALES> 0
<TOTAL-REVENUES> 1,401
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,414
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 270
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13)
<EPS-PRIMARY> (.15)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
