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 June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from.........to.........
Commission file number 0-14248
ANGELES PARTNERS XIV
(Exact name of small business issuer as specified in its charter)
California 95-3959771
(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)
(864) 239-1000
Issuer's telephone number
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES PARTNERS XIV
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1998
Assets
Cash and cash equivalents $ 835
Receivables and deposits 357
Restricted escrows 293
Other assets 332
Investment properties:
Land $ 2,579
Buildings and related personal property 28,967
31,546
Less accumulated depreciation (19,664) 11,882
$ 13,699
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 33
Tenant security deposit liabilities 91
Accrued property taxes 369
Accrued interest 4,797
Due to affiliates 1,271
Other liabilities 72
Notes payable, including $7,242 in default 34,081
Partners' Deficit
General partners $ (653)
Limited partners (43,887 units
issued and outstanding) (26,362) (27,015)
$ 13,699
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,295 $ 1,399 $ 2,621 $ 2,741
Other income 40 34 75 72
Write-up of investment property 44 -- 44 --
Total revenues 1,379 1,433 2,740 2,813
Expenses:
Operating 513 595 1,003 1,153
General and administrative 66 98 119 178
Depreciation 313 302 621 603
Interest 991 1,170 2,101 2,318
Property taxes 99 119 213 234
Bad debt (recovery) expense, net (7) 9 (7) (18)
Loss on sale of investment property 177 -- 177 --
Total expenses 2,152 2,293 4,227 4,468
Net loss before
extraordinary item (773) (860) (1,487) (1,655)
Extraordinary gain on extinguishment
of debt 5,735 -- 7,979 --
Net income (loss) $ 4,962 $ (860) $ 6,492 $(1,655)
Net income (loss) allocated to
general partners (1%) $ 50 $ (9) $ 65 $ (17)
Net income (loss) allocated to
limited partners (99%) 4,912 (851) 6,427 (1,638)
Net income (loss) $ 4,962 $ (860) $ 6,492 $(1,655)
Per limited partnership unit:
Net loss before extraordinary item $(17.43) $(19.39) $(33.54) $(37.32)
Extraordinary gain on extinguishment
of debt 129.35 -- 179.98 --
Net income (loss) $111.92 $(19.39) $146.44 $(37.32)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
c)
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 44,390 $ 1 $ 44,390 $ 44,391
Partners' deficit at
December 31, 1997 43,887 $ (718) $(32,789) $(33,507)
Net income for the six months
ended June 30, 1998 -- 65 6,427 6,492
Partners' deficit at
June 30, 1998 43,887 $ (653) $(26,362) $(27,015)
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 6,492 $(1,655)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Write-up of investment property (44) --
Loss on sale of investment property 177 --
Extraordinary gain on extinguishment of debt (7,979) --
Depreciation 621 603
Amortization of discounts, loan costs, and
leasing commissions 49 28
Bad debt recovery, net (7) (18)
Change in accounts:
Receivables and deposits (148) 67
Other assets 69 (28)
Accounts payable -- 4
Tenant security deposit liabilities (5) 2
Accrued property taxes 51 72
Accrued interest 1,259 1,534
Due to affiliates 71 143
Other liabilities (4) 5
Net cash provided by operating activities 602 757
Cash flows from investing activities:
Property improvements and replacements (263) (127)
Net receipts from (deposits to) restricted escrows 98 (48)
Proceeds from sale of investment property, net 1,847 --
Net cash provided by (used in) investing activities 1,682 (175)
Cash flows from financing activities:
Principal payments on notes payable (308) (341)
Additions to notes payable 32 96
Repayment of notes payable (1,822) --
Net cash used in financing activities (2,098) (245)
Net increase in cash and cash equivalents 186 337
Cash and cash equivalents at beginning of period 649 318
Cash and cash equivalents at end of period $ 835 $ 655
Supplemental disclosure of cash flow information:
Cash paid for interest $ 765 $ 720
Supplemental disclosure of non-cash investing and
financing activities:
Interest on notes transferred to notes payable $ 350 $ 434
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
(in thousands)
Supplemental disclosure of non-cash activities
Foreclosures
In January and April of 1998, Building 53 and Building 59, respectively, of the
Dayton Industrial Complex were foreclosed upon by the lender. In June 1998,
Building 41 of the Dayton Industrial Complex was sold to an independent third
party. In connection with these non-cash transactions, the following accounts
were adjusted:
Building 53 Building 59 Building 41
Receivables and deposits $ (35) $ -- $ (54)
Other assets (9) -- (8)
Investment properties (660) (706) (1,962)
Property tax payable 64 26 --
Tenant security deposit liabilities 12 -- --
Accrued interest 175 688 23
Mortgage notes payable 2,697 3,599 2,105
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - GOING CONCERN
The accompanying financial statements have been prepared assuming Angeles
Partners XIV (the "Partnership") will continue as a going concern. The
Partnership continues to incur recurring operating losses and suffers from
inadequate liquidity. Non-recourse and recourse indebtedness of approximately
$2,666,000 and $4,576,000 is in default at June 30, 1998, due to nonpayment of
interest and principal when due.
The Partnership incurred net income of approximately $6,492,000 for the six
months ended June 30, 1998. This was due to the recognition of an extraordinary
gain on the extinguishment of debt of approximately $7,979,000, relating to the
foreclosures of Buildings 53 and 59 and the sale of Building 41 in the Dayton
Industrial Complex. The Partnership realized a loss before the extraordinary
gain of approximately $1,487,000. Angeles Realty Corporation II, (the "Managing
General Partner" or "ARC II") expects the Partnership to continue to incur such
losses from operations. The Partnership generated cash from operations of
approximately $602,000 during the six months ended June 30, 1998; however, this
primarily was the result of accruing interest of approximately $1,259,000 on its
indebtedness and $71,000 for services provided by affiliates.
In January 1998 and April 1998, Buildings 53 and 59, respectively, of the Dayton
Industrial Complex were foreclosed on and in June 1998, Building 41 of the
Dayton Industrial Complex was sold. Historically, the Dayton Industrial Complex
has not been able to retain tenants and has never generated operating cash.
Effective October 1, 1996, the Partnership determined that, based on economic
conditions at the time as well as projected future operational cash flows, the
decline in value of the property was other than temporary and recovery of the
carrying value was not likely. Accordingly, the Dayton Industrial Complex's
carrying value was reduced to an amount equal to its estimated fair value. The
Partnership ceased making debt service payments on Buildings 53 and 59 in 1996
and the buildings were placed in receivership in 1997. In the Managing General
Partner's opinion, it was not in the Partnership's best interest to contest the
foreclosure actions. As a result of the foreclosures, the Partnership recorded
an extraordinary gain on extinguishment of debt of approximately $2,244,000 and
$3,607,000 for Buildings 53 and 59, respectively. Also, in connection with the
foreclosure of Building 59, the Partnership recorded a $44,000 write-up of the
building from its carrying value to its estimated fair value during the second
quarter of 1998. Prior to the foreclosure of Building 53, the outstanding debt
on the property was a first mortgage in the amount of approximately $1,043,000
and a second mortgage in the amount of approximately $1,669,000. Related
accrued interest amounted to approximately $175,000. Prior to the foreclosure
of Building 59, the outstanding debt on the property was a first mortgage in the
amount of approximately $2,895,000 and a second mortgage in the amount of
approximately $704,000. Related accrued interest amounted to approximately
$688,000. As a result of the sale of Building 41, the Partnership recorded an
extraordinary gain on extinguishment of debt of approximately $2,128,000. Prior
to the sale of Building 41, the outstanding debt on the property was a first
mortgage in the amount of approximately $1,104,000 and a second mortgage in the
amount of approximately $2,823,000. Related accrued interest amounted to
approximately $23,000.
The Dayton Industrial Complex has one remaining building at June 30, 1998. The
first mortgage on Building 55 which totals approximately $2,666,000 is all
nonrecourse to the Partnership, matured in December 1997 and is in default due
to nonpayment of interest and principal when due. The Managing General Partner
has entered into a sales agreement for Building 55 of the Dayton Industrial
Complex and anticipates selling this building to an unrelated party in 1998.
The Dayton Industrial Complex has not generated any operating cash for the
Partnership since it was purchased nor has the Partnership expended any cash to
support the property. The Managing General Partner will not use any Partnership
funds on the remaining building in 1998.
The Partnership has unsecured working capital loans to Angeles Acceptance Pool,
L.P. ("AAP") in the amount of approximately $4,576,000 plus related accrued
interest that was due in November 1997. This indebtedness is recourse to the
Partnership. The Partnership does not have the means with which to satisfy this
obligation. The Managing General Partner does not plan to enter into
negotiations with AAP on this indebtedness at this time. The Managing General
Partner believes that the possibility that AAP will initiate collection
proceedings on this indebtedness is remote, as the estimated value of the
Partnership's investment properties and other assets are significantly less than
the existing first mortgages and other secured Partnership indebtedness. If AAP
initiates proceedings, then the Managing General Partner will enter into
negotiations to restructure this indebtedness.
The Partnership has two notes to Angeles Mortgage Investment Trust ("AMIT"),
which are recourse to the partnership only, in the amount of approximately
$2,326,000 plus related accrued interest that originally matured in March 1998.
The Managing General Partner negotiated with AMIT to extend this indebtedness
and in the second quarter of 1998 executed an extension through November 2027.
No other sources of additional financing have been identified by the
Partnership, nor does the Managing General Partner have any other plans to
remedy the liquidity problems the Partnership is currently experiencing. The
Managing General Partner anticipates that Fox Crest Apartments and Waterford
Square Apartments will generate sufficient cash flows for the next twelve months
to meet all property operating expenses, debt service requirements and to fund
capital expenditures.
As a result of the above, there is substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or amounts and classifications of liabilities that may
result from these uncertainties.
NOTE B - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements 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 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, 1998, are
not necessarily indicative of the results that may be expected for the fiscal
year ending 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.
Effective October 1, 1996, the Dayton Industrial Complex buildings were
classified as an investment property "held for disposal". Accordingly, the
remaining building has been recorded at the lower of its carrying amount or fair
value, less costs to sell, and no additional depreciation expense will be
recorded during the period the asset is held for disposal.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
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 Managing General Partner is a wholly-owned
subsidiary of Insignia Properties Trust ("IPT"), an affiliate of Insignia
Financial Group, Inc. ("Insignia"). 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 payments were paid or accrued to the Managing General Partner and
affiliates during each of the six months ended June 30, 1998 and 1997:
1998 1997
(in thousands)
Property management fees (included in operating
expenses) $132 $123
Reimbursement for services of affiliates,
including $1,271 accrued at June 30, 1998
(included in general and administrative
expenses) 76 143
Included in operating expense and investment properties for the period ended
June 30, 1998, is approximately $5,000 of construction oversight reimbursements.
For the period from January 1, 1997, to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner with an insurer unaffiliated with the Managing General
Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy. The
agent assumed the financial obligations to the affiliate of the Managing General
Partner which receives payment 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.
In November 1992, AAP, a Delaware limited partnership which now controls the
working capital loan previously provided by Angeles Capital Investment, Inc.
("ACII"), was organized. Angeles Corporation ("Angeles") is the 99% limited
partner of AAP and Angeles Acceptance Directives, Inc.("AAD"), which is wholly-
owned by IPT, was, until April 14, 1995, the 1% general partner of AAP. On
April 14, 1995, as part of a settlement of claims between affiliates of the
General Partner and Angeles, AAD resigned as general partner of AAP and
simultaneously received a .5% limited partner interest in AAP. An affiliate of
Angeles now serves as the general partner of AAP.
These working capital loans funded the Partnership's operating deficits in prior
years. Total indebtedness was approximately $4,576,000, plus accrued interest,
at June 30, 1998, with monthly interest accruing at prime plus two percent. Upon
maturity on November 25, 1997, the Partnership did not have the means with which
to satisfy this maturing debt obligation. Total interest expense for this loan
was approximately $240,000 for both the six months ended June 30, 1998 and 1997.
Accrued interest payable was approximately $2,513,000 at June 30, 1998.
AMIT currently holds notes receivable from the Partnership in the amount of
approximately $7,090,000. Total interest expense on this financing was
approximately $555,000 and $498,000 for the six months ended June 30, 1998 and
1997, respectively. Accrued interest was approximately $2,141,000 at June 30,
1998.
In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The
terms of the Class B Shares provide that they are convertible, in whole or in
part, into Class A Common Shares on the basis of one Class A Share for every 49
Class B Shares (however, in connection with the settlement agreement described
in the following paragraph, MAE GP has agreed not to convert the Class B Shares
so long as AMIT's option is outstanding). These Class B Shares entitle the
holder to receive 1% of the distributions of net cash distributed by AMIT
(however, in connection with the settlement agreement described in the following
paragraph, MAE GP agreed to waive its right to receive dividends and
distributions so long as AMIT's option is outstanding). The holder of the Class
B Shares is also entitled to vote on the same basis as the holders of Class A
Shares, providing the holder with approximately 39% of the total voting power of
AMIT (unless and until converted to Class A Shares, in which case the percentage
of the vote controlled represented by such shares would approximate 1.3% of the
total voting power of AMIT).
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B Shares owned by it. This option can be exercised
at the end of 10 years or when all loans made by AMIT to partnerships which were
affiliated with MAE GP as of November 9, 1994 (which is the date of execution of
a definitive Settlement Agreement) have been paid in full. In connection with
such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing
(which occurred April 14, 1995) as payment for the option. If and when the
option is exercised, AMIT will be required to remit to MAE GP an additional
$94,000.
Simultaneously with the execution of the option and as part of the settlement,
MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that
the holder of the Class B Shares is permitted to vote those shares on all
matters except those involving transactions between AMIT and MAE GP affiliated
borrowers or the election of any MAE GP affiliate as an officer or trustee of
AMIT. With respect to such matters, the trustees of AMIT are required to vote
(pursuant to the irrevocable proxy) the Class B Shares (as a single block) in
the same manner as a majority of the Class A Shares are voted (to be determined
without consideration of the votes of "Excess Class A Shares" (as defined in
Section 6.13 of AMIT's Declaration of Trust)).
Between its acquisition of the Class B Shares (in November 1992) and March 31,
1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its
shares at the 1995 and 1996 annual meetings in connection with the election of
trustees and other matters. In February 1998, MAE GP was merged into IPT, and in
connection with that merger, MAE GP dividended all of the Class B Shares to its
sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a result,
MAE, as the holder of the Class B Shares, is now subject to the terms of the
settlement agreement, option and irrevocable proxy described in the two
preceding paragraphs. Neither MAE GP nor MAE has exerted or has any current
intention to exert any management control over or participate in the management
of AMIT. However, subject to the terms of the proxy described below, MAE may
choose to vote the Class B Shares or otherwise exercise its rights as a
shareholder of AMIT as it deems appropriate in the future.
Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE
and Insignia (which provides property management and partnership administration
services to the Partnership), owned 96,800 Class A Shares of AMIT at June 30,
1998. These Class A Shares represent approximately 2.2% of the total voting
power of AMIT.
On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in
principle contemplating, among other things, a business combination of AMIT and
IPT, which was then owned 98% by Insignia and its affiliates. On July 18, 1997,
IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to
which (subject to shareholder approval and certain other conditions, including
the receipt by AMIT of a fairness opinion from its investment bankers) AMIT
would be merged with and into IPT, with each Class A Share and Class B Share
being converted into 1.625 and 0.0332 Common Shares of IPT, respectively. The
foregoing exchange ratios are subject to adjustment to account for dividends
paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1,
1997. It is anticipated that Insignia and its affiliates (including MAE) would
own approximately 57% of post-merger IPT if this transaction is consummated.
The Partnership has agreed to pay Miller Valentine Realty ("MV") property
management fees, leasing commissions, and financing fees and sales commissions
upon the refinancing or sale of the properties. The Partnership will receive
the first $3,000,000 of excess cash from operations, refinancing or sales of the
properties less unrefunded arrearages. Thereafter, the agreement provides that
MV shall receive, as incentive for providing property management, leasing and
asset management services to the Partnership, two-thirds of the next $12,000,000
of excess cash proceeds generated by the properties. Cash in excess of
$15,000,000 shall be shared equally by MV and the Partnership.
The agreement contemplates that the properties will be sold at an opportune time
but no later than 10 years after commencement of the agreements (March 2, 1992).
In addition, the agreement contains an option for MV to buy the properties five
years after the commencement date of the agreement. MV did not exercise this
option.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
September or October of 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the Managing General Partner of the
Partnership.
NOTE D - SALE OF INVESTMENT PROPERTY
The Partnership sold Building 41 of the Dayton Industrial Complex on June 12,
1998, to an unaffiliated party for net sales proceeds of approximately
$1,847,000. The Partnership realized a loss of approximately $177,000 on the
sale and a related $2,128,000 extraordinary gain on the early extinguishment of
debt during the second quarter of 1998. The extraordinary gain was the result
of forgiveness of debt.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two apartment complexes and
one commercial property. The following table sets forth the average occupancy
of the properties for the six months ended June 30, 1998 and June 30, 1997.
Property 1998 1997
Waterford Square Apartments
Huntsville, Alabama 94% 91%
Fox Crest Apartments
Waukegan, Illinois 96% 96%
Dayton Industrial Complex
Dayton, Ohio (1) 74% 69%
1)Dayton Industrial has been adversely affected by the build-up of commercial
space in the area. The increase in occupancy is due to the foreclosures of
Buildings 53 and 59 in 1998 that were not occupied. The remaining building
is fully leased at June 30, 1998.
The Partnership realized net income of approximately $4,962,000 and $6,492,000
for the three and six months ended June 30, 1998, versus net losses of
approximately $860,000 and $1,655,000 for the three and six months ended June
30, 1997. Net income for the three and six months ended June 30, 1998, resulted
from the extraordinary gain on extinguishment of debt of approximately
$5,735,000 and $7,979,000, respectively. The Partnership realized a loss before
the extraordinary gain of approximately $1,487,000. The Partnership experienced
a decrease in revenues and expenses for the six months ended June 30, 1998, due
to the loss of Buildings 53, 59, and 41 of the Dayton Industrial Complex in
January, April, and June 1998, respectively (see discussion below).
Rental income decreased primarily due to the loss of Buildings 53, 59, and 41 of
the Dayton Industrial Complex but was offset by an increase in rental income at
both Foxcrest Apartments and Waterford Square Apartments. Average rental rates
increased at both investment properties, while Waterford Square Apartments also
experienced an increase in average occupancy.
The decrease in expenses is mainly due to decreases in operating expenses,
general and administrative expenses, and interest expense. These decreases were
primarily due to the foreclosures of Buildings 53 and 59 and the sale of
Building 41 of the Dayton Industrial Complex. The decrease in operating
expenses was offset by an increase in maintenance expense at Waterford Square
Apartments due to an exterior painting project during the six months ended June
30, 1998. Offsetting the decrease in interest expense due to the foreclosure of
Buildings 53 and 59 and the sale of Building 41 was an increase in interest
expense on the defaulted debt due to interest accruing on increased debt
balances as unpaid interest is added to principal.
As part of the ongoing business plan of the Partnership, the Managing General
Partner continues to monitor 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 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, 1998, the Partnership had cash and cash equivalents of approximately
$835,000 compared to approximately $655,000 at June 30, 1997. Cash and cash
equivalents increased approximately $186,000 and $337,000 for the periods ended
June 30, 1998 and 1997, respectively. Net cash provided by operating activities
decreased primarily due to an increase in receivables and deposits and smaller
increases in accrued interest and amounts due to affiliates. These changes were
partially offset by a decrease in other assets. The decrease in receivables and
deposits during the first six months of 1997 is primarily due to a decrease in
tenant accounts receivable. The increase in receivables and deposits during the
first six months of 1998 is primarily due to an increase in escrow accounts due
to the timing of payments. The increase in accrued interest is primarily due to
the accrual of default interest, along with interest accruing on increased debt
balances at Dayton Industrial Complex as accrued interest is added to the
principal on all of the 2nd mortgages secured by this property. However, due to
the foreclosures of Buildings 53 and 55 and the sale of Building 41 of the
Dayton Industrial Complex, the second mortgage balance was lower during the six
months ended June 30, 1998, resulting in a smaller increase in accrued interest.
Also, as a result of the sale and foreclosures of the buildings, expense
reimbursements decreased for the six months ended June 30, 1998, resulting in a
smaller accrual to due to affiliates. Other assets decreased for the six months
ended June 30, 1998, due to a decrease in prepaid insurance. Net cash provided
by investing activities increased primarily as a result of the recognition of
proceeds from the sale of Building 41 of the Dayton Industrial Complex, along
with an increase in receipts from restricted escrows. This was partially offset
by an increase in property improvements and replacements at Waterford Square
Apartments and Fox Crest Apartments. Net cash used in financing activities
increased due to the repayment of loans which occurred as a result of the sale
of Building 41 of the Dayton Industrial Complex. Also contributing to the
increase in cash used in financing activities was a decrease in additions to
notes payable as a result of fewer advances received from the lender to cover
operating expenses for Building 59 of the Dayton Industrial Complex. These
changes were partially offset by a decrease in principal payments on notes
payable. For the six months ended June 30, 1997, a $200,000 principal payment
was made on the third mortgage indebtedness at the Dayton Industrial Complex
versus a $150,000 principal payment for the six months ended June 30, 1998.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. The Partnership continues to
incur recurring operating losses and suffers from inadequate liquidity. Non-
recourse and recourse indebtedness of approximately $2,666,000 and $4,576,000 is
in default at June 30, 1998, due to nonpayment of interest and principal when
due.
The Partnership incurred net income of approximately $6,492,000 for the six
months ended June 30, 1998. This was due to the recognition of an extraordinary
gain on the extinguishment of debt of approximately $7,979,000, relating to the
foreclosures of Buildings 53 and 59 and the sale of Building 41 in the Dayton
Industrial Complex. The Partnership realized a loss before the extraordinary
gain of approximately $1,487,000. Angeles Realty Corporation II, (the "Managing
General Partner" or "ARC II") expects the Partnership to continue to incur such
losses. The Partnership generated cash from operations of approximately
$602,000 during the six months ended June 30, 1998; however, this primarily was
the result of accruing interest of approximately $1,259,000 on its indebtedness
and $71,000 for services provided by affiliates.
In January and April 1998, Buildings 53 and 59, respectively, of the Dayton
Industrial Complex were foreclosed on and in June 1998, Building 41 of the
Dayton Industrial Complex was sold. Historically, the Dayton Industrial Complex
has not been able to retain tenants and has never generated operating cash.
Effective October 1, 1996, the Partnership determined that, based on economic
conditions at the time as well as projected future operational cash flows, the
decline in value of the property was other than temporary and recovery of the
carrying value was not likely. Accordingly, the Dayton Industrial Complex's
carrying value was reduced to an amount equal to its estimated fair value. The
Partnership ceased making debt service payments on Buildings 53 and 59 in 1996
and the buildings were placed in receivership in 1997. In the Managing General
Partner's opinion, it was not in the Partnership's best interest to contest the
foreclosure actions. As a result of the foreclosures, the Partnership recorded
an extraordinary gain on extinguishment of debt of approximately $2,244,000 and
$3,607,000 for Buildings 53 and 59, respectively. Also, in connection with the
foreclosure of Building 59, the Partnership recorded a $44,000 write-up of the
building from its carrying value to its estimated fair value during the second
quarter of 1998. Prior to the foreclosure of Building 53, the outstanding debt
on the property was a first mortgage in the amount of approximately $1,043,000
and a second mortgage in the amount of approximately $1,669,000. Related
accrued interest amounted to approximately $175,000. Prior to the foreclosure
of Building 59, the outstanding debt on the property was a first mortgage in the
amount of approximately $2,895,000 and a second mortgage in the amount of
approximately $704,000. Related accrued interest amounted to approximately
$688,000. As a result of the sale of Building 41, the Partnership recorded an
extraordinary gain on extinguishment of debt of approximately $2,128,000. Prior
to the sale of Building 41, the outstanding debt on the property was a first
mortgage in the amount of approximately $1,104,000 and a second mortgage in the
amount of approximately $2,823,000. Related accrued interest amounted to
approximately $23,000.
The Dayton Industrial Complex has one remaining building at June 30, 1998. The
first mortgage on Building 55 which totals approximately $2,666,000 is all
nonrecourse to the Partnership, matured in December 1997 and is in default due
to nonpayment of interest and principal when due. The Managing General Partner
has entered into a sales agreement for Building 55 of the Dayton Industrial
Complex and anticipates selling this building to an unrelated party in 1998.
The Dayton Industrial Complex has not generated any operating cash for the
Partnership since it was purchased nor has the Partnership expended any cash to
support the property. The Managing General Partner will not use any Partnership
funds on the remaining building in 1998.
The Partnership has unsecured working capital loans to Angeles Acceptance Pool,
L.P. ("AAP") in the amount of approximately $4,576,000 plus related accrued
interest that was due in November 1997. This indebtedness is recourse to the
Partnership. The Partnership does not have the means with which to satisfy this
obligation. The Managing General Partner does not plan to enter into
negotiations with AAP on this indebtedness at this time. The Managing General
Partner believes that the possibility that AAP will initiate collection
proceedings on this indebtedness is remote, as the estimated value of the
Partnership's investment properties and other assets are significantly less than
the existing first mortgages and other secured Partnership indebtedness. If AAP
initiates proceedings, then the Managing General Partner will enter into
negotiations to restructure this indebtedness.
The Partnership has two notes to Angeles Mortgage Investment Trust ("AMIT"),
which are recourse to the partnership only, in the amount of approximately
$2,326,000 plus related accrued interest that originally matured in March 1998.
The Managing General Partner negotiated with AMIT to extend this indebtedness
and in the second quarter of 1998 executed an extension through November 2027.
No other sources of additional financing have been identified by the
Partnership, nor does the Managing General Partner have any other plans to
remedy the liquidity problems the Partnership is currently experiencing. The
Managing General Partner anticipates that Fox Crest Apartments and Waterford
Square Apartments will generate sufficient cash flows for the next twelve months
to meet all property operating expenses, debt service requirements and to fund
capital expenditures.
As a result of the above, there is substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or amounts and classifications of liabilities that may
result from these uncertainties.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
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 (the "Reform Act") 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 its 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, plaintiffs have recently filed an amended
complaint.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners are affiliates of
Insignia filed a complaint in the Superior Court of the State of California,
County of Los Angeles. The action involves 44 real estate limited partnerships
(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 defendant limited
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 Partnership was
only recently served with the complaint and has not yet responded to it. The
Partnership 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.
Exhibit 10.38, Assignment of Warranties - Building 41 of the Dayton
Industrial Complex - between the Partnership and Mid-States
Development Company, dated June 12, 1998.
Exhibit 10.39, Assignment of Permits - Building 41 of the Dayton
Industrial Complex - between the Partnership and Mid-States
Development Company, dated June 12, 1998.
Exhibit 10.40, Purchase Agreement - Building 41 of the Dayton
Industrial Complex - between the Partnership and Mid-States
Development Company, dated June 12, 1998.
Exhibit 10.41, Closing Statement - Building 41 of the Dayton
Industrial Complex - between the Partnership and Mid-States
Development Company, dated June 12, 1998.
Exhibit 10.42, Journal Entry Confirming Sale, Ordering Deed and
Distributing Sale Proceeds - between The Traveler's Insurance
Company and the Partnership, dated June 12, 1998.
b) Reports on Form 8-K:
No reports on form 8-K were filed during the six months ended June
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 PARTNERS XIV
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President/Director
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: August 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Partners XIV 1998 Second Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000759859
<NAME> ANGELES PARTNERS XIV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 835
<SECURITIES> 0
<RECEIVABLES> 357
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 31,546
<DEPRECIATION> (19,664)
<TOTAL-ASSETS> 13,699
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 34,081
0
0
<COMMON> 0
<OTHER-SE> (27,015)
<TOTAL-LIABILITY-AND-EQUITY> 13,699
<SALES> 0
<TOTAL-REVENUES> 2,740
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,101
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,487)
<DISCONTINUED> 0
<EXTRAORDINARY> 7,979
<CHANGES> 0
<NET-INCOME> 6,492
<EPS-PRIMARY> 146.44<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
ASSIGNMENT OF WARRANTIES
(PROJECT 41)
(PER SECTION 7.1.4)
Angeles Partners XIV, a California limited partnership (the "Assignor") for
Ten Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby transfers, assigns and
conveys unto MID-STATES DEVELOPMENT COMPANY, an Ohio general partnership, (the
"Assignee") all of its right, title and interest in and to any warranty or
guaranty given by any person, partnership, corporation or other entity in
connection with, or related to, work or labor performed, materials supplied, or
property of any type delivered to or in connection with that certain commercial
property being sold by Assignor to Assignee pursuant to that certain Purchase
Agreement dated January ____, 1998, as assigned, and which is located in
Montgomery County, Ohio as more particularly described on Exhibit A attached
hereto and incorporated by reference herein to the full extent that any such
warranty or guaranty is assignable or transferable by Assignor.
IN WITNESS WHEREOF, the Assignor has executed the within Assignment this
10th day of June, 1998
ANGELES PARTNERS XIV, a California
limited partnership
By: Angeles Realty Corporation II,
general partner of Angeles
Partners XIV
By: /s/William H. Jarrard, Jr.
Its: President
ASSIGNMENT OF PERMITS, ETC.
(PROJECT 41)
(PER SECTION 7.1.8)
ANGELES PARTNERS XIV, a California limited partnership ("Assignor), for Ten
Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby transfers, assigns and
conveys unto MID-STATES DEVELOPMENT COMPANY, an Ohio general partnership
("Assignee") all of its right, title and interest in and to any and all permits,
licenses and certificates and other authority granted to Assignor related to, or
granted, held or possessed in connection with or arising out of the ownership,
occupation and operation of that certain commercial property being sold to
Assignor to Assignee pursuant to that certain Purchase Agreement dated January
____1998, as assigned, and which is located in Greene County, Ohio as more fully
described on Exhibit A attached hereto and incorporated by reference herein, to
the full extent that any such permit, license, certificate or authority is
assignable or transferable by Assignor.
IN WITNESS WHEREOF, the Assignor has executed the within Assignment this
10th day of June, 1998.
ANGELES PARTNERS XIV, a California
limited partnership
By: Angeles Realty Corporation II,
general partner of Angeles
Partners XIV
By: /s/William H. Jarrard, Jr.
Its: President
ASSIGNMENT AND ASSUMPTION OF LEASES
AND SECURITY DEPOSITS
(PROJECT 41)
(PER SECTION 7.1.5)
For Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned,
ANGELES PARTNERS XIV, a California limited partnership (the "Assignor"), hereby
transfers, conveys and assigns unto MID-STATES DEVELOPMENT COMPANY, an Ohio
general partnership (the "Assignee"), all of the right, title and interest of
the Assignor in and to all tenant leases currently in force and effect between
the Assignor and tenants of that certain commercial property (more fully
described on Exhibit A attached hereto) being sold by Assignor to Assignee as of
the date hereof and commonly referred to as located at 3981-3983 Image Drive,
Vandalia, Ohio, (the "Leases") and security deposits paid to Assignor by Tenants
under the Leases.
Assignee hereby assumes the obligations of Assignor under the Leases,
including the obligations with respect to the security deposits being
transferred herein.
IN WITNESS WHEREOF, the Assignor and Assignee have executed the within
Assignment and Assumption of Leases and Security Deposits effective as of this
10th day of June, 1998.
MID-STATES DEVELOPMENT Angeles Partners XIV
COMPANY a California limited partnership
By: /s/William Schneider By: Angeles Realty Corporation, II
Its: General Partner General Partner of Angeles
Partners XIV
Date: June 12, 1998 By: /s/William H. Jarrard, Jr.
Its: President
Date: June 10, 1998
PURCHASE AGREEMENT
RE: ANGELES PROPERTIES XIV PROJECT 41
THIS PURCHASE AGREEMENT (this "Agreement") is made as of January ______,
1998, (the "date of this Agreement") between ANGELES PROPERTIES XIV, a
California limited partnership ("Seller") and MID-STATES DEVELOPMENT COMPANY,
an Ohio general partnership ("Purchaser").
Section 1. Description of Property: Agreement of Purchase and Sale.
1.1 Purchase and Sale; Property. Seller agrees to sell and convey to
Purchaser, and Purchaser agrees to purchase and pay for, upon the terms and
conditions contained in this Agreement, the following:
1.1.1 The following real estate located in the City of Vandalia,
County of Montgomery, State of Ohio and commonly referred to as follows:
(a) Project 41 located at 3981 - 3983 Image Drive, Vandalia, Ohio.
The land respectively encompassed by said project is more fully described
on Exhibits A-1 and A-2 attached hereto and incorporated by reference herein.
All of the land described in Exhibits A-1 and A-2 is collectively hereafter
referred to as the Land. The Land shall include all of Seller's rights therein
and in any alleys, strips or gores, if any, adjoining the Land or any part
thereof.
1.1.2 Said project is improved with an office/industrial building
containing approximately 128,800 gross square footage area, and includes all
other buildings, structures, appurtenances, landscaping and other improvements
on the Land (collectively, the "Improvements") (all of the Land and Improvements
and the Personal Property, hereinafter defined, are referred to as the
"Premises."
1.1.3 Any building supplies, fuels, intangible rights wherever
located including, but not limited to, all plans and specifications, surveys,
studies and drawings related to the Premises, all transferable permits and
licenses and all warranties and guarantees of contractors, suppliers, and
manufacturers, all fixtures, machinery and equipment, heating, ventilating and
air conditioning equipment and systems, plumbing and electrical equipment and
systems, furnishings, furniture, alarm systems, sprinkler systems and all other
tangible and intangible personal property that is owned by Seller and attached
to, appurtenant to or located in or used in connection with the operation,
management or maintenance of the Premises (all of the foregoing being
collectively referred to as the "Personal Property");
1.1.4 All right, title and interest of Seller in and to any air
rights, riparian rights, easements, right-of-way, rights of ingress or egress,
licenses or other interests in or to any land, highway, street, road or avenue,
open or proposed, in, on, across, abutting or adjoining, the Land.
1.1.5 Any and all other rights, privileges and appurtenances owned
by Seller and in any way related to, or used in connection with, the operation,
management, or maintenance of the Premises and/or the Personal Property; and
1.1.6 All right, title and interest of Seller in and to any
condemnation award or proceeds of insurance made or to be made in respect of the
Premises or any of the other interests described above.
1.1.7 All right, title and interest of Seller in and to all rents,
income, revenues, issues and profits, leases and rental agreements affecting or
pertaining to the Premises or any part thereof.
1.2 The term "Property" as used in this Agreement shall mean all property,
whether real or personal, tangible or intangible, set out and described above.
1.3 Closing. The parties agree to consummate this purchase and sale and
the transactions contemplated hereby ("Closing") on or before February 27, 1998
at 1:00 p.m., Eastern Standard Time, in the offices of the Title Company
(hereinafter defined) in Dayton, Ohio, or at such other earlier date and time as
may be agreed upon by the parties ("Closing Date" or "Date of Closing").
Purchaser and Seller agree to work toward an earlier Closing if conditions
precedent to Closing can be reasonably accomplished by such earlier date.
Section 2. Purchase Price.
2.1 Purchase Price. The total purchase price for the Property shall be
One Million Nine Hundred Thousand Dollars ($1,900,000.00) payable on the Closing
Date by certified check, cashier's check, wire transfer or cash. The purchase
price shall be allocated between the Land and Improvements as set forth in
Exhibit B hereto (which, if not attached hereto at the time of execution, shall
thereafter be agreed to by the parties and then attached to this agreement and
shall become a part hereof).
2.2 Disbursement of Purchase Price. The Purchase Price after adjustment
for any prorations of taxes, assessments, rents, utilities or transfers of
security deposits as provided herein and other customary closing adjustments and
credits, shall be paid and disbursed at the Closing in the following manner:
2.2.1 First, to payment in full of all loans
secured by first mortgage liens on the Property or any part
thereof. If Purchaser assumes any such loan, then the
amount of the assumed loan shall be treated as a credit to
the payment of the purchase price.
2.2.2 Next to payment of all costs of sale to be
paid by Seller, including, but not limited to, real estate
commissions, pursuant to the terms hereof.
2.2.3 Next, to the payment in full of the mortgage
held by Miller-Valentine Realty, Inc. recorded at Microfiche
92-0650-D02 of the Montgomery County, Ohio mortgage records.
2.2.4 Next to the payment in full of the loan
secured by the mortgage held by Mid-States Development
Company, recorded at Microfiche 85-1840-E06 and amended by
document recorded at Microfiche 92-0651-B08 of the
Montgomery County, Ohio mortgage records.
2.2.5 Next, any remaining portion of the purchase
price shall be distributed in satisfaction of any other
liens and encumbrances on the Property.
2.2.6 Any remaining balance of the purchase price
shall be distributed as provided in the Property Operating
and Management Agreement between Seller and Miller-Valentine
Realty, Inc.
2.3 Minimum Payment to Seller. Notwithstanding anything to the contrary
provided herein, in no event shall Seller receive from the disbursement of the
purchase price less than Five Thousand Dollars ($5,000).
Section 3. Documents and Inspections.
3.1 Seller's Deliveries. Upon execution of this Agreement to the extent
not previously delivered, Seller shall deliver to Purchaser correct copies of
each of the following document and materials:
3.1.1 All of the agreements, oral or written, formal or informal,
actually known by Seller to pertain to the ownership, management, maintenance
and operation of the Property. The current manager of the Property, Miller-
Valentine Realty, Inc., is authorized by Seller to turn over all such documents
which it may possess to Purchaser and is further directed by Seller to cooperate
in the closing of the transaction contemplated hereby.
3.1.2 All plans, specifications and blueprints pertaining to the
Improvements that are in Seller's possession.
3.1.3 All certificates of occupancy, licenses, permits,
authorizations and approvals, issued by all governmental authorities having
jurisdiction over the Property, together with copies of all certificates issued
by any local board of fire underwriters (or other body exercising similar
functions), if available.
3.1.4 All leases and rental agreements relating or pertaining to
the Property or any part thereof in possession of Seller.
3.1.5 Copies of any environmental audits or other reports
concerning soil, ground water, underground tanks, subsurface conditions,
environmental conditions or other matters concerning the Premises or any part
thereof of which Seller is aware and in possession or control of such
information or data.
3.2 Entry for Inspection. Immediately upon the execution of this
Agreement and thereafter continuously through the date of Closing, Seller shall
make the Property available for inspection by Purchaser, and Purchaser's agents,
employees and contractors. During that time, Purchaser may, at Purchaser's sole
risk and expense, undertake a complete physical inspection of the Property as
Purchaser deems appropriate. Purchaser agrees to indemnify and save Seller
harmless against all liabilities, claims, damages, penalties, costs and expenses
incurred by or asserted against Seller in connection with or arising out of the
entry upon the Premises by Purchaser or Purchaser's employees, agents, or
contractors. This obligation shall survive the consummation or termination of
this Agreement.
3.3 Inspection Period. Purchaser shall have until the date of Closing
(the "Inspection Period"), in which to determine whether the condition and
suitability of the Property and all of the items delivered to Purchaser pursuant
to Section 3.1 are satisfactory to Purchaser. If the Property or any of such
items is not satisfactory to Purchaser, Purchaser may elect not to purchase the
Property by sending written notice of termination to Seller, postmarked not
later than the date of Closing. In such event, this Agreement shall terminate
and neither party shall have any further rights or obligations under this
Agreement other than those rights and/or obligations that are expressly stated
to survive expiration or termination of this Agreement.
Section 4. Title and Survey.
4.1 Title; Deed. Prior to Closing, Purchaser, at Purchaser's cost, shall
obtain a commitment for an Owner's Policy of Title Insurance (the "Commitment")
issued by Chicago Title Insurance Company (the "Title Company") and dated as of
a current date, pursuant to which the Title Company shall commit to issue to
Purchaser an ALTA Owner's Policy of Title Insurance in the amount of the
Purchase Price, with all printed General Exceptions of Schedule B of the title
policy form deleted, insuring in Purchaser marketable fee simple title to the
Premises, subject only to the "Permitted Exceptions" as defined below. From the
proceeds of sale, Seller shall pay for or reimburse Purchaser for the cost of
such policy at Closing. At the Closing, and as a condition to Purchaser's
obligations under this Agreement, the Title Company shall deliver or irrevocably
commit to delivery to Purchaser the policy of title insurance in accordance with
the Commitment. At Closing, Seller will convey the Premises to Purchaser by
transferable and recordable limited warranty deed, conveying marketable title to
Purchaser, or its nominee, free and clear of all defects, liens, claims
encumbrances, easements, restrictions, covenants, conditions, encroachments,
assessments (general or special) or any other exceptions, including but not
limited to the printed General Exceptions of Schedule B of the title policy
form, except for the following (the "Permitted Exceptions"):
(a) all legal highways.
(b) Zoning, building and other laws, ordinances, codes and
regulations that do not materially adversely affect the current use of
the Property.
(c) Easements, rights-of-way, covenants and restrictions of
record, to the extent that such easements, right-of-way, covenants and
restrictions do not interfere with, obstruct, or otherwise impair, in
Purchaser's sole judgment, Purchaser's current or intended future use
and enjoyment of the Property or Purchaser's plans for the future
development of the Property;
(d) Installments of real estate taxes and assessments which are
a lien upon the Premises, but not yet due and payable; and
(e) Any mortgage assumed by Purchaser.
Any mortgage or other monetary lien on the Property not assumed by Purchaser is
to be discharged and paid by Seller at the time of Closing. If funds are
disbursed as set forth in Section 2.2, it shall be Purchaser's obligation
hereunder to obtain releases of the security interests held on the Property or
any part thereof by Mid-States Development Company or Miller-Valentine Realty,
Inc.
4.2 Survey. Prior to Closing, Purchaser, at Purchaser's cost, shall
obtain such survey ("Survey") as is reasonably necessary to cause the title
insurer to delete the survey exception from the title insurance policy and to
satisfy the requirements of Purchaser's lender, if any, certified to Purchaser,
the Title Company and Purchaser's lender, if any, showing all improvements,
easements, roads, highways, and other restrictions affecting the Property.
4.3 U.C.C. Searches. Prior to Closing, Purchaser, at Purchaser's cost,
shall obtain current searches of all Uniform Commercial Code financing
statements filed with the Secretary of State of Ohio and the County Recorder's
Office in Montgomery County, Ohio against Seller and against all prior owners of
the Property during the past six (6) years. Such searches shall reveal that
there are no claims or liens against any of those parties encumbering the
Property. If claims or liens are revealed that do or could encumber the
Property, then the cure and termination election provisions set forth below
shall apply.
4.4 Defects and Cure.
4.4.1 The Commitment, the Survey and the Uniform Commercial Code
searches described in Section 4.1 through 4.3 are referred to as the "Title
Evidence." Prior to the Closing Date, Purchaser shall notify Seller of
Purchaser's disapproval of any matter contained in the Title evidence after
Purchaser's receipt of all of the Title Evidence and copies of the documents
referred to in the Title Evidence as exceptions or exclusions from coverage.
Except for real estate taxes that are to be prorated at Closing and mortgages
and other monetary liens which, in any event and notwithstanding anything
hereinafter to the contrary, shall be discharged and paid at Closing,
Purchaser's failure to so notify Seller of disapproval of any matter shall be
deemed approval of that matter. If the Title Evidence discloses, with respect
to the Survey, conditions that will adversely affect Purchaser's current or
future use or enjoyment of the Premises or Purchaser's plans for the future
development of the Premises, with respect to the Title Commitment, matters other
than the Permitted Exceptions, or with respect to the Uniform Commercial Code
searches, liens or claims (collectively, "Defects"), those Defects shall, as a
condition to Purchaser's obligations under this Agreement, be cured or removed
from the Title Evidence prior to or at Closing. If Seller fails to cure and
remove all Defects within fifteen (15) days after written notice, this Agreement
(1) may be terminated, at Purchaser's election, by written notice given to
Seller within ten (10) days after expiration of the period allowed for cure. If
necessary to allow the full time to cure or remove such defect, the date of
Closing shall be extended accordingly; or (2) Purchaser may, at its sole
election, proceed to close this transaction notwithstanding such defects. If
this agreement is terminated as above provided in this Section 4, neither party
shall have any further rights or obligations under this Agreement other than
those rights and/or obligations that are expressly stated to survive
consummation or termination of this Agreement.
Section 5. Purchaser's Conditions to Closing.
The obligation of Purchaser to close the transaction contemplated by this
Agreement is subject to the following conditions, inserted for Purchaser's
benefit and which may be waived by Purchaser at its sole option by notice to
Seller.
5.1 The representations and warranties of Seller contained in Section 6 of
this Agreement shall be true on the date of Closing in all material respects as
though those representations and warranties were made on that date.
5.2 Seller shall not have breached any material affirmative covenant
contained in this Agreement to be performed by Seller on or prior to the date of
Closing.
5.3 Purchaser shall have either affirmatively approved or shall have been
deemed (pursuant to the provisions of Section 3 and 4) to have approved all of
the matters set forth in Sections 3 and 4 in respect to which Purchaser has,
under provisions of this Agreement, a right of inspection and/or approval; or,
in the event Purchaser has delivered written objections to Seller in respect to
any of those matters, Seller has remedied Purchaser's objections prior to
Closing in the manner and within the time period provided in this Agreement, or
Purchaser has waived same in writing.
5.4 Seller shall have timely delivered to Purchaser in satisfactory form
the documents and all other items referred to in Section 7 below.
5.5 The Title Company shall at Closing have delivered or irrevocably
committed itself in writing to deliver the Title Policy described in Section
4.1.
5.6 Seller shall have obtained the agreement of holders of mortgages on
the Property to release their respective liens against the Property at Closing
in any case where such mortgage is not being paid in full, except that it shall
be Purchaser's obligation to obtain releases from Miller-Valentine Realty, Inc.
and Mid-States Development Company if liens held by either of them are not paid
in full, so long as the proceeds of sale are disbursed as provided in Section
2.2 hereof.
5.7 Purchaser, at its expense, shall determine that all legal highways do
not interfere with, obstruct, or otherwise impair, in Purchaser's sole judgment,
Purchaser's current or intended future use and enjoyment of the Property or
Purchaser's plans for future development of the Property.
5.8 Purchaser shall have received an environmental assessment satisfactory
to Purchaser, as Purchaser in its sole discretion shall determine, evidencing
that no condition of or concerning the Property causes or creates a situation or
matter which violates or is not in compliance with any law, rule or regulation
or ordinance which relates to protection of the environment or which, in
Purchaser's sole judgment, would cause Purchaser to incur significant costs to
correct any such matter, or to investigate such matter further to determine the
potential impact thereof.
5.9 Purchaser shall have obtained a commitment for financing in the amount
of not less than $1,000,000 on terms no less favorable than those generally
prevailing for commercial loans of similar size and on similar types to
commercial property as the Property to a borrower of similar creditworthiness as
Purchaser. The financing may include any combination of loans, loan
assumptions, and lenders as Purchaser may determine appropriate. Purchaser
agrees to promptly apply for and diligently proceed to obtain such financing.
The closing of this transaction is contingent upon Purchaser's lender funding
said loan commitment.
5.10 If any of the conditions provided in this Section 5 are not satisfied
or waived, or the time periods for satisfaction extended by Purchaser, then
Purchaser shall have the right, in addition to any other right which it may
have, to terminate this Agreement by notice delivered to Seller no later than
the date of Closing or such earlier time as may be provided above. In the event
of such termination, neither party shall have any further rights or obligations
under this Agreement other than those rights and/or obligations which are
expressly stated to survive consummation or termination of this Agreement.
Section 6. Representations, Warranties and Covenants.
6.1 Seller's Representations, Warranties and Covenants. Seller
represents, warrants and covenants to Purchaser as of the date hereof as to the
following matters, and shall be deemed to remake all of the following
representations, warranties and covenants as of the date of Closing without
further action on its part:
6.1.1 The execution and delivery of this Agreement by Seller, the
execution and delivery of every other document and instrument delivered pursuant
to this Agreement by or on behalf of Seller, and the consummation of the
transactions contemplated by this Agreement have been duly authorized and
validly executed and delivered by Seller, and will not (a) constitute or result
in the breach of or default under any written agreement to which Seller is a
party or which affects the Property; (b) constitute or result in a violation of
any order, decree or injunction with respect to which Seller and/or the Property
is bound; (c) cause or entitle any party to have a right to accelerate or
declare a default under any written agreement to which Seller is a party or
which affects the Property; and/or (d) violate any provision of any municipal,
state or federal law, statutory or otherwise, to which Seller or the Property
may be subject.
6.1.2 No attachments, execution proceedings, liens, assignments,
bankruptcy, or insolvency proceedings are pending or, to the actual knowledge of
Seller, threatened against Seller or the Property or contemplated by Seller,
except such liens as may be specifically disclosed in the Commitment issued by
the Title Company, which shall be released at Closing or assumed by Purchaser.
6.1.3 Seller is not a party to any collective bargaining agreement as
to any employees who are engaged by Seller with regard to the operation and
maintenance of the Property. Purchaser is assuming no responsibilities or
obligations whatsoever relative to any employees engaged by Seller with regard
to the operation and management of the Property, and Seller indemnifies
Purchaser from and against any and all obligations and other matters relative to
such employees, whether arising or accruing on, before or after the date of
Closing.
6.1.4 Between the date of this Agreement and the date of Closing,
no part of the Property will be sold, encumbered or transferred in favor of or
to any other party whatsoever.
6.1.5 There are no purchase contracts, options or any other agreements
of any kind, oral or written, by which any person or entity other than Seller
will have acquired or will have any basis to assert any right, title or interest
in, or right to possession, use, enjoyment or proceeds of, any part or all of
the Property other than tenants of the Property, the leases and rental
agreements which have been previously disclosed to Purchaser, and which do not
contain any option to purchase the Property or any part thereof.
6.1.6 Seller is a limited partnership duly organized and validly
existing under California law and qualified to own property and transact
business in Ohio, and the person(s) signing this Agreement on behalf of Seller
have the power and authority to enter into and perform this Agreement in
accordance with its terms; and at Closing Seller's execution and delivery of
this Agreement and the consummation of this transaction by its general partners
will have been duly authorized by all appropriate actions and proceedings.
Evidence by Seller of the foregoing representation reasonably satisfactory to
Purchaser's counsel shall be delivered at Closing, which evidence may include,
but not be limited to, an opinion of Seller's counsel with respect to such
matters.
6.1.7 Seller owns good record and marketable, fee simple title to the
Premises in recordable form, free and clear of any and all mortgages (except
mortgages to be assumed, paid or released at closing), liens, encumbrances,
claims, charges, equities, covenants, conditions, restrictions, easements,
rights-of-way, or other matters, whether or not of record, except for Permitted
Exceptions.
6.1.8 Seller is not a foreign person as such term is used in Section
1445 of the Internal Revenue Code.
6.1.9 Hazardous Materials. Seller represents and warrants to
Purchaser that it has not received written notice from any federal, state or
local governmental agency regarding Hazardous materials (as defined below) on,
in, under or affecting the Property. Seller further represents and warrants to
Purchaser that, to the best of Seller's knowledge, there has been no spill,
release, discharge or disposal of Hazardous Materials on, in, under or affecting
the Property. Seller further represents and warrants that, to the best of its
knowledge, the soil and groundwater are not contaminated with Hazardous
Materials. As used in this Agreement, the term "Hazardous Materials" means any
hazardous or toxic substance, materials or waste which is or become regulated by
any local governmental authority, any agency of the State of Ohio, or any agency
of the United States Government. The term "Hazardous Materials" includes
without limitation any material or substance which is (I) designated, defined
or listed as a "hazardous substance" pursuant to the Federal Water Pollution
Control Act (33 U.S.C. - 1251, et seq.), the Federal Resource Conservation and
Recovery Act (42 U.S.C. - 9601, et seq.), or the Hazardous Materials
Transportation Act (49 U.S.C. - 1801, et seq.); (ii) petroleum and any petroleum
by-products; (iii) asbestos; or (iv) polychlorinated biphenyls.
6.1.10 To the best knowledge of Seller, the Premises are not in
violation of any zoning, subdivision, building or fire code, or any other
applicable ordinance, statute, regulation or requirement of any governmental
authority having jurisdiction thereof, and Seller has received no notice or
order from any governmental authority as to such a violation.
6.3 No Other Representations. Except as is expressly provided in this
Agreement, Purchaser acknowledges that neither Seller nor any agent, attorney,
employee or representative of Seller has made any representations as to the
physical nature or condition of the Property.
6.4 Survival. All of the representations, warranties and covenants made
by Seller in Section 6.2 and elsewhere in this Agreement shall survive Closing
for a period of one (1) year, except for the environmental representations,
warranties and covenants which shall survive indefinitely. Unless Purchaser
delivers notice to Seller of a breach of representation, warranty or covenant
contained in Section 6.1 or elsewhere in this Agreement (other than a matter
which relates to an environmental representation or warranty) within one (1)
year of the date of Closing, the representation, warranty or covenant shall be
of no further force or effect. Notwithstanding the foregoing, the covenants of
limited warranty contained in Seller's deed shall survive indefinitely.
Section 7. Closing and Transfer of Title.
7.1 Seller's Documents; Other Deliveries. At Closing, Seller shall
execute and/or deliver to Purchaser the following:
7.1.2 A limited warranty deed to the Premises in accordance with
Section 4.1, conveying marketable title in recordable form to the Premises to
Purchaser (or its nominee) free, clear and unencumbered, subject, however, to
the Permitted Exceptions, and any mortgage assumed by Purchaser.
7.1.3 A Bill of Sale with full warranties of title, conveying the
Personal Property to Purchaser.
7.1.4 An assignment of all warranties and guarantees with respect
to the Property.
7.1.5 An assignment of all leases and rental agreements concerning
the Property or any portion thereof.
7.1.6 Releases of all mortgages liens which are liens against the
Premises. The parties recognize that the purchase price will not be sufficient
to satisfy all mortgage liens on the Premises, but anticipate that certain of
the lienholders will release their respective lien or liens for less than full
consideration. If funds are distributed as provided in Section 2.2 hereof, then
Purchaser shall be responsible for obtaining releases from Miller-Valentine
Realty, Inc. and Mid-States Development Company. If satisfactory arrangements
are not reached with any other lienholder who is not to be paid in full at
Closing, then either party hereto may terminate this agreement by giving written
notice to the other prior to Closing Date, and in such event. neither party
shall have any further rights or obligations under this agreement other than
those rights and/or obligations which are expressly stated to survive
consummation or termination of this agreement.
7.1.7 All other documents and instruments referred to in this
Agreement which are to be delivered to Purchaser.
7.1.8 An assignment of all permits, licenses and certificates and
authority granted to Seller for the ownership, occupation and operation of the
Property.
7.1.9 All of the Personal Property.
7.1.10 Documents satisfactory to Purchaser and the Title Company,
indemnifying Purchaser and the Title Company from all liability and expense,
including attorneys' fees, in connection with unfiled mechanics' liens in the
event of any work being completed or performed, or material being furnished, at,
on, or about the Property within ninety (90) days of the date of Closing.
7.1.11 The originals of all blueprints, construction plans,
specifications and plats for all of the Improvements or Seller's rights to any
of the foregoing that are held by third parties, if available.
7.1.12 An owner's affidavit as to mechanics' liens, parties in
possession of the Premises, unrecorded agreements, and such other matters
required by the Title Company as a condition to its deletion of the printed
General Exceptions relating to such matters from the title policy.
7.1.13 All consents that may be required from any third person or
entity in connection with the sale of the Property.
7.1.14 Such evidence of Seller's due authorization of this agreement
and the transactions as contemplated hereby in form and substance as shall
comply with the requirements set forth in Section 6.1.6.
7.1.15 Such other documents or instruments as may be reasonably
required by Purchaser or Purchaser's lender, if any, to cause such lender to
fund and disburse the loan obtained by Purchaser to finance the purchase
contemplated hereby or as may be reasonably necessary to effectuate Closing,
including, but not limited to, a closing statement and affidavit of non-foreign
status. All of the documents and instruments to be delivered by Seller shall be
in form and substance reasonably satisfactory to counsel for Purchaser.
7.2 Purchaser's Documents. At Closing, Purchaser shall execute and/or
deliver to Seller the following documents:
7.2.1 An assignment of leases and rental agreements, as described
in 7.1.4 hereof, which shall include Purchasers assumption of the obligations of
the Lessor thereunder.
7.2.2. Such other documents and instruments as Seller or the Title
Company shall reasonably request in order to consummate this transaction, or as
may be reasonably necessary to effectuate Closing, including, but not limited
to, a closing statement.
Section 8. Possession.
Seller shall deliver possession of the Property to Purchaser at Closing.
Section 9. Prorations and Expenses.
9.1 Proration of Real Estate Taxes and Assessments. At or prior to
Closing, Seller shall pay all real estate taxes and assessments on the Property,
including all penalties, which become due and payable prior to the date of
Closing. The Seller shall have paid the June, 1997 installment of real estate
taxes and assessments for the property. The December, 1997 installment of real
estate taxes (due and payable in approximately February, 1998) shall be prorated
as of the date of Closing, based upon the most recent tax bills issued by the
Treasurer of Montgomery County, Ohio in accordance with the "short form" method
of proration (as is the custom for property located in Montgomery County, Ohio).
Purchaser shall pay the December, 1997 installment of real estate taxes and all
installments thereafter. In computing the real estate tax proration, any
payment by Tenants of the Property pursuant to rental agreement and leases shall
be taken into account.
9.2 Utility Expenses and Other Expenses. Final reading on all gas, water
and electric meters which are the responsibility of the Seller shall be made as
of the date of Closing, if possible, and shall be transferred to Purchaser.
Seller shall be responsible for payment of all utility charges arising before
the Closing Date, Purchaser shall be responsible for payments of all such
utility charges from and after the date of Closing. Purchaser shall be
responsible for making all arrangements for the continuation of utility
services. Seller shall pay all operating expenses which relate to the Property
or any part thereof which relate to any period prior to the Closing and which
are Seller's responsibility to pay, and Purchaser shall be responsible for all
such expenses relating to any period on or after the Closing.
The Property is currently being operated by Miller-Valentine Realty,
Inc. ("Manager") for the Seller pursuant to an operating agreement effective
March 2, 1992 ("Operating Agreement"). The parties will direct the Manager to
utilize any funds of Seller which were received by Manager in connection with
its management of the Property to satisfy any and all operating expenses which
are Seller's responsibility hereunder. After payment of all such items and any
other items under the Operating Agreement which are to be paid by Seller any
remaining funds shall be applied in partial satisfaction of any obligation owing
by Seller to Purchaser or Miller-Valentine Realty, Inc. Manager shall
disburse all funds of Seller which it is holding and provide an accounting of
all receipts and payments within 60 days after Closing. If any item which is
Seller's responsibility to pay cannot be exactly paid and determined, Manager
shall make a reasonable estimation thereof, which shall be conclusive as between
the parties hereto if exact determination cannot be made within such 60-day
period.
9.3 Security Deposits. Seller shall turn over to Purchaser all security
deposits which Seller holds in connection with the Property at Closing, and
Purchaser shall thereafter be responsible therefor and shall indemnify and hold
Seller harmless in connection therewith.
9.4 Rents. The parties will prorate as of the Closing all rents, and
other income items arising from the Property, or any part thereof.
Section 10. Condemnation or Casualty.
10.1 Condemnation. If between the date of this Agreement and the date of
Closing all or any portion of the Property is taken or is made subject to
condemnation, eminent domain or other governmental or quasi-governmental
acquisition proceedings, then the following provisions shall apply. In the
event Seller receives a written notice from any governmental or quasi-
governmental authority with powers of eminent domain to the effect that a
condemnation as to any portion or all of the Property is pending or
contemplated, Seller shall notify Purchaser promptly after receipt of the
notice. If the proposed or pending condemnation is one that could reasonably be
expected to render any portion of the Premises untenantable, then Purchaser may,
upon receipt of notice of the event, cancel this Agreement at any time prior to
Closing, in which event neither party shall have any further rights or
obligations under this Agreement other than those rights and/or obligations
which are expressly stated to survive expiration or termination of this
Agreement. In the event that Purchaser elects not to terminate, then this
Agreement shall remain in full force and effect, and Seller shall be entitled to
all monies received or collected prior to the Closing by reason of the
condemnation. In that event, this transaction shall close in accordance with
the terms and conditions of this Agreement except that there will be an
abatement of the Purchase Price equal to the amount of the gross proceeds
received by Seller, less reasonable out-of-pocket costs and reasonable
attorneys' fees expended by Seller. If, however, Seller has not received any
proceeds by reason of such condemnation prior to the Closing and Purchaser does
not elect to terminate Purchaser's obligations under this Agreement, then the
Closing shall take place without abatement of the Purchase price, and Seller
shall assign and transfer to Purchaser at Closing by written instrument all of
Seller's right, title and interest in any condemnation awards, less, however,
the amount required to reimburse Seller for any of the out-of-pocket costs and
reasonable attorneys' fees expended by Seller prior to the date of Closing.
10.2 Casualty. In the event of substantial loss or damage to the Property
prior to the Closing by fire or other casualty, Purchaser may, at any time after
receipt of notice or knowledge of that event, cancel this Agreement, in which
event neither party shall have any further rights or obligations under this
Agreement other than those rights and/or obligations which are expressly stated
to survive expiration or termination of this Agreement. In the event that
Purchaser shall not elect to terminate, or if the loss or damage is not
"substantial," then this Agreement shall remain in full force and effect and
Purchaser shall proceed to close and take the Property as damaged, in which
event Purchaser shall be entitled to receive the insurance proceeds payable on
account of such loss or damage plus a credit against the purchase price equal to
the amount of any deductible, co-insurance or self-insurance carried by Seller,
so that Purchaser shall receive, in effect, the full replacement cost of the
loss or damage, as the cost is determined in the settlement with the insurer, or
if there be no insurer, then based upon the actual costs or reasonable estimates
of actual costs, as the parties shall reasonably agree, to completely and fully
repair and replace such loss or damage. Seller and Purchaser shall each be
entitled to participate in the settlement. As used in this Section 10.2, the
term "substantial loss or damage" means any loss or damage resulting to the
Property which the parties reasonably estimate will cost $100,000 or more to
repair or restore.
Section 11. Default.
If the closing is not concluded due to failure of Purchaser to perform its
obligations under this Agreement, Seller may terminate this Agreement by written
notice to Purchaser, after which neither party shall have any further rights or
obligations under this Agreement other than such rights or obligations that are
expressly stated to survive consummation or termination of this Agreement.
If the closing is not concluded due to failure of Seller to perform its
obligations under this Agreement, Purchaser, at its option, may (a) elect to
enforce the terms of this Agreement by action for specific performance or (b)
terminate this Agreement by written notice to Seller, after which neither party
shall have any further rights or obligations under this Agreement other than
such rights or obligations that are expressly stated to survive consummation or
termination of this Agreement.
Section 12. Broker.
Each party represents and warrants to the other that it has dealt with no
agent or broker who has in any way participated in the sale of the Property
other than Miller-Valentine Realty, Inc. Seller agrees to pay out of the
purchase price the brokerage commission due Miller-Valentine Realty, Inc. in the
amount of 2% of the purchase price. Any other fees or commissions that may be
claimed shall be the sole responsibility of the party breaching the preceding
warranty. Each party agrees to indemnify and hold harmless the other against
any and all claims, judgments, costs of suit, attorneys' fees and other
reasonable expenses that the other may incur by reason of any action or claim
made against the other by any agent, advisor or intermediary appointed by or
instructed by Seller or Purchaser as the case may be, arising out of this
Agreement or sale of the Property to Purchaser. The foregoing indemnity shall
survive Closing and delivery of the deed.
Section 13. Binding Effect/Assignment.
This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, personal representatives, successors and
assigns.
Section 14. Notices.
All notices permitted or required under this Agreement shall be in writing,
and shall be deemed properly delivered when deposited in the United States
regular mail, postage prepaid, addressed to the parties at their respective
addresses set forth below or as they may otherwise specify by written notice
delivered in accordance with this Section:
As to Purchaser: Mid-States Development Company
4000 Miller-Valentine Court
Dayton, Ohio 45439
Attention: Vern Oakley
As to Seller: Angeles Partners XIV
c/o Insignia Financial Group, Inc.
One Insignia Financial Plaza
P. O. Box 1089
Greenville, South Carolina 29602
Attention: Ken Cobler
Section 15. Expenses.
Seller shall pay from the proceeds of sale the transfer and conveyance fee
charged in connection with the conveyance of the Premises, provided that in no
event shall Seller's payment of such expenses cause it to receive less than the
amount specified in Section 2.3. Purchaser shall pay recording charges for the
deed and any mortgages Purchaser may place upon the Premises. Each party shall
pay for its own legal and accounting fees and incidental expenses.
Section 16. Miscellaneous.
16.1 Gender. Words of any gender used in this Agreement shall be held and
construed to include any other gender, any words in the singular number shall be
held to include the plural, and vice versa, unless the context requires
otherwise.
16.2 Captions. The captions in this Agreement are inserted only for the
purpose of convenient reference and in no way define, limit or prescribe the
scope or intent of this Agreement or any part of this Agreement.
16.3 Construction. No provisions of this Agreement shall be construed by
any Court or other judicial authority against any party by reason of that
party's being deemed to have drafted or structured the provisions.
16.4 Entire Agreement. This Agreement constitutes the entire contract
between the parties and supersedes all prior understandings, if any, there being
no other oral or written promises, conditions, representations, understanding or
terms of any kind as conditions or inducements to the execution of this
Agreement and none have been relied upon by either party. Any subsequent
conditions, representations, warranties or agreements shall not be valid and
binding upon the parties unless in writing and signed by both parties.
16.5 Time of Essence. Time is of the essence in this transaction.
16.6 Governing Law. This Agreement shall be construed and the rights
and obligations of Seller and Purchaser shall be determined, in accordance with
the laws of the State of Ohio.
16.7 Date of Agreement, Counterparts. The date of this Agreement shall be
the date first above written, regardless of the dates on which Purchaser and
Seller execute this Agreement. This Agreement may be executed in counterparts
each of which shall constitute an original but all of which taken together shall
constitute one and the same instrument.
WITNESS the execution hereof by Purchaser and Seller on the dates set forth
below their respective signatures.
PURCHASER:
MID-STATES DEVELOPMENT COMPANY
By:/s/William Schneider
Its General Partner
Date: June 12, 1998
SELLER:
ANGELES PROPERTIES XIV, a California Limited
Partnership
By: ANGELES REALTY CORPORATION II, INC., a
California corporation and general partner of
Angeles Properties XIV
By: /s/Robert D. Long, Jr.
Its: Vice President
Date: June 10, 1998
EXHIBIT A
PROJECT LEGAL DESCRIPTIONS
EXHIBIT B
PURCHASE PRICE ALLOCATION
PROJECT LAND BUILDING TOTAL
41 325,000 1,575,000 $1,900,000.00
CLOSING STATEMENT
SELLER: PURCHASER:
Angeles Partners XIV Mid-States Development Company
c/o Insignia Financial Group, inc. 4000 Miller-Valentine Court
One Insignia Financial Plaza Dayton, Ohio 45439
P. O. Box 1089
Greenville, South Carolina 29662
PROPERTY LOCATION: 3981-3983 Image Drive, Vandalia, Ohio
DATE OF CLOSING: June 12, 1998
SELLER'S STATEMENT
1. Purchase Price $1,900,000.00
Less Deductions
2. Pay-off Life Insurance Company of Virginia
Loan II
a. Principal ($1,049,309.23)
b. Interest to June 5, 1998 ($1,530.24)
c. Prepayment fee ($10,493.09)
d. Per diem interest $306.05/day x 7 days ($2,142.35)
Total to Life Insurance Company of Virginia ($1,063,474.91)
3. Partial Pay off of Miller Valentine Realty, Inc.
Mortgage (Rec. Ref. 92-0650-D02) ($773,136.58)
4. Miller-Valentine Realty, Inc. Commission
of 2% of Purchase Price ($38,000.00)
5. Conveyance fee ($3,800.00)
6. Real Estate Tax Proration of June, 1998
installment ($101.77 per day x 163 days) ($16,588.51)
7. Total Deductions (lines 2-7) ($1,895,000.00)
Net cash due to Seller (line 1 minus 8) $5,000.00
PURCHASER'S STATEMENT
1. Purchase Price $1,900,000.00
Plus Charges
2. National City Bank (loan charges) $5,600.00
3. Total (lines 1 and 2) $1,905,600.00
Less credits
4. Real estate tax proration of June, 1996 installment
($101.77/day x 163 days ) ($16,588.51)
5. National City Bank Mortgage ($1,120,000.00)
6. Partial pay-off of MV Realty Mortgage ($773,136.58)
(paid outside of closing by inter-company transfer)
7. Total Credits ($1,909,725.09)
Cash to Purchaser (line 3 minus line 7) $4,125.09
DISBURSEMENTS
1. Life Insurance Co. of Virginia $1,063,474.91
2. National City Bank loan fees $5,600.00
3. Auditor for conveyance fees $3,800.00
4. Cash to Seller $5,000.00
5. Miller-Valentine Realty Commission $38,000.00
6. Cash to Purchaser $4,125.09
Total Cash Disbursements $1,120,000.00
Cash funds provided by:
National City Bank Loan $1,120,000.00
The parties acknowledge receiving a copy of this closing statement and
agree to the correctness thereof. In addition to the above, Purchaser shall pay
Chicago Title Insurance Co. the title insurance policy charges, miscellaneous
recording fees, and any loan charges not reflected in the above.
SELLER: PURCHASER:
ANGELES PARTNERS XIV MID-STATES DEVELOPMENT COMPANY
By: Angeles Realty Corp. II, its
General Partner
By: /s/William H. Jarrard, Jr. By: /s/William Schneider
Its: President Its: General Partner
COURT OF COMMON PLEAS
MONTGOMERY COUNTY, OHIO
THE TRAVELERS INSURANCE COMPANY
: Case No. 96-5314
Plaintiff,
: (Judge Langer)
-VS-
: JOURNAL ENTRY CONFIRMING
SALE, ORDERING DEED AND
ANGELES PARTNERS XIV, et al : DISTRIBUTING SALE PROCEEDS
Defendants :
This cause came on to be heard on the return of the Sheriff of this County,
for the sale of the real estate on Friday, April 3, 1998, for $1,150,000.00, to
the substituted party plaintiff, Ocwen Partnership, L.P., A Virginia Limited
Partnership and the assignment by it of its bid to OAIC Park Center, LLC
(hereinafter "grantee"); and the Court finding that the sale was made in
conformity to the law and orders of this Court, hereby orders the sale in these
proceedings approved and confirmed.
IT IS FURTHER ORDERED that the Sheriff convey to the said OAIC Park Center,
LLC, whose address is c/o Ocwen Federal Bank, FSB, 1675 Palm Beach Lakes Blvd.,
Suite 402, West Palm Beach, FL 33401 a deed for the lands and tenements
described in Exhibit "A" attached hereto.
IT IS FURTHER ORDERED that the grantee is subrogated to all the rights of
the mortgagee and lien holders in the real estate to the extent necessary for
the protection of its title, and a writ of possession is hereby awarded to put
it in possession of the real estate.
IT IS FURTHER ORDERED that the Clerk cause a release (or certified copy of
this entry) to be filed for record to discharge of record the following liens as
they relate to the real estate herein:
A. Mortgage to Travelers Life and Annuity Company in Mortgage Microfiche
83-76B07;
B. Assignment to The Travelers Insurance Company in Mortgage Microfiche
92-2501A09;
C. Modification in Mortgage Microfiche 93-0137D10;
D. Mortgage to Mid-States Development Company in Microfiche 85-1843D10;
E. Modification in Mortgage Microfiche 92-651B08;
F. Mortgage held by Miller-Valentine Realty, Inc. in Microfiche 92-650D02
G. Assignment of rents in Microfiche 83-76C11;
H. Financing statement filed on January 26, 1983 as Document No. 83-697
to Travelers Life and Annuity Company;
I. Financing statement in favor of Mid-States Development Company filed
on December 20, 1985 as Document No. 85-12675;
J. Financing statement in favor of The Travelers Life and Annuity Company
filed on October 21, 1991 as Document No. 91-10099; and
K. Financing Statement in favor of Miller-Valentine Realty, Inc. filed on
March 4, 1992 as Document No. 92-1919;
IT IS FURTHER ORDERED that the Sheriff pay from the sale price the
following claims in the order of their stated priority:
First, To the Clerk of this Court, the costs of this action, taxed at a
total of $2,385,54, which sum includes $26.00 for the preparation
of the Sheriff's Deed.
Second, To the Treasurer of this County, the taxes and assessments legally
assessed against the real estate and due and payable under Parcel
No. B02-012-13-0005 as of the date of Sheriff's Sale, in the
amount of none, inclusive of penalties.
Third, To the plaintiff, Ocwen Partnership, L.P., the balance of said
proceeds of sale, in partial satisfaction of its judgment herein,
being the sum of $1,147,614.46.
Prior Deed Reference: Deed Book 850702A05
Judgment amount, interest and date: $2,684,008.78 plus interest from October 1,
1996
/s/ Dennis Langer
Dennis Langer
Judge
/s/ J. Michael Debbeler
J. Michael Debbeler, Trail Counsel
Ohio Supreme Court Reg. #0012991
LERNER, SAMPSON & ROTHFUSS
Attorneys for Plaintiff
EXHIBIT A
Situate in the City of Vandalia, County of Montgomery, State of Ohio and being
known as Lot numbered Two (2) 70/75 Corporate, Section Two as recorded in Plat
Book 168, Pages 26 and 26A for the Plat records of Montgomery County, Ohio.
