March 24, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Angeles Partners XIV
Form 10-KSB
File No. 0-14248
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
Managing General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from _________to _________
Commission file number 0-14248
ANGELES PARTNERS XIV
(Name of small business issuer in its charter)
California 95-3959771
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $4,857,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Description of Business
Angeles Partners XIV (the "Partnership" or "Registrant") is a publicly held
limited partnership organized under the California Uniform Limited Partnership
Act on June 29, 1984, as amended (the "Agreement"). The Partnership's managing
general partner is Angeles Realty Corporation II ("ARC II" or the "Managing
General Partner"), a California corporation and was a wholly-owned subsidiary of
MAE GP Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged
into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia
Financial Group, Inc. ("Insignia"). Effective October 1, 1998, and February 26,
1999, Insignia and IPT, respectively, were merged into Apartment Investment and
Management Company ("AIMCO"). Thus the Managing General Partner is now a
wholly-owned subsidiary of AIMCO. The Partnership's Non-Managing General Partner
is ARCII/AREMCO Partners, Ltd. ARC II and ARCII/AREMCO Partners, Ltd. are herein
collectively referred to as the "General Partners". The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2035, unless
terminated prior to such date.
The Registrant is engaged in the business of operating and holding real estate
properties for investment. In 1985 and 1987, during its acquisition phase, the
Registrant acquired four existing apartment properties, one office building and
one industrial complex. The Registrant continues to own and operate two of the
apartment properties. See "Item 2. Description of Properties".
Commencing in February 1985, the Registrant offered, pursuant to a Registration
Statement filed with the Securities and Exchange Commission, up to 80,000 Units
of Limited Partnership Interest (the "Units") at a purchase price of $1,000 per
Unit with a minimum purchase of 5 Units ($5,000). The offering terminated in
February 1987. Upon termination of the offering, the Registrant had accepted
subscriptions for 44,390 Units, for an aggregate $44,390,000. Since its initial
offering, the Registrant has not received, nor are limited partners required to
make, additional capital contributions.
The Managing General Partner contributed capital in the amount of $1,000 for a
1% interest in the Partnership. The Partnership was formed for the purpose of
acquiring fee interests in various types of real estate property. The Managing
General Partner intends to maximize the operating results and, ultimately, the
net realizable value of each of the Partnership's properties in order to achieve
the best possible return for the investors. Such results may best be achieved
through property sales, refinancings, debt restructurings or relinquishment of
the assets. The Partnership intends to evaluate each of its holdings
periodically to determine the most appropriate strategy for each of the assets.
The Partnership has no full time employees. The Managing General Partner is
vested with full authority as to the general management and supervision of the
business and affairs of the Partnership. Limited Partners have no right to
participate in the management or conduct of such business and affairs. Property
management and administrative services are provided by affiliates of the
Managing General Partner.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Managing General
Partner, in such market area could have a material effect on the rental market
for the apartments at the Registrant's properties and the rents that may be
charged for such apartments. While the Managing General Partner and its
affiliates own and/or control a significant number of apartment units in the
United States, such units represent an insignificant percentage of total
apartment units in the United States and competition for the apartments is
local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its property for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and IPT merged into AIMCO, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO acquired a 100% ownership interest in the
Managing General Partner. The Managing General Partner does not believe that
this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
<PAGE>
Item 2. Description of Properties:
The following table sets forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
Waterford Square 05/31/85 Fee ownership subject to a Apartments
Apartments first mortgage (1) 487 units
Huntsville, Alabama
Fox Crest Apartments 06/30/85 Fee ownership subject to Apartments
Waukegan, Illinois first mortgage 245 units
(1) Property is held by a Limited Partnership in which the Registrant
owns a 99% interest.
Schedule of Properties:
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Waterford Square Apts $ 17,992 $ 11,936 5-20 yrs (1) $ 6,062
Fox Crest Apartments 10,004 6,547 5-20 yrs (1) 3,324
$ 27,996 $ 18,483 $ 9,386
</TABLE>
(1) Straight line and accelerated
See "Note B" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation policy
and "Note M - Change in Accounting Principle".
<PAGE>
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date (6) Maturity (6)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Waterford Square Apts
1st mortgage $11,684 7.90% 31 yrs 11/2027 $ 86
Fox Crest Apartments
1st mortgage 6,136 8.00% 30 yrs 05/2003 5,445
Angeles Partners XIV
Working capital
loan, in default(3) 1,281 (1) (1) 11/1997 1,281
Working capital
loan, in default(3) 3,295 (1) (1) 11/1997 3,295
Note payable (2)
("Glenwood") 2,405 12.50% (4) 03/2002 2,405
Note payable (2)
("Waterford Square") 433 12.00% (4) 03/2002 433
Note payable (2)
("Foxcrest") 4,765 12.50% (5) 03/2003 4,765
Total $ 29,999 $17,710
</TABLE>
(1) Interest accrues at prime plus 2%; payments are made based on excess
cash flow as defined.
(2) Payable to Angeles Mortgage Investment Trust ("AMIT"), an affiliate of
the Managing General Partner.
(3) Payable to Angeles Acceptance Pool, L.P. ("AAP")
(4) Payment of excess cash flow only, as defined, due semi-annually.
(5) No payments due until maturity.
(6) See "Item 7. Financial Statements - Note F" for information with respect
to the Registrant's ability to prepay these loans and more specific
details as to the terms of the loans
Rental Rates and Occupancy:
Average annual rental rates and occupancy for 1999 and 1998 for each property
are as follows:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
Waterford Square Apartments $6,224 $6,156 95% 94%
Fox Crest Apartments 8,013 7,794 96% 96%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the area. The Managing
General Partner believes that all of the properties are adequately insured. Each
property is an apartment complex which leases its units for terms of one year or
less. No residential tenant leases 10% or more of the available rental space.
All of the buildings are in good physical condition, subject to normal
depreciation and deterioration as is typical for assets of this type and age.
Real Estate Taxes and Rates:
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
Waterford Square Apartments 157 5.80%
Fox Crest Apartments 213 8.10%
Capital Improvements:
Waterford Square Apartments
The Partnership made approximately $646,000 in capital improvements at Waterford
Square Apartments for the year ended December 31, 1999 consisting primarily of
flooring replacement, new appliances, air conditioning upgrades, exterior
painting, major landscaping, roof enhancements, and structural improvements.
These improvements were funded from operating cash flow and replacement
reserves. The Partnership is currently evaluating the capital improvement needs
of the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $146,100. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Fox Crest Apartments
The Partnership made approximately $383,000 in capital improvements at Fox Crest
Apartments for the year ended December 31, 1999 consisting primarily of parking
lot upgrades, new appliances, flooring replacements and improvements to its
recreational facility. These improvements were funded from operating cash flow.
The Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $73,500. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements Note C - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999. Pending the
ruling on such demurrers, settlement negotiations commenced. On November 2,
1999, the parties executed and filed a Stipulation of Settlement settling
claims, subject to final court approval, on behalf of the Partnership and all
limited partners who own units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Superior Court of the
State of California, County of San Mateo, at which time the Court set a final
approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing
the Court received various objections to the settlement, including a challenge
to the Court's preliminary approval based upon the alleged lack of authority of
class plaintiffs' counsel to enter the settlement. On December 14, 1999, the
Managing General Partner and its affiliates terminated the proposed settlement.
Certain plaintiffs have filed a motion to disqualify some of the plaintiffs'
counsel in the action. The Managing General Partner does not anticipate that
costs associated with this case will be material to the Partnership's overall
operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
The Unit holders of the Registrant did not vote on any matter during the quarter
ended December 31, 1999.
<PAGE>
PART II
Item 5. Market for the Partnership's Common Equity and Related Security Holder
Matters
The Partnership, a publicly-held limited partnership, offered and sold 44,390
limited partnership units aggregating $44,390,000. The Partnership currently has
3,502 holders of record owning an aggregate of 43,589 Units. An affiliate of the
Managing General Partner owned 8,578 units or 19.68% at December 31, 1999. No
public trading market has developed for the Units, and it is not anticipated
that such a market will develop in the future. In 1998 the number of Limited
Partnership Units decreased by 298 units due to Limited Partners abandoning
their Limited Partnership Units. In abandoning his or her Limited Partnership
Units, a Limited Partner relinquishes all right, title and interest in the
Partnership as of the date of abandonment. However, the Limited Partner is
allocated his or her share of income (loss) for that year. The income (loss) per
Limited Partnership Unit in the accompanying consolidated statements of
operations is calculated based on the number of units outstanding at the
beginning of the year.
For the year ended December 31, 1999 an operating distribution of $24,000 was
made to certain limited partners. This amount represents payment made to the
State of Ohio on behalf of nonresident limited partners for required tax
withholdings. There were no distributions made for the year ended December 31,
1998. Future cash distributions will depend on the levels of net cash generated
from operations, the availability of cash reserves and the timing of debt
maturities refinancings, and/or property sales. The Registrant's distribution
policy is reviewed on an annual basis. However based on the current default
under the working capital loans and the pending maturities of the first mortgage
loans, it is unlikely that a distribution will be made by the Registrant in the
foreseeable future.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these tender offers, AIMCO and its affiliates currently own 8,578
limited partnership units in the Partnership representing 19.68% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership realized a net loss of approximately $1,940,000 for the year
ended December 31, 1999 versus net income of approximately $7,936,000 for the
year ended December 31, 1998. The increase in net loss for the year ended
December 31, 1999 was primarily due to the foreclosure of Buildings 53 and 59 in
January and April of 1998, respectively, and the sale of Buildings 41 and 55 of
the Dayton Industrial Complex in June and December 1998, respectively. As a
result of the foreclosures and sale, the Partnership realized an extraordinary
gain on extinguishment of debt of approximately $9,343,000 for the year ended
December 31, 1998. The Partnership also recorded a $44,000 write-up of Building
59 from its carrying value to its estimated fair value during the year ended
December 31, 1998. In addition, a gain of $1,140,000 was realized on the sale of
building 55 during the year ended December 31, 1998, which was offset by a loss
on the sale of Building 41 of $177,000 for the same period.
Historically, the Dayton Industrial Complex had not been able to retain tenants
and had never generated any operating cash. In October 1996, the Partnership had
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 opinion of the Managing General Partner, it was not in the
Partnership's best interest to contest the foreclosure actions. In January 1998
and April 1998, Buildings 53 and 59, respectively, of the Dayton Industrial
complex were foreclosed upon. As a result of the foreclosures, the Partnership
recorded an extraordinary gain on extinguishment of debt of approximately
$2,244,000 and $3,637,000 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. 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. 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. Net proceeds of $1,822,000 were used to pay down this non-recourse
indebtedness and the remaining balances were forgiven. The Partnership sold
Building 55 of the Dayton Industrial Complex on December 31, 1998 to an
unaffiliated party for net sales proceeds of approximately $2,894,000. The
Partnership realized a gain of approximately $1,140,000 on the sale and a
related $1,334,000 extraordinary gain on the early extinguishment of debt. The
extraordinary gain was the result of forgiveness of debt. Prior to the sale of
Building 55, the outstanding debt on the property was a second mortgage in the
amount of approximately $2,833,000 and a third mortgage in the amount of
approximately $1,377,000. Net proceeds of $2,876,000 were used to pay down its
non-recourse indebtedness and the remaining balances were forgiven.
Excluding (i) the impact of the foreclosures of Buildings 53 and 59 and (ii) the
sale of Buildings 41 and 55 of the Dayton Industrial Complex, net loss for the
Partnership decreased approximately $56,000 for the year ended December 31, 1999
as compared to the corresponding period in 1998 primarily due to an increase in
total revenues, partially offset by an increase in total expenses. Total
revenues increased approximately $97,000 primarily due to an increase in average
occupancy at Waterford Square Apartments and also an increase in average annual
rental rates at both properties. The increase of approximately $41,000 in total
expenses is primarily the result of increases in interest and general and
administrative expenses, partially offset by a decrease in operating expenses.
Interest expense increased due to interest accruing on the defaulted AAP and
AMIT notes. Operating expense declined primarily due to the completion of
various projects to enhance the appearance of both properties and gutter repairs
at Waterford Square Apartments during 1998. Also, insurance expense decreased at
both investment properties due to a change in insurance carriers.
The increase in general and administrative expense is primarily due to the
settlement of a legal matter which was disclosed in a prior quarter. Included in
general and administrative expenses for the year ended December 31, 1999 and
1998 are management reimbursements to the Managing General Partner allowed under
the Partnership Agreement. In addition, costs associated with the quarterly and
annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement are also included.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. The effect of the change in 1999 was
not material. The cumulative effect, had this change been applied to prior
periods, is not material. The accounting principle change will not have an
effect on cash flow, funds available for distribution or fees payable to the
Managing General Partner and affiliates.
As part of the ongoing business plan of the Partnership, the Managing General
Partner continues to monitor the rental market environment of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expenses. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due to
changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $1,210,000 as compared to approximately $883,000 at December 31,
1998. The increase in cash and cash equivalents of approximately $327,000 is due
to approximately $1,513,000 of cash provided by operating activities. However,
this was primarily the result of accruing interest of approximately $1,728,000
on its indebtedness and approximately $113,000 for services provided by
affiliates, all of which if paid would have meant no cash would have been
provided by operating activities. This increase is partially offset by
approximately $876,000 of cash used in investing activities, and approximately
$310,000 of cash used in financing activities. Cash used in investing activities
consisted of property improvements and replacements, which were partially offset
by net withdrawals from restricted escrows. Cash used in financing activities
consisted of payments of principal on the mortgages encumbering the Registrant's
properties and a distribution to partners. The Registrant invests its working
capital reserves in a money market account.
The accompanying consolidated 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. Recourse
indebtedness owed to AAP of approximately $4,576,000, plus accrued interest of
approximately $3,193,000 is in default at December 31, 1999, as a result of
nonpayment of interest and principal upon its maturity 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.
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 the Fox Crest Apartments and Waterford
Square Apartments will generate sufficient cash flows during 2000 to meet all
property operating expenses, property debt service requirements and to fund
capital expenditures. However, these cash flows will be insufficient to provide
debt service for the unsecured Partnership indebtedness. If the Managing General
Partner is unsuccessful in its efforts to restructure these loans, then it may
be forced to liquidate the Partnership.
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.
With respect to the Partnership's two apartment complexes, the sufficiency of
existing liquid assets to meet future liquidity and capital expenditure
requirements is directly related to the level of capital expenditures required
at the properties to adequately maintain the physical assets and other operating
needs of the Partnership and to comply with Federal, state, and local legal and
regulatory requirements. The Partnership is currently evaluating the capital
improvement needs of each of its properties for the upcoming year. The minimum
amount to be budgeted for the Partnership is expected to be $300 per unit or
$219,600. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
The existing first mortgage indebtedness, working capital loans and amounts due
to AMIT are thought to be in excess of the value of the properties. (Pursuant to
a series of transactions, affiliates of the Managing General Partner acquired
ownership interests in AMIT as follows: On September 17, 1998, AMIT was merged
with and into IPT, effective February 26, 1999, IPT was merged into AIMCO.
Accordingly, AIMCO is the current holder of the AMIT loans.) The two AMIT Notes
in the aggregate amount of approximately $2,838,000 plus related accrued
interest, approximately $693,000 at December 31, 1999, originally matured in
March 1998; these notes are recourse to the Partnership only. During 1998, the
lender agreed to extend the maturity date on these notes to March 2002. At the
time of the granting of the extension, an additional $28,000 in loan costs was
added to the principal. These loans require monthly payments of excess cash
flow, as defined in the terms of the promissory notes. The Partnership's other
remaining note to AMIT for approximately $4,765,000, plus accrued interest at
12.5% per annum compounded monthly, is due March 2003 and does not require any
payments until maturity. Accrued interest as of December 31, 1999 is
approximately $2,831,000. The first mortgage loan encumbering Waterford Square
Apartments, which is guaranteed by HUD, is scheduled to mature November 2027, at
which time a balloon payment of $86,000 is due. Likewise, the first mortgage
loan encumbering Fox Crest Apartments is scheduled to mature in May 2003, at
which time a balloon payment of $5,445,000 is due. The Registrant is current in
its payments on both of these mortgages. The Managing General Partner will
attempt to refinance such indebtedness and/or sell the properties prior to such
maturity dates. If the properties cannot be refinanced or sold for a sufficient
amount, the Registrant will risk losing such properties through foreclosure.
For the year ended December 31, 1999 an operating distribution of $24,000 was
made to certain limited partners. This amount represents payment made to the
State of Ohio on behalf of nonresident limited partners for required tax
withholdings. There were no distributions made for the year ended December 31,
1998. Future cash distributions will depend on the levels of net cash generated
from operations, the availability of cash reserves and the timing of debt
maturities, refinancings, and/or property sales. The Registrant's distribution
policy is reviewed on an annual basis. However based on the current default
under the working capital loans and the pending maturities of the first mortgage
loans, it is unlikely that a distribution will be made by the Registrant in the
foreseeable future.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these tender offers, AIMCO and its affiliates currently own 8,578
limited partnership units in the Partnership representing 19.68% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
<PAGE>
Item 7. Financial Statements
ANGELES PARTNERS XIV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young, LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and
1998
Consolidated Statements of Changes in Partners' Deficit - Years ended
December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and
1998
Notes to Consolidated Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Partners
Angeles Partners XIV
We have audited the accompanying consolidated balance sheet of Angeles Partners
XIV as of December 31, 1999, and the related consolidated statements of
operations, changes in partners' deficit and cash flows for each of the two
years in the period ended December 31, 1999. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Angeles Partners
XIV at December 31, 1999, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
The accompanying consolidated financial statements have been prepared assuming
that Angeles Partners XIV will continue as a going concern. As more fully
described in Note A, the Partnership continues to incur recurring operating
losses and suffers from inadequate liquidity. It is in default on unsecured
indebtedness of $4,576,000, plus related accrued interest of $3,193,000, due to
non-payment upon maturity of the debt in November 1997. These conditions raise
substantial doubt about the Partnership's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note A. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
ANGELES PARTNERS XIV
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 1,210
Receivables and deposits 253
Restricted escrows 201
Other assets 351
Investment properties (Notes D, E, F and I):
Land $ 2,243
Buildings and related personal property 25,753
27,996
Less accumulated depreciation (18,483) 9,513
$ 11,528
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 128
Tenant security deposit liabilities 107
Accrued property taxes 265
Accrued interest 6,835
Due to affiliates (Note H) 1,455
Other liabilities 274
Notes payable, including
$4,576 in default (Notes D, E, F and I) 29,999
Partners' Deficit
General partner $ (658)
Limited partners (43,589 units issued and
outstanding) (26,877) (27,535)
$ 11,528
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
<S> <C> <C>
Revenues:
Rental income $ 4,689 $ 5,147
Other income 168 157
Gain on sale of investment properties (Note D) -- 963
Total revenues 4,857 6,267
Expenses:
Operating 1,680 1,928
General and administrative 251 226
Depreciation 1,233 1,258
Interest 3,245 3,922
Property taxes 388 384
Write up of investment property (Note E) -- (44)
Total expenses 6,797 7,674
Loss before extraordinary item (1,940) (1,407)
Extraordinary item - gain on extinguishment of
debt (Notes D and E) -- 9,343
Net (loss) income $(1,940) $ 7,936
Net (loss) income allocated to general partner (1%) $ (19) $ 79
Net (loss) income allocated to limited partners (99%) (1,921) 7,857
$(1,940) $ 7,936
Per limited partnership unit:
Loss before extraordinary items $(44.07) $(31.74)
Extraordinary item - gain on extinguishment of debt -- 210.76
$(44.07) $179.02
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 44,390 $ 1 $ 44,390 $ 44,391
Partners' deficit
at December 31, 1997 43,887 $ (718) $(32,789) $(33,507)
Net income for the year ended
December 31, 1998 -- 79 7,857 7,936
Abandonment of limited
Partnership Units (Note J) (298) -- -- --
Partners' deficit at
December 31, 1998 43,589 (639) (24,932) (25,571)
Net loss for the year
ended December 31, 1999 -- (19) (1,921) (1,940)
Distribution to partners -- -- (24) (24)
Partners' deficit
at December 31, 1999 43,589 $ (658) $(26,877) $(27,535)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (1,940) $ 7,936
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation 1,233 1,258
Amortization of discounts, loan costs, and
leasing commissions 33 64
Extraordinary gain on extinguishment of debt -- (9,343)
Gain on sale of investment properties -- (963)
Bad debt recovery, net -- (7)
Write up of investment property -- (44)
Change in accounts:
Receivables and deposits 129 (173)
Other assets (24) 23
Accounts payable 83 42
Tenant security deposit liabilities 19 (8)
Accrued taxes (50) (3)
Accrued interest 1,728 2,282
Due to affiliates 113 142
Other liabilities 189 9
Net cash provided by operating activities 1,513 1,215
Cash flows from investing activities:
Property improvements and replacements (1,029) (486)
Proceeds from sale of investment properties -- 4,741
Net withdrawals restricted escrows 153 37
Net cash (used in) provided by investing activities (876) 4,292
Cash flows from financing activities:
Principal payments on notes payable (286) (603)
Repayment of loans -- (4,698)
Additions to notes payable -- 28
Distribution to partners (24) --
Net cash used in financing activities (310) (5,273)
Net increase in cash and cash equivalents 327 234
Cash and cash equivalents at beginning of year 883 649
Cash and cash equivalents at end year $ 1,210 $ 883
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,425 $ 1,603
Supplemental disclosure of non-cash flow investing and
financing activities:
Interest on notes transferred to notes payable $ -- $ 1,063
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
(in thousands)
Supplemental disclosure of non-cash activities
Foreclosures/Sale
In January and April of 1998, Buildings 53 and 59, respectively, of the Dayton
Industrial Complex were foreclosed upon by the lender. In June 1998 and December
1998, Buildings 41 and 55, respectively, of the Dayton Industrial Complex were
sold to an unaffiliated third party. The proceeds from the sale were used to pay
down the mortgages secured by the property, and the remaining balance of the
non-recourse indebtedness was forgiven. In connection with these non-cash
transactions, the following accounts were adjusted:
<TABLE>
<CAPTION>
Building 53 Building 59 Building 41 Building 55
<S> <C> <C> <C> <C>
Receivables and deposits $ (35) $ -- $ -- $ --
Other assets (9) -- -- --
Investment properties (660) (706) -- --
Accounts payable -- 30 -- --
Tenant security deposit
liabilities 12 -- -- --
Property tax payable 64 26 -- --
Accrued interest 175 688 23 --
Mortgage notes payable 2,697 3,599 2,105 1,334
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
ANGELES PARTNERS XIV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Going Concern
The accompanying consolidated financial statements have been prepared assuming
Angeles Partners XIV (the "Partnership" or the "Registrant") will continue as a
going concern. The Partnership continues to incur recurring operating losses and
suffers from inadequate liquidity.
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 of approximately $3,193,000 that is in default due to non-payment upon
maturity in November 1997. This indebtedness is recourse to the Partnership. The
Partnership does not have the means with which to satisfy this obligation.
Angeles Realty Corporation II (the "Managing General Partner" or "ARC II") does
not plan to enter into negotiations with AAP on this indebtedness at this time.
The Managing General Partner believes that it is doubtful that AAP will initiate
collection proceedings on this indebtedness since 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 realized a net loss of approximately $1,940,000 for the year
ended December 31, 1999. The Managing General Partner expects the Partnership to
continue to incur such losses from operations. The Partnership generated cash
from operations of approximately $1,513,000 during the year ended December 31,
1999; however, this primarily was the result of an increase in accrued interest
of approximately $1,728,000 on its indebtedness and, to a lesser extent,
$113,000 for services provided by affiliates.
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, property debt service requirements and
to fund capital expenditures. However, these cash flows will be insufficient to
provide debt service for the unsecured Partnership indebtedness.
As a result of the above, there is substantial doubt about the Partnership's
ability to continue as a going concern. The consolidated 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.
Organization: The Partnership is a California limited partnership organized in
June 1984, to acquire and operate residential and commercial real estate
properties. The Partnership's managing general partner is Angeles Realty
Corporation II ("ARC II" or "Managing General Partner") an affiliate of Insignia
Financial Group, Inc. ("Insignia") and wholly-owned subsidiary of MAE GP
Corporation ("MAE GP"). Effective February 25, 1999, MAE GP was merged into
Insignia Properties Trust ("IPT"). Effective October 1, 1998 and February 26,
1999, Insignia and IPT, respectively, were merged into Apartment Investment and
Management Company ("AIMCO"). Thus the Managing General Partner is now a
wholly-owned subsidiary of AIMCO. The Partnership's Non-Managing General Partner
is ARCII/AREMCO Partners, Ltd. ARC II and ARCII/AREMCO Partners, Ltd. are herein
collectively referred to as the "General Partners". The Partnership commenced
operations on June 29, 1984, and completed its acquisition of apartment and
commercial properties on December 20, 1985. As of December 31, 1999 the
Partnership continues to operate two apartment properties, one in Illinois and
the other is in Alabama. The Partnership Agreement provides that the Partnership
will terminate on December 31, 2035 unless terminated prior to such date.
Principles of Consolidation: The consolidated financial statements include all
of the accounts of the Partnership and its 99% limited partnership interest in
Waterford Square Apartments, Ltd. The general partner of the consolidated
partnership is the Managing General Partner. The Managing General Partner may be
removed by the Registrant; therefore, this consolidated partnership is
controlled and consolidated by the Registrant. All significant interpartnership
balances have been eliminated.
Allocations and Distributions to Partners: In accordance with the Agreement, any
gain from the sale or other disposition of Partnership assets will be allocated
first to the General Partners to the extent of the amount of any Incentive
Interest (as defined below) to which the General Partners is entitled. Any gain
remaining after said allocation will be allocated to the Limited Partners in
proportion to their interests in the Partnership; provided that the gain shall
first be allocated to Partners with negative account balances, in proportion to
such balances, in an amount equal to the sum of such negative capital account
balances. The Partnership will allocate other profits and losses 1% to the
General Partners and 99% to the Limited Partners.
Except as discussed below, the Partnership will allocate distributions 1% to the
General Partners and 99% to the Limited Partners.
Upon the sale or other disposition, or refinancing of any asset of the
Partnership, the Distributable Net Proceeds shall be distributed as follows: (i)
First, to the Partners in proportion to their interests until the Limited
Partners have received proceeds equal to their Original Capital Investment; (ii)
Second, to the Partners until Limited Partners have received distributions from
all sources equal to their 6% Cumulative Distribution, (iii) Third, to the
General Partners until it has received its cumulative distributions equal to 3%
of the aggregate Disposition Prices of all properties, mortgages or other
investments sold ("Initial Incentive Interest") and (iv) Thereafter, 85% to the
Limited Partners in proportion to their interests and 15% to the General
Partners ("Final Incentive Interest").
Cash and Cash Equivalents: Cash and cash equivalents includes cash on hand, in
banks, and money market accounts. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. The security deposits are refunded when the tenant
vacates, provided the tenant has not damaged its space and is current on its
rental payments.
Advertising Costs: Advertising costs, of approximately $76,000 in 1999 and
approximately $59,000 in 1998, are charged to expense as they are incurred and
are included in operating expenses in the accompanying consolidated statements
of operations.
Investment Properties: Investment properties consist of two apartment complexes
and are stated at cost. Acquisition fees are capitalized as a cost of real
estate. In accordance with Financial Accounting Standards Board Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", the Partnership records impairment losses on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
Costs of apartment properties that have been permanently impaired have been
written down to appraised value. No adjustment for impairment of value was
recorded for the years ended December 31, 1999 or 1998.
Depreciation: Depreciation is computed utilizing straight-line and accelerated
methods over the estimated useful lives of the investment properties and related
personal property. For Federal income tax purposes, depreciation is computed
utilizing the straight-line method over an estimated life of 5 to 20 years for
personal property and 15 to 40 years for real property.
Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note M).
Loan Costs: Loan costs of approximately $356,000, at December 31, 1999, which
are included in other assets on the accompanying consolidated balance sheet, are
being amortized on a straight-line basis over the lives of the loans. At
December 31, 1999, accumulated amortization of approximately $93,000 is also
included in other assets on the accompanying consolidated balance sheet.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. In addition, the Managing General Partner's policy is to offer rental
concessions during particularly slow months or in response to heavy competition
from other similar complexes in the area. Concessions are charged against rental
income as incurred.
Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's first mortgages, after discounting the scheduled loan payments to
maturity, approximates its carrying balance. The Managing General Partner
believes that it is not appropriate to use the Partnership's incremental
borrowing rate for debt to affiliates or debt that is in default as there is no
market in which the Partnership could obtain similar financing.
Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. (See "Note K" for disclosure about the Registrant's segments).
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Note C - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and IPT merged into AIMCO, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO acquired a 100% ownership interest in the
Managing General Partner. The Managing General Partner does not believe that
this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note D - Investment Property Sales
The Partnership sold Building 41 and Building 55 of the Dayton Industrial
Complex on June 12, 1998 and December 31, 1998, respectively, to unaffiliated
parties. Building 41 and Building 55 sold for net sales proceeds of
approximately $1,847,000 and $2,894,000, respectively. The Partnership realized
a loss of approximately $177,000 and a gain of approximately $1,140,000 on the
sale of Buildings 41 and 55, respectively. The Partnership also realized a
related extraordinary gain on the early extinguishment of debt of $2,128,000 and
$1,334,000 on the sale of Buildings 41 and 55, respectively. The extraordinary
gains were the result of forgiveness of debt.
Note E - Investment Property Foreclosures
In January 1998 and April 1998, Buildings 53 and 59, respectively, of the Dayton
Industrial Complex were foreclosed upon. As a result of the foreclosures, the
Partnership recorded an extraordinary gain on extinguishment of debt of
approximately $2,244,000 and $3,637,000 for Building 53 and 59, respectively.
Also, in conjunction 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 in the second quarter of 1998.
Note F - Notes Payable
The principle terms of notes payable are as follows:
<TABLE>
<CAPTION>
Monthly Principal Principal
Payment Stated Balance Balance At
Including Interest Maturity Due At December 31,
Property Interest Rate Date Maturity 1999
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Waterford Square Apts
1st mortgage $ 87 7.90% 11/2027 $ 86 $ 11,684
Fox Crest Apartments
1st mortgage 56 8.0% 05/2003 5,445 6,136
Angeles Partners XIV
Working capital
loan, in default(3) (1) (1) 11/1997 1,281 1,281
Working capital
loan, in default(3) (1) (1) 11/1997 3,295 3,295
Note payable (2)
("Glenwood") (4) 12.50% 03/2002 2,405 2,405
Note payable (2)
("Waterford Square") (4) 12.00% 03/2002 433 433
Note payable (2)
("Foxcrest") (5) 12.50% 03/2003 4,765 4,765
Total $17,710 $ 29,999
</TABLE>
(1) Interest accrues at prime plus 2%; payments are based on excess cash flow
as defined.
(2) Payable to AMIT, an affiliate of the Managing General Partner.
(3) Payable to AAP
(4) Payments of excess cash flow only, as defined, due semi-annually.
(5) No payments due until maturity.
In June 1996, the Waterford Square note and the Glenwood note, both held by
AMIT, were restructured, adding previously accrued delinquent interest and late
charges of approximately $874,000 to the original note amounts. The notes
provided for the accrual of interest on the unpaid balance at 12.0% (Waterford
Square note) and 12.5% (Glenwood note). In July 1998, the lender agreed to
extend the maturity date on these notes to March 2002. At the time of the
granting of the extension, an additional $28,000 in loan costs was added to the
principal.
Mortgage notes payable totaling approximately $17,820,000 are nonrecourse and
are secured by pledge of certain of the Partnership's investment properties and
by pledge of revenues from the respective investment properties. Certain of the
notes include prepayment penalties if repaid prior to maturity. Further the
properties may not be sold subject to existing indebtedness.
Scheduled principal payments of notes payable subsequent to December 31, 1999,
are as follows (in thousands):
2000 $ 4,884
2001 333
2002 3,199
2003 10,440
Thereafter 11,143
$29,999
Note G - Income Taxes
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
The following is a reconciliation of reported net (loss) income and Federal
taxable (loss) income (in thousands, except unit data):
1999 1998
Net (loss) income as reported $ (1,940) $ 7,936
Add (deduct):
Depreciation differences 113 (38)
Unearned income 21 (1)
Book-tax difference on
sale/foreclosures -- (2,472)
Write up of investment -- (44)
Other (10) 48
Federal taxable (loss) income $ (1,816) $ 5,429
Federal taxable (loss) income
per limited partnership unit $ (41.23) $ 81.42
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net liabilities as reported $(27,535)
Land and buildings (21)
Accumulated depreciation (106)
Syndication and distribution costs 6,047
Other 67
Net liabilities - Federal tax basis $(21,548)
=======
<PAGE>
Note H - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
made or accrued to the Managing General Partner and affiliates during the year
ended December 31, 1999 and 1998.
1999 1998
(in thousands)
Property management fees (included in operating expenses) $ 268 $ 264
Reimbursement for services of affiliates, (included
in investment property, operating, and general and
administrative expenses) 137 164
Due to affiliate 1,455 1,342
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from both of the
Registrant's residential properties as compensation for providing property
management services. The Registrant paid to such affiliates approximately
$268,000 and $264,000 for the years ended December 31, 1999 and 1998,
respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $137,000 and $164,000 for the
years ended December 31, 1999 and 1998, respectively. Included in these amounts
is approximately $20,000 and $23,000 in construction oversight costs for the
years ended December 31, 1999 and 1998, respectively. The Partnership owed the
affiliates a total of approximately $1,455,000 and $1,342,000 at December 31,
1999 and 1998, respectively.
In November 1992, AAP, a Delaware limited partnership which now controls the
working capital loans 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 was
wholly-owned by IPT, and was, until April 14, 1995, the 1% general partner of
AAP. On April 12, 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 0.5% limited partner interest in AAP. An affiliate of
Angeles now serves as the general partner of AAP.
The AAP working capital loans funded the Partnership's operating deficits in
prior years. Total indebtedness is approximately $4,576,000, plus accrued
interest of approximately $3,193,000 at December 31, 1999, 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 $432,000 and
$489,000 for year ended December 31, 1999 and 1998, respectively.
As discussed in "Note A", AMIT provides financing (the "AMIT Loans") to the
Partnership. The principal balances on the AMIT Loans totals approximately
$7,603,000 at December 31, 1999, accrues interest at rates of 12% to 12.5% per
annum and are recourse to the Partnership. Two of the three notes totaling
$2,838,000 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 March 2002. The remaining note with a
principal balance of approximately $4,765,000 matures in March 2003. Total
interest expense on the AMIT Loans was approximately $1,299,000 and $1,124,000
for the years ended December 31, 1999 and 1998, respectively. Accrued interest
was approximately $3,523,000 at December 31, 1999. Pursuant to a series of
transactions, affiliates of the Managing General Partner acquired ownership
interests in AMIT. On September 17, 1998, AMIT was merged with and into IPT, the
entity which controlled the Managing General Partner. Effective February 26,
1999, IPT was merged into AIMCO. Thus, AIMCO is now the holder of the AMIT
Loans.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these tender offers, AIMCO and its affiliates currently own 8,578
limited partnership units in the Partnership representing 19.68% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
<PAGE>
Note I - Investment Properties and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Net Subsequent
Description Encumbrances Land Property to Acquisition
Waterford Square Apts $11,684 $ 1,382 $13,479 $ 3,131
Fox Crest Apartments 6,136 861 8,198 945
Angeles Partners XIV 12,179 -- -- --
Totals $29,999 $ 2,243 $21,677 $ 4,076
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Buildings
And
Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C>
Waterford Square Apt $1,382 $16,610 $17,992 $11,936 05/31/85 5-20 yrs
Fox Crest Apartments 861 9,143 10,004 6,547 06/30/85 5-20 yrs
Totals $2,243 $25,753 $27,996 $18,483
</TABLE>
The depreciable lives included above are for the building and components. The
depreciable lives for related personal property are for 3 to 7 years.
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Investment Properties
Balance at beginning of year $26,967 $40,284
Property improvements 1,029 486
Dispositions of investment properties -- (13,847)
Write up of investment properties -- 44
Balance at end of year $27,996 $26,967
Accumulated Depreciation
Balance at beginning of year $17,250 $24,760
Additions charged to expense 1,233 1,258
Dispositions of investment properties -- (8,768)
Balance at end of year $18,483 $17,250
The aggregate cost of the investment properties for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $27,975,000 and $26,893,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $18,589,000 and $17,473,000,
respectively.
Note J - Abandonment of Limited Partnership Units
In 1998, the number of Limited Partnership Units decreased by 298 units due to
Limited Partners abandoning their Limited Partnership Units. In abandoning his
or her Limited Partnership Units, a Limited Partner relinquishes all right,
title and interest in the Partnership as of the date of abandonment. However,
the Limited Partner is allocated his or her share of income (loss) for that
year. The income (loss) per Limited Partnership Unit in the accompanying
statements of operations is calculated based on the number of units outstanding
at the beginning of the year.
Note K - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of two apartment complexes
located in Waukegan, Illinois and Huntsville, Alabama. The Partnership rents
apartment units to tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the years 1999 and 1998 is shown in the tables below (in
thousands). The "Other" column includes partnership administration related items
and income and expense not allocated to the reportable segment.
1999 Residential Other Totals
Rental income $ 4,689 $ -- $ 4,689
Other income 155 13 168
Interest expense 1,507 1,738 3,245
Depreciation 1,233 -- 1,233
General and administrative expense -- 251 251
Segment profit (loss) 36 (1,976) (1,940)
Total assets 10,982 546 11,528
Capital expenditures for investment
properties 1,029 -- 1,029
1998 Residential Other Totals
Rental income $ 4,605 $ 542 $ 5,147
Other income 143 14 157
Interest expense 1,526 2,396 3,922
Depreciation 1,258 -- 1,258
General and administrative expense -- 226 226
Gain on sale of investment
properties -- 963 963
Extraordinary item-gain on
extinguishment of debt -- 9,343 9,343
Segment profit (loss) (157) 8,093 7,936
Total assets 11,321 375 11,696
Capital expenditures for investment
properties 486 -- 486
Note L - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note C - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement settling claims, subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999. Prior to the December 10, 1999 hearing the Court received various
objections to the settlement, including a challenge to the Court's preliminary
approval based upon the alleged lack of authority of class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. The
Managing General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note M - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. The effect of the change in 1999 was
not material. The cumulative effect, had this change been applied to prior
periods, is not material. The accounting principle change will not have an
effect on cash flow, funds available for distribution or fees payable to the
Managing General Partner and affiliates.
<PAGE>
Item 8. Changes in and Disagreements with Accountant on Accounting and Financial
Disclosures
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Angeles Realty Corporation II ("ARC II" or the "Managing General Partner"), was
a wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February
25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"). Effective
February 26, 1999, IPT was merged into Apartment Investment and Management
Company ("AIMCO"). Thus the Managing General Partner is now a wholly-owned
subsidiary of AIMCO.
The names and ages of, as well as the positions and offices held by, the present
executive officers and director of ARC II are set forth below. There are no
family relationships between or among any officers or directors.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the Managing
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the Managing
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO and its joint filers failed to timely file a Form 3 and Form 4 with
respect to its acquisition of Units
Item 10. Executive Compensation
No compensation or remuneration was paid by the Partnership to any officer or
director of ARC II. The Partnership has no plan, nor does the Partnership
presently propose a plan, which will result in any remuneration being paid to
any officer or director upon termination of employment. However, certain fees
and other payments have been made to the Partnership's Managing General Partner
and its affiliates, as described in "Item 12.".
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as December 31, 1999.
Entity Number of Units Percentage
AIMCO Properties LP 8,578 19.68%
(an affiliate of AIMCO)
AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Blvd., Denver, Colorado 80222.
The Partnership knows of no contractual arrangements, the operation of the terms
of which may at a subsequent date result in a change in control of the
Partnership, except for: Article 12.1 of the Agreement, which provides that upon
a vote of the Limited Partners holding more than 50% of the then outstanding
Limited Partnership Units the Managing General Partner may be expelled from the
Partnership upon 90 days written notice. In the event that a successor general
partner has been elected by Limited Partners holding more than 50% of the then
outstanding Limited Partnership Units and if said Limited Partners elect to
continue the business of the Partnership, the Partnership is required to pay in
cash to the expelled Managing General Partner an amount equal to the accrued and
unpaid management fee described in Article 10 of the Agreement and to purchase
the Managing General Partner's interest in the Partnership on the effective date
of the expulsion, which shall be an amount equal to the difference between (i)
the balance of the Managing General Partner's capital account and (ii) the fair
market value of the share of Distributable Net Proceeds to which the Managing
General Partner would be entitled. Such determination of the fair market value
of the share of Distributable Net Proceeds is defined in Article 12.2(b) of the
Agreement.
Item 12. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
made to the Managing General Partner and affiliates during the year ended
December 31, 1999 and 1998.
1999 1998
(in thousands)
Property management fees $ 268 $ 264
Reimbursement for services of affiliates 137 164
Due to affiliate 1,455 1,342
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from both of the
Registrant's residential properties as compensation for providing property
management services. The Registrant paid to such affiliates approximately
$268,000 and $264,000 for the years ended December 31, 1999 and 1998,
respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $137,000 and $164,000 for the
years ended December 31, 1999 and 1998, respectively. Included in these amounts
is approximately $20,000 and $23,000 in construction oversight costs for the
years ended December 31, 1999 and 1998, respectively.
In November 1992, AAP, a Delaware limited partnership which now controls the
working capital loans 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 was
wholly-owned by IPT, and was, until April 14, 1995, the 1% general partner of
AAP. On April 12, 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 0.5% limited partner interest in AAP. An affiliate of
Angeles now serves as the general partner of AAP.
The AAP working capital loans funded the Partnership's operating deficits in
prior years. Total indebtedness is approximately $4,576,000, plus accrued
interest of approximately $3,193,000 at December 31, 1999, 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 $432,000 and
$489,000 for year ended December 31, 1999 and 1998, respectively.
As discussed in "Note A", AMIT provides financing (the "AMIT Loans") to the
Partnership. The principal balances on the AMIT Loans totals approximately
$7,603,000 at December 31, 1999, accrues interest at rates of 12% to 12.5% per
annum and are recourse to the Partnership. Two of the three notes totaling
$2,838,000 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 March 2002. The remaining note with a
principal balance of approximately $4,765,000 matures in March 2003. Total
interest expense on the AMIT Loans was approximately $1,299,000 and $1,124,000
for the years ended December 31, 1999 and 1998, respectively. Accrued interest
was approximately $3,523,000 at December 31, 1999. Pursuant to a series of
transactions, affiliates of the Managing General Partner acquired ownership
interests in AMIT. On September 17, 1998, AMIT was merged with and into IPT, the
entity which controlled the Managing General Partner. Effective February 26,
1999, IPT was merged into AIMCO. Thus, AIMCO is now the holder of the AMIT
Loans.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these tender offers, AIMCO and its affiliates currently own 8,578
limited partnership units in the Partnership representing 19.68% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-B: Refer to
Exhibit Index in this report.
Exhibit 18, Independent Accountants' Preferability Letter for
Change in Accounting Principle, is filed as an exhibit to this
report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
(b) Reports on Form 8-K filed in the fourth quarter of the calendar
year 1999:
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS XIV
(A California Limited Partnership)
(Registrant)
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities on the date
indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
ANGELES PARTNERS XIV
EXHIBIT INDEX
Exhibit Number Description of Exhibit
3.1 Amended Certificate and Agreement of Limited Partnership filed
in Form S-11 dated December 24, 1984 incorporated herein by
reference.
10.1 Agreement of Purchase and Sale of Real Property with Exhibits
- Waterford Square Apartments filed in Form 8-K dated May 31,
1985 incorporated herein by reference.
10.2 Agreement of Purchase and Sale of Real Property with Exhibits
- Fox Crest Apartments filed in Form 8-K dated June 30, 1985
incorporated herein by reference.
10.3 Agreement of Purchase and Sale of Real Property with Exhibits
- Dayton Industrial Complex filed in Form 8-K dated December
20, 1985 incorporated herein by reference.
10.4 Agreement of Purchase and Sale of Real Property with Exhibits
- Camelot Village Apartments filed in Form 8-K dated March 31,
1987 incorporated herein by reference.
10.5 Agreement of Purchase and Sale of Real Property with Exhibits
- Glenwood Plaza Shopping Center filed in Form 8-K dated March
31, 1987 incorporated herein by reference.
10.6 Glenwood Plaza Shopping Center financing disclosed in notes to
financial statements filed in Form 10-Q dated June 30, 1988,
incorporated herein by reference.
10.7 Promissory note - Waterford Square Apartments financing
disclosed in notes to financial statements filed in Form 10-K
dated December 31, 1989 incorporated herein by reference.
10.8 Promissory note - Fox Crest Apartments financing disclosed in
notes to financial statements filed in Form 10-K dated
December 31, 1989 incorporated herein by reference.
10.9 Sale agreement - Cascades Apartments filed in Form 8-K,
Exhibit I, dated August 28, 1991, incorporated herein by
reference.
10.10 Stock Purchase Agreement dated November 24, 1992 showing the
purchase of 100% of the outstanding stock of Angeles Realty
Corporation II by IAP GP Corporation, a subsidiary of MAE GP
Corporation, filed in Form 8-K dated December 31, 1992, which
is incorporated herein by reference.
10.11 Agreement of Purchase and Sale of Real Property with Exhibits
Camelot Village Apartments and Glenwood Plaza Shopping Center
filed in Form 8-K dated July 15, 1993 incorporated herein by
reference.
10.12 Agreement of Purchase and Sale of Real Property with Exhibits
Building 54 of the Dayton Industrial Complex Shopping Center
filed in Form 8-K dated December 28, 1994 incorporated herein
by reference.
10.13 Agreement of Purchase and Sale of Real Property with Exhibits
Building 47 of the Dayton Industrial Complex Shopping Center
filed in Form 8-K dated August 31, 1995 incorporated herein by
reference.
10.14 Purchase Agreement - Building 45 of the Dayton Industrial
Complex - between the Partnership and Miller-Valentine
Partners, dated December 31, 1995.
10.15 Amendment to and Assignment of Purchase Agreement - Building
45 of the Dayton Industrial Complex - between the Partnership,
Miller-Valentine Partners and Mid-States Development Company,
dated April 8, 1996.
10.16 Assignment of Permits, Etc. - Building 45 of the Dayton
Industrial Complex - between the Partnership and Mid-States
Development Company, dated April 8, 1996.
10.17 Assignment and Assumption of Leases and Security Deposits -
Building 45 of the Dayton Industrial Complex - between the
Partnership and Mid-States Development Company, dated April 8,
1996.
10.18 Assignment of Warranties - Building 45 of the Dayton
Industrial Complex - between the Partnership and Mid-States
Development Company, dated April 8, 1996.
10.19 Bill of Sale and Assignment - Building 45 of the Dayton
Industrial Complex - between the Partnership and Mid-States
Development Company, dated April 8, 1996.
10.20 Limited Warranty Deed - Building 45 of the Dayton Industrial
Complex - between the Partnership and Mid-States Development
Company, dated April 8, 1996.
10.21 Purchase Agreement - Building 52 of the Dayton Industrial
Complex - between the Partnership and Miller-Valentine
Partner, dated December 31, 1995.
10.22 Assignment of Purchase Agreement - Building 52 of the Dayton
Industrial Complex - between the Partnership, Miller-Valentine
Partners and Mid-States Development Company, dated April 8,
1996.
10.23 Assignment of Permits, Etc. - Building 52 of the Dayton
Industrial Complex - between the Partnership, Miller-
Valentine Partners and Mid-States Development Company, dated
April 8, 1996.
10.24 Assignment of Assumption of Leases and Security Deposits -
Building 52 of the Dayton Industrial Complex - between the
Partnership, Miller-Valentine Partners and Mid-States
Development Company, dated April 8, 1996.
10.25 Assignment of Warranties - Building 52 of the Dayton
Industrial Complex - between the Partnership, Miller-Valentine
Partners and Mid-States Development Company, dated April 8,
1996.
10.26 Bill of Sale and Assignment - Building 52 of the Dayton
Industrial Complex - between the Partnership, Miller-Valentine
Partners and Mid-States Development Company, dated April 8,
1996.
10.27 Limited Warranty Deed - Building 52 of the Dayton Industrial
Complex - between the Partnership, Miller-Valentine Partners
and Mid-States Development Company, dated April 8, 1996.
10.28 Purchase Agreement - between Angeles Partners XIV and ABMD,
LTD., dated July 30, 1996.
10.29 Assignment of Service Agreements - between Angeles Partners
XIV to ABMD, LTD.
10.30 Assignment of Licenses and Permits - between Angeles Partners
XIV to ABMD, LTD.
10.31 Assignment of Warranties and Guarantees - by Angeles Partners
XIV to ABMD, LTD.
10.32 Bill of Sale and Assignment - between Angeles Partners XIV to
ABMD, LTD.
10.33 Limited Warranty Deed - by Angeles Partners XIV to ABMD, LTD.
10.34 Assignment and Assumption of Leases and Subleases - by Angeles
Partners XIV to ABMD, LTD.
10.35 Mortgage Note between Washington Capital Associates, Inc. and
Waterford Square Apartments, a California general partnership,
dated October 28, 1996.
10.36 Rider to Mortgage Note by Waterford Square Apartments, a
California general partnership, to the order of Washington
Capital Associates, Inc. dated as of October 28, 1996.
10.37 Assignment of Warranties - Building 41 of the Dayton
Industrial Complex - between the Partnership and Mid-States
Development Company, dated June 12, 1998.
10.38 Assignment of Permits - Building 41 of the Dayton Industrial
Complex - between the Partnership and Mid-States Development
Company, dated June 12, 1998.
10.39 Purchase Agreement - Building 41 of the Dayton Industrial
Complex - between the Partnership and Mid-States Development
Company, dated June 12, 1998.
10.40 Closing Statement - Building 41 of the Dayton Industrial
Complex - between the Partnership and Mid-States Development
Company, dated June 12, 1998.
10.41 Journal Entry Confirming Sale, Ordering Deed and Distributing
Sale Proceeds - between The Traveler's Insurance Company and
the Partnership, dated June 12, 1998.
10.42 Agreement of Purchase and Sale - Building 55 of the Dayton
Industrial Complex - between Angeles Partners XIV and
Shopsmith Inc., dated December 31, 1998 filed in 10-KSB for
the year ended December 31, 1998.
16.1 Letter from the Registrant's former independent accountant
regarding its concurrence with the statements made by the
Registrant, is incorporated by reference to the Exhibit filed
with Form 8-K dated September 1, 1993.
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle
27 Financial Data Schedule.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Angeles Realty Corporation II
Managing General Partner of Angeles Partners XIV
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note M of Notes to the Consolidated Financial Statements of Angeles Partners XIV
included in its Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. You have
advised us that you believe that the change is to a preferable method in your
circumstances because it provides a better matching of expenses with the related
benefit of the expenditures and is consistent with policies currently being used
by your industry and conforms to the policies of the Managing General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners XIV 1999 Fourth Quarter 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000759859
<NAME> Angeles Partners XIV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,210
<SECURITIES> 0
<RECEIVABLES> 253
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 27,996
<DEPRECIATION> 18,483
<TOTAL-ASSETS> 11,528
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 29,999
0
0
<COMMON> 0
<OTHER-SE> (27,535)
<TOTAL-LIABILITY-AND-EQUITY> 11,528
<SALES> 0
<TOTAL-REVENUES> 4,857
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,797
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,245
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,940)
<EPS-BASIC> (44.07) <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
