FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-14283
ANGELES INCOME PROPERTIES LTD. IV
(Exact name of small business issuer as specified in its charter)
California 95-3974194
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES INCOME PROPERTIES. LTD. IV
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash:
Unrestricted $ 2,901,850
Restricted--tenant security deposits 7,589
Accounts receivable, net of an allowance
of $73,120 244,130
Escrow deposits for taxes 116,178
Other assets 2,020,461
Investment properties:
Land $ 2,707,811
Buildings and related personal
property 19,847,312
22,555,123
Less accumulated depreciation (9,897,536) 12,657,587
$ 17,947,795
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 39,465
Tenant security deposits 7,589
Accrued taxes 69,496
Other liabilities 212,507
Mortgage note payable 14,612,020
Equity interest in net liabilities of
joint ventures 16,365,741
Partners' Deficit
General partner $ (1,406,160)
Limited partners (131,760
units issued and outstanding) (11,952,863) (13,359,023)
$ 17,947,795
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
1
<PAGE>
b) ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 811,400 $ 741,385 $ 1,723,809 $ 1,613,661
Other income 65,246 7,839 73,512 24,041
Total revenue 876,646 749,224 1,797,321 1,637,702
Expenses:
Operating 209,206 210,810 423,093 491,959
General and
administrative 106,891 201,786 214,028 424,256
Property management fees 42,485 45,812 74,892 78,640
Maintenance 85,364 92,277 166,184 143,838
Depreciation 276,023 279,560 551,744 558,829
Amortization 17,652 21,754 36,360 36,577
Interest 372,119 376,974 745,906 756,446
Property taxes 53,762 55,834 106,834 110,617
Bad debt expense 27,805 54,859 55,010 54,859
Bad debt recovery (1,961,437) -- (1,961,437) --
Tenant reimbursements (246,134) (221,330) (406,676) (578,559)
Total expenses (1,016,264) 1,118,336 5,938 2,077,462
Income (loss) before
equity in income (loss)
of joint ventures 1,892,910 (369,112) 1,791,383 (439,760)
Equity in income (loss)
of joint ventures 300,994 (493,869) (208,173) (1,232,766)
Net income (loss) $ 2,193,904 $ (862,981) $ 1,583,210 $(1,672,526)
Net income (loss) allocated
to general partners (2%) $ 43,878 $ (17,260) $ 31,664 $ (33,451)
Net income (loss) allocated
to limited partners (98%) 2,150,026 (845,721) 1,551,546 (1,639,075)
Net income (loss) $ 2,193,904 $ (862,981) $ 1,583,210 $(1,672,526)
Net income (loss) per
limited partnership unit $ 16.32 $ (6.42) $ 11.78 $ (12.44)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
c) ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT - June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital
contributions 131,800 $ 1,000 $ 65,900,000 $ 65,901,000
Partners' deficit at
December 31, 1994 131,760 $(1,437,824) $(13,504,409) $(14,942,233)
Net income for the six
months ended
June 30, 1995 -- 31,664 1,551,546 1,583,210
Partners' deficit at
June 30, 1995 131,760 $(1,406,160) $(11,952,863) $(13,359,023)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
d) ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $1,583,210 $(1,672,526)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Equity in loss of joint ventures 208,173 1,232,766
Depreciation 551,744 558,829
Bad debt expense 55,010 54,859
Amortization of loan costs and leasing
commissions 57,228 56,265
Change in accounts:
Restricted cash 557 (829)
Accounts receivable (190,098) (183,798)
Escrows for taxes 54,160 4,294
Other assets (2,645,605) (219,041)
Accounts payable 654 (81,433)
Tenant security deposit liabilities (556) (325)
Accrued taxes (62,878) (62,877)
Other liabilities 37,362 (42,737)
Net cash used in operating
activities (351,039) (356,553)
Cash flows from investing activities:
Capital improvements (86,752) (326,500)
Distributions from joint venture 965,730 --
Proceeds from note receivable - Forth Worth 1,961,437 --
Net cash provided by (used in)
investing activities 2,840,415 (326,500)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows used in financing activities:
Payments on mortgage notes payable $ (135,744) $ (123,011)
Net increase (decrease) in cash 2,353,632 (806,064)
Cash at beginning of period 548,218 1,454,522
Cash at end of period $2,901,850 $ 648,458
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 725,038 $ 737,771
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
e) ANGELES INCOME PROPERTIES, LTD. IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period ended June 30,
1995, are not necessarily indicative of the results that may be expected
for the fiscal year ending December 31, 1995. For further information,
refer to the financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1994.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B - Investment in Joint Ventures
The Partnership has a 43% investment in the Fort Worth Option Joint
Venture ("Fort Worth"), a 66.7% investment in Northtown Mall Partners
("Northtown"), a 43% investment in Burlington Outlet Mall Joint Venture
("Burlington") and a 50% investment in Moraine West Carrollton Partners
("Moraine").
The investment in Fort Worth, Northtown and Burlington are included
in the "Equity interest in net liabilities of joint ventures" on the
balance sheet.
A purchase agreement was executed on May 8, 1994 for the sale of all
of the Moraine properties to an affiliate of the third party managing
agent. The sale closed on July 21, 1994. Moraine received a net amount
of approximately $2,199,000 in cash after satisfying all indebtedness.
Moraine realized a $140,553 gain on the transaction of
which the Partnerships pro rata share was $70,277.
During the six month period ended June 30, 1995, all of Moraine's
remaining cash was distributed. Also, during this period, Moraine
earned interest income and incurred a minimal amount of expense.
Condensed balance sheet information as of June 30, 1995, for the
joint ventures is as follows:
<TABLE>
<CAPTION>
Assets Fort Worth Northtown Burlington
<S> <C> <C> <C>
Cash $ 192,164 $ 446,599 $ 101,440
Other assets 55,733 6,408,157 144,769
Investment properties, net -- 27,600,306 4,521,516
Total $ 247,897 $34,455,062 $4,767,725
</TABLE>
6
<PAGE>
Note B - Investment in Joint Ventures (continued)
Liabilities and Partners' Deficit
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fort Worth Northtown Burlington
Other liabilities $ 2,283,384 $ 2,158,921 $ 330,678
Notes payable 3,038,563 51,893,502 6,700,281
Partners' deficit (5,074,050) (19,597,361) (2,263,234)
Total $ 247,897 $ 34,455,062 $ 4,767,725
</TABLE>
The condensed profit and loss statements for the three and six months
ended June 30, 1995 and 1994 for the joint ventures are summarized as
follows:
<TABLE>
<CAPTION>
Fort Worth Northtown
Three Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 34,313 $ 201,673 $ 1,554,709 $ 1,742,969
Costs and expenses (196,543) (431,837) (2,211,967) (2,172,567)
Bad debt recovery 1,932,975 -- -- --
Net income (loss) $1,770,745 $(230,164) $ (657,258) $ (429,598)
</TABLE>
<TABLE>
<CAPTION>
Burlington Moraine
Three Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 105,140 $ 142,862 $ 3 $ 467,972
Costs and expenses (163,594) (329,246) -- (470,429)
Net income (loss) $ (58,454) $(186,384) $ 3 $ (2,457)
</TABLE>
7
<PAGE>
Note B - Investment in Joint Ventures (continued)
<TABLE>
<CAPTION>
Fort Worth Northtown
Six Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 212,491 $ 397,145 $ 3,087,161 $ 3,145,453
Costs and expenses (323,333) (803,884) (4,348,010) (4,397,949)
Bad debt recovery 1,932,975 -- -- --
Loss on sale of
investment property (42,401) -- -- --
Net income (loss) $1,779,732 $(406,739) $(1,260,849) $(1,252,496)
</TABLE>
<TABLE>
<CAPTION>
Burlington Moraine
Six Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 236,959 $ 320,050 $ 12,447 $ 888,697
Costs and expenses (425,315) (729,737) (625) (931,651)
Net income (loss) $ (188,356) $(409,687) $ 11,822 $ (42,954)
</TABLE>
The Partnership's equity in the losses of the joint ventures was
$208,173 and $1,232,766 for the six months ended June 30, 1995 and 1994,
respectively.
On March 22, 1995, a tenant of the W.T. Waggoner Building purchased
the investment property for $300,000. The net proceeds to Fort Worth at
the time of the sale were $214,749 and the loss on the sale amounted to
$42,401. As part of the sales agreement, $55,420 was held in escrow to
cover any unknown outstanding payables and a mechanic's lien on the
property. The General Partner believes that the escrow is sufficient to
cover any outstanding payables and that the mechanic's lien is without
merit. The balance of the escrow account at June 30, 1995, is $5,420.
The Partnership accounts for its 66.7 % investment in Northtown, its
43% investment in Burlington, its 43% investment in Fort Worth and its
50% investment in Moraine using the equity method of accounting. Under
the equity method, the Partnership records its equity interest in
earnings or losses of the joint ventures; however, the investment in the
joint ventures will be recorded at an amount less than zero (a
liability) to the extent of the Partnership's share of net liabilities
of the joint ventures.
8
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments
to affiliates for services and as reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership.
The following payments were made to the General Partner and
affiliates during the six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Property management fees $ 74,892 $ 78,640
Lease commissions 25,560 --
Reimbursement for services of
affiliates 171,796 339,882
</TABLE>
The Partnership insures its properties under a master policy through
an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a
business, certain financial obligations from an insurance agency which
was later acquired by the agent who placed the current year's master
policy. The current agent assumed the financial obligations to the
affiliate of the General Partner, who receives payment on these
obligations from the agent. The amount of the Partnership's insurance
premiums accruing to the benefit of the affiliate of the General Partner
by virtue of the agent's obligations is not significant.
In July 1993, Angeles Mortgage Investment Trust ("AMIT"), a real
estate investment trust formerly affiliated with Angeles Corporation
("Angeles"), initiated litigation against Fort Worth and other
partnerships which loaned money to AMIT seeking to avoid repayment of
such obligations. The Partnership subsequently filed a counterclaim
against AMIT seeking to enforce the obligation, the principal amount of
which was $2,240,000 plus accrued interest from March 1993 ("AMIT
Obligation").
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner,
owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert
these Class B Shares, in whole or in part, into Class A Shares on the
basis of 1 Class A Share for every 49 Class B Shares. These Class B
Shares entitle MAE GP to receive 1% of the distributions of net cash
distributed by AMIT. These Class B Shares also entitle MAE GP to vote
on the same basis as Class A Shares which allows MAE GP to vote
approximately 33% of the total shares (unless and until converted to
Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the
vote). Between the date of acquisition of these shares (November 24,
1992) and March 31, 1995, MAE GP declined to vote these shares. Since
that date, MAE GP voted its shares at the 1995 annual meeting in
connection with the election of trustees and other matters. MAE GP has
not exerted, and continues to decline to exert, any management control
over or participate in the management of AMIT. However, MAE GP may
choose to vote these shares as it deems appropriate in the future.
9
<PAGE>
Note C - Transactions with Affiliated Parties (continued)
On November 9, 1994, Fort Worth executed a definitive Settlement
Agreement to settle the dispute with respect to the AMIT obligation.
The actual closing of the Settlement occurred April 14, 1995. The
Partnership's claim against AMIT was satisfied by a cash payment to Fort
Worth by AMIT totalling $1,932,975 (the "Settlement Amount") plus
interest at closing. These funds were used to pay down Fort Worth's
$5,000,000 note payable to the Partnership (See discussion below).
Subsequent to June 30, 1995, Fort Worth and Angeles entered into an
agreement in principle regarding the allowance of an amended claim for
the deficiency between the original principal and the Settlement Amount
(the "deficiency"). The General Partner anticipates that the amended
claim will equal 90% of the deficiency or $276,322. The General Partner
estimates that the amended claim will result in a recovery of
approximately 20%.
As part of the settlement with AMIT, MAE GP granted to AMIT an option
to acquire the Class B Shares. This option can be exercised at the end
of 10 years or when all loans made by AMIT to partnerships affiliated
with MAE GP as of November 9, 1994, (which is the date of execution of a
definitive Settlement Agreement), have been paid in full, but in no
event prior to November 9, 1997. AMIT delivered to MAE GP cash in the
sum of $250,000 at closing, which occurred April 14, 1995, as payment
for the option. Upon exercise of the option, AMIT would remit to MAE GP
an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be
able to vote the Class B Shares on all matters except those involving
transactions between AMIT and MAE GP affiliated borrowers or the
election of any MAE GP affiliate as an officer or trustee of AMIT. On
these matters, MAE GP granted to the AMIT trustees, in their capacity as
trustees of AMIT, proxies with regard to the Class B Shares instructing
such trustees to vote said Class B Shares in accordance with the vote of
the majority of the Class A Shares voting to be determined without
consideration of the votes of "Excess Class A Shares" as defined in
Section 6.13 of the Declaration of Trust of AMIT.
In 1992, the Partnership loaned Fort Worth $5,000,000 to cover
leasing commissions, tenant improvements, and capital expenditures. The
note payable requires interest at a rate of prime plus 1.5% with monthly
interest only payments through January 1996, at which time the principal
is due. In 1992, an allowance of $2,850,000 was established for the
uncollectible portion of this note receivable. The remaining note
receivable balance was fully reserved in 1993. AMIT has since paid
$1,961,437 to the Partnership, (see discussion below), reducing AMIT's
note payable to Fort Worth and also Fort Worth's note payable to the
Partnership. In addition, the Partnership recovered a portion of the
note receivable that was previously written off resulting in recognition
of a bad debt recovery on both the Partnership's and Fort Worth's books.
On December 22, 1994, the Partnership entered into an agreement with
Fort Worth and Angeles Income Properties, Ltd. V ("AIPL V"), an
affiliate of the General Partner and the other 57% owner of Fort Worth,
whereby Fort Worth transferred, assigned and delivered to the
Partnership all of Fort Worth's right, title and interests in and to all
payment, distributions, profits, returns of capital and benefits
accruing from the
10
<PAGE>
Note C - Transactions with Affiliated Parties (continued)
repayment by AMIT of the loan made to AMIT from Fort Worth. This
transfer effectively transferred AIPL V's right, title and interest in
and to all payment, distributions, profits, returns of capital and
benefits accruing from the repayment by AMIT of the loan made to AMIT
from Fort Worth. AIPL V has consented to this transfer, assignment and
delivery.
The Partnership may make advances to the affiliated joint ventures as
deemed appropriate by the General Partner. These advances do not bear
interest and do not have stated terms of repayment.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two commercial
properties. The following table sets forth the average occupancy of the
properties for the six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Average
Occupancy
Property 1995 1994
<S> <C> <C>
Factory Merchant's Mall
Pigeon Forge, Tennessee 90% 92%
Eastgate Market Place
Walla Walla, Washington 94% 93%
</TABLE>
The Partnership realized net income of $1,583,210 for the six months
ended June 30, 1995, as compared to a net loss of $1,672,526 for the six
months ended June 30, 1994. The Partnership realized net income of
$2,193,904 for the three months ended June 30, 1995, as compared to a
net loss of $862,981 for the three months ended June 30, 1994. The
decrease in the net loss for the three and six months ended June 30,
1995, as compared to the three and six months ended June 30, 1994, is
primarily due to bad debt recovery of $1,961,437 and a decrease in the
equity in the loss of the joint ventures for the three and six months
ended June 30, 1995, versus the three and six months ended June 30, 1994
(see discussion below).
The increase in rental revenue for the three and six month periods
ended June 30, 1995, as compared to the three and six month periods
ended June 30, 1994, is a result of an increase in occupancy at Eastgate
Market Place and an increase in rental rates. The increase in other
income is due to an increase in interest income as a result of increased
cash balances. The decrease in operating expenses for the six months
ended June 30, 1995, as compared to the six months ended June 30, 1994,
is a result of 1994's costs including costs associated with the buyout
of an outside management company, which had obtained the management
contract for Factory Merchant's Mall and Burlington Outlet Mall.
General and administrative expense decreased primarily due to a decrease
in partnership accounting, investor services and asset management
reimbursements. The increase in maintenance expense for the six months
ended June 30, 1995, as compared to the six months ended June 30, 1994,
is primarily caused by increased repairs and maintenance and cleaning
costs at Factory Merchant's Mall. Bad debt recovery as of June 30,
1995, relates to partial recovery of the note receivable that the
Partnership has from Fort Worth. The entire note receivable
($5,000,000) had been previously reserved. The $1,961,437 represents
proceeds received from Fort Worth. Tenant reimbursements decreased for
the six months ended June 30, 1995, as compared to the six months ended
June 30, 1994, due to the tenant reimbursements in the first quarter of
1994 including amounts related to 1993. Tenant reimbursements for 1993
were estimated based on information provided to the Partnership by the
previous management company. Such estimates were not an accurate
reflection of actual reimbursements.
The Partnership's equity in the losses of the joint ventures is
$208,173 and $1,232,766 for the six months ended June 30, 1995 and 1994,
respectively. The decrease in the equity in loss of joint ventures can
be attributed to bad debt recovery for Fort Worth as a result AMIT's
note payment to Fort Worth and also to decreased losses relating to
Burlington. In addition, the decrease in equity in loss of joint
ventures can be attributed to a change from a net loss of $42,954 for
Moraine for the first six months of 1994 versus net income of $11,822
for the first six months of 1995.
12
<PAGE>
As a result of the sale of the W.T. Waggoner Building on March 22,
1995, Fort Worth realized a considerable decrease in costs and expenses
for the six months ended June 30, 1995, versus the six months ended June
30, 1994. Revenue decreased at Burlington for the six months ended June
30, 1995, versus the six months ended June 30, 1994, as a result of
decreased occupancy. The decrease in revenue was offset by a large
decrease in expenses primarily caused by decreased occupancy and a
decrease in interest expense as a result of the loan modification
agreement (see discussion below). The decrease in revenue at Moraine
for the six months ended June 30, 1995, versus the six months ended June
30, 1994, and the decrease in costs and expenses for the same period are
the result of the sale of the property on July 21, 1994 (see discussion
below).
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from
increases in expense. As part of this plan, the 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 General
Partner will be able to sustain such a plan.
At June 30, 1995, the Partnership had unrestricted cash of $2,901,850
compared to $648,458 at June 30, 1994. Net cash used in operating
activities remained stable from 1994 to 1995. Net cash provided by
investing activities increased as a result of distributions received
from Moraine and proceeds received from Fort Worth. Net cash used in
financing activities remained stable from 1994 to 1995.
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the level of
capital expenditures required at the properties to adequately maintain
the physical assets and other operating needs of the Partnership. Such
assets are currently thought to be sufficient for any near-term needs of
the Partnership. The mortgage indebtedness of $14,612,020, which is
secured by the Factory Merchant's Mall investment property, matures in
December 1997 at which time the indebtedness will be refinanced or the
property will be sold. Future cash distributions will depend on the
levels of net cash generated from operations, refinancings, property
sales and the availability of cash reserves. There were no cash
distributions in the first six months of 1995 or 1994.
The mortgage note payable secured by the Burlington investment
property matured on July 1, 1994. Burlington obtained new financing the
terms of which consolidate all principal, accrued interest, and late
charges outstanding on July 1, 1994, into a new loan amount which will
accrue interest at the greater of 2% or net cash flow as defined in the
loan extension agreement. The loan maturity date had been extended
until April 1, 1995. The mortgage holder has initiated foreclosure
proceedings against this property, however, the mortgage holder has
issued a stay of these proceedings in order to give the General Partner
an opportunity to sell the property. The General Partner has entered
into contract negotiations to sell the property. The outcome of such
negotiations can not presently be determined.
On March 15, 1991 ("Effective Date"), Northtown and the holder of the
Northtown Mall Mortgage note payable entered into an Option Agreement
("Option") whereby such lender has the right and an option to purchase
the Northtown Mall property on the terms and conditions as set forth in
the Option. The purchase price of the property, as set forth in the
Option, is defined as the fair market value of the property. Such
Option
13
<PAGE>
can be exercised by written notice by the lender at any time
during any of the thirty day periods occurring immediately prior to the
third, fifth, seventh, ninth, eleventh, thirteenth and fifteenth
anniversaries of the effective date. The first date on which the Option
could have been exercised was March 15, 1994. On February 22, 1994 the
lender gave notice to the Partnership that it intended to exercise this
Option. The lender offered $58,000,000 based on an annual appraisal.
Northtown determined that the fair value as determined in accordance
with the loan documents is $62,000,000. Northtown is negotiating with
the lender to retain ownership of the property in order to protect the
Partnership's equity in the property. However, Northtown cannot
presently determine the outcome of such negotiations.
A purchase agreement was executed on May 8, 1994 for the sale of all
of the Moraine properties to an affiliate of the third party managing
agent. The sale closed on July 21, 1994. Moraine received a net amount
of approximately $2,199,000 in cash after satisfying all indebtedness.
Moraine realized a $140,553 gain on the transaction of which the
Partnerships pro rata share was $70,277.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In July 1993, Angeles Mortgage Investment Trust ("AMIT"), a real
estate investment trust formerly affiliated with Angeles Corporation
("Angeles"), initiated litigation against Fort Worth and other
partnerships which loaned money to AMIT seeking to avoid repayment of
such obligations. The Partnership subsequently filed a counterclaim
against AMIT seeking to enforce the obligation, the principal amount of
which was $2,240,000 plus accrued interest from March 1993 ("AMIT
Obligation").
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner,
owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert
these Class B Shares, in whole or in part, into Class A Shares on the
basis of 1 Class A Share for every 49 Class B Shares. These Class B
Shares entitle MAE GP to receive 1% of the distributions of net cash
distributed by AMIT. These Class B Shares also entitle MAE GP to vote
on the same basis as Class A Shares which allows MAE GP to vote
approximately 33% of the total shares (unless and until converted to
Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the
vote). Between the date of acquisition of these shares (November 24,
1992) and March 31, 1995, MAE GP declined to vote these shares. Since
that date, MAE GP voted its shares at the 1995 annual meeting in
connection with the election of trustees and other matters. MAE GP has
not exerted, and continues to decline to exert, any management control
over or participate in the management of AMIT. However, MAE GP may
choose to vote these shares as it deems appropriate in the future.
On November 9, 1994, Fort Worth executed a definitive Settlement
Agreement to settle the dispute with respect to the AMIT obligation.
The actual closing of the Settlement occurred April 14, 1995. The
Partnership's claim against AMIT was satisfied by a cash payment to Fort
Worth by AMIT totalling $1,932,975 (the "Settlement Amount") plus
interest at closing. Subsequent to June 30, 1995, Fort Worth and
Angeles entered into an agreement in principle regarding the allowance
of an amended claim for the deficiency between the original principal
and the Settlement Amount (the "deficiency"). The General Partner
anticipates that the amended claim will equal 90% of the deficiency or
$276,322. The General Partner estimates that the amended claim will
result in a recovery of approximately 20%.
As part of the above described settlement, MAE GP granted to AMIT an
option to acquire the Class B Shares. This option can be exercised at
the end of 10 years or when all loans made by AMIT to partnerships
affiliated with MAE GP as of November 9, 1994, (which is the date of
execution of a definitive Settlement Agreement), have been paid in
full, but in no event prior to November 9, 1997. AMIT delivered to MAE
GP cash in the sum of $250,000 at closing, which occurred April 14,
1995, as payment for the option. Upon exercise of the option, AMIT
would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be
able to vote the Class B Shares on all matters except those involving
transactions between AMIT and MAE GP affiliated borrowers or the
election of any MAE GP affiliate as an officer or trustee of AMIT. On
these matters, MAE GP granted to the AMIT trustees, in their capacity as
trustees of AMIT, proxies with regard to the Class B Shares instructing
such trustees to vote said Class B Shares in accordance with the vote of
the majority of the Class A Shares voting to be determined without
consideration of the votes of "Excess Class A Shares" as defined in
Section 6.13 of the Declaration of Trust of AMIT.
15
<PAGE>
Additionally, Angeles either directly or through an affiliate,
maintained a central disbursement account (the "Account") for the
properties and partnerships managed by Angeles and its affiliates,
including the Registrant. Angeles caused the Partnership to make
deposits to the Account ostensibly to fund the payment of certain
obligations of the Partnership. Angeles further caused checks on such
account to be written to or on behalf of certain other Partnerships.
However, of these total deposits, at least $81,263 deposited by or on
behalf of the Partnership was used for purposes other than satisfying
the liabilities of the Partnership. Accordingly, the Partnership has
filed a Proof of Claim in the Angeles bankruptcy proceedings for such
amount. However, subsequently the General Partner of the Partnership
has determined that the cost involved to pursue such claim would likely
exceed any amount received, if in fact such claim were to be resolved in
favor of the Partnership. Therefore, the Partnership anticipates that
it will withdraw its Proof of Claim.
The Registrant is unaware of any other pending or outstanding
litigation that is not of a routine nature. The General Partner of the
Registrant believes that all such pending or outstanding litigation will
be resolved without a material adverse effect upon the business,
financial condition, or operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None.
16
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANGELES INCOME PROPERTIES, LTD. IV
By: Angeles Realty Corporation II
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and
Principal Accounting Officer
Date: August 10, 1995
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Angeles Income Properties Ltd. IV 1995 Second Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,901,850
<SECURITIES> 0
<RECEIVABLES> 317,250
<ALLOWANCES> 73,120
<INVENTORY> 0
<CURRENT-ASSETS> 3,269,747
<PP&E> 22,555,123
<DEPRECIATION> (9,897,536)
<TOTAL-ASSETS> 17,947,795
<CURRENT-LIABILITIES> 116,550
<BONDS> 14,612,020
<COMMON> 0
0
0
<OTHER-SE> (13,359,023)
<TOTAL-LIABILITY-AND-EQUITY> 17,947,795
<SALES> 0
<TOTAL-REVENUES> 1,797,321
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,938
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 745,906
<INCOME-PRETAX> 1,583,210
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,583,210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,583,210
<EPS-PRIMARY> 11.78
<EPS-DILUTED> 0
</TABLE>
