FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
(MarkOne)
[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 0-14283
ANGELES INCOME PROPERTIES, LTD. IV
(Name of small business issuer in its charter)
California 95-3974194
(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. $7,524,000
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
<PAGE>
PART I
Item 1. Description of Business
Angeles Income Properties, Ltd. IV (the "Partnership" or "Registrant") is a
publicly held limited partnership organized under the California Uniform Limited
Partnership Act on June 29, 1984. The Partnership's general partner is Angeles
Realty Corporation II, a California corporation (the "General Partner" or "ARC
II"). ARC II was wholly-owned by 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 General Partner is now wholly-owned by
AIMCO. The Partnership Agreement provides that the Partnership is to terminate
on December 31, 2035 unless terminated prior to such date.
The Registrant, through its public offering of Limited Partnership Units, sold
131,800 units aggregating $65,900,000. The General Partner contributed capital
in the amount of $1,000 for a 2% interest in the Partnership. Since its initial
offering, the Partnership had not received, nor are limited partners required to
make, additional capital contributions. The Partnership is engaged in the
business of operating and holding real estate properties for investment (see
"Item 2. Description of Property"). The Partnership presently owns one
commercial property. The Partnership owned a general partnership interest in an
additional property which was sold in 1999.
The Partnership has no employees. Management and administrative services are
provided by the General Partner and by agents of the General Partner. These
services for the remaining property were provided by affiliates of the General
Partner for the nine months ended September 30, 1998. Effective October 1, 1998
these services were provided by an unrelated party.
The business in which the Partnership is engaged is highly competitive. There
are other commercial properties within the market area of the Registrant's
property. The number and quality of competitive properties in such market area
could have a material effect on the rental market for the commercial space at
the Registrant's property and the rents that may be charged for such space.
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 property
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.
The Partnership receives income from its property and is responsible for
operating expenses, capital improvements and debt service payments under
mortgage obligations secured by the property. The Partnership financed its
property through non-recourse debt. Therefore, in the event of default, the
lender can generally look only to the subject property for recovery of amounts
due.
Both the income and expenses of operating the property 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 commercial properties because such properties are
susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
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 Financial Group, Inc. 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 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Item 2. Description of Property
The following table sets forth the Partnership's investment in property:
Date of
Property Purchase Type of Ownership Use
Factory Merchants Mall 05/22/86 Fee ownership subject Commercial
Pigeon Forge, Tennessee to a first mortgage (1) 200,000 sq. ft.
(1) Owned by a limited partnership of which the Registrant is the sole limited
partner.
Schedule of Property
Set forth below for the Registrant's property is the gross carrying value,
accumulated depreciation, depreciable life, method of depreciation and Federal
tax basis.
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
Factory Merchants Mall $20,518 $12,402 5-20 yrs S/L $ 9,341
See "Note A" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation
policy. .
<PAGE>
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loan
encumbering the Registrant's property.
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity
(in thousands) (in thousands)
Factory Merchants Mall
<S> <C> <C> <C> <C> <C>
1st mortgage $14,864 9.75% 25 yrs 10/2006 $12,955
</TABLE>
See "Item 7. Financial Statements - Note C" for information with respect to the
Registrant's ability to prepay this loan and other specific details about the
loan.
Rental Rates and Occupancy
Average annual rental rate and occupancy for 1999 and 1998 for the property is
as follows:
Average Annual Average
Rental Rates Occupancy
(per square foot)
Property 1999 1998 1999 1998
Factory Merchants Mall $13.11 $12.72 90% 95%
The General Partner attributes the decrease in occupancy to the loss of several
tenants during 1999 and to reduced rental footage by several existing tenants
during 1999.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The property is subject to competition from other commercial
buildings in the area. The General Partner believes that the property is
adequately insured. The property is in good physical condition, subject to
normal depreciation and deterioration as is typical for assets of this type and
age.
Capital Improvements
During the year ended December 31, 1999, approximately $90,000 of capital
improvements were made at Factory Merchants Mall consisting primarily of tenant
improvements. These improvements were funded from operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the year 2000.
<PAGE>
Schedule of Lease Expirations
The following is a schedule of the commercial lease expirations for the years
2000-2009:
<TABLE>
<CAPTION>
Number of Annual % of Gross
Factory Merchants Mall Expirations Square Feet Rent Annual Rent
(in thousands)
<S> <C> <C> <C> <C> <C>
2000 6 18,061 $248 9.51%
2001 10 46,578 704 26.95%
2002 6 15,942 241 9.23%
2003 5 20,949 304 11.63%
2004 6 38,858 608 23.30%
2005 1 2,500 43 1.65%
2006 1 10,455 181 6.94%
2007-2008 -- -- -- --
2009 1 5,435 124 4.77%
</TABLE>
Factory Merchants Mall has no tenants occupying 10% or more of the leasable
square footage (See "Notes A and H" of the consolidated financial statements
included in "Item 7. Financial Statements" for a description of the principle
terms of the leases of the available space ).
Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for the property are as follows:
1999 1999
Billing Rate
(in thousands)
Factory Merchants Mall $153 1.52%
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 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 B - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the 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 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 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 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 Partnership 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 131,800
Limited Partnership Units aggregating $65,900,000. The Partnership currently has
4,465 holders of record owning an aggregate of 131,585 units. Affiliates of the
General Partner owned 27,432 units or 20.847% 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.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999.
Distributions
Per Limited
Aggregate Partnership Unit
01/01/98 - 12/31/98 $ -- $ --
01/01/99 - 12/31/99 $6,700,000 (1) $49.90
(1) Consists of $2,124,000 of cash from operations and $4,576,000 of proceeds
from the sale of Eastgate Mall (see "Item 6. Management's Discussion and
Analysis or Plan of Operation" for further details).
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of the debt
maturity, refinancing and/or property sale. The Partnership's distribution
policy is reviewed on a semi-annual basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations after
required capital expenditures to permit distributions to its partners in 2000 or
subsequent periods.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 27,432
limited partnership units in the Partnership representing 20.847% 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 General Partner because of their
affiliation with the 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 matter, 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 "Item 7. Financial Statements" and
other items contained elsewhere in this report.
Results of Operations
The Partnership realized net income of approximately $2,735,000 for the year
ended December 31, 1999 as compared to a net loss of approximately $825,000 for
the comparable period of 1998. The increase in net income for the year ended
December 31, 1999 is primarily due to the gain recognized on the sale of
Eastgate Mall of approximately $3,553,000 in June 1999. Excluding the gain on
sale of and results of operations for Eastgate Mall for 1999 and 1998, the
Partnership realized a net loss of approximately $1,085,000 and $1,204,000 for
the years ended December 31, 1999 and 1998, respectively. The decrease in net
loss is due to a decrease in total expenses, which was offset by a decrease in
total revenues. The decrease in total revenues is due to a decrease in rental
income and other income. The decrease in rental income is due to the decrease in
occupancy at Factory Merchants Mall. The decrease in other income is due to a
decrease in lease cancellation fees at Factory Merchants Mall and a decrease in
cash held in interest bearing accounts. The decrease in total expenses is
primarily due to the recognition of a loss on a litigation settlement in 1998,
as previously disclosed in the Partnership's Annual Report on Form 10-KSB as of
December 31, 1998, and a decrease in general and administrative expense, which
was offset by an increase in bad debt expense. The decrease in general and
administrative expenses is due to legal costs incurred during 1998 for the
settlement of litigation concerning a prior investment in a joint venture, as
previously disclosed in the Partnership's Annual Report on Form 10-KSB. The
increase in bad debt expense is due to the increase in the allowance for
doubtful accounts for temporary tenants at Factory Merchants Mall.
Included in general and administrative expenses for the year ended December 31,
1999 and 1998, are reimbursements to the General Partner allowed under the
Partnership Agreement associated with its management of the Partnership. 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.
On June 16, 1999, the Partnership sold Eastgate Mall to an unrelated party, for
net proceeds of approximately $4,576,000 after payment of closing costs. The
Partnership recognized a gain of approximately $3,553,000 on the sale during
1999.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property 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.
Capital Resources and Liquidity
At December 31, 1999, the Partnership held cash equivalents of approximately
$1,170,000 compared to approximately $3,637,000 at December 31, 1998. The
decrease in cash and cash equivalents was approximately $2,467,000 from the year
ended December 31, 1998. The decrease is due to approximately $6,888,000 of cash
used in financing activities partially offset by approximately $4,235,000 of
cash provided by investing activities and approximately $186,000 of cash
provided by operating activities. Cash used in financing activities consisted
primarily of distributions to partners and, to a lessor extent, payments on the
mortgage securing the Partnership's remaining property. Cash provided by
investing activities consisted of proceeds from the sale of Eastgate Mall
partially offset by capital improvements and replacements, lease commissions,
and net deposits to restricted escrows maintained by the mortgage lender. The
Partnership invests its working capital reserves in money market accounts.
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 property to adequately maintain the physical assets
and other operating needs of the Registrant and to comply with Federal, state,
and local legal and regulatory requirements. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
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 capital expenditures will be incurred only if cash is
available from operations or from Partnership reserves. To the extent that such
budgeted capital improvements are completed, the Registrant's distributable cash
flow, if any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $14,864,000 matures in October 2006. If the
property is not sold prior to the mortgage maturity date, the General Partner
will attempt to refinance such indebtedness and/or sell the property prior to
such maturity date. If the property cannot be refinanced or sold for a
sufficient amount, the Registrant will risk losing the property through
foreclosure.
During the year ended December 31, 1999, the Partnership distributed
approximately $6,700,000 (approximately $6,566,000 to the limited partners,
$49.90 per limited partnership unit) to the partners. Approximately $2,124,000
(approximately $2,082,000 to the limited partners, $15.82 per limited
partnership unit) of the distribution was from operations and approximately
$4,576,000 (approximately $4,484,000 to the limited partners, $34.08 per limited
partnership unit) was from proceeds of the sale of Eastgate Mall in June 1999.
There were no distributions during the year ended December 31, 1998. The
Partnership's distribution policy is reviewed on a semi-annual basis. Future
cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of the debt
maturity, refinancing, and/or property sale. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations after
required capital expenditures to permit distributions to its partners in 2000 or
subsequent periods.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 27,432
limited partnership units in the Partnership representing 20.847% 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 General Partner because of their
affiliation with the 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 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.
<PAGE>
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 INCOME PROPERTIES, LTD. IV
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) Capital - 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 Income Properties, Ltd. IV
We have audited the accompanying consolidated balance sheet of Angeles Income
Properties, Ltd. IV as of December 31, 1999, and the related consolidated
statements of operations, changes in partners' (deficit) capital 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 Income
Properties, Ltd. IV 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.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 21, 2000
<PAGE>
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,170
Receivables and deposits, net of allowance for
doubtful accounts of $278,000 586
Restricted escrows 649
Other assets 471
Investment property (Notes C and G):
Land $ 2,414
Buildings and related personal property 18,104
20,518
Less accumulated depreciation (12,402) 8,116
$ 10,992
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 35
Tenant security deposit liabilities 6
Accrued property taxes 161
Other liabilities 229
Mortgage note payable (Notes C and G) 14,864
Partners' Deficit
General partner $ (102)
Limited partners (131,585 units issued and
outstanding) (4,201) (4,303)
$ 10,992
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Revenues:
<S> <C> <C>
Rental income $ 3,724 $ 4,360
Other income 247 264
Gain on sale of property (Note E) 3,553 --
Total revenues 7,524 4,624
Expenses:
Operating 1,655 1,752
General and administrative 232 532
Depreciation 1,004 1,076
Interest 1,494 1,509
Property taxes 194 198
Bad debt expense (recovery), net 210 (28)
Loss on settlement -- 410
Total expenses 4,789 5,449
Net income (loss) (Note D) $ 2,735 $ (825)
Net income (loss) allocated to general partner $ 1,178 $ (17)
Net income (loss) allocated to limited partner 1,557 (808)
$ 2,735 $ (825)
Net income (loss) per limited partnership unit $ 11.83 $ (6.14)
Distributions per limited partnership unit $ 49.90 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 131,800 $ 1 $65,900 $65,901
Partners' (deficit) capital at
December 31, 1997 131,585 $(1,129) $ 1,616 $ 487
Net loss for the year ended
December 31, 1998 -- (17) (808) (825)
Partners' (deficit) capital at
December 31, 1998 131,585 (1,146) 808 (338)
Distributions to partners -- (134) (6,566) (6,700)
Net income for the year
ended December 31, 1999 -- 1,178 1,557 2,735
Partners' deficit at
December 31, 1999 131,585 $ (102) $(4,201) $(4,303)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ 2,735 $ (825)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 1,004 1,076
Amortization of loan costs and leasing commissions 116 117
Gain on sale of property (3,553) --
Bad debt expense (recovery) 210 (28)
Change in accounts:
Receivables and deposits (50) (170)
Other assets 70 12
Accounts payable 28 (30)
Tenants security deposit liabilities (1) --
Accrued taxes 16 7
Other liabilities (389) 440
Net cash provided by operating activities 186 599
Cash flows from investing activities:
Property improvements and replacements (90) (323)
Lease commissions paid (61) (56)
Net (deposits to) withdrawals from restricted escrows (190) 27
Net proceeds from sale of investment property 4,576 --
Net cash provided by (used in) investing
activities 4,235 (352)
Cash flows used in financing activities:
Payments on mortgage notes payable (188) (169)
Distributions to partners (6,700) --
Net cash used in financing activities (6,888) (169)
Net (decrease) increase in cash and cash equivalents (2,467) 78
Cash and cash equivalents at beginning of the year 3,637 3,559
Cash and cash equivalents at end of year $ 1,170 $ 3,637
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,459 $ 1,478
Supplemental disclosure:
Property improvements and replacements and accounts payable at December 31,
1998, were adjusted by approximately $100,000 for non-cash activity at
December 31, 1997.
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES INCOME PROPERTIES, LTD. IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Angeles Income Properties, Ltd. IV (the "Partnership" or
"Registrant") is a publicly-held limited partnership organized under the Uniform
Limited Partnership Laws of California on June 29, 1984. The general partner
responsible for management of the Partnership's business is Angeles Realty
Corporation II, a California corporation (the "General Partner" or "ARC II").
ARC II was wholly-owned by 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 General Partner is now wholly-owned by AIMCO (see
"Note B - Transfer of Control"). The directors and officers of the General
Partner also serve as executive officers of AIMCO. The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2035 unless
terminated prior to such date. The Partnership operates a commercial retail
center located in Tennessee.
Principles of Consolidation: The consolidated financial statements of the
Partnership include its wholly-owned limited partnership interest in Factory
Merchants, AIP IV, L.P. and AIP IV GP, LP. The Partnership may remove the
general partner of Factory Merchants, AIP IV L.P. and AIP IV GP, LP; therefore,
the partnerships are controlled and consolidated by the Partnership. All
significant interpartnership balances have been eliminated. Minority interest is
immaterial and not shown separately in the consolidated financial statements.
Allocations of Profits, Gains and Losses: In accordance with the Partnership
Agreement, any gain from the sale or other disposition of Partnership assets
will be allocated first to the General Partner to the extent of the amount of
any brokerage compensation and incentive interest to which the General Partner
is entitled. Any gain remaining after said allocation will be allocated to the
extent of any partners' negative capital balance then to the General Partner and
Limited Partners in proportion to their interests in the Partnership.
The Partnership will allocate other profits and losses 2% to the General Partner
and 98% to the Limited Partners.
Except as discussed below, the Partnership will allocate distributions 2% to the
General Partner and 98% 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:
First, to the General Partner, on account of the current and accrued management
fee payable, deferred as contemplated therein; Second, to the partners in
proportion to their interests until the Limited Partners have received proceeds
equal to their original capital investment applicable to the property; Third to
the partners until the Limited Partners have received distributions from all
sources equal to their 8% cumulative distribution; Fourth, to the General
Partner until it has received its brokerage compensation and thereafter, 88% to
the Limited Partners in proportion to their interests and 12% ("Incentive
Interest") to the General Partner.
Uses 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.
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 long term debt, after discounting the scheduled loan payments at a
borrowing rate currently available to the Partnership, approximates its carrying
balance.
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.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the commercial property and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984 and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 7 years.
Loan Costs: Loan costs of approximately $337,000, less accumulated amortization
of approximately $109,000, are included in other assets and are being amortized
on a straight-line basis over the life of the loan.
Tenant Security Deposits: The Partnership requires security deposits from
certain commercial space lessees for the duration of the lease and such deposits
are included in receivables and deposits. Deposits are refunded when the tenant
vacates, provided the tenant has not damaged its space and is current on rental
payments.
Restricted Escrows: At the time the Partnership refinanced the mortgage
encumbering Factory Merchants Mall in October 1996, a portion of the proceeds
were used to establish restricted escrows. These escrows are used to fund
capital improvements and replacements. At December 31, 1999, these escrows
equaled approximately $649,000 which includes interest.
Leases: Commercial building lease terms are generally for one to twenty years.
Several tenants have percentage rent clauses which provide for additional rent
upon the tenant achieving certain rental objectives. Percentage rent totaled
approximately $122,000 in 1999 and approximately $230,000 in 1998. For leases
containing fixed rental increases during their term, rents are recognized on a
straight-line basis over the terms of the lease. For all other leases, rents are
recognized over the terms of the leases as earned. In addition, the General
Partner's policy is to offer rental concessions during particularly slow months
or in response to heavy competition from other similar commercial retail malls
in the area. Concessions are charged against rental income as incurred.
Lease Commissions: Lease commissions of approximately $525,000, which are
included in other assets in the accompanying consolidated balance sheet, are
amortized on a straight line basis over the terms of the respective leases.
Current accumulated amortization is approximately $338,000.
Investment Property: Investment property consists of one commercial retail mall
which is stated at cost. Acquisition fees are capitalized as a cost of real
estate. In accordance with SFAS 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 the commercial property that have
been permanently impaired have been written down to appraised value. No
adjustments for impairment of value were necessary for the years ending December
31, 1999, or 1998.
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 required disclosure.
Advertising: The Partnership expenses the cost of advertising as incurred.
Advertising costs of approximately $8,000 and $3,000 for the years ended
December 31, 1999 and 1998, respectively were included in operating expense.
Reclassifications: Certain reclassifications have been made to the 1998
information to conform to the 1999 presentation.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. 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 100% ownership
interest in the General Partner. The 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 C - Mortgage Note Payable
The principle terms of the mortgage note payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
Factory Merchants Mall
<S> <C> <C> <C> <C> <C>
1st mortgage $14,864 $ 137 9.75% 10/2006 $12,955
</TABLE>
The mortgage note payable is nonrecourse and is secured by pledge of the
Partnership's investment property and by pledge of revenues from the investment
property. Prepayment penalties are imposed if the mortgage note is repaid prior
to maturity. Further, the property may not be sold subject to existing
indebtedness.
Scheduled principal payments of the mortgage note payable subsequent to December
31, 1999 are as follows (in thousands):
2000 $ 207
2001 228
2002 251
2003 277
2004 305
Thereafter 13,596
$14,864
Note D - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation of reported net income (loss) and Federal
taxable income (loss) income (in thousands, except per unit data):
1999 1998
Net income (loss) as reported $ 2,735 $ (825)
Add (deduct):
Depreciation differences 87 54
Gain on sale of property (2,614)
Change in prepaid rental (19) 60
Accrued expenses 108 415
Other (442) (1,175)
Federal taxable loss $ (145) $(1,471)
Federal taxable loss per
limited partnership unit $ (1.08) $(10.96)
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 $(4,303)
Land and buildings (221)
Accumulated depreciation 1,446
Syndication 8,848
Other 322
Net assets - tax basis $ 6,092
Note E - Sale of Investment Property
On June 16, 1999, Eastgate Mall, located in Walla Walla, Washington, was sold to
an unaffiliated third party for $4,800,000. After payment of closing expenses,
the net proceeds received by the Partnership were approximately $4,576,000. The
sale of the property resulted in a gain on sale of the property of approximately
$3,553,000.
Note F - 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 certain payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were paid or accrued to the
General Partner and affiliates in 1999 and 1998:
1999 1998
(in thousands)
Property management fees (included in operating expense) $ -- $ 130
Partnership management fees (included in general and
administrative expense) (1) -- 8
Lease commissions -- 57
Reimbursement for services of affiliates (included in
general and administrative expense) 71 144
(1) The Partnership Agreement provides for a fee equal to 10% of "Net cash
flow from operations", as defined in the Partnership Agreement to be paid
to the General Partner for executive and administrative management
services.
During the nine months ending September 30, 1998, affiliates of the General
Partner were entitled to varying percentages of gross receipts from all of the
Registrant's commercial properties as compensation for providing property
management services. These services were performed by affiliates of the General
Partner for the nine months ending September 31, 1998 and were $130,000.
Effective October 1, 1998 (the effective date of the Insignia Merger, see "Note
B"), these services for the commercial properties were performed by an unrelated
party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $71,000 and $144,000 for the
years ended December 31, 1999 and 1998, respectively. Included in
"Reimbursements for services of affiliates" is approximately $27,500 for
consulting performed by an affiliate of the General Partner for the year ended
December 31, 1998.
Pursuant to the Partnership Agreement, the General Partner is entitled to
receive a distribution equal to 3% of the aggregate disposition price of sold
properties. Pursuant to this provision, during the twelve months ended December
31, 1999, the Partnership declared and paid a distribution of approximately
$144,000 to the General Partner related to the sale of Eastgate Mall. However,
this fee is subordinate to the limited partners receiving a preferred return, as
specified in the Partnership Agreement. In January 2000, the General Partner
determined the limited partner preferred return would not be met and repaid
approximately $144,000 to the Partnership. This repayment is reflected in
receivables and deposits as of December 31, 1999.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 27,432
limited partnership units in the Partnership representing 20.847% 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 General Partner because of their
affiliation with the General Partner.
Note G - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrance Land Property Acquisition
(in thousands) (in thousands)
Factory Merchants Mall
<S> <C> <C> <C> <C>
Pigeon Forge, Tennessee $14,864 $ 2,414 $16,155 $ 1,949
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
Factory Merchants Mall
<S> <C> <C> <C> <C> <C> <C>
Pigeon Forge, Tennessee $ 2,414 $18,104 $20,518 $12,402 05/22/86 10-20
</TABLE>
The depreciable lives included above are for the buildings and components. The
depreciable lives for related personal property are for 5 to 7 years.
<PAGE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Investment Property
Balance at beginning of year $23,591 $23,368
Property improvements 90 223
Disposal of property (3,163) --
Balance at end of year $20,518 $23,591
Accumulated Depreciation
Balance at beginning of year $13,645 $12,569
Additions charged to expense 1,004 1,076
Disposal of property (2,247) --
Balance at end of year $12,402 $13,645
The Partnership's remaining property is being marketed for sale.
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $20,297,000 and $26,283,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $10,956,000 and $12,567,000,
respectively.
Note H - Operating Leases
Tenants of the commercial properties are responsible for their own utilities and
maintenance of their space, and payment of their proportionate share of common
area maintenance, utilities, insurance and real estate taxes. Tenants are
generally not required to pay a security deposit.
As of December 31, 1999, the Partnership had minimum future rentals under
non-cancelable leases with initial or remaining terms in excess of one year as
follows (in thousands):
2000 $ 2,250
2001 1,658
2002 1,362
2003 1,121
2004 594
Thereafter 779
$ 7,764
Note I - Ground Lease
Factory Merchants Mall is subject to three ground leases. The aggregate annual
lease expense was approximately $176,000 for both years ended December 31, 1999
and 1998. Such amounts are included in the consolidated statements of operation
as operating expenses. The terms of two of the leases provide for increases
every year, based on the Consumer Price Index. The terms of the third lease
provide for increases every five years, based on the Consumer Price Index.
As of December 31, 1999, the aggregate minimum rental payments under the land
leases were as follows (in thousands):
2000 $ 176
2001 176
2002 176
2003 176
2004 176
Thereafter 4,092
$ 4,972
Note J - Distributions
During the year ended December 31, 1999, the Partnership distributed
approximately $6,700,000 (approximately $6,566,000 to the limited partners,
$49.90 per limited partnership unit) to the partners. Approximately $2,124,000
(approximately $2,082,000 to the limited partners, $15.82 per limited
partnership unit) of the distribution was from operations and approximately
$4,576,000 (approximately $4,484,000 to the limited partners, $34.08 per limited
partnership unit) was from the sale of Eastgate Mall in June 1999.
Note K - Segment Information
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has one reportable segment:
commercial property. The Partnership's commercial property segment consists of
one retail shopping center in Tennessee. This property leases space to various
specialty retail outlets and fast food enterprises at terms ranging from 12
months to 9 years. The Partnership's other commercial property was sold on June
16, 1999.
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.
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 Commercial Other Totals
Rental income $ 3,724 $ -- $ 3,724
Other income 95 152 247
Interest expense 1,494 -- 1,494
Depreciation 1,004 -- 1,004
General and administrative expense -- 232 232
Gain on sale of property 3,553 -- 3,553
Segment income (loss) 2,815 (80) 2,735
Total assets 9,904 1,088 10,992
Capital expenditures for investment
properties 90 -- 90
1998 Commercial Other Totals
Rental income $ 4,360 $ -- $ 4,360
Other income 121 143 264
Interest expense 1,509 -- 1,509
Depreciation 1,076 -- 1,076
General and administrative expense -- 532 532
Loss on settlement -- 410 410
Segment loss (26) (799) (825)
Total assets 12,144 3,347 15,491
Capital expenditures for investment
properties 323 -- 323
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 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 B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the 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 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 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 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 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
The names of the directors and executive officers of Angeles Realty Corporation
II ("ARC II" or the "General Partner"), their ages and the nature of all
positions presently held by them are as follows:
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 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 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.
Item 10. Executive Compensation
None of the directors and officers of the General Partner received any
remuneration from the Registrant.
<PAGE>
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 of December 31, 1999.
Entity Number of Units Percentage
Cooper River Properties, LLC 12,561 9.546%
(an affiliate of AIMCO)
Insignia Properties LP 8,668 6.587%
(an affiliate of AIMCO)
AIMCO Properties, L.P. 6,203 4.714%
(an affiliate of AIMCO)
Cooper River Properties, LLC and Insignia Properties LP are indirectly
ultimately owned by AIMCO. Their business address is 55 Beattie Place,
Greenville, South Carolina 29602.
AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its
business address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
No director or officer of the General Partner owns any Units.
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 provide that upon
a vote of the limited partners holding more than 50% of the then outstanding
limited partnership units the general partner may be expelled from the
Partnership upon 90 days written notice. In the event that successor general
partner have 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 general partner an amount equal to the accrued and unpaid
management fee described in Article 10 of the Agreement and to purchase the
general partner's interest in the Partnership on the effective date of the
expulsion, which shall be an amount equal to the difference between the balance
of the general partner's capital account and the fair market value of the share
of distributable net proceeds to which the 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.
<PAGE>
Item 12. Certain Relationships and Related Transactions
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 certain payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were paid or accrued to the
Managing General Partner and affiliates in 1999 and 1998:
1999 1998
(in thousands)
Property management fees $ -- $130
Partnership management fees (1) -- 8
Lease Commissions -- 57
Reimbursement for services of affiliates 71 144
(1) The Partnership Agreement provides for a fee equal to 10% of "net cash
flow from operations", as defined in the Partnership Agreement to be paid
to the General Partner for executive and administrative management
services.
During the nine months ending September 30, 1998, affiliates of the General
Partner were entitled to varying percentages of gross receipts from all of the
Registrant's commercial properties as compensation for providing property
management services. These services were performed by affiliates of the General
Partner for the nine months ending September 31, 1998 and were approximately
$130,000. Effective October 1, 1998 (the effective date of the Insignia Merger
(see "Item 7. Financial Statements, Note B - Transfer of Control")) these
services for the commercial properties were performed by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $71,000 and $144,000 for the
years ended December 31, 1999 and 1998, respectively. Included in
"Reimbursements for services of affiliates" is approximately $27,500 for
consulting performed by an affiliate of the General Partner for the year ended
December 31, 1998.
Pursuant to the Partnership Agreement, the General Partner is entitled to
receive a distribution equal to 3% of the aggregate disposition price of sold
properties. Pursuant to this provision, during the twelve months ended December
31, 1999, the Partnership declared and paid a distribution of approximately
$144,000 to the General Partner related to the sale of Eastgate Mall. However,
this fee is subordinate to the limited partners receiving a preferred return, as
specified in the Partnership Agreement. In January 2000, the General Partner
determined the limited partner preferred return would not be met and repaid
approximately $144,000 to the Partnership. This repayment is reflected in
receivables and deposits as of December 31, 1999.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 27,432
limited partnership units in the Partnership representing 20.847% 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 General Partner because of their
affiliation with the General Partner.
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed in the quarter ended December 31, 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 INCOME PROPERTIES, LTD. IV
By: Angeles Realty Corporation II
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 INCOME PROPERTIES, LTD. IV
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and between
AIMCO and IPT (incorporated by reference to Exhibit 2.1 of Registrant's
Current Report on Form 8-K dated October 1, 1998)
3.1 Amended Certificate and Agreement of the Limited Partnership filed in
Amendment Number 2 to Form S-11 dated April 25, 1985 which is incorporated
herein by reference
10.1 Agreement of Purchase and of Real Property with Exhibits - Northtown Mall
filed in Form 8K dated July 15, 1985 which is incorporated herein by
reference
10.2 Agreement of Purchase and Sale of Real Property with Exhibits - Burlington
Mall Partners filed in Form 8K dated December 19, 1985 which is
incorporated herein by reference
10.3 Agreement of Purchase and Sale of Real Property with Exhibits - Moraine
West Carrollton Partners filed in Form 8K dated December 20, 1985 which is
incorporated herein by reference
10.4 Agreement of Purchase and Sale of Real Property with Exhibits - Factory
Merchants Etc. Mall-Phase I and Phase II filed in Form 8K dated May 22,
1986 which is incorporated herein by reference
10.5 Promissory Note - Fort Worth Center and the W.T. Waggoner Building filed in
Form 8-K dated July 16, 1986 which is incorporated herein by reference
10.6 Deed of Trust, Assignment of Leases and Rents and Security Agreement - Fort
Worth Center and the W.T. Waggoner Building filed in Form 8-K dated July
16, 1986 which is incorporated herein by reference
10.7 Deed of Trust - Option - Fort Worth Center and the W.T. Waggoner Building
filed in Form 8-K dated July 16, 1986 which is incorporated herein by
reference
10.8 Security Agreement - Fort Worth Center and the W.T. Waggoner Building filed
in Form 8-K dated July 16, 1986 which is incorporated herein by reference
10.9 Option Agreement - Fort Worth center and the W.T. Waggoner Building filed
in Form 8-K dated July 16, 1986 which is incorporated herein by reference
10.10Covenant not to compete - Fort Worth center and the W.T. Waggoner Building
filed in Form 8-K dated November 1, 1987, which is incorporated herein by
reference
10.12Acquisition or Disposition of Assets - Fort Worth Option Joint Venture -
filed in Form 8K dated November 1, 1997, which is incorporated herein by
reference
10.13Promissory Note - Northtown Mall. Filed in Form 10-K dated December 31,
1990, Exhibit 10.13, which is incorporated herein by reference
10.14Stock Purchase Agreement dated November 24, 1992 showing the purchase of
100% of the outstanding stock of Angeles Realty Corporation II, a
subsidiary of MAE GP Corporation, filed in Form 8-K dated December 31,
1992, which is incorporated herein by reference
10.15Acquisition or Disposition of Assets - Moraine West Carrollton - filed in
Form 8-K dated July 21, 1994, which is incorporated herein by reference
10.16Promissory note - dated August 19, 1996, between Factory Merchants AIP IV,
L.P., and Union Capital Investments, LLC.
10.17Purchase and Sale Contract between Registrant and Pearce-Woodfield
Development Co., LLC., a Washington limited partnership, dated June 16,
1999.
16 Letter from the Registrant's former 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
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties, LTD IV 1999 Fourth Quarter 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000763049
<NAME> Angeles Income Properties, LTD IV
<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> 1,170
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 20,518
<DEPRECIATION> 12,402
<TOTAL-ASSETS> 10,992
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 14,864
0
0
<COMMON> 0
<OTHER-SE> (4,303)
<TOTAL-LIABILITY-AND-EQUITY> 10,992
<SALES> 0
<TOTAL-REVENUES> 7,524
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,789
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,494
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,735
<EPS-BASIC> 11.83 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
