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 September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-16116
ANGELES OPPORTUNITY PROPERTIES, LTD.
(Exact name of small business issuer as specified in its charter)
California 95-4052473
(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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash:
Unrestricted $1,081,269
Restricted--tenant security deposits 44,705
Accounts receivable 6,109
Escrow for taxes 162,832
Restricted escrows 264,713
Other assets 201,426
Investment properties:
Land $ 955,873
Buildings and related personal property 6,853,403
7,809,276
Less accumulated depreciation (1,292,427) 6,516,849
$8,277,903
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 27,606
Tenant security deposits 45,608
Accrued taxes 148,865
Other liabilities 115,806
Mortgage notes payable 4,378,999
Partners' (Deficit) Capital
General partner $ (68,081)
Limited partners (12,425 units issued
and outstanding) 3,629,100 3,561,019
$8,277,903
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 489,477 $ 557,321 $1,581,202 $1,682,498
Other income 30,488 42,625 96,968 106,736
Total revenues 519,965 599,946 1,678,170 1,789,234
Expenses:
Operating 177,455 168,273 500,524 511,991
General and administrative 43,180 58,511 171,081 242,758
Property management fees 26,315 19,106 81,520 84,865
Maintenance 35,169 66,287 141,773 218,142
Depreciation 63,358 84,173 204,160 248,132
Amortization of lease
commissions -- 2,361 7,374 6,808
Interest 111,356 113,901 335,226 336,682
Property taxes 53,568 53,768 153,872 145,499
Bad debt expense 8,623 8,560 8,623 8,560
Tenant reimbursements 3,200 (13,591) (22,070) (29,856)
Total expenses 522,224 561,349 1,582,083 1,773,581
(Loss) income before loss
on disposal of property,
gain on sale of investment
property and casualty gain (2,259) 38,597 96,087 15,653
Loss on disposal of property -- -- -- (5,559)
Gain on sale of investment -- -- 957,760 --
property
Casualty gain 5,287 25,460 25,989 25,460
Net income $ 3,028 $ 64,057 $1,079,836 $ 35,554
Net income allocated
to general partner (1%) $ 30 $ 641 $ 10,798 $ 356
Net income allocated to
limited partners (99%) 2,998 63,416 1,069,038 35,198
Net income $ 3,028 $ 64,057 $1,079,836 $ 35,554
Net income per limited
partnership unit $ .24 $ 5.10 $ 86.04 $ 2.83
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 12,425 $ 1,000 $12,425,000 $12,426,000
Partners' (deficit) capital
at December 31, 1994 12,425 $ (43,879) $ 6,024,997 $ 5,981,118
Distributions to partners -- (35,000) (3,464,935) (3,499,935)
Net income for the nine months
ended September 30, 1995 -- 10,798 1,069,038 1,079,836
Partners' (deficit) capital
at September 30, 1995 12,425 $ (68,081) $ 3,629,100 $ 3,561,019
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $1,079,836 $ 35,554
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 204,160 248,132
Amortization of discounts, loan costs,
and leasing commissions 30,152 21,602
Bad debt expense 8,623 8,560
Gain on sale of investment property (957,760) --
Casualty gain (25,989) (25,460)
Loss on disposal of property -- 5,559
Change in accounts:
Restricted cash 34,664 (14,831)
Accounts receivable 10,913 (60,192)
Escrows for taxes 50,707 62,853
Other assets (9,490) (24,615)
Accounts payable (920) 63,057
Tenant security deposit liabilities (6,416) (3,349)
Accrued taxes (38,945) (37,346)
Due to affiliates -- --
Other liabilities (24,783) 44,123
Net cash provided by operating activities 354,752 323,647
Cash flows from investing activities:
Property improvements and replacements (237,573) (85,707)
Proceeds from sale of investment property 3,392,871 --
Proceeds from settlement of note receivable -- 1,061,440
Deposits to restricted escrows (33,209) (33,364)
Withdrawals from restricted escrows 4,063 32,817
Insurance proceeds 87,673 --
Net cash provided by investing activities 3,213,825 975,186
Cash flows from financing activities:
Payments on mortgage notes payable (88,901) (80,464)
Distributions to partners (3,499,935) (54,972)
Net cash used in financing activities (3,588,836) (135,436)
Net (decrease) increase in cash (20,259) 1,163,397
Cash at beginning of period 1,101,528 799,634
Cash at end of period $ 1,081,269 $1,963,031
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 313,451 $ 321,887
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY
Property Damage
The changes in accounts receivable, accounts payable, and capital expenditures
were adjusted by $64,931 at September 30, 1994 for non-cash amounts in
connection with property damage resulting from a hailstorm at Lake Meadows
Apartments. (See Managements' Discussion and Analysis or Plan of Operations for
further detail).
[FN]
See Accompanying Notes to Consolidated Financial Statements
e) ANGELES OPPORTUNITY PROPERTIES, LTD.
NOTES TO 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 nine month period
ended September 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 September 30, 1994,
information to conform to the September 30, 1995, presentation.
Note B - Note Receivable
The Partnership's assets included a note receivable ("Note") of $1,070,000
from Rolling Greens Communities, Ltd. ("Borrower") net of a write-down for in-
substance foreclosure, as more fully described below, of $780,000. This Note
was collateralized by a first trust deed on undeveloped commercial and mobile
home park land adjacent to Rolling Green Communities ("Rolling Greens"), and
required interest only payments computed at a 12.5% rate per annum with a
maturity date of June 1997.
During 1992, a refinancing of the first mortgage on Rolling Greens was
consummated. As a concession to the new first mortgage holder, Angeles
Corporation ("Angeles"), a former affiliate of the General Partner and/or its
affiliates, released or caused to be released a lien on the developed portion of
the mobile home park, retaining a lien upon undeveloped commercial and park
zoned land as security for the Note. The Partnership was informed and believes
that the release of the lien was without consideration to the Partnership.
Proceeds from the refinanced first mortgage and an additional $450,000 that
the Partnership advanced to the Borrower in 1992 under this Note were used by
the Borrower to pay off (i) third trust deed financing that had been provided by
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust, and
(ii) unsecured advances payable to Angeles. Subsequent to the refinancing of
the first mortgage discussed above, the developed portion of Rolling Greens was
sold to a third party and a note receivable was received by the Partnership as
consideration. AMIT continues to have loans outstanding to the Partnership that
owns the interest in the Borrower.
Note B - Note Receivable - (continued)
Since the Partnership's Note from the Borrower is secured by land that does
not generate any cash flow, the Borrower has been unable to make interest
payments on a current basis and consequently defaulted on the Note. The
undeveloped land which serves as collateral for the Partnership's Note is
adjacent to the mobile home park that was recently sold by the Borrower. Given
its lack of direct access to public highways, it was difficult to ascertain a
market value for this particular tract. The General Partner believed that the
land securing the $1,850,000 Note had an estimated net realizable value of
approximately $1,070,000, net of an estimated $80,000 in selling costs, which
was lower than the carrying value of the Note, and that the decline in the
value of the real estate was other than temporary. Accordingly, the
Partnership had recorded the Note as an in-substance foreclosure at the
estimated fair value of the underlying collateral and recorded a write-down
for in-substance foreclosed property of $650,000 in the fourth quarter of 1992
and an additional $130,000 in the fourth quarter of 1993. Also, the
Partnership ceased recording interest income or late fees on this Note due to
the low probability that these fees would be collected. During the first
quarter of 1993, the Partnership recorded $61,281 in interest and late fees.
These amounts were fully reserved in the second quarter of 1993.
On April 29, 1994, the Partnership, the Borrower and AMIT entered into an
agreement as to the distribution of the sales proceeds generated by the sale of
certain real estate owned by the Borrower, as follows: i) $50,000 was retained
in an escrow account for the purpose of paying operating and legal expenses of
the Borrower, (an additional sum of $22,000 was retained in the escrow account
for the purpose of paying 1994 real estate taxes), ii) $125,000 was paid towards
the principal balance outstanding to Angeles Acceptance Pool, L.P. ("AAP"), an
affiliate of the General Partner, plus unpaid interest accrued of $19,447 on
that balance, iii) $561,741 was distributed to the Partnership to be applied
towards the reduction of the outstanding balance due by the Borrower to the
Partnership, and iv) the remaining balance was distributed 57.18% to AMIT and
42.82% to the Partnership. In addition, the Partnership executed and delivered
to AMIT an assignment of a 57.18% interest in the Note.
On August 29, 1994, the Partnership received $1,061,440 in proceeds as a
partial settlement from the above described Note.
During the first quarter of 1995, the Partnership initiated foreclosure
proceedings under the terms of the Note against the Borrower relating to the raw
land which is security for the Note.
Note B - Note Receivable - (continued)
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 37% 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.
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT
an option to acquire the Class B shares owned by it. This option can be
exercised at the end of 10 years or when all loans made by AMIT to partnerships
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 those matters, MAE GP granted to
the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to
the 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.
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 nine months ended September 30, 1995 and 1994:
1995 1994
Property management fees $ 81,520 $ 84,865
Reimbursement for services of affiliates 105,768 135,099
Marketing services 238 23
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.
See Note B for discussion of the transaction with AMIT.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of two apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
Lake Meadows Apartments
Garland, Texas 94% 95%
Lakewood Apartments
Tomball, Texas 97% 94%
For the three and nine months ended September 30, 1995, the Partnership
generated net income of $3,028 and $1,079,836, respectively, as compared to net
income for the three and nine months ended September 30, 1994, of $64,057 and
$35,554, respectively. The decrease in net income for the three months ended
September 30, 1995, versus the three months ended September 30, 1994, can
primarily be attributed to decreased revenues as a result of the sale of Oquendo
Warehouse, one of the Partnership's investment properties, during the first half
of 1995. The increase in net income for the nine months ended September 30,
1995, as compared to the nine months ended September 30, 1994, is primarily a
result of the gain recognized on the sale of the buildings at Oquendo Warehouse
(see discussion below).
Overall, total revenues and total expenses for the three and nine months
ended September 30, 1995, decreased in comparison to the three and nine months
ended September 30, 1994. The decreases in rental income, other income,
operating expenses, property management fees, maintenance expense, depreciation
expense, and tenant reimbursements can all be attributed to the sale of Oquendo
Warehouse (See discussion below). Partially offsetting the decrease in rental
income for the three and nine months ended September 30, 1995, versus the three
and nine months ended September 30, 1994, was the increase in rental rates and
occupancy at Lakewood Apartments. Decreases in corporate unit income, cleaning
and damage fees, and deposit forfeitures at Lakewood Apartments also contributed
to the decrease in other income for the three and nine months ended September
30, 1995, versus the three and nine months ended September 30, 1994. Partially
offsetting this decrease in other income was an increase in interest income due
to higher cash balances for most of 1995, resulting from the sale of Oquendo
Warehouse. General and administrative expenses decreased primarily due to
decreased partnership accounting, investor relations, and asset management cost
reimbursements. In addition, 1994 general and administrative expenses included
additional legal fees associated with the settlement on the Rolling Greens note
(see discussion at Note B). Property tax expense increased for the nine months
ended September 30, 1995, as compared to the nine months ended September 30,
1994 due to a tax refund received by Lakewood Apartments during 1994. The bad
debt expense recorded for the three and nine months ended September 30, 1995,
and 1994, can be attributed to the reserving of certain amounts considered
uncollectible for past due rent and common area maintenance charges relating to
one of the tenants at Oquendo Warehouse.
On January 20, 1995, the Partnership sold one building at Oquendo Warehouse,
located at 3550 W. Quail Avenue in Las Vegas, Nevada to the tenant occupying the
building, Czarnowski Display Service, Inc. Total consideration was $1,325,000
resulting in a gain on sale of the property of $491,930. On May 5, 1995, the
Partnership sold the remaining two buildings at Oquendo Warehouse, located at
3655 W. Quail and 3600 W. Oquendo in Las Vegas, Nevada, to an unrelated third
party. Total consideration was $2,250,000 resulting in a gain on the sale of
the property of $465,830. Due to the above transactions, a total gain on sale
of the property of $957,760 was realized for the nine months ended September 30,
1995. The General Partner believed that the sale of the property was in the
best interest of the Partnership.
On March 27, 1995, Lake Meadows Apartments sustained damage to the roofs of
the apartment units due to a severe hailstorm. This casualty was covered by
insurance. Due to the receipt of additional insurance proceeds over the book
value of the roofs written off, a casualty gain of $25,989 was recorded.
During the second quarter of 1994, the investment property, Oquendo
Warehouse, replaced a roof on one of its buildings. The cost of the new roof
was in excess of the book value of the old roof. The write off of the old roof
resulted in a $5,559 loss on the disposition of the property.
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 expenses. 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 September 30, 1995, the Partnership had unrestricted cash of $1,081,269 as
compared to $1,963,031 at September 30, 1994. Net cash provided by operating
activities increased only slightly for the nine months ended September 30, 1995,
as compared to the nine months ended September 30, 1994. Net cash provided by
investing activities increased due to the cash proceeds received relating to the
sale of Oquendo Warehouse during the nine months ended September 30, 1995. Net
cash used in financing activities increased due to the distribution to the
partners during the second quarter of 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 various 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 $4,378,999, net of discount, is amortized over 10
years and 37 years with maturity dates of October 2003 and March 2008, at which
time the properties will either be refinanced or sold. Total cash distributed
was $3,499,935 for the nine months ended September 30, 1995, consisting of
$3,464,935 to the limited partners and $35,000 to the General Partner. Future
cash distributions will depend on the levels of net cash generated from
operations, property sales, and the availability of cash reserves.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is unaware of any 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) Exhibits -
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1995.
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 OPPORTUNITY PROPERTIES, LTD.
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: October 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule coitnains summary financial information extraced from Angeles
Opportunity Properties Ltd. 1995 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB.
</LEGEND>
<CIK> 0000789282
<NAME> ANGELES OPPORTUNITY PROPERTIES LTD.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,081,269
<SECURITIES> 0
<RECEIVABLES> 6,109
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,294,915
<PP&E> 7,809,276
<DEPRECIATION> (1,292,427)
<TOTAL-ASSETS> 8,277,903
<CURRENT-LIABILITIES> 222,079
<BONDS> 4,378,999
<COMMON> 0
0
0
<OTHER-SE> 3,561,019
<TOTAL-LIABILITY-AND-EQUITY> 8,277,903
<SALES> 0
<TOTAL-REVENUES> 1,678,170
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,582,083
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 335,226
<INCOME-PRETAX> 1,079,836
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,079,836
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,079,836
<EPS-PRIMARY> 86.04
<EPS-DILUTED> 0
</TABLE>
