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 March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT
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 (864) 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)
(in thousands, except unit data)
March 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 1,099
Restricted--tenant security deposits 43
Accounts receivable 5
Escrow for taxes 84
Restricted escrows 107
Other assets 175
Investment properties:
Land $ 956
Buildings and related personal property 7,068
8,024
Less accumulated depreciation (1,421) 6,603
$ 8,116
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 52
Tenant security deposits 44
Accrued taxes 51
Other liabilities 82
Mortgage notes payable 4,317
Partners' (Deficit) Capital
General partner $ (68)
Limited partners (12,425 units
issued and outstanding) 3,638 3,570
$ 8,116
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 493 $ 587
Other income 28 34
Total revenues 521 621
Expenses:
Operating 179 194
General and administrative 39 60
Maintenance 56 48
Depreciation 65 74
Interest 110 112
Property taxes 51 55
Bad debt expense -- 9
Total expenses 500 552
Income before gain on sale of
investment property and
casualty gain 21 69
Gain on sale of investment
property -- 492
Casualty gain -- 3
Net income $ 21 $ 564
Net income allocated to general
partner (1%) $ -- $ 6
Net income allocated to limited
partners (99%) 21 558
Net income $ 21 $ 564
Net income per limited partnership unit $ 1.69 $ 44.91
See Accompanying Notes to Consolidated Financial Statements
c) ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 12,425 $ 1 $12,425 $12,426
Partners' (deficit) capital at
December 31, 1995 12,425 $ (68) $ 3,617 $ 3,549
Net income for the three months
ended March 31, 1996 -- -- 21 21
Partners' (deficit) capital at
March 31, 1996 12,425 $ (68) $ 3,638 $ 3,570
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 21 $ 564
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation 65 74
Amortization of discounts, loan costs and
leasing commissions 8 14
Gain on sale of investment property -- (492)
Bad debt expense -- 9
Casualty gain -- (3)
Change in accounts:
Restricted cash -- 8
Accounts receivable -- (12)
Escrows for taxes 136 134
Other assets 5 6
Accounts payable (141) (8)
Tenant security deposit liabilities -- 1
Accrued taxes (147) (140)
Other liabilities (7) (66)
Net cash (used in) provided by operating activities (60) 89
Cash flows from investing activities:
Property improvements and replacements (32) (16)
Proceeds from sale of investment property -- 1,312
Deposits to restricted escrows (11) (11)
Withdrawals from restricted escrows 154 2
Net cash provided by investing activities 111 1,287
Cash flows used in financing activities:
Payments on mortgage notes payable (32) (29)
Net increase in cash 19 1,347
Cash at beginning of period 1,080 1,102
Cash at end of period $ 1,099 $ 2,449
Supplemental disclosure of cash flow information:
Cash paid for interest $ 102 $ 105
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) ANGELES OPPORTUNITY PROPERTIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of the General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 1996,
are not necessarily indicative of the results that may be expected for the
fiscal year ended December 31, 1996. For further information, refer to the
financial statements and footnotes thereto included in Angeles Opportunity
Properties, Ltd.'s (the "Partnership") annual report on Form 10-KSB for the
fiscal year ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Note B - Note Receivable
The Partnership's assets included a note receivable ("Note") of $1,850,000 from
Rolling Greens Communities, Ltd. ("Borrower") collateralized by a first trust
deed on undeveloped commercial and mobile home park land adjacent to Rolling
Green Communities ("Rolling Greens"). The note required interest only payments
computed at a 12.5% rate per annum with a maturity date of June 1997. The Note
was in default due to non-payment and had been written down in prior years to
$1,070,000, which is the estimated value of the collateral less the estimated
cost to dispose of such collateral.
During 1992, a refinancing of the first mortgage secured by 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 included in the
note amount of $1,850,000 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)
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. 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
remaining security for the Note. At March 31, 1996, these foreclosure
proceedings are still in process. The General Partner anticipates that the
foreclosure will be consummated in 1996.
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 1.2% 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 1.2% of the vote).
Between the date of acquisition of these shares on November 24, 1992, and March
31, 1995, MAE GP has 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.
MAE GP may choose to vote these shares as it deems appropriate in the future.
In addition, Liquidity Assistance, LLC, ("LAC"), an affiliate of the General
Partner and an affiliate of Insignia Financial Group, Inc., which provides
property management and partnership administration services to the Partnership,
owns 63,200 Class A Shares of AMIT. These Class A Shares entitle LAC to vote
approximately 1.5% of the total shares.
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 paid to the General Partner and
affiliates during the first three months of 1996 and 1995:
1996 1995
(in thousands)
Property management fees $26 $28
Reimbursement for services of
affiliates 40 35
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.
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 three
months ended March 31, 1996 and 1995:
Average Occupancy
Property 1996 1995
Lake Meadows Apartments 93% 94%
Garland, Texas
Lakewood Apartments (1) 89% 96%
Houston, Texas
(1) The occupancy at Lakewood Apartments decreased due to increased
competition from new apartment complexes and due to decreased traffic,
caused by highway construction, which restricts access to the property.
The Partnership generated $21,000 in net income for the three months ended March
31, 1996, as compared to $564,000 in net income for the three months ended March
31, 1995. The decreased net income can primarily be attributed to the $492,000
gain recognized on the sale of one of the buildings at Oquendo Warehouse during
the first three months of 1995 (See discussion below).
Overall, total revenues and total expenses decreased during the first three
months of 1996, as compared to the first quarter of 1995. The decreases in
rental income, other income, operating expense, depreciation expense and
property tax expense can all be attributed to the sale of one of the buildings
at Oquendo Warehouse during the first three months of 1995. General and
administrative expenses decreased primarily due to a decrease in partnership
administration cost reimbursements. Maintenance expense increased for the three
months ended March 31, 1996, versus the three months ended March 31, 1995, due
to increased use of contract labor at Lake Meadows Apartments which is due to
the loss one of the property's maintenance employees. The bad debt expense for
the three months ended March 31, 1995, is due to the write-off 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 $492,000. 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. The roofs were written-off as of March 31, 1995, and a receivable
was established for the insurance proceeds. The casualty gain of $3,000 results
from the estimated excess proceeds over the book value of the roofs written-off.
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 March 31, 1996, the Partnership had unrestricted cash of $1,099,000 as
compared to $2,449,000 at March 31, 1995. Net cash from operating activities
decreased primarily due to the decrease in accounts payable. Net cash provided
by investing activities decreased due to the cash proceeds received relating to
the sale of the building at Oquendo Warehouse in 1995. This decrease was
partially offset by increased withdrawals from the restricted escrow to fund
exterior siding repair and exterior painting at Lakewood Apartments. Net cash
used in financing activities increased only slightly due to increased principal
payments as the mortgage nears maturity.
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 $4,317,000, 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. Future cash
distributions will depend on the levels of net cash generated from operations,
property sales, and the availability of cash reserves. There were no cash
distributions during the first three months of 1996.
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 three months ended March 31, 1996.
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.
Vice President/CAO
Date: May 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Opportunity Properties Ltd. 1996 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000789282
<NAME> ANGELES OPPORTUNITY PROEPRTIES LTD.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,099
<SECURITIES> 0
<RECEIVABLES> 5
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,338
<PP&E> 8,024
<DEPRECIATION> 1,421
<TOTAL-ASSETS> 8,116
<CURRENT-LIABILITIES> 147
<BONDS> 4,317
0
0
<COMMON> 0
<OTHER-SE> 3,570
<TOTAL-LIABILITY-AND-EQUITY> 8,116
<SALES> 0
<TOTAL-REVENUES> 521
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110
<INCOME-PRETAX> 21
<INCOME-TAX> 0
<INCOME-CONTINUING> 21
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21
<EPS-PRIMARY> 1.69
<EPS-DILUTED> 0
</TABLE>
