FORM 10-KSB.-ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
(As last amended by 34-31905, eff. 4/26/93)
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
[] 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 0-16116
ANGELES OPPORTUNITY PROPERTIES, LTD.
(Name of small business issuer in its charter)
California
(State or other jurisdiction of 95-4052473
incorporation or organization) (I.R.S. Employer
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
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(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 is not contained in this form, and no disclosure will be
contained, to the best of 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. [X]
State issuer's revenues for its most recent fiscal year. $2,747,000
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. Market value information for Registrant's Partnership Interests is not
available. Should a trading market develop for these Interests, it is the
General Partner's belief that such trading would not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. Description of Business
Angeles Opportunity Properties, Ltd. (the "Partnership") is a publicly-held
limited partnership organized under the California Uniform Limited Partnership
Act pursuant to a Certificate and Agreement of Limited Partnership (hereinafter
referred to as the "Agreement") dated June 29, 1984, as amended. The
Partnership's general partner is Angeles Realty Corporation II (the "General
Partner"), a California corporation.
The Partnership, through its public offering of Limited Partnership units,
sold 12,425 units aggregating $12,425,000. The General Partner contributed
capital in the amount of $1,000 for a 1% interest in the Partnership. The
Partnership was formed for the purpose of acquiring fee interests in various
types of real property. The Partnership presently owns two investment properties
and a 42.82% ownership interest in a joint venture property. The General
Partner of the Partnership intends to maximize the operating results and,
ultimately, the net realizable value of each of the Partnership's properties in
order to achieve the best possible return for the investors. Such results may
best be achieved through property sales, refinancings, debt restructurings or
relinquishment of the assets. The Partnership intends to evaluate each of its
holdings periodically to determine the most appropriate strategy for each of the
assets.
The Partnership has no full time employees. The General Partner is vested
with full authority as to the general management and supervision of the business
and affairs of the Partnership. Limited Partners have no right to participate
in the management or conduct of such business and affairs. Insignia Residential
Group, L.P. provides day-to-day management services for the Partnership's
investment properties.
The business in which the Partnership is engaged is highly competitive, and
the Partnership is not a significant factor in its industry. Each of its
apartment properties is located in or near a major urban area and, accordingly,
competes for rentals not only with similar apartment properties in its immediate
area but with hundreds of similar apartment properties throughout the urban
area. Such competition is primarily on the basis of location, rents, services
and amenities. In addition, the Partnership competes with significant numbers of
individuals and organizations (including similar partnerships, real estate
investment trusts and financial institutions) with respect to the sale of
improved real properties, primarily on the basis of the prices and terms of such
transactions.
ITEM 2. Description of Properties:
The following table sets forth the Partnership's investments in properties:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Lake Meadows Apartments 3/31/88 Fee ownership subject to a Residential Rental
first and second mortgage 96 units
Lakewood Apartments 11/01/89 Fee ownership subject to Residential Rental
a first mortgage 256 units
</TABLE>
The Partnership sold one building at Oquendo Warehouses on January 20, 1995,
to the tenant occupying the building. The Partnership sold the two remaining
buildings at Oquendo Warehouse on May 5, 1995 (See "Item 6. Management's
Discussion and Analysis or Plan of Operation" for further details).
Schedule of Properties (in thousands):
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Lake Meadows Apts. $ 2,297 $ 518 5-40 yrs S/L $ 1,818
Lakewood Apts. 5,775 1,109 5-40 yrs S/L 5,331
$ 8,072 $ 1,627 $ 7,149
See "Note A" of the financial statements included in "Item 7" for a
description of the Partnership's depreciation policy.
Schedule of Mortgages (in thousands):
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1996 Rate Amortized Date Maturity
<S> <C> <C> <C> <C> <C>
Lake Meadows Apts.
1st mortgage $ 1,672 7.83% (1) 10/2003 $ 1,489
2nd mortgage 54 7.83% (2) 10/2003 54
Lakewood Apartments
1st mortgage 3,750 7.33% (2) 11/2003 3,750
5,476
Unamortized discount (26)
Total $ 5,450 $ 5,293
</TABLE>
(1) The principal balance is being amortized over 343 months with a balloon
payment due October 15, 2003.
(2) Interest only payments.
Schedule of Rental Rates and Occupancy:
Average Annual Average
Rental Rates Occupancy
Property 1996 1995 1996 1995
Lake Meadows Apartments $6,573/unit $6,357/unit 96% 93%
Lakewood Apartments 6,208/unit 5,943/unit 94% 95%
As noted under "Item 1. Description of Business", the real estate industry
is highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the area. The General
Partner believes that all of the properties are adequately insured. The multi-
family residential properties' lease terms are for one year or less. No
residential tenant leases 10% or more of the available rental space.
Real estate taxes (in thousands) and rates in 1996 for each property were:
1996 1996
Billing Rate
Lake Meadows Apartments $ 54 2.54
Lakewood Apartments 151 2.92
ITEM 3. Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that
is not of a routine nature. The General Partner of the Partnership 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 4. Submission of Matters to a Vote of Security Holders
The Unit holders of the Registrant did not vote on any matter during the
fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. Market for the Partnership's Common Equity and Related Security Holder
Matters
The Partnership, a publicly-held limited partnership, sold 12,425 Limited
Partnership Units during its offering period through June 25, 1988, and
currently has 1,780 Limited Partners of record. There is no intention to sell
additional Limited Partnership Units nor is there an established market for
these Units.
Cash distributions to the limited partners have been declared and paid
during the two years ended December 31, 1996 and 1995 as follows:
Declaration Date Amount Per Unit
May 15, 1996 $ 23.90
May 26, 1995 278.87
The Partnership expects that cash distributions will continue to be paid in
the future to the extent that they are supportable by cash from operations.
ITEM 6. Management's Discussion and Analysis or Plan of Operation
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership realized net income for the year ended December 31, 1996 of
approximately $396,000 versus approximately $1,067,000 for the year ended
December 31, 1995. The decrease in net income can be attributed to the
Partnership recording a gain of approximately $958,000 on the sale of Oquendo
Warehouse during 1995. In addition, during the year ended December 31, 1996,
the Partnership realized an extraordinary loss of $139,000, as a result of the
refinancing of Lakewood Apartments. The decrease in net income was partially
offset by a $539,000 bad debt recovery in 1996, as the Partnership foreclosed on
property previously collateralized by a note receivable (see discussion in "Item
7. Financial Statements, Note E" for further detail).
Also contributing to the decrease in net income for the year ended December
31, 1996, was an increase in maintenance expense. The increase in maintenance
expense is primarily due to an exterior rehabilitation project at Lakewood in
1996, including painting and parking lot repairs. Maintenance expense also
increased at Lake Meadows primarily due to exterior painting and gutter repairs.
Partially offsetting the decrease in net income was a decrease in general and
administrative expenses primarily due to a decrease in expense reimbursements.
Included in operating expense is approximately $180,000 of major repairs and
maintenance comprised of exterior painting, parking lot repairs, and other
exterior building repairs for the year ended December 31, 1996.
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 approximately $492,000. 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 approximately $466,000. Due to the above
transactions, a total gain on sale of the property of approximately $958,000 was
realized in 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 approximately $44,000 was
recorded.
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.
Capital Resources and Liquidity
At December 31, 1996, the Partnership had unrestricted cash of approximately
$1,836,000 as compared to approximately $1,080,000 at December 31, 1995. Net
cash provided by operating activities decreased for the year ended December 31,
1996, as compared to the year ended December 31, 1995, primarily due to a
decrease in accrued taxes due to the payment of a portion of Lakewood's taxes at
the time of the property's refinancing. Net cash provided by investing
activities decreased due to the cash proceeds received relating to the sale of
Oquendo Warehouse during the year ended December 31, 1995. Net cash provided by
financing activities increased due to decreased distributions to partners in
1996. Also contributing to the increase were net proceeds received from the
refinancing of Lakewood in 1996.
Until 1993, 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 Greens 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 nonpayment and had been written down in
1993 to $1,070,000 which was the estimated value of the collateral less the
estimated cost to dispose of such collateral.
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 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 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.
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 approximately $1,061,000 in proceeds as a partial settlement from the
above described Note.
During 1995, the Partnership and an affiliate of AMIT initiated foreclosure
proceedings under the terms of the Note, against the Borrower, relating to the
remaining security for the Note. On June 6, 1996, the collateralized property
was foreclosed upon, the Partnership and AMIT became joint owners of an
approximately 8,000 square foot retail strip shopping center and over 150 acres
of land with 42.82% and 57.18% ownership, respectively (see "Note F" for further
information). The Partnership recorded a bad debt recovery of approximately
$539,000, which was its proportionate share of the fair value of the property
foreclosed. A purchase agreement has been executed for the sale of these
properties, with the closing expected to occur in March 1997. The sales price
approximates the net book value of the properties at December 31, 1996. Upon
the sale, the Rolling Green Joint Venture will liquidate, distributing the
proceeds to the owners.
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 39% 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 1.3% of the vote).
Between the date of acquisition of these shares on 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 and 1996 annual meetings 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.
Liquidity Assistance, LLC, ("LAC"), an affiliate of the General Partner and an
affiliate of Insignia Financial Group, Inc. ("Insignia"), which provides
property management and partnership administration services to the Partnership,
owns 126,500 Class A Shares of AMIT at December 31, 1996. As of February 1,
1997, the number of shares owned by LAC decreased to 96,800. These Class A
Shares entitle LAC to vote approximately 2.2% of the total shares. In addition,
Insignia has engaged and continues to engage in discussions with AMIT regarding
various potential business combinations with affiliates of Insignia.
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 instructing such trustees to vote said Class B shares in
accordance with the vote of the majority of the Class A shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
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 approximately $5,450,000 net of discount, is
interest only or is being amortized over 343 months with balloon payments due at
the maturity dates of October and November 2003, at which time the properties
will either be refinanced or sold. Total cash distributed was approximately
$3,500,000 for the year ended December 31, 1995, consisting of approximately
$3,465,000 to the limited partners and approximately $35,000 to the General
Partner. Total cash distributed was approximately $303,000 for the year ended
December 31, 1996, consisting of $297,000 to the limited partners and
approximately $6,000 to the General Partner. The distribution made in 1995
consisted primarily of cash proceeds from the sale of Oquendo Warehouse. The
cash distribution in 1996 was from cash generated by operations. Future cash
distributions will depend on the levels of net cash generated from operations,
refinancings, property sales, and the availability of cash reserves. The
General Partner anticipates that the Partnership will make a distribution during
the second quarter of 1997.
Item 7. Financial Statements
ANGELES OPPORTUNITY PROPERTIES, LTD.
LIST OF FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Balance Sheet - December 31, 1996
Consolidated Statements of Operations - Years ended December 31, 1996 and
1995
Consolidated Statement of Changes in Partners' Capital (Deficit) - Years
ended December 31, 1996 and 1995
Consolidated Statements of Cash Flows - Years ended December 31, 1996 and
1995
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Angeles Opportunity Properties, Ltd.
We have audited the accompanying consolidated balance sheet of Angeles
Opportunity Properties, Ltd. as of December 31, 1996, and the related
consolidated statements of operations, changes in partners' capital (deficit)
and cash flows for each of the two years in the period ended December 31, 1996.
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 generally accepted auditing
standards. 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
Opportunity Properties, Ltd. as of December 31, 1996, and the consolidated
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
/S/ ERNST & YOUNG LLP
Greenville, South Carolina
February 27, 1997
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED BALANCE SHEET
December 31, 1996
(in thousands, except unit data)
Assets
Cash and cash equivalents:
Unrestricted $ 1,836
Restricted--tenant security deposits 37
Accounts receivable 18
Escrow for taxes 82
Restricted escrows 200
Other assets 192
Investment in joint venture (Note F) 494
Investment properties (Notes B and G):
Land $ 956
Buildings and related personal property 7,116
8,072
Less accumulated depreciation (1,627) 6,445
$ 9,304
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 33
Tenant security deposits 37
Accrued taxes 87
Other liabilities 55
Mortgage notes payable (Notes B and G) 5,450
Partners' Capital (Deficit):
General partner's $ (70)
Limited partners' (12,425 units issued
and outstanding) 3,712 3,642
$ 9,304
See Accompanying Notes to Consolidated Financial Statements
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1996 1995
Revenues:
Rental income $ 2,089 $ 2,105
Other income 119 124
Bad debt recovery (Note E) 539 --
Gain on sale of investment property (Note G) -- 958
Casualty gain -- 44
Total revenues 2,747 3,231
Expenses:
Operating 717 770
General and administrative 177 235
Maintenance 362 232
Depreciation 271 268
Interest 435 446
Property taxes 205 204
Bad debt expense -- 9
Total expenses 2,167 2,164
Income before equity in loss of
joint venture and extraordinary loss 580 1,067
Equity in loss of joint venture (Note F) (45) --
Income before extraordinary loss 535 1,067
Extraordinary loss on debt refinancing (Note B) (139) --
Net income $ 396 $ 1,067
Net income allocated
to general partner (1%) $ 4 $ 11
Net income allocated to
limited partners (99%) 392 1,056
Net income $ 396 $ 1,067
Per limited partnership unit:
Income before extraordinary item $ 42.62 $ 85.02
Extraordinary loss (11.07) --
Net income $ 31.55 $ 85.02
See Accompanying Notes to Consolidated Financial Statements
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 12,425 $ 1 $ 12,425 $ 12,426
Partners' (deficit) capital
at December 31, 1994 12,425 $ (44) $ 6,026 $ 5,982
Net income for the year
ended December 31, 1995 -- 11 1,056 1,067
Distributions to partners -- (35) (3,465) (3,500)
Partners' (deficit) capital at
December 31, 1995 12,425 (68) 3,617 3,549
Net income for the year
ended December 31, 1996 -- 4 392 396
Distributions to partners -- (6) (297) (303)
Partners' (deficit) capital at
December 31, 1996 12,425 $ (70) $ 3,712 $ 3,642
See Accompanying Notes to Consolidated Financial Statements
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1996 1995
Cash flows from operating activities:
Net income $ 396 $ 1,067
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in loss of joint venture 45 --
Depreciation 271 268
Amortization of discounts, loan costs, and leasing
commissions 30 38
Gain on sale of investment property -- (958)
Casualty gain -- (44)
Extraordinary loss on debt refinancing 139 --
Bad debt (recovery) expense (539) 9
Change in accounts:
Restricted cash 6 37
Accounts receivable (13) 12
Escrows for taxes 138 (7)
Other assets (1) (1)
Accounts payable 3 2
Tenant security deposit liabilities (6) (9)
Accrued taxes (111) 10
Other liabilities (34) (53)
Net cash provided by operating activities 324 371
Cash flows from investing activities:
Property improvements and replacements (243) (257)
Proceeds from sale of investment property -- 3,393
Deposits to restricted escrows (178) (28)
Withdrawals from restricted escrows 229 13
Insurance proceeds -- 106
Net cash (used in) provided by investing activities (192) 3,227
Cash flows from financing activities:
Proceeds from long term borrowing 3,750 --
Payments on mortgage notes payable (2,652) (120)
Costs paid to extinguish debt (51) --
Loan costs (120) --
Distributions to partners (303) (3,500)
Net cash provided by (used in) financing activities 624 (3,620)
Net increase (decrease) in cash 756 (22)
Cash and cash equivalents at beginning of period 1,080 1,102
Cash and cash equivalents at end of period $ 1,836 $ 1,080
Supplemental disclosure of cash flow information:
Cash paid for interest $ 405 $ 416
Property improvements and replacements included in
accounts payable $ -- $ 163
See Accompanying Notes to Consolidated Financial Statements
ANGELES OPPORTUNITY PROPERTIES, LTD.
Notes to Consolidated Financial Statements
December 31, 1996
Note A - Organization and Significant Accounting Policies
Organization:
Angeles Opportunity Properties, Ltd. ("Partnership") is a California limited
partnership organized in June 1984 to acquire and operate residential and
commercial real estate properties. The Partnership's General Partner is Angeles
Realty Corporation II ("ARC II"), an affiliate of Insignia Financial Group, Inc.
As of December 31, 1996, the Partnership operates two residential properties
located in Texas.
Principles of Consolidation:
The financial statements include all of the accounts of the Partnership and its
majority owned partnerships. All significant interpartnership balances have
been eliminated. Minority interest is immaterial and is not shown separately in
the financial statements.
Joint Venture:
The Partnership accounts for its 42.82% investment in a property owned jointly
with an affiliate of Angeles Mortgage Investment Trust ("AMIT") using the equity
method of accounting.
Allocations to Partners:
Allocations of Profits and Losses - In accordance with the Partnership
Agreement ("the 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 Incentive Interest (as defined below) to which the General
Partner is entitled. Any gain remaining after said allocation will be allocated
to the Limited Partners in proportion to their interests in the Partnership;
provided that the gain shall first be allocated to Partners with negative
account balances, in proportion to such balances, in an amount equal to the sum
of such negative capital account balances. The Partnership will allocate other
profits and losses 1% to the General Partner and 99% to the Limited Partners.
For financial reporting purposes, net income (loss) is allocated 1% to the
General Partner and 99% to the Limited Partners.
Distributions - Except as discussed below, the Partnership will allocate
distributions 1% to the General Partner and 99% to the Limited Partners.
Upon the sale or other disposition, or refinancing of any asset of the
Partnership, the Distributable Net Proceeds shall be distributed as follows: (i)
First, to the Partners in proportion to their interests until the Limited
Partners have received proceeds equal to their Original Capital Investment
applicable to the property; (ii) Second, to the Partners until Limited Partners
have received distributions from all sources equal to their 6% Cumulative
Distribution, (iii) Third, to the General Partner until it has received its
cumulative distributions in an amount equal to 3% of the aggregate disposition
prices of all real properties, mortgages or other investments sold (Initial
Incentive Interest); (iv) Fourth, to the Partners until the Limited Partners
have received distributions equal to their 4% (not compounded) Cumulative
Distribution, with certain Limited Partners receiving priority distributions
ranging from 2% to 6% per annum (not compounded); and (v) Fifth, thereafter, 76%
to the Partners in proportion to their interests and 24% to the General Partner
(Final Incentive Interest).
Depreciation:
Depreciation is provided by the straight-line method over the estimated lives of
the investment properties and related personal property. For Federal income tax
purposes, the accelerated cost recovery method is used (1) for real property
over 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
alternative depreciation system is used for depreciation of (1) real property
additions over 40 years, and (2) personal property additions over 6-20 years.
Cash and Cash Equivalents:
Unrestricted Cash: Unrestricted cash includes cash on hand and in banks, demand
deposits, money market funds, and certificates of deposit with original
maturities less than 90 days. At certain times, the amount of cash deposited at
a bank may exceed the limit on insured deposits.
Restricted Cash - Tenant Security Deposits: The Partnership requires security
deposits from all lessees for the duration of the lease and such deposits are
considered restricted cash. Deposits are refunded when the tenant vacates the
apartment, provided the tenant has not damaged its space and is current on its
rental payments.
Investment Properties:
Prior to the fourth quarter of 1995, investment properties were carried at the
lower of cost or estimated fair value, which was determined using the higher of
the property's non-recourse debt amount, when applicable, or the net operating
income of the investment property capitalized at a rate deemed reasonable for
the type of property. During the fourth quarter of 1995 the Partnership adopted
"FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. The impairment loss is
measured by comparing the fair value of the asset to its carrying amount. The
effect of adoption was not material.
Loan Costs:
Loan costs of approximately $210,000 are included in "Other assets" in the
accompanying balance sheet and are being amortized on a straight-line basis over
the lives of the loans. At December 31, 1996, accumulated amortization is
approximately $30,000.
Leases:
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on its leases. 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 complexes in the
area. Concessions are charged to expense as incurred.
Restricted Escrows:
Capital Improvement - In conjunction with the refinancing of Lake Meadows
Apartments mortgage note payable in 1993, the Partnership established a "Capital
Improvement Escrow" for certain capital improvements. At December 31, 1996, the
balance in the account was approximately $29,000. During the fourth quarter of
1996, the Partnership refinanced Lakewood Apartments mortgage note payable (see
"Note B"), funding a "Capital Improvement Escrow" in the amount of approximately
$126,000, which was the balance at December 31, 1996.
Reserve Account - A general Reserve Account was also established with the
refinancing of Lake Meadows Apartments mortgage note payable. These funds were
to cover necessary repairs and replacements of existing improvements, debt
service, out-of-pocket expenses incurred for ordinary and necessary
administrative tasks, and payment of real property taxes and insurance premiums.
The Partnership was required to deposit net operating income (as defined in the
mortgage note) from the financed property to the reserve account until the
reserve account equaled $400 per apartment unit or $38,400. The reserve account
was fully funded at December 31, 1996.
Replacement Reserves - The Partnership maintains a replacement reserve with the
holder of the mortgage note payable on Lakewood Apartments. These funds are
available for the maintenance of the property. The balance at December 31, 1996
was approximately $5,000.
Advertising Costs:
Advertising costs, approximately $56,000 in 1996 and $50,000 in 1995, are
charged to expense as incurred and are included in operating expenses.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Reclassification:
Certain reclassifications have been made to the 1995 balances to conform to the
1996 presentation.
Fair Value:
The carrying amount of the Partnership's cash and cash equivalents approximates
fair value due to short-term maturities. The Partnership estimates the fair
value of its fixed rate mortgages by discounted cash flow analysis, based on
estimated borrowing rates currently available to the Partnership ("Note B").
Note B - Notes Payable
The principal terms of notes payable are as follows (in thousands):
Monthly Principal Principal
Payment Stated Balance Balance At
Including Interest Maturity Due At December 31,
Property Interest Rate Date Maturity 1996
Lake Meadows Apts.
1st mortgage $ 13 7.83% 10/2003 $ 1,489 $ 1,672
2nd mortgage (a) (b) 7.83% 10/2003 54 54
Lakewood Apartments
1st mortgage (a) 23 7.33% 11/2003 3,750 3,750
5,476
Unamortized discount (26)
Totals $ 36 $ 5,293 $ 5,450
(a) Interest only payments.
(b) Monthly payment is less than $1,000.
The Partnership exercised an interest rate buy-down option for Lake Meadows when
the debt was refinanced, reducing the stated rate from 8.13% to 7.83%. The fee
for the interest rate reduction amounted to $35,000 and is being amortized as a
loan discount on the interest method over the life of the loan. The discount fee
is reflected as a reduction of the mortgage notes payable and increases the
effective rate of the debt to 8.13%.
The carrying value of the Partnership's aggregate debt approximates its
estimated fair value.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's rental properties and by pledge of revenues from the respective
rental properties. Certain of the notes include prepayment penalties if repaid
prior to maturity.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1996, are as follows (in thousands):
1997 $ 22
1998 23
1999 25
2000 27
2001 30
Thereafter 5,349
$ 5,476
During 1996, the Partnership refinanced the mortgage encumbering Lakewood
Apartments. The total mortgage principal indebtedness refinanced was
approximately $2,528,000. As a result of the refinancing, the Partnership paid
approximately $51,000 in prepayment penalties and wrote off approximately
$88,000 in unamortized loan costs, resulting in an extraordinary loss of
approximately $139,000. The refinancing replaced the aforementioned
indebtedness, which carried an interest rate of 10.38% with a maturity date of
March, 2008. The new mortgage indebtedness of $3,750,000 carries an interest
rate of 7.33% and has interest only payments until maturity at November, 2003.
Total capitalized loan costs incurred for the refinancing was approximately
$120,000 and is being amortized over the life of the loan.
NOTE C - INCOME TAXES
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
Differences between the net income as reported and Federal taxable income result
primarily from (1) depreciation over different methods and lives and on
differing cost bases of the properties and (2) change in rental income received
in advance. The following is a reconciliation of reported net income and Federal
taxable income (in thousands, except unit data):
1996 1995
Net income as reported $ 396 $ 1,067
Add (deduct):
Depreciation differences 49 40
Unearned income (23) (48)
Casualty gain -- (44)
Gain on disposition -- (142)
Miscellaneous (7) (6)
Income from Rolling Green 47 --
Federal taxable income $ 462 $ 867
Federal taxable income per
limited partnership unit $ 36.78 $ 69.08
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $ 3,642
Land and buildings 202
Accumulated depreciation 501
Syndication and distribution costs 1,838
Other (3)
Net assets - Federal tax basis $ 6,180
NOTE D - 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 transactions with the General Partner and its
affiliates were incurred in 1996 and 1995 (in thousands):
1996 1995
Property management fees (included in
operating expenses) $ 107 $ 108
Reimbursement for services of affiliates,
including $31,000 of construction services
reimbursements in 1996 (included in general
and administrative and operating expenses) 144 145
In addition, during 1996, the Partnership paid approximately $21,000 to
affiliates of the General Partner for reimbursement of services related to the
Lakewood loan refinancing (see "Note B"). These charges have been capitalized
as loan costs, and will be amortized over the life of the loan.
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 E" for discussion of transactions with AMIT.
Note E - Note Receivable
Until 1993, the Partnership's assets included a note receivable ("Note") of
$1,850,000 from Rolling Green 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 nonpayment and had been written down in 1993 to
$1,070,000 which was the estimated value of the collateral less the estimated
cost to dispose of such collateral.
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 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 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.
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 approximately $1,061,000 in proceeds as a partial settlement from the
above described Note.
During 1995, the Partnership and an affiliate of AMIT initiated foreclosure
proceedings under the terms of the Note, against the Borrower, relating to the
remaining security for the Note. On June 6, 1996, the collateralized property
was foreclosed upon and the Partnership and AMIT became joint owners of an
approximately 8,000 square foot retail strip shopping center and over 150 acres
of land with 42.82% and 57.18% ownership, respectively (see "Note F" for further
information). The Partnership recorded a bad debt recovery of approximately
$539,000, which was its proportionate share of the fair value of the property
foreclosed.
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 39% 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 1.3% of the vote).
Between the date of acquisition of these shares on 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 and 1996 annual meetings 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.
Liquidity Assistance, LLC, ("LAC"), an affiliate of the General Partner and an
affiliate of Insignia Financial Group, Inc. ("Insignia"), which provides
property management and partnership administration services to the Partnership,
owns 126,500 Class A Shares of AMIT at December 31, 1996. As of February 1,
1997, the number of shares owned by LAC decreased to 96,800. These Class A
Shares entitle LAC to vote approximately 2.2% of the total shares. In addition,
Insignia has engaged and continues to engage in discussions with AMIT regarding
various potential business combinations with affiliates of Insignia.
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 instructing such trustees to vote said Class B shares in
accordance with the vote of the majority of the Class A shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
NOTE F - INVESTMENT IN JOINT VENTURE
The Partnership has a 42.82% interest in a property owned jointly by the
Partnership and an affiliate of AMIT ("Joint Venture") effective June 6, 1996.
The condensed balance sheet of the Joint Venture is summarized as follows:
December 31, 1996
(in thousands)
Assets
Cash $ 82
Investment properties, net 1,076
Total $ 1,158
Liabilities and Partners' Capital
Other liabilities $ 4
Partners' capital 1,154
Total $ 1,158
The statements of operations of the Joint Venture are summarized as follows:
Year Ended
December 31, 1996
(in thousands)
Revenue $ 22
Costs and expenses (26)
Write down of investment properties (100)
Net loss $ (104)
The Partnership's equity interest in loss of the Joint Venture for the year
ended December 31, 1996, was approximately $45,000. A purchase agreement has
been executed for the sale of the investment properties, with the closing
expected to occur in March 1997. The sales price approximates the net book
value of the properties at December 31, 1996. Upon the sale, the Joint Venture
will liquidate, distributing the proceeds to the owners.
NOTE G - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (IN THOUSANDS)
Initial Cost
To Partnership
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Lake Meadows $ 1,700 (1) $ 473 $ 1,584 $ 240
Lakewood 3,750 483 3,491 1,801
Totals $ 5,450 $ 956 $ 5,075 $ 2,041
(1) Net of a $26 unamortized discount
Gross Amount At Which Carried
At December 31, 1996
Buildings
And Accum- Deprec-
Related ulated iable
Personal Deprec- Date Life
Description Land Property Total iation Acquired Years
Lake Meadows $473 $ 1,824 $2,297 $ 518 3/31/88 10-40
Lakewood 483 5,292 5,775 1,109 11/01/89 10-40
Totals $ 956 $ 7,116 $8,072 $1,627
The depreciable lives included above are for the buildings and components. The
depreciable lives for related personal property are for 5 to 7 years.
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1996 1995
Investment Properties
Balance at beginning of year $ 7,992 $ 10,627
Property improvements 80 420
Dispositions -- (3,055)
Balance at End of Year $ 8,072 $ 7,992
Accumulated Depreciation
Balance at beginning of year $ 1,356 $ 1,634
Additions charged to expense 271 268
Dispositions -- (546)
Balance at End of Year $ 1,627 $ 1,356
In 1995, the Partnership sold Oquendo Warehouse, one of its investment
properties to unaffiliated parties resulting in a gain to the Partnership of
approximately $958,000. Net proceeds of approximately $3,393,000 were
distributed to the partners.
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1996 and 1995 is approximately $8,274,000 and $8,193,000,
respectively. The accumulated depreciation taken for Federal income tax
purposes at December 31, 1996 and 1995 is approximately $1,125,000 and
$903,000, respectively.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND
FINANCIAL DISCLOSURES
There were no disagreements with Ernst & Young LLP regarding the 1996 or 1995
audits of the Partnership's financial statements.
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"), the Partnership's General Partner as of December 31,
1996, their age and the nature of all positions with ARC II presently held by
them are as follows:
Name Age Position
Carroll D. Vinson 56 President
Robert D. Long, Jr. 29 Vice President and Chief
Accounting Officer
William H. Jarrard, Jr. 50 Vice President
John K. Lines 37 Secretary
Kelley M. Buechler 39 Assistant Secretary
Carroll D. Vinson has been President of ARC II and Metropolitan Asset
Enhancement, L.P., and subsidiaries since August of 1994. Prior to that, during
1993 to August 1994, Mr. Vinson was affiliated with Crisp, Hughes & Co.
(regional CPA firm) and engaged in various other investment and consulting
activities. Briefly, in early 1993, Mr. Vinson served as President and Chief
Executive Officer of Angeles Corporation, a real estate investment firm. From
1991 to 1993, Mr. Vinson was employed by Insignia Financial Group, Inc.
("Insignia") in various capacities including Managing Director-President during
1991. From 1986 to 1990, Mr. Vinson was President and a Director of U.S.
Shelter Corporation, a real estate services company, which sold substantially
all of its assets to Insignia in December 1990.
Robert D. Long, Jr. is Vice President and Chief Accounting Officer. Prior to
joining Metropolitan Asset Enhancement, L.P., and subsidiaries, he was an
auditor for the State of Tennessee and was associated with the accounting firm
of Harshman Lewis and Associates.
William H. Jarrard, Jr. is the Vice President of the General Partner and has
been Managing Director - Partnership Administration of Insignia since January
1991. Mr. Jarrard served as Managing Director - Partnership Administration and
Asset Management from July 1994 until January 1996.
John K. Lines has been Secretary of the General Partner since August 1, 1994,
Insignia's General Counsel since June 1994, and General Counsel and Secretary of
Insignia since July 1994. From May 1993 until June 1994, Mr. Lines was the
Assistant General Counsel and Vice President of Ocwen Financial Corporation in
West Palm Beach, Florida. From October 1991 until May 1993, Mr. Lines was a
Senior Attorney with Banc One Corporation in Columbus, Ohio. From May 1984
until October 1991, Mr. Lines was an attorney with Squire Sanders & Dempsey in
Columbus, Ohio.
Kelley M. Buechler is Assistant Secretary of the General Partner and of
Insignia. During the five years prior to joining Insignia in 1991, she served
in a similar capacity for U.S. Shelter.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of ARC II. The Partnership has no plan, nor does the
Partnership presently propose a plan, which will result in any remuneration
being paid to any officer or director upon termination of employment. However,
reimbursements and other payments have been made to the Partnership's General
Partner and its affiliates, as described in Note D of the Financial Statements
included under Item 7, which is incorporated herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of January 1, 1997, no person owned of record more than 5% of Limited
Partnership Units of the Partnership nor was any person known by the Partnership
to own of record and beneficially, or beneficially only, more than 5% of such
securities.
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 as follows: Article 12.1 of the Agreement, which provides
that upon a vote of the Limited Partners holding more than 50% of the then
outstanding Limited Partnership Units the General Partner may be expelled from
the Partnership upon 90 days written notice. In the event that a successor
general partner has been elected by Limited Partners holding more than 50% of
the then outstanding Limited Partnership Units and if said Limited Partners
elect to continue the business of the Partnership, the Partnership is required
to pay in cash to the expelled 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 (i)
the balance of the General Partner's capital account and (ii) 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.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No transactions have occurred between the Partnership and any officer or
director of ARC II.
During the years ended December 31, 1996, and December 31, 1995, the
transactions that occurred between the Partnership and ARC II and affiliates of
ARC II pursuant to the terms of the Agreement are disclosed under "Note D" of
the Partnership's Financial Statements included under "Item 7", which is hereby
incorporated by reference.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) No Reports on Form 8-K were filed during the fourth quarter
of 1996.
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 OPPORTUNITY PROPERTIES, LTD.
(A California Limited Partnership)
(Registrant)
By: Angeles Realty Corporation II
Its General Partner
By: /s/Carroll D. Vinson
President
Date: March 18, 1997
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/ Carroll D. Vinson President March 18, 1997
Carroll D. Vinson
/s/ Robert D. Long, Jr. Vice President/CAO March 18, 1997
Robert D. Long, Jr.
ANGELES OPPORTUNITY PROPERTIES, LTD.
EXHIBIT INDEX
Exhibit Number Description of Exhibit
3.1 Amended Certificate and Agreement of the Limited Partnership
filed in the Partnership's prospectus dated July 7, 1986
which is incorporated herein by reference.
10.1 Purchase and Sale Agreement with Exhibits - Lake Meadows
Apartments filed in Form 8K dated March 31, 1988, and is
incorporated herein by reference.
10.2 Purchase and Sale Agreement with Exhibits - Oquendo
Warehouses filed in form 8K dated April 26, 1988, and is
incorporated herein by reference.
10.3 Joint Venture Agreement - Lakewood Project Joint Venture
filed in From 10K dated December 31, 1990, and is
incorporated herein by reference.
10.4 General Partnership Agreement - AOPL-AMIT Rolling Greens
Joint Venture dated December 28, 1989, filed in Form 10K
dated December 31, 1990, and is incorporated herein by
reference.
10.5 Stock Purchase Agreement dated November 24, 1992 showing the
purchase of 100% of the outstanding stock of Angeles Realty
Corporation II by IAP GP Corporation, a subsidiary of MAE GP
Corporation, filed in Form 8K dated December 31, 1992, which
is incorporated herein by reference.
10.6 Contracts related to the refinancing of debt.
(a) First Deeds of Trust and Security Agreements dated September
30, 1993 between New Lake Meadows, L.P. and Lexington
Mortgage Company, a Virginia Corporation, securing Lake
Meadows Apartments.
(b) Second Deeds of Trust and Security Agreements dated September
30, 1993 between New Lake Meadows, L.P. and Lexington
Mortgage Company, a Virginia Corporation, securing Lake
Meadows Apartments.
(c) First Assignments of Leases and Rents dated September 30,
1993 between New Lake Meadows, L.P. and Lexington Mortgage
Company, a Virginia Corporation, securing Lake Meadows
Apartments.
(d) Second Assignments of Leases and Rents dated September 30,
1993 between New Lake Meadows, L.P. and Lexington Mortgage
Company, a Virginia Corporation, securing Lake Meadows
Apartments.
(e) First Deeds of Trust Notes dated September 30, 1993 between
New Lake Meadows, L.P. and Lexington Mortgage Company,
relating to Lake Meadows Apartments.
(f) Second Deeds of Trust Notes dated September 30, 1993 between
New Lake Meadows, L.P. and Lexington Mortgage Company,
relating to Lake Meadows Apartments.
10.7 Commercial Contract to Buy Real Estate between Angeles
Opportunity Properties, Ltd. and Paul Willet, Mark Nagle and
Kim Nagle dated August 1, 1994, documenting the sale of
Oquendo Warehouse located at 3550 West Quail Avenue.
10.8 Contract of Sale between Angeles Opportunity Properties, Ltd.
and Roberts Ranch Venture L.P. dated March 30, 1995,
documenting the sale of Oquendo Warehouse located at 3655
West Quail and 3600 West Oquendo.
10.9 Multifamily Note dated November 1, 1996, between
Lakewood AOPL and Lehman Brothers Holdings Inc.,
a Delaware Corporation, securing Lakewood Apartments.
99.1 Partnership prospectus filed in registration statement dated
June 26, 1987, which is incorporated herein by reference.
99.2 Agreement of Limited Partnership for AOP GP Limited
Partnership, L.P. and Angeles Opportunity Properties, Ltd.
entered into on September 9, 1993.
99.3 Agreement of Limited Partnership for New Lake Meadows, L.P.
between AOP GP Limited Partnership, L.P. and Angeles
Opportunity Properties, Ltd. entered into on September 9,
1993.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Opportunity Properties, Ltd. 1996 Year-End 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000789282
<NAME> ANGELES OPPORTUNITY PROPERTIES LTD.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,836
<SECURITIES> 0
<RECEIVABLES> 18
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 8,072
<DEPRECIATION> 1,627
<TOTAL-ASSETS> 9,304
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 5,450
0
0
<COMMON> 0
<OTHER-SE> 3,642
<TOTAL-LIABILITY-AND-EQUITY> 9,304
<SALES> 0
<TOTAL-REVENUES> 2,747
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,167
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 435
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (139)
<CHANGES> 0
<NET-INCOME> 396
<EPS-PRIMARY> 31.55<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
Loan No. 734133650
Lakewood
MULTIFAMILY NOTE
US $3,750,000.00
New York, New York
As of November 1, 1996
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS INC.
d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, or order, the principal sum of Three
Million Seven Hundred Fifty Thousand and 00/100 Dollars, with interest on the
unpaid principal balance from the date of this Note, until paid, at the rate of
7.33 percent per annum. Interest only shall be payable at 3 World Financial
Center, New York, New York 10285, in consecutive monthly installments of Twenty-
two Thousand Nine Hundred Six and 25/100 Dollars (US $22,906.25) on the first
day of each month beginning December 1, 1996, until the entire indebtedness
evidenced hereby is fully paid, except that any remaining indebtedness, if not
sooner paid, shall be due and payable on November 1, 2003.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, attorney's fees.
Prepayments shall be applied against the outstanding principal balance of
this Note and shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless the
holder hereof shall agree otherwise in writing. The holder hereof may require
that any partial prepayments be made on the date monthly installments are due
and be in the amount of that part of one or more monthly installments which
would be applicable to principal.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance of this Note,
without giving notice to or obtaining the consent of the undersigned, the
successors or assigns of the undersigned or guarantors, and without liability on
the part of the holder hereof, the holder hereof may, at the option of the
holder hereof, extend the time for payment of said outstanding principal balance
or any part thereof, reduce the payments thereon, release anyone liable on any
of said outstanding principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers, and shall be binding upon them and
their successors and assigns.
The indebtedness evidenced by this Note is secured by a Mortgage or Deed of
Trust dated as of the date hereof, and reference is made thereto for rights as
to acceleration of the indebtedness evidenced by this Note. This Note shall be
governed by the law of the jurisdiction in which the Property subject to the
Mortgage or Deed of Trust is located.
The undersigned shall pay any installment of interest due hereunder within
ten (10) calendar days after such installment of interest is due. The
undersigned shall pay any other installment due hereunder or due in accordance
with the terms of the Mortgage or Deed of Trust securing this Note, within
thirty (30) calendar days of the date such installment is due.
The term "Maximum Rate" shall mean the highest lawful rate of interest
applicable to this Note. In determining the Maximum Rate, due regard shall be
given to all payments, fees, charges, deposits, balances and agreements which
may constitute interest or be deducted from principal when calculating interest.
For purposes of determining the Maximum Rate, the Indicated Rate Ceiling
specified in Texas Revised Civil Statutes, Article 5069-1.04 shall be used;
however, if permitted by law, holder hereof may implement any ceiling under that
law used to compute the rate of interest hereunder by notice to the undersigned
as provided in such article. Notwithstanding the foregoing sentence, if
Section 501 of the Depository Institutions Deregulation and Monetary Control Act
of 1980 (as amended) permits a higher Maximum Rate than Article 5069-1.04 or
applicable state law, such higher Maximum Rate shall apply to this Note.
Interest on the unpaid principal balance of this Note at the rate stated
above in the first paragraph of the first page of this Note (the "Stated Rate")
shall be calculated at a daily rate equal to 1/360 times the Stated Rate (but in
no event greater than the Maximum Rate). Notwithstanding the foregoing, at any
time when the interest contracted for, collected, or charged on the unpaid
balance of this Note shall exceed the Stated Rate, such interest shall be
calculated at a daily rate of 1/365 times such rate (but in no event greater
than the Maximum Rate).
It is expressly stipulated and agreed to be the intent of the undersigned
and holder hereof at all times to comply with the applicable law governing the
Maximum Rate or amount of interest payable on or in connection with this Note
and the loan (the "Loan") evidenced thereby (or applicable United States federal
law to the extent that it permits holder hereof to contract for, charge, take,
reserve or receive a greater amount of interest than under law of the state in
which the Property is located). If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under this Note or
under the Deed of Trust or any other document (collectively, the "Security
Documents") evidencing, securing or executed in connection with Loan, or
contracted for, charged, taken, reserved or received with respect to Loan, or if
acceleration of the maturity of this Note or if any prepayment by the
undersigned results in the undersigned having paid any interest in excess of
that permitted by law, then it is the undersigned's and the holder hereof's
express intent that all excess amounts theretofore collected by the holder
hereof be credited on the principal balance of this Note (or, if this Note has
been or would thereby be paid in full, refunded to the undersigned), and the
provisions of this Note, the Deed of Trust and the other Security Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and thereunder.
The right to accelerate maturity of this Note does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and holder hereof does not intend to collect any unearned interest
in the event of acceleration. All sums paid or agreed to be paid to holder
hereof for the use, forbearance or detention of the indebtedness evidenced
hereby shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until payment
in full so that the rate or amount of interest on account of such indebtedness
does not exceed the applicable usury ceiling. Notwithstanding any provision
contained in this Note, the Deed of Trust or in any of the other Security
Documents that permits the compounding of interest, including, without
limitation, any provisions by which any accrued interest is added to the
principal amount of this Note, the total amount of interest that the undersigned
is obligated to pay and the holder hereof is entitled to receive with respect to
this Note shall not exceed the amount calculated on a simple (i.e.,
noncompounded) interest basis at the Maximum Rate on principal amounts actually
advanced to or for the account of the undersigned, including all current and
prior advances and any advances made pursuant to the Deed of Trust or other
Security Documents (such as for the payment of taxes, insurance premiums and
similar expenses or costs).
The undersigned and all other makers, signers, sureties, guarantors and
endorsers of this Note waive demand, presentment, notice of dishonor, notice of
intent to demand or accelerate payment hereof, diligence in the collecting,
grace, notice and protest and agree to one or more extensions for any period or
periods of time and partial payments, before or after maturity, without
prejudice to the holder hereof; and if collection procedures are ever commenced,
by any means, including legal proceedings or through a probate or bankruptcy
court, of if this Note is placed in the hands of any attorney for collection
after default or maturity, the undersigned agrees to pay all costs of collection
or attempted collection, including reasonable attorney's fees.
IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same
to be executed by its representatives thereunto duly authorized.
LAKEWOOD AOPL, a Texas limited partnership
By: Lakewood AOPL, Inc., a Texas
corporation, its general partner
By: /s/William H. Jarrard, Jr.
Name: William H. Jarrard, Jr.
Title: Vice President
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This 1st day of November, 1996.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman
Brothers Holdings Inc., a Delaware
corporation
By: /s/Larry J. Kravetz
Name: Larry J. Kravetz
Title: Vice President
