March 15, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Angeles Opportunity Properties, Ltd.
Form 10-KSB
File No. 0-16116
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
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, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from _________to _________
Commission file number 0-16116
ANGELES OPPORTUNITY PROPERTIES, LTD.
(Name of small business issuer in its charter)
California 95-4052473
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
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 contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $2,465,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Angeles Opportunity Properties, Ltd. (the "Partnership" or "Registrant") is a
publicly held limited partnership organized under the California Uniform Limited
Partnership Act pursuant to a Certificate of 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 General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"). The
Partnership Agreement provides that the Partnership is to terminate on December
31, 2035 unless terminated prior to such date.
The Partnership is engaged in the business of operating and holding real estate
properties for investment. In 1988 and 1989, during its acquisition phase, the
Partnership acquired one apartment complex, three warehouses, and a 70% interest
in a joint venture project which ultimately acquired an apartment complex. In
1992, the Partnership acquired the remaining 30% interest of the joint venture.
The Partnership continues to own and operate the two apartment properties. See
"Item 2. Description of Properties".
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. Since its initial
offering, the Partnership has not received, nor are the limited partners
required to make, additional capital contributions. 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 by
holding and operating the properties or through property sales or exchanges,
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 employees. Property management and administrative
services are provided by the General Partner and by agents retained by the
General Partner. An affiliate of the General Partner has been providing such
property management services.
The business in which the Partnership is engaged is highly competitive. There
are other residential properties within the market area of the Partnership's
properties. The number and quality of competitive properties, including those
which may be managed by an affiliate of the General Partner in such market area,
could have a material effect on the rental market for the apartments at the
Partnership's properties and the rents that may be charged for such apartments.
While the General Partner and its affiliates own and/or control a significant
number of apartment units in the United States, such units represent an
insignificant percentage of total apartment units in the United States and
competition for the apartments is local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into AIMCO, a publicly traded real estate investment trust, with AIMCO
being the surviving corporation (the "Insignia Merger"). As a result, AIMCO
acquired 100% ownership interest in the General Partner. The General Partner
does not believe that this transaction has had or will have a material effect on
the affairs and operations of the Partnership.
Item 2. Description of Properties
The following table sets forth the Partnership's investment in properties:
Date of
Property Purchase Type of Ownership Use
Lake Meadows Apartments 03/31/88 Fee ownership subject to a Apartment
Garland, Texas first and second mortgage (1) 96 units
Lakewood Apartments 11/01/89 Fee ownership subject to Apartment
Tomball, Texas a first mortgage (1) 256 units
(1) Each property is held by a limited partnership in which the Partnership
owns a 99% interest.
<PAGE>
Schedule of Properties
Set forth below for each of the Partnership's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
Lake Meadows $2,576 $ 744 5-40 yrs S/L $1,908
Lakewood 6,338 1,789 5-40 yrs S/L 5,198
Total $8,914 $2,533 $7,106
See "Note A" to the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation policy
and "Note J - Change in Accounting Principle".
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Partnership's properties.
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity(3)
(in thousands) (in thousands)
Lake Meadows
1st mortgage $1,602 7.83% (1) 10/2003 $1,489
2nd mortgage 54 7.83% (2) 10/2003 54
Lakewood
1st mortgage 3,750 7.33% (2) 11/2003 3,750
5,406 $5,293
Unamortized
discount (12)
$5,394
(1) The principal balance is being amortized over 343 months with a balloon
payment due October 15, 2003.
(2) Interest only payments.
(3) See "Item 7. Financial Statements - Note C" for information with respect to
the Partnership's ability to prepay these loans and other specific details
about the loans.
<PAGE>
Schedule of Rental Rates and Occupancy
Average annual rental rate and occupancy for 1999 and 1998 for each property are
as follows:
Average Annual Average Annual
Rental Rate Occupancy
(per unit)
Property 1999 1998 1999 1998
Lake Meadows Apartments $7,524 $7,127 96% 98%
Lakewood Apartments 7,121 6,802 93% 96%
The General Partner attributes the decrease in occupancy at Lakewood Apartments
to layoffs at the major employer in the area during the twelve months ended
December 31, 1999.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties are subject to competition from other
residential apartment complexes in the area. The General Partner believes that
all of the properties are adequately insured. Each residential property is an
apartment complex which leases its units for lease terms of one year or less. No
tenant leases 10% or more of the available rental space. All of the properties
are in good physical condition, subject to normal depreciation and deterioration
as is typical for assets of this type and age.
Schedule of Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for each property were as follows:
1999 1999
Billing Rate
(in thousands)
Lake Meadows Apartments $ 68 2.54%
Lakewood Apartments 189 2.95%
Capital Improvements
Lake Meadow Apartments
During 1999, the Partnership completed approximately $209,000 of capital
improvements at Lake Meadows Apartments, consisting primarily of structural
upgrades, pool improvements, major landscaping, and floor covering replacement.
These improvements were funded from operating cash flow and replacement
reserves. The Partnership is currently evaluating the capital improvement needs
of the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $28,800. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Lakewood Apartments
During 1999, the Partnership completed approximately $226,000 of capital
improvements at the property, consisting primarily of structural upgrades, floor
covering, exterior painting, and electrical fixture replacements. In addition,
the property purchased additional land for approximately $62,000. These
improvements were funded from operating cash flow and replacement reserves. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $76,800. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the General Partner filed a motion seeking
dismissal of the action. In lieu of responding to the motion, the plaintiffs
have filed an amended complaint. The General Partner filed demurrers to the
amended complaint which were heard February 1999. Pending the ruling on such
demurrers, settlement negotiations commenced. On November 2, 1999, the parties
executed and filed a Stipulation of Settlement, settling claims, subject to
final court approval, on behalf of the Partnership and all limited partners who
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Registrant did not vote on any matter during the quarter
ended December 31, 1999.
<PAGE>
PART II
Item 5. Market for the Partnership's Common Equity and Related Security Holder
Matters
The Partnership, a publicly-held limited partnership, offered and sold 12,425
Limited Partnership Units during its offering period through June 25, 1988, and
currently has 1,076 Limited Partners of record. Affiliates of the General
Partner owned 5,138 units or 41.35% at December 31, 1999. No public trading
market has developed for the Units, and it is not anticipated that such a market
will develop in the future.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999:
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/98 - 12/31/98 $254 (1) $19.88
01/01/99 - 12/31/99 $500 (1) $39.84
(1) Distributions were made from cash from operations (see "Item 6.
Management's Discussion and Analysis or Plan of Operation" for further
details).
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. The Partnership's distribution
policy is reviewed on a semi-annual basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations after
required capital expenditures to permit any distributions to its partners in the
year 2000 or subsequent periods. In addition, the Partnership is restricted from
making distributions if the amount in the reserve account for each property
maintained by the mortgage lender is less than $400 per apartment unit at such
property. The reserve accounts are not currently fully funded. See "Item 6.
Management's Discussion and Analysis or Plan of Operations" for information
relating to anticipated capital expenditures at the properties.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and it affiliates currently own 5,138 limited
partnership units in the Partnership representing 41.35% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operations. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership's net income for the year ended December 31, 1999, was
approximately $339,000 as compared to net income of approximately $323,000 for
the year ended December 31, 1998. The increase in net income for the year ended
December 31, 1999, is attributable to a decrease in total expenses which was
partially offset by a decrease in total revenues. The decrease in total expenses
is primarily due to a decrease in operating expenses partially offset by an
increase in depreciation expense. The decrease in operating expense is primarily
due to a decrease in major landscaping and exterior building maintenance, along
with maintenance salaries, at Lakewood Apartments. The decrease is also due to a
decrease in contract repairs and a decrease in insurance expense, as a result of
a change in insurance carrier, at both properties. The increase in depreciation
expense is primarily due to an increase in depreciable assets put into service
in the last twelve months. The decrease in total revenues is due to a decrease
in other income offset by an increase in rental income. The decrease in other
income is primarily due to a decrease in interest income as a result of lower
cash balances held in interest bearing accounts. The increase in rental income
is primarily due to the increase in the average rental rates which offset the
decrease in average occupancy at both properties.
Included in general and administrative expenses for the years ended December 31,
1999 and 1998, are reimbursements to the General Partner allowed under the
Partnership Agreement associated with its management of the Partnership. In
addition, costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement are also included. All other items of expense remained
relatively consistent for the comparable periods.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $121,000 ($9.64 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
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 needed to offset softening market conditions, there is no guarantee
that the General Partner will be able to sustain such a plan.
Capital Resources and Liquidity
At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $885,000 as compared to approximately $1,060,000 at December 31,
1998. The net decrease in cash and cash equivalents for the year ended December
31, 1999, was $175,000 compared to an increase of approximately $363,000 for the
prior year. The decrease in cash and cash equivalents is due to approximately
$339,000 of cash used in investing activities and approximately $525,000 of cash
used in financing activities partially offset by approximately $689,000 of cash
provided by operating activities. Cash used in investing activities is comprised
primarily of capital improvements partially offset by net withdrawals from
restricted escrows. Cash used in financing activities consisted primarily of
distributions to the partners and, to a lessor extent, of payments of principal
made on the mortgages encumbering the Partnership's investment properties. The
Partnership invests its working capital reserves in money market accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state, and local legal and regulatory requirements. The minimum amount
to be budgeted by the Partnership is expected to be $300 per unit or $105,600 in
capital improvements for both of the Partnership's properties in the year 2000.
The capital expenditures will be incurred only if cash is available from
operations or from Partnership reserves. To the extent that such capital
improvements are completed, the Partnership's distributable cash flow, if any,
may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $5,394,000, 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. The General Partner will attempt to
refinance such indebtedness and/or sell the properties prior to such maturity
dates. If the properties cannot be refinanced or sold for a sufficient amount,
the Partnership will risk losing such properties through foreclosure.
Total cash distributed from operations was approximately $500,000 (approximately
$495,000 to the limited partners or $39.84 per limited partnership unit) for the
year ended December 31, 1999. Total cash distributed from operations during the
year ended December 31 1998, was approximately $254,000 (approximately $247,000
to the limited partners or $19.88 per limited partnership unit). Future cash
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves, and the timing of debt maturities,
refinancings, and/or property sales. The Partnership's distribution policy is
reviewed on a semi-annual basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit any distributions to its partners in the year
2000 or subsequent periods. In addition, the Partnership is restricted from
making distributions if the amount in the reserve account for each property
maintained by the mortgage lender is less than $400 per apartment unit at such
property. The reserve accounts are not currently fully funded. See "Item 2.
Description of Properties - Capital Improvements" for information relating to
anticipated capital expenditures at the properties.
Tender Offers
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and it affiliates currently own 5,138 limited
partnership units in the Partnership representing 41.35% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the Corporate General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
<PAGE>
Item 7. Financial Statements
ANGELES OPPORTUNITY PROPERTIES, LTD.
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and 1998
Consolidated Statements of Changes in Partners' (Deficit) Capital - Years ended
December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and 1998
Notes to Consolidated Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Partners
Angeles Opportunity Properties, Ltd.
We have audited the accompanying consolidated balance sheet of Angeles
Opportunity Properties, Ltd. as of December 31, 1999, and the related
consolidated statements of operations, changes in partners' (deficit) capital
and cash flows for each of the two years in the period ended December 31, 1999.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Angeles
Opportunity Properties, Ltd. at December 31, 1999, and the consolidated results
of its operations and its cash flows for each of the two years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
As discussed in Note J to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 21, 2000
<PAGE>
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
Assets
Cash and cash equivalents $ 885
Receivables and deposits 373
Restricted escrows 36
Other assets 123
Investment properties (Notes C and F):
Land $ 1,018
Buildings and related personal property 7,896
8,914
Less accumulated depreciation (2,533) 6,381
$ 7,798
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 22
Tenant security deposit liabilities 27
Accrued property taxes 245
Other liabilities 207
Mortgage notes payable (Note C) 5,394
Partners' (Deficit) Capital
General partner $ (104)
Limited partners (12,425 units issued and
outstanding) 2,007 1,903
$ 7,798
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1999 1998
Revenues:
Rental income $2,339 $2,322
Other income 126 153
Total revenues 2,465 2,475
Expenses:
Operating 942 1,006
General and administrative 175 173
Depreciation 322 297
Interest 444 440
Property taxes 243 236
Total expenses 2,126 2,152
Net income (Note D) $ 339 $ 323
Net income allocated to general partner (1%) $ 3 $ 3
Net income allocated to limited partners (99%) 336 320
$ 339 $ 323
Net income per limited partnership unit $27.04 $25.75
Distributions per limited partnership unit $39.84 $19.88
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 12,425 $ 1 $12,425 $12,426
Partners' (deficit) capital
at December 31, 1997 12,425 $ (98) $ 2,093 $ 1,995
Net income for the year ended
December 31, 1998 -- 3 320 323
Distributions to partners -- (7) (247) (254)
Partners' (deficit) capital at
December 31, 1998 12,425 (102) 2,166 2,064
Net income for the year
ended December 31, 1999 -- 3 336 339
Distributions to partners -- (5) (495) (500)
Partners' (deficit) capital
at December 31, 1999 12,425 $ (104) $ 2,007 $ 1,903
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except unit data)
Year Ended December 31,
1999 1998
Cash flows from operating activities:
Net income $ 339 $ 323
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 322 297
Amortization of discounts and loan costs 32 32
Change in accounts:
Receivables and deposits (119) 12
Other assets (16) 8
Accounts payable 4 (1)
Tenant security deposit liabilities -- (4)
Accrued property taxes 10 11
Other liabilities 117 32
Net cash provided by operating activities 689 710
Cash flows from investing activities:
Property improvements and replacements (497) (123)
Net withdrawals from restricted escrows 158 53
Net cash used in investing activities (339) (70)
Cash flows from financing activities:
Payments on mortgage notes payable (25) (23)
Distributions to partners (500) (254)
Net cash used in financing activities (525) (277)
Net (decrease) increase in cash and cash equivalents (175) 363
Cash and cash equivalents at beginning of the period 1,060 697
Cash and cash equivalents at end of period $ 885 $ 1,060
Supplemental disclosure of cash flow information:
Cash paid for interest $ 406 $ 408
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES OPPORTUNITY PROPERTIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Angeles Opportunity Properties, Ltd. (the "Partnership" or
"Registrant") is a California limited partnership organized in June 1984 to
operate and hold residential and commercial real estate properties. The
Partnership's general partner is Angeles Realty Corporation II ("ARC II" or the
"General Partner"), which is a subsidiary of Apartment Investment and Management
Company ("AIMCO") (see "Note B"). The directors and officers of the General
Partner also serve as executive officers of AIMCO. The Partnership Agreement
provides that the Partnership will terminate on December 31, 2035, unless
terminated prior to such date. As of December 31, 1999, the Partnership operates
two residential properties located in Texas.
Principles of Consolidation: The consolidated financial statements of the
Partnership include its 99% limited partnership interests in New Lake Meadows LP
and Lakewood AOPL Ltd. The general partner of each of the consolidated
partnerships may be removed by the Registrant, therefore, the partnerships are
controlled and consolidated by the Partnership. All significant interpartnership
balances have been eliminated.
Allocations to Partners: Allocations of Profits, Gains 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.
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 the 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 Limited Partners in proportion to their interests and 24%
to the General Partner (Final Incentive Interest).
<PAGE>
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 over 40 years and (2) personal property additions over 5-20 years.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping ("Note J").
Cash and Cash Equivalents: Includes cash on hand and in banks, and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Investment Properties: Investment properties consist of two apartment complexes,
which are stated at cost. Acquisition fees are capitalized as a cost of real
estate. In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", the Partnership records impairment losses on
long-lived assets used in operations when events and circumstances indicate the
assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets. No
adjustments for impairment of value were recorded in either of the years ended
December 31, 1999 or 1998.
Loan Costs: Loan costs of approximately $217,000 are being included in other
assets in the accompanying consolidated balance sheet and are being amortized on
a straight-line basis over the lives of the loans. At December 31, 1999,
accumulated amortization is approximately $112,000.
Security Deposits: The Partnership requires security deposits from lessees for
the duration of the lease and such deposits are included in receivables and
deposits. The security deposits are refunded when the tenant vacates, provided
the tenant has not damaged its space and is current on its rental payments.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its residential 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 against rental income as
incurred.
Restricted Escrows:
Reserve Account - In 1993, a general reserve account was established in
conjunction with the refinancing of the Lake Meadows Apartments mortgage
note payable. These funds were earmarked for 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 equals $400 per apartment unit, or approximately $38,000. At
December 31, 1999, the reserve totaled approximately $24,000, which
includes interest earned on these funds.
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, 1999 was approximately $12,000.
Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. (See "Note H" for required disclosures).
Advertising Costs: Advertising costs of approximately $45,000 in 1999 and
$53,000 in 1998 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.
Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company, a publicly traded real
estate investment trust ("AIMCO"), with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
<PAGE>
Note C - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
Lake Meadows
<S> <C> <C> <C> <C> <C>
1st mortgage $1,602 $ 13 7.83% 10/2003 $1,489
2nd mortgage (a) 54 (b) 7.83% 10/2003 54
Lakewood
1st mortgage (a) 3,750 23 7.33% 11/2003 3,750
5,406 $ 36 $5,293
Unamortized discount (12)
Totals $5,394
</TABLE>
(a) Interest only payments.
(b) Monthly payment is less than $1,000.
The Partnership exercised an interest rate buy-down option for Lake Meadows
Apartments when the debt was refinanced in 1993, 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 mortgage notes payable are nonrecourse and are secured by pledge of certain
of the Partnership's rental properties and by pledge of revenues from the
respective rental properties. Certain of the notes require prepayment penalties
if repaid prior to maturity. Further, the properties may not be sold subject to
existing indebtedness.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1999, are as follows (in thousands):
2000 $ 27
2001 30
2002 32
2003 5,317
$5,406
Note D - 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. The following is a reconciliation of
reported net income and Federal taxable income (in thousands, except per unit
data):
1999 1998
Net income as reported $ 339 $ 323
Add (deduct):
Depreciation differences (82) 56
Unearned income (17) 65
Miscellaneous (7) 23
Federal taxable income $ 233 $ 467
Federal taxable income per limited
partnership unit $ 1.85 $37.18
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 $ 1,903
Land and buildings 199
Accumulated depreciation 526
Syndication and distribution costs 1,838
Other 71
Net assets - Federal tax basis $ 4,537
Note E - 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 (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were paid or accrued to the
General Partner and affiliates in 1999 and in 1998 (in thousands):
1999 1998
Property management fees (included in operating
expense) $ 124 $ 121
Reimbursement for services of affiliates (included
in general and administrative and operating
expense and investment properties) 66 75
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from both of the
Partnership's properties for providing property management services. The
Partnership paid to such affiliates approximately $124,000 and $121,000 for the
years ended December 31, 1999 and 1998, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $66,000 and $75,000 for the
years ended December 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 5,138 limited
partnership units in the Partnership representing 41.35% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Note F - Real Estate and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
Lake Meadows $1,644 (1) $ 473 $1,584 $ 519
Lakewood 3,750 483 3,491 2,364
Totals $5,394 $ 956 $5,075 $2,883
(1) Net of $12,000 unamortized discount.
<PAGE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1999
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Lake Meadows $ 473 $2,103 $2,576 $ 744 03/31/88 5-40
Lakewood 545 5,793 6,338 1,789 10/01/89 5-40
Totals $1,018 $7,896 $8,914 $2,533
</TABLE>
The depreciable lives for buildings and building components are for 10 to 40
years. The depreciable lives for related personal property are for 5 to 7 years.
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Real Estate
Balance at beginning of year $8,417 $8,294
Property improvements 497 123
Balance at end of year $8,914 $8,417
Accumulated Depreciation
Balance at beginning of year $2,211 $1,914
Additions charged to expense 322 297
Balance at end of year $2,533 $2,211
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998 is approximately $9,113,000 and $8,616,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $2,007,000 and $1,602,000,
respectively.
Note G - Distributions
Total cash distributed from operations was approximately $500,000 ($39.84 per
limited partnership unit) for the year ended December 31, 1999. Total cash
distributed from operations during the year ended December 31, 1998, was
approximately $254,000 ($19.88 per limited partnership unit).
Note H - Segment Reporting
Description of types of products and services from which each reportable segment
derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of two apartment complexes
in the state of Texas. The Partnership rents apartment units to people for terms
that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit/(loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
is managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the years 1999 and 1998 is shown in the tables below.
The "Other" column includes Partnership administration related items and income
and expense not allocated to the reportable segments.
1999 Residential Other Totals
(in thousands)
Rental income $ 2,339 $ -- $ 2,339
Other income 105 21 126
Interest expense 444 -- 444
Depreciation 322 -- 322
General and administrative expense -- 175 175
Segment profit (loss) 493 (154) 339
Total assets 7,353 445 7,798
Capital expenditures for investment
properties 497 -- 497
1998 Residential Other Totals
(in thousands)
Rental income $ 2,322 $ -- $ 2,322
Other income 126 27 153
Interest expense 440 -- 440
Depreciation 297 -- 297
General and administrative expense -- 173 173
Segment profit (loss) 469 (146) 323
Total assets 7,112 736 7,848
Capital expenditures for investment
properties 123 -- 123
Note I - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement, settling claims, subject to final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the General Partner and its affiliates
terminated the proposed settlement. Certain plaintiffs have filed a motion to
disqualify some of the plaintiffs' counsel in the action. The General Partner
does not anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note J - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $121,000 ($9.64 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
<PAGE>
Item 8. Changes in and Disagreements with Accountant on Accounting and Financial
Disclosures
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
The names of the directors and executive officers of Angeles Realty Corporation
II ("ARC II"), the Partnership's General Partner, their ages and the nature of
all positions with ARC II presently held by them are as follows:
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the Managing
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the Managing
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Forms 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO Properties, L.P. and its joint filers failed to timely file a Form 3 with
respect to its acquisition of Units and AIMCO and its joint filers failed to
timely file a Form 4 with respect to its acquisition of Units.
Item 10. Executive Compensation
None of the directors and officers of the General Partner received any
renumeration from the Registrant during the year ended December 31, 1999.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1999.
Entity Number of Units Percentage
Insignia Properties LP 405 3.26%
(an affiliate of AIMCO)
Cooper River Properties, LLC 969 7.80%
(an affiliate of AIMCO)
AIMCO Properties, LP 3,764 30.29%
(an affiliate of AIMCO)
Insignia Properties LP and Cooper River Properties LLC are indirectly ultimately
owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC
29601. AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its
business address is 2000 South Colorado Boulevard, Denver, Colorado 80222. No
director or officer of the General Partner owns any Units.
The Partnership knows of no contractual arrangements, the operation of the terms
of which may at a subsequent date result in a change in control of the
Partnership, except for as follows: Article 12.1 of the Agreement, which provide
that upon a vote of the Limited Partners holding more than 50% of the then
outstanding Limited Partnership Units the General Partners 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 Partners' 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 Partners' 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
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of both Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were paid or accrued to the
General Partner and affiliates in 1999 and in 1998 (in thousands):
1999 1998
Property management fees $124 $121
Reimbursement for services of affiliates 66 75
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties for providing property management services. The
Partnership paid to such affiliates approximately $124,000 and $121,000 for the
years ended December 31, 1999 and 1998, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $66,000 and $75,000 for the
years ended December 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 5,138 limited
partnership units in the Partnership representing 41.35% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change
in Accounting Principle, is filed as an exhibit to this report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed during the fourth quarter of calendar year
1999:
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES OPPORTUNITY PROPERTIES, LTD.
By: Angeles Realty Corporation II
It's General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities on the date
indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
ANGELES OPPORTUNITY PROPERTIES, LTD.
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by
and between AIMCO and IPT, filed in Form 8-K on October 16,
1998.
3.1 Amendment 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, 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 Form 8K 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 8K 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 Kime
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.
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.
27 Financial Data Schedule.
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.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Angeles Realty Corporation II
General Partner of Angeles Opportunity Properties, Ltd.
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note J of Notes to the Consolidated Financial Statements of Angeles Opportunity
Properties, Ltd. included in its Form 10-KSB for the year ended December 31,
1999 describes a change in the method of accounting to capitalize exterior
painting and major landscaping, which would have been expensed under the old
policy. You have advised us that you believe that the change is to a preferable
method in your circumstances because it provides a better matching of expenses
with the related benefit of the expenditures and is consistent with policies
currently being used by your industry and conforms to the policies of the
General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method, which based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Opportunity Properties, Ltd. 1999 Fourth Quarter 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 885
<SECURITIES> 0
<RECEIVABLES> 373
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 8,914
<DEPRECIATION> 2,533
<TOTAL-ASSETS> 7,798
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 5,394
0
0
<COMMON> 0
<OTHER-SE> 1,903
<TOTAL-LIABILITY-AND-EQUITY> 7,798
<SALES> 0
<TOTAL-REVENUES> 2,465
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 444
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 339
<EPS-BASIC> 27.04 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
