FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-16116
ANGELES OPPORTUNITY PROPERTIES, LTD.
(Exact name of small business issuer as specified in its charter)
California 95-4052473
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 543
Receivables and deposits 182
Restricted escrows 48
Other assets 131
Investment properties:
Land $ 1,018
Buildings and related personal property 7,931
8,949
Less accumulated depreciation (2,618) 6,331
$ 7,235
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 18
Tenant security deposit liabilities 28
Accrued property taxes 71
Other liabilities 83
Mortgage notes payable 5,389
Partners' (Deficit) Capital:
General partner $ (110)
Limited partners (12,425 units issued and
outstanding) 1,756 1,646
$ 7,235
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
b)
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2000 1999
Revenues:
Rental income $ 567 $ 587
Other income 23 35
Total revenues 590 622
Expenses:
Operating 233 234
General and administrative 28 39
Depreciation 85 77
Interest 104 110
Property taxes 63 53
Total expenses 513 513
Net income $ 77 $ 109
Net income allocated to general partner (1%) $ 1 $ 1
Net income allocated to limited partners (99%) 76 108
$ 77 $ 109
Net income per limited partnership unit $ 6.12 $ 8.69
Distributions per limited partnership unit $26.32 $ --
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
c)
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 12,425 $ 1 $12,425 $12,426
Partners' (deficit) capital at
December 31, 1999 12,425 $ (104) $ 2,007 $ 1,903
Distributions to partners -- (7) (327) (334)
Net income for the three months
ended March 31, 2000 -- 1 76 77
Partners' (deficit) capital
at March 31, 2000 12,425 $ (110) $ 1,756 $ 1,646
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
d)
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 77 $ 109
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 85 77
Amortization of loan costs and discount 9 8
Change in accounts:
Receivables and deposits 191 75
Other assets (15) (20)
Accounts payable (4) 3
Tenant security deposit liabilities 1 --
Accrued property taxes (174) (180)
Other liabilities (124) (6)
Net cash provided by operating activities 46 66
Cash flows from investing activities:
Property improvements and replacements (35) (87)
Net (deposits to) withdrawals from restricted escrows (12) 50
Net cash used in investing activities (47) (37)
Cash flows from financing activities:
Payments on mortgage notes payable (7) (6)
Distributions to partners (334) --
Net cash used in financing activities (341) (6)
Net (decrease) increase in cash and cash equivalents (342) 23
Cash and cash equivalents at beginning of period 885 1,060
Cash and cash equivalents at end of period $ 543 $1,083
Supplemental disclosure of cash flow information:
Cash paid for interest $ 101 $ 102
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
e)
ANGELES OPPORTUNITY PROPERTIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles
Opportunity Properties, Ltd. (the "Partnership" or the "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Angeles Realty Corporation II (the
"General Partner"), all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 2000, are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 2000. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Partnership's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1999.
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 this consolidated partnership is the general partner. The Partnership
may remove the general partner of both of these 99% owned partnerships;
therefore, the partnerships are controlled and consolidated by the Partnership.
All significant interpartnership balances have been eliminated.
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 ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for certain payments to affiliates for
services and reimbursement of certain expenses incurred by affiliates on behalf
of the Partnership.
The following transactions with the General Partner and its affiliates were
incurred during the three months ended March 31, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in
operating expenses) $ 30 $ 32
Reimbursement for services of affiliates
(included in general and administrative expenses
and investment properties) 14 20
<PAGE>
During the three months ended March 31, 2000 and 1999, affiliates of the General
Partner were entitled to receive 5% of gross receipts from both of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $30,000 and
$32,000 for the three months ended March 31, 2000 and 1999, respectively.
An affiliate of the General Partner received reimbursements of accountable
administrative expense amounting to approximately $14,000 and $20,000 for the
three months ended March 31, 2000 and 1999, respectively.
AIMCO and its affiliates currently own 5,138 limited partnership units in the
Partnership representing 41.35% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 41.35% of the outstanding units, AIMCO is in a position to
significantly influence all voting decisions with respect to the Registrant.
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 D - Distributions
During the three months ended March 31, 2000, a distribution of $330,000
(approximately $327,000 to the limited partners, $26.32 per limited partnership
unit) was paid to the partners from cash from operations. In conjunction with
the transfer of funds from certain majority-owned sub-tier limited partnerships
to the Partnership, approximately $4,000 was distributed to the general partner
of the majority-owned sub-tier limited partnerships. There were no distributions
during the three months ended March 31, 1999.
Note E - Segment Reporting
Description of the types of products and services from which the 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 tenants 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 of the Partnership as described in
the Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1999.
Factors management used to identify the enterprise's reportable segments: 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.
<PAGE>
Segment information for the three months ended March 31, 2000 and 1999, is shown
in the tables below. The "Other" column includes Partnership administration
related items and income and expense not allocated to the reportable segments.
2000 Residential Other Totals
(in thousands)
Rental income $ 567 $ -- $ 567
Other income 22 1 23
Interest expense 104 -- 104
Depreciation 85 -- 85
General and administrative expense -- 28 28
Segment profit (loss) 104 (27) 77
Total assets 7,184 51 7,235
Capital expenditures for
investment properties 35 -- 35
1999 Residential Other Totals
(in thousands)
Rental income $ 587 $ -- $ 587
Other income 27 8 35
Interest expense 110 -- 110
Depreciation 77 -- 77
General and administrative expense -- 39 39
Segment profit (loss) 140 (31) 109
Total assets 6,938 831 7,769
Capital expenditures for
investment properties 87 -- 87
Note F - 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.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussions of the Partnership'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 Partnership's business and
results of operation. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy for each of the properties for
the three months ended March 31, 2000 and 1999:
Average Occupancy
Property 2000 1999
Lake Meadows Apartments 98% 98%
Garland, Texas
Lakewood Apartments (1) 88% 94%
Tomball, Texas
(1) Occupancy at Lakewood Apartments decreased due to new apartments
constructed in the area and a layoff by a major employer.
Results from Operations
The Partnership reported net income of approximately $77,000 and $109,000 for
the three months ended March 31, 2000 and 1999, respectively. The decrease in
net income is attributable to a decrease in total revenues. The decrease in
total revenues is due to decreased rental income and other income. Rental income
decreased due to reduced occupancy at Lakewood Apartments as well as increased
concession costs and bad debt expense at Lakewood Apartments. These decreases in
rental revenue were partially offset by increased rental rates at both of the
Partnership's properties. Other income decreased due to lower cash balances in
interest bearing accounts and reduced tenant charges at Lakewood Apartments.
Total expenses remained constant between the two periods. The increase in
depreciation expense and property tax expense was offset by reduced general and
administrative expense and interest expense. The increase in depreciation
expense is primarily attributable to the increase in depreciable assets put into
service in the last twelve months. The increase in property tax expense is
primarily attributable to increases in the assessed values of both investment
properties. General and administrative expenses decreased primarily due to
reduced general partner reimbursements. Included in general and administrative
expenses for the three months ended March 31, 2000 and 1999 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.
Interest expense decreased as a result of principle payments made on the
properties' mortgages.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment 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.
Liquidity and Capital Resources
At March 31, 2000, the Partnership had cash and cash equivalents of
approximately $543,000 compared to approximately $1,083,000 for the
corresponding period in 1999. The net decrease in cash and cash equivalents was
approximately $342,000 from the year ended December 31, 1999, and is due to
approximately $341,000 and $47,000 of cash used in financing and investing
activities, respectively, offset by approximately $46,000 of cash provided by
operating activities. Cash used in financing activities consisted primarily of
distributions to the partners and, to a lesser extent, payments of principal
made on the mortgages encumbering Lake Meadows Apartments. Cash used in
investing activities consisted of property improvements and replacements and net
deposits to restricted escrows maintained by the mortgage lenders. 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 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. Capital improvements for
each of the Partnership's properties are detailed below.
Lake Meadows Apartments
Approximately $65,000 was budgeted for capital improvements for the year 2000 at
Lake Meadows Apartments consisting primarily of carpet and vinyl replacement,
interior decorations, parking lot improvements, and structural improvements.
During the three months ended March 31, 2000, the Partnership completed
approximately $10,000 of such budgeted capital improvements at Lake Meadows
Apartments, consisting primarily of carpet and vinyl replacement and structural
upgrades. These improvements were funded from operating cash flow and
replacement reserves.
Lakewood Apartments
Approximately $93,000 was budgeted for capital improvements for the year 2000 at
Lakewood Apartments consisting primarily of carpet and tile replacement, air
conditioning unit replacement, structural upgrades, and appliance replacements.
During the three months ended March 31, 2000, the Partnership completed
approximately $25,000 of such budgeted capital improvements at the property,
consisting primarily of carpet and tile replacements, appliance replacements and
office equipment. These improvements were funded from operating cash flow.
The additional capital expenditures will be incurred only to the extent of cash
available from operations and from the Partnership's reserves. To the extent
that such budgeted 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 $5,389,000, net of discount, is interest only or
is being amortized over 343 months with balloon payments due at 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.
<PAGE>
During the three months ended March 31, 2000, a distribution of $330,000
(approximately $327,000 to the limited partners, $26.32 per limited partnership
unit) was paid to the partners consisting of cash from operations. In
conjunction with the transfer of funds from certain majority-owned sub-tier
limited partnerships to the Partnership, approximately $4,000 was distributed to
the general partner of the majority-owned sub-tier limited partnerships. There
were no distributions during the three months ended March 31, 1999. The
Partnership's distribution policy is reviewed on a semi-annual basis. Future
cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations
after required capital expenditures to permit further distributions to its
partners for the remainder of 2000 or subsequent periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEDINGS
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
"Part 1 - Financial Information, Item 1. 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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES OPPORTUNITY PROPERTIES, LTD.
By: Angeles Realty Corporation II
Its 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:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Opportunity Properties, Ltd. 2000 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000789282
<NAME> Angeles Opportunity Properties, Ltd.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 543
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 8,949
<DEPRECIATION> 2,618
<TOTAL-ASSETS> 7,235
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 5,389
0
0
<COMMON> 0
<OTHER-SE> 1,646
<TOTAL-LIABILITY-AND-EQUITY> 7,235
<SALES> 0
<TOTAL-REVENUES> 590
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 513
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77
<EPS-BASIC> 6.12 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
