FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-15547
ANGELES INCOME PROPERTIES, LTD. V
(Exact name of small business issuer as specified in its charter)
California 95-4049903
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES INCOME PROPERTIES, LTD. V
BALANCE SHEET
(Unaudited)
June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash:
Unrestricted $ 446,848
Restricted--tenant security deposits 59,646
Accounts receivable (net of allowance for
doubtful accounts of $115,163) 67,605
Escrow deposits for taxes 78,790
Other assets 363,918
Investment properties:
Land $ 1,351,522
Buildings and related personal
property 11,289,516
12,641,038
Less accumulated depreciation (3,477,076) 9,163,962
$10,180,769
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 181,773
Tenant security deposits 83,627
Accrued taxes 242,493
Accrued interest 2,514,863
Due to affiliates 868,963
Other liabilities 119,752
Notes payable, including
$7,250,000 in default 12,955,476
Equity interest in net liabilities
of joint venture 2,892,209
Partners' Deficit
General partners $ (486,585)
Limited partners (45,201 units issued
and outstanding) (9,191,802) (9,678,387)
$10,180,769
</TABLE>
See Accompanying Notes to Financial Statements
1
<PAGE>
b) ANGELES INCOME PROPERTIES, LTD. V
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 595,426 $ 564,139 $1,101,662 $ 1,142,438
Other income 49,874 10,396 65,367 22,913
Total revenues 645,300 574,535 1,167,029 1,165,351
Expenses:
Operating 137,825 232,244 349,501 446,426
General and administrative 61,241 143,039 127,533 303,954
Property management fees 36,761 38,100 74,419 64,603
Maintenance 70,081 29,433 129,490 95,968
Depreciation 95,626 98,459 190,888 196,770
Amortization 9,833 7,053 14,969 12,911
Interest 469,914 664,161 1,172,076 1,287,099
Property taxes 110,593 142,165 224,869 219,838
Bad debt expense 7,324 11,804 7,324 21,392
Tenant reimbursements (148,193) (98,659) (170,345) (225,757)
Total expenses 851,005 1,267,799 2,120,724 2,423,204
Loss before equity in income
of joint venture, loss on
disposal of property and
extraordinary item (205,705) (693,264) (953,695) (1,257,853)
Equity in income of joint
ventures 1,009,326 40,228 1,197,457 132,534
Loss on disposal of
property -- (21,670) -- (21,670)
Income (loss) before
extraordinary item 803,621 (674,706) 243,762 (1,146,989)
Extraordinary item -
forgiveness of debt 496,881 -- 496,881 --
Net income (loss) $1,300,502 $ (674,706) $ 740,643 $(1,146,989)
Net income (loss) allocated
to general partners (1%) $ 13,005 $ 6,747 $ 7,406 $ (11,470)
Net income (loss) allocated
to limited partners (99%) 1,287,497 (667,959) 733,237 (1,135,519)
$1,300,502 $ (674,706) $ 740,643 $(1,146,989)
</TABLE>
See Accompanying Notes to Financial Statements
2
<PAGE>
ANGELES INCOME PROPERTIES, LTD. V
STATEMENTS OF OPERATIONS - (continued)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Per limited partnership unit:
Income (loss) before
extraordinary item $ 17.67 $ (14.70) $ 5.36 $ (24.98)
Extraordinary item 10.93 -- 10.93 --
Net income (loss) $ 28.60 $ (14.70) $ 16.29 $ (24.98)
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE>
c) ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF CHANGES IN PARTNERS' DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital
contributions 45,450 $ 1,000 $ 45,450,000 $ 45,451,000
Partners' deficit at
December 31, 1994 45,021 $(493,991) $ (9,925,039) $(10,419,030)
Net income for the six
months ended June 30, 1995 -- 7,406 733,237 740,643
Partners' deficit at
June 30, 1995 45,021 $(486,585) $ (9,191,802) $ (9,678,387)
</TABLE>
See Accompanying Notes to Financial Statements
4
<PAGE>
d) ANGELES INCOME PROPERTIES, LTD. V
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 740,643 $(1,146,989)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Equity in income of joint ventures (1,197,457) (132,534)
Depreciation 190,888 196,770
Amortization of loan costs and leasing
commissions 57,468 73,740
Loss on disposal of property -- 21,670
Bad debt expense 7,324 21,392
Extraordinary gain on forgiveness
of debt (496,881) --
Change in accounts:
Restricted cash (15,519) (14,403)
Accounts receivable (32,221) 4,399
Escrows for taxes (34,761) (28,332)
Other assets (4,337) (3,108)
Accounts payable (7,106) (20,183)
Tenant security deposit liabilities 14,329 2,345
Accrued taxes 91,789 (31,895)
Accrued interest 772,432 873,996
Due to affiliates 110,490 (481,140)
Other liabilities 4,072 694,725
Net cash provided by operating
activities 201,153 30,453
Cash flows used in investing activities:
Property improvements and replacements (18,122) (18,705)
</TABLE>
See Accompanying Notes to Financial Statements
5
<PAGE>
d) ANGELES INCOME PROPERTIES, LTD. V
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows used in financing activities:
Payments on mortgage notes payable (36,101) (29,695)
Net increase (decrease) in cash 146,930 (17,947)
Cash at beginning of period 299,918 226,247
Cash at end of period $ 446,848 $ 208,300
Supplemental disclosure of cash flow
information
Cash paid for interest $ 308,643 $ 352,274
</TABLE>
See Accompanying Notes to Financial Statements
6
<PAGE>
e) ANGELES INCOME PROPERTIES, LTD. V
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Going Concern
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. The Partnership has
incurred recurring operating losses and is experiencing liquidity
problems. It is also in default on $7,250,000 of its mortgages and
other notes payable due to its inability to service the indebtedness on
a current basis, including $6,400,000 indebtedness to Angeles Mortgage
Investment Trust ("AMIT"), an affiliate of the General Partner.
Included in the debt to AMIT are two second mortgages secured by
Southgate Village Apartments and Springdale Lake Estates Mobile Home
Park totalling $4,600,000 which are in default due to nonpayment of
interest. Also, included in the debt to AMIT are mortgage notes payable
secured by University Park Center - Phase IV in the amount of
$1,800,000, which is recourse to the Partnership. In addition, $850,000
in debt, which is secured by University Park Center - Phase III is in
default due to nonpayment of interest. On July 21, 1995, and May 24,
1995, Phase III and Phase IV were sold at a foreclosure sale,
respectively. Under foreclosure proceedings, the property was sold to
the lender, however, the Partnership has a one year redemption period
during which it may pay off the debt, including related accrued
interest, and retain the property. If the Partnership cannot pay the
debt on the property, the title to the property will transfer to the
lender at the close of the one year redemption period. Also, AMIT has
issued a deficiency judgement against the Partnership for the $1,800,000
mortgage note. Finally, the Partnership is delinquent in approximately
$94,000 in taxes relating to University Center Phase I & II at June 30,
1995.
The Partnership also had a note payable to Mesa Dunes, Wakonda and
Town & Country Partners ("Mesa Dunes") of $5,000,000, secured by its 50%
interest in Mesa Dunes, in default due to nonpayment of interest and, in
February 1995, Mesa Dunes notified the Partnership that it intended to
foreclose on its collateral. On April 1, 1995, Mesa Dunes foreclosed on
its collateral and the Partnership lost its 50% interest in Mesa Dunes.
The Partnership is presently paying non-debt related expenses of the
properties, is current on two first mortgage notes payable and is making
partial interest payments on certain mortgages in default. It is the
General Partner's intent at this time to continue to operate the
Partnership as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects on the
recoverability and classification of assets or amounts and
classification of liabilities that may result from these uncertainties.
Note B - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period ended June 30,
1995, are not necessarily indicative of the results that may be expected
7
<PAGE>
Note B - Basis of Presentation (continued)
for the fiscal year ending December 31, 1995. For further information,
refer to the financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1994.
Certain reclassifications have been made to the June 30, 1994,
information to conform to the June 30, 1995, presentation.
Note C - Investment in Joint Venture
The Partnership owns a 57% investment in Angeles Fort Worth Option
Joint Venture ("Fort Worth"). The investment in Fort Worth is included
in "Equity interest in net liabilities of joint venture" on the balance
sheet. As mentioned previously, the Partnership lost its 50% interest
in Mesa Dunes through foreclosure on April 1, 1995.
Condensed balance sheet information of Fort Worth at June 30, 1995,
is as follows:
<TABLE>
<CAPTION>
<S> <C>
Assets
Cash $ 192,164
Deferred charges and other assets 55,733
Total $ 247,897
Liabilities and Partners' Deficit
Notes payable in default $ 3,038,563
Other liabilities 2,283,384
Partners' deficit (5,074,050)
Total $ 247,897
</TABLE>
The condensed profit and loss statements of Fort Worth for the three
and six months ended June 30, 1995 and 1994, are summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended June 30,
1995 1994
<S> <C> <C>
Revenue $ 34,313 $ 201,673
Costs and expenses (196,543) (431,837)
Bad debt recovery 1,932,975 --
Net income (loss) $1,770,745 $(230,164)
</TABLE>
8
<PAGE>
Note C - Investment in Joint Venture (continued)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994
<S> <C> <C>
Revenue $ 212,491 $ 397,145
Costs and expenses (323,333) (803,884)
Bad debt recovery 1,932,975 --
Loss on sale of investment
property (42,401) --
Net income (loss) $1,779,732 $(406,739)
</TABLE>
The Partnership's equity interest in the income of the joint ventures
was $1,197,457 for the six months ended June 30, 1995, and $132,534 for
the six months ended June 30, 1994.
On March 22, 1995, a tenant of the W.T. Wagoner Building purchased
the investment property for $300,000. The net proceeds to Fort Worth at
the time of the sale were $214,749 and the loss on the sale amounted to
$42,401. As part of the sales agreement, $55,420 was held in escrow to
cover any unknown outstanding payables and a mechanic's lien on the
property. The General Partner believes that this escrow is sufficient
to cover any outstanding payables and that the mechanic's lien is
without merit. The balance of the escrow account at June 30, 1995, is
$5,420.
The Partnership accounts for its 57% investment in Fort Worth using
the equity method of accounting. The Partnership accounted for its 50%
investment in Mesa Dunes using the equity method prior to losing its
investment on April 1, 1995. Under the equity method, the Partnership
records its equity interest in earnings or losses of the joint ventures,
however, the investment in the joint ventures will be recorded at an
amount less than zero (a liability) to the extent of the Partnership's
share of net liabilities of the joint ventures.
Note D - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments
to affiliates for services and as reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership.
9
<PAGE>
Note D - Transactions with Affiliated Parties (continued)
The following expenses were accrued or paid to the General Partner
and affiliates during the six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Property management fees $ 74,419 $ 64,603
Reimbursement for services of
affiliates including $868,963 and
$729,144 accrued at June 30, 1995
and 1994, respectively 110,490 248,004
Marketing services -- 293
</TABLE>
The Partnership insures its properties under a master policy through
an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a
business, certain financial obligations from an insurance agency which
was later acquired by the agent who placed the current year's master
policy. The current agent assumed the financial obligations to the
affiliate of the General Partner, who receives payment on these
obligations from the agent. The amount of the Partnership's insurance
premiums accruing to the benefit of the affiliate of the General Partner
by virtue of the agent's obligations is not significant.
In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware
limited partnership was organized to acquire and hold the obligations
evidencing the working capital loan previously provided to the
Partnership by Angeles Capital Investments, Inc. ("ACII"). Angeles
Corporation ("Angeles") is the 99% limited partner of AAP and Angeles
Acceptance Directives, Inc.("AAD"), an affiliate of the General Partner,
was until April 14, 1995, the 1% general partner of AAP. On April 14,
1995, as part of a settlement of claims between affiliates of the
General Partner and Angeles, AAD resigned as general partner of AAP and
simultaneously received a 1/2% limited partner interest in AAP.
This working capital loan funded the Partnership's operating deficits
in prior years. Total indebtedness which is included as a note payable,
was $198,172 at June 30, 1995, and June 30, 1994, with monthly interest
only payments at prime plus 2%. Principal is to be paid the earlier of
i) the availability of funds, ii) the sale of one or more properties
owned by the Partnership, or iii) November 25, 1997. Total interest
expense for this loan was $10,817 and $8,505 during the six months ended
June 30, 1995 and 1994, respectively.
AMIT currently provides financing to the Partnership in the total
principal amount of $6,400,000 secured by some of the Partnership's
investment properties. All of this debt is in default at June 30, 1995.
Total interest expense on this financing was $567,191 and $409,776 for
the six months ended June 30, 1995 and 1994, respectively.
10
<PAGE>
Note D - Transactions with Affiliated Parties (continued)
In July 1993, AMIT, a real estate investment trust, formerly
affiliated with Angeles, initiated litigation against Fort Worth, and
other partnerships which loaned money to AMIT seeking to avoid repayment
of such obligations. The Partnership subsequently filed a counterclaim
against AMIT seeking to enforce the obligation, the principal amount of
which was $2,240,000 plus accrued interest from March 1993 ("AMIT
Obligation").
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner,
owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert
these Class B Shares, in whole or in part, into Class A Shares on the
basis of 1 Class A Share for every 49 Class B Shares. These Class B
Shares entitle MAE GP to receive 1% of the distributions of net cash
distributed by AMIT. These Class B Shares also entitle MAE GP to vote
on the same basis as Class A Shares which allows MAE GP to vote
approximately 33% of the total shares (unless and until converted to
Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the
vote). Between the date of acquisition of these shares (November 24,
1992) and March 31, 1995, MAE GP has declined to vote these shares.
Since that date, MAE GP voted its shares at the 1995 annual meeting
in connection with the election of trustees and other matters.
MAE GP has not exerted, and continues to decline to exert, any
management control over or participate in the management of AMIT.
However, MAE GP may choose to vote these shares as it deems appropriate
in the future.
On November 9, 1994, Fort Worth executed a definitive Settlement
Agreement to settle the dispute with respect to the AMIT Obligation.
The actual closing of the Settlement occurred April 14, 1995. The
Partnership's claim was satisfied by a cash payment to Fort Worth by
AMIT totalling $1,932,975 (the "Settlement Amount") plus interest at
closing. These funds were transferred to Angeles Income Properties,
Ltd. IV, an affiliate of the General Partner (See discussion below).
As part of the settlement, MAE GP granted to AMIT an option to
acquire the Class B Shares. This option can be exercised at the end of
10 years or when all loans made by AMIT to partnerships affiliated with
MAE GP as of November 9, 1994, (which is the date of execution of a
definitive Settlement Agreement), have been paid in full, but in no
event prior to November 9, 1997. AMIT delivered to MAE GP cash in the
sum of $250,000 at closing, which occurred April 14, 1995, as payment
for the option. Upon exercise of the option, AMIT would remit to MAE GP
an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be
able to vote the Class B Shares on all matters except those involving
transactions between AMIT and MAE GP affiliated borrowers or the
election of any MAE GP affiliate as an officer or trustee of AMIT. On
these matters, MAE GP granted to the AMIT trustees, in their capacity as
trustees of AMIT, proxies with regard to the Class B Shares instructing
such trustees to vote said Class B Shares in accordance with the vote of
the majority of the Class A Shares voting to be determined without
consideration of the votes of "Excess Class A Shares" as defined in
Section 6.13 of the Declaration of Trust of AMIT.
11
<PAGE>
Note D - Transactions with Affiliated Parties (continued)
On December 22, 1994, the Partnership entered into an agreement with
Fort Worth and AIPL IV, whereby Fort Worth transferred, assigned and
delivered to AIPL IV all of Fort Worth's right, title and interests in
and to all payment, distributions, profits, returns of capital and
benefits accruing from the repayment by AMIT of the loans made to AMIT
from Fort Worth. This transfer effectively transferred all of the
Partnership's right, title and interests in and to all payment,
distributions, profits, returns of capital and benefits accruing from
the repayment by AMIT of the loans made to AMIT from Fort Worth. The
Partnership has consented to this transfer, assignment and delivery. As
a result, the previously mentioned cash settlement that Fort Worth
received from AMIT was assigned to AIPL IV.
On December 6, 1994, Mesa Dunes gave notice to the Partnership that
the note in the amount of $5,000,000 dated September 20, 1991, and
originally due on September 30, 1996, was in default because of failure
to perform under the terms and conditions of said note and security
interest, including but not limited to, failure to make interest
payments. In February 1995, Mesa Dunes gave notice that it intended to
foreclose on its collateral. As mentioned previously, on April 1, 1995,
Mesa Dunes foreclosed on its collateral and the Partnership lost its 50%
interest in Mesa Dunes.
12
<PAGE>
Item 2. Managements Discussion and Analysis and Plan of Operation
The Partnership's investment properties consist of one apartment
complex, one mobile home park and one commercial property. The
following table sets forth the average occupancy of the properties for
the six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Average
Occupancy
Property 1995 1994
<S> <C> <C>
Southgate Village Apartments
Bedford Heights, Ohio 92% 96%
Springdale Lake Estates Mobile Park
Belton, Missouri 77% 82%
University Park Center
Spring Lake Park, Minnesota 82% 86%
</TABLE>
The Partnership realized net income of $740,643 for the six months
ended June 30, 1995, as compared to a net loss of $1,146,989 for the
six months ended June 30, 1994. The Partnership realized net income of
$1,300,502 for the three months ended June 30, 1995, as compared to a
net loss of $674,706 for the three months ended June 30, 1994. The
increase in income is primarily due to decreases in general and
administrative expense and interest expense. Also offsetting this
increase was the gain on early extinguishment of debt as a result of the
foreclosure of the Partnership's interest in Mesa Dunes by Mesa Dunes.
The increase in other income during the three and six months ended
June 30, 1995, as compared to the three and six months ended June 30,
1994, is a result of an increase in miscellaneous income at University
Park Center. The decrease in general and administrative expenses during
the three and six months ended June 30, 1995, as compared to the three
and six months ended June 30, 1994, is primarily related to decreased
expense reimbursements for asset management, partnership accounting and
investor services. The increase in maintenance expense for the three
and six months ended June 30, 1995, as compared to the three and six
months ended June 30, 1994, is primarily caused by increased contract
services for repairs and maintenance and an increase in snow removal
costs. The decrease in interest expense is due to the forgiveness of
debt as the Partnership's interest in Mesa Dunes was foreclosed upon in
exchange for the $5,000,000 debt that the Partnership owed to Mesa
Dunes. Tenant reimbursements were significantly lower for the six
months ended June 30, 1995, versus the six months ended June 30, 1994.
Due to changes in the management companies at University Park Center
III, the detail data needed to accurately estimate the receivable in
1994 was not available.
The Partnership's equity in income of joint ventures is $1,197,457
for the six months ended June 30, 1995, and $132,534 for the six months
ended June 30, 1994. The increase in equity in income of joint ventures
can be attributed to the bad debt recovery that Fort Worth realized on
April 1, 1995, as a result of a partial recovery of its investment in
AMIT. In addition, the increase in equity in income of joint venture
can be attributed to the sale of the W.T. Wagoner Building. As a result
of the sale, Fort Worth realized a decrease in revenues and a
considerable decrease in costs and expenses.
13
<PAGE>
The Partnership recognized a gain on forgiveness of debt at June 30,
1995, as a result of the loss of its 50% interest in Mesa Dunes. The
gain on forgiveness of debt amounted to $496,881 at June 30, 1995.
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from
increases in expenses. As part of this plan, the General Partner
attempts to protect the Partnership from the burden of inflation-related
increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, due to changing market conditions, which can
result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General
Partner will be able to sustain such a plan.
At June 30, 1995, the Partnership had unrestricted cash of $446,848
compared to $208,300 at June 30, 1994. Net cash provided by operating
activities increased due to increased net income. Net cash used in
investing and financing activities remained stable.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. The Partnership has
incurred recurring operating losses and is experiencing liquidity
problems. It is also in default on $7,250,000 of its mortgages and
other notes payable due to its inability to service the indebtedness on
a current basis, including $6,400,000 indebtedness to AMIT.
Included in the debt to AMIT are two second mortgages secured by
Southgate Village Apartments and Springdale Lake Estates Mobile Home
Park totalling $4,600,000 which are in default due to nonpayment of
interest. Also included in the debt to AMIT are mortgage notes payable
secured by University Park Center - Phase IV in the amount of
$1,800,000, which is recourse to the Partnership. In addition, $850,000
in debt, which is secured by University Park Center - Phase III is in
default due to nonpayment of interest. As mentioned previously, on July
21, 1995, and on May 24, 1995, Phase III and Phase IV were sold at a
foreclosure sale, respectively. Under foreclosure proceedings, the
property was sold to the lender, however, the Partnership has a one year
redemption period during which it may pay off the debt, including
related accrued interest, and retain the property. If the Partnership
cannot pay the debt on the property, the title to the property will
transfer to the lender at the close of the one year redemption period.
Also, AMIT has issued a deficiency judgement against the Partnership for
the $1,800,000 mortgage note. Finally, the Partnership is delinquent on
approximately $94,000 in taxes relating to University Center Phase I &
II at June 30, 1995.
The Partnership also had a note payable to Mesa Dunes of $5,000,000,
secured by its 50% interest in Mesa Dunes, in default due to nonpayment
of interest. In February 1995, Mesa Dunes notified the Partnership that
it intended to foreclose on its collateral. On April 1, 1995, Mesa Dunes
foreclosed on its collateral and the Partnership lost its 50% interest
in Mesa Dunes.
The Partnership is presently paying non-debt related expenses of the
properties, is current on two first mortgage notes payable and is making
partial interest payments on certain mortgages in default. It is the
General Partner's intent at this time to continue to operate the
Partnership as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects on the
recoverability and classification of assets or amounts and
classification of liabilities that may result from these uncertainties.
14
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In July 1993, Angeles Mortgage Investment Trust ("AMIT"), a real
estate investment trust formerly affiliated with Angeles Corporation
("Angeles"), initiated litigation against Fort Worth and other
partnerships which loaned money to AMIT seeking to avoid repayment of
such obligations. The Partnership subsequently filed a counterclaim
against AMIT seeking to enforce the obligation, the principal amount of
which is $2,240,000 plus accrued interest from March 1993 ("AMIT
obligation").
MAE GP Corporation ("MAE GP"), an affiliate of the General
Partner, owns 1,675,113 Class B Shares of AMIT. MAE GP has the option
to convert these Class B Shares, in whole or in part, into Class A
Shares on the basis of 1 Class A Share for every 49 Class B Shares.
These Class B Shares entitle MAE GP to receive 1% of the distributions
of net cash distributed by AMIT. These Class B Shares also entitle MAE
GP to vote on the same basis as Class A Shares which allows MAE GP to
vote approximately 33% of the total shares (unless and until converted
to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the
vote). Between the date of acquisition of these shares (November 24,
1992) and March 31, 1995, MAE GP has declined to vote these shares.
Since that date, MAE GP votes its shares at the 1995 annual meeting
in connection with the election of trustees and other matters.
MAE GP has not exerted, and continues to decline to exert, any
management control over or participate in the management of AMIT.
However, MAE GP may choose to vote these shares as it deems appropriate
in the future.
On November 9, 1994, Fort Worth executed a definitive Settlement
Agreement to settle the dispute with respect to the AMIT Obligation.
The actual closing of the Settlement occurred April 14, 1995. The
Partnership's claim was satisfied by a cash payment to Fort Worth by
AMIT totalling $1,932,975 (the "Settlement Amount") plus interest at
closing.
As part of the settlement, MAE GP granted to AMIT an option to
acquire the Class B Shares. This option can be exercised at the end of
10 years or when all loans made by AMIT to partnerships affiliated with
MAE GP as of November 9, 1994, (which is the date of execution of a
definitive Settlement Agreement), have been paid in full, but in no
event prior to November 9, 1997. AMIT delivered to MAE GP cash in the
sum of $250,000 at closing, which occurred on April 14, 1995, as payment
for the option. Upon exercise of the option, AMIT would remit to MAE GP
an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed
an irrevocable proxy in favor of AMIT the result of which is MAE GP will
be able to vote the Class B Shares on all matters except those involving
transactions between AMIT and MAE GP affiliated borrowers or the
election of any MAE GP affiliate as an officer or trustee of AMIT. On
these matters, MAE GP granted to the AMIT trustees, in their capacity as
trustees of AMIT, proxies with regard to the Class B Shares instructing
such trustees to vote said Class B Shares in accordance with the vote of
the majority of the Class A Shares voting to be determined without
consideration of the votes of "Excess Class A Shares" as defined in
Section 6.13 of the Declaration of Trust of AMIT.
15
<PAGE>
Also, AMIT made a loan to the Partnership on June 29, 1990, in the
amount of $2,600,000, secured by the Partnership's real property known
as Springdale Lake Estates Mobile Home Park and a loan to Mesa Dunes on
November 15, 1991, in the amount of $5,000,000, secured by the Mesa
Dunes real properties known as Mesa Dunes Mobile Home Park, Wakonda
Shopping Center and Town & Country Shopping Center. Both of these loans
were made on a non-recourse basis. AMIT now asserts that these loans
are recourse by virtue of certain amendments purportedly entered into as
of November 1, 1992, but which the Partnership and Mesa Dunes have been
informed and believe were actually executed in December of 1992. The
Partnership and Mesa Dunes have been further informed and believe that
the amendments may have been executed at the direction of Angeles by an
individual in his purported capacity as an officer of the General
Partner of the Partnership and Mesa Dunes at a time when such person was
not in fact an officer of such entities. In the event AMIT prevails in
its assertion that the loans are recourse, rather than non-recourse
loans, the Partnership and Mesa Dunes may have a claim against Angeles
for any damages caused by Angeles' conduct in purporting to enter into
the amendments. Accordingly, the Partnership and Mesa Dunes have filed
a Proof of Claim in the Angeles bankruptcy proceeding with respect to
such purported amendments. Additionally, the Partnership and Mesa Dunes
filed a Proof of Claim in the Angeles Funding Corporation and Angeles
Real Estate Corporation bankruptcy proceedings on similar grounds. Both
Angeles Funding Corporation and Angeles Real Estate Corporation are
affiliates of Angeles. While a plan of reorganization in the Angeles
bankruptcy case was confirmed in March 1995, Angeles reserved the right
to object to certain claims. Angeles has in fact indicated that it will
object to the above described claim. The pursuit of this claim would be
expensive and the outcome uncertain. In considering all of its options,
the Partnership decided that the costs of pursuing this claim are not
warranted in light of all of the relevant facts and circumstances. The
Partnership has had and continues to have discussions with AMIT
regarding resolution of this issue. No agreement has been reached with
AMIT at this time.
Also, Angeles, either directly or through an affiliate, maintained
a central disbursement account (the "Account") for the properties and
partnerships managed by Angeles and its affiliates, including the
Registrant. Angeles caused the Partnership to make deposits to the
Account ostensibly to fund the payment of certain obligations of the
Partnership. Angeles further caused checks on such Account to be
written to or on behalf of certain other partnerships. At least $2,286
deposited by or on behalf of the Partnership was used for purposes other
than satisfying the liabilities of the Partnership. However,
subsequently the General Partner of the Partnership has determined that
the cost involved to pursue such claim would likely exceed any amount
received, if in fact such claim were to be resolved in favor of the
Partnership. Therefore, the Partnership anticipates that it will not
pursue its Proof of Claim.
Additionally, the Partnership has filed a Proof of Claim in the
bankruptcy proceeding of Angeles concerning the Partnership's
indebtedness to AAP. The Proof of Claim alleges that instead of causing
the Partnership to pay AAP on account of such debt in the amount of
$605,000, Angeles either itself or through an affiliate, caused the
Partnership to make payment to another Angeles affiliate. To the extent
that such action results in the Partnership not receiving credit for the
payments so made, the Partnership will have been damaged in an amount
equal to the misappropriated payments. Subsequent to June 30, 1995, an
Angeles affiliate acknowledged constructive receipt of such payment and,
therefore, the General Partner anticipates resolution in favor of the
Partnership.
16
<PAGE>
The Registrant is unaware of any other pending or outstanding
litigation that is not of a routine nature. The General Partner of the
Registrant believes that all such pending or outstanding litigation will
be resolved without a material adverse effect upon the business,
financial condition or operations of the Partnership.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit
to this report.
(b) Reports on Form 8-K:
None.
17
<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 Income Properties, Ltd. V
By: Angeles Realty Corporation II
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: August 11, 1995
18
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Income Properties Ltd. V's 1995 second quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 446,848
<SECURITIES> 0
<RECEIVABLES> 182,768
<ALLOWANCES> (115,163)
<INVENTORY> 0
<CURRENT-ASSETS> 652,889
<PP&E> 12,641,038
<DEPRECIATION> (3,477,076)
<TOTAL-ASSETS> 10,180,769
<CURRENT-LIABILITIES> 3,891,719
<BONDS> 12,955,476
<COMMON> 0
0
0
<OTHER-SE> (9,678,387)
<TOTAL-LIABILITY-AND-EQUITY> 10,180,769
<SALES> 0
<TOTAL-REVENUES> 1,167,029
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,120,724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,172,076
<INCOME-PRETAX> 740,643
<INCOME-TAX> 0
<INCOME-CONTINUING> 740,643
<DISCONTINUED> 0
<EXTRAORDINARY> 496,881
<CHANGES> 0
<NET-INCOME> 740,643
<EPS-PRIMARY> 16.29
<EPS-DILUTED> 0
</TABLE>
