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 September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
September 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 271
Restricted--tenant security deposits 26
Accounts receivable 3
Escrow for taxes 20
Other assets 1
Investment properties 3,622
3,943
Liabilities
Accounts payable 27
Tenant security deposits 25
Accrued interest 1,563
Other liabilities 73
Mortgage notes payable, $2,000 in default 4,826
Estimated costs during the period of
liquidation (Note A) 972
7,486
Net liabilities in liquidation (Note A) $ (3,543)
See Accompanying Notes to Financial Statements
b)
ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(in thousands)
September 30, 1996
Net liabilities in liquidation at July 1, 1996 $ (4,107)
Changes in net liabilities in liquidation
attributed to:
Increase in unrestricted cash 165
Decrease in restricted cash (34)
Decrease in accounts receivable (4)
Decrease in escrows for taxes (68)
Increase in other assets 1
Decrease in investment properties (3,560)
Increase in accounts payable (10)
Decrease in tenant security deposits 36
Decrease in accrued interest 605
Decrease in other liabilities 12
Decrease in mortgage notes payable 4,522
Decrease in estimated costs during the period
of liquidation (1,101)
Net liabilities in liquidation at September 30, 1996 $ (3,543)
See Accompanying Notes To Financial Statements
c) ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Six Months Ended
June 30,
1996
Revenues:
Rental income $ 729
Other income 100
Total revenues 829
Expenses:
Operating 347
General and administrative 111
Maintenance 64
Depreciation 121
Interest 627
Bad debt recovery, net (1)
Property taxes 64
Total expenses 1,333
Loss on transfer of property in foreclosure (435)
Loss before extraordinary gain (939)
Extraordinary gain - extinguishment of debt 1,176
Net income $ 237
Net income allocated to general partner (1%) $ 2
Net income allocated to limited partners (99%) 235
Net income $ 237
Per limited partnership unit:
Loss before extraordinary item $ (20.64)
Extraordinary item 25.86
Net income $ 5.22
See Accompanying Notes to Financial Statements
e) ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 45,450 $ 1 $45,450 $ 45,451
Partners' deficit at
December 31, 1995 45,021 $ (448) $(5,338) $ (5,786)
Net income for the six months
ended June 30, 1996 2 235 237
Partners' deficit at
June 30, 1996 45,021 $ (446) $(5,103) $ (5,549)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
f) ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months
Ended
June 30,
1996
Cash flows from operating activities:
Net income $ 237
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 121
Amortization of loan costs and leasing commission 9
Loss on disposal of property (1)
Bad debt expense 435
Extraordinary gain on extinguishment of debt (1,176)
Change in accounts:
Restricted cash 7
Accounts receivable 11
Escrows for taxes 11
Accounts payable (26)
Tenant security deposit liabilities 4
Accrued interest 354
Due to affiliates 77
Other liabilities (14)
Net cash provided by operating activities 49
Cash flows used in investing activities:
Cash transferred upon foreclosure (179)
Property improvements and replacements (17)
Net cash used in investing activities (196)
Cash flows from financing activities:
Payments on mortgage notes payable (40)
Net decrease in cash (187)
Cash and cash equivalents at beginning of period 293
Cash and cash equivalents at end of period $ 106
Supplemental disclosure of cash flow information:
Cash paid for interest $ 263
Supplemental disclosure of non-cash investing
and financing activities:
Debt extinguished upon foreclosure $ 850
See Accompanying Notes to Financial Statements
f) ANGELES INCOME PROPERTIES, LTD. V
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30
1995 1995
<S> <C> <C>
Revenues:
Rental income $ 661 $ 1,954
Other income 8 52
Total revenues 669 2,006
Expenses:
Operating 206 646
General and administrative 96 223
Maintenance 60 189
Depreciation 97 288
Interest 474 1,646
Property taxes 108 333
Bad debt expense 47 54
Total expenses 1,088 3,379
Equity in (loss) income of joint venture (75) 1,123
Loss before extraordinary item (494) (250)
Extraordinary gain on extinguishment of debt -- 497
Net (loss) income $ (494) $ 247
Net (loss) income allocated to general partners $ (5) $ 2
(1%)
Net (loss) income allocated to limited partners (489) 245
(99%)
Net (loss) income $ (494) $ 247
Per limited partnership unit:
(Loss) income before extraordinary item $ (10.85) $ (5.49)
Extraordinary gain on extinguishment of debt -- 10.93
Net (loss) income $ (10.85) $ 5.44
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
g) ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended
September 30,
1995
Cash flows from operating activities:
Net income $ 247
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in income of joint ventures (1,123)
Depreciation 288
Amortization of loan costs and leasing 71
commissions
Bad debt expense 54
Extraordinary gain on forgiveness of debt (497)
Change in accounts:
Restricted cash (8)
Accounts receivable (68)
Escrows for taxes (29)
Other assets (18)
Accounts payable (17)
Tenant security deposit liabilities 9
Accrued taxes 168
Accrued interest 1,094
Due to affiliates 93
Other liabilities (34)
Net cash provided by operating activities 230
Cash flows from investing activities:
Property improvements and replacements (32)
Cash flows from financing activities:
Payments on mortgage notes payable (55)
Net increase in cash 143
Cash at beginning of period 300
Cash at end of period $ 443
Supplemental disclosure of cash flow information
Cash paid for interest $ 501
See Accompanying Notes to Financial Statements
ANGELES INCOME PROPERTIES, LTD. V
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
(Unaudited)
Foreclosures
During 1996, Angeles Income Properties, Ltd. V lost its interest in University
Center Phase III as the mortgage holder of this property foreclosed on its
collateral. In connection with the transaction, the following accounts were
adjusted:
(in thousands)
Other assets $ 2
Investment Properties 435
Accounts payable 43
Other liabilities 70
Accrued interest 394
Mortgage notes payable 850
During 1996, Angeles Income Properties LTD. V lost its interest in Springdale
Lake Estates as the mortgage holder of this property foreclosed on its
collateral. In connection with the transaction, the following accounts were
adjusted:
(in thousands)
Other assets $ 38
Investment properties 4,100
Accrued interest 1,215
Other liabilities 75
Mortgage notes payable 4,508
See Accompanying Notes to Financial Statements
e) ANGELES INCOME PROPERTIES, LTD. V
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
As of July 1, 1996, the Partnership adopted the liquidation basis of
accounting. The Partnership has significant recurring operating losses and
continues to suffer from inadequate liquidity. The Partnership is in default on
recourse indebtedness of approximately $2,000,000 due to Angeles Mortgage
Investment Trust ("AMIT") and does not generate sufficient cash flows to meet
current operating requirements. In addition, there are limited identified
capital resources available to the Partnership.
The Partnership has a second mortgage in the amount of approximately
$2,000,000 which is secured by Southgate Village Apartments. This indebtedness
is in default due to nonpayment upon maturity and is recourse to the
Partnership. On February 29, 1996, a formal demand for payment of the unpaid
principal balance and accrued interest was received from AMIT for the debt
secured by Southgate Village Apartments. On June 12, 1996, AMIT filed a
Complaint For Foreclosure and Other Relief. The Partnership entered into a
forebearance agreement with AMIT, effective July 1, 1996, which provides that
surplus cash be deposited into a seperate account on which the Partnership has
granted AMIT a first priority lien. In exchange, the Partnership agrees to
refrain from appointing a receiver for the property. The General Partner does
not intend to contest the foreclosure and anticipates that this property will be
lost in 1997 through foreclosure.
Until August 1996, the Partnership had a nonrecourse second mortgage note
payable to AMIT, in the amount of approximately $1,720,000 plus accrued
interest on Springdale Lake Estates Mobile Home Park that was in default due to
nonpayment upon maturity. On April 11, 1996, a formal demand for payment of the
unpaid principal balance and accrued interest was received from AMIT for the
debt secured by Springdale Lake Estates Mobile Home Park. AMIT foreclosed on
the property on August 15, 1996.
Until November 1995, the Partnership had a recourse first mortgage note
payable to AMIT, a lending trust sponsored by an affiliate of the General
Partner, in the amount of approximately $1,800,000 plus accrued interest on
University Park Center - Phase IV that was in default due to nonpayment of
interest. In May 1995, AMIT initiated foreclosure proceedings and acquired the
property in a sheriff's sale, subject to Minnesota law of one year right of
redemption, leaving a deficiency judgment. In November 1995, the Partnership
granted to AMIT Deeds in Lieu of Foreclosure on University Park Center Phase I
and II and agreed to waive the right of redemption on Phase IV (See "Note B" for
further discussion). The Partnership's mortgage of approximately $850,000
secured by University Park Center - Phase III was in default due to nonpayment
of interest. The lender foreclosed on University Park Center - Phase III in
1996.
The Partnership is presently paying non-debt related expenses of the
properties and is current on its first mortgage note payable. At this time, the
General Partner believes the equity in Southgate Village Apartments is not
sufficient to retire the AMIT debt, therefore, the General Partner expects to
transfer the Partnership's interest in Southgate Village Apartments to AMIT as
full satisfaction of the debt. These transactions are anticipated to occur
during the fourth quarter of 1997. The Partnership does not expect to contest
any of these proceedings. The General Partner does not have any other plans to
remedy the liquidity problems the Partnership is currently experiencing. The
Partnership does not intend to purchase any additional properties and the
General Partner has decided to terminate the Partnership upon foreclosure of the
final property.
NOTE A - BASIS OF PRESENTATION - CONTINUED
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements on July 1, 1996,
from the going concern basis of accounting to the liquidation basis of
accounting in accordance with generally accepted accounting principles.
Consequently, assets have been valued at estimated realizable value (including
subsequent actual transactions described below) and liabilities are presented at
their estimated settlement amounts, including estimated costs associated with
carrying out the liquidation. The valuation of assets and liabilities
necessarily requires many estimates and assumptions and there are substantial
uncertainties in carrying out the liquidation. The actual realization of assets
and settlement of liabilities could be higher or lower than amounts indicated
and is based upon the General Partner's estimates as of the date of the
financial statements.
The investment properties were adjusted to their estimated net realizable
values. Prior to the change from the going concern basis to the liquidation
basis of accounting, investment properties were stated at lower of cost or
estimated fair value.
The statements of consolidated net liabilities in liquidation as of September
30, 1996, include approximately $972,000 of costs, net of income, that the
General Partner estimates will be incurred during the period of liquidation
based upon the assumption that the liquidation process will be completed by
December 31, 1997. These costs include anticipated legal fees, administrative
expenses, and loss from property operations. Because the success in realization
of assets and the settlement of liabilities is based on the General Partner's
best estimates, the liquidating period may be shorter than projected or it may
be extended beyond the projected period.
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of the General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and nine month periods ended
September 30, 1996, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1996. 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, 1995.
Certain reclassifications have been made to 1995 information to conform to the
1996 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED)
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Partnership Agreement provides for payments to affiliates for services and
as reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following expenses were paid or accrued to the General Partner and
affiliates during the nine months ended September 30, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $ 60 $ 72
Reimbursement for services of
affiliates ($1,006,000 accrued at
September 30, 1996) 117 163
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.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED)
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
approximately $198,000 at September 30, 1996, and September 30, 1995, 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 $15,000 and $16,000 for the nine months ended September 30, 1996
and 1995, respectively.
AMIT currently provides financing to the Partnership in the total principal
amount of approximately $2,000,000 secured by Southgate Village Apartments.
This debt is in default at September 30, 1996. During the nine months ended
September 30, 1995, AMIT provided approximately $6,400,000 in financing
(principal only) to the Partnership secured by Southgate Village Apartments,
Springdale Lake Estates Mobile Home Park and University Park Center - Phase IV.
Total interest expense on this financing was $928,000 and $863,000 for the nine
months ended September 30, 1996 and 1995, respectively.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class
B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A
Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1.2% of the distributions of net cash distributed by AMIT. These Class
B Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1.2% of the vote).
Between the date of acquisition of these shares (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. In addition, Liquidity Assistance, LLC, ("LAC"), an affiliate of the
General Partner and an affiliate of Insignia Financial Group, Inc., which
provides property management and partnership administration services to the
Partnership, currently owns 87,700 Class A Shares of AMIT. These Class A Shares
entitle LAC to vote approximately 2% of the total shares. The number of Class A
Shares of AMIT owned by LAC increased from 63,200 shares on September 30, 1996,
to 87,700 shares as of October 22, 1996. The voting percentage also increased
from 1.5% to 2% over the same time period.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED)
As part of the settlement of certain disputes with AMIT, 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.
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 non-payment 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.
NOTE C - OTHER ITEMS
The Partnership had a 57% interest in Angeles Fort Worth Option Joint Venture
("Fort Worth"). Fort Worth's remaining asset was sold on March 22, 1995, and
all remaining cash was used to pay Fort Worth's liabilities. As a result, Forth
Worth was dissolved effective December 31, 1995, and therefore, the Partnership
lost its 57% interest in Forth Worth.
University Park Center - Phase III was in default of its mortgage ($850,000
principal plus accrued interest) due to non-payment of interest. The mortgage
holder foreclosed upon this property and it was lost in 1996.
Springdale Lake Estates Mobile Home Park was in default of its second mortgage
($1,720,000 principal plus accrued interest) due to non payment upon maturity.
The mortgage holder foreclosed upon this property and it was lost in August
1996.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
As of July 1, 1996, the Partnership adopted the liquidation basis of accounting.
The Partnership has significant recurring operating losses and continues to
suffer from inadequate liquidity. The Partnership is in default on recourse
indebtedness totaling $2,000,000 due to AMIT and does not generate sufficient
cash flows to meet current operating requirements. In addition, there are
limited identified capital resources available to the Partnership.
The Partnership has a second mortgage in the amount of approximately $2,000,000
which is secured by Southgate Village Apartments. This indebtedness is in
default due to nonpayment upon maturity and is recourse to the Partnership. On
February 29, 1996, a formal demand for payment of the unpaid principal balance
and accrued interest was received from AMIT for the debt secured by Southgate
Village Apartments. On June 12, 1996, AMIT filed a Complaint For Foreclosure
and Other Relief. The Partnership entered into a forebearance agreement with
AMIT, effective July 1, 1996, which provides that surplus cash be deposited into
a seperate account on which the Partnership has granted AMIT a first priority
lien. In exchange, the Partnership agrees to refrain from appointing a receiver
for the property. The General Partner does not intend to contest the
foreclosure and anticipates that this property will be lost in 1997 through
foreclosure.
The Partnership is presently paying non-debt related expenses of the properties
and is current on its first mortgage note payable. At this time, the General
Partner believes the equity in Southgate Village Apartments is not sufficient to
retire the AMIT debt, therefore, the General Partner expects to transfer the
Partnership's interest in Southgate Village Apartments to AMIT as full
satisfaction of the debt. These transactions are anticipated to occur during the
fourth quarter of 1997. The Partnership does not expect to contest any of these
proceedings. The General Partner does not have any other plans to remedy the
liquidity problems the Partnership is currently experiencing. The Partnership
does not intend to purchase any additional properties and the General Partner
has decided to terminate the Partnership upon foreclosure of the final property.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements on July 1, 1996,
from the going concern basis of accounting to the liquidation basis of
accounting in accordance with generally accepted accounting principles.
Consequently, assets have been valued at estimated realizable value (including
subsequent actual transactions described below) and liabilities are presented at
their estimated settlement amounts, including estimated costs associated with
carrying out the liquidation. The valuation of assets and liabilities
necessarily requires many estimates and assumptions and there are substantial
uncertainties in carrying out the liquidation. The actual realization of assets
and settlement of liabilities could be higher or lower than amounts indicated
and is based upon the General Partner's estimates as of the date of the
financial statements.
For the three months ended September 30, 1996, the Partnership recorded a net
decrease in net liabilities in liquidation of approximately $564,000. The
decrease is primarily due to the foreclosure by AMIT of Springdale Lake Estates
Mobile Home Park in the third quarter of 1996. Contributing to the decrease in
net liabilities in liquidation was a decrease in estimated net costs during
liquidation.
The statements of consolidated net liabilities in liquidation as of September
30, 1996, include approximately $972,000 of costs, net of income, that the
General Partner estimates will be incurred during the period of liquidation
based upon the assumption that the liquidation process will be completed by
December 31, 1997. These costs include anticipated legal fees, administrative
expenses, and loss from property operations. Because the success in realization
of assets and the settlement of liabilities is based on the General Partner's
best estimates, the liquidating period may be shorter than projected or it may
be extended beyond the projected period.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In July 1993, AMIT 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").
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 totaling $1,932,975 (the "Settlement
Amount") plus interest at closing.
MAE GP, an affiliate of the General Partner, owns 1,675,113 Class B Shares of
AMIT. MAE GP has the option to convert these Class B Shares, in whole or in
part, into Class A Shares on the basis of 1 Class A Share for every 49 Class B
Shares. These Class B Shares entitle MAE GP to receive 1.2% of the
distributions of net cash distributed by AMIT. These Class B Shares also
entitle MAE GP to vote on the same basis as Class A Shares which allows MAE GP
to vote approximately 37% of the total shares (unless and until converted to
Class A Shares at which time the percentage of the vote controlled represented
by the shares held by MAE GP would approximate 1.2% of the vote). Between the
date of acquisition of these shares (November 24, 1992) and March 31, 1995, MAE
GP declined to vote these shares. Since that date, MAE GP voted its shares at
the 1995 annual meeting in connection with the election of trustees and other
matters. MAE GP has not exerted, and continues to decline to exert, any
management control over or participate in the management of AMIT. MAE GP may
choose to vote these shares as it deems appropriate in the future. In addition,
Liquidity Assistance, LLC, ("LAC"), an affiliate of the General Partner and an
affiliate of Insignia Financial Group, Inc., which provides property management
and partnership administration services to the Partnership, currently owns
87,700 Class A Shares of AMIT. These Class A Shares entitle LAC to vote
approximately 2% of the total shares. The number of Class A Shares of AMIT
owned by LAC increased from 63,200 shares on September 30, 1996, to 87,700
shares as of October 22, 1996. The voting percentage also increased from 1.5%
to 2% over the same period.
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.
In addition, 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 withdrew this claim on August 9, 1995.
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 would have been damaged in an amount equal to
the misappropriated payments. On August 9, 1995, AAP acknowledged constructive
receipt of such payment and, therefore, the General Partner withdrew this claim.
The Partnership, along with other affiliates, has been named in a suit brought
by a company which owned a 20% interest ("Plaintiff") in Fort Worth's investment
property, the W.T. Waggoner Building, which was sold in 1995. The Plaintiff is
suing for breach of contract and negligence for mismanagement of the property.
The General Partner believes that there is no merit in this suit and intends to
vigorously defend it.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The General Partner of the Partnership believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition or operations of
the Partnership.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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:
A Form 8-K was filed on August 15, 1996, reporting the foreclosure of
Springdale Lake Estates Mobile Home Park by the second mortgage
holder.
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.
Vice President/CAO
Date: November 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties Ltd. V 1996 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000792181
<NAME> ANGELES INCOME PROPERTIES LTD. V
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 271
<SECURITIES> 0
<RECEIVABLES> 3
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,622
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,943
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,826
0
0
<COMMON> 0
<OTHER-SE> (3,543)
<TOTAL-LIABILITY-AND-EQUITY> 3,943
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
</FN>
</TABLE>
