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
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO 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)
(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 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, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 32
Restricted--tenant security deposits 32
Accounts receivable 6
Escrow for taxes 26
Other assets 12
Investment property 3,172
3,280
Liabilities
Accounts payable 9
Tenant security deposits 32
Accrued interest 2,231
Other liabilities 58
Mortgage notes payable, $2,000 in default 4,779
Estimated costs during the period of
liquidation (Note A) 545
7,654
Net liabilities in liquidation (Note A) $ (4,374)
See Accompanying Notes to Financial Statements
ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(in thousands)
September 30, 1997
Net liabilities in liquidation at December 31, 1996 $ (3,824)
Changes in net liabilities in liquidation
attributed to:
Decrease in unrestricted cash (103)
Increase in restricted cash 15
Decrease in accounts receivable (1)
Decrease in escrows for taxes (15)
Increase in other assets 12
Decrease in investment property (71)
Decrease in accounts payable 16
Increase in tenant security deposits (5)
Increase in accrued interest (531)
Decrease in other liabilities 14
Decrease in mortgage notes payable 33
Decrease in estimated costs during the period
of liquidation 86
Net liabilities in liquidation at September 30, 1997 $(4,374)
See Accompanying Notes To Financial Statements
b) ANGELES INCOME PROPERTIES, LTD. V
STATEMENTS 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 before loss on transfer of property in
foreclosure and extraordinary item (504)
Loss on transfer of property in
foreclosure (435)
Loss before extraordinary item (939)
Extraordinary gain - forgiveness 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 $ (20.65)
Extraordinary gain 25.86
Net income $ 5.21
See Accompanying Notes to Financial Statements
c) ANGELES INCOME PROPERTIES, LTD. V
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
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)
See Accompanying Notes to Financial Statements
d) ANGELES INCOME PROPERTIES, LTD. V
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1996
<S> <C>
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 9
Bad debt recovery, net (1)
Loss on transfer of property in foreclosure 435
Extraordinary gain - forgiveness
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 from investing activities:
Cash transferred upon foreclosure (179)
Property improvements and replacements (17)
Net cash used in investing activities (196)
Cash flows used in financing activities:
Payments on mortgage notes payable (40)
Net decrease in unrestricted cash and cash equivalents (187)
Unrestricted cash and cash equivalents at beginning of period 293
Unrestricted 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 financing activities:
Debt extinguished upon foreclosure $ 850
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
ANGELES INCOME PROPERTIES, LTD. V
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1997
NOTE A - BASIS OF PRESENTATION
As of July 1, 1996, Angeles Income Properties, Ltd. V (the "Partnership" or
"Registrant") 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 and does not
generate sufficient cash flows to meet current operating requirements. In
addition, there are no other capital resources available to the Partnership.
Until November 1995, the Partnership had a recourse first mortgage note payable
to Angeles Mortgage Investment Trust ("AMIT") in the amount of $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.
The Partnership had a non-recourse mortgage of $850,000 secured by University
Park Center - Phase III, which was in default due to nonpayment of interest. The
lender foreclosed on University Park Center - Phase III in 1996.
The Partnership had a nonrecourse second mortgage note payable to AMIT, in the
amount of $1,720,000 plus accrued interest, secured by 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.
The Partnership has a second mortgage payable to AMIT in the amount of
$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
forbearance agreement with AMIT, effective July 1, 1996, which provides that
surplus cash be deposited into a separate account in which the Partnership has
granted AMIT a first priority lien. In exchange, AMIT agrees to refrain from
appointing a receiver for the property. Angeles Realty Corporation II (the
"General Partner") does not intend to contest the foreclosure and anticipates
that this property will be lost in 1998 through foreclosure.
The Partnership is presently paying non-debt related expenses of the property
and is current on its first mortgage note payable. However, the debt to Angeles
Acceptance Pool, L.P. ("AAP") matures November 25, 1997, and the Partnership
does not have the ability to satisfy the indebtedness when it is due (See "Note
C"). 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. These transactions are anticipated to occur in 1998. The
General Partner 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 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.
The statement of net liabilities in liquidation as of September 30, 1997,
include approximately $545,000 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 June 30, 1998.
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
liquidation period may be shorter than projected or it may be extended beyond
the projected period.
NOTE B - ADJUSTMENT TO LIQUIDATION BASIS OF ACCOUNTING
At July 1, 1996, in accordance with the liquidation basis of accounting, assets
were adjusted to their estimated net realizable value and liabilities were
adjusted to their settlement amount and include all estimated costs associated
with carrying out the liquidation. The net adjustment required to convert to
the liquidation basis of accounting was a decrease in net liabilities of
$1,809,000. Significant adjustments in 1996 are summarized as follows:
(Increase) Decrease
in net liabilities
(in thousands)
Adjustment from book value of property improvements
to estimated net realizable value $ 38
Adjustment to record estimated costs during the period
of liquidation (1,267)
Adjustment of debt to net settlement value 979
Adjustment for other assets and liabilities 2,059
Net decrease in net liabilities $ 1,809
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 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, 1997 and 1996:
1997 1996
(in thousands)
Property management fees $ 30 $ 60
Reimbursement for services of
affiliates 41 117
For the period from January 1, 1996, to August 31, 1997, the Partnership insured
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 master policy. The
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 that accrued to the benefit of the affiliate of
the General Partner by virtue of the agent's obligations was not significant.
In November 1992, 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, 1997, and September 30, 1996, 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 approximately $16,0000 and $15,000 for the nine months ended
September 30, 1997 and September 30, 1996, respectively.
AMIT currently holds a note receivable from the Partnership in the total
principal amount of $2,000,000, secured by Southgate Village Apartments. This
debt is in default at September 30, 1997. From January 1, 1996, until August
15, 1996, AMIT held notes receivable from the Partnership in the principal
amount of $3,720,000, secured by Southgate Village Apartments and Springdale
Lake Estate Mobile Home Park. Total interest expense on this financing was
approximately $516,000 and $928,000 for the nine months ended September 30, 1997
and 1996, respectively.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. The terms of the Class B Shares provide that
they are convertable, in whole or in part, into Class A Shares on the basis of 1
Class A Share for every 49 Class B Shares (however, in connection with the
settlement agreement described in the following paragraph, MAE GP has agreed not
to convert the Class B Shares so long as AMIT's option is outstanding). These
Class B Shares entitle MAE GP to receive 1% of the distributions of net cash
distributed by AMIT (however, in connection with the settlement agreement
described in the following paragraph, MAE GP has agreed to waive it's right to
receive dividends and distributions so long as AMIT's option is outstanding).
These Class B Shares also entitle MAE GP to vote on the same basis as Class A
Shares, providing MAE GP with approximately 39% of the total voting power of
AMIT (unless and until converted to Class A Shares, in which case the percentage
of the vote controlled represented by the shares held by MAE GP would
approximate 1.3% of the vote). Between the date of acquisition of these shares
(November 24, 1992) and March 31, 1995, MAE GP declined to vote these shares.
Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in
connection with the election of trustees and other matters. MAE GP has not
exerted and continues to decline to exert any management control over or
participate in the management of AMIT. Subject to the terms of the proxy
described below, MAE GP may choose to vote these shares as it deems appropriate
in the future. In addition, Liquidity Assistance L.L.C., an affiliate of the
General Partner and an affiliate of Insignia Financial Group, Inc. ("Insignia"),
which provides property management and partnership administration services to
the Partnership, owns 96,800 Class A Shares of AMIT at September 30, 1997. These
Class A Shares represent approximately 2.2% of the total voting power of AMIT.
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B shares owned by it. This option can be exercised
at the end of 10 years or when all loans made by AMIT to partnerships affiliated
with MAE GP as of November 9, 1994 (which is the date of execution of a
definitive Settlement Agreement) have been paid in full, but in no event prior
to November 9, 1997. In connection with such settlement, AMIT delivered to MAE
GP cash in the sum of $250,000 at closing (which occurred April 14, 1995) as
payment for the option. If and when the option is exercised, AMIT will be
required to remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option and as part of the settlement,
MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is
that MAE GP is permitted to vote the Class B Shares on all matters except those
involving transactions between AMIT and MAE GP affiliated borrowers or the
election of any MAE GP affiliate as an officer or trustee of AMIT. On those
matters, MAE GP is obligated to deliver 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).
On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in
principle contemplating, among other things, a business combination of AMIT and
Insignia Properties Trust, an entity owned 98% by Insignia and its affiliates
("IPT"). On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive
merger agreement pursuant to which (subject to shareholder approval and certain
other conditions, including the receipt by AMIT of a fairness opinion from its
investment bankers) AMIT would be merged with and into IPT, with each Class A
Share and Class B Share being converted into 1.625 and 0.0332 common shares of
IPT, respectively. The foregoing exchange ratios are subject to adjustment to
account for dividends paid by AMIT from January 1, 1997 and dividends paid by
IPT from February 1, 1997. It is anticipated that Insignia (and its affiliates)
and MAE GP (and its affiliates) would own approximately 53.1% and 2.3%,
respectively, of post-merger IPT when this transaction is consummated.
ITEM 2. MANAGEMENT'S 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 $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 forbearance agreement with AMIT,
effective July 1, 1996, which provides that surplus cash be deposited into a
separate account in 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 1998 through
foreclosure.
The Partnership is presently paying non-debt related expenses of the properties
and is current on its first mortgage note payable. However, the debt to AAP
matures November 25, 1997 and the Partnership does not have the ability to
satisfy the indebtedness when it becomes due. 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. These transactions are
anticipated to occur during 1998. 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 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 nine months ended September 30, 1997, the Partnership recorded a net
increase in net liabilities in liquidation of approximately $550,000. The
statements of net liabilities in liquidation as of September 30, 1997, include
approximately $545,000 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 complete by June 30, 1998. 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
The Partnership had an investment in the Angeles Fort Worth Option Joint Venture
("Fort Worth") until the investment property owned by Fort Worth was sold. At
that time, Fort Worth was dissolved. 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 has a second mortgage in the amount of $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 General Partner does not intend to contest the foreclosure and
anticipates that this property will be lost in 1998 through foreclosure.
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.
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: November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties, Ltd. V 1997 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-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 32
<SECURITIES> 0
<RECEIVABLES> 6
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,172
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,280
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,779
0
0
<COMMON> 0
<OTHER-SE> 545
<TOTAL-LIABILITY-AND-EQUITY> 7,654
<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>
