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, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-16209
ANGELES PARTNERS 16
(Exact name of small business issuer as specified in its charter)
California 95-4106417
(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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES PARTNERS 16
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash:
Unrestricted $ 825,832
Restricted--tenant security deposits 63,700
Accounts receivable 8,617
Escrow for taxes 263,736
Restricted escrows 1,375,582
Other assets 226,045
Investment properties:
Land $ 1,075,589
Buildings and related personal property 10,594,664
11,670,253
Less accumulated depreciation (2,934,019) 8,736,234
$11,499,746
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 40,610
Tenant security deposits 64,341
Accrued taxes 452,154
Other liabilities 2,741,157
Notes payable, including $2,342,345 in
default 13,569,347
Partners' Deficit
General partner $ (171,480)
Limited partners (14,033 units
issued and outstanding) (5,196,383) (5,367,863)
$11,499,746
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
b) ANGELES PARTNERS 16
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 587,307 $ 865,076 $2,133,481 $ 2,604,422
Other income 64,608 57,921 158,322 146,474
Total revenues 651,915 922,997 2,291,803 2,750,896
Expenses:
Operating 206,699 205,666 1,440,957 724,681
General and administrative 36,797 28,068 130,871 166,640
Property management fees 31,524 45,990 108,989 138,748
Maintenance 69,078 56,648 219,172 208,302
Depreciation 72,358 167,280 400,450 497,361
Amortization -- 1,716 11,833 5,149
Interest 298,063 391,340 1,217,827 1,326,278
Property taxes 130,489 335,902 662,424 917,523
Bad debt (recovery) expense -- (17,586) (4,226) 7,524
Tenant reimbursements -- (125,212) (298,142) (952,017)
Total expenses 845,008 1,089,812 3,890,155 3,040,189
Loss before gain on sale of
investment property and
extraordinary item (193,093) (166,815) (1,598,352) (289,293)
Gain on sale of investment
property -- -- 610,767 --
Loss before extraordinary item (193,093) (166,815) (987,585) (289,293)
Extraordinary item - gain on
early extinguishment of debt -- -- 56,203 --
Net loss $ (193,093) $ (166,815) $ (931,382) $ (289,293)
Net loss allocated to general
partner (1%) $ (1,931) $ (1,668) $ (9,314) $ (2,893)
Net loss allocated to limited
partners (99%) (191,162) (165,147) (922,068) (286,400)
$ (193,093) $ (166,815) $ (931,382) $ (289,293)
Per limited partnership unit:
Loss before extraordinary item $ (13.62) $ (11.75) $ (69.67) $ (20.38)
Extraordinary item -- -- 3.97 --
Net loss $ (13.62) $ (11.75) $ (65.70) $ (20.38)
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
c) ANGELES PARTNERS 16
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 14,050 $ 1,000 $14,050,000 $14,051,000
Partners' deficit at
December 31, 1994 14,033 $(162,166) $(4,274,315) $(4,436,481)
Net loss for the nine months
ended September 30, 1995 -- (9,314) (922,068) (931,382)
Partners' deficit at
September 30, 1995 14,033 $(171,480) $(5,196,383) $(5,367,863)
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
d) ANGELES PARTNERS 16
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (931,382) $ (289,293)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation 400,450 497,361
Amortization of loan costs and leasing commissions 27,365 26,664
Gain on sale of investment property (610,767) --
Bad debt expense -- 7,524
Extraordinary item - gain on early extinguishment
of debt (56,203) --
Change in accounts:
Restricted cash 6,036 (7,861)
Accounts receivable 39,897 12,433
Escrows for taxes 44,470 (63,042)
Other assets (40,182) --
Accounts payable 13,129 (51,381)
Tenant security deposit liabilities 6,355 723
Accrued taxes 108,655 (187,982)
Due to affiliates -- 13,494
Other liabilities (157,464) 991,695
Net cash (used in) provided by operating activities (1,149,641) 950,335
Cash flows from investing activities:
Property improvements and replacements (297,577) (94,747)
Proceeds from sale of investment property 9,862,641 --
Deposits to restricted escrows (1,390,473) (96,299)
Withdrawals from restricted escrows 191,912 --
Net cash provided by (used in) investing activities 8,366,503 (191,046)
Cash flows from financing activities:
Repayment of notes payable (8,140,130) --
Payments on notes payable (24,156) (58,807)
Net cash used in financing activities (8,164,286) (58,807)
Net (decrease) increase in cash (947,424) 700,482
Cash at beginning of period 1,773,256 983,119
Cash at end of period $ 825,832 $1,683,601
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,034,096 $ 345,132
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
e) ANGELES PARTNERS 16
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Going Concern
The financial statements have been prepared assuming the Partnership will
continue as a going concern. The Partnership has incurred recurring operating
losses and continues to suffer from inadequate liquidity. In addition, there
are limited identified capital resources available to the Partnership. As a
result, the Partnership has not had cash available to perform the substantial
rehabilitation necessary at each of the investment properties.
The Partnership is in default on $2,342,345 of its indebtedness due to its
inability to make interest and principal payments when due. The debt is
unsecured debt of the Partnership payable to Angeles Mortgage Investment Trust
("AMIT") (See Note C).
On June 12, 1995, the Partnership sold one of its investment properties,
North Prior Industrial Park, for $10,450,000 to an unrelated third party. The
net proceeds were used to pay the first mortgage and related accrued interest.
Accrued interest of $56,203 related to the first mortgage was forgiven, and a
total gain of $610,767 was realized on the sale. A principal payment of
$117,384 was made on the AMIT debt, which is now unsecured debt of the
Partnership. (See Note D for further details). An additional principal payment
was made to AMIT for $104,602, during the third quarter of 1995, due to an
escrow refund received as a result of the sale of North Prior. Prior to the
sale, this property had been in receivership.
The Partnership is presently paying non-debt related expenses of the
properties, is current on its mortgages on its other two investment properties
and is negotiating forbearance agreements with AMIT on the debt in default.
As a result of the above conditions, there is substantial doubt about the
Partnership's ability to continue as a going concern. The financial statements
do not include any adjustments to reflect the possible future effects on the
recoverability or classification of assets or amounts or 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 nine month period
ended September 30, 1995, are not necessarily indicative of the results that may
be expected 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.
Note B - Basis of Presentation (continued)
Certain reclassifications have been made to the September 30, 1994,
information to conform to the September 30, 1995, presentation.
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 payments were made to the General
Partner and affiliates during the nine months ended September 30, 1995 and 1994:
1995 1994
Property management fees $108,989 $138,748
Reimbursement for services of affiliates 64,821 101,314
Marketing services 1,263 596
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. An affiliate of
Angeles now serves as the general partner of AAP.
The AAP working capital loan funded the Partnership's operating deficits in
prior years. Total indebtedness, which is included as a note payable, was
$1,516,789 at September 30, 1995 and 1994, with monthly interest only payments
at the prime rate 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 $123,555 and $91,323 for the nine months ended September 30, 1995 and 1994,
respectively.
Note C - Transactions with Affiliated Parties (continued)
AMIT currently holds two unsecured note receivables from the Partnership.
Total indebtedness of $2,342,345 and $2,564,331 was in default at September 30,
1995, and September 30, 1994, respectively. A principal payment of $117,384 was
made as a result of the sale of North Prior on June 12, 1995. An additional
principal payment of $104,602 was made during the third quarter of 1995, due to
an escrow refund received also as a result of the sale of North Prior. Total
interest expense on this financing was $331,308 and $220,275 for the nine months
ended September 30, 1995 and 1994, respectively. Accrued interest was
$1,050,245 at September 30, 1995.
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 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% 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.
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. 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 those 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.
Note D - Contingencies
On June 12, 1995, North Prior Industrial Park was sold for $10,450,000 to an
unrelated party. The net proceeds were used to pay off the first mortgage and
related accrued interest. Accrued interest of $56,203 related to the first
mortgage was forgiven. Proceeds were also used to pay down the AMIT debt in the
amount of $117,384. A gain was recognized on the sale of $610,767. An
additional principal payment of $104,602 was made to AMIT during the third
quarter of 1995, due to an escrow refund received as a result of the sale of
North Prior. The AMIT debt that had been the second mortgage of the property
became unsecured debt of the Partnership, the principal balance of which is
$1,482,818, which is currently in default. As required by the sales agreement
the Partnership has set up three escrows as described below:
Tenant Improvements Escrow - This escrow is being held pending completion of
tenant improvements that were begun by the receiver prior to the sale. As the
improvement projects are completed the funds will be disbursed. The projects
are expected to be completed prior to December 31, 1995. The original escrow
balance was $200,000 and at September 30, 1995, $125,487 has been expended. All
funds are expected to be used in the improvement projects; however, any
remaining funds will be used to reduce the AMIT debt discussed above.
Environmental Escrow - This escrow was established for costs associated with
fuel oil contamination at the property. In January 1993, a local fuel oil
distributor pumped fuel oil into a testing well instead of into the storage tank
at North Prior Industrial Park. The Partnership notified the necessary
authorities and engaged an environmental engineering firm to develop a plan of
action to clean up the site. The cost of the clean up, which is not covered by
insurance, is estimated to be approximately $900,000 over a five year period. A
liability was recorded for $200,000 in 1993, an additional liability was
recorded during the second quarter of 1995, for the amount of $746,488. During
1994, the Partnership paid $46,488 relating to the remediation; a balance of
$900,000 is included in "Other liabilities" at September 30, 1995. The
Partnership entered into an Environmental Undertaking and Indemnity Agreement
with the buyer of the property limiting the Partnership's liability with regard
to the clean up of this site to the balance of the escrow account. This
agreement will terminate when the Partnership receives a "Site Closure Letter"
from the Minnesota Pollution and Control Agency. Upon receipt of this letter,
any remaining funds in the escrow account will be used to pay down the AMIT debt
discussed above. In January 1995, the holder of the first mortgage, along with
the receiver, initiated two separate lawsuits against the Partnership, among
others, for damages sustained as a result of the above. The General Partner
believes that the former holder of the first mortgage will not pursue their
lawsuit. The General Partner also believes that prior to December 31, 1995, the
Partnership will be substituted in as the Plaintiff in the lawsuit initiated by
the former receiver in a suit filed against the fuel distributor, among others.
However, the outcome of these claims is uncertain and their effect on the
Partnership cannot presently be determined.
Note D - Contingencies (continued)
North Prior Industrial Park also had ground water contamination that
originated off site. In 1994 the Minnesota Pollution and Control Agency issued
a "No Further Action" letter to the party responsible for causing the problem.
There have been no claims against the Partnership for this matter.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of two apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
Whispering Pines Apartments
Fitchburg, Wisconsin (1) 93% 98%
Silver Ridge Apartments
Maplewood, Minnesota 95% 92%
(1) Decrease in occupancy due to increased home sales in the area. New home
construction and low interest rates for home buyers has made renting less
appealing and thereby decreased occupancy.
The Partnership realized a net loss for the three and nine months ended
September 30, 1995, of $193,093 and $931,382, respectively as compared to a net
loss for the three and nine months ended September 30, 1994, of $166,815 and
$289,293, respectively. The increase in the net loss for the nine months ended
September 30, 1995, as compared to the nine months ended September 30, 1994, is
due to the accrual of $746,488 in the second quarter of 1995 for the estimated
costs associated with the environmental clean up of North Prior Industrial Park
(See Note D for additional information). Partially offsetting this expense is
the gain recognized on the sale of North Prior Industrial Park on June 12, 1995
(See discussion below).
Rental income decreased for the three and nine months ended September 30,
1995, as compared to the three and nine months ended September 30, 1994, due to
the sale of North Prior on June 12, 1995, resulting in the loss of rental
revenue at this property. Also contributing to the decrease in rental income
was the decrease in occupancy at Whispering Pines Apartments.
Operating expenses for the nine months ended September 30, 1995, versus the
nine months ended September 30, 1994, increased due to the estimated clean up
costs at North Prior, as discussed above, along with increased advertising at
Whispering Pines Apartments. This increase was partially offset by the overall
decrease in operating expenses at North Prior Industrial Park due to the sale of
the property during the second quarter of 1995 (See discussion below). General
and administrative expenses decreased for the nine months ended September 30,
1995, as compared to the nine months ended September 30, 1994, primarily due to
decreased cost reimbursements for partnership accounting, asset management and
investor services. The decrease in property management fees for the three and
nine months ended September 30, 1995, as compared to the three and nine months
ended September 30, 1994, is attributable to the decrease in rental income, as
such fees are based on revenue. Depreciation expense decreased for the three
and nine months ended September 30, 1994, versus the three and nine months ended
September 30, 1995, primarily due to the sale of North Prior Industrial Park
during the second quarter of 1995. Amortization expense increased for the nine
months ended September 30, 1995, versus the nine months ended September 30,
1994, due to the addition of lease commissions at North Prior Industrial Park
prior to the sale. Interest expense also decreased for the three and nine
months ended September 30, 1995, as compared to the three and nine months ended
September 30, 1994, due to the sale of North Prior. This decrease was partially
offset by increases in interest expense at Whispering Pines Apartments and
Silver Ridge Apartments due to rising interest rates on the variable rate
mortgages secured by these properties. Property tax expense decreased for the
three and nine months ended September 30, 1995, as compared to the three and
nine months ended September 30, 1994, due to lower tax bills at North Prior
Industrial Park along with the sale of the property during the second quarter of
1995. The bad debt recovery for the nine months ended September 30, 1995,
relates to past due amounts received from tenants of the North Prior Industrial
Park that had been previously reserved. The bad debt recovery for the three
months ended September 30, 1994, also related to past due amounts received from
tenants of the North Prior Industrial Park that had previously been reserved.
The bad debt expense for the nine months ended September 30, 1994, can be
attributed to reserving accounts receivable at North Prior Industrial Park that
were considered uncollectible. Tenant reimbursements decreased for the three
and nine months ended September 30, 1995, versus the three and nine months ended
September 30, 1994, due to the sale of North Prior Industrial Park during the
second quarter of 1995. Furthermore, due to changes in management companies of
North Prior Industrial Park, the detailed data needed to accurately estimate the
receivable was not available and, therefore, tenant reimbursements were
underestimated in 1993 resulting in significant recoveries during the first nine
months of 1994, which contributed to the increased tenant reimbursements for the
nine months ended September 30, 1994.
On June 12, 1995, the Partnership sold one of its investment properties,
North Prior Industrial Park, for $10,450,000 to an unrelated third party. The
net proceeds were used to pay the first mortgage and related accrued interest.
Accrued interest of $56,203 related to the first mortgage was forgiven, and a
total gain of $610,767 was realized on the sale. A principal payment of
$117,384 was made on the AMIT debt, which will now become unsecured debt of the
Partnership (See Note D for further details). An additional principal payment
of $104,602 was made during the third quarter of 1995, with proceeds from an
escrow refund received as a result of the sale of North Prior.
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 September 30, 1995, the Partnership had unrestricted cash of $825,832
versus $1,683,601 at September 30. 1994. Net cash used in operating activities
increased due to the increased net loss and a decrease in other liabilities.
Net cash provided by investing activities increased due to the proceeds from the
sale of North Prior. Net cash used in financing activities increased due to
repayments of the mortgage principal balances relating to the sale of North
Prior.
The financial statements have been prepared assuming the Partnership will
continue as a going concern. The Partnership has incurred recurring operating
losses and continues to suffer from inadequate liquidity. In addition, there
are limited identified capital resources available to the Partnership. As a
result, the Partnership has not had cash available to perform the substantial
rehabilitation necessary at each of the investment properties.
The Partnership is in default on $2,342,345 of its indebtedness due to its
inability to make interest and principal payments when due. The debt is
unsecured debt of the Partnership payable to AMIT.
The Partnership is presently paying non-debt related expenses of the
properties, is current on its mortgages on its other two investment properties
and is negotiating forbearance agreements with AMIT on the debt in default.
As a result of the above conditions, there is substantial doubt about the
Partnership's ability to continue as a going concern. The financial statements
do not include any adjustments to reflect the possible future effects on the
recoverability or classification of assets or amounts or classification of
liabilities that may result from these uncertainties.
The second mortgage secured by the Silver Ridge Apartments property in the
amount of $775,000 has $400,000 of principal due by December 31, 1995. The
General Partner is negotiating a refinance of this indebtedness or this property
may be lost through foreclosure.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In January 1993, a local fuel oil distributor pumped fuel oil into a testing
well instead of into the storage tank at North Prior Industrial Park. The
Partnership notified the necessary authorities and engaged an environmental
engineering firm to develop a plan of action to clean up the site. The cost of
the clean up, which is not covered by insurance, is estimated to be
approximately $900,000 over a five year period. A liability was recorded for
$200,000 in 1993, an additional liability was recorded during the second quarter
of 1995, for the amount of $746,488. During 1994, the Partnership paid $46,488
relating to the remediation; a balance of $900,000 is included in "Other
liabilities" at September 30, 1995. The Partnership entered into an
Environmental Undertaking and Indemnity Agreement with the buyer of the property
limiting the Partnership's liability with regard to the clean up of this site to
the balance of the escrow account. This agreement will terminate when the
Partnership receives a "Site Closure Letter" from the Minnesota Pollution and
Control Agency. Upon receipt of this letter, any remaining funds in the escrow
account will be used to pay down the AMIT debt discussed above. In January
1995, the holder of the first mortgage, along with the receiver, initiated two
separate lawsuits against the Partnership, among others, for damages sustained
as a result of the above. The General Partner believes that the former holder
of the first mortgage will not pursue their lawsuit. The General Partner also
believes that prior to December 31, 1995, the Partnership will be substituted in
as the Plaintiff in the lawsuit initiated by the former receiver in a suit filed
against the fuel distributor, among others. However, the outcome of these
claims is uncertain and their effect on the Partnership cannot presently be
determined.
AMIT, a real estate investment trust, made a loan to the Partnership in
October 1992 in the amount of $1,879,804, secured by the Partnership's real
property known as North Prior Industrial Park, on a non-recourse basis. In
January 1993, the Partnership repaid $175,000 in principal on this loan. As
mentioned previously, the Partnership paid $117,384 in principal on this loan
from the sales proceeds of this property, along with an additional principal
payment of $104,602 during the third quarter of 1995. The current principal
balance as of September 30, 1995, is $1,482,818. The Partnership believed that
the loan was a non-recourse obligation. AMIT has asserted that the loan is
recourse by virtue of a certain amendment purportedly entered into as of
November 1, 1992, but which the Partnership has been informed and believes was
actually executed in December 1992 ("Note Modification"). The Partnership has
been further informed and believes that the amendment 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 at a time when such person was
not in fact an officer of such entity. Accordingly, the Partnership filed a
Proof of Claim in the Angeles bankruptcy proceeding with respect to such
purported amendment. Additionally, the Partnership 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. Subsequently, the
Partnership determined that the original note agreement was in fact recourse
and, therefore,the Partnership's Proofs of Claim were withdrawn.
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 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% 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.
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. 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 those 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 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 filed during the three months ended September 30, 1995.
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 PARTNERS 16
By: Angeles Realty Corporation II
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long
Robert D. Long
Controller and Principal
Accounting Officer
Date: November 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Partners 16 1995 Third Quarter 10-QSB and is qualified in its entirety by
reference to such filing.
</LEGEND>
<CIK> 0000812187
<NAME> ANGELES PARTNERS 16
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 825,832
<SECURITIES> 0
<RECEIVABLES> 8,617
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 11,670,253
<DEPRECIATION> 2,934,019
<TOTAL-ASSETS> 11,499,746
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 13,569,347
<COMMON> 0
0
0
<OTHER-SE> (5,367,863)
<TOTAL-LIABILITY-AND-EQUITY> 11,499,746
<SALES> 0
<TOTAL-REVENUES> 2,291,803
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,890,155
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,217,827
<INCOME-PRETAX> (931,382)
<INCOME-TAX> 0
<INCOME-CONTINUING> (931,382)
<DISCONTINUED> 0
<EXTRAORDINARY> 56,203
<CHANGES> 0
<NET-INCOME> (931,382)
<EPS-PRIMARY> (65.70)
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
