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 OF 1934
For the transition period.........to.........
Commission file number 0-16210
ANGELES INCOME PROPERTIES LTD. 6
(Exact name of small business issuer as specified in its charter)
California 95-4106139
(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 INCOME PROPERTIES. LTD. 6
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash:
Unrestricted $ 1,421,480
Restricted--tenant security deposits 207,709
Accounts receivable, net of allowance
of $996,905 279,427
Escrow for taxes 972,965
Restricted escrows 371,735
Other assets 1,319,569
Investment properties:
Land $ 7,616,187
Buildings and related personal property 46,578,432
54,194,619
Less accumulated depreciation (10,435,527) 43,759,092
$48,331,977
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 190,254
Due to affiliates 24,261
Tenant security deposits 251,576
Accrued taxes 1,343,746
Other liabilities 884,055
Notes payable 42,717,866
Partners' Capital (Deficit)
General partner $ (375,261)
Limited partners (47,379 units issued
and outstanding) 3,295,480 2,920,219
$48,331,977
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED 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 $2,310,279 $1,642,147 $6,494,672 $ 4,741,421
Other income 88,037 47,562 238,835 109,046
Total revenues 2,398,316 1,689,709 6,733,507 4,850,467
Expenses:
Operating 579,020 445,442 1,789,609 1,402,587
General and administrative 113,560 84,467 300,481 468,106
Property management fees 110,443 71,089 308,005 216,725
Maintenance 236,986 142,906 625,817 597,288
Depreciation 391,533 268,384 1,043,745 818,441
Amortization 32,369 15,336 84,758 37,410
Interest 1,046,943 723,606 2,918,853 2,099,126
Property taxes 411,927 260,656 1,014,181 809,849
Bad debt expense 151,618 124,898 39,453 303,721
Tenant reimbursements (189,943) (56,606) (347,021) (466,313)
Total expenses 2,884,456 2,080,178 7,777,881 6,286,940
Loss before loss on disposal
of property and equity in
(loss) income from joint
venture (486,140) (390,469) (1,044,374) (1,436,473)
Loss on disposal of property -- -- (9,453) --
Equity in (loss) income from
joint venture -- (2,818) 2,894,652 117,018
Net (loss) income $ (486,140) $ (393,287) $1,840,825 $(1,319,455)
Net (loss) income allocated
to general partner (1%) $ (4,861) $ (3,933) $ 18,408 $ (13,195)
Net (loss) income allocated
to limited partners (99%) (481,279) (389,354) 1,822,417 (1,306,260)
Net (loss) income $ (486,140) $ (393,287) $1,840,825 $(1,319,455)
Net (loss) income per limited
partnership unit $ (10.16) $ (8.22) $ 38.46 $ (27.57)
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 47,384 $ 1,000 $47,384,000 $47,385,000
Partners' (deficit) capital at
December 31, 1994 47,379 $(393,669) $ 1,473,063 $ 1,079,394
Net income for the nine months
ended September 30, 1995 -- 18,408 1,822,417 1,840,825
Partners' (deficit) capital at
September 30, 1995 47,379 $(375,261) $ 3,295,480 $ 2,920,219
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $1,840,825 $(1,319,455)
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation 1,043,745 818,441
Amortization of discounts, loan costs, and
leasing commissions 169,867 139,229
Bad debt expense 39,453 303,721
Loss on disposal of property 9,453 --
Equity in income from joint venture (2,894,652) (117,018)
Change in accounts:
Restricted cash (31,469) (5,288)
Accounts receivable 161,267 (483,501)
Escrows for taxes (460,042) 88,536
Other assets (210,994) (130,394)
Accounts payable (432,196) (45,195)
Due to affiliates (238,226) 332,532
Tenant security deposit liabilities 52,845 21,529
Accrued taxes 534,341 (19,870)
Other liabilities 183,489 633,060
Net cash (used in) provided by
operating activities (232,294) 216,327
Cash flows from investing activities:
Property improvements and replacements (626,282) (197,617)
Deposits to restricted escrows (32,604) (34,601)
Withdrawals from restricted escrows 135,952 201,960
Proceeds received from foreclosure of Mesa Dunes 876,108 --
Net cash provided by (used in)
investing activites 353,174 (30,258)
Cash flows from financing activities:
Proceeds from long-term borrowing 768,761 258,552
Payments on notes payable (161,662) (116,565)
Loan costs -- (30,779)
Net cash provided by financing activities 607,099 111,208
Net increase in cash 727,979 297,277
Cash at beginning of period 693,501 878,130
Cash at end of period $1,421,480 $1,175,407
Supplemental disclosure of cash flow information:
Cash paid for interest $2,676,622 $1,405,544
Interest on notes transferred to principal $ 43,839 $ --
Fixed assets included in accounts payable $ 27,845 $ --
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
ANGELES INCOME PROPERTIES, LTD. 6
NOTES TO CONSOLIDATED STATEMENTS
(Unaudited)
Note A - 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.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Note B - 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, 1995
and 1994:
1995 1994
Property management fees $308,005 $216,725
Property lease commissions 39,436 16,253
Reimbursement for services of affiliates 226,926 364,041
Marketing services 731 2,534
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. An affiliate of
Angeles now serves as the general partner of AAP. Total indebtedness was
$446,258 at September 30, 1995 and 1994, with monthly interest only payments at
prime plus 2%. Principal is to be paid the earlier of i) the availability of
funds, ii) the sale of one or more properties owned by the Partnership, or iii)
November 25, 1997. Total interest expense for this loan was $36,351 and $29,843
for the nine months ended September 30, 1995 and 1994, respectively.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
formerly affiliated with Angeles, has provided first trust financing secured by
the Partnership's investment property, LaSalle Warehouse. Total indebtedness
was $911,134 at September 30, 1995 and 1994. In addition, AMIT made a loan to
Mesa Dunes, Wakonda and Town & Country Partners ("Mesa Dunes") secured by the
Mesa Dunes real properties known as Mesa Dunes Mobile Home Park, Wakonda
Shopping Center and Town & Country Shopping Center. Total indebtedness was
$3,454,457 and $3,500,000 at September 30, 1995, and September 30, 1994,
respectively. Total interest expense on this financing was $328,962 and
$123,670 for the nine months ended September 30, 1995 and 1994, 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% 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.
Note B - Transactions with Affiliated Parties (continued)
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 C - Mesa Dunes, Wakonda and Town & Country Partners
Prior to April 1, 1995, the Partnership had a 50% investment in Mesa Dunes.
On December 6, 1994, Mesa Dunes gave notice to Angeles Income Properties, Ltd. V
("AIPL V"), a California Limited Partnership and the other 50% owner in Mesa
Dunes, that the note receivable that Mesa Dunes held from AIPL V in the amount
of $5,000,000, dated September 20, 1991, and originally due on September 30,
1996, was in default because of failure to perform under the terms and
conditions of said note and security interest, including but not limited to,
failure to make interest payments. On April 1, 1995, Mesa Dunes foreclosed on
its collateral and AIPL V lost its 50% interest in Mesa Dunes. This foreclosure
effectively dissolved Mesa Dunes and the Mesa Dunes Mobile Home Park, Wakonda
Shopping Center and Town & Country Shopping Center properties became 100% owned
by the Partnership.
As of April 1, 1995, the assets, liabilities, revenues and expenses of the
properties were consolidated into the Partnership and were no longer accounted
for using the equity method of accounting. The operations of these properties
prior to April 1, 1995, are accounted for using the equity method of accounting.
The following pro forma statements for the three and nine months ended
September 30, 1995, and 1994 assume the Partnership became the 100% owner as of
January 1, 1994.
Pro Forma Statement
(Unaudited)
Three Months Ended
September 30, 1995
As Reported Adjustment Pro Forma
Revenues $2,398,316 $ -- $2,398,316
Net loss $ (486,140) $ -- $ (486,140)
Note C - Mesa Dunes, Wakonda and Town & Country Partners (continued)
Pro Forma Statement
(Unaudited)
Three Months Ended
September 30, 1994
As Reported Adjustment Pro Forma
Revenues $1,689,709 $356,277 $2,045,986
Net loss $ (393,287) $ (2,136) $ (395,423)
Nine Months Ended
September 30, 1995
As Reported Adjustment Pro Forma
Revenues $6,733,507 $728,486 $7,461,993
Net income $1,840,825 $ 71,451 $1,912,276
Nine Months Ended
September 30, 1994
As Reported Adjustment Pro Forma
Revenues $ 4,850,467 $2,041,542 $ 6,892,009
Net (loss) income $(1,319,455) $ 119,065 $(1,200,390)
Note D - Contingencies
In December 1994, certain chemicals were discovered in the septic system of
LaSalle Warehouse which appears to have been caused by one of the present
tenants (the "Tenant"). An environmental consulting firm was engaged in January
1995 to determine the level of contamination. The known costs to empty and
dispose of the contents of the septic tank and to retest the property are not
material, however, subsequent to September 30, 1995, the Partnership and the
Tenant entered into a remediation agreement whereby the Tenant has agreed to be
solely responsible for any costs associated with the clean-up of this site.
The General Partner is currently attempting to sell this property and
believes this would be in the best interest of the Partnership. Any proceeds
from this sale would be used to pay off the AMIT debt (see Note B).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of four commercial
properties, three apartment complexes and two mobile home parks. 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
Lazy Hollow Apartments
Columbia, Maryland 95% 92%
Homestead Apartments
East Lansing, Michigan 94% 88%
Whispering Pines Mobile Home Park
Lantana, Florida 97% 99%
Hawthorne Works Business Center
Chicago, Illinois 70% 56%
LaSalle Warehouse
Las Vegas, Nevada 100% 100%
Casa Granada Apartments
Harlingen, Texas 92% 98%
Mesa Dunes Mobile Home Park
Mesa, Arizona 85% 88%
Wakonda Shopping Center
Des Moines, Iowa 95% 92%
Town & Country Shopping Center
Cedar Rapids, Iowa 80% 98%
The increase in average occupancy at Homestead Apartments for the nine months
ended September 30, 1995, as compared to the nine months ended September 30,
1994, is due to a strengthening market along with improvements at the property
which are attracting new tenants. The increase in average occupancy at
Hawthorne Works Business Center for the nine months ended September 30, 1995,
versus the nine months ended September 30, 1994, is due primarily to the
addition of a new tenant during the first quarter of 1995 occupying 214,090
square feet, or 16% of the leasable square footage of the property. The decrease
in average occupancy at Casa Granada Apartments for the nine months ended
September 30, 1995, versus the nine months ended September 30, 1994, is
primarily due to increased competition resulting from new apartment complexes in
the area. The decrease in average occupancy at Mesa Dunes Mobile Home Park for
the nine months ended September 30, 1995, versus the nine months ended September
30, 1994, is due to the construction of new mobile home parks in the area,
thereby increasing competition. In addition, the lots at Mesa Dunes are small
and the property suffers from electrical limitations which make it harder to
attract new homes to the park. Finally, the decrease in average occupancy at
Town & Country Shopping Center for the nine months ended September 30, 1995,
versus the nine months ended September 30, 1994, is due to the loss of tenants
during the first quarter of 1995 which occupied 26,766 square feet or
approximately 20% of the leasable square footage of the property. However,
during the three months ended September 30, 1995, the General Partner was
successful in leasing 14,112 square feet of this space.
The Partnership realized a net loss of $486,140 and net income of $1,840,825
for the three and nine months ended September 30, 1995, respectively, versus
net losses of $393,287 and $1,319,455 for the three and nine months ended
September 30, 1994, respectively. The increased loss for the three months ended
September 30, 1995, versus the three months ended September 30, 1994, can be
attributed to increased expenses resulting from the consolidation of Mesa Dunes
Mobile Home Park, Wakonda Shopping Center, and Town and Country Shopping Center
with the Partnership during 1995 (See Note C). The increase in net income for
the nine months ended September 30, 1995, as compared to the nine months ended
September 30, 1994, can be primarily attributed to the increased equity in
income from the joint venture (See discussion below).
The consolidation of Mesa Dunes Mobile Home Park, Wakonda Shopping Center,
and Town and Country Shopping Center with the Partnership during the second
quarter of 1995 resulted in increases in rental and other income, along with
increases in operating, property management fees, maintenance, depreciation,
amortization, interest, and property tax expenses. General and administrative
expenses increased slightly for the three months ended September 30, 1995,
versus the three months ended September 30, 1994, due to the general and
administrative expenses relating to Mesa Dunes Mobile Home Park, Wakonda
Shopping Center, and Town and Country Shopping Center. However, for the nine
months ended September 30, 1995, versus the nine months ended September 30,
1994, general and administrative expenses decreased due to decreases in
reimbursements for partnership accounting, asset management and investor
services. Interest expense also increased for the three and nine months ended
September 30, 1995, as compared to the three and nine months ended September 30,
1994, due to increasing default interest and late charges on the AMIT debt along
with an increased principal balance resulting from the refinancing of the debt
that is secured by the Hawthorne Works Business Center (See discussion below).
The bad debt expense for the three and nine months ended September 30, 1995
and 1994, can be attributed to several tenants at Hawthorne Works Business
Center and Whispering Pines Mobile Home Park suffering from deteriorating
financial conditions resulting in delinquency in their payments; therefore, the
Partnership reserved a portion of the receivable relating to these tenants. The
decrease in bad debt expense for the nine months ended September 30, 1995,
versus the nine months ended September 30, 1994, is due to the collection of a
portion of these receivables from tenants at Hawthorne Works Business Center
that had previously been reserved. Tenant reimbursements increased for the
three months ended September 30, 1995, versus the three months ended September
30, 1994, due to the consolidation of the Wakonda and Town and Country Shopping
Centers to the Partnership during 1995. Tenant reimbursements decreased for the
nine months ended September 30, 1995, versus the nine months ended September 30,
1994. Tenant reimbursements are billed annually with estimates recorded
quarterly. Due to the change in management companies in 1993, the detailed
information was not available to accurately estimate this receivable. The
receivable was underestimated in 1993, and adjusted in 1994 causing the 1994
tenant reimbursements to be higher. This decrease was partially offset by the
increase in tenant reimbursements resulting from the consolidation of the two
additional commercial properties with the Partnership. Finally, Casa Granada
Apartments replaced three roofs during 1995 that were not yet fully depreciated
resulting in a loss on disposal of property of $9,453.
In 1993, Mesa Dunes fully reserved its $5,000,000 note receivable from AIPL V
along with the related accrued interest. Accordingly, the Partnership recorded
its proportionate share of the loss totaling $2,825,000. Due to the foreclosure
by Mesa Dunes of AIPL V's interest in the joint venture and the resulting
consolidation of the Mesa Dunes properties by the Partnership, the Partnership
recorded a recovery of the $2,825,000 previously reserved through its equity
interest in the earnings of the joint venture during the second quarter of
1995. This recovery amount, in addition to the equity in income of the joint
venture of $69,652 during the first quarter of 1995, resulted in a $2,894,652
equity in the income from the joint venture for the nine months ended September
30, 1995.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
At September 30, 1995, the Partnership had unrestricted cash of $1,421,480
versus unrestricted cash of $1,175,407 at September 30, 1994. Net cash flow
from operating activities decreased during the nine months ended September 30,
1995, as compared to the nine months ended September 30, 1994, due to increased
tax and insurance escrow balances and a decrease in accounts payable and due to
affiliates. Net cash flow from investing activities increased due to the
proceeds received from the foreclosure of Mesa Dunes. Net cash flow from
financing activities increased due to additional proceeds received from long-
term borrowings related to the refinancing of Hawthorne Works Business Center.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets, meet mortgage obligations, and other operating needs of the
Partnership. Such assets are currently thought to be sufficient for any near-
term needs of the Partnership. Future cash distributions will depend on the
levels of net cash generated from operations, refinancings, property sales, and
the availability of cash reserves. There were no cash distributions made during
the nine months ended September 30, 1995 or 1994.
During the fourth quarter of 1994, the Partnership refinanced the first and
second mortgage notes which encumber the Hawthorne Works Business Center. As a
result of the refinancing, the stated interest rate on the first mortgage is
based on the Corporate Base Rate plus 1.75%, with a maturity date of December
1995. The maturity date on the second mortgage is also December 1995. The
first mortgage holder established and funded two escrows, thereby increasing the
principal balance of the first mortgage by the amount funded. The first escrow,
the purpose of which is to fund tax and insurance escrow deposits, amounts to
$175,000. The second escrow was established to fund tenant improvements. At
December 31, 1994, the balance of this fund had been expended, which amounted to
$302,900. The first mortgage holder also added to principal $707,791 of
previously accrued interest. Also, $1,779,481 of principal was transferred from
the first mortgage note to the second mortgage note. On the second mortgage
note, the note holder added to principal $33,252 of previously accrued
interest. During the first nine months of 1995, the mortgage holder again
funded the escrow for tenant improvements and added to the principal balance of
the first mortgage $768,761. Accrued interest of $43,839 was also added to
the second mortgage during the nine months ended September 30, 1995.
On July 3, 1995, there was a fire at the Cable Plant of the Hawthorne Works
Business Center. The fire resulted in structural damage to approximately 5,000
square feet of space. The cost to repair the damage cannot presently be
determined, however, this casualty will be 100% covered by insurance.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
made a loan to Mesa Dunes, Wakonda and Town and Country Partners ("Mesa Dunes")
on September 30, 1991, in the amount of $5,000,000 secured by the Partnership's
real properties known as Mesa Dunes Mobile Home Park, Wakonda Shopping Center
and Town & Country Shopping Center. At September 30, 1995, the balance of this
loan was $3,454,457. The Partnership believed that this loan was made on a non-
recourse basis. AMIT asserted that this loan is recourse by virtue of a certain
amendment ("Note Modification") purportedly entered into as of November 1, 1992,
but which the Partnership and Mesa Dunes have been informed and believe were
actually executed in December of 1992. The Partnership and Mesa Dunes have been
further informed and believe that the amendments may have been executed at the
direction of Angeles by an individual in his purported capacity as an officer of
the General Partner of the Partnership and Mesa Dunes at a time when such person
was not in fact an officer of such entities. In the event AMIT prevails in its
assertion that the loan is a recourse, rather than a non-recourse loan, the
Partnership and Mesa Dunes may have a claim against Angeles for any damages
caused by Angeles' conduct in purporting to enter into the amendment.
Accordingly, the Partnership and Mesa Dunes filed a Proof of Claim in the
Angeles bankruptcy proceeding with respect to such purported amendment.
Additionally, the Partnership and Mesa Dunes filed a Proof of Claim in the
Angeles Funding Corporation and Angeles Real Estate Corporation bankruptcy
proceedings on similar grounds. Both Angeles Funding Corporation and Angeles
Real Estate Corporation are affiliates of Angeles. Angeles has now agreed to
cooperate with the Partnership in any action commenced by or against them by
AMIT asserting that the $3,454,457 obligation owed to AMIT is recourse to the
Partnership. Angeles has further agreed to waive the attorney-client privilege
with respect to the Note Modification. Accordingly, the Partnership withdrew
its Proof of Claim on August 9, 1995. The Partnership has had and continues to
have discussions with AMIT regarding resolution of this issue. No agreement has
been reached with AMIT at this time.
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 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 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.
Also, Angeles, either directly or through an affiliate, maintained a central
disbursement account (the "account") for the properties and partnerships managed
by Angeles and its affiliates, including the Registrant. Angeles caused the
Partnership to make deposits to the account ostensibly to fund the payment of
certain obligations of the Partnership. Angeles further caused checks on such
account to be written to or on behalf of certain other partnerships. At least
$12,206 deposited by or on behalf of the Partnership was used for purposes other
than satisfying the liabilities of the Partnership. Accordingly, the
Partnership filed a Proof of Claim in the Angeles bankruptcy proceedings for
such amount. 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 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 INCOME PROPERTIES, LTD. 6
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
Income Properties Ltd. 6 1995 Third Quarter 10-QSB and is qualified in its
entirety by reference to such filing.
</LEGEND>
<CIK> 0000812564
<NAME> ANGELES INCOME PROPERTIES LTD. 6
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,421,480
<SECURITIES> 0
<RECEIVABLES> 279,427
<ALLOWANCES> 996,905
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 54,194,619
<DEPRECIATION> 10,435,527
<TOTAL-ASSETS> 48,331,977
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 42,717,866
<COMMON> 0
0
0
<OTHER-SE> 2,920,219
<TOTAL-LIABILITY-AND-EQUITY> 48,331,977
<SALES> 0
<TOTAL-REVENUES> 6,733,507
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,777,881
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,918,853
<INCOME-PRETAX> 1,840,825
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,840,825
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,840,825
<EPS-PRIMARY> 38.46
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
