<PAGE>
FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-16210
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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES INCOME PROPERTIES. LTD. 6
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash:
Unrestricted $ 1,589,129
Restricted--tenant security deposits 207,515
Accounts receivable 413,373
Escrow for taxes 1,007,089
Restricted escrows 393,590
Other assets 1,237,875
Investment properties:
Land $ 7,616,187
Buildings and related personal
property 46,450,434
54,066,621
Less accumulated depreciation (10,043,995) 44,022,626
$48,871,197
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 186,988
Due to affiliates 262,487
Tenant security deposits 260,850
Accrued taxes 1,174,264
Other liabilities 819,793
Notes payable 42,760,456
Partners' Capital (Deficit)
General partner $ (370,399)
Limited partners (47,379
units issued and outstanding) 3,776,758 3,406,359
$48,871,197
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
1
<PAGE>
b) ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
1995 1994 1995 1994
Revenues:
Rental income $2,307,455 $1,478,333 $4,184,393 $ 3,099,274
Other income 113,271 27,879 150,798 61,484
Total revenues 2,420,726 1,506,212 4,335,191 3,160,758
Expenses:
Operating 654,447 479,611 1,210,589 957,145
General and
administrative 84,315 206,978 186,921 383,639
Property management fees 112,889 75,235 197,562 145,636
Maintenance 249,983 198,430 388,831 454,382
Depreciation 384,594 275,677 652,212 550,057
Amortization of lease
commissions 29,470 11,037 52,389 22,074
Interest 1,052,548 708,241 1,871,910 1,375,520
Property taxes 332,758 268,740 602,254 549,193
Bad debt (recovery)
expense (12,332) 46,367 (112,165) 178,823
Tenant reimbursements (173,827) (297,596) (157,078) (409,707)
Total expenses 2,714,845 1,972,720 4,893,425 4,206,762
Loss before loss on
disposal of property
and equity in income
from joint venture (294,119) (466,508) (558,234) (1,046,004)
Loss on disposal of
property (9,453) -- (9,453) --
Equity in income from
joint venture 2,825,000 48,469 2,894,652 119,836
Net income (loss) $2,521,428 $ (418,039) $2,326,965 $ (926,168)
Net income (loss) allocated
to general partner (1%) $ 25,214 $ (4,180) $ 23,270 $ (9,262)
Net income (loss) allocated
to limited partners
(99%) 2,496,214 (413,859) 2,303,695 (916,906)
Net income (loss) $2,521,428 $ (418,039) $2,326,965 $ (926,168)
Net income (loss) per limited
partnership unit $ 52.69 $ (8.73) $ 48.62 $ (19.35)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
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 six months
ended June 30, 1995 -- 23,270 2,303,695 2,326,965
Partners' (deficit) capital at
June 30, 1995 47,379 $(370,399) $ 3,776,758 $ 3,406,359
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
d) ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
<S> <C> <C>
1995 1994
Cash flows from operating activities:
Net income (loss) $2,326,965 $ (926,168)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation 652,212 550,057
Amortization of discounts, loan costs,
and leasing commissions 107,704 97,753
Bad debt expense -- 178,823
Loss on disposal of property 9,453 --
Equity in income from joint venture (2,894,652) (119,836)
Change in accounts:
Restricted cash (31,275) (2,797)
Accounts receivable 66,774 (353,474)
Escrows for taxes (494,166) (188,157)
Other assets (71,980) 56,408
Accounts payable (407,617) 74,326
Due to affiliates -- 284,028
Tenant security deposit liabilities 62,119 (8,260)
Accrued taxes 364,859 101,933
Other liabilities 161,747 131,348
Net cash used in operating
activities (147,857) (124,016)
Cash flows from investing activities:
Property improvements and replacements (526,034) (85,481)
Deposits to restricted escrows (22,325) (21,256)
Withdrawals from restricted escrows 103,817 91,114
Proceeds received from foreclosure
of Mesa Dunes 876,108 --
Net cash provided by (used in)
investing activities 431,566 (15,623)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
<S> <C> <C>
1995 1994
Cash flows from financing activities:
Proceeds from long-term borrowing $ 704,070 $ 87,427
Payments on notes payable (92,151) (81,130)
Net cash provided by financing
activities 611,919 6,297
Net increase (decrease) in cash 895,628 (133,342)
Cash at beginning of period 693,501 878,130
Cash at end of period $1,589,129 $ 744,788
Supplemental disclosure of cash
flow information:
Cash paid for interest $1,743,353 $1,103,780
Interest on notes transferred to principal $ 86,360 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
e) ANGELES INCOME PROPERTIES, LTD. 6.
NOTES TO CONSOLIDATED FINANCIAL 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 six month period ended June 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 six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Property management fees $197,562 $145,636
Property lease commissions 24,695 1,200
Reimbursement for services of affiliates,
including amounts accrued at June 30,
1995 and 1994 of $261,137 and $804,746,
respectively 150,718 284,028
Marketing services 361 1,169
</TABLE>
6
<PAGE>
Note B - Transactions with Affiliated Parties (continued)
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. Total
indebtedness was $446,258 at June 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 $24,358 and $19,152 for the six
months ended June 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 June 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 $3,467,629 and
$3,500,000 at June 30, 1995, and June 30, 1994, respectively. Total
interest expense on this financing was $236,528 and $83,470 for the six
months ended June 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 33% of the total shares (unless and until converted to
Class A Shares at which time the percentage
7
<PAGE>
Note B - Transactions with Affiliated Parties (continued)
of the vote controlled represented by the shares held by MAE GP would
approximate 1% of the vote). Between the date of acquisition of these
shares (November 24, 1992) and March 31, 1995, MAE GP has declined to
vote these shares. Since that date, MAE GP voted its shares at the 1995
annual meeting in connection with the election of trustees and other
matters. MAE GP has not exerted, and continues to decline to exert, any
management control over or participate in the management of AMIT.
However, MAE GP may choose to vote these shares as it deems appropriate
in the future.
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 C - Mesa Dunes, Wakonda and Town & Country Joint Venture
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 the Mesa Dunes joint venture and the
Mesa Dunes, Wakonda Shopping Center and Town & Country Shopping Center
properties became 100% owned by the Partnership.
8
<PAGE>
Note C - Mesa Dunes, Wakonda and Town & Country Joint Venture
(continued)
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 six months ended
June 30, 1995, and 1994 assume the Partnership became the 100% owner as
of January 1, 1994.
<TABLE>
<CAPTION>
Pro Forma Statement
(Unaudited)
Three Months Ended
June 30, 1995
As Reported Adjustment Pro Forma
<S> <C> <C> <C>
Revenues $2,420,726 $ -- $2,420,726
Net income $2,521,428 $ -- $2,521,428
Three Months Ended
June 30, 1994
As Reported Adjustment Pro Forma
Revenues $1,506,212 $797,051 $2,303,263
Net (loss) income $ (418,039) $ 49,834 $ (368,205)
Pro Forma Statement
(Unaudited)
Six Months Ended
June 30, 1995
As Reported Adjustment Pro Forma
Revenues $4,335,191 $728,486 $5,063,677
Net income $2,326,965 $ 71,451 $2,398,416
Six Months Ended
June 30, 1994
As Reported Adjustment Pro Forma
Revenues $3,160,758 $1,685,265 $4,846,023
Net (loss) income $ (926,168) $ 121,201 $ (804,967)
</TABLE>
9
<PAGE>
Note D - Contingencies
In December 1994 certain chemicals were discovered in the septic system
of LaSalle Warehouse. This appears to have been caused by one of the
past or present tenants. Legal counsel is being consulted for further
direction. 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. Other corrective actions, if any, are presently
unknown due to the early stage of this determination and the ultimate
outcome of this matter cannot presently be determined. Accordingly, the
financial statements do not include any adjustments to reflect the
possible future effects that might result from this uncertainty.
The General Partner is currently attempting to sell this property. The
General Partner believes this would be in the best interest of the
Partnership. The proceeds from this sale would be used to pay off the
AMIT debt (see Note B).
10
<PAGE>
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 six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Average
Occupancy
<S> <C> <C>
Property 1995 1994
Lazy Hollow Apartments
Columbia, Maryland 94% 91%
Homestead Apartments
East Lansing, Michigan 93% 88%
Whispering Pines Mobile Home Park
Lantana, Florida 98% 99%
Hawthorne Works Business Center
Chicago, Illinois 70% 62%
LaSalle Warehouse
Las Vegas, Nevada 100% 100%
Casa Granada Apartments
Harlingen, Texas 92% 98%
Mesa Dunes Mobile Home Park
Mesa, Arizona 85% 91%
Wakonda Shopping Center
Des Moines, Iowa 95% 92%
Town & Country Shopping Center
Cedar Rapids, Iowa 79% 98%
</TABLE>
The increase in average occupancy at Homestead Apartments for the six
months ended June 30, 1995, as compared to the six months ended June 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 six months ended
June 30, 1995, versus the six months ended June 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 six months ended June 30, 1995, versus the
six months ended June 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 six
months ended June 30, 1995, versus the six months ended June 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 makes it
harder to attract new homes to the park. Finally, the decrease in
occupancy at Town & Country Shopping Center for the six months ended
June 30, 1995, versus the
11
<PAGE>
six months ended June 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.
Subsequent to June 30, 1995, the General Partner was successful in
leasing 14,112 quare feet of this space.
For the three and six months ended June 30, 1995, the Partnership
realized net income of $2,521,428 and $2,326,965 respectively, versus
net losses of $418,039 and $926,168 for the three and six months ended
June 30, 1994, respectively. The increase in income can primarily be
attributed to the increased equity in income from the joint venture (See
Note C and discussion below).
The consolidation of Mesa Dunes Mobile Home Park, Wakonda Shopping
Center and Town & Country Shopping Center during the second quarter of
1995, (see Note C), with the Partnership resulted in increases in rental
and other income, along with increases in operating, property management
fees, depreciation, amortization, interest and property tax expenses.
General and administrative expenses decreased primarily due to decreases
in reimbursements for partnership accounting, asset management and
investor services during the three and six months ended June 30, 1995,
versus the three and six months ended June 30, 1994. Maintenance
expense decreased due to decreases in the following: snow and trash
removal and yards and grounds contract at Lazy Hollow Apartments;
contract repairs, improvements and security contracts at Hawthorne Works
Business Center; and major landscaping at Whispering Pines Mobile Home
Park. These decreases were partially offset by the additional
maintenance expenses incurred as a result of the consolidation of Mesa
Dunes Mobile Home Park, Wakonda Shopping Center and Town & Country
Shopping Center. Interest expense also increased for the three and six
months ended June 30, 1995, as compared to the three and six months
ended June 30, 1994, due to increasing default interest and late charges
on the AMIT debt along with an increased principal balance resulting
from the refinancing that is secured by the Hawthorne Works Business
Center.
The bad debt expense for the three and six months ended June 30, 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 during the six months ended June 30, 1994. The bad debt
recovery during the three and six months ended June 30, 1995, is due to
the receipt of a portion of these receivables from tenants at the
Hawthorne Works Business Center that had been previously reserved.
Tenant reimbursements decreased for the three and six months ended June
30, 1995, versus the three and six months ended June 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 that
were not yet fully depreciated during the second quarter of 1995
resulting in a loss on disposal of property of $9,453.
12
<PAGE>
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 it's 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 six
months ended June 30, 1995.
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from
increases in expenses. As part of this plan, the General Partner
attempts to protect the Partnership from the burden of inflation-related
increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, due to changing market conditions, which can
result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General
Partner will be able to sustain such a plan.
At June 30, 1995, the Partnership had unrestricted cash of $1,589,129
versus unrestricted cash of $744,788 at June 30, 1994. Net cash used in
operating activities remained stable during the six months ended June
30, 1995, as compared to the six months ended June 30, 1994. Net cash
flow from investing activities increased due to 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 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 six months
ended June 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 six months of 1995, the mortgage holder again funded the escrow
for tenant improvements and
13
<PAGE>
added to the principal balance of the first mortgage $704,070.
Accrued interest of $86,360 was also added to the second mortgage
during the six months ended June 30, 1995, for those improvements.
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.
14
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment
trust, made a loan to 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. In 1993, Mesa Dunes paid $1,500,000 towards the
principal balance of this loan. 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 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 have 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. 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. While a plan of reorganization in the Angeles bankruptcy
case was confirmed in March 1995, Angeles reserved the right to object
to certain claims. Angeles has in fact indicated that it will object to
the above described claim. The pursuit of this claim would be expensive
and the outcome uncertain. In considering all of its options, the
Partnership decided that the costs of pursing this claim are not
warranted in light of all the relevant facts and circumstances. The
Partnership has had and continues to have discussions with AMIT
regarding resolution of this issue. No agreement has been reached with
AMIT at this time.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner,
owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert
these Class B Shares, in whole or in part, into Class A Shares on the
basis of 1 Class A Share for every 49 Class B Shares. These Class B
Shares entitle MAE GP to receive 1% of the distributions of net cash
distributed by AMIT. These Class B Shares also entitle MAE GP to vote
on the same basis as Class A Shares which allows MAE GP to vote
approximately 33% of the total shares (unless and until converted to
Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the
vote). Between the date of acquisition of these shares (November 24,
1992) and March 31, 1995, MAE GP has declined to vote these shares.
Since that date, MAE GP voted its shares at the 1995 annual meeting in
connection with the election of trustees and other matters. MAE GP has
not exerted, and continues to decline to exert, any management control
over or participate in the management of AMIT. However, MAE GP may
choose to vote these shares as it deems appropriate in the future.
15
<PAGE>
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 has 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 anticipates that it will withdraw its Proof of Claim.
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 six months ended June 30, 1995.
16
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANGELES INCOME PROPERTIES, LTD. 6
By: Angeles Realty Corporation II
General Partner
By:
Carroll D. Vinson
President
By:
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: August 10, 1995
17
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANGELES INCOME PROPERTIES, LTD. 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: August 10, 1995
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Income Properties Ltd 6's 1995 second quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,589,129
<SECURITIES> 0
<RECEIVABLES> 413,373
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,217,106
<PP&E> 54,066,621
<DEPRECIATION> (10,043,995)
<TOTAL-ASSETS> 48,871,197
<CURRENT-LIABILITIES> 1,884,589
<BONDS> 42,760,456
<COMMON> 0
0
0
<OTHER-SE> 3,406,359
<TOTAL-LIABILITY-AND-EQUITY> 48,871,197
<SALES> 0
<TOTAL-REVENUES> 4,335,191
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,893,425
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,871,910
<INCOME-PRETAX> 2,326,965
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,326,965
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,326,965
<EPS-PRIMARY> 48.62
<EPS-DILUTED> 0
</TABLE>
