March 30, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Angeles Income Properties 6
Form 10-KSB
File No. 0-16210
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
[No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[No Fee Required]
For the transition period from _________to _________
Commission file number 0-16210
ANGELES INCOME PROPERTIES, LTD. 6
(Name of small business issuer in its charter)
California 95-4106139
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
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___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $5,646,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Angeles Income Properties, Ltd. 6 (the "Partnership" or "Registrant") is a
publicly held limited partnership organized under the California Uniform Limited
Partnership Act on June 29, 1984, as amended. The Partnership Agreement provides
that the Partnership is to terminate on December 31, 2037, unless terminated
prior to such date.
The Partnership's general partner is Angeles Realty Corporation II, a California
corporation (the "General Partner" or "ARC II") was wholly-owned by Insignia
Properties Trust ("IPT"). Effective February 26, 1999, IPT was merged into
Apartment Investment and Management Company ("AIMCO") (see "Transfer of
Control"). Thus, the General Partner is now a wholly-owned subsidiary of AIMCO.
The Partnership, through its public offering of Limited Partnership Units, sold
47,384 units aggregating $47,384,000. The General Partner contributed capital in
the amount of $1,000 for a 1% interest in the Partnership. Since its initial
offering, the Partnership has not received, nor are limited partners required to
make, additional capital contributions. The Partnership was formed for the
purpose of acquiring fee and other forms of equity interests in various types of
real estate property. At December 31, 1999, the Partnership owned and operated
three residential properties and two commercial properties (see "Item 2.
Description of Properties").
The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
These services for the residential properties were provided by affiliates of the
General Partner for the years ended December 31, 1999 and 1998. As of October 1,
1998, these services for the commercial properties were provided by an unrelated
party.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential and commercial properties within the
market area of the Partnership's properties. The number and quality of
competitive properties, including those which may be managed by an affiliate of
the General Partner in such market area, could have a material effect on the
rental market for the apartments and commercial space at the Partnership's
properties and the rents that may be charged for such apartments and commercial
space. While the General Partner and its affiliates own and/or control a
significant number of apartment units in the United States such units represent
an insignificant percentage of total apartment units in the United States and
competition for the apartments is local. The General Partner is not a
significant factor in commercial real estate.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
<PAGE>
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential and commercial properties because
such properties are susceptible to the impact of economic and other conditions
outside of the control of the Partnership.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Item 2. Description of Properties
The following table sets forth the Partnership's investment in properties:
Date of
Property Purchase Type of Ownership Use
Lazy Hollow Apartments 07/01/89 Fee ownership, subject to Apartment
Columbia, MD a first mortgage 178 units
Homestead Apartments 11/10/88 Fee ownership subject to Apartment
East Lansing, MI a first mortgage 168 units
Casa Granada Apartments 04/30/89 Fee ownership subject to Apartment
Harlingen, TX a first mortgage (1) 108 units
Wakonda Shopping Center 04/01/95 Fee ownership subject to Commercial
Des Moines, IA a first mortgage (2) 147,000 sq. ft
Town & Country 04/01/95 Fee ownership subject to Commercial
Shopping Center a first mortgage (2) 104,000 sq. ft (3)
Cedar Rapids, IA
(1) Property is held by a Limited Partnership which the Registrant owns a 99%
interest in.
(2) Property is held by a Limited Partnership which the Registrant owns a 100%
interest in.
(3) During May 1997, a tenant occupying 18,600 square feet moved out as its
lease had expired. The tenant was a bowling center and occupied the
basement level of the property. Due to the estimated high cost of
improving this space and its basement location, the space is considered
non-leasable space and is not included in the square footage above.
Schedule of Properties
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Lazy Hollow Apartments $ 7,399 $ 2,778 5-40 yrs S/L $ 8,392
Homestead Apartments 5,721 2,070 5-40 yrs S/L 5,062
Casa Granada Apartments 2,868 778 5-40 yrs S/L 2,240
Continuing operations 15,988 5,626 15,694
Discontinued Operations
Wakonda Shopping Center 3,578 1,151 5-40 yrs S/L 4,551
Town & Country
Shopping Center 4,458 1,192 5-40 yrs S/L 3,431
Totals $24,024 $ 7,969 $23,676
</TABLE>
See "Note A" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation policy
and "Note N - Change in Accounting Principle".
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
Lazy Hollow Apartments
<S> <C> <C> <C> <C> <C>
1st trust deed $ 3,919 7.50% 30 yrs 07/19 $ --
Homestead Apartments
1st trust deed 3,099 7.33% 30 yrs 11/03 2,935
Casa Granada Apartments
1st trust deed 1,408 7.65% 20 yrs 10/19 --
Continuing operations 8,426 2,935
Discontinued Operations
Wakonda Shopping Center and
Town & Country Center
1st trust deed (1) 3,312 9.00% 30 yrs 12/03 3,125
Total $11,738 $ 6,060
</TABLE>
(1) Payable to Angeles Mortgage Investment Trust ("AMIT") (See "Item 7.
Financial Statements - Note G").
(2) See "Item 7. Financial Statements - Note C" for information with respect
to the Registrant's ability to prepay these loans and other specific
details about the loans.
On September 30, 1999, the Partnership refinanced the mortgage encumbering Casa
Granada Apartments. Interest on the new mortgage is 7.65%. Interest on the old
mortgage was 10.07%. The refinancing replaced indebtedness of approximately
$1,279,000, including accrued interest of approximately $12,000 with a new
mortgage in the amount of $1,413,000. Payments of approximately $12,000 are due
on the first day of each month until the loan matures on October 1, 2019. The
prior note matured in September 1999.
Rental Rates and Occupancy
Average annual rental rate and occupancy for 1999 and 1998 for each property:
<TABLE>
<CAPTION>
Average Annual Average
Rental Rates Occupancy
Property 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Lazy Hollow Apartments $9,618/unit $9,391/unit 96% 97%
Homestead Apartments 7,866/unit 7,657/unit 93% 89%
Casa Granada Apartments 5,677/unit 5,595/unit 95% 94%
Discontinued Operations
Wakonda Shopping Center 5.42/s.f. 5.04/s.f. 86% 85%
Town & Country Shopping Center 7.27/s.f. 6.80/s.f. 98% 89%
</TABLE>
The Partnership attributes the increase in occupancy at Homestead Apartments and
Town and Country Shopping Center to increased marketing efforts.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties are subject to competition from other
residential apartment complexes and commercial buildings in the area. The
General Partner believes that all of the properties are adequately insured. The
multi-family residential properties' lease terms are for one year or less. No
residential tenant leases 10% or more of the available rental space. All of the
properties are in good physical condition, subject to normal depreciation and
deterioration as is typical for assets of this type and age.
<PAGE>
The following is a schedule of the commercial lease expirations for the years
2000-2009:
<TABLE>
<CAPTION>
Town & Country Number of Annual % of Gross
Shopping Center Expirations Square Feet Rent Annual Rent
(in thousands)
<S> <C> <C> <C> <C> <C>
2000 10 31,207 $ 245 34.44%
2001 11 42,367 220 30.84%
2002 4 5,704 47 6.65%
2003 4 16,260 157 21.99%
2004 2 3,339 29 4.14%
2005 1 1,517 14 1.94%
2006-2009 -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
Wakonda Shopping Number of Annual % of Gross
Center Expirations Square Feet Rent Annual Rent
(in thousands)
<S> <C> <C> <C> <C> <C>
2000 9 14,104 $ 104 18.10%
2001 4 13,963 90 15.60%
2002 8 73,407 210 36.47%
2003 1 1,542 11 1.87%
2004 3 8,530 60 10.41%
2005 1 3,500 37 6.42%
2006-2007 -- -- -- --
2008 1 4,300 33 5.75%
2009 -- -- -- --
</TABLE>
The following schedule reflects information on tenants occupying 10% or more of
the leasable square feet for each commercial property:
<TABLE>
<CAPTION>
Square Footage Annual Rent Lease
Property Nature of Business Leased Per Sq. Ft Expiration
Town & Country
<S> <C> <C> <C> <C>
Shopping Center Variety Discount 14,412 $7.02 01/31/01
Wakonda Shopping
Center Grocery 47,382 $ .78 01/31/02
</TABLE>
See financial statements Notes A and K for additional information as to the
terms of these leases.
<PAGE>
Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
Properties
Lazy Hollow Apartments (1) $134 3.45%
Homestead Apartments 144 5.50%
Casa Granada Apartments 36 2.39%
Discontinued Operations
Wakonda Shopping Center (1) 257 4.36%
Town & Country Shopping Center (1) 98 3.05%
(1) Tax bill is for the fiscal year of the taxing authority which differs from
that of the Partnership.
Capital Improvements
Lazy Hollow Apartments
The Partnership completed approximately $691,000 in capital expenditures at Lazy
Hollow Apartments as of December 31, 1999, consisting primarily of heating and
air conditioning replacements, exterior painting, major landscaping, structural
repairs, and carpet and vinyl replacement. These improvements were funded from
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $53,400. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
Homestead Apartments
The Partnership completed approximately $149,000 in capital expenditures at
Homestead Apartments as of December 31, 1999, consisting primarily of roof
replacements and carpet and vinyl replacements. These improvements were funded
from operating cash flow and replacement reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $50,400.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Casa Granada Apartments
The Partnership completed approximately $202,000 in capital expenditures at Casa
Granada Apartments as of December 31, 1999, consisting primarily of carpet and
vinyl replacements, structural improvements, exterior painting, and roof
replacements. These improvements were funded from replacement reserves and
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $32,400. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
Wakonda Shopping Center
The Partnership completed approximately $25,000 in capital expenditures at
Wakonda Shopping Center as of December 31, 1999, consisting of tenant
improvements and HVAC units. These improvements were funded from operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year.
Town & Country Shopping Center
The Partnership completed approximately $4,000 in capital expenditures at Town &
Country Shopping Center as of December 31, 1999, consisting of tenant
improvements. These improvements were funded from operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year.
Mesa Dunes Mobile Home Park
The Partnership completed approximately $1,000 in capital improvements at Mesa
Dunes Mobile Home Park during 1999 consisting primarily of building
improvements. This property was sold on February 19, 1999.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the General Partner filed a motion seeking
dismissal of the action. In lieu of responding to the motion, the plaintiffs
have filed an amended complaint. The General Partner filed demurrers to the
amended complaint which were heard February 1999. Pending the ruling on such
demurrers, settlement negotiations commenced. On November 2, 1999, the parties
executed and filed a Stipulation of Settlement, settling claims, subject to
final court approval, on behalf of the Partnership and all limited partners who
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation
that is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1999, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.
<PAGE>
PART II
Item 5. Market for the Partnership's Common Equity and Related Security
Holder Matters
The Partnership, a publicly-held limited partnership sold 47,384 Limited
Partnership Units during its offering period through September 30, 1988, and as
of December 31, 1999, had 47,311 Limited Partnership Units outstanding held by
2,848 Limited Partners of record. Affiliates of the General Partner owned 16,261
units or 34.37% at December 31, 1999. In 1998, the number of Limited Partnership
Units decreased by 3 units due to Limited Partners abandoning their units. In
abandoning Limited Partnership Units, a Limited Partner relinquishes all right,
title and interest in the Partnership as of the date of abandonment.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999:
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/98 - 12/31/98 212 --
01/01/99 - 12/31/99 $5,615 $111.54
During the year ended December 31, 1999, the Partnership declared and paid a
distribution of approximately $285,000 payable to the General Partner in
connection with the sale of Mesa Dunes Mobile Home Park. The Partnership
declared a distribution of approximately $212,000 in 1998 for the sale of
Whispering Pines Mobile Home Park which was subsequently paid to the General
Partner during the year ended December 31, 1999. However, these fees are
subordinate to the limited partners receiving a preferred return, as specified
in the partnership agreement. If the limited partners have not received their
preferred return when the Partnership terminates, the General Partner will
return these amounts to the Partnership. The Partnership distributed
approximately $4,016,000 (approximately $3,976,000 to the limited partners or
$84.04 per limited partnership unit) from the Mesa Dunes Mobile Home Park and
Whispering Pines Mobile Home Park sale proceeds and approximately $1,314,000
(approximately $1,301,000 to the limited partners or $27.50 per limited
partnership unit) from operations during the year ended December 31, 1999. No
distributions were paid during the year ended December 31, 1998. Future
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves, and the timing of debt maturities,
refinancings, and/or property sales. The Partnership's distribution policy is
reviewed on a semi-annual basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit distributions to its partners in the year 2000 or
subsequent periods.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 16,261 limited
partnership units in the Partnership representing 34.37% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with "Item 7. Financial Statements" and
other items contained elsewhere in this report.
Results of Operations
The Partnership realized net income of approximately $1,714,000 versus net
income of approximately $3,131,000 for the years ended December 31, 1999 and
1998, respectively. The decrease in net income is due primarily to a decrease in
total revenues resulting from the gain of approximately $1,783,000 realized on
the sale of Mesa Dunes Mobile Home Park in February 1999 partially offset by the
extraordinary loss on early extinguishment of debt of approximately $1,011,000
during the first quarter of 1999 was less than the gain of approximately
$2,995,000 realized on the sale of Whispering Pines Mobile Home Park in July
1998 partially offset by the extraordinary loss on early extinguishment of debt
of approximately $229,000 during the third quarter of 1998. Excluding the
operations of Mesa Dunes and Whispering Pines and the related gain on the sale
of the investment properties, income increased during the year ended December
31, 1999 as compared to the year ended December 31, 1998. This increase at the
Partnership's residential properties is due to an increase in total revenues and
a decrease in total expenses. The increase in total revenues is due to an
increase in rental and other income. Rental income increased due to rental rate
increases and improved occupancy at two of the residential properties. Other
income increased primarily due to interest earned on the sale proceeds of Mesa
Dunes Mobile Home Park prior to the funds being distributed to the partners. The
decrease in total expenses is primarily due to a decrease in operating expense
and general and administrative expense partially offset by an increase in
depreciation expense. The decrease in operating expense is due to decreases in
insurance and maintenance expenses. The decrease in insurance expense is due to
a change in insurance carriers which resulted in new policies with lower
premiums. The decrease in maintenance expense is due primarily to the reduction
of exterior building improvements at Homestead Apartments. The decrease in
general and administrative expenses is due to a decline in general partner
reimbursements. The increase in depreciation expense is due to property
improvements and replacements placed into service at the remaining properties
over the last 12 months.
<PAGE>
Included in general and administrative expenses at both December 31, 1999 and
1998 are management reimbursements to the General Partner allowed under the
Partnership Agreement. In addition, costs associated with the quarterly and
annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement are also included.
On February 19, 1999, the Partnership sold Mesa Dunes Mobile Home Park to an
unaffiliated third party for distributable net sales proceeds of approximately
$9,292,000 after payment of closing costs. The Partnership realized a gain of
approximately $1,783,000 on the sale during the first quarter of 1999. The
Partnership also realized a loss on the early extinguishment of debt encumbering
the property of approximately $1,011,000 during the first quarter of 1999
consisting of a prepayment penalty and the write off of unamortized loan costs
and mortgage discount.
On July 16, 1998, the Partnership sold Whispering Pines Mobile Home Park to an
unaffiliated third party for net sales proceeds of approximately $6,959,000
after payment of closing costs. The Partnership realized a gain of approximately
$2,995,000 on the sale during the third quarter of 1998. The Partnership also
realized a loss on the early extinguishment of debt encumbering Whispering Pines
Mobile Home Park of approximately $229,000 during the third quarter of 1998
consisting of the write off of unamortized loan costs and mortgage discount.
The increase in income from discontinued operations is primarily due to an
increase in rental income as the result of the increase in occupancy at Town &
Country Shopping Center.
Wakonda Shopping Center and Town & Country Shopping Center are the two
commercial properties owned by the Partnership and represent one segment of the
Partnership's operations. Due to the projected sale of the two commercial
properties in 2000, the net assets of these properties have been classified as
"Investment in discontinued operations" as of December 31, 1999, on the balance
sheet. The investment in discontinued operations on the balance sheet as of
December 31, 1999 includes all the assets and liabilities of Town & Country
Shopping Center and Wakonda Shopping Center. The income of these two properties
has been classified as "Income from discontinued operations" for the years ended
December 31, 1999 and 1998. The revenues of these properties were approximately
$1,909,000 and $1,735,000 for 1999 and 1998, respectively. Income from
operations was approximately $460,000 and $308,000, respectively.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $156,000 ($3.26 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
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 expense. 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.
Capital Resources and Liquidity
At December 31, 1999, the Partnership held cash equivalents of approximately
$1,235,000 compared to approximately $4,918,000 at December 31, 1998. For the
year ended December 31, 1999, cash and cash equivalents decreased by
approximately $3,683,000 from the Partnership's year ended December 31, 1998.
The decrease in cash and cash equivalents is due to approximately $13,137,000 of
cash used in financing activities, which was partially offset by approximately
$8,366,000 of cash provided by investing activities and approximately $1,088,000
of cash provided by operating activities. Cash used in financing activities
consisted primarily of repayment of the mortgages encumbering Mesa Dunes Mobile
Home Park and Casa Granada Apartments, distributions paid to partners,
prepayment penalties relating to Mesa Dunes Mobile Home Park, loan costs, and
payments on mortgages encumbering the remaining properties partially offset by
proceeds from the refinancing of Casa Granada Apartments. Cash provided by
investing activities consisted primarily of sale proceeds from Mesa Dunes Mobile
Home Park and net withdrawals from restricted escrows maintained by the mortgage
lenders offset by property improvements and replacements and lease commissions.
The Registrant invests its working capital reserves in money market accounts.
On September 30, 1999, the Partnership refinanced the mortgage encumbering Casa
Granada Apartments. Interest on the new mortgage is 7.65%. Interest on the old
mortgage was 10.07%. The refinancing replaced indebtedness of approximately
$1,279,000, including accrued interest of approximately $12,000 with a new
mortgage in the amount of $1,413,000. Payments of approximately $12,000 are due
on the first day of each month until the loan matures on October 1, 2019. The
prior note matured in September 1999.
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 and other operating needs of the Registrant and to comply with
Federal, state, and local legal and regulatory requirements. The minimum amount
to be budgeted is expected to be $300 per unit or approximately $136,200.
Additional improvements may be considered and will depend on the physical
condition of each property as well as replacement reserves and anticipated cash
flow generated by each property. To the extent that such budgeted capital
improvements are completed, the Registrant's distributable cash flow, if any,
may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $8,426,000 has maturity dates ranging from
November 2003 to October 2019. The General Partner will attempt to refinance
such indebtedness and/or sell the properties prior to such maturity dates. If
the properties cannot be refinanced or sold for a sufficient amount, the
Registrant will risk losing such properties through foreclosure.
The Partnership declared a distribution of approximately $212,000 in 1998 for
the sale of Whispering Pines Mobile Home Park which was subsequently paid to the
General Partner during the year ended December 31, 1999. During the twelve
months ended December 31, 1999, the Partnership declared and paid a distribution
of approximately $285,000 payable to the General Partner in connection with the
sale of Mesa Dunes Mobile Home Park. However, both of these fees are subordinate
to the limited partners receiving a preferred return, as specified in the
partnership agreement. If the limited partners have not received their preferred
return when the Partnership terminates, the General Partner will return these
amounts to the Partnership. The Partnership distributed approximately $4,016,000
(approximately $3,976,000 to the limited partners or $84.04 per limited
partnership unit) from the Mesa Dunes Mobile Home Park and Whispering Pines
Mobile Home Park sale proceeds and approximately $1,314,000 (approximately
$1,301,000 to the limited partners or $27.50 per limited partnership unit) from
operations during the year ended December 31, 1999. No distributions were paid
during the twelve months ended December 31, 1998. The Partnership's distribution
policy is reviewed on a semi-annual basis. Future cash distributions will depend
on the levels of net cash generated from operations, the availability of cash
reserves, and the timing of debt maturities, refinancings, and/or property
sales. There can be no assurance, however, that the Partnership will generate
sufficient funds from operations after required capital expenditures to permit
any further distributions to its partners during the year 2000 or subsequent
periods.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 16,261 limited
partnership units in the Partnership representing 34.37% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any of the Managing Agent's computer
programs or hardware that had date-sensitive software or embedded chips might
have recognized a date using "00" as the year 1900 rather than the year 2000.
This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership has not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
<PAGE>
Item 7. Financial Statements
ANGELES INCOME PROPERTIES, LTD. 6
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999
and 1998
Consolidated Statements of Changes in Partners' (Deficit) Capital - Years
ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999
and 1998
Notes to Consolidated Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Partners
Angeles Income Properties, Ltd. 6
We have audited the accompanying consolidated balance sheet of Angeles Income
Properties, Ltd. 6 as of December 31, 1999, and the related consolidated
statements of operations, changes in partners' (deficit) capital and cash flows
for each of the two years in the period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Angeles Income
Properties, Ltd. 6 at December 31, 1999, and the consolidated results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
As discussed in Note N to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
<PAGE>
ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,235
Receivables and deposits 381
Restricted escrows 245
Other assets 288
Investment properties (Notes C and I):
Land $ 1,632
Buildings and related personal property 14,356
15,988
Less accumulated depreciation (5,626) 10,362
Investment in discontinued operations (Note H) 2,811
$15,322
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 257
Tenant security deposit liabilities 52
Accrued property taxes 63
Other liabilities 226
Mortgage notes payable (Note C) 8,426
Partners' Capital
General partner $ 63
Limited partners (47,311 units issued
and outstanding) 6,235 6,298
$15,322
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Revenues: (Restated)
<S> <C> <C>
Rental income $ 3,556 $ 5,035
Other income 307 340
Gain on sale of investment properties 1,783 2,995
Total revenues 5,646 8,370
Expenses:
Operating expenses 1,458 2,100
General and administrative 311 567
Depreciation 519 719
Interest 757 1,475
Property taxes 336 457
Total expenses 3,381 5,318
Income before discontinued operations and
extraordinary item 2,265 3,052
Income from discontinued operations 460 308
Income before extraordinary item 2,725 3,360
Extraordinary loss on early extinguishment of debt (1,011) (229)
Net income $ 1,714 $ 3,131
Net income allocated to general partner $ 299 $ 646
Net income allocated to limited partners 1,415 2,485
$ 1,714 $ 3,131
Per limited partnership unit:
Income before discontinued operations and
extraordinary item $ 41.44 $ 50.86
Income from discontinued operations 9.63 6.45
Extraordinary loss on early extinguishment of debt (21.16) (4.79)
Net income $ 29.91 $ 52.52
Distributions per limited partnership unit $ 111.54 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 47,384 $ 1 $47,384 $47,385
Partners' (deficit) capital at
December 31, 1997 47,314 $ (332) $ 7,612 $ 7,280
Abandonment of limited
partnership units (Note J) (3)
Distribution payable to General
Partner (Note G) -- (212) -- (212)
Net income for the year ended
December 31, 1998 -- 646 2,485 3,131
Partners' capital at
December 31, 1998 47,311 102 10,097 10,199
Distributions to partners -- (338) (5,277) (5,615)
Net income for the year ended
December 31, 1999 -- 299 1,415 1,714
Partners' capital at
December 31, 1999 47,311 $ 63 $ 6,235 $ 6,298
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES INCOME PROPERTIES, LTD. 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,714 $ 3,131
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 868 999
Amortization of discounts, loan costs, and leasing
commissions 75 124
Gain on sale of investment properties (1,783) (2,995)
Extraordinary loss on early extinguishment of debt 1,011 229
Change in accounts:
Receivables and deposits (62) 340
Other assets (314) (87)
Accounts payable 77 16
Tenant security deposit liabilities -- (2)
Accrued taxes (52) 28
Other liabilities (446) 316
Net cash provided by operating activities 1,088 2,099
Cash flows from investing activities:
Property improvements and replacements (977) (749)
Lease commissions paid (7) --
Net withdrawals from (deposits to) restricted escrows 58 (14)
Proceeds from sale of investment properties 9,292 6,959
Net cash provided by investing activities 8,366 6,196
Cash flows used in financing activities:
Proceeds from long-term borrowing 1,413 --
Repayment of mortgage notes payable (7,702) (5,027)
Loan costs paid (46) --
Prepayment penalty (787) --
Distributions paid (5,827) --
Payments on mortgage notes payable (188) (291)
Net cash used in financing activities (13,137) (5,318)
Net (decrease) increase in cash and cash equivalents (3,683) 2,977
Cash and cash equivalents at beginning of the year 4,918 1,941
Cash and cash equivalents at end of year $ 1,235 $ 4,918
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,050 $ 1,707
Supplemental disclosure of non-cash flow information:
Distribution payable to General Partner $ -- $ 212
Property improvements and replacements in accounts
payable $ 95 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
ANGELES INCOME PROPERTIES, LTD. 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Angeles Income Properties, Ltd. 6 (the "Partnership" or
"Registrant") is a publicly-held limited partnership organized under the
California Uniform Limited Partnership Act pursuant to the Agreement of Limited
Partnership dated June 29, 1984, as amended. The Partnership's general partner,
Angeles Realty Corporation II, a California corporation (the "General Partner"
or "ARC II") was wholly-owned by Insignia Properties Trust ("IPT"). Effective
February 26, 1999, IPT merged into Apartment Investment and Management Company
("AIMCO"). Thus, the General Partner is now a wholly-owned subsidiary of AIMCO
(see "Note B - Transfer of Control"). The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2037, unless terminated prior to
such date. As of December 31, 1999, the Partnership operates three residential
properties in Maryland, Michigan, and Texas and two commercial properties in
Iowa.
Principles of Consolidation: The consolidated financial statements of the
Partnership include its 99% limited partnership interests in Granada AIPL 6,
Ltd., AIP 6 GP, LP, Whispering Pines AIP 6, LP and Lazy Hollow Partners, Ltd.
The Partnership may remove the General Partner of all of the above Partnerships;
therefore, the partnerships are controlled and consolidated by the Partnership.
Also included in the consolidated financial statements are Mesa Dunes GP, LLC,
Wakonda Partners, Town and Country Partners and Mesa Dunes Partners, which are
wholly-owned by the partnership. All significant interentity balances have been
eliminated.
Allocations and Distributions to Partners: In accordance with the Agreement of
Limited Partnership (the "Partnership Agreement"), any gain from the sale or
other disposition of Partnership assets will be allocated first to the General
Partner to the extent of the amount of any Incentive Interest to which the
General Partner is entitled. Any gain remaining after said allocation will be
allocated to the General Partner and Limited Partners in proportion to their
interests in the Partnership; provided, that the gain shall first be allocated
to Partners with negative account balances, in proportion to such balances, in
an amount equal to the sum of such negative capital account balances.
The Partnership will allocate other profits and losses 1% to the General Partner
and 99% to the Limited Partners.
Except as discussed below, the Partnership will allocate distributions 1% to the
General Partner and 99% to the Limited Partners.
Upon the sale or other disposition, or refinancing of any asset of the
Partnership, the Distributable Net Proceeds shall be distributed as follows: (i)
First, to the General Partner, on account of the current and accrued Management
Fee payable, deferred as contemplated therein (ii) Second, to the Partners in
proportion to their interests until the Limited Partners have received proceeds
equal to their unrecovered Capital Contributions (iii) Third, to the Partners
until the Limited Partners have received distributions equal to their 6% (not
compounded) Cumulative Distribution; (iv) Fourth, to the General Partner until
it has received an amount equal to 3% of the aggregate Disposition Prices of all
properties or investments sold (Initial Incentive Interest); (v) Fifth, to the
Partners until the Limited Partners have received distributions equal to their
8% (not compounded) Cumulative Distribution, with certain limited partners
receiving additional priority distributions ranging from 1.5% to 4.5% per annum
(not compounded); and (vi) Sixth, thereafter, 86% to the Partners in proportion
to their interests and 14% (Final Incentive Interest) to the General Partner.
Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.
Depreciation: Depreciation is calculated by the straight-line method over the
estimated lives of the investment properties and related personal property
ranging from 15 to 40 years for buildings and improvements and from five to
seven years for furnishings. For Federal income tax purposes, the accelerated
cost recovery method is used (1) for real property over 15 years for additions
prior to March 16, 1984, 18 years for additions after March 15, 1984 and before
May 9, 1985, and 19 years for additions after May 8, 1985, and before January 1,
1987, and (2) for personal property over 5 years for additions prior to January
1, 1987. As a result of the Tax Reform Act of 1986, for additions after December
31, 1986, the modified accelerated cost recovery method is used for depreciation
of (1) real property over 27 1/2 years and (2) personal property additions over
5 years.
Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (see "Note N").
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, in
banks and money market accounts. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
<PAGE>
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits for the residential properties and investment in
discontinued operations for the commercial properties. Deposits are refunded
when the tenant vacates, provided the tenant has not damaged its space and is
current on its rental payments.
Investment Properties: Investment properties consist of three apartment
complexes and two commercial complexes and are stated at cost. Due to the
projected sale of the two commercial properties in 2000, the net assets of these
properties have been classified as "Investment in discontinued operations" as of
December 31, 1999, on the balance sheet. Acquisition fees are capitalized as a
cost of real estate. In accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
the Partnership records impairment losses on long-lived assets used in
operations when events and circumstances indicate that the assets might be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets. Costs of investment
properties that have been permanently impaired have been written down to
appraised value. No adjustments for impairment of value were recorded in the
years ended December 31, 1999 or 1998.
Restricted Escrows: As a result of the refinancings in prior years of Homestead
Apartments and Lazy Hollow Apartments, general reserve accounts were established
to cover necessary repairs and replacements of existing improvements. The
balance in the reserve account for Homestead Apartments at December 31, 1999 is
approximately $24,000, with required monthly deposits of $2,000. The balance for
Lazy Hollow Apartments at December 31, 1999, is approximately $221,000 with
required monthly deposits of $2,000.
Loan Costs: Loan costs of approximately $194,000, less accumulated amortization
of approximately $45,000 at December 31, 1999, are included in other assets and
are being amortized on a straight-line basis over the lives of the related
loans.
Advertising: The Partnership expenses the cost of advertising as incurred.
Advertising costs of approximately $94,000 and $109,000 for the years ended
December 31, 1999 and 1998, respectively were charged to operating expense for
the residential properties as incurred. Advertising costs of approximately
$6,000 and $27,000 for the years ended December 31, 1999 and 1998, respectively,
are included in Income from discontinued operations for the commercial
properties.
Lease Commissions: Lease commissions of approximately $281,000, which are
included in Investment in discontinued operations in the accompanying
consolidated balance sheet, are amortized on a straight line basis over the
terms of the respective leases. Current accumulated amortization is
approximately $182,000.
Leases: The Partnership generally leases residential units for twelve-months
terms or less. The Partnership recognizes income as earned on residential
leases. Commercial building lease terms are generally for one to twenty years.
Income from base rents on such leases is recognized on a straight-line basis
over the lease term. Several tenants have percentage rent clauses which provide
for additional rent upon the tenant achieving certain rental objectives.
Percentage rent recognized was approximately $124,000 in 1999 and approximately
$103,000 in 1998 and is included in income from discontinued operations.
<PAGE>
Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. See "Note L" for required disclosures.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Note C - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
Lazy Hollow Apartments
<S> <C> <C> <C> <C> <C>
1st trust deed $ 3,919 $32 7.50% 07/19 $ --
Homestead Apartments
1st trust deed 3,099 22 7.33% 11/03 2,935
Casa Granada Apartments
1st trust deed 1,408 12 7.65% 10/19 --
Continuing Operations 8,426 66 2,935
Discontinued Operations
Wakonda Shopping Center
Town & Country
Shopping Center
1st trust deed (1) 3,312 28 9.00% 12/03 3,125
Total $11,738 $94 $ 6,060
</TABLE>
(1) Payable to Angeles Mortgage Investment Trust ("AMIT") (see "Note G").
<PAGE>
On September 30, 1999, the Partnership refinanced the mortgage encumbering Casa
Granada Apartments. Interest on the new mortgage is 7.65%. Interest on the old
mortgage was 10.07%. The refinancing replaced indebtedness of approximately
$1,279,000, including accrued interest of approximately $12,000 with a new
mortgage in the amount of $1,413,000. Payments of approximately $12,000 are due
on the first day of each month until the loan matures on October 1, 2019. The
prior note matured in September 1999.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's investment properties and by pledge of revenues from the
investment properties. Prepayment penalties are imposed if the mortgage note is
repaid prior to maturity. Further, the properties may not be sold subject to
existing indebtedness.
Scheduled principal payments of the mortgage notes payable subsequent to
December 31, 1999 are as follows (in thousands):
2000 $ 204
2001 220
2002 238
2003 6,306
2004 167
Thereafter 4,603
$11,738
Note D - Sale of Investment Properties
On February 19, 1999, the Partnership sold Mesa Dunes Mobile Home Park to an
unaffiliated third party for distributable net sales proceeds of approximately
$9,292,000 after payment of closing costs. The Partnership realized a gain of
approximately $1,783,000 on the sale during the first quarter of 1999. The
Partnership also realized a loss on the early extinguishment of debt encumbering
the property of approximately $1,011,000 during the first quarter of 1999
consisting of a prepayment penalty and the write off of unamortized loan costs
and mortgage discount. Revenues from Mesa Dunes included in the accompanying
consolidated statements of operations were approximately $254,000 and $1,336,000
for the years ended December 31, 1999 and 1998, respectively.
On July 16, 1998, the Partnership sold Whispering Pines Mobile Home Park to an
unaffiliated third party for net sales proceeds of approximately $6,959,000
after payment of closing costs. The Partnership realized a gain of approximately
$2,995,000 on the sale during the third quarter of 1998. The Partnership also
realized a loss on the early extinguishment of debt encumbering Whispering Pines
Mobile Home Park of approximately $229,000 during the third quarter of 1998
consisting of the write off of unamortized loan costs and mortgage discount.
Revenues from Whispering Pines in the accompanying consolidated statements of
operations were approximately $572,000 for the year ended December 31, 1998.
<PAGE>
Note E - Distributions
During the year ended December 31, 1999, the Partnership declared and paid a
distribution of approximately $285,000 payable to the General Partner in
connection with the sale of Mesa Dunes Mobile Home Park. The Partnership
declared a distribution of approximately $212,000 in 1998 for the sale of
Whispering Pines Mobile Home Park which was subsequently paid to the General
Partner during the year ended December 31, 1999. However, these fees are
subordinate to the limited partners receiving a preferred return, as specified
in the partnership agreement. If the limited partners have not received their
preferred return when the Partnership terminates, the General Partner will
return these amounts to the Partnership. The Partnership distributed
approximately $4,016,000 (approximately $3,976,000 to the limited partners or
$84.04 per limited partnership unit) from the Mesa Dunes Mobile Home Park and
Whispering Pines Mobile Home Park sale proceeds and approximately $1,314,000
(approximately $1,301,000 to the limited partners or $27.50 per limited
partnership unit) from operations during the year ended December 31, 1999. No
distributions were paid during the year ended December 31, 1998.
Note F - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation of reported net income and Federal taxable
income (in thousands, except per unit data):
1999 1998
Net income as reported $ 1,714 $ 3,131
Add (deduct):
Depreciation differences (103) (64)
Disposition of investment property 349 (54)
Other (219) 124
Federal taxable income $ 1,741 $ 3,137
Federal taxable income per limited
partnership unit $ 30.48 $ 53.32
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $6,298
Land and buildings 8,113
Accumulated depreciation (492)
Syndication 6,802
Other 163
Net assets - tax basis $20,884
<PAGE>
Note G - 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 certain payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
The following payments were paid or accrued to the General Partner and
affiliates in 1999 and in 1998:
1999 1998
(in thousands)
Property management fees (included in
operating expense) $189 $313
Partnership management fees (included in general and
administrative expense) -- 104
Reimbursement for services of affiliates (included in
investment properties, operating expense and
general and administrative expense) 205 293
Property lease commissions -- 34
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Registrant's residential properties for providing property management services.
The Registrant paid to such affiliates approximately $189,000 and $274,000 for
the years ended December 31, 1999 and 1998, respectively. For the nine months
ending September 30, 1998, affiliates of the General Partner were entitled to
varying percentages of gross receipts from the Registrant's commercial
properties for providing property management services. These services were
performed by affiliates of the General Partner for the nine months ending
September 30, 1998 and were approximately $39,000. Effective October 1, 1998
(the effective date of the Insignia Merger), these services for the commercial
properties were provided by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $205,000 and $293,000 for the
years ended December 31, 1999 and 1998, respectively.
Pursuant to the Partnership Agreement for managing the affairs of the
Partnership, the General Partner is entitled to receive a Partnership management
fee equal to 10% of the Partnership's adjusted cash from operations. No fee was
accrued or paid in 1999. Approximately $104,000 in Partnership management fees
was accrued during the year ended December 31, 1998 and paid in 1999. No fees
were due in 1999.
Pursuant to the Partnership Agreement, the General Partner is entitled to
receive a distribution of 3% of the aggregate disposition price of sold
properties. Pursuant to this provision, the Partnership declared a distribution
of approximately $212,000 in 1998 for the sale of Whispering Pines Mobile Home
Park which was subsequently paid to the General Partner during the year ended
December 31, 1999. The Registrant also declared and paid a distribution to the
General Partner of approximately $285,000 in 1999 for the sale of Mesa Dunes
Mobile Home Park. These fees are subordinate to the limited partners receiving a
preferred return, as specified in the Partnership Agreement. If the limited
partners have not received their preferred return when the Partnership
terminates, the General Partner will return these amounts to the Partnership.
The Partnership has a first mortgage to AMIT in the amount of $3,312,000, which
is secured by Wakonda Shopping Center and Town & Country Shopping Center.
Pursuant to a series of transactions, affiliates of the General Partner acquired
ownership interests in AMIT. On September 17, 1998, AMIT was merged with and
into IPT. On February 26, 1999, IPT was then merged into AIMCO. As a result,
AIMCO became the holder of the AMIT note. The Partnership paid approximately
$300,000 and $303,000 in interest expense on this note to AMIT for 1999 and
1998, respectively.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 16,261 limited
partnership units in the Partnership representing 34.37% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
Note H - Investment in Discontinued Operations
Wakonda Shopping Center and Town & Country Shopping Center are the two
commercial properties owned by the Partnership and represent one segment of the
Partnership's operations. Due to the projected sale of the two commercial
properties in 2000, the net assets of these properties have been classified as
"Investment in discontinued operations" as of December 31, 1999, on the balance
sheet. The investment in discontinued operations on the balance sheet as of
December 31, 1999 includes the investment property and the remaining
receivables, other assets and liabilities of Town & Country Shopping Center and
Wakonda Shopping Center. The results of the commercial segment have been
classified as "Income from discontinued operations" for the years ended December
31, 1999 and 1998. The revenues of these properties were approximately
$1,909,000 and $1,735,000 for 1999 and 1998, respectively. Income from
operations was approximately $460,000 and $308,000, for 1999 and 1998,
respectively.
<PAGE>
Note I - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Cost
Buildings (Removed)
and Related Captialized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Lazy Hollow Apartments $ 3,919 $ 998 $ 8,988 $(2,587)
Homestead Apartments 3,099 557 5,988 (824)
Casa Granada Apartments 1,408 235 1,930 703
Continuing Operations 8,426 1,790 16,906 (2,708)
Discontinued Operations
Wakonda Shopping Center 1,656 873 2,469 236
Town & Country Shopping
Center 1,656 38 3,994 426
Totals $11,738 $ 2,701 $23,369 $(2,046)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1999
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Lazy Hollow Apartments $ 841 $ 6,558 $ 7,399 $ 2,778 07/01/89 5-40
Homestead Apartments 557 5,164 5,721 2,070 11/10/88 5-40
Casa Granada Apartments 234 2,634 2,868 778 04/30/89 5-40
Continuing Operations 1,632 14,356 15,988 5,626
Discontinued Operations
Wakonda Shopping Center 873 2,705 3,578 1,151 04/01/95 5-40
And Town & Country
Shopping Center 38 4,420 4,458 1,192 04/01/95 5-40
Totals $ 2,543 $21,481 $24,024 $ 7,969
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Investment Properties
Balance at beginning of year $31,921 $36,223
Property improvements 1,072 749
Disposal of investment properties (8,969) (5,051)
Balance at end of year $24,024 $31,921
Accumulated Depreciation
Balance at beginning of year $ 8,562 $ 8,650
Additions charged to expense 868 999
Disposal of investment properties (1,461) (1,087)
Balance at end of year $ 7,969 $ 8,562
<PAGE>
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $32,137,000 and $38,914,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $8,461,000 and $8,080,000.
Note J - Abandonment of Limited Partnership Units
In 1998, the number of Limited Partnership Units decreased by 3 units due to
Limited Partners abandoning their units. In abandoning Limited Partnership
Units, a Limited Partner relinquishes all right, title and interest in the
Partnership as of the date of abandonment. However, during the year of
abandonment, the Limited Partner will still be allocated his or her share of the
income or loss for that year. The income per limited partnership unit in the
accompanying consolidated statements of operations is calculated based on the
number of units outstanding at the beginning of the year. No units were
abandoned in 1999.
Note K - Operating Leases
Tenants of the commercial properties are responsible for their own utilities and
maintenance of their space, and payment of their proportionate share of common
area maintenance, utilities, insurance and real estate taxes. Tenants are
generally not required to pay a security deposit.
As of December 31, 1999, the Partnership had minimum future rentals under
non-cancelable leases with initial or remaining terms in excess of one year as
follows (in thousands):
2000 $1,130
2001 778
2002 536
2003 283
2004 159
Thereafter 573
$3,459
Note L - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has two reportable segments: residential and commercial
properties. The Partnership's residential property segment consists of three
apartment complexes in Maryland, Michigan, and Texas. The Partnership rents
apartment units for terms that are typically twelve months or less. At December
31, 1999, the Partnership's commercial property segment consists of two retail
shopping centers located in Iowa. The Partnership rents commercial space to
tenants under various lease terms expiring during 2000 through 2017. These
properties lease space to a grocery chain, various specialty retail outlets and
fast food enterprises and discount stores.
<PAGE>
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segments consist of investment properties that
offer different products and services. The reportable segments are each managed
separately because they provide services with different types of products and
customers.
Segment information for the years 1999 and 1998 is shown in the tables below (in
thousands). The "Other" Column includes Partnership administration related items
and income and expense not allocated to the reportable segments (in thousands).
<TABLE>
<CAPTION>
1999 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $ 3,556 $ -- $ -- $ 3,556
Other income 225 -- 82 307
Interest expense 757 -- -- 757
Depreciation 519 -- -- 519
General and administrative
expense -- -- 311 311
Gain on sale of investment
property 1,783 -- -- 1,783
Loss on extraordinary item (1,011) -- -- (1,011)
Segment profit (loss) 1,483 460 (229) 1,714
Total assets 12,123 2,554 645 15,322
Capital expenditures for
investment properties 1,043 29 -- 1,072
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $ 5,035 $ -- $ -- $ 5,035
Other income 285 -- 55 340
Interest expense 1,475 -- -- 1,475
Depreciation 719 -- -- 719
General and administrative
expense -- -- 567 567
Gain on sale of investment
property 2,995 -- -- 2,995
Loss on extraordinary item (229) -- -- (229)
Segment profit (loss) 3,335 308 (512) 3,131
Total assets 22,275 6,607 941 29,823
Capital expenditures for
investment properties 325 424 -- 749
</TABLE>
Note M - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement, settling claims, subject to final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the General Partner and its affiliates
terminated the proposed settlement. Certain plaintiffs have filed a motion to
disqualify some of the plaintiffs' counsel in the action. The General Partner
does not anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note N - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $156,000 ($3.26 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
<PAGE>
Item 8. Changes in and Disagreements with Accountant on Accounting and
Financial Disclosures
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Angeles Income Properties, Ltd. 6 (the "Partnership" or the "Registrant") has no
officers or directors. The names of the directors and executive officers of
Angeles Realty Corporation ("ARC II" or the "General Partner"), their ages and
the nature of all positions with ARC II presently held by them are as follows:
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the
Managing General Partner since October 1, 1998. Mr. Foye has served as
Executive Vice President of AIMCO since May 1998. Prior to joining AIMCO,
Mr. Foye was a partner in the law firm of Skadden, Arps, Slate, Meagher &
Flom LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels,
Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy
Chairman of the Long Island Power Authority and serves as a member of the New
York State Privatization Council. He received a B.A. from Fordham College
and a J.D. from Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group, Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO Properties, L.P. and its joint filers failed to timely file a Form 3 with
respect to its acquisition of Units and AIMCO and its joint filers failed to
timely file a Form 4 with respect to its acquisition of Units.
Item 10. Executive Compensation
Neither the director nor officers received any remuneration from the General
Partner during the year ended December 31, 1999.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1999.
Entity Number of Units Percentage
AIMCO Properties, LP 10,799 22.83%
(an affiliate of AIMCO)
Cooper River Properties, LLC 3,506 7.41%
(an affiliate of AIMCO)
Insignia Properties LP 1,956 4.13%
(an affiliate of AIMCO)
Cooper River Properties, LLC and Insignia Properties LP are indirectly
ultimately owned by AIMCO. Their business address is 55 Beattie Place,
Greenville, SC 29602.
AIMCO Properties, LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, CO 80222.
No director or officer of the General Partner owns any Units. The General
Partner owns 100 Units as required by the terms of the partnership agreement
governing the Partnership.
The Partnership knows of no contractual arrangements, the operation of the terms
of which may at a subsequent date result in a change in control of the
Partnership, except for: Article 12.1 of the Agreement, which provides that upon
a vote of the limited partners holding more than 50% of the then outstanding
limited partnership units the general partner may be expelled from the
Partnership upon 90 days written notice. In the event that successor general
partner has been elected by limited partners holding more than 50% of the then
outstanding limited partnership Units and if said limited partners elect to
continue the business of the Partnership, the Partnership is required to pay in
cash to the expelled general partner an amount equal to the accrued and unpaid
management fee, described in Article 10 of the Agreement and to purchase the
general partner's interest in the Partnership on the effective date of the
expulsion, which shall be an amount equal to the difference between the balance
of the general partner's capital account and the fair market value of the share
of distributable net proceeds to which the general partner would be entitled.
Such determination of the fair market value of the share of distributable net
proceeds is defined in Article 12.2(b) of the Agreement.
Item 12. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for certain payments
to affiliates for services and reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
<PAGE>
The following payments were paid or accrued to the Managing General Partner and
affiliates in 1999 and in 1998:
1999 1998
(in thousands)
Property management fees $189 $313
Partnership management fees -- 104
Lease commissions -- 34
Reimbursement for services of affiliates 205 293
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Registrant's residential properties for providing property management services.
The Registrant paid to such affiliates approximately $189,000 and $274,000 for
the years ended December 31, 1999 and 1998, respectively. For the nine months
ending September 30, 1998, affiliates of the General Partner were entitled to
varying percentages of gross receipts from the Registrant's commercial
properties for providing property management services. These services were
performed by affiliates of the General Partner for the nine months ending
September 30, 1998 and were approximately $39,000. Effective October 1, 1998
(the effective date of the Insignia Merger), these services for the commercial
properties were provided by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $205,000 and $293,000 for the
years ended December 31, 1999 and 1998, respectively.
Pursuant to the Partnership Agreement for managing the affairs of the
Partnership, the General Partner is entitled to receive a Partnership management
fee equal to 10% of the Partnership's adjusted cash from operations. No fee was
accrued or paid in 1999. Approximately $104,000 in Partnership management fees
was accrued during the year ended December 31, 1998 and paid in 1999. No fees
were due in 1999.
Pursuant to the Partnership Agreement, the General Partner is entitled to
receive a distribution of 3% the aggregate disposition price of sold properties.
Pursuant to this provision, the Registrant declared a distribution of
approximately $212,000 in 1998 for the sale of Whispering Pines Mobile Home Park
which was subsequently paid to the General Partner during the year ended
December 31, 1999. The Registrant also declared and paid a distribution, to the
General Partner of approximately $285,000 in 1999 for the sale of Mesa Dunes
Mobile Home Park. These fees are subordinate to the limited partners receiving a
preferred return, as specified in the Partnership Agreement. If the limited
partners have not received their preferred return when the Partnership
terminates the General Partner will return these amounts to the Partnership.
The Partnership has a first mortgage to AMIT in the amount of $3,350,000, which
is secured by Wakonda Shopping Center and Town & Country Shopping Center.
Pursuant to a series of transactions, affiliates of the General Partner acquired
ownership interests in AMIT. On September 17, 1998, AMIT was merged with and
into IPT. On February 26, 1999, IPT was then merged into AIMCO. As a result,
AIMCO became the holder of the AMIT note. The Partnership paid approximately
$300,000 and $303,000 in interest expense on this note to AMIT for 1999 and
1998, respectively.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 16,261 limited
partnership units in the Partnership representing 34.37% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change
in Accounting Principle, is filed as an exhibit to this report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed in the fourth quarter of calendar year
1999:
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
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/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities on the date
indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
EXHIBIT INDEX
Exhibit
2.1 NPI, Inc. Stock Purchase Agreement, dated as of August 17, 1995,
incorporated by reference to the Partnership's Current Report on
Form 8-K dated August 17, 1995.
3.1 Amended Certificate and Agreement of the Limited Partnership filed
in the Partnership's Prospectus dated June 11, 1987 which is
incorporated herein by reference.
3.2 Second Amended and Restated Bylaws of IPT, dated October 2, 1998
(incorporated by reference to Registrant's Current Report on Form
8-K, dated October 1, 1998.
10.1 Agreement of Purchase and Sale of Real Property with Exhibits -
Whispering Pines Mobile Home Park filed in Form 8-K dated November
30, 1987 which is incorporated herein by reference.
10.2 Agreement of Purchase and sale of Real Property and Exhibits - Mesa
Dunes Mobile Home Park filed in Form 8-K dated December 23, 1987
which is incorporated herein by reference.
10.3 Beneficiary's Statement of Assumption - Mesa Dunes Mobile Home Park
filed in Form 8-K dated December 23, 1987 which is incorporated
herein by reference.
10.4 General Partnership Agreement of Sunny Acres Partners - Mesa Dunes
Mobile Home Park filed in Form 8-K dated December 23, 1987 which is
incorporated herein by reference.
10.5 Agreement of Purchase and Sale of Property with Exhibits - Wakonda
Shopping Center and Town & Country Shopping Center filed in Form 8-K
dated December 30, 1987 which is incorporated herein by reference.
10.6 First Amendment to Agreement of Purchase and Sale of Property -
Wakonda Shopping Center and Town & Country Shopping Center filed in
Form 8-K dated December 30, 1987 which is incorporated herein by
reference.
10.7 Agreement of Purchase and Sale of Real Property with Exhibits -
Homestead Apartments filed in Form 8-K dated November 10, 1988 which
is incorporated herein by reference.
10.8 Promissory Notes Homestead Apartments filed in Form 8-K dated March
29, 1991 which is incorporated herein by reference.
10.9 Agreement of Purchase and Sale of Real Property and Exhibits - Lazy
Hollow Apartments filed in Form 8-K dated December 1989, which is
incorporated herein by reference.
10.10 Agreement of Purchase and Sale of Real Property and Exhibits -
Hawthorne Works Business Center filed in Form 8-K dated January 19,
1990, which is incorporated herein by reference.
10.11 Promissory Note - Whispering Pines filed in Form 10-K dated March
27, 1992, which is incorporated herein by reference.
10.12 Stock Purchase Agreement dated November 24, 1992 showing the
purchase of 100% of the outstanding stock of Angeles Realty
Corporation II by IAP GP Corporation, a subsidiary of MAE GP
Corporation, filed in Form 8-K dated December 31, 1992, which is
incorporated herein by reference.
10.13 Contract to Purchase and Sell Property - Cable Plant and CM Complex
of Hawthorne Business Works - between CP and CMC and Greybeard
Properties, LLC, dated July 1, 1996.
10.14 Assignment and Assumption of Contracts - Cable Plant and CM Complex
of Hawthorne Business Works - between CP and CMC and LaSalle
National Trust, dated August 28, 1996.
10.15 Assignment and Assumption of Contracts - Cable Plant and CM Complex
of Hawthorne Business Works - between CP and CMC and Hawthorne
Street Properties, LLC, as agent of LaSalle National Trust, as
Trustee dated August 28, 1996.
10.16 Bill of Sale - Cable Plant and CM Complex of Hawthorne Business
Works - between CP and CMC and LaSalle National Trust, as Trustee
dated August 28, 1996.
10.17 Multifamily Note dated November 1, 1996, between Angeles Income
Properties Ltd. 6, a California Limited Partnership and Lehman
Brothers Holdings, Inc., relating to Homestead Apartments.
10.18 Contract of Sale executed October 8, 1997, by and between Angeles
Income Properties Ltd. 6, a California Limited Partnership and
Paul Callister regarding the sale of LaSalle Warehouse.
10.19 Assignment and Assumption of Leases regarding the sale of LaSalle
Warehouse.
10.20 Blanket Conveyance, Bill of Sale and Assignment regarding the
sale of LaSalle Warehouse.
10.21 Contract of Sale between Registrant and Hometown America, L.L.C.
effective July 16, 1998.
10.22 Amendment to Contract of Sale between Registrant and Hometown
America, L.L.C. effective July 16, 1998.
10.23 Second Amendment to Contract of Sale between Registrant and
Hometown America, L.L.C. effective July 16, 1998.
10.24 Contract of Sale between Registrant and Matthew N. Follett, L.P.,
effective September 8, 1998 (filed as Exhibit 10.21 on Form 8-K
February 19, 1999).
10.25 Reinstatement and Amendment to Contract of Sale between
Registrant and Matthew N. Follett, L.P., effective December 14,
1998 (filed as Exhibit 10.21 on Form 8-K February 19, 1999).
10.26 Multi-family note between Granada AIPL6, L.P. and GMAC Commercial
Mortgage Corporation dated September 27, 1999.
<PAGE>
16.1 Letter from the Registrant's former independent accountant regarding
its concurrence with the statements made by the Registrant is
incorporated by reference to the Exhibit filed with Form 8-K dated
September 1, 1993.
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.
27 Financial Data Schedule.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Angeles Realty Corporation II
General Partner of Angeles Income Properties, Ltd. 6
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note N of Notes to the Consolidated Financial Statements of Angeles Income
Properties, Ltd. 6 included in its Form 10-KSB for the year ended December 31,
1999 describes a change in the method of accounting to capitalize exterior
painting and major landscaping, which would have been expensed under the old
policy. You have advised us that you believe that the change is to a preferable
method in your circumstances because it provides a better matching of expenses
with the related benefit of the expenditures and is consistent with policies
currently being used by your industry and conforms to the policies of the
General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<PAGE>
Exhibit 10.26
FHLMC Loan No. 002640244
MULTIFAMILY NOTE
(TEXAS)
US $1,413,000.00 As of this 27th day of September, 1999
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of One Million Four
Hundred Thirteen Thousand and 00/100 Dollars (US $1,413,000.00), with interest
on the unpaid principal balance at the annual rate of seven and sixty-five
hundredths percent (7.65%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Eleven Thousand Five Hundred Twelve and 98/100 Dollars (US
$11,512.98), shall be payable on the first day of each month beginning on
November 1, 1999, until the entire unpaid principal balance evidenced by this
Note is fully paid. Any accrued interest remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on October 1, 2019 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "Maturity Date"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Default Rate. So long as (a) any monthly installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first paragraph of this Note or the maximum interest rate which may be
collected from Borrower under applicable law. If the unpaid principal balance
and all accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate. Borrower also acknowledges that its failure to make
timely payments will cause Lender to incur additional expenses in servicing and
processing the loan evidenced by this Note (the "Loan"), that, during the time
that any monthly installment under this Note is delinquent for more than 30
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment under this Note is delinquent for more than 30 days or any
other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk. Borrower agrees that the increase in the
rate of interest payable under this Note to the Default Rate represents a fair
and reasonable estimate, taking into account all circumstances existing on the
date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.
8. Loan Charges. Borrower and Lender intend at all times to comply with the law
of the State of Texas governing the maximum rate or amount of interest payable
on or in connection with this Note and the Indebtedness (or applicable United
States federal law to the extent that it permits Lender to contract for, charge,
take, reserve or receive a greater amount of interest than under Texas law). If
the applicable law is ever judicially interpreted so as to render usurious any
amount payable under this Note or under any other Loan Document, or contracted
for, charged, taken, reserved or received with respect to the Indebtedness, or
of acceleration of the maturity of this Note, or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by any
applicable law, then Borrower and Lender expressly intend that all excess
amounts collected by Lender shall be applied to reduce the unpaid principal
balance of this Note (or, if this Note has been or would thereby be paid in
full, shall be refunded to Borrower), and the provisions of this Note, the
Security Instrument and any other Loan Documents immediately shall be deemed
reformed and the amounts thereafter collectible under this Note or any other
Loan Document reduced, without the necessity of the execution of any new
documents, so as to comply with any applicable law, but so as to permit the
recovery of the fullest amount otherwise payable under this Note or any other
Loan Document. The right to accelerate the maturity of this Note does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Lender does not intend to collect any
unearned interest in the event of acceleration. All sums paid or agreed to be
paid to Lender for the use, forbearance or detention of the Indebtedness shall,
to the extent permitted by any applicable law, be amortized, prorated, allocated
and spread throughout the full term of the Indebtedness until payment in full so
that the rate or amount of interest on account of the Indebtedness does not
exceed the applicable usury ceiling. Notwithstanding any provision contained in
this Note, the Security Instrument or any other Loan Document that permits the
compounding of interest, including any provision by which any accrued interest
is added to the principal amount of this Note, the total amount of interest that
Borrower is obligated to pay and Lender is entitled to receive with respect to
the Indebtedness shall not exceed the amount calculated on a simple (i.e.,
noncompounded) interest basis at the maximum rate on principal amounts actually
advanced to or for the account of Borrower, including all current and prior
advances and any advances made pursuant to the Security Instrument or other Loan
Documents (such as for the payment of taxes, insurance premiums and similar
expenses or costs).
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on the last Business Day of a calendar month if Borrower has given Lender
at least 30 days prior notice of its intention to make such prepayment. Such
prepayment shall be made by paying (A) the amount of principal being prepaid,
(B) all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
For all purposes including the accrual of interest, any prepayment received by
Lender on any day other than the last calendar day of the month shall be deemed
to have been received on the last calendar day of such month. For purposes of
this Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made no more than 180 days
before the Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs, including
fees and out-of-pocket expenses of attorneys and expert witnesses and costs of
investigation, incurred by Lender as a result of any default under this Note or
in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
15. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
16. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
17. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
18. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 31 of the Security Instrument.
19. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
20. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
X Schedule A Prepayment Premium (required)
X Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.
GRANADA AIPL6, A TEXAS LIMITED PARTNERSHIP, a
Texas limited partnership
By: Granada AIPL6, Inc.,
a Texas corporation,
its general partner
By
Name:
Title:
74-2640737
Borrower's Social Security/Employer ID Number
<PAGE>
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS 28TH DAY OF SEPTEMBER, 1999.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:
Donald W. Marshall
Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:
(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be the
greater of:
(i) of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of the Note,
expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on which the
prepayment is made; in any other case, the date on which Lender accelerates the
unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of the date 5
Business Days before the Prepayment Date, on the 9.25% U.S. Treasury Security
due February 1, 2016, as reported in The Wall Street Journal, expressed as a
decimal calculated to five digits. In the event that no yield is published on
the applicable date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the non-callable
Treasury Security maturing in the same year as the Treasury Security specified
above with the lowest yield published in The Wall Street Journal as of the
applicable date. If the publication of such yield rates in The Wall Street
Journal is discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine the Assumed
Reinvestment Rate. The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.
<PAGE>
Present Value Factor: the factor that discounts to present value the costs
resulting to Lender from the difference in interest rates during the months
remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate
as the discount rate, with monthly compounding, expressed numerically as
follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than 180 days before the Maturity Date, the prepayment premium
shall be 1.0% of the unpaid principal balance of this Note.
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The following paragraph is added to Paragraph 8 of the Note ("Loan
Charges"):
Notwithstanding any contrary provision contained in this Note, if
any sum payable under this Note is not paid within three (3) days
from the date on which it is due or the earliest time permitted
under applicable law for a late payment charge to accrue, Borrower
shall pay to Lender upon demand an amount equal to the lesser of (a)
five percent (5%) of such unpaid sum or (b) the maximum amount
permitted by applicable law in order to defray a portion of the
expenses incurred by Lender in handling and processing such
delinquent payment and to compensate Lender for the loss of the use
of such delinquent payment. If the day when any payment required
under this Note is due is not a Business Day (as defined in
Paragraph 10 of the Note), then payment shall be due on the first
Business Day thereafter.
2. The first sentence of 7 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
3. Paragraph 9(c) of the Note is amended to add the following subparagraph
(4):
(4) failure by Borrower to pay the amount of the water and sewer charges,
taxes, fire, hazard or other insurance premiums, ground rents in accordance with
the terms of the Security Instrument.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties, LTD. 6 1999 Fourth Quarter 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000812564
<NAME> Angeles Income Properties, LTD. 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,235
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 15,988
<DEPRECIATION> 5,626
<TOTAL-ASSETS> 15,322
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 8,426
0
0
<COMMON> 0
<OTHER-SE> 6,298
<TOTAL-LIABILITY-AND-EQUITY> 15,322
<SALES> 0
<TOTAL-REVENUES> 5,646
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,381
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 757
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 460
<EXTRAORDINARY> (1,011)
<CHANGES> 0
<NET-INCOME> 1,714
<EPS-BASIC> 29.91 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
