FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from .........to.........
Commission file number 0-11766
ANGELES PARTNERS XI
(Exact name of small business issuer as specified in its charter)
California 95-3788040
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
55 Beattie Place, Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES PARTNERS XI
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1998
Assets
Cash and cash equivalents $ 1,114
Receivables and deposits 999
Other assets 375
Investment in, and advances of $164 to, Joint Venture 257
Investment property:
Land $ 3,998
Buildings and related personal property 25,582
29,580
Less accumulated depreciation (18,270) 11,310
$ 14,055
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 133
Due to affiliates 10
Tenant security deposit liabilities 565
Other liabilities 453
Notes payable 31,269
Partners' Deficit
General partners $ (499)
Limited partners (39,637 units issued and outstanding) (17,876) (18,375)
$ 14,055
See Accompanying Notes to Financial Statements
b)
ANGELES PARTNERS XI
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Rental income $ 1,814 $ 1,741 $ 5,367 $ 5,138
Other income 136 88 321 221
Casualty gain -- -- 346 --
Total revenues 1,950 1,829 6,034 5,359
Expenses:
Operating 676 679 1,858 1,920
General and administrative 43 46 140 128
Depreciation 374 383 1,122 1,133
Interest 726 728 2,180 2,181
Property taxes 204 212 606 571
Total expenses 2,023 2,048 5,906 5,933
Equity in income of Joint Venture 29 70 55 102
Net income (loss) $ (44) $ (149) $ 183 $ (472)
Net income (loss) allocated to $ -- $ (1) $ 2 $ (5)
general partners (1%)
Net income (loss) allocated to (44) (148) 181 (467)
limited partners (99%)
Net income (loss) $ (44) $ (149) $ 183 $ (472)
Net income (loss) per limited
partnership unit $ (1.11) $ (3.73) $ 4.57 $(11.78)
See Accompanying Notes to Financial Statements
c)
ANGELES PARTNERS XI
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 40,000 $ 30 $ 40,000 $ 40,030
Partners' deficit at
December 31, 1997 39,637 $ (501) $(18,057) $(18,558)
Net income for the nine months
ended September 30, 1998 -- 2 181 183
Partners' deficit at
September 30, 1998 39,637 $ (499) $(17,876) $(18,375)
See Accompanying Notes to Financial Statements
d)
ANGELES PARTNERS XI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1998 1997
Cash flows from operating activities:
Net income (loss) $ 183 $ (472)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Equity in income of Joint Venture (55) (102)
Depreciation 1,122 1,133
Amortization of loan costs 85 94
Casualty gain (346) --
Change in accounts:
Receivables and deposits (67) 3
Other assets 12 (42)
Accounts payable 61 (539)
Tenant security deposit liabilities 24 47
Due to affiliates (460) (28)
Other liabilities 20 85
Net cash provided by operating activities 579 179
Cash flows from investing activities:
Property improvements and replacements (438) (350)
Advances to Joint Venture -- (7)
Insurance proceeds received related to casualty 230 --
Net cash used in investing activities (208) (357)
Cash flows from financing activities:
Loan costs -- (12)
Payment on mortgage notes payable (3) (2)
Net cash used in financing activities (3) (14)
Net increase (decrease) in cash and cash equivalents 368 (192)
Cash and cash equivalents at beginning of period 746 662
Cash and cash equivalents at end of period $1,114 $ 470
Supplemental disclosure of cash flow information:
Cash paid for interest $2,096 $1,924
Supplemental disclosure of non-cash activity:
At September 30, 1998, in connection with a fire at Fox Run Apartments,
accounts payable was adjusted by approximately $43,000 and receivables and
deposits were adjusted by approximately $297,000 for non-cash activity.
See Accompanying Notes to Financial Statements
e)
ANGELES PARTNERS XI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Angeles Partners
XI (the "Partnership") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of Angeles Realty Corporation II (the "Managing General Partner"), all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and nine
month periods ended September 30, 1998, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1998. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Partnership's annual report on Form 10-KSB for
the fiscal year ended December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
PRINCIPLES OF CONSOLIDATION
The Partnership's financial statements include the accounts of Fox Run AP XI,
L.P., and Fox Run GP, L.P., of which the Partnership owns 99% limited
partnership interests. The Partnership may remove the General Partner of Fox
Run AP XI, L.P. and Fox Run GP, L.P.; therefore, these partnerships are deemed
controlled and therefore, consolidated by the Partnership. All interpartnership
balances have been eliminated.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
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's partnership greement 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 made to the Managing General Partner and its
affiliates during the nine months ended September 30, 1998 and 1997:
Nine Months Ended
September 30,
1998 1997
(in thousands)
Property management fees (included in operating expenses) $281 $261
Reimbursement for services of affiliates, including
approximately $10,000 and $10,000 of construction
services reimbursements for the nine months ended
September 30, 1998 and September 30, 1997,
respectively (included in investment properties,
general and administrative, and operating expenses) 107 102
Due to affiliates 10 470
The decrease in due to affiliates relates to the payment of amounts owing to
affiliates of the Managing General Partner for reimbursement of expenses in
prior years. The amounts had been previously accrued by the Partnership due to
the Partnership's liquidity problems in previous years. The Managing General
Partner postponed payment of the amounts until the Partnership's cash flow
position improved. In the third quarter of 1998, the Managing General Partner
determined that the Partnership had sufficient liquid assets to meet its current
operational needs and to provide the necessary maintenance and improvements to
its investment property in the near term. As a result, the amount due to
affiliates of approximately $460,000 was paid.
For the period from January 1, 1997, to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner with an insurer unaffiliated with the Managing General
Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy. The
agent assumed the financial obligations to the affiliate of the Managing General
Partner which receives payments on these obligations from the agent. The amount
of the Partnership's insurance premiums accruing to the benefit of the affiliate
of the Managing General Partner by virtue of the agent's obligations was not
significant.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
provides financing (the "AMIT Loan") to the Princeton Meadows Golf Course Joint
Venture ("Joint Venture"), (see "Note C" below). The AMIT Loan had a principal
balance of $1,567,000 at September 30, 1998, accrues interest at a rate of 12.5%
per annum and matures on September 1, 2000, at which time the outstanding
principal and any unpaid interest is due. Interest expense on the debt secured
by the Joint Venture was approximately $147,000 for each of the nine months
ended September 30, 1998 and 1997, respectively. Accrued interest was $18,000
at September 30, 1998. Pursuant to a series of transactions, affiliates of the
Managing General Partner acquired ownership interests in AMIT. On September 17,
1998, AMIT was merged with and into Insignia Properties Trust ("IPT"), the
entity which controls the Managing General Partner. As a result, IPT became the
holder of the AMIT Loan.
The Partnership may make advances to the Joint Venture as deemed appropriate by
the Managing General Partner. These advances do not bear interest and do not
have stated terms of repayment. At September 30, 1998, the amount of advances
receivable from the Joint Venture was approximately $2,400.
On August 12, 1998, an affiliate of the Managing General Partner (the
"Purchaser") commenced a tender offer for limited partnership interests in the
Partnership. The Purchaser offered to purchase up to 18,000 of the outstanding
units of limited partnership interest in the Partnership at $150 per Unit, net
to the seller in cash. The expiration date for the tender offers has been
extended to November 16, 1998.
NOTE C - INVESTMENT IN JOINT VENTURE
The Partnership owns a 41.1% interest in the Princeton Meadows Golf Course Joint
Venture. The Partnership accounts for its interest in the Joint Venture using
the equity method of accounting.
Condensed balance sheet information of the Joint Venture at September 30, 1998,
is as follows (in thousands):
Assets
Cash $ 357
Other assets 268
Investment property, net 2,039
Total $ 2,664
Liabilities and Partners' Capital
Note payable to AMIT $ 1,567
Other liabilities 852
Partners' capital 245
Total $ 2,664
The condensed statements of operations of the Joint Venture are summarized as
follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(in thousands) (in thousands)
Revenues $ 575 $ 620 $ 1,319 $ 1,361
Costs and expenses (490) (449) (1,171) (1,113)
Net income $ 85 $ 171 $ 148 $ 248
The Partnership realized equity income of approximately $55,000 and $102,000 in
the Joint Venture for the nine months ended September 30, 1998, and 1997,
respectively.
The Princeton Meadows Golf Course property had an underground fuel storage tank
that was removed in 1992. This fuel storage tank caused contamination to the
area. Management installed monitoring wells in the area where the tank was
formerly buried. Some samples from these wells indicated lead and phosphorous
readings that were higher than the range prescribed by the New Jersey Department
of Environmental Protection ("DEP"). The Joint Venture notified the DEP of the
findings when they were first discovered. However, the DEP did not give any
directives as to corrective action until late 1995.
In November 1995, representatives of the Joint Venture and the DEP met and
developed a plan of action to clean-up the contamination site at Princeton
Meadows Golf Course.
The Joint Venture has engaged an engineering firm to conduct consulting and
compliance work and a second firm to perform the field work necessary for the
clean-up. Field work is in process with skimmers having been installed at three
test wells on the site. These skimmers are in place to detect any residual fuel
that may still be in the ground. The expected completion date of field work
should be sometime in 1999. The Joint Venture originally recorded a liability of
$199,000 for the costs of the clean-up. Subsequently, in 1997, the Joint Venture
recorded an additional liability of approximately $45,000 as an adjustment to
estimated costs remaining to complete the clean-up. At September 30, 1998, the
balance in the liability for clean-up costs is $54,000. Funds from the property
will be used to cover this excess.
Representatives of the Joint Venture have entered into negotiations with a
potential buyer for the Princeton Meadows Golf Course. However, the contract
for the sale has not been finalized and Joint Venture Representatives cannot
assure that the sale will be consummated.
NOTE D - TRANSFER OF CONTROL; SUBSEQUENT EVENT
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired approximately
51% of the outstanding common shares of beneficial interest of IPT. Also,
effective October 1, 1998 IPT and AIMCO entered into an Agreement and plan of
Merger pursuant to which IPT is to be merged with and into AIMCO or a subsidiary
of AIMCO (the "IPT Merger"). The IPT Merger requires the approval of the
holders of a majority of the outstanding IPT Shares. AIMCO has agreed to vote
all of the IPT Shares owned by it in favor of the IPT Merger and has granted an
irrevocable limited proxy to unaffiliated representatives of IPT to vote the IPT
Shares acquired by AIMCO and its subsidiaries in favor of the IPT Merger. As a
result of AIMCO's ownership and its agreement, the vote of no other holder of
IPT is required to approve the merger. The Managing General Partner does not
believe that this transaction will have a material effect on the affairs and
operations of the Partnership.
NOTE E - CASUALTY
In October, 1997, there was a fire at Fox Run Apartments that completely
destroyed the clubhouse and office. The undepreciated value of the clubhouse
and office was written off and netted with the proceeds received in 1997,
resulting in no gain or loss recognized in 1997. Total insurance proceeds have
now been received and are estimated to cover the cost of replacement of the
assets. A casualty gain of approximately $346,000 resulting from the receipt of
these insurance proceeds was recognized during the nine months ended September
30, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment property consists of one apartment complex. The
following table sets forth the average occupancy of the property for the nine
months ended September 30, 1998 and 1997:
Average Occupancy
1998 1997
Fox Run Apartments
Plainsboro, New Jersey 96% 96%
The Partnership incurred a net loss of approximately $44,000 and net income of
$183,000, respectively, for the three and nine months ended September 30, 1998,
as compared to net losses of approximately $149,000 and $472,000 for the three
and nine months ended September 30, 1997. These increases in net income is due
to an increase in rental income, other income and the recognition of a casualty
gain for the nine months ended September 30, 1998 combined with a decrease in
operating expense partially offset by a decrease in the equity in the income of
the joint venture in Princeton Meadows Golf Course.
Fox Run Apartments' increased rental income is the result of an increase in
average rental rates for the nine months ended September 30, 1998, versus the
nine months ended September 30, 1997. In addition, the increase in other income
is primarily the result of increased revenues from laundry facilities and
increased lease cancellation fees. While total expenses for the nine months
ended September 30, 1998 remained relatively consistent with the nine months
ended September 30, 1997, operating expense decreased primarily due to a
decrease in maintenance expense at Fox Run Apartments. This can be attributed
to the fact that much of the maintenance work is currently being done less
expensively by in-house personnel rather than outside contractors. Also, less
interior painting was done at Fox Run Apartments during the period ended
September 30, 1998 as compared to the period ended September 30, 1997 due to
fewer tenants vacating their units. The decrease in operating expenses was
partially offset by an increase in tax expense due to an increase in tax rates
at Fox Run Apartments.
In October 1997, there was a fire at Fox Run Apartments that completely
destroyed the clubhouse and office. The undepreciated value of the clubhouse
and office was written off and netted with the proceeds received in 1997,
resulting in no gain or loss recognized in 1997. Total insurance proceeds have
now been received and are estimated to cover the cost of replacement of the
assets. A casualty gain of approximately $346,000 resulting from the receipt of
these insurance proceeds was recognized during the nine months ended September
30, 1998.
The Partnership has a 41.1% investment in the Princeton Meadows Golf Course
Joint Venture. For the three and nine months ended September 30, 1998, the
Partnership realized equity in income of the Joint Venture of approximately
$29,000 and $55,000, respectively, as compared to equity in income of the Joint
Venture of approximately $70,000 and $102,000 for the three and nine months
ended September 30, 1997.
Representatives of the Joint Venture have entered into negotiations with a
potential buyer for the Princeton Meadows Golf Course. However, the contract
for the sale has not been finalized and Joint Venture Representatives cannot
assure that the sale will be consummated.
Included in operating expense for the nine months ended September 30, 1998, is
approximately $41,000 of major repairs and maintenance mainly comprised of major
landscaping and window covering replacements. For the nine months ended
September 30, 1997, included in operating expense is approximately $32,000 of
major repairs and maintenance mainly comprised of construction oversight costs
relating to repairs ongoing at Fox Run Apartments during 1997, window covering
replacements, and swimming pool repairs.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment at its investment property to
assess the feasibility of increasing rent, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of
this plan, the Managing 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
Managing General Partner will be able to sustain such a plan.
At September 30, 1998, the Partnership had cash and cash equivalents of
approximately $1,114,000 as compared to approximately $470,000 at September 30,
1997. Cash and cash equivalents increased by approximately $368,000 and
decreased by approximately $192,000 for the nine month periods ended September
30, 1998 and 1997, respectively. Net cash provided by operating activities
increased for the nine months ended September 30, 1998, as compared to the nine
months ended September 30, 1997, due to an increase in net income, as previously
explained, along with an increase in accounts payable, offset by a decrease is
due to affiliates. Payment of utility expenses, loan costs, past due insurance
premiums, and deferred liabilities from a casualty, all accrued for at December
31, 1996, contributed to the large decrease in accounts payable for the nine
months ended September 30, 1997. The decrease in due to affiliates relates to
the payment of amounts owing to affiliates of the Managing General Partner for
reimbursement of expenses in prior years. The amounts had been previously
accrued by the Partnership due to the its liquidity problems in previous years.
The Managing General Partner postponed payment of the amounts until the
Partnership's cash flow position improved. In the third quarter of 1998, the
Managing General Partner determined that the Partnership had sufficient liquid
assets to meet its current operational needs and to provide the necessary
maintenance and improvements to its investment property in the near term. As a
result, the amount due to affiliates of approximately $460,000 was paid. Net
cash used in investing activities decreased primarily due to insurance proceeds
received as a result of the casualties at Fox Run Apartments (see Note E). This
is partially offset by an increase in cash used for property improvements during
the nine months ended September 30, 1998 resulting from construction in progress
payments for the replacement of assets damaged by the casualties. The decrease
in cash used in financing activities is due to loan costs incurred in 1997
relating to the refinancing of the indebtedness at Fox Run Apartments in
December 1996.
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 property to adequately maintain the physical assets
and other operating needs of the Partnership and to comply with federal, state
and local legal and regulatory requirements. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The Managing
General Partner is currently assessing the need for capital improvements at the
Partnership's property. To the extent that additional capital improvements are
required, the Partnership's distributable cash flow, if any, may be adversely
affected. The mortgage indebtedness of approximately $31,269,000 matures
January 2002 with a balloon payment due at maturity totaling approximately
$29,960,000. The Managing General Partner will attempt to refinance such
indebtedness or sell the property prior to such maturity date. If the property
cannot be refinanced or sold for a sufficient amount, the Partnership will risk
losing the property through foreclosure. There were no cash distributions
during the nine months ended September 30, 1998, or September 30, 1997. Future
cash distributions will depend on the levels of net cash generated from
operations, refinancings, a property sale and the availability of cash reserves.
The Partnership's distribution policy will be reviewed on a quarterly basis.
There can be no assurance, however, that the Partnership will generate
sufficient funds from operations to permit distributions to its partners in 1998
or subsequent periods.
Transfer of Control; Subsequent Event
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired approximately
51% of the outstanding common shares of beneficial interest of Insignia
Properties Trust ("IPT"), the entity which controls the Managing General
Partner. Also, effective October 1, 1998 IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares. AIMCO has
agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger and
has granted an irrevocable limited proxy to unaffiliated representatives of IPT
to vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the
IPT Merger. As a result of AIMCO's ownership and its agreement, the vote of no
other holder of IPT is required to approve the merger. The Managing General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Partnership.
Year 2000
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Partnership is
dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
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.
The Managing Agent has determined that it will be required to modify or replace
significant portions of its software and certain hardware so that those systems
will properly utilize dates beyond December 31, 1999. The Managing Agent
presently believes that with modifications or replacements of existing software
and certain hardware, the Year 2000 Issue can be mitigated. However, if such
modifications and replacements are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the Managing
Agent and the Partnership.
Status of Progress in Becoming Year 2000 Compliant
The Managing Agent's plan to resolve the Year 2000 Issue involves the following
four phases: assessment, remediation, testing and implementation. To date, the
Managing Agent has fully completed its assessment of all information systems
that could be significantly affected by the Year 2000, and has begun the
remediation, testing and implementation phase on both hardware and software
systems. Assessments are continuing in regards to embedded systems in operating
equipment. The Managing Agent anticipates having all phases complete by June 1,
1999.
In addition to the areas the Partnership is relying on the Managing Agent to
verify compliance with, the Partnership has certain operating equipment,
primarily at the property sites, which needed to be evaluated for Year 2000
compliance. The focus of the Managing General Partner was to the security
systems, elevators, heating-ventilation-air-conditioning systems, telephone
systems and switches, and sprinkler systems. The Managing General Partner is
currently engaged in the identification of all non-compliant operational
systems, and is in the process of estimating the costs associated with any
potential modifications or replacements needed to such systems in order for them
to be Year 2000 compliant. It is not expected that such costs would have a
material adverse affect upon the operations of the Partnership.
Risk Associated with the Year 2000
The Managing General Partner believes that the Managing Agent has an effective
program in place to resolve the Year 2000 issue in a timely manner and has
appropriate contingency plans in place for critical applications that could
affect the Partnership's operations. To date, the Managing General Partner is
not aware of any external agent with a Year 2000 issue that would materially
impact the Partnership's results of operations, liquidity or capital resources.
However, the Managing General Partner has no means of ensuring that external
agents will be Year 2000 compliant. The Managing General Partner does not
believe that the inability of external agents to complete their Year 2000
resolution process in a timely manner will have a material impact on the
financial position or results of operations of the Partnership. However, the
effect of non-compliance by external agents is not readily determinable.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date of
this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. 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 Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint 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 as well as a recently
announced agreement between Insignia and Apartment Investment and Management
Company. The complaint seeks monetary damages and equitable relief, including
judicial dissolution of the Partnership. On June 25, 1998, the Managing 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 Managing
General Partner has filed demurrers to the amended complaint which are schedule
to be heard on January 8, 1999. The Managing General Partner believes this
action to be without merit, and intends to vigorously defend it.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled EVEREST PROPERTIES, LLC. V.
INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of
California, county of Los Angeles. The action involves 44 real estate limited
partnership (including the Partnership) in which the plaintiffs allegedly own
interests and which Insignia Affiliates allegedly manage or control (the
"Subject Partnerships"). The complaint names as defendants Insignia, several
Insignia Affiliates alleged to be managing partners of the Subject Partnerships,
the Partnership and the Managing General Partner. Plaintiffs allege that they
have requested from, but have been denied by each of the Subject Partnerships,
lists of their respective limited partners for the purpose of making tender
offers to purchase up to 4.9% of the limited partner units of each of the
Subject Partnerships. The complaint also alleges that certain of the defendants
made tender offers to purchase limited partner units in many of the Subject
Partnerships, with the alleged result that plaintiffs have been deprived of the
benefits they would have realized from ownership of the additional units. The
plaintiffs assert eleven causes of action, including breach of contract, unfair
business practices, and violations of the partnership statutes of the states in
which the Subject Partnerships are organized. Plaintiffs seek compensatory,
punitive and treble damages. The Managing General Partner filed an answer to the
complaint on September 15, 1998. The Managing General Partner believes the
claims to be without merit and intends to defend the action vigorously.
The Registrant is unaware of any other pending or outstanding litigation that is
not of a routine nature. The Managing General Partner of the Registrant
believes that all such pending or outstanding litigation will be resolved
without a material adverse effect upon the business, financial condition, or
operations of the Partnership.
ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27 is filed as an exhibit to this report.
b) Reports on Form 8-K:
None filed during the nine months ended September 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS XI
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Patrick Foye
Patrick Foye
Executive Vice President
By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
(Duly Authorized Officer)
Date: November 13, 1998