FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-15546
ANGELES PARTNERS XV
(Exact name of small business issuer as specified in its charter)
California 95-4046025
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES PARTNERS XV
STATEMENT OF NET LIABILITIES IN LIQUIDATION
September 30, 1995
Assets
Cash:
Unrestricted $ 235,209
Restricted--tenant security deposits 38,738
Accounts receivable 34,253
Escrow for taxes 34,389
Other assets 47,291
Investment properties 5,350,000
5,739,880
Liabilities
Accounts payable 1,368
Tenant security deposits 11,028
Property taxes 82,073
Interest 1,391,453
Other 52,630
Mortgage notes payable in default 6,967,409
Estimated costs during the period
of liquidation (Note A) 110,529
8,616,490
Net liabilities in liquidation (Note A) $(2,876,610)
[FN]
See Accompanying Notes to Financial Statements
b) ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
September 30, 1995
Net liabilities in liquidation
at December 31, 1994 $(5,861,591)
Changes in net liabilities in liquidation
attributed to:
Increase in unrestricted cash 57,427
Decrease in restricted cash (19,198)
Decrease in accounts receivable (51,773)
Decrease in escrows for taxes (119,537)
Increase in other assets 911
Decrease in investment properties (9,751,138)
Decrease in accounts payable 66,693
Decrease in accrued taxes 65,496
Decrease in tenant security deposit liabilities 148,912
Increase in accrued interest (56,102)
Decrease in other liabilities 218,238
Decrease in mortgage notes payable 11,858,407
Decrease in estimated costs during the
period of liquidation 566,645
Net liabilities in liquidation at
September 30, 1995 $(2,876,610)
[FN]
See Accompanying Note to Financial Statements
c) ANGELES PARTNERS XV
STATEMENT OF OPERATIONS
(Unaudited)
(Going Concern Basis)
Three Months Ended Nine Months Ended
September 30, 1994 September 30, 1994
Revenues:
Rental income $ 681,402 $ 3,819,941
Other income 77,716 176,273
Total revenues 759,118 3,996,214
Expenses:
Operating 104,861 357,244
General and administrative 75,182 226,170
Property management fees 28,843 100,854
Maintenance 60,034 225,303
Depreciation 335,712 1,112,140
Amortization 23,606 58,766
Interest 850,991 2,647,709
Property taxes 59,958 258,726
Bad debt -- 39,799
Tenant reimbursements (49,217) (206,290)
Total expenses 1,489,970 4,820,421
Loss on sale of investment properties (6,932,847) (6,523,946)
Loss before extraordinary item (7,663,699) (7,348,153)
Extraordinary gain:
Forgiveness of debt 6,631,718 6,631,718
Net loss $(1,031,981) $ (716,435)
Net income allocated to general
partners (1%) $ (10,320) $ (7,164)
Net income allocated to limited
partners (99%) (1,021,661) (709,271)
Net income $(1,031,981) $ (716,435)
Net loss per limited partnership unit:
Net loss before extraordinary item $ (438.03) $ (419.99)
Extraordinary item 379.04 379.04
$ (58.99) $ (40.95)
[FN]
See Accompanying Notes to Financial Statements
d) ANGELES PARTNERS XV
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30, 1994
Cash flows from operating activities:
Net loss $ (716,435)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,112,140
Amortization of loan costs and lease
commissions 237,454
Loss on sale of investment properties 6,523,946
Extraordinary gain on debt forgiveness (6,631,718)
Bad debt 39,799
Change in accounts:
Restricted cash (51,255)
Accounts receivable 10,968
Escrow deposits for taxes 429,785
Other assets (171,542)
Accounts payable 73,119
Property taxes (73,553)
Tenant security deposits (105,102)
Accrued interest 882,990
Other liabilities 29,397
Net cash provided by
operating activities 1,589,993
Cash flows from investing activities:
Net proceeds from the sale of investment
properties 3,713,948
Property improvements and replacements (104,498)
Net cash provided by investing
activities 3,609,450
Cash flows used in financing activities:
Principal payments on notes payable (5,353,713)
Additional borrowings 35,852
Net cash used in financing
activities (5,317,861)
Increase in cash (118,418)
Cash at beginning of period 482,508
Cash at end of period $ 364,090
Supplemental cash flow information:
Cash paid during the period for interest $ 1,636,532
[FN]
See Accompanying Notes to Financial Statements
ANGELES PARTNERS XV
STATEMENTS OF CASH FLOWS - continued
(Unaudited)
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Sale of Investment Properties
On February 28, 1994, the Partnership sold six of its investment properties,
4650 Springs Road, 100 Hayes Drive, 210 Hayes Drive, 211 Hayes Drive, 4595 Van
Epps Road and 4597 Van Epps Road to an unaffiliated party. In connection with
the transaction, notes payable and investment properties were reduced for non-
cash amounts of $5,173,006 and $4,807,975, respectively. The buyer assumed the
mortgages secured by the investment properties.
On August 22, 1994, the Partnership sold Rancho Park Office Building to an
unaffiliated party. In connection with the transaction, note payable and
investment properties were reduced for non-cash amounts of $6,316,231 and
$10,367,930, respectively.
e) ANGELES PARTNERS XV
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A Basis of Presentation
As of December 31, 1994, the Partnership adopted the liquidation basis of
accounting. The Partnership has experienced significant recurring operating
losses. Also, the Partnership sold six of the eleven Cleveland Industrial
Complex ("Cleveland") buildings and the Rancho Park Office Building during
1994. The Partnership is in default on recourse indebtedness totaling
$3,500,000 due to Angeles Mortgage Investment Trust ("AMIT"). Of this debt,
$1,500,000 was secured by one of the remaining Cleveland buildings and AMIT
placed the property in receivership in January 1995 and foreclosed on the
property on September 6, 1995. AMIT also foreclosed on another of the
Cleveland buildings on August 23, 1995. The remaining $2,000,000 is recourse
to the Partnership and AMIT received a default judgement against the
Partnership on January 18, 1995. As a result of the foreclosure on the
Cleveland building on August 23, 1995, this judgement was reduced by
$500,000. At this time, the Managing General Partner believes the
equity in the remaining three Cleveland buildings is not sufficient to retire
the AMIT debt, therefore, the Managing General Partner expects to transfer the
Partnership's interest in the remaining Cleveland buildings to AMIT as full
satisfaction of the debt. These transactions are anticipated to occur during
the fourth quarter of 1995 or the first quarter of 1996. The Partnership does
not expect to contest any of these proceedings. In March 1995, the lender on
the non-recourse debt secured by the Marina Plaza notified the Partnership that
this debt was in default and initiated foreclosure proceedings. Marina Plaza
was placed into receivership in June 1995 and was foreclosed upon on August 1,
1995. The Partnership does not intend to purchase any additional properties and
the Managing General Partner has decided to terminate the Partnership upon
foreclosure of the final property.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements at December 31,
1994, from the going concern basis of accounting to the liquidation basis of
accounting in accordance with generally accepted accounting principles.
Consequently, assets have been valued at estimated net realizable value
(including subsequent actual transactions described below) and liabilities are
presented at their estimated settlement amounts, including estimated costs
associated with carrying out the liquidation. The valuation of assets and
liabilities necessarily requires many estimates and assumptions and there are
substantial uncertainties in carrying out the liquidation. The actual
realization of assets and settlement of liabilities could be higher or lower
than amounts indicated and is based upon the Managing General Partner's
estimates as of the date of the financial statements.
The statements of consolidated net liabilities in liquidation as of September
30, 1995, include approximately $110,529 of costs, net of income, that the
Managing General Partner estimates will be incurred during the period of
liquidation, based on the assumption that the liquidation process will be
completed by December 31, 1995. These costs include anticipated legal fees,
administrative expenses, and loss from property operations. Because the success
in realization of assets and the settlement of liabilities is based on the
Managing General Partner's best estimates, the liquidation period may be shorter
than projected or it may be extended beyond the projected period.
Note A - Basis of Presentation - continued
The accompanying unaudited, condensed, consolidated financial statements at
September 30, 1995, have been prepared in accordance with generally accepted
accounting principles for interim financial information under the liquidation
basis of accounting and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Managing General Partner, all
adjustments considered necessary for a fair presentation on the liquidation
basis have been included. Operating results for the nine month period ended
September 30, 1995, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1995. For further information,
refer to the financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-KSB for the year ended December 31, 1994.
Note B - Angeles Acceptance Pool, Angeles Mortgage Investment Trust
In November 1992, Angeles Acceptance Pool ("AAP"), a Delaware limited
partnership was organized to acquire and hold the obligations evidencing the
working capital loan previously provided by Angeles Capital Investment, Inc.
("ACCI"). Angeles Corporation ("Angeles") is the 99% limited partner of AAP and
Angeles Acceptance Directives, Inc.("AAD"), an affiliate of the General Partner,
was, until April 14, 1995, the 1% General Partner of AAP. On April 14, 1995, as
part of a settlement of claims between affiliates of the General Partner and
Angeles, AAD resigned as general partner of AAP and simultaneously received a
1/2% limited partner interest in AAP. An affiliate of Angeles now serves as the
general partner of AAP.
AAP's working capital loan funded the Partnership's operating deficits in
prior years. Total indebtedness, which is included as a note payable, was
$1,582,408 at September 30, 1995, and September 30, 1994, with monthly interest
only payments at prime plus 2%. Principal is to be paid the earlier of i) the
availability of funds, ii) the sale of one or more properties owned by the
Partnership, or iii) November 25, 1997. Total interest expense for this loan
was $128,900 and $105,824 for the nine months ended September 30, 1995 and 1994,
respectively.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust,
has provided secondary financing to the Partnership secured by the Partnership's
investment properties known as Cleveland Industrial and Marina Plaza. One of
the notes in the amount of $600,000 secured by one of the Cleveland Industrial
buildings was assumed by the purchaser of the building during 1994. Total
interest expense was $486,322 and $438,091 for the nine months ended September
30, 1995 and 1994, respectively.
Note B - Angeles Acceptance Pool, Angeles Mortgage Investment Trust - continued
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class
B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A
Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1% of the distributions of net cash distributed by AMIT. These Class B
Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the vote).
Between the date of acquisition of these shares (November 24, 1992) and March
31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted
its shares at the 1995 annual meeting in connection with the election of
trustees and other matters. MAE GP has not exerted, and continues to decline to
exert, any management control over or participate in the management of AMIT.
As part of the settlement of certain disputes with AMIT, MAE GP granted to
AMIT an option to acquire the Class B shares owned by it. This option can be
exercised at the end of 10 years or when all loans made by AMIT to partnerships
affiliated with MAE GP as of November 9, 1994, (which is the date of execution
of a definitive Settlement Agreement) have been paid in full, but in no event
prior to November 9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000
at closing, which occurred April 14, 1995, as payment for the option. Upon
exercise of the option, AMIT would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT thereby enabling MAE GP to vote the Class B
shares on all matters except those involving transactions between AMIT and MAE
GP affiliated borrowers or the election of any MAE GP affiliate as an officer or
trustee of AMIT. On those matters, MAE GP granted to the AMIT trustees, in
their capacity as trustees of AMIT, proxies with regard to the Class B shares
instructing such trustees to vote said Class B shares in accordance with the
vote of the majority of Class A Shares voting to be determined without
consideration of the votes of "Excess Class A Shares" as defined in Section 6.13
of the Declaration of Trust of AMIT.
Note C 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 Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following transactions with the Managing General Partner and affiliates
for the nine months ended September 30, 1995 and 1994, are as follows:
1995 1994
Property management fees $ 62,698 $ 80,005
Reimbursement for services of affiliates 98,478 (1) 122,135
(1) $52,630 of the reimbursements for services of affiliates had not been
paid as of September 30, 1995.
The Partnership insures its properties under a master policy through an
agency and 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 current year's master policy. The current agent
assumed the financial obligations to the affiliate of the Managing General
Partner, who 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 is not
significant. See Note B with respect to transactions between the Partnership
and AMIT and AAP.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
As of December 31, 1994, the Partnership adopted the liquidation basis of
accounting. The Partnership has experienced significant recurring operating
losses. Also, the Partnership sold six of the eleven Cleveland Industrial
Complex ("Cleveland") buildings and the Rancho Park Office Building during
1994. The Partnership is in default on recourse indebtedness totaling
$3,500,000 due to Angeles Mortgage Investment Trust ("AMIT"). Of this debt,
$1,500,000 is secured by one of the remaining Cleveland buildings and AMIT
placed the property in receivership in January 1995 and foreclosed on it
September 6, 1995. AMIT also foreclosed on another of the Cleveland buildings
on August 23, 1995. The remaining $2,000,000 is recourse to the Partnership
and AMIT received a default judgement against the Partnership on January 18,
1995. As a result of the foreclosure on the Cleveland building, 4705 Van
Epps, on August 23, 1995, this judgement was reduced by $500,000. At this
time, the Managing General Partner believes the equity in the remaining three
Cleveland buildings is not sufficient to retire the AMIT debt. The Partnership
does not expect to contest any of these proceedings. In March 1995, the lender
on the non-recourse debt secured by the Marina Plaza notified the Partnership
that this debt was in default and foreclosed on the property August 1, 1995.
The Partnership does not intend to purchase any additional properties and the
Managing General Partner has decided to terminate the Partnership upon
foreclosure of the final property.
Liquidity and Capital Resources
For the nine months ended September 30, 1995, the Partnership recorded a net
decrease in net liabilities in liquidation of $2,984,981. The decrease is
primarily due to the foreclosure by AMIT of two of the Cleveland buildings and
the foreclosure by the lender of Marina Plaza in the third quarter of 1995. The
decrease is also due to an increase in the net realizable value of its
investment properties resulting from an appraisal performed by a third party on
the Cleveland Industrial buildings valuing the property higher than the Managing
General Partner estimated at December 31, 1995. Also, contributing to the
decrease in net liabilities in liquidation was a decrease in estimated costs
during the liquidation period. The Managing General Partner had anticipated
that Marina Plaza would foreclose in September 1995, but the proceedings were
completed in early August. The Managing General Partner also believes the
remaining three Cleveland Industrial buildings will be lost during the fourth
quarter of 1995 or the first quarter of 1996. There can be no assurance that
all transactions will be complete as of December 31, 1995.
The statement of consolidated net liabilities in liquidation as of September
30, 1995, include $110,529 of costs, net of income, that the Managing General
Partner estimates will be incurred during the period of liquidation, based on
the assumption that the liquidation process will be completed by December 31,
1995. These costs include anticipated legal fees ($15,000), administrative
expenses ($157,477), audit fees ($12,100) and income from property operations
($74,048). Because the success in realization of assets and the settlement of
liabilities is based on the Managing General Partner's best estimates, the
liquidation period may be shorter than projected or it may be extended beyond
the projected period.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In January 1995, Angeles Mortgage Investment Trust ("AMIT"), began
foreclosure proceedings on one of the remaining Cleveland Industrial Buildings
and the property was placed in receivership at this time. AMIT completed the
foreclosure on September 6, 1995. AMIT also foreclosed on another of the
Cleveland buildings on August 23, 1995. In March 1995, the Partnership received
a notice of default from the lender on Marina Plaza and it was foreclosed upon
in August 1995.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class
B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A
Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1% of the distributions of net cash distributed by AMIT. These Class B
Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the vote).
Between the date of acquisition of these shares (November 24, 1992) and March
31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted
its shares at the 1995 annual meeting in connection with the election of
trustees and other matters. MAE GP has not exerted, and continues to decline to
exert, any management control over or participate in the management of AMIT.
As part of the above described settlement, MAE GP granted to AMIT an option
to acquire the Class B shares owned by it. This option can be exercised at the
end of 10 years or when all loans made by AMIT to partnerships affiliated with
MAE GP as of November 9, 1997, (which is the date of execution of a definitive
Settlement Agreement) have been paid in full, but in no event prior to November
9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which
occurred April 14, 1995, as payment for the option. Upon exercise of the
option, AMIT would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to
vote the Class B shares on all matters except those involving transactions
between AMIT and MAE GP affiliated borrowers or the election of any MAE GP
affiliate as an officer or trustee of AMIT. On those matters, MAE GP granted to
the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to
the Class B shares instructing such trustees to vote said Class B shares in
accordance with the vote of the majority of Class A Shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
Except for the issues stated, the Registrant is unaware of any 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 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 10.11 Agreement for Deed-in-Lieu Foreclosure on 4705 Van Epps
Exhibit 10.12 Agreement for Deed-in-Lieu Foreclosure on 4851 Van Epps
Exhibit 10.13 Motion for Foreclosure on Marina Plaza and Marina Harbor
Exhibit 27 Financial Data Schedule
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS XV
By: Angeles Realty Corporation II
Corporate General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal Accounting
Officer
Date: November 14, 1995