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 March 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-11767
ANGELES INCOME PROPERTIES, LTD. II
(Exact name of small business issuer as specified in its charter)
California 95-3793526
(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)
(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 INCOME PROPERTIES, LTD. II
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2001
Assets
Cash and cash equivalents $ 517
Receivables and deposits 421
Restricted escrows 134
Other assets 313
Investment properties:
Land $ 1,984
Buildings and related personal property 31,969
33,953
Less accumulated depreciation (24,785) 9,168
$ 10,553
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 173
Tenant security deposit liabilities 289
Accrued property taxes 217
Other liabilities 159
Due to affiliates 102
Mortgage notes payable 17,491
Partners' Deficit
General partners $ (517)
Limited partners (99,784 units issued and
outstanding) (7,361) (7,878)
$ 10,553
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2001 2000
Revenues:
Rental income $1,677 $1,605
Other income 89 86
Total revenues 1,766 1,691
Expenses:
Operating 542 526
General and administrative 96 112
Depreciation 448 423
Interest 349 351
Property taxes 178 140
Total expenses 1,613 1,552
Income before discontinued operation 153 139
Income from discontinued operation -- 61
Gain on sale of discontinued operation -- 2,060
Net income $ 153 $2,260
Net income allocated to general partners $ 2 $ 108
Net income allocated to limited partners 151 2,152
$ 153 $2,260
Per limited partnership unit:
Income before discontinued operation $ 1.51 $ 1.37
Income from discontinued operation -- 0.62
Gain on sale of discontinued operation -- 19.58
Net income $ 1.51 $21.57
Distributions per limited partnership unit $ 5.31 $ --
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 100,000 $ 1 $50,000 $50,001
Partners' deficit at
December 31, 2000 99,784 $ (514) $(6,982) $(7,496)
Distributions to partners -- (5) (530) (535)
Net income for the three months
ended March 31, 2001 -- 2 151 153
Partners' deficit at
March 31, 2001 99,784 $ (517) $(7,361) $(7,878)
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES INCOME PROPERTIES, LTD. II
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
Cash flows from operating activities:
Net income $ 153 $ 2,260
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 448 423
Amortization of discounts, loan costs and lease
commissions 19 25
Gain on sale of investment property -- (2,060)
Change in accounts:
Receivables and deposits (93) 33
Other assets (83) 143
Accounts payable 69 52
Tenant security deposit liabilities (1) (11)
Accrued property taxes 104 68
Due to affiliates 21 44
Other liabilities (137) (104)
Net cash provided by operating activities 500 873
Cash flows from investing activities:
Property improvements and replacements (369) (374)
Net withdrawals from restricted escrows 9 122
Proceeds from sale of investment property -- 2,746
Net cash (used in) provided by investing
activities (360) 2,494
Cash flows from financing activities:
Payments on mortgage notes payable (63) (61)
Distributions to partners (535) (1,500)
Net cash used in financing activities (598) (1,561)
Net (decrease) increase in cash and cash equivalents (458) 1,806
Cash and cash equivalents at beginning of period 975 4,229
Cash and cash equivalents at end of period $ 517 $ 6,035
Supplemental disclosure of cash flow information:
Cash paid for interest $ 329 $ 331
At December 31, 2000 and 1999, approximately $150,000 and $157,000,
respectively, of property improvements and replacements were included in
accounts payable.
Distributions to partners of approximately $1,500,000 were declared at December
31, 1999 and paid in January 2000.
See Accompanying Notes to Consolidated Financial Statements
e)
ANGELES INCOME PROPERTIES, LTD. II
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles Income
Properties, Ltd. II (the "Partnership" or "Registrant") 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") which is wholly-owned by Apartment Investment and
Management Company ("AIMCO"), all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 2001, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2001. 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 year ended December 31, 2000.
Principles of Consolidation
The consolidated financial statements of the Partnership include all accounts of
the Partnership and its 99% limited partnership interest in Georgetown AIP II,
LP and its 100% owned limited liability corporation interest in AIPL II GP, LLC.
Although legal ownership of the respective asset remains with these entities,
the Partnership retains all economic benefits from the properties. As a result,
the Partnership consolidates its interests in these two entities, whereby all
accounts are included in the consolidated financial statements of the
Partnership with all inter-entity accounts being 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 Agreement provides for certain payments
to affiliates for services and reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were paid or
accrued to the Managing General Partner and affiliates during the three months
ended March 31, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating
expenses) $ 88 $ 84
Reimbursement for services of affiliates (included
in general and administrative expense and investment
properties) 59 46
Due to affiliate 102 272
Deposition fee (included in general partner
distribution) -- 86
During the three months ended March 31, 2001 and 2000, affiliates of the
Managing 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 $88,000 and
$84,000 for the three months ended March 31, 2001 and 2000, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $59,000 and
$46,000 for the three months ended March 31, 2001 and 2000, respectively.
The Partnership Agreement provides for a fee equal to 10% of "Net cash flow from
operations," as defined in the Partnership Agreement to be paid to the Managing
General Partner for executive and administrative management services. The amount
of the fee for the year ended December 31, 2000 was $100,000. This amount is
included in "Due to affiliates" on the consolidated balance sheet and will be
paid during the second quarter of 2001.
Pursuant to the Partnership Agreement, the Managing General Partner is entitled
to receive a distribution equal to 3% of the aggregate disposition price of sold
properties. The Partnership paid a distribution of approximately $86,000 to the
Managing General Partner related to the sale of Atlanta Crossing Shopping center
in March 2000. This amount is subordinate to the limited partners receiving
their original capital contributions plus a cumulative preferred return of 6%
per annum of their adjusted capital investment, as defined in the Partnership
Agreement. If the limited partners have not received these returns when the
Partnership terminates, the Managing General Partner will return this amount to
the Partnership.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 57,254 limited partnership
units in the Partnership representing 57.38% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will acquire additional
limited partnership interests in the Partnership for cash or in exchange for
units in the operating partnership of AIMCO either through private purchases or
tender offers. Under the Partnership Agreement, unitholders holding a majority
of the Units are entitled to take action with respect to a variety of matters,
which would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 57.38% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
Note C - Sale of Discontinued Operation
In March 2000, Atlanta Crossing Shopping Center, located in Montgomery, Alabama,
was sold to an unaffiliated party for $2,875,000. After payment of closing
expenses, the net sales proceeds received by the Partnership were approximately
$2,746,000. For financial statement purposes, the sale resulted in a gain of
approximately $2,060,000, which was recognized during the three months ended
March 31, 2000.
Atlanta Crossing Shopping Center was the only commercial property owned by the
Partnership and represented one segment of the Partnership's operations. Due to
the sale of this property, the results of the commercial segment have been shown
as income from discontinued operation on the consolidated statement of
operations. Revenues of this property were approximately $136,000 for the three
months ended March 31, 2000. Income from operations was approximately $61,000
for the three months ended March 31, 2000.
Note D - Distributions
During the three months ended March 31, 2001, the Partnership declared and paid
distributions of approximately $535,000 (approximately $530,000 to the limited
partners or $5.31 per limited partnership unit) from operations. Subsequent to
March 31, 2001, the Partnership declared and paid a distribution of
approximately $173,000 (approximately $171,000 to the limited partners or $1.71
per limited partnership unit) from operations. During the three months ended
March 31, 2000, the Partnership paid a distribution of approximately $1,500,000
of which approximately $1,074,000 (approximately $1,063,000 to the limited
partners or $10.65 per limited partnership unit) is from operations and
approximately $426,000 (approximately $422,000 to the limited partners or $4.23
per limited partnership unit) is from proceeds from the sale of Princeton
Meadows Golf Course Joint Venture. The distribution was accrued in December
1999.
Note E - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership had two reportable segments: residential properties and
commercial properties. The Partnership's residential property segment consists
of three apartment complexes, one each in New Jersey, Indiana, and North
Carolina. The Partnership rents apartment units to tenants for terms that are
typically twelve months or less. The commercial property segment consisted of a
retail shopping center located in Montgomery, Alabama. This property leased
space to a discount store, various specialty retail outlets, and several
restaurants at terms ranging from twelve months to twenty years. The commercial
property was sold on March 15, 2000 (see "Note C"). Therefore, the commercial
segment is reflected as discontinued operations.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segments are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the year ended December 31, 2000.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segments are investment properties that offer
different products and services. The reportable segments are each managed
separately because they provide distinct services with different types of
products and customers.
Segment information for the three months ended March 31, 2001 and 2000 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.
2001 Residential Other Totals
Rental income $ 1,677 $ -- $ 1,677
Other income 88 1 89
Interest expense 349 -- 349
Depreciation 448 -- 448
General and administrative
expense -- 96 96
Segment profit (loss) 248 (95) 153
Total assets 10,419 134 10,553
Capital expenditures for
investment properties 219 -- 219
2000 Residential Commercial Other Totals
(discontinued)
Rental income $ 1,605 $ -- $ -- $ 1,605
Other income 76 -- 10 86
Interest expense 351 -- -- 351
Depreciation 423 -- -- 423
General and administrative
expense -- -- 112 112
Income from discontinued
operation -- 61 -- 61
Gain on sale of discontinued
operation -- 2,060 -- 2,060
Segment profit (loss) 241 2,121 (102) 2,260
Total assets 12,975 -- 3,488 16,463
Capital expenditures for
investment properties 211 6 -- 217
Note F - 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, its Managing 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, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the partnerships by the Insignia affiliates; and the Insignia Merger. The
plaintiffs seek 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 filed an amended complaint. The Managing 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 court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, 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 prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. The demurrer is scheduled to be heard
on May 14, 2001. The Court has also scheduled a hearing on a motion for class
certification for August 27, 2001. Plaintiffs must file their motion for class
certification no later than June 15, 2001. The Managing 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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB 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
operations. 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.
The Partnership's investment properties consist of three apartment complexes.
The following table sets forth the average occupancy of the properties for both
of the three months ended March 31, 2001 and 2000:
Average Occupancy
Property 2001 2000
Deer Creek Apartments 97% 97%
Plainsboro, New Jersey
Georgetown Apartments 96% 96%
South Bend, Indiana
Landmark Apartments 92% 90%
Raleigh, North Carolina
Results of Operations
The Partnership's net income for the three months ended March 31, 2001, was
approximately $153,000 compared to approximately $2,260,000 for the three months
ended March 31, 2000. The decrease in net income for the three months ended
March 31, 2001 is attributable to the sale of Atlanta Crossing Shopping Center
in March 2000 (see discussion below).
Excluding the operations of and the gain on the sale of the discontinued
operation, the Partnership had income before discontinued operation of
approximately $153,000 for the three months ended March 31, 2001, compared to
approximately $139,000 for the three months ended March 31, 2000. The increase
in income is due to an increase in total revenues which was partially offset by
an increase in total expenses.
The increase in total revenues is due primarily to an increase in rental income
and, to a lesser extent, other income. The increase in rental income is the
result of increased average rental rates at all of the Partnership's properties
and an increase in occupancy at Landmark Apartments. The increase in other
income is due to an increase in clubhouse rentals at Deer Creek Apartments and
tenant reimbursements at Georgetown Apartments and Landmark Apartments.
Total expenses increased for the three months ended March 31, 2001 primarily due
to increases in operating, property tax and depreciation expenses partially
offset by a decrease in general and administrative expenses. Operating expenses
increased due to an increase in salary expenses at all of the Partnership's
properties. Property tax expense increased due to an increase in the tax rate at
Deer Creek Apartments. Depreciation expense increased due to capital
improvements completed during the past twelve months. General and administrative
expenses decreased due to a decrease in a management fee accrued to the Managing
General Partner based on cash flow as allowed in the Partnership Agreement and a
decrease in legal expenses. These decreases were partially offset by increases
in the cost of services included in the management reimbursements paid to the
Managing General Partner as allowed under the Partnership Agreement and
increased professional fees. Included in general and administrative expenses at
both March 31, 2001 and 2000 are reimbursements to the Managing General Partner
allowed under the Partnership Agreement associated with its management of the
Partnership. 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.
In March 2000, Atlanta Crossing Shopping Center, located in Montgomery, Alabama,
was sold to an unaffiliated party for $2,875,000. After payment of closing
expenses, the net sales proceeds received by the Partnership were approximately
$2,746,000. For financial statement purposes, the sale resulted in a gain of
approximately $2,060,000, which was recognized during the three months ended
March 31, 2000.
Atlanta Crossing Shopping Center was the only commercial property owned by the
Partnership and represented one segment of the Partnership's operations. Due to
the sale of this property, the results of the commercial segment have been shown
as income from discontinued operation on the consolidated statement of
operations. Revenues of this property were approximately $136,000 for the three
months ended March 31, 2000. Income from operations was approximately $61,000
for the three months ended March 31, 2000.
As part of the ongoing business plan of the Partnership, the Managing 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 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.
Liquidity and Capital Resources
At March 31, 2001, the Partnership had cash and cash equivalents of
approximately $517,000 compared to approximately $6,035,000 at March 31, 2000.
The decrease in cash and cash equivalents of approximately $458,000 since
December 31, 2000 is due to approximately $360,000 of cash used in investing
activities and approximately $598,000 of cash used in financing activities
partially offset by approximately $500,000 of cash provided by operating
activities. Cash used in investing activities consisted of property improvements
and replacements slightly offset by net withdrawals from escrow accounts
maintained by the mortgage lenders. Cash used in financing activities consisted
primarily of distributions to the partners and, to a lesser extent, payments of
principal made on the mortgages encumbering the Partnership's properties. The
Partnership invests its working capital reserves in interest bearing accounts.
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 Partnership and to comply with
Federal, state, and local legal and regulatory requirements. Capital
improvements planned for each of the Registrant's properties are detailed below.
Deer Creek
During the three months ended March 31, 2001, the Partnership spent
approximately $144,000 on capital improvements consisting primarily of carpet
replacements, exterior painting, cabinets, appliances and maintenance equipment.
These improvements were funded from Partnership reserves and operating cash
flow. The Partnership has evaluated the capital improvement needs of the
property for the year 2001. The amount budgeted is approximately $917,000,
consisting primarily of cabinets, appliances and water submetering. 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.
Georgetown
During the three months ended March 31, 2001, the Partnership spent
approximately $57,000 on capital improvements consisting primarily of appliances
and carpet replacements. These improvements were funded from Partnership
reserves and operating cash flow. The Partnership has evaluated the capital
improvement needs of the property for the year 2001. The amount budgeted is
approximately $64,000, consisting primarily of appliances, carpet and vinyl
replacements and structural improvements. 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.
Landmark
During the three months ended March 31, 2001, the Partnership spent
approximately $18,000 on capital improvements consisting primarily of parking
area improvements, water heater replacements and carpet and vinyl replacements.
These improvements were funded from operating cash flow. The Partnership has
evaluated the capital improvement needs of the property for the year 2001. The
amount budgeted is approximately $80,000, consisting primarily of air
conditioning unit replacements, window treatments, appliances, cabinets and
carpet and vinyl replacement. 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.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. 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 $17,491,000, net of discount, is amortized over
periods ranging from 29 to 30 years with balloon payments due in 2003. The
Managing General Partner will attempt to refinance such indebtedness and/or sell
the properties prior to such maturity date. If the properties cannot be
refinanced or sold for a sufficient amount, the Partnership may risk losing such
properties through foreclosure.
During the three months ended March 31, 2001, the Partnership declared and paid
distributions of approximately $535,000 (approximately $530,000 to the limited
partners or $5.31 per limited partnership unit) from operations. Subsequent to
March 31, 2001, the Partnership declared and paid a distribution of
approximately $173,000 (approximately $171,000 to the limited partners or $1.71
per limited partnership unit) from operations. During the three months ended
March 31, 2000, the Partnership paid a distribution of approximately $1,500,000
of which approximately $1,074,000 (approximately $1,063,000 to the limited
partners or $10.65 per limited partnership unit) is from operations and
approximately $426,000 (approximately $422,000 to the limited partners or $4.23
per limited partnership unit) is from proceeds from the sale of Princeton
Meadows Golf Course Joint Venture. The distribution was accrued in December
1999. Future cash distributions will depend on the levels of 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 quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit additional distributions to its partners during
the remainder of 2001 or subsequent periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 57,254 limited partnership
units in the Partnership representing 57.38% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will acquire additional
limited partnership interests in the Partnership for cash or in exchange for
units in the operating partnership of AIMCO either through private purchases or
tender offers. Under the Partnership Agreement, unitholders holding a majority
of the Units are entitled to take action with respect to a variety of matters,
which would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 57.38% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEDINGS
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, its Managing 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, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the partnerships by the Insignia affiliates; and the Insignia Merger. The
plaintiffs seek 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 filed an amended complaint. The Managing 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 court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, 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 prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. The demurrer is scheduled to be heard
on May 14, 2001. The Court has also scheduled a hearing on a motion for class
certification for August 27, 2001. Plaintiffs must file their motion for class
certification no later than June 15, 2001. The Managing General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K filed in the first quarter of 2001:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES INCOME PROPERTIES, LTD. II
By: Angeles Realty Corporation II
Managing 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: