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 0-14283
ANGELES INCOME PROPERTIES, LTD. IV
(Exact name of small business issuer as specified in its charter)
California 95-3974194
(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 preceding 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. IV
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2001
Assets
Cash and cash equivalents $ 415
Receivables and deposits, net of allowance
for doubtful accounts of $118 191
Restricted escrows 533
Other assets 353
Investment property:
Land $ 2,414
Buildings and related personal property 18,194
20,608
Less accumulated depreciation (13,577) 7,031
$ 8,523
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 46
Tenant security deposit liabilities 16
Accrued property taxes 35
Other liabilities 226
Mortgage note payable 14,602
Partners' Deficit
General partner $ (145)
Limited partners (131,585 units issued and
outstanding) (6,257) (6,402)
$ 8,523
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2001 2000
Revenues:
Rental income $ 707 $ 930
Other income 10 22
Total revenues 717 952
Expenses:
Operating 352 397
General and administrative 47 47
Depreciation 235 237
Interest 362 371
Property taxes 31 40
Bad debt expense, net 16 14
Total expenses 1,043 1,106
Net loss $ (326) $ (154)
Net loss allocated to general partner (2%) $ (7) $ (3)
Net loss allocated to limited partners (98%) (319) (151)
$ (326) $ (154)
Net loss per limited partnership unit $ (2.42) $ (1.15)
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 131,800 $ 1 $65,900 $65,901
Partners' deficit at
December 31, 2000 131,585 $ (138) $(5,938) $(6,076)
Net loss for the three months
ended March 31, 2001 -- (7) (319) (326)
Partners' deficit at
March 31, 2001 131,585 $ (145) $(6,257) $(6,402)
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
Cash flows from operating activities:
Net loss $ (326) $ (154)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation 235 237
Amortization of loan costs and leasing commissions 6 33
Bad debt expense, net 16 14
Change in accounts:
Receivables and deposits 150 155
Other assets 16 14
Accounts payable (54) (35)
Accrued property taxes (93) 41
Other liabilities 32 (40)
Net cash (used in) provided by operating
activities (18) 265
Cash flows used in investing activities:
Net deposits to restricted escrows (48) (34)
Cash flows from financing activities:
Payments on mortgage note payable (55) (50)
Distributions to partners (89) --
Net cash used in financing activities (144) (50)
Net (decrease) increase in cash and cash equivalents (210) 181
Cash and cash equivalents at beginning of period 625 1,170
Cash and cash equivalents at end of period $ 415 $1,351
Supplemental disclosure of cash flow information:
Cash paid for interest $ 357 $ 362
A distribution of approximately $89,000 was declared and accrued at December 31,
2000. This distribution was paid during the three months ended March 31, 2001.
See Accompanying Notes to Consolidated Financial Statements
e)
ANGELES INCOME PROPERTIES, LTD. IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles Income
Properties, Ltd. IV (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 ("ARC II"
or the "General Partner"), 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 fiscal year ended December 31, 2000. The General
Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust.
Principles of Consolidation
The consolidated financial statements include the Partnership's majority
interest in a joint venture which owns Factory Merchants AIP IV, L.P., and AIP
IV Factory GP, LLC. The Partnership has the ability to control the major
operating and financial policies of the joint venture. The Partnership may
remove the general partner of its 99.5% owned joint venture, therefore, the
joint venture is deemed controlled and therefore consolidated by the
Partnership. No minority interest has been reflected for the joint venture
because minority interests are limited to the extent of their equity capital,
and losses in excess of the minority interest equity capital are charged against
the Partnership's interest. Should the losses reverse, the Partnership would be
credited with the amount of minority interest losses previously absorbed. All
significant interpartnership balances have been eliminated.
Reclassification
Certain 2000 amounts have been classified to conform with the 2001 presentation.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for certain payments to affiliates for
services and reimbursement of certain expenses incurred by affiliates on behalf
of the Partnership.
The following amounts were paid or accrued to the General Partner and affiliates
during the three months ended March 31, 2001 and 2000:
2001 2000
(in thousands)
Reimbursement for services of affiliates (included
in operating and general and administrative
expenses and investment properties) $ 28 $ 17
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $28,000 and $17,000 for the
three months ended March 31, 2001 and 2000, respectively.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 28,704 limited partnership
units in the Partnership representing 21.81% 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 General Partner. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.
Note C - Distribution
During the three months ended March 31, 2001, the Partnership paid distributions
of approximately $89,000 from operations, of which approximately $87,000 ($0.66
per limited partnership unit) is allocable to the limited partners. This
distribution was declared and accrued as of December 31, 2000. There were no
distributions declared or paid during the three months ended March 31, 2000.
Note D - Segment Reporting
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports. It
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The General Partner believes that
segment-based disclosures will not result in a more meaningful presentation than
the consolidated financial statements as currently presented.
Note E - 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 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 General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Note E - Legal Proceedings (continued)
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 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 General Partner and its affiliates filed a demurrer to the third
amended complaint. 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 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 OPERATION
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
discussions of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment property consists of one commercial property. The
following table sets forth the average occupancy of the property for the three
months ended March 31, 2001 and 2000:
Average Occupancy
Property 2001 2000
Factory Merchants Mall 89% 88%
Pigeon Forge, Tennessee
Results from Operations
The Partnership realized a net loss of approximately $326,000 for the three
months ended March 31, 2001 as compared to a net loss of approximately $154,000
for the comparable period in 2000. The increase in net loss is due to a decrease
in total revenues partially offset by a decrease in total expenses. Total
revenues decreased due to decreases in rental and other income. Rental income
decreased due to decreased rent revenue and percentage rent caused by increased
competition in the local market for comparable commercial space. Other income
decreased primarily due to decreased common area tenant reimbursements at
Factory Merchants Mall and lower interest income due to a decrease in cash held
in interest bearing accounts. Total expenses decreased due to a decrease in
operating expenses. Operating expenses decreased due to lower merchant
association dues as the property experienced a decrease in rental income.
Included in general and administrative expenses for the three months ended March
31, 2001 and 2000, are reimbursements to the General Partner allowed under the
Partnership Agreement associated with its management of the Partnership. In
addition, costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement are also included.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Partnership from increases in expenses. As part of this plan, the
General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, due to changing market conditions, which
can result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General Partner will
be able to sustain such a plan.
Liquidity and Capital Resources
At March 31, 2001, the Partnership had cash and cash equivalents of
approximately $415,000 as compared to approximately $1,351,000 at March 31,
2000. For the three months ended March 31, 2001, cash and cash equivalents
decreased approximately $210,000 from the Partnership's year ended December 31,
2000. This decrease in cash and cash equivalents is due to approximately
$144,000 of cash used in financing activities, approximately $48,000 of cash
used in investing activities and approximately $18,000 of cash used in operating
activities. Cash used in financing activities consists of payments of principal
made on the mortgage encumbering Factory Merchants Mall and payment of a
distribution accrued in the prior year. Cash used in investing activities
consists of net deposits to restricted escrows maintained by the mortgage
lender. 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 property to adequately maintain the physical assets
and other operating needs of the Registrant and to comply with Federal, state,
and local legal and regulatory requirements. Capital improvements planned for
the Partnership's property is detailed below.
Factory Merchants Mall
During the three months ended March 31, 2001, no capital improvements were made
at Factory Merchants Mall. As the property is currently being marketed for sale,
capital improvements will be made only as needed.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $14,602,000 matures in October 2006. If the
property is not sold prior to the mortgage maturity date, the General Partner
will attempt to refinance such indebtedness and/or sell the property prior to
such maturity date. If the property cannot be refinanced or sold for a
sufficient amount, the Registrant will risk losing such property through
foreclosure.
During the three months ended March 31, 2001, the Partnership paid distributions
of approximately $89,000 from operations, of which approximately $87,000 ($0.66
per limited partnership unit) is allocable to the limited partners. This
distribution was declared and accrued as of December 31, 2000. There were no
distributions declared or paid during the three months ended March 31, 2000. The
Registrant's distribution policy is reviewed on a quarterly basis. Future cash
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves, and the timing of the debt maturity,
refinancing and/or property sale. There can be no assurance, however, that the
Registrant will generate sufficient funds from operations after required capital
expenditures to permit 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 28,704 limited partnership
units in the Partnership representing 21.81% 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 General Partner. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.
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, its 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 General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to 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 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 General Partner and its affiliates filed a demurrer to the third
amended complaint. 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 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:
None filed during the quarter ended March 31, 2001.
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. IV
By: Angeles Realty Corporation II
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date: