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 June 30, 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 0-9704
ANGELES PARTNERS IX
(Exact name of small business issuer as specified in its charter)
California 95-3417137
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. 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 Partnership 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 IX
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2001
Assets
Cash and cash equivalents $ 2,258
Receivables and deposits 521
Restricted escrows 174
Other assets 431
Investment properties:
Land $ 1,442
Buildings and related personal property 27,881
29,323
Less accumulated depreciation (21,207) 8,116
$ 11,500
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 95
Tenant security deposit liabilities 112
Accrued property taxes 204
Other liabilities 311
Mortgage notes payable 16,363
Partners' Deficit
General partner $ (275)
Limited partners (19,975 units issued and
outstanding) (5,310) (5,585)
$ 11,500
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Revenues:
Rental income $ 1,401 $ 1,933 $ 2,788 $ 3,841
Other income 114 140 215 223
Casualty gain -- 50 41 50
Total revenues 1,515 2,123 3,044 4,114
Expenses:
Operating 656 856 1,372 1,695
General and administrative 99 77 194 140
Depreciation 388 511 772 1,047
Interest 320 443 636 863
Property taxes 76 82 151 189
Total expenses 1,539 1,969 3,125 3,934
(Loss) income before
extraordinary item (24) 154 (81) 180
Extraordinary loss on early
extinguishment of debt (50) -- (50) --
Net (loss) income $ (74) $ 154 $ (131) $ 180
Net (loss) income allocated to
general partner (1%) $ (1) $ 2 $ (1) $ 2
Net (loss) income allocated to
limited partners (99%) (73) 152 (130) 178
$ (74) $ 154 $ (131) $ 180
Per limited partnership unit:
(Loss) income before
extraordinary item $ (1.20) $ 7.61 $ (4.06) $ 8.91
Extraordinary loss (2.45) -- (2.45) --
Net (loss) income $ (3.65) $ 7.61 $ (6.51) $ 8.91
Distributions per limited
partnership unit $ 14.47 $ 33.79 $ 33.79 $ 33.79
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 20,000 $ 1 $ 20,000 $ 20,001
Partners' deficit at
December 31, 2000 19,975 $ (262) $ (4,505) $ (4,767)
Distributions to partners -- (12) (675) (687)
Net loss for the six months
ended June 30, 2001 -- (1) (130) (131)
Partners' deficit
at June 30, 2001 19,975 $ (275) $ (5,310) $ (5,585)
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2001 2000
Cash flows from operating activities:
Net (loss) income $ (131) $ 180
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Casualty gain (41) (50)
Depreciation 772 1,047
Amortization of loan costs and discounts 39 74
Extraordinary loss on early extinguishment of debt 50 --
Change in accounts:
Receivables and deposits (325) 129
Other assets (57) (41)
Accounts payable (117) 141
Tenant security deposit liabilities (7) 18
Accrued property taxes 151 32
Due to General Partner (285) --
Other liabilities 85 (99)
Net cash (used in) provided by operating activities 134 1,431
Cash flows from investing activities:
Property improvements and replacements (297) (1,157)
Insurance proceeds received 45 154
Net receipts from (deposits to) restricted escrows 48 (115)
Net cash used in investing activities (204) (1,118)
Cash flows from financing activities:
Payments on mortgage notes payable (111) (141)
Loan costs paid (219) --
Proceeds from mortgage notes payable 6,800 --
Repayment of mortgage notes payable (4,655) --
Distributions to partners (687) (682)
Net cash provided by (used in) financing activities 1,128 (823)
Net increase (decrease) in cash and cash equivalents 1,058 (510)
Cash and cash equivalents at beginning of period 1,200 1,313
Cash and cash equivalents at end of period $ 2,258 $ 803
Supplemental disclosure of cash flow information:
Cash paid for interest $ 625 $ 788
At December 31, 1999 approximately $396,000 of property improvements and
replacements were included in accounts payable.
See Accompanying Notes to Consolidated Financial Statements
e)
ANGELES PARTNERS IX
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles Partners
IX (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 (the "General Partner" or "ARC"),
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three and
six month periods ended June 30, 2001 are not necessarily indicative of the
results that may be expected for the 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. ARC is an affiliate of Apartment Investment and
Management Company ("AIMCO"), a publicly traded real estate investment trust.
Certain reclassifications have been made to the 2000 balances to conform to the
2001 presentation.
Principles of Consolidation
The financial statements include all of the accounts of the Partnership and its
99% owned partnership. The general partner of the consolidated partnership is
Angeles Realty Corporation. Angeles Realty Corporation may be removed as the
general partner of the consolidated partnership by the Registrant; therefore,
the consolidated partnership is controlled and consolidated by the Registrant.
All significant interpartnership balances have been eliminated.
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 required that those
enterprises report selected information about operating segments in interim
financial reports. It also established 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 B - Disposition of Investment Property
On July 20, 2000, The Pines of Northwest Crossing Apartments, located in
Houston, Texas, was sold to an unaffiliated third party for a gross sales price
of $9,500,000. The net proceeds realized by the Partnership were approximately
$9,338,000. The Partnership used a portion of the proceeds from the sale of the
property to repay the debt encumbering the property of approximately $4,739,000.
Note C - 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 (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
The following amounts were paid to the General Partner and its affiliates for
the six months ended June 30, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in
operating expenses) $157 $205
Reimbursement for services of affiliates
(included in investment properties and general
and administrative expenses) 139 138
Loan costs (included in other assets) 68 --
During the six months ended June 30, 2001 and 2000, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $157,000 and $205,000 for the
six months ended June 30, 2001 and 2000, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $139,000 and $138,000 for the
six months ended June 30, 2001 and 2000, respectively. Included in these
expenses for the six months ended June 30, 2000, is approximately $43,000 for
construction oversight reimbursements. No similar costs were incurred for the
six months ended June 30, 2001.
For services provided in connection with the refinancing of Village Green
Apartments, the General Partner was paid for loan costs related to the
refinancing of approximately $68,000 during the six months ended June 30, 2001.
These costs were capitalized and are included in other assets on the
consolidated balance sheet.
In connection with the sale of The Pines of Northwest Crossing Apartments in
July 2000, the General Partner earned a commission of 3% of the selling price or
$285,000. However, this fee is subordinate to the limited partners receiving a
preferred return, as specified in the Partnership Agreement. During the six
months ended June 30, 2001, the Partnership paid this fee. If the limited
partners have not received their preferred return when the Partnership
terminates, the 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 13,251 limited partnership
units in the Partnership representing 66.34% of the outstanding units at June
30, 2001. 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
make one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO. Under the Partnership Agreement, unitholders holding a
majority of the Units are entitled to take action with respect to a variety of
matters, which would include without limitation, voting on certain amendments to
the Partnership Agreement and voting to remove the General Partner. As a result
of its ownership of 66.34% 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 General Partner because of its affiliation with
the General Partner.
Note D - Distributions
During the six months ended June 30, 2001, cash distributions of approximately
$687,000 (approximately $675,000 to the limited partners or $33.79 per limited
partnership unit) were paid to the partners, of which approximately $539,000
(approximately $529,000 to the limited partners or $26.48 per limited
partnership unit) was paid from operations and approximately $148,000
(approximately $146,000 to the limited partners or $7.31 per limited partnership
unit) was paid from the remaining proceeds from the sale of The Pines of
Northwest Crossing Apartments in July 2000. During the six months ended June 30,
2000, cash distributions of approximately $682,000 (approximately $675,000 of
which was paid to the limited partners or $33.79 per limited partnership unit)
were paid from operations. Subsequent to June 30, 2001, the General Partner
approved and paid a distribution of approximately $1,891,000 (approximately
$1,872,000 to the limited partners or $93.72 per limited partnership unit) from
proceeds from the refinancing of the mortgage of Village Green Apartments as
discussed in "Note E".
Note E - Refinancing and Extraordinary Loss
On June 27, 2001, the Partnership refinanced the mortgage encumbering Village
Green Apartments. The refinancing replaced indebtedness of approximately
$4,655,000 with a new mortgage in the amount of $6,800,000. The new mortgage
carries a stated interest rate of 7.39% as compared to 7.33% on the previous
loan. Payments of principal and interest on the new mortgage loan are due
monthly until the loan matures on July 1, 2021. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately $50,000
due to the write-off of unamortized loan costs. Total capitalized loan costs for
the new mortgage were approximately $219,000 at June 30, 2001.
Note F - Casualty Event
In October 2000, a fire occurred at Forest River Apartments, which resulted in
damage to two apartment units. The property incurred damages of approximately
$51,000. Insurance proceeds of approximately $45,000 were received during the
six months ended June 30, 2001. After writing off the undepreciated cost of the
damaged units, the Partnership realized a casualty gain of approximately $41,000
from this event during the six months ended June 30, 2001.
In March 2000, a fire occurred at Forest River Apartments, which resulted in
damage to four apartment units. The property incurred damages of approximately
$250,000. Insurance proceeds of approximately $154,000 were received during the
six months ended June 30, 2000. The Partnership realized a casualty gain of
approximately $50,000 from this event for the six months ended June 30, 2000.
Note G - Subsequent Event
On July 30, 2001, the Partnership sold Rosemont Crossing Apartments to an
unrelated third party, for net proceeds of approximately $5,049,000 after
payment of closing costs. The Partnership realized a gain of approximately
$2,704,000 as a result of the sale. The Partnership used approximately
$2,764,000 of the net proceeds to repay the mortgages encumbering the property.
In addition, the Partnership recorded an extraordinary loss on early
extinguishment of debt of approximately $265,000 as a result of the write off of
unamortized loan costs and mortgage discounts and a prepayment penalty.
On August 1, 2001, the Partnership sold Panorama Terrace Apartments to an
unrelated third party, for net proceeds of approximately $7,160,000 after
payment of closing costs. The Partnership realized a gain of approximately
$4,427,000 as a result of the sale. The Partnership used approximately
$3,649,000 of the net proceeds to repay the mortgage encumbering the property.
In addition, the Partnership recorded an extraordinary loss on early
extinguishment of debt of approximately $261,000 as a result of the write off of
unamortized loan costs and a prepayment penalty.
The following pro-forma information reflects the operations of the Partnership
as if Rosemont Crossing Apartments, Panorama Terrace Apartments and The Pines of
Northwest Crossing, which sold in July 2000 (see "Note B"), had been sold
January 1, 2000 (in thousands, except unit data).
June 30, 2001
Assets
Cash and cash equivalents $ 2,142
Other assets 826
Fixed assets, net 3,296
$ 6,264
Liabilities and partners' deficit
Liabilities $ 353
Mortgage notes payable 9,959
Equity (4,048)
$ 6,264
Six Months Ended Year Ended
June 30, 2001 June 30, 2000 December 31, 2000
Revenues $ 1,649 $ 1,609 $ 3,204
Total expenses 1,546 1,400 2,936
Income before extraordinary
item $ 103 $ 209 $ 268
Income before extraordinary
item per limited
partnership unit $ 5.05 $ 10.36 $ 13.27
Note H - 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 series of transactions
which closed on October 1, 1998 and February 26, 1999 whereby Insignia and
Insignia Properties Trust, respectively, were merged into AIMCO. 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. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. Plaintiffs have until August 16, 2001
to file a fourth amended complaint. The General Partner does not anticipate that
any costs, whether legal or settlement 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 properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for the six
months ended June 30, 2001 and 2000:
Average Occupancy
Property 2001 2000
Panorama Terrace Apartments 95% 94%
Birmingham, Alabama
Forest River Apartments 96% 96%
Gadsden, Alabama
Village Green Apartments 94% 95%
Montgomery, Alabama
Rosemont Crossing Apartments 85% 94%
San Antonio, Texas
The General Partner attributes the decrease in occupancy at Rosemont Crossing
Apartments to the competitive market of the apartment industry in the San
Antonio area.
Results of Operations
The Registrant's net loss for the three and six months ended June 30, 2001 was
approximately $74,000 and $131,000, respectively, compared to net income of
approximately $154,000 and $180,000, respectively, for the three and six months
ended June 30, 2000. The increase in net loss is primarily due to the sale
during 2000 of The Pines at Northwest Crossing Apartments. On July 20, 2000, The
Pines of Northwest Crossing Apartments, located in Houston, Texas, was sold to
an unaffiliated third party for a gross sales price of $9,500,000. The net
proceeds realized by the Partnership were approximately $9,338,000. Excluding
the impact of the operating results of The Pines of Northwest Crossing
Apartments for the three and six months ended June 30, 2000, the Registrant's
net income for the three and six months ended June 30, 2000 was approximately
$119,000 and $111,000, respectively. The increase in net loss for the three and
six months ended June 30, 2001 is due to an increase in total expenses and an
extraordinary loss as a result of the refinancing of the mortgage at Village
Green Apartments (as discussed in "Liquidity and Capital Resources"). The
increase in net loss for the six months ended June 30, 2001 was partially offset
by an increase in total revenues. Total revenues remained relatively constant
for the three months ended June 30, 2001. Total expenses increased for the three
and six months ended June 30, 2001 primarily due to increases in operating,
property tax, and general and administrative expenses. Operating expenses
increased primarily due to an increase in utility and payroll expenses,
primarily at Panorama Terrace Apartments and Rosemont Crossing Apartments and
increased advertising and insurance expenses at all the Partnership's investment
properties. The increase in property tax expense is due to the timing of the
receipt of tax bills, which affected the tax accruals recorded for the
respective periods. Depreciation expense and interest expense remained
relatively constant for the comparable periods.
General and administrative expenses increased primarily due to an increase in
the costs of services included in the management reimbursements to the General
Partner as allowed under the Partnership Agreement and an increase in
professional fees associated with the management of the Partnership. Also
included in general and administrative expenses at both June 30, 2001 and 2000
are costs associated with the quarterly and annual communications with investors
and regulatory agencies and the annual audit required by the Partnership
Agreement.
Excluding the revenues from The Pines of Northwest Crossing Apartments for the
three and six month periods ended June 30, 2000, total revenues increased for
the six months ended June 30, 2001 due to increases in rental income, other
income, and the recognition of a casualty gain during the six months ended June
30, 2001. Rental income increased primarily due to an increase in the average
rental rates at all four of the Partnership's remaining investment properties
and an increase in occupancy at Panorama Terrace Apartments which more than
offset the decrease in occupancy at Village Green Apartments and Rosemont
Crossing Apartments. Other income increased primarily due to an increase in
tenant reimbursements and laundry income primarily at Rosemont Crossing
Apartments and cable TV income at all the Partnership's properties. The casualty
gain in 2001 is a result of an October 2000 fire which occurred at Forest River
Apartments. Two apartment units were damaged with a cost of repairs of
approximately $51,000. Insurance proceeds of approximately $45,000 were received
in 2001 to cover these damages. After writing off the undepreciated cost of the
damaged units, the Partnership recognized a casualty gain of approximately
$41,000. The increase in total revenues was partially offset by the recognition
of a casualty gain during the six months ended June 30, 2000. This casualty gain
was a result of a March 2000 fire which occurred at Forest River Apartments.
Four apartment units were damaged with a cost of approximately $250,000.
Insurance proceeds of approximately $154,000 were received during the six months
ended June 30, 2000 to cover these damages. After writing off the undepreciated
cost of the damaged units, the Partnership recognized a casualty gain of
approximately $50,000 during the six months ended June 30, 2000.
On July 30, 2001, the Partnership sold Rosemont Crossing Apartments to an
unrelated third party, for net proceeds of approximately $5,202,000 after
payment of closing costs. The Partnership realized a gain of approximately
$2,704,000 as a result of the sale. The Partnership used approximately
$2,764,000 of the net proceeds to repay the mortgages encumbering the property.
In addition, the Partnership recorded an extraordinary loss on early
extinguishment of debt of approximately $265,000 as a result of the write off of
unamortized loan costs and mortgage discounts and a prepayment penalty.
On August 1, 2001, the Partnership sold Panorama Terrace Apartments to an
unrelated third party, for net proceeds of approximately $7,377,000 after
payment of closing costs. The Partnership realized a gain of approximately
$4,427,000 as a result of the sale. The Partnership used approximately
$3,649,000 of the net proceeds to repay the mortgage encumbering the property.
In addition, the Partnership recorded an extraordinary loss on early
extinguishment of debt of approximately $261,000 as a result of the write off of
unamortized loan costs and a prepayment penalty.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment properties 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 June 30, 2001, the Partnership had cash and cash equivalents of approximately
$2,258,000, compared to approximately $803,000 at June 30, 2000. The increase in
cash and cash equivalents of approximately $1,058,000 for the six months ended
June 30, 2001, from the Partnership's calendar year end, is due to approximately
$1,128,000 of cash provided by financing activities and approximately $134,000
of cash provided by operating activities, which was partially offset by
approximately $204,000 of cash used in investing activities. Cash used in
investing activities consisted of property improvements and replacements, which
was partially offset by net receipts from escrow accounts maintained by the
mortgage lender and the receipt of insurance proceeds related to the casualty at
Forest River Apartments. Cash provided by financing activities consisted of net
proceeds received as a result of the refinancing of the mortgage of Village
Green Apartments, which was partially offset by the repayment of the existing
mortgage at Village Green Apartments, and to a lesser extent, distributions to
partners, loan costs paid related to the refinancing of the mortgage encumbering
Village Green Apartments, and payments of principal made on the mortgages
encumbering the Registrant's properties. The Registrant 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 Partnership's properties are detailed
below.
Panorama Terrace Apartments: For 2001, the Partnership has budgeted
approximately $127,000 for capital improvements, consisting primarily of floor
covering, appliance, and air conditioning unit replacements. The Partnership
completed approximately $109,000 in capital expenditures at Panorama Terrace
Apartments as of June 30, 2001, consisting primarily of plumbing upgrades,
structural building improvements, other building improvements, and floor
covering replacement. These improvements were funded primarily from operations.
Forest River Apartments: For 2001, the Partnership has budgeted approximately
$76,000 for capital improvements, consisting primarily of floor covering,
appliances, and air conditioning unit replacements. The Partnership completed
approximately $65,000 in capital expenditures at Forest River Apartments as of
June 30, 2001, consisting primarily of floor covering and appliance replacement,
furniture upgrades, and construction costs related to the repair of two units
damaged in a fire. These improvements were funded primarily from operations,
replacement reserves, and insurance proceeds.
Village Green Apartments: For 2001, the Partnership has budgeted approximately
$160,000 for capital improvements, consisting primarily of floor covering and
appliance replacement, furniture upgrades and electrical and plumbing
improvements. The Partnership completed approximately $70,000 in capital
expenditures at Village Green Apartments as of June 30, 2001, consisting
primarily of floor covering and appliance replacements, structural improvements,
and major landscaping. These improvements were funded primarily from operations
and replacement reserves.
Rosemont Crossing Apartments: For 2001, the Partnership has budgeted
approximately $373,000 for capital improvements, consisting primarily of floor
covering and appliance replacements, HVAC upgrades, and interior and exterior
building improvements. The Partnership completed approximately $53,000 in
capital expenditures at Rosemont Crossing Apartments as of June 30, 2001,
consisting primarily of structural improvements, interior decoration and floor
covering replacement. These improvements were funded primarily from operations
and replacement reserves.
The additional capital expenditures will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
On June 27, 2001, the Partnership refinanced the mortgage encumbering Village
Green Apartments. The refinancing replaced indebtedness of approximately
$4,655,000 with a new mortgage in the amount of $6,800,000. The new mortgage
carries a stated interest rate of 7.39% as compared to 7.33% on the previous
loan. Payments of principal and interest on the new mortgage loan are due
monthly until the loan matures on July 1, 2021. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately $50,000
due to the write-off of unamortized loan costs. Total capitalized loan costs for
the new mortgage were approximately $219,000 at June 30, 2001.
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 on the Partnership's properties, other than Village Green
Apartments, of approximately $9,563,000, net of discounts, is being amortized
over varying periods ranging from 29 to 30 years with balloon payments due in
2002 and 2003. The General Partner may attempt to refinance such indebtedness
and/or sell the properties prior to such maturity dates. If the properties
cannot be refinanced or sold for a sufficient amount, the Partnership will risk
losing such properties through foreclosure.
During the six months ended June 30, 2001, cash distributions of approximately
$687,000 (approximately $675,000 to the limited partners or $33.79 per limited
partnership unit) were paid to the partners, of which approximately $539,000
(approximately $529,000 to the limited partners or $26.48 per limited
partnership unit) was paid from operations and approximately $148,000
(approximately $146,000 to the limited partners or $7.31 per limited partnership
unit) was paid from the remaining proceeds from the sale of The Pines of
Northwest Crossing Apartments in July 2000. During the six months ended June 30,
2000, cash distributions of approximately $682,000 (approximately $675,000 of
which was paid to the limited partners or $33.79 per limited partnership unit)
were paid from operations. Subsequent to June 30, 2001, the General Partner
approved and paid a distribution of approximately $1,891,000 (approximately
$1,872,000 to the limited partners or $93.72 per limited partnership unit) from
proceeds from the refinancing of the mortgage of Village Green Apartments.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings and/or property sales. 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
planned capital improvement expenditures, to permit any additional distributions
to its partners in 2001 or subsequent periods. In addition, the Partnership may
be restricted from making distributions until the amount in the reserve account
maintained by the mortgage lender is equal to a minimum of $200 and a maximum of
$400 per apartment unit at Forest River Apartments and Rosemont Crossing
Apartments for a total of approximately $93,000 to $186,000. As of June 30,
2001, the balance in the reserve account is approximately $169,000.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 13,251 limited partnership
units in the Partnership representing 66.34% of the outstanding units at June
30, 2001. 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
make one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO. Under the Partnership Agreement, unitholders holding a
majority of the Units are entitled to take action with respect to a variety of
matters, which would include without limitation, voting on certain amendments to
the Partnership Agreement and voting to remove the General Partner. As a result
of its ownership of 66.34% 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 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 series of transactions
which closed on October 1, 1998 and February 26, 1999 whereby Insignia and
Insignia Properties Trust, respectively, were merged into AIMCO. 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. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. Plaintiffs have until August 16, 2001
to file a fourth amended complaint. The General Partner does not anticipate that
any costs, whether legal or settlement 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:
Exhibit 10.15, Multifamily Note dated June 27, 2001, by and
between Angeles Partners IX, a California limited partnership,
and GMAC Commercial Mortgage Corporation.
b) No reports on Form 8-K were filed during the quarter ended
June 30, 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 PARTNERS IX
By: Angeles Realty Corporation
Its 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: August 14, 2001
EXHIBIT 10.15
FHLMC Loan No. 002692465
Village Green Apartments
MULTIFAMILY NOTE
(MULTISTATE - REVISION DATE 11-01-2000)
US $6,800,000.00 As of June 27, 2001
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Six Million Eight
Hundred Thousand and 00/100 Dollars (US $6,800,000.00), with interest on the
unpaid principal balance at the annual rate of Seven and Three Hundred Ninety
Thousandths percent (7.390%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, and any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 200
Witmer Road, Post Office Box 809, Horsham, Pennsylvania 19044, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid
as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Fifty-Four Thousand Three Hundred Twenty-Three and 87/100 Dollars (US
$54,323.87), shall be payable on the first day of each month beginning on August
1, 2001, until the entire unpaid principal balance evidenced by this Note is
fully paid.
(c) Any accrued interest remaining past due for 30 days or more may, at Lender's
discretion, be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on July 1, 2021 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(d) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower (except if notice is
required by applicable law, then after such notice). Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due (unless applicable law requires a longer
period of time before a late charge may be imposed, in which event such longer
period shall be substituted), Borrower shall pay to Lender, immediately and
without demand by Lender, a late charge equal to five percent (5%) of such
amount (unless applicable law requires a lesser amount be charged, in which
event such lesser amount shall be substituted). Borrower acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the loan evidenced by this Note (the "Loan"), and
that it is extremely difficult and impractical to determine those additional
expenses. Borrower agrees that the late charge payable pursuant to this
Paragraph represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional expenses
Lender will incur by reason of such late payment. The late charge is payable in
addition to, and not in lieu of, any interest payable at the Default Rate
pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for thirty (30) days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "Default Rate") equal to the lesser of four (4) percentage points
above the rate stated in the first paragraph of this Note and the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment under this Note is delinquent for more than thirty (30)
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment under this Note is delinquent for more than thirty (30) days
or any other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk. Borrower agrees that the increase in the
rate of interest payable under this Note to the Default Rate represents a fair
and reasonable estimate, taking into account all circumstances existing on the
date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding. To the fullest extent permitted by
applicable law, in any action to enforce Borrower's personal liability under
this Paragraph 9, Borrower waives any right to set off the value of the
Mortgaged Property against such personal liability.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment (any
receipt by Lender of principal, other than principal required to be paid in
monthly installments pursuant to Paragraph 3(b), prior to the scheduled Maturity
Date set forth in Paragraph 3(c)) under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on a Business Day designated as the date for such prepayment in a written
notice from Borrower to Lender given at least 30 days prior to the date of such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Paragraph 10(c). For all purposes including the accrual of interest, any
prepayment received by Lender on any day other than the last calendar day of the
month shall be deemed to have been received on the last calendar day of such
month. For purposes of this Note, a "Business Day" means any day other than a
Saturday, Sunday or any other day on which Lender is not open for business.
Unless expressly provided for in the Loan Documents, Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
However, if a partial prepayment is provided for in the Loan Documents or is
accepted by Lender in Lender's discretion, a prepayment premium calculated
pursuant to Paragraph 10(c) shall be due and payable by Borrower.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Paragraph 10(c).
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made during the period from
one hundred eighty (180) days before the scheduled Maturity Date to the
scheduled Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Any prepayment premium payable under this Note shall be computed as follows:
(1) If the prepayment is made between the date of this Note and the
date that is 180 months after the first day of the first calendar month
following the date of this Note (the "Yield Maintenance Period"), the prepayment
premium shall be whichever is the greater of subparagraphs (i) and (ii) below:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of
this Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in the case of the application by
Lender of collateral or security to a portion of the principal
balance, the date of such application; and in any other case, the
date on which Lender accelerates the unpaid principal balance of
this Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
9.250% U.S. Treasury Security due February 1, 2016, as reported in
The Wall Street Journal, expressed as a decimal calculated to five
digits. In the event that no yield is published on the applicable
date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(2) If the prepayment is made after the expiration of the Yield
Maintenance Period but before the period set forth in Paragraph 10(b)(A) above,
the prepayment premium shall be 1.0% of the unpaid principal balance of this
Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth in this Note represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. To the fullest extent allowed by applicable law,
Borrower shall pay all expenses and costs, including fees and out-of-pocket
expenses of attorneys (including Lender's in-house attorneys) and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. Neither this Note nor any of the other Loan Documents shall be
construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate greater than the maximum interest rate
permitted to be charged under applicable law. If any applicable law limiting the
amount of interest or other charges permitted to be collected from Borrower in
connection with the Loan is interpreted so that any interest or other charge
provided for in any Loan Document, whether considered separately or together
with other charges provided for in any other Loan Document, violates that law,
and Borrower is entitled to the benefit of that law, that interest or charge is
hereby reduced to the extent necessary to eliminate that violation. The amounts,
if any, previously paid to Lender in excess of the permitted amounts shall be
applied by Lender to reduce the unpaid principal balance of this Note. For the
purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family, household or agricultural
purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices; Written Modifications. All notices, demands and other
communications required or permitted to be given by Lender to Borrower pursuant
to this Note shall be given in accordance with Section 31 of the Security
Instrument. Any modification or amendment to this Note shall be ineffective
unless in writing signed by the party sought to be charged with such
modification or amendment; provided, however, that in the event of a Transfer
under the terms of the Security Instrument, any or some or all of the
Modifications to Multifamily Note may be modified or rendered void by Lender at
Lender's option by notice to Borrower/transferee.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBIT. The following Exhibit is attached to this Note:
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X Exhibit A Modifications to Multifamily Note
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IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
ANGELES PARTNERS IX, a California limited
partnership
By: Angeles Realty Corporation, a California
corporation, its general partner
By: ______________________
Patti K. Fielding
Senior Vice President
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Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF ___________________
________________, WITHOUT RECOURSE, THIS ____ DAY
OF _________, 2001.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:_________________________________
Donald W. Marshall
Vice President
PAGE A-1
EXHIBIT A
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of Paragraph 8 of the Note ("Default Rate") is hereby
deleted and replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents, assessments or other charges in accordance with the terms
of the Security Instrument.
3. Paragraph 19 is modified by deleting: "; provided, however, that in the
event of a Transfer under the terms of the Security Instrument, any or
some or all of the Modifications to Multifamily Note may be modified or
rendered void by Lender at Lender's option by notice to
Borrower/transferee" in the last sentence of the Paragraph; and by adding
the following new sentence:
The Modifications to Multifamily Note set forth in this Exhibit A
shall be null and void unless title to the Mortgaged Property is
vested in an entity whose Controlling Interest(s) are directly or
indirectly held by AIMCO REIT or AIMCO OP. The capitalized terms
used in this paragraph are defined in the Security Instrument.