FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 0-16116
ANGELES OPPORTUNITY PROPERTIES, LTD.
(Exact name of small business issuer as specified in its charter)
California 95-4052473
(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 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 OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2001
Assets
Cash and cash equivalents $ 321
Receivables and deposits 134
Restricted escrows 40
Other assets 84
Investment properties:
Land $ 1,013
Buildings and related personal property 8,185
9,198
Less accumulated depreciation (3,133) 6,065
$ 6,644
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 24
Tenant security deposit liabilities 26
Accrued property taxes 205
Other liabilities 170
Mortgage notes payable 5,355
Partners' (Deficit) Capital:
General partner $ (129)
Limited partners (12,425 units issued and
outstanding) 993 864
$ 6,644
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Revenues:
Rental income $ 646 $ 619 $ 1,904 $ 1,772
Other income 31 34 107 95
Total revenues 677 653 2,011 1,867
Expenses:
Operating 268 245 777 737
General and administrative 41 59 121 145
Depreciation 85 83 261 254
Interest 109 109 326 323
Property taxes 71 69 201 186
Total expenses 574 565 1,686 1,645
Net income $ 103 $ 88 $ 325 $ 222
Net income allocated to general
partner (1%) $ 1 $ 1 $ 3 $ 2
Net income allocated to limited
partners (99%) 102 87 322 220
$ 103 $ 88 $ 325 $ 222
Net income per limited
partnership unit $ 8.21 $ 7.00 $ 25.92 $ 17.71
Distributions per limited
partnership unit $ 13.04 $ -- $ 51.11 $ 71.55
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 12,425 $ 1 $12,425 $12,426
Partners' (deficit) capital at
December 31, 2000 12,425 $ (120) $ 1,306 $ 1,186
Distributions to partners -- (12) (635) (647)
Net income for the nine months
ended September 30, 2001 -- 3 322 325
Partners' (deficit) capital
at September 30, 2001 12,425 $ (129) $ 993 $ 864
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES OPPORTUNITY PROPERTIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2001 2000
Cash flows from operating activities:
Net income $ 325 $ 222
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 261 254
Amortization of loan costs and discount 24 25
Change in accounts:
Receivables and deposits 98 124
Other assets (7) (12)
Accounts payable (36) (5)
Tenant security deposit liabilities (1) 3
Accrued property taxes (56) (53)
Other liabilities 82 (80)
Net cash provided by operating activities 690 478
Cash flows from investing activities:
Property improvements and replacements (131) (111)
Net withdrawals from (deposits to) restricted escrows 38 (36)
Net cash used in investing activities (93) (147)
Cash flows from financing activities:
Payments on mortgage notes payable (22) (20)
Distributions to partners (647) (907)
Net cash used in financing activities (669) (927)
Net decrease in cash and cash equivalents (72) (596)
Cash and cash equivalents at beginning of period 393 885
Cash and cash equivalents at end of period $ 321 $ 289
Supplemental disclosure of cash flow information:
Cash paid for interest $ 301 $ 303
See Accompanying Notes to Consolidated Financial Statements
e)
ANGELES OPPORTUNITY PROPERTIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles
Opportunity Properties, Ltd. (the "Partnership" or the "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Angeles Realty Corporation II (the
"General Partner") all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 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 of the Partnership include its 99% limited
partnership interests in New Lake Meadows LP and Lakewood AOPL Ltd. The general
partner of these partnerships is the General Partner. The Partnership may remove
the general partner of both of these 99% owned partnerships; therefore, the
partnerships are controlled and consolidated by the Partnership. All significant
interpartnership balances have been eliminated.
Segment Reporting: Statements 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 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 - 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 transactions with the General Partner and its affiliates were
incurred during the nine months ended September 30, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in
operating expenses) $101 $ 93
Reimbursement for services of affiliates
(included in general and administrative expenses
and investment properties) 83 69
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from both of the Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$101,000 and $93,000 for the nine months ended September 30, 2001 and 2000,
respectively.
An affiliate of the General Partner received reimbursements of accountable
administrative expense amounting to approximately $83,000 and $69,000 for the
nine months ended September 30, 2001 and 2000, respectively. Included in these
amounts at September 30, 2001 and 2000 are reimbursements of approximately
$18,000 and $1,000, respectively, for construction service fees.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 5,768 limited partnership
units (the "Units") in the Partnership representing 46.42% 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 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 46.42% of the outstanding Units, AIMCO is in a position to
significantly 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 C - Distributions
During the nine months ended September 30, 2001, distributions of approximately
$647,000 (approximately $635,000 to the limited partners or $51.11 per limited
partnership unit) were paid to the partners from cash provided by operations.
During the nine months ended September 30, 2000, distributions of $898,000
(approximately $889,000 to the limited partners or $71.55 per limited
partnership unit) were paid from operations. In conjunction with the transfer of
funds from certain majority-owned sub-tier limited partnerships to the
Partnership, approximately $9,000 was distributed to the general partner of the
majority-owned sub-tier limited partnerships during the nine months ended
September 30, 2000.
Note D - 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. (the "Nuanes action") 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. On July 20, 2001, plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which, together with a demurrer filed by other defendants, is
currently scheduled to be heard on November 15, 2001. The Court has set the
matter for trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. The matters are currently scheduled to be heard on
November 15, 2001.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussions of the Partnership'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 Partnership'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 two apartment complexes. The
following table sets forth the average occupancy for each of the properties for
the nine months ended September 30, 2001 and 2000:
Average Occupancy
Property 2001 2000
Lake Meadows Apartments 96% 98%
Garland, Texas
Lakewood Apartments (1) 95% 92%
Tomball, Texas
(1) Occupancy at Lakewood Apartments increased due to local competition
increasing average rental rates.
Results of Operations
The Partnership had net income of approximately $325,000 for the nine months
ended September 30, 2001, compared to net income of approximately $222,000 for
the nine months ended September 30, 2000. The Partnership had net income of
approximately $103,000 for the three months ended September 30, 2001, compared
to net income of approximately $88,000 for the three months ended September 30,
2000. The increase in net income for the three and nine months ended September
30, 2001 was due to an increase in total revenues offset by an increase in total
expenses. The increase in total revenues for the nine months ended September 30,
2001 was due to an increase in rental revenue and other income. The increase in
total revenue for the three months ended September 30, 2001 was due to an
increase in rental revenue. Rental revenue increased for the three and nine
month periods ended September 30, 2001 due to an increase in occupancy at
Lakewood Apartments and due to an increase in average rental rates at both
investment properties. Other income increased for the nine months ended
September 30, 2001 due to increases in utility reimbursements, tenant charges
and lease cancellation fees at Lakewood Apartments.
Total expenses for the three and nine month periods increased due to increases
in operating and property tax expenses, offset by a decrease in general and
administrative expenses. Operating expenses for both periods increased due to
increases in utility costs at Lakewood Apartments. Property tax for both periods
increased due to an increase in the assessed value of Lakewood Apartments as it
was reassessed by the taxing authorities. General and administrative expenses
decreased due to a decrease in legal fees. Included in general and
administrative expense for the three and nine months ended September 30, 2001
and 2000 are management reimbursements to the General Partner as allowed under
the Partnership Agreement. 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 in general and
administrative expenses.
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 September 30, 2001, the Partnership had cash and cash equivalents of
approximately $321,000 compared to approximately $289,000 at September 30, 2000.
Cash and cash equivalents decreased approximately $72,000 from December 31, 2000
due to approximately $669,000 and $93,000 of cash used in financing and
investing activities, respectively, offset by approximately $690,000 of cash
provided by operating activities. Cash used in financing activities consisted of
distributions to the partners and, to a lesser extent, principal payments made
on the first mortgage encumbering Lake Meadows Apartments. Cash used in
investing activities consisted of property improvements and replacements,
slightly offset by net withdrawals from restricted escrows maintained by the
mortgage lenders. 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 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 for
each of the Partnership's properties are detailed below.
Lake Meadows Apartments
Approximately $56,000 was budgeted for capital improvements for the year 2001 at
Lake Meadows Apartments consisting primarily of floor covering, appliance and
air conditioning unit replacements and swimming pool improvements. During the
nine months ended September 30, 2001, the Partnership completed approximately
$66,000 of budgeted and unbudgeted capital improvements at Lake Meadows
Apartments, consisting primarily of floor covering and appliance replacements
and swimming pool improvements. These improvements were funded from operating
cash flow and replacement reserves.
Lakewood Apartments
Approximately $78,000 was budgeted for capital improvements for the year 2001 at
Lakewood Apartments consisting primarily of floor covering, air conditioning
unit and appliance replacements and parking lot resurfacing. During the nine
months ended September 30, 2001, the Partnership completed approximately $65,000
of such budgeted capital improvements at the property, consisting primarily of
floor covering, appliance and air conditioning replacements. These improvements
were funded from replacement reserves.
Additional capital expenditures will be incurred only to the extent of cash
available from operations and from the Partnership's 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.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
encumbering Lakewood Apartments of $3,750,000 is interest only with a balloon
payment due at its maturity in November 2003. The mortgages encumbering Lake
Meadows Apartments of approximately $1,605,000, net of discount, are being
amortized over 343 months with balloon payments of $1,543,000 due at their
maturity in October 2003. The General Partner will 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 nine months ended September 30, 2001, distributions of approximately
$647,000 (approximately $635,000 to the limited partners or $51.11 per limited
partnership unit) were paid to the partners from cash provided by operations.
During the nine months ended September 30, 2000, distributions of $898,000
(approximately $889,000 to the limited partners or $71.55 per limited
partnership unit) were paid from operations. In conjunction with the transfer of
funds from certain majority-owned sub-tier limited partnerships to the
Partnership, approximately $9,000 was distributed to the general partner of the
majority-owned sub-tier limited partnerships during the nine months ended
September 30, 2000. The Partnership's distribution policy is reviewed on a
monthly basis. 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. There can be no assurance
that the Partnership will generate sufficient funds from operations after
required capital expenditures to permit further distributions to its partners
for 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 5,768 limited partnership
units (the "Units") in the Partnership representing 46.42% 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 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 46.42% of the outstanding Units, AIMCO is in a position to
significantly 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. (the "Nuanes action") 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. On July 20, 2001, plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which, together with a demurrer filed by other defendants, is
currently scheduled to be heard on November 15, 2001. The Court has set the
matter for trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. The matters are currently scheduled to be heard on
November 15, 2001.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases 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 September 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 OPPORTUNITY PROPERTIES, LTD.
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: October 29, 2001