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 0-13192
ANGELES INCOME PROPERTIES, LTD. III
(Exact name of small business issuer as specified in its charter)
California 95-3903984
(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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2001
Assets
Cash and cash equivalents $ 235
Receivables and deposits 4
Other assets 14
Investment property:
Land $ 657
Buildings and related personal property 4,381
5,038
Less accumulated depreciation (3,580) 1,458
$ 1,711
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 9
Tenant security deposit liabilities 19
Accrued property taxes 31
Due to Affiliates 12
Other liabilities 92
Partners' (Deficit) Capital
General partners $ (16)
Limited partners (86,738 units issued and
outstanding) 1,564 1,548
$ 1,711
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Revenues:
Rental income $ 205 $ 215 $ 624 $ 638
Other income 11 12 37 68
Total revenues 216 227 661 706
Expenses:
Operating 95 86 259 260
General and administrative 45 41 115 106
Depreciation 59 66 192 201
Property taxes 8 9 32 30
Total expenses 207 202 598 597
Income from continuing operations 9 25 63 109
Loss from discontinued
operations -- (50) -- (50)
Net income (loss) $ 9 $ (25) $ 63 $ 59
Net income allocated to general
partners (1%) $ -- $ -- $ 1 $ 1
Net income (loss) allocated to limited
partners (99%) 9 (25) 62 58
$ 9 $ (25) $ 63 $ 59
Per limited partnership unit:
Income from continuing operations $ .10 $ .29 $.71 $1.25
Loss from discontinued
operations -- (.58) -- (.58)
Net income (loss) $ .10 $(.29) $.71 $ .67
Distributions per limited partnership
unit $ -- $ -- $2.23 $25.17
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 86,920 $ 1 $43,460 $43,461
Partners' (deficit) capital at
December 31, 2000 86,738 $ (15) $ 1,695 $ 1,680
Distributions to partners -- (2) (193) (195)
Net income for the nine months
ended September 30, 2001 -- 1 62 63
Partners' (deficit) capital at
September 30, 2001 86,738 $ (16) $ 1,564 $ 1,548
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES INCOME PROPERTIES, LTD. III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2001 2000
Cash flows from operating activities:
Net income $ 63 $ 59
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 192 201
Change in accounts:
Receivables and deposits 25 135
Other assets (6) (4)
Accounts payable (14) (30)
Tenant security deposit liabilities (4) 3
Accrued property taxes (7) (8)
Due to Affiliates (21) --
Other liabilities 42 (94)
Net cash provided by operating activities 270 262
Cash flows from investing activities:
Property improvements and replacements (46) (35)
Cash flows from financing activities:
Distributions to partners (195) (2,205)
Net increase (decrease) in cash and cash equivalents 29 (1,978)
Cash and cash equivalents at beginning of period 206 2,253
Cash and cash equivalents at end of period $ 235 $ 275
See Accompanying Notes to Consolidated Financial Statements
e)
ANGELES INCOME PROPERTIES, LTD. III
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles Income
Properties, Ltd. III (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Angeles Realty Corporation II (the
"Managing General Partner"), 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 year ended December 31, 2000.
The Managing General Partner is a wholly owned 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 Poplar Square AIP
III, L.P. and Poplar Square GP LP. Poplar Square GP LP is the general partner of
Poplar Square AIP III and the Managing General Partner is the general partner of
Poplar Square GP LP. Both general partners of the consolidated partnerships may
be removed by the Registrant; therefore, the partnerships are controlled and
consolidated by the Partnership. 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 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 Managing 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 Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides (i) for certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership.
The following payments were made to the Managing General Partner and affiliates
during the nine months ended September 30, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating
expenses) $ 33 $ 34
Reimbursement for services of affiliates (included
in general and administrative expenses and
investment property 68 41
Partnership management fees (included in general and
administrative expense) 16 --
Affiliates of the Managing General Partner are entitled to receive 5% of gross
receipts from the Registrant's residential property as compensation for
providing property management services. The Registrant paid to such affiliates
approximately $33,000 and $34,000 for the nine months ended September 30, 2001
and 2000, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $68,000 and
$41,000 for the nine months ended September 30, 2001 and 2000, respectively.
Included in these amounts at September 30, 2001, and 2000 are reimbursement of
approximately $17,000 and $2,000, respectively, for construction oversight
costs.
The Partnership Agreement provides for a fee equal to 10% of "net cash flow from
operations", as defined in the Partnership Agreement to be paid to the Managing
General Partner for executive and administrative management services. This fee
is calculated and accrued quarterly. At September 30, 2001, the Partnership had
accrued approximately $12,000 which is included in due to affiliates on the
accompanying consolidated balance sheet.
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 40,934 limited partnership units
(the "Units") in the Partnership representing 47.19% of the outstanding Units at
September 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 voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 47.19% of the outstanding Units, AIMCO is in a
position to influence all such voting decisions with respect to the Registrant.
When voting on matters, AIMCO would in all likelihood vote the Units it acquired
in a manner favorable to the interest of the Managing General Partner because of
its affiliation with the Managing General Partner.
Note C - Distributions
The Partnership declared and paid cash distributions from operations of
approximately $195,000 (approximately $193,000 to the limited partners or $2.23
per limited partnership unit) during the nine months ended September 30, 2001.
During the nine months ended September 30, 2000, the Partnership paid a cash
distribution from the net sale proceeds of Poplar Square Shopping Center, which
sold in December 1999, of approximately $1,205,000 (approximately $1,193,000 to
the limited partners or $13.76 per limited partnership unit) and from operations
of approximately $1,000,000 (approximately $990,000 to the limited partners or
$11.41 per limited partnership unit).
Note D - Legal Proceedings
In March 1998, several putative unitholders 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 Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purports to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) which are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain general partner entities by
Insignia Financial Group, Inc. ("Insignia") and entities which were, at one
time, affiliates of Insignia; past tender offers by the Insignia affiliates to
acquire limited partnership units; management of the partnerships by the
Insignia affiliates; and the 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 Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs filed an amended
complaint. The Managing General Partner filed demurrers to the amended complaint
which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. 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 Managing 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 Managing 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 Managing 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 Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment property consists of one apartment complex. The
following table sets forth the average occupancy of the property for the nine
months ended September 30, 2001 and 2000:
Average Occupancy
Property 2001 2000
Lake Forest Apartments 91% 94%
Brandon, Mississippi
The decrease in occupancy at Lake Forest Apartments is due to increased
competition in the market area and a number of tenants purchasing homes.
Results from Operations
The Registrant's net income for the nine months ended September 30, 2001 was
approximately $63,000 compared to net income of approximately $59,000 for the
nine months ended September 30, 2000. The Registrant's net income for the three
months ended September 30, 2001 was approximately $9,000 compared to a net loss
of approximately $25,000 for the three months ended September 30, 2000. The
increase in net income for the three and nine months ended September 30, 2001
was attributable to the recognition of a net loss from discontinued operations
during 2000, slightly offset by a decrease in total revenues. Total expenses
remained relatively constant. Poplar Square was the only commercial property
owned by the Partnership and represented one segment of the Partnership's
operations. Due to the sale of this property in December 1999, the results of
the commercial segment have been shown as loss from discontinued operations for
the three and nine months ended September 30, 2000.
The decrease in total revenues for the three and nine months ended September 31,
2001 was attributable to a decrease in rental and other income. Rental income
decreased due to a decrease in occupancy at Lake Forest Apartments offset by an
increase in average rental rates. The decrease in other income was due to a
decrease in interest income due to lower average cash balances in interest
bearing accounts.
Included in general and administrative expenses are reimbursements for the costs
of services provided by the Managing General Partner as allowed under the
Partnership Agreement associated with its management of the Partnership. Also
included are costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment property to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the Managing General Partner attempts to protect the Partnership from
the burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At September 30, 2001, the Registrant had cash and cash equivalents of
approximately $235,000 compared to approximately $275,000 at September 30, 2000.
Cash and cash equivalents increased approximately $29,000 since December 31,
2000 due to approximately $270,000 of cash provided by operating activities
partially offset by approximately $46,000 and $195,000 of cash used in investing
and financing activities, respectively. Cash used in investing activities
consisted of property improvements and replacements. Cash used in financing
activities consisted of distributions to the partners. 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 Partnership's property to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state, and local legal and regulatory requirements.
The Partnership budgeted approximately $86,000 for capital improvements at Lake
Forest Apartments for the year 2001 consisting primarily of structural
improvements, floor covering replacements, heating and air conditioning upgrades
and appliances. During the nine months ended September 30, 2001, the property
completed approximately $46,000 in capital expenditures, consisting primarily of
floor coverings, heating and air conditioning upgrades, appliances, exterior
painting and pool improvements. These improvements were funded from operating
cash flow. Additional improvements may be considered and will depend on the
physical condition of the property and anticipated cash flow generated by the
property.
Additional capital expenditures will be incurred only if cash is available from
operations. To the extent that such budgeted capital improvements are completed,
the Registrant's distributable cash flow, if any, may be adversely affected at
least in the short term. The Registrant's current assets are thought to be
sufficient for any near-term needs (exclusive of capital improvements) of the
Registrant.
The Partnership declared and paid cash distributions from operations of
approximately $195,000 (approximately $193,000 to the limited partners or $2.23
per limited partnership unit) during the nine months ended September 30, 2001.
During the nine months ended September 30, 2000, the Partnership paid a cash
distribution from the net sale proceeds of Poplar Square Shopping Center, which
sold in December 1999, of approximately $1,205,000 (approximately $1,193,000 to
the limited partners or $13.76 per limited partnership unit) and from operations
of approximately $1,000,000 (approximately $990,000 to the limited partners or
$11.41 per limited partnership unit). 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, mortgage financing, and/or the sale of
the property. There can be no assurance that the Partnership will generate
sufficient funds from operations, after required capital expenditures, to permit
additional distributions to its partners during the remainder of 2001 or
subsequent periods.
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 40,934 limited partnership units
(the "Units") in the Partnership representing 47.19% of the outstanding Units at
September 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 voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 47.19% of the outstanding Units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of its
affiliation with the Managing General Partner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unitholders 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 Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purports to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) which are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain general partner entities by
Insignia Financial Group, Inc. ("Insignia") and entities which were, at one
time, affiliates of Insignia; past tender offers by the Insignia affiliates to
acquire limited partnership units; management of the partnerships by the
Insignia affiliates; and the 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 Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs filed an amended
complaint. The Managing General Partner filed demurrers to the amended complaint
which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. 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 Managing 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 Managing 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 Managing 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 INCOME PROPERTIES, LTD. III
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: November 13, 2001