FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2002
[ ] 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)
March 31, 2002
Assets
Cash and cash equivalents $ 404
Receivables and deposits 22
Restricted escrows 100
Other assets 340
Investment properties:
Land $ 532
Buildings and related personal property 13,981
14,513
Less accumulated depreciation (11,514) 2,999
$ 3,865
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 44
Tenant security deposit liabilities 50
Accrued property taxes 52
Other liabilities 162
Mortgage notes payable 9,817
Partners' Deficit
General partner $ (295)
Limited partners (19,975 units issued and
outstanding) (5,965) (6,260)
$ 3,865
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2002 2001
(Restated)
Revenues:
Rental income $ 734 $ 739
Other income 53 65
Casualty gain -- 41
Total revenues 787 845
Expenses:
Operating 300 294
General and administrative 87 95
Depreciation 171 171
Interest 196 159
Property taxes 30 25
Total expenses 784 744
Income from continuing operations 3 101
Loss from discontinued operations -- (158)
Net income (loss) $ 3 $ (57)
Net loss allocated to general partner (1%) $ -- $ (1)
Net income (loss) allocated to limited partners (99%) 3 (56)
$ 3 $ (57)
Per limited partnership unit:
Income from continuing operations $ .15 $ 5.01
Loss from discontinued operations -- (7.81)
Net income (loss) $ .15 $ (2.80)
Distributions per limited partnership unit $ -- $ 19.32
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, 2001 19,975 $ (295) $ (5,968) $ (6,263)
Net income for the three
months ended March 31, 2002 -- -- 3 3
Partners' deficit
at March 31, 2002 19,975 $ (295) $ (5,965) $ (6,260)
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES PARTNERS IX
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2002 2001
Cash flows from operating activities:
Net income (loss) $ 3 $ (57)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Casualty gain -- (41)
Depreciation 171 384
Amortization of loan costs and discounts 10 19
Change in accounts:
Receivables and deposits 2 9
Other assets (65) (94)
Due from General Partner 52 --
Accounts payable (27) (96)
Tenant security deposit liabilities 3 (3)
Accrued property taxes 28 75
Due to General Partner -- (285)
Other liabilities 62 38
Net cash provided by (used in) operating activities 239 (51)
Cash flows from investing activities:
Insurance proceeds received -- 45
Property improvements and replacements (52) (137)
Net deposits to restricted escrows -- (28)
Net cash used in investing activities (52) (120)
Cash flows from financing activities:
Payments on mortgage notes payable (54) (55)
Distributions to partners -- (392)
Net cash used in financing activities (54) (447)
Net increase (decrease) in cash and cash equivalents 133 (618)
Cash and cash equivalents at beginning of period 271 1,200
Cash and cash equivalents at end of period $ 404 $ 582
Supplemental disclosure of cash flow information:
Cash paid for interest $ 186 $ 297
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
months ended March 31, 2002 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2002. 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,
2001. The General Partner is a wholly owned subsidiary of Apartment Investment
and Management Company ("AIMCO"), a publicly traded real estate investment
trust.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", which established standards for the way that public business
enterprises report information about long-lived assets that are either being
held for sale or have already been disposed of by sale or other means. The
standard requires that results of operations for a long-lived asset that is
being held for sale or has already been disposed of be reported as a
discontinued operation on the statement of operations. As a result, the
accompanying consolidated statements of operations have been restated as of
January 1, 2001 to reflect the operations of Rosemont Crossing Apartments and
Panorama Terrace Apartments as loss from discontinued operations, due to their
sales in July 2001 and August 2001, respectively.
Note B - Disposition of Investment Properties
On July 30, 2001, the Partnership sold Rosemont Crossing Apartments to an
unrelated third party for a gross sale price of approximately $5,339,000. The
net proceeds realized by the Partnership were approximately $4,809,000 after
payment of closing costs of approximately $316,000 and a prepayment penalty of
approximately $214,000 owed by the Partnership and paid by the buyer. The
Partnership used approximately $2,764,000 of the net proceeds to repay the
mortgages encumbering the property. The property's operations, a loss of
approximately $78,000 for the three months ended March 31, 2001, including
revenues of approximately $288,000, are included in loss from discontinued
operations on the accompanying consolidated statements of operations.
On August 1, 2001, the Partnership sold Panorama Terrace Apartments to an
unrelated third party for a gross sale price of approximately $7,463,000. The
net proceeds realized by the Partnership were approximately $6,915,000 after
payment of closing costs of approximately $303,000 and prepayment penalty of
approximately $245,000 owed by the Partnership and paid by the buyer. The
Partnership used approximately $3,649,000 of the net proceeds to repay the
mortgage encumbering the property. The property's operations, a loss of
approximately $80,000 for the three months ended March 31, 2001, including
revenues of approximately $396,000, are included in loss from discontinued
operations on the accompanying consolidated statements of operations.
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.
During the three months ended March 31, 2002 and 2001, 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 $42,000 and $79,000 for the
three months ended March 31, 2002 and 2001, respectively, which are included in
operating expenses and loss from discontinued operations.
Affiliates of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $70,000 and $69,000 for the
three months ended March 31, 2002 and 2001, respectively, which are included in
general and administrative expenses.
In connection with the sales of Rosemont Crossing Apartments and Panorama
Terrace Apartments during 2001, the General Partner earned commissions of 3% of
the selling price, or approximately $154,000 and $217,000, respectively. 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. These fees are subordinate to the limited partners receiving a
preferred return, as specified in the Partnership Agreement. During 2001, the
Partnership paid all of these fees. If the limited partners have not received
their preferred return when the Partnership terminates, the General Partner will
return these amounts to the Partnership.
Pursuant to the Partnership Agreement, the General Partner is entitled to a fee
for executive and administrative management services equal to 5% of "net cash
from operations". For the three months ended March 31, 2002 approximately $7,000
was owed to the General Partner and is included in other liabilities. No such
fee was owed or earned for the three months ended March 31, 2001.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the three months ended March 31,
2002 and 2001, the Partnership was charged by AIMCO and its affiliates
approximately $43,000 and $95,000, respectively, for insurance coverage and fees
associated with policy claims administration.
Note D - 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
three months ended March 31, 2001. After writing off the undepreciated cost of
the damaged units, the Partnership realized a casualty gain of approximately
$41,000 from this event.
Note E - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (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 was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants oppose the motion. On April 29, 2002,
the Court heard argument on the motion and ordered further briefing after which
time the matter will be taken under submission. 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. On December 11, 2001, the court heard argument on the
motions and took the matters under submission. On February 4, 2002, the Court
served notice of its order granting defendants' motion to strike the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action. On
March 27, 2002, the plaintiffs filed a notice appealing the order striking the
complaint.
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 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 two apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 2002 and 2001:
Average Occupancy
Property 2002 2001
Forest River Apartments 96% 98%
Gadsden, Alabama
Village Green Apartments 93% 93%
Montgomery, Alabama
Results of Operations
The Registrant's net income for the three months ended March 31, 2002 was
approximately $3,000, compared to a net loss of approximately $57,000 for the
three months ended March 31, 2001. The increase in net income is due to a
decrease in loss from discontinued operations resulting from the operations
during 2001 of Rosemont Crossing and Panorama Terrace Apartments partially
offset by a decrease in total revenues. Effective January 1, 2002, the
Partnership adopted Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", which
established standards for the way that public business enterprises report
information about long-lived assets that are either being held for sale or have
already been disposed of by sale or other means. The standard requires that
results of operations for a long-lived asset that is being held for sale or has
already been disposed of be reported as a discontinued operation on the
statement of operations. As a result, the accompanying consolidated statements
of operations have been restated as of January 1, 2001 to reflect the operations
of Rosemont Crossing Apartments and Panorama Terrace Apartments as loss from
discontinued operations.
On July 30, 2001, the Partnership sold Rosemont Crossing Apartments to an
unrelated third party for a gross sale price of approximately $5,339,000. The
net proceeds realized by the Partnership were approximately $4,809,000 after
payment of closing costs of approximately $316,000 and a prepayment penalty of
approximately $214,000 owed by the Partnership and paid by the buyer. The
Partnership used approximately $2,764,000 of the net proceeds to repay the
mortgages encumbering the property. The property's operations, a loss of
approximately $78,000 for the three months ended March 31, 2001, including
revenues of approximately $288,000, are included in loss from discontinued
operations on the accompanying consolidated statements of operations.
On August 1, 2001, the Partnership sold Panorama Terrace Apartments to an
unrelated third party for a gross sale price of approximately $7,463,000. The
net proceeds realized by the Partnership were approximately $6,915,000 after
payment of closing costs of approximately $303,000 and prepayment penalty of
approximately $245,000 owed by the Partnership and paid by the buyer. The
Partnership used approximately $3,649,000 of the net proceeds to repay the
mortgage encumbering the property. The property's operations, a loss of
approximately $80,000 for the three months ended March 31, 2001, including
revenues of approximately $396,000, are included in loss from discontinued
operations on the accompanying consolidated statements of operations.
The Partnership's income from continuing operations for the three months ended
March 31, 2002 and 2001 was approximately $3,000 and $101,000, respectively. The
decrease in income from continuing operations is due to a decrease in total
revenues and an increase in total expenses. Total revenues decreased primarily
due to the recognition of a casualty gain during the three months ended March
31, 2001 and, to a lesser extent, a decrease in other income. The casualty gain
is the 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
decrease in other income is primarily due to a decrease in interest income as a
result of lower cash balances in interest bearing accounts. Rental income
remained relatively constant for the comparable periods, as the decrease in
occupancy at Forest River Apartments and a decrease in the average rental rate
at Village Green Apartments was offset by an increase in the average rental rate
at Forest River Apartments and reduced concession costs at Village Green
Apartments.
Total expenses increased primarily due to increases in interest and property tax
expenses, partially offset by a decrease in general and administrative expense.
Operating and depreciation expenses remained relatively constant for the
comparable periods. Interest expense increased as a result of the 2001
refinancing of the debt encumbering Village Green Apartments (as discussed
below) which resulted in a larger loan balance at the property. Property tax
expense increased primarily due to an increase in the assessed value of Village
Green Apartments. Operating expense remained relatively constant for the
comparable periods, as a decrease in maintenance expense was offset by an
increase in insurance premiums at both of the Partnership's investment
properties. General and administrative expenses decreased primarily due to
decreased professional fees associated with the management of the Partnership.
Included in general and administrative expenses at both March 31, 2002 and 2001
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.
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 March 31, 2002, the Partnership had cash and cash equivalents of
approximately $404,000, compared to approximately $582,000 at March 31, 2001.
The increase in cash and cash equivalents of approximately $133,000 for the
three months ended March 31, 2002, from the Partnership's calendar year end, is
due to approximately $239,000 of cash provided by operating activities,
partially offset by approximately $54,000 of cash used in financing activities
and approximately $52,000 of cash used in investing activities. Cash used in
investing activities consisted of property improvements and replacements. Cash
used in financing activities consisted of payments of principal made on the
mortgages encumbering the Registrant's properties. The Partnership invests its
working capital reserves in interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state and local legal and regulatory requirements. Capital improvements
planned for each of the Partnership's properties are detailed below.
Forest River Apartments: For 2002 the Partnership has budgeted approximately
$104,000 for capital improvements, consisting primarily of structural
improvements, cabinet upgrades, and floor covering, appliance, and air
conditioning unit replacements. The Partnership completed approximately $20,000
in capital expenditures at Forest River Apartments as of March 31, 2002,
consisting primarily of office computers and floor covering and appliance
replacements. These improvements were funded from operations. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Village Green Apartments: For 2002 the Partnership has budgeted approximately
$114,000 for capital improvements, consisting primarily of cabinet upgrades, air
conditioning unit upgrades, and floor covering and appliance replacements. The
Partnership completed approximately $32,000 in capital expenditures at Village
Green Apartments as of March 31, 2002, consisting primarily of office computers
and floor covering replacement. These improvements were funded from operations.
Additional improvements may be considered and will depend on the physical
condition of the property as well as anticipated cash flow generated by the
property.
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.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. 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, at which time it will be fully amortized.
The mortgage indebtedness on Forest River Apartments of approximately
$3,119,000, net of discount, is being amortized over 29 years with a balloon
payment due in October 2003. The General Partner may attempt to refinance such
indebtedness and/or sell the property prior to such maturity date. If the
property cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such property through foreclosure.
The Partnership distributed the following amounts during the three months ended
March 31, 2002 and 2001 (in thousands, except per unit data):
Three Months Per Limited Three Months Per Limited
Ended Partnership Ended Partnership
March 31, 2002 Unit March 31, 2001 Unit
Operations $ -- $ -- $ 244 $12.01
Sale Proceeds (1) -- -- 148 7.31
$ -- $ -- $ 392 $19.32
(1) From the sale of The Pines of Northwest Crossing Apartments in 2000.
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 cash available
for distribution is reviewed on a monthly basis. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations,
after required capital improvement expenditures, to permit any distributions to
its partners during the remainder of 2002 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 for a
total of approximately $49,600 to $99,200. As of March 31, 2002, the balance in
the reserve account is approximately $100,000.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 13,271 limited partnership units in
the Partnership representing 66.44% of the outstanding units at March 31, 2002.
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 General Partner. As a result of its ownership of 66.44% of
the outstanding units, AIMCO is in a position to control 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 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 was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants oppose the motion. On April 29, 2002,
the Court heard argument on the motion and ordered further briefing after which
time the matter will be taken under submission. 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. On December 11, 2001, the court heard argument on the
motions and took the matters under submission. On February 4, 2002, the Court
served notice of its order granting defendants' motion to strike the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action. On
March 27, 2002, the plaintiffs filed a notice appealing the order striking the
complaint.
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) No reports on Form 8-K were filed during the quarter ended
March 31, 2002.
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: May 14, 2002