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
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] 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 0-15546
ANGELES PARTNERS XV
(Exact name of small business issuer as specified in its charter)
California 95-4046025
(State or other jurisdiction of (IRS 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 PARTNERS XV
STATEMENT OF NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
September 30, 1998
Assets
Cash $ 220
Other assets 5
225
Liabilities
Interest 915
Other liabilities 30
Notes payable, including $1,582
in default 1,602
Estimated costs during the period
of liquidation 103
2,650
Net liabilities in liquidation $(2,425)
See Accompanying Notes to Financial Statements
b)
ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
Nine Months Ended September 30, 1998
Net liabilities in liquidation at December 31, 1997 $ (6,273)
Changes in net liabilities in liquidation
attributed to:
Decrease in cash (136)
Increase in other assets 1
Decrease in investment property (4,127)
Decrease in accrued taxes 111
Decrease in accrued interest 1,951
Increase in other liabilities (30)
Decrease in mortgage payable 5,365
Decrease in estimated costs during the period
of liquidation 713
Net liabilities in liquidation at September 30, 1998 $ (2,425)
See Accompanying Notes to Financial Statements
b)
ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
Nine Months Ended September 30, 1997
Net liabilities in liquidation at December 31, 1996 $ (4,025)
Changes in net liabilities in liquidation
attributed to:
Decrease in cash (14)
Increase in accrued taxes (96)
Increase in accrued interest (501)
Decrease in estimated costs during the period
of liquidation 345
Net liabilities in liquidation at September 30, 1997 $ (4,291)
See Accompanying Notes to Financial Statements
e)
ANGELES PARTNERS XV
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
As of December 31, 1994, Angeles Partnership XV (the "Partnership") adopted the
liquidation basis of accounting. The Partnership had experienced significant
recurring operating losses. In March 1995, the lender on the non-recourse debt
secured by the Marina Plaza notified the Partnership that this debt was in
default and initiated foreclosure proceedings. Marina Plaza was placed in
receivership in June 1995, and was foreclosed upon on August 1, 1995. In
addition, the Partnership was in default on recourse indebtedness totaling
$3,500,000 due to Angeles Mortgage Investment Trust ("AMIT"). Of this debt,
$1,500,000 was secured by one of the remaining Cleveland Industrial Complex
("Cleveland") buildings and AMIT placed the property in receivership in January
1995, and foreclosed on the property on September 6, 1995. AMIT also
foreclosed on another of the Cleveland buildings on August 23, 1995. The
remaining $2,000,000 was recourse to the Partnership and AMIT received a
default judgment against the Partnership on January 18, 1995. As a result of
the foreclosure on the Cleveland building on August 23, 1995, this judgment was
reduced by $500,000. In July of 1996, AMIT entered a complaint for foreclosure
and other relief against the Partnership. On July 26, 1996, the remaining
Cleveland Properties were placed in receivership. The receiver is authorized
to collect the rents, profits and all income derived from the properties, to
maintain the premises, and otherwise preserve, manage, maintain and protect
such properties.
On July 28, 1998, the Partnership executed an Agreement for Deed in Lieu of
Foreclosure by and between the Partnership and AMIT, a California business
trust. Pursuant thereto, the Partnership conveyed the properties to AMIT in
lieu of mortgage foreclosure. As a result of the foreclosure, the debt has
been deemed satisfied. Angeles Realty Corporation II, the general partner of
the Partnership (the "Managing General Partner"), did not believe that it was
in the Partnership's best interest to contest this foreclosure action because
there is no equity in the properties or the Partnership. Furthermore, the
Partnership did not have the funds with which to contest this action. Any
remaining cash will be used to cover the costs of liquidating the Partnership.
The Partnership does not intend nor does it have the ability to purchase any
additional properties and the Managing General Partner has decided to liquidate
the Partnership during the fourth quarter of 1998. Although the Partnership has
$2,425,000 in net liabilities in liquidation at September 30, 1998, neither the
general partners nor the limited partners will be required to contribute
additional capital to cover this deficit. It is not anticipated that the
Partnership will have any funds to distribute to the partners.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements at December 31,
1994, from the going concern basis of accounting to the liquidation basis of
accounting. Consequently, assets have been valued at estimated net realizable
value and liabilities are presented at their estimated settlement amounts,
including estimated costs associated with carrying out the liquidation. The
valuation of assets and liabilities necessarily requires many estimates and
assumptions and there are substantial uncertainties in carrying out the
liquidation. The actual realization of assets and settlement of liabilities
could be higher or lower than amounts indicated and is based upon the Managing
General Partner's estimates as of the date of the financial statements.
On July 28, 1998, the investment properties were deeded in lieu of foreclosure
to AMIT. The statement of net liabilities in liquidation as of September 30,
1998, includes approximately $103,000 of accrued costs that the Managing General
Partner estimates will be incurred during the period of liquidation, based on
the assumption that the liquidation process will be completed during the fourth
quarter of 1998. These costs include anticipated legal fees and administrative
expenses. Because the success in realization of assets and the settlement of
liabilities is based on the Managing General Partner's best estimates, the
liquidation period may be shorter than projected or it may be extended beyond
the projected period.
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. Affiliates of the Managing General Partner provide
property management and asset management services to the Partnership. The
Partnership Agreement provides for payments to affiliates for services and as
reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership. The day to day management of the remaining investment properties
are managed by a third party receiver, which was court appointed.
The following amounts were paid or accrued to the Managing General Partner and
affiliates during the nine months ended September 30, 1998 and 1997:
1998 1997
(in thousands)
Reimbursement for services of affiliates $ 30 $ 28
For the period of January 1, 1997 through August 31, 1997, the Partnership
insured its properties under a master policy through an agency affiliated with
the Managing General Partner with an insurer unaffiliated with the Managing
General Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy. The
current agent assumed the financial obligations to the affiliate of the Managing
General Partner, which receives payments on these obligations from the agent.
The amount of the Partnership's insurance premiums accruing to the benefit of
the affiliate of the Managing General Partner by virtue of the agent's
obligations is not significant.
In November 1992, Angeles Acceptance Pool ("AAP"), a Delaware limited
partnership was organized to acquire and hold the obligations evidencing the
working capital loan previously provided by Angeles Capital Investment, Inc.
("ACII"). Angeles Corporation ("Angeles") is the 99% limited partner of AAP and
Angeles Acceptance Directives, Inc.("AAD"), an affiliate of the Managing General
Partner, was, until April 14, 1995, the 1% General Partner of AAP. On April 14,
1995, as part of a settlement of claims between affiliates of the Managing
General Partner and Angeles, AAD resigned as general partner of AAP and
simultaneously received a 1/2% limited partner interest in AAP. An affiliate of
Angeles now serves as the general partner of AAP. AAP's working capital loan
funded the Partnership's operating deficits in prior years. Total indebtedness,
which is included as a note payable, was approximately $1,582,000 and is in
default at September 30, 1998. Total interest charges for this loan were
approximately $126,000 and $125,000 for the nine month periods ended September
30, 1998 and 1997, respectively. Total past due accrued interest is
approximately $909,000 at September 30, 1998.
NOTE C - TRANSFER OF CONTROL; SUBSEQUENT EVENT
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
Insignia Properties Trust ("IPT"), the sole shareholder of the Managing General
Partner. Also, effective October 1, 1998 IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares. AIMCO has
agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger and
has granted an irrevocable limited proxy to unaffiliated representatives of IPT
to vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the
IPT Merger. As a result of AIMCO's ownership and its agreement, the vote of no
other holder of IPT is required to approve the merger. The Managing General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATION
Results of Operations, Liquidity and Capital Resources
As of December 31, 1994, the Angeles Partnership XV (the "Partnership") adopted
the liquidation basis of accounting. The Partnership had experienced
significant recurring operating losses. In March 1995, the lender on the non-
recourse debt secured by Marina Plaza notified the Partnership that this debt
was in default and initiated foreclosure proceedings. Marina Plaza was placed
in receivership in June 1995, and was foreclosed upon on August 1, 1995. The
Partnership was in default on recourse indebtedness totaling $3,500,000 due to
Angeles Mortgage Investment Trust ("AMIT"). Of this debt, $1,500,000 was
secured by one of the remaining Cleveland Industrial Complex ("Cleveland")
buildings and AMIT placed the property in receivership in January 1995, and
foreclosed on it September 6, 1995. AMIT also foreclosed on another of the
Cleveland buildings on August 23, 1995. The remaining $2,000,000 was recourse
to the Partnership and AMIT received a default judgment against the Partnership
on January 18, 1995. As a result of the foreclosure on the Cleveland building
on August 23, 1995, this judgment was reduced by $500,000. In July of 1996,
AMIT entered a complaint for foreclosure and other relief against the
Partnership. On July 26, 1996, the remaining Cleveland Properties were placed
in receivership. The receiver is authorized to collect the rents, profits and
all income derived from the properties, to maintain the premises, and otherwise
preserve, manage, maintain and protect such properties.
On July 28, 1998, the Partnership executed an Agreement for Deed in Lieu of
Foreclosure by and between the Partnership and AMIT, a California business
trust. Pursuant thereto, the Partnership conveyed to AMIT in lieu of mortgage
foreclosure. As a result of the foreclosure, the debt has been satisfied.
Angeles Realty Corporation II, the general partner, of the Partnership (the
"Managing General Partner") did not believe that it was in the Partnership's
best interest to contest this foreclosure action because there is no equity in
the property or Partnership. Furthermore, the Partnership does not have the
funds with which to contest this action. Any remaining cash will be used to
cover the costs of liquidating the Partnership. The Partnership does not intend
nor does it have the ability to purchase any additional properties and the
Managing General Partner has decided to liquidate the Partnership during the
fourth quarter of 1998. Although the Partnership has $2,425,000 in net
liabilities in liquidation at September 30, 1998, neither the general partners
nor the limited partners will be required to contribute additional capital to
cover this deficit. It is not anticipated that the partnership will have any
funds to distribute to its partners.
AAP's working capital loan funded the Partnership's operating deficits in prior
years. Total indebtedness, which is included as a note payable, was
approximately $1,582,000 and is in default at September 30, 1998. Total
interest charges for this loan were approximately $126,000 and $125,000 for the
nine month periods ended September 30, 1998 and 1997, respectively. Total past
due accrued interest is approximately $909,000 at September 30, 1998.
The statement of net liabilities in liquidation as of September 30, 1998,
includes approximately $103,000 of accrued costs that the Managing General
Partner estimates will be incurred during the period of liquidation, based on
the assumption that the liquidation process will be completed during the fourth
quarter of 1998. These costs include anticipated legal fees and administrative
expenses. Because the success in realization of assets and the settlement of
liabilities is based on the Managing General Partner's best estimates, the
liquidation period may be shorter than projected or it may be extended beyond
the projected period.
For the nine months ended September 30, 1998, the Partnership recorded a
decrease in the estimated costs during the period of liquidation of
approximately $713,000. This decrease is primarily due to the payment of
liquidation charges and a decrease in the estimated costs to liquidate as a
result of the deed in lieu of foreclosure which occurred on July 28, 1998.
Transfer of Control; Subsequent Event
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
Insignia Properties Trust ("IPT"), the sole shareholder of the Managing General
Partner. Also, effective October 1, 1998 IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares. AIMCO has
agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger and
has granted an irrevocable limited proxy to unaffiliated representatives of IPT
to vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the
IPT Merger. As a result of AIMCO's ownership and its agreement, the vote of no
other holder of IPT is required to approve the merger. The Managing General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Partnership.
Year 2000
As a result of the liquidation and winding down of the Partnership affairs,
which are expected to occur prior to the year 2000, the Managing General
Partner does not believe the Year 2000 issue will have an impact on the
Partnership.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint 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 the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at the time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates as well as a recently
announced agreement between Insignia and Apartment Investment and Management
Company. The complaint seeks 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 have filed an amended complaint. The Managing General
Partner has filed demurrers to the amended complaint which are scheduled to be
heard on January 8, 1999. The Managing General Partner believes the action to be
without merit, and intends to vigorously defend it.
On July 30, 1998 certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties, LLC. v.
Insignia Financial Group, Inc., et al. in the Superior Court of the State of
California, County of Los Angeles. The action involves 44 real estate limited
partnerships (including the Partnership) in which the plaintiffs allegedly own
interests and which Insignia Affiliates allegedly manage or control (the
"Subject Partnerships"). The complaint names as defendants Insignia, several
Insignia Affiliates alleged to be managing partners of the defendant limited
partnerships, the Partnership and the Managing General Partner. Plaintiffs
allege that they have requested from, but have been denied by each of the
Subject Partnerships, lists of their respective limited partners for the purpose
of making tender offers to purchase up to 4.9% of the limited partner units of
each of the Subject Partnerships. The complaint also alleges that certain of
the defendants made tender offers to purchase limited partner units in many of
the Subject Partnerships, with the alleged result that plaintiffs have been
deprived of the benefits they would have realized from ownership of the
additional units. The plaintiffs assert eleven causes of action, including
breach of contract, unfair business practices, and violations of the partnership
statutes of the states in which the Subject Partnerships are organized.
Plaintiffs seek compensatory, punitive and treble damages. The Managing General
Partner filed an answer to the complaint on September 15, 1998. The Managing
General Partner believes the claims to be without merit and intends to defend
the action vigorously.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Managing General Partner of the Partnership
believes that all such pending or outstanding litigation will be resolved
without a material adverse effect upon the business, financial condition, or
operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 10.14, Agreement for Deed-in-Lieu-of-Foreclosure, by and
between Angeles Partners XV and Angeles Mortgage Investment Trust
("AMIT"), dated July 28, 1998, conveying the Cleveland properties, two
located in Strongeville, Ohio and one located in Solon, Ohio to AMIT.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K filed during the quarter ended September 30, 1998:
None.
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 XV
By: Angeles Realty Corporation II
Its Managing General Partner
By: /s/ Patrick Foye
Patrick Foye
Executive Vice President
By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
Duly Authorized Officer
Date: November 16, 1998