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 March 31, 1998
[ ] 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.)
One Insignia Financial Plaza, 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
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES PARTNERS XV
STATEMENT OF NET LIABILITIES IN LIQUIDATION
(in thousands)
March 31, 1998
Assets
Cash $ 368
Other assets 5
Investment properties 4,128
4,501
Liabilities
Property taxes 113
Interest 3,067
Other liabilities 10
Notes payable, including $3,082
in default 6,967
Estimated costs during the period
of liquidation 638
10,795
Net liabilities in liquidation $ (6,294)
See Accompanying Notes to Financial Statements
b)
ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(in thousands)
Three Months Ended March 31, 1998
Net liabilities in liquidation at December 31, 1997 $ (6,273)
Changes in net liabilities in liquidation
attributed to:
Increase in cash 13
Increase in other assets 1
Increase in accrued taxes (2)
Increase in accrued interest (201)
Increase in other liabilities (10)
Decrease in estimated costs during the
period of liquidation 178
Net liabilities in liquidation at March 31, 1998 $ (6,294)
See Accompanying Notes To Financial Statements
c)
ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(in thousands)
Three Months Ended March 31, 1997
Net liabilities in liquidation at December 31, 1996 $(4,025)
Changes in net liabilities in liquidation attributed to:
Increase in cash 54
Increase in other assets 15
Increase in accrued taxes (28)
Increase in accrued interest (175)
Decrease in estimated costs during the
period of liquidation 84
Net liabilities in liquidation at March 31, 1997 $(4,075)
See Accompanying Note to Financial Statements
d)
ANGELES PARTNERS XV
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
As of December 31, 1994, Angeles Partners 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. At this time, Angeles Realty Corporation II ("ARC II" or the
"Managing General Partner") believes the equity in the remaining three Cleveland
buildings is not sufficient to retire the AMIT debt; therefore, the Managing
General Partner expects to transfer the Partnership's interest in the remaining
Cleveland buildings to AMIT. 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. 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 upon foreclosure of the
final property.
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 their 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.
The investment properties were adjusted to their estimated net realizable
values. The net realizable values were based on independent appraisals as of
December 31, 1997.
The statement of net liabilities in liquidation as of March 31, 1998, includes
approximately $638,000 of accrued costs, net of income, 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, net of estimated income from property operations.
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. The Managing General Partner is wholly-owned by Insignia
Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc.
("Insignia"). 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 to the Managing General Partner and affiliates
during the three months ended March 31, 1998 and 1997:
1998 1997
(in thousands)
Reimbursement for services of affiliates $ 10 $ 24
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 March 31, 1998.
Angeles Mortgage Investment Trust ("AMIT"), a real estate investment trust, has
provided secondary financing to the Partnership secured by the Partnership's
investment properties known as Cleveland Industrial and Marina Plaza. One of
the notes in the amount of $600,000 secured by one of the Cleveland Industrial
buildings was assumed by the purchaser of the building during 1994. Total AMIT
indebtedness at March 31, 1998, is $1,500,000, plus accrued interest of
approximately $2,208,000. Total interest charges were approximately $145,000
and $122,000 for the three months ended March 31, 1998 and 1997, respectively.
In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The
terms of the Class B shares provide that they are convertible, in whole or in
part, into Class A Common Shares of AMIT on the basis of one Class A share for
every 49 Class B shares (however, in connection with the settlement agreement
described in the following paragraph, MAE GP agreed not to convert the Class B
shares so long as AMIT's option is outstanding). These Class B Shares entitle
the holder to receive 1% of the distributions of net cash distributed by AMIT
(however, in connection with the settlement agreement described in the
following paragraph, MAE GP agreed to waive its right to receive dividends and
distributions so long as AMIT's option is outstanding). The holder of the Class
B shares is also entitled to vote on the same basis as the holders of Class A
shares, providing the holder with approximately 39% of the total voting power of
AMIT (unless and until converted to Class A shares, in which case the percentage
of the vote controlled represented by such shares would approximate 1.3% of the
total voting power of AMIT).
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B shares owned by it. This option can be exercised
at the end of 10 years or when all loans made by AMIT to partnerships affiliated
with MAE GP as of November 9, 1994 (which is the date of execution of a
definitive Settlement Agreement) have been paid in full. In connection with
such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing
(which occurred April 14, 1995) as payment for the option. If and when the
option is exercised, AMIT will be required to remit to MAE GP an additional
$94,000.
Simultaneously with the grant of the option and as part of the settlement, MAE
GP executed an irrevocable proxy in favor of AMIT, which provides that the
holder of the Class B shares is permitted to vote those shares on all matters
except those involving transactions between AMIT and MAE GP affiliated borrowers
or the election of any MAE GP affiliate as an officer or trustee of AMIT. With
respect to such matters, the trustees of AMIT are required to vote (pursuant to
the irrevocable proxy) the Class B shares (as a single block) in the same manner
as a majority of the Class A shares are voted (to be determined without
consideration of the votes of "Excess Class A Shares" (as defined in Section
6.13 of AMIT's Declaration of Trust)).
Between its acquisition of the Class B shares (in November 1992) and March 31,
1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its
shares at the 1995 and 1996 annual meetings in connection with the
election of trustees and other matters. In February 1998, MAE GP was merged into
IPT, and in connection with that merger, MAE GP dividended all of the Class B
shares to its sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE").
As a result, MAE, as the holder of the Class B shares, is now subject to the
terms of the settlement agreement, option and irrevocable proxy described in the
two preceding paragraphs. Neither MAE GP nor MAE has exerted or intends to
exert any management control over or participate in the management of AMIT.
However, subject to the terms of the proxy described below, MAE may choose to
vote the Class B shares as it deems appropriate in the future.
Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE
and Insignia (which provides property management and partnership administration
services to the Partnership), owned 96,800 Class A shares of AMIT at March 31,
1998. These Class A shares represent approximately 2.2% of the total voting
power of AMIT.
On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in
principle contemplating, among other things, a business combination of AMIT and
IPT, an entity then owned 98% by Insignia and its affiliates. On July 18, 1997,
IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to
which (subject to shareholder approval and certain other conditions, including
the receipt by AMIT of a fairness opinion from its investment bankers) AMIT
would be merged with and into IPT, with each Class A share and Class B share
being converted into 1.625 and 0.0332 common shares of IPT, respectively. The
foregoing exchange ratios are subject to adjustment to account for dividends
paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1,
1997. It is anticipated that Insignia and its affiliates (including MAE) would
own approximately 57% of post-merger IPT when this transaction is consummated.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a
publicly traded real estate investment trust. The closing, which is anticipated
to happen in the third quarter of 1998, is subject to customary conditions,
including government approvals and the approval of Insignia's shareholders. If
the closing occurs, AIMCO will then control the Managing General Partner of the
Partnership. It is not anticipated that this transaction will have a material
effect on 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 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. The Partnership was in
default on recourse indebtedness totaling $3,500,000 due to AMIT. Of this debt,
$1,500,000 was secured by one of the remaining 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. At this time, the Managing General
Partner believes the equity in the remaining three Cleveland buildings is not
sufficient to retire the AMIT debt therefore, the Managing General Partner
expects to transfer the Partnership's interest in the remaining Cleveland
buildings to AMIT. 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. The Managing General Partner intends to liquidate the Partnership
upon foreclosure of the final property.
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 March 31, 1998. Total
interest charges for this loan were approximately $42,000 and $41,000 for the
three months ended March 31, 1998 and 1997.
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 their 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.
The investment properties were adjusted to their estimated net realizable value.
The estimated net realizable value for the three Cleveland buildings remaining
at March 31, 1998, was based on independent appraisals.
The statement of net liabilities in liquidation as of March 31, 1998, includes
approximately $638,000 of accrued costs, net of income, 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, less income from property operations. 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 three months ended March 31, 1998, the Partnership recorded a decrease
in the estimated costs during the period of liquidation of approximately
$178,000. This decrease is primarily due to the payment of liquidation charges.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of 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 and its 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 AIMCO. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. The Managing General Partner
was only recently served with the complaint which it believes to be without
merit, and intends to vigorously defend the action.
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 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K filed during the quarter ended March 31, 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
Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President and Director
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President and Chief Accounting
Officer
Date: May 14, 1998