FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
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, 1996
[ ] 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) (Zip Code)
Issuer's telephone number (864) 239-1000
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, 1996
Assets
Cash:
Unrestricted $ 273
Restricted--tenant security deposits 11
Escrows for taxes 38
Other assets 36
Investment properties 5,400
5,758
Liabilities
Tenant security deposits 2
Property taxes 82
Interest 1,703
Other 36
Notes payable including $1,500,000
in default 6,967
Estimated costs during the period
of liquidation 464
9,254
Net liabilities in liquidation $ (3,496)
See Accompanying Notes to Financial Statements
b) ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(in thousands)
March 31, 1996
Net liabilities in liquidation at December 31, 1995 $ (3,209)
Changes in net liabilities in liquidation
attributed to:
Increase in unrestricted cash 42
Increase in escrows for taxes 30
Decrease in other assets (6)
Increase in accrued taxes (29)
Increase in accrued interest (143)
Increase in other liabilities (24)
Increase in estimated costs during the
period of liquidation (157)
Net liabilities in liquidation at March 31, 1996 $ (3,496)
See Accompanying Notes To Financial Statements
b) ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(in thousands)
March 31, 1996
Net liabilities in liquidation at December 31, 1994 $ (5,862)
Changes in net liabilities in liquidation
attributed to:
Increase in unrestricted cash 151
Increase in accounts receivable 38
Decrease in escrows for taxes (19)
Decrease in other assets (7)
Increase in investment properties 2,374
Decrease in accounts payable 56
Increase in accrued taxes (20)
Decrease in tenant security deposit liabilities 98
Increase in accrued interest (587)
Decrease in other liabilities 206
Decrease in mortgage notes payable 12
Increase in estimated costs during the
period of liquidation (376)
Net liabilities in liquidation at March 31, 1995 $ (3,936)
See Accompanying Note to Financial Statements
e) ANGELES PARTNERS XV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Presentation
As of December 31, 1994, the Partnership adopted the liquidation basis of
accounting. The Partnership has experienced significant recurring operating
losses. Also, the Partnership sold six of the eleven Cleveland Industrial
Complex ("Cleveland") buildings and the Rancho Park Office Building during 1994.
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 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, 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 as full satisfaction of
the debt. These transactions are anticipated to occur during the second quarter
of 1996. The Partnership does not expect to contest any of these proceedings.
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 estimated net realizable
value (including subsequent actual transactions described below) 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 certified appraisals. Prior to
the change from the going concern basis to the liquidation basis of accounting,
investment properties were stated at lower of cost or estimated fair value.
The statement of net liabilities in liquidation as of March 31, 1996, includes
approximately $464,000 of 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 by December 31,
1996. These costs include anticipated legal fees, administrative expenses, and
are net of estimated income from property operations. Because the 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 - Angeles Acceptance Pool, Angeles Mortgage Investment Trust
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 at March 31, 1996, with monthly interest only payments
at prime plus 2%. Principal is to be paid the earlier of i) the availability of
funds, ii) the sale of one or more properties owned by the Partnership, or iii)
November 25, 1997. Total interest charges for this loan were $41,000 and
$43,000 for the quarters ended March 31, 1996 and 1995, respectively.
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, 1996, is $1,500,000, plus accrued interest of
approximately $1,208,000. Total interest charges were $102,000 and $181,000 for
the quarters ended March 31, 1996 and 1995, respectively.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class
B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A
Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1.2% of the distributions of net cash distributed by AMIT. These Class
B Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1.2% of the vote).
Between the date of acquisition of these shares (November 24, 1992) and March
31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted
its shares at the 1995 annual meeting in connection with the election of
trustees and other matters. MAE GP has not exerted, and continues to decline to
exert, any management control over or participate in the management of AMIT. MAE
GP may choose to vote these shares as it deems appropriate in the future. In
addition, Liquidity Assistance, LLC, ("LAC"), an affiliate of the General
Partner and an affiliate of Insignia Financial Group, Inc., which provides
property management and partnership administration services to the Partnership,
owns 63,200 Class A shares of AMIT. These Class A Shares entitle LAC to vote
approximately 1.5% of the total shares.
As part of the 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, but in no event
prior to November 9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000
at closing, which occurred April 14, 1995, as payment for the option. Upon
exercise of the option, AMIT would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an irrevocable
proxy in favor of AMIT thereby enabling MAE GP to vote the Class B 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. On those matters, MAE GP granted to the AMIT trustees, in their capacity
as trustees of AMIT, proxies with regard to the Class B shares instructing such
trustees to vote said Class B shares in accordance with the vote of the majority
of Class A Shares voting to be determined without consideration of the votes of
"Excess Class A Shares" as defined in Section 6.13 of the Declaration of Trust
of AMIT.
Note C - 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 for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following transactions with the Managing General Partner and affiliates for
the three months ended March 31, 1996 and 1995, are as follows:
1996 1995
(in thousands)
Property management fees $ 13 $ 41
Reimbursement for services of affiliates 18 (1) 32
(1) Reimbursement for services of affiliates during 1996 had not been paid as
of March 31, 1996. The Partnership owes $30,000 to affiliates as
reimbursement for services.
The Partnership insures its properties under a master policy through an agency
and 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 current year's master policy. The current agent assumed
the financial obligations to the affiliate of the Managing General Partner, who
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. See "Note B" with respect to transactions between the Partnership
and AMIT and AAP.
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 has 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 Angeles Mortgage
Investment Trust ("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
is 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 as full satisfaction of the debt.
These transactions are expected to occur during the second quarter of 1996. The
Partnership does not expect to contest any of these proceedings. The General
Partner intends to terminate the Partnership upon foreclosure of the final
property.
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 at March 31, 1996 and 1995, with monthly interest only
payments at prime plus 2%. Principal is to be paid the earlier of i) the
availability of funds, ii) the sale of one or more properties owned by the
Partnership, or iii) November 25, 1997. Total interest charges for this loan
were $41,000 and $43,000 for the three months March 31, 1996 and 1995,
respectively.
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 the estimated net
realizable value (including subsequent actual transactions described below) 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 3, 1996, was based on independent appraisals. Prior to the
change from the going concern basis to the liquidation basis of accounting,
investment properties were stated at the lower of cost or estimated fair value.
The statement of net liabilities in liquidation as of March 31, 1996,
includes $464,000 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 1996.
These costs include anticipated legal fees ($14,000), administrative expenses
($606,000), audit fees ($19,000), less income from property operations
($175,000). 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 quarter ended March 31, 1996, the Partnership recorded an increase
in the estimated costs during the period of liquidation of $157,000. This
increase is primarily due to the extended liquidation period.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In January 1995, Angeles Mortgage Investment Trust ("AMIT"), began
foreclosure proceedings on one of the remaining Cleveland Industrial Buildings
and the property was placed in receivership at this time. AMIT completed the
foreclosure on September 6, 1995. AMIT also foreclosed on another of the
Cleveland buildings on August 23, 1995. In March 1995, the Partnership received
a notice of default from the lender on Marina Plaza and it was foreclosed upon
in August 1995.
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class
B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A
Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1.2% of the distributions of net cash distributed by AMIT. These Class
B Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1.2% of the vote).
Between the date of acquisition of these shares (November 24, 1992) and March
31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted
its shares at the 1995 annual meeting in connection with the election of
trustees and other matters. MAE GP has not exerted, and continues to decline to
exert, any management control over or participate in the management of AMIT.
MAE GP may choose to vote these shares as it deems appropriate in the future.
In addition, Liquidity Assistance, LLC, ("LAC"), an affiliate of the General
Partner and an affiliate of Insignia Financial Group, Inc., which provides
property management and partnership administration services to the Partnership,
owns 63,200 Class A shares of AMIT. These Class A Shares entitle LAC to vote
approximately 1.5% of the total shares.
As part of the 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, but in no event
prior to November 9, 1997. AMIT delivered to MAE GP cash in the sum of $250,000
at closing, which occurred April 14, 1995, as payment for the option. Upon
exercise of the option, AMIT would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to
vote the Class B 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. On those matters, MAE GP granted to
the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to
the Class B shares instructing such trustees to vote said Class B shares in
accordance with the vote of the majority of Class A Shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
Except for the issues stated, the Registrant is unaware of any pending or
outstanding litigation that is not of a routine nature. The Managing General
Partner of the Registrant 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, 1996:
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
Corporate General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: May 9, 1996