SCHEDULE 14C
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary Information Statement [ ] Confidential,
for use of the Commission only
[ ] Definitive Information Statement (as permitted by Rule 14c-5(d)(2)).
ANGELES OPPORTUNITY PROPERTIES, LTD.
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(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (check the appropriate box):
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
Limited Partnership Units
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(2) Aggregate number of securities to which transaction applies:
12,425
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
$4,350,000, based on contract price for property being sold.
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(4) Proposed maximum aggregate value of transaction:
$4,350,000, based on contract price for property being sold.
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(5) Total fee paid:
$551.15
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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INFORMATION STATEMENT
FOR
ANGELES OPPORTUNITY PROPERTIES, LTD.
Stanford Place 3
4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado 80237
Dear Limited Partner:
We are sending you this information statement to inform you that Angeles Realty
Corporation II, a California corporation (the "General Partner"), the general
partner of Angeles Opportunity Properties, Ltd., a California limited
partnership (the "Partnership"), has agreed to cause the Partnership to sell the
Partnership's interest in the apartment complex known as Lake Meadows, located
in Dallas County, Texas ("Lake Meadows" or the "Property"), which is owned by
New Lake Meadows, L.P., a South Carolina limited partnership (the "Seller"). The
Partnership owns a 99% limited partnership interest in the Seller and owns 100%
of Lake Meadows GP, L.L.C., a South Carolina limited liability company ("Lake
Meadows GP"), which owns a 1% general partnership interest in the Seller. Thus,
the Seller is a wholly owned subsidiary of the Partnership. Accordingly, as
referenced throughout this information statement, the sale of the Property by
the Partnership shall mean the sale of the Property by the Seller in its
capacity as a wholly owned subsidiary of the Partnership. Lake Meadows will be
sold to Wyndmere Capital, Inc., a Texas corporation (the "Buyer"), an
unaffiliated third party, for $4,350,000 cash. The General Partner has conflicts
of interest in the sale of the Property as described in greater detail herein,
including the receipt of certain fees to be paid in connection with the
completion of the sale. After the sale closes, we estimate that there will be
approximately $2,064,702 and $165 per limited partnership unit to distribute to
the limited partners as a result of the sale of Lake Meadows. This amount is an
estimate, and as explained below, it is based on a number of assumptions. We
expect the distribution will occur 60 to 120 days after the sale closes. This
information statement contains information about the sale and the reason that
the General Partner has decided that the sale is in the best interests of the
limited partners.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
The date of this information statement is May 6, 2004.
This information statement is being mailed on or about May 8, 2004 to all
holders at the close of business on May 8, 2004 of the limited partnership units
of Angeles Opportunity Properties, Ltd., a California limited partnership.
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SUMMARY OF THE TRANSACTION
The following is a summary of the sale transaction for the Property:
o The Buyer or an affiliate of the Buyer will acquire Lake Meadows for
$4,350,000 cash pursuant to a purchase and sale agreement dated as of
April 15, 2004 between the Buyer and the Seller (the "Purchase and
Sale Agreement").
o The completion of the sale is scheduled to occur on or before July 29,
2004, subject to certain extension options.
A more detailed summary of the sale transaction for the Property can be found on
page 11 of this information statement under the heading entitled "Summary of the
Lake Meadows Purchase and Sale Agreement".
Upon the completion of the sale of Lake Meadows, the Partnership will calculate
the net distribution per partnership unit in the following manner:
SOURCES AND USES INCLUDE:
Gross purchase price: $4,350,000
Plus: Cash and cash equivalents 57,528
Plus: Other Partnership assets 64,307
Less: Mortgage debt, including accrued interest (2,058,011)
Less: Accounts payable, accrued expenses and other liabilities (88,122)
Less: Reserves for Contingencies (130,500)
Less: Closing costs/sales commissions (130,500)
TOTAL $2,064,702
Net proceeds distributable to all Partners $2,064,702
Percentage of proceeds allocable to Limited Partners 99%
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Net proceeds distributable to Limited Partners $2,044,055
Total number of Units 12,425
Distributable net proceeds per Unit $ 165
Upon the completion of the sale of Lake Meadows, the Partnership will continue
to hold and operate its remaining apartment complex known as Lakewood
Apartments, located in Harris County, Texas. The General Partner is currently
planning to sell the Lakewood Apartments in the first quarter of 2005 upon terms
and conditions subsequently to be approved by the General Partner.
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REASONS FOR THE SALES OF THE PROPERTIES
The General Partner has determined that the sale of the Property and the sale of
the Lakewood Apartments later in 2005 are in the best interest of the limited
partners after considering the following:
o The Property was completed in 1984 and the Lakewood Apartments was
completed in 1979, and given their age, the Property and the Lakewood
Apartments probably will require substantial capital expenditures in
the future for which existing reserves will not be adequate.
o Market conditions are currently favorable for selling properties of
this type because of the availability of favorable financing terms and
the general withdrawal of capital from the stock markets and into
alternative investments such as real estate.
The factors described above were not the only factors considered by the General
Partner. The General Partner did not find it practicable to quantify or
otherwise assign relative weights to any of the factors considered. However,
after taking into account all of the factors, the General Partner concluded that
this offer would be preferred over any other alternative available and
recommended the transaction as the best way to secure value for the limited
partners. For these reasons, the General Partner has approved the sale and the
agreement, and limited partners holding a majority of the limited partnership
units also approved the sale and the agreement.
THE SELLER
The Property is owned by New Lake Meadows, L.P., a South Carolina limited
partnership (the "Seller"). The Partnership owns a 99% limited partnership
interest in the Seller and owns 100% of Lake Meadows GP, L.L.C., a South
Carolina limited liability company ("Lake Meadows GP"), which owns a 1% general
partnership interest in the Seller. Thus, the Seller is a wholly owned
subsidiary of the Partnership. Accordingly, as referenced throughout this
information statement, the sale of the Property by the Partnership shall mean
the sale of the Property by the Seller in its capacity as a wholly owned
subsidiary of the Partnership. The Partnership, Angeles Opportunity Properties,
Ltd., is located at 55 Beattie Place, P.O. Box 1089, Greenville, South Carolina
29602. The phone number for Angeles Opportunity Properties, Ltd. is (864)
239-1000.
THE BUYER
The Buyer, which is not affiliated with the Partnership, agreed to acquire the
Property through an arms length negotiation. The General Partner or its
affiliates have sold other properties to the Buyer or its affiliates in the
past. In 2003, Consolidated Capital Growth Fund, a California limited
partnership, an affiliate of the General Partner, sold the apartment complex
known as Breckinridge Square, located in Jefferson County, Kentucky to
Breckinridge Multifamily, LLC, an affiliate of the Buyer, for $11,400,000 cash.
In 2003, AIMCO Park Townhomes, L.P., a Delaware limited partnership, an
affiliate of the General Partner, sold the apartment complex known as The Park,
located in Brevard County, Florida to The Park Apartments, LLC, a Delaware
limited liability company, an affiliate of the Buyer, for $5,350,000, which
purchase price was paid with both cash and the assumption of a loan encumbering
the property. In 2003,
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Brittany Point AP VIII, L.P., a South Carolina limited partnership, an affiliate
of the General Partner, sold the apartment complex known as Brittany Point,
located in Madison County, Alabama to Brittany Point Properties, LLC, a North
Carolina limited liability company, an affiliate of the Buyer, for $15,500,000,
which purchase price was paid with both cash and the assumption of a loan
encumbering the property. In 2003, Westlake East Associates Limited Partnership,
an Ohio limited partnership, an affiliate of the General Partner, sold the
apartment complex known as Barrington Place, located in Cuyahoga County, Ohio to
Barrington Place Apartments, LLC, a Delaware limited liability company, an
affiliate of the Buyer, for $10,100,000, which purchase price was paid with both
cash and the assumption of a loan encumbering the property. The Buyer is in the
business of managing and operating real estate properties for investment. The
Buyer or its affiliates plan to manage and operate the Property upon completion
of the sale. The Buyer has an office located at 14785 Preston Road, Suite 550,
Dallas, Texas 75254. The phone number for the Buyer is 972-789-5590.
THE PROPERTY
The Partnership has owned and operated Lake Meadows, a 96-unit apartment complex
located in Dallas County, Texas, since March 31, 1988. There is a first mortgage
loan on the Property with an unpaid principal balance of approximately
$2,071,000 at December 31, 2003. The Partnership has other indebtedness of
approximately $5,071,000 at December 31, 2003. The loan encumbering the Property
is not subject to a prepayment penalty.
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 Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that 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 sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, 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 Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary duty, unfair competition, conversion, unjust enrichment, and
judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the
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"Partnerships") as of December 20, 2002, the dismissal with prejudice and
release of claims in the Nuanes and Heller litigation, payment by AIMCO of $9.9
million (which shall be distributed to settlement class members after deduction
of attorney fees and costs of class counsel and certain costs of settlement) and
up to $1 million toward the cost of independent appraisals of the Partnerships'
properties by a Court appointed appraiser. An affiliate of the Managing General
Partner has also agreed to make at least one round of tender offers to purchase
all of the partnership interests in the Partnerships within one year of final
approval, if it is granted, and to provide partners with the independent
appraisals at the time of these tenders. The proposed settlement also provided
for the limitation of the allowable costs which the Managing General Partner or
its affiliates will charge the Partnerships in connection with this litigation
and imposes limits on the class counsel fees and costs in this litigation. On
April 11, 2003, notice was distributed to limited partners providing the details
of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety. On January 28, 2004, Objector filed his
opening brief in his pending appeal. The Managing General Partner is currently
scheduled to file a brief in support of the order approving settlement and
entering judgment thereto by April 23, 2004.
APPROVAL OF THE SALE
The General Partner approved the sale and determined that it is in the best
interests of the Partnership and the limited partners.
Section 8.2(l) of the Partnership's amended certificate and agreement of limited
partnership, dated September 29, 1986, permits the Partnership to sell all or
substantially all of its assets if the sale or series of sales is approved by
the limited partners holding a majority of the then outstanding units; provided
however, the foregoing shall not be interpreted as requiring such approval of
the sale of the last property to be sold by the Partnership.
As of December 31, 2003, the Partnership has approximately 895 limited partners
who collectively own 12,425 outstanding limited partnership units. Each limited
partnership unit represents approximately 0.008% of the outstanding limited
partnership units. Affiliates of the General Partner owned 6,357 limited
partnership units or 51.16% of the outstanding limited partnership units at
December 31, 2003. On April 26, 2004, the holders of these 51.16% of the
outstanding limited partnership units gave their written consent approving and
adopting the sale. The following limited partners executed a written consent:
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NAME AND ADDRESS NUMBER OF LIMITED
OF BENEFICIAL OWNER PARTNERSHIP UNITS PERCENT OF CLASS
------------------- ----------------- ----------------
AIMCO IPLP, L.P. (formerly known as Insignia Properties, L.P.) 405 3.26%
55 Beattie Place, Greenville, SC 29602
Cooper River Properties, L.L.C.
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100, Denver, 969 7.80%
CO 80237
AIMCO Properties, L.P.
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100, Denver, 4,983 40.10%
CO 80237
TOTAL: 6,357 51.16%
As a result, the holders of a majority of the limited partnership units have
approved the sale of the Property and the subsequent sale of the Lakewood
Apartments property (the last property held by the Partnership) upon terms and
conditions subsequently to be approved by the General Partner. Accordingly, no
vote of any other limited partnership unit holder is necessary to approve the
sales and, therefore, the Partnership is not soliciting any other votes.
Subject to the terms and conditions of the Purchase and Sale Agreement, we
contemplate that the sale of the Property will be consummated within
approximately two to three months, but no sooner than 20 days after the mailing
of this information statement and following satisfaction or waiver of the
conditions contained in the Purchase and Sale Agreement. See "Summary of
Agreement."
INTEREST OF CERTAIN PERSONS IN THE SALE
The General Partner has conflicts of interest with respect to the sale. The
General Partner and its affiliates will receive reimbursement for administrative
expenses of $26,809. In addition, because a general partner generally is liable
for all recourse debts and other liabilities of a partnership when the
partnership's assets are insufficient, a sale of the Property reduces the
General Partner's liability for existing and future partnership debt and
liabilities
USE OF PROCEEDS
We estimate that we will use the gross proceeds from the sale as follows
(subject, however, to such reductions in the purchase price and reallocations in
the proceeds as determined by the General Partner, in its reasonable discretion,
to address objections made by the Buyer to the condition of the Property):
Gross purchase price $4,350,000
Plus: Cash and cash equivalents 57,528
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Plus: Other Partnership assets 64,307
Less: Mortgage debt, including accrued interest (2,058,011)
Less: Accounts payable, accrued expenses and other liabilities (88,122)
Less: Reserves for Contingencies (130,500)
Less: Closing costs/sales commissions (130,500)
TOTAL $2,064,702
Net proceeds distributable to all Partners $2,064,702
Percentage of proceeds allocable to Limited Partners 99%
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Net proceeds distributable to Limited Partners $2,044,055
Total number of Units 12,425
Distributable net proceeds per Unit $ 165
This estimate assumes the closing of the sale of the Property occurs as of March
31, 2004 and is based on information known to the General Partner at this time.
Of course, many factors could cause the actual use of proceeds to vary from this
estimate, including delays or unforeseen complications with the closing or
contingent liabilities of the Partnership.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences to you of the sale of the Property may be significant. The
following discussion briefly summarizes the typical material aspects of the
federal income tax consequences of the limited partners that should be
considered in connection with the sale; however, the tax consequences to you
could be materially different for a variety of reasons. The discussion is based
on current law, which is subject to change (possibly with retroactive effect),
and does not consider state, local and foreign income tax aspects of the sale.
For purposes of this tax discussion, references to "I.R.C. Section" are to
sections of the Internal Revenue Code of 1986, as amended. THIS DISCUSSION DOES
NOT ADDRESS SPECIAL CONSIDERATIONS AND RULES APPLICABLE TO LIMITED PARTNERS THAT
ARE TAX-EXEMPT OR FOREIGN ENTITIES.
No ruling will be requested from the Internal Revenue Service on any of the tax
matters discussed herein. The federal income tax consequences to the limited
partners from the sale cannot be predicted with absolute certainty. We cannot
assure that the Internal Revenue Service will not audit or question the
treatment of any item discussed herein.
EACH LIMITED PARTNER SHOULD CONSULT AND MUST RELY UPON HIS, HER, OR ITS OWN TAX
ADVISOR IN ORDER TO UNDERSTAND FULLY THE FEDERAL, STATE, LOCAL AND FOREIGN
INCOME AND ESTATE AND GIFT TAX CONSEQUENCES TO HIM, HER, OR IT ARISING FROM THE
SALE.
TAX CONSEQUENCES IF THE PROPERTY IS SOLD. The Partnership will recognize gain
from the sale of the Property to the extent that the amount the Partnership
realizes from that sale exceeds its adjusted basis in the Property. The
Partnership's amount realized from the sale includes the sum
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of cash it receives from the Buyer plus the fair market value of any property it
receives other than money. If the Buyer assumes or takes the Property subject to
liabilities which encumber the Property, the face amount of those liabilities
also is included in the Partnership's amount realized as though the Buyer had
made a cash payment to the Partnership in the same amount. Selling expenses of
the Partnership, such as brokerage commissions, legal fees, and title costs,
reduce the Partnership's amount realized. Any gain recognized by the Partnership
will be allocated to the partners, including the limited partners, in accordance
with the Partnership agreement. We estimate that approximately $178 gain will be
allocated per unit to the limited partners. This amount is an estimate based on
a number of assumptions with respect to closing costs discussed under "Use of
Proceeds".
NOTE: Any gain in excess of "depreciation recapture gain" (discussed below) and
"unrecaptured I.R.C. Section 1250 gain" (discussed below) generally will be
taxed as gain arising from the sale of property used in the partnership's trade
or business under I.R.C. Section 1231 ("I.R.C. Section 1231 gain"). Each limited
partner will be allocated its share of the Partnership's I.R.C. Section 1231
gain. In general, if the combination of all I.R.C. Section 1231 gains and losses
of a particular limited partner for a taxable year results in a net gain, all of
such gains and losses will be characterized as long-term capital gains and
losses. If the combination results in a net loss, all of such gains and losses
will be characterized as ordinary gains and losses. However, notwithstanding the
foregoing, gains from the sale or exchange of I.R.C. Section 1231 property will
be treated as ordinary gains to the extent of a limited partner's unrecaptured
net I.R.C. Section 1231 losses for the five most recent prior years. As a
result, all or a portion of any I.R.C. Section 1231 gain from the sale of the
Partnership's property allocated to a limited partner may be treated as ordinary
income, rather than long-term capital gain, if the limited partner has had net
I.R.C. Section 1231 losses in prior years.
Under I.R.C. Section 1245, gain recognized by the Partnership from the sale of
any of its depreciable or amortizable personal property and certain statutorily
designated real property, i.e., "depreciation recapture gain," is
re-characterized as ordinary income and will be allocated to the partners as
such. The amount of the Partnership's depreciation recapture gain equals the
amount by which the lower of the (i) amount realized or (ii) recomputed basis
(i.e., the property's basis plus all amounts allowed for depreciation) of the
transferred property exceeds that property's adjusted basis.
Under I.R.C. Section 1250, no portion of the gain recognized by the Partnership
upon the disposition of its residential rental real property generally is
re-characterized as ordinary income because such property is depreciated using
the straight-line method. However, under I.R.C. Section 291 (a)(1), a portion of
a corporation's capital gain from the disposition of residential rental real
property is re-characterized as ordinary income. The portion that is
re-characterized equals 20% of the amount that would have been treated as
ordinary income under I.R.C. Section 1245 if the transferred property were
I.R.C. Section 1245 property (which generally would be all depreciation
deductions previously claimed). Therefore, under I.R.C. Section 291(a)(1),
corporate limited partners of the Partnership may recognize ordinary income upon
a disposition of the Partnership's residential rental real property.
In the case of limited partners of the Partnership that are individuals,
estates, or trusts, the application of I.R.C. Section 1250 will not require
those taxpayers to recognize gain taxable as
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ordinary income; however, those limited partners may be allocated gain from the
Partnership's sale of the property that is taxed as "unrecaptured I.R.C. Section
1250 gain." Unrecaptured I.R.C. section 1250 gain generally is equal to the gain
on the sale of real property that is attributable to straight-line depreciation.
The maximum federal tax rate at which unrecaptured I.R.C. Section 1250 gain
currently is 25%.
In the case of limited partners that are individuals, trusts, or estates, gain
from the sale of the Partnership's property that is not taxed as ordinary income
or as unrecaptured I.R.C. Section 1250 gain generally is taxed at a current
maximum capital gains tax rate of 15%. Gain from the sale of the Partnership's
property that is allocated to limited partners that are corporations is not
subject to preferential capital gains tax rates.
If a limited partner possesses suspended tax losses, tax credits, or other items
of tax benefit, such items may be used to reduce any tax liability that arises
with respect to any gain resulting from the sale of the Partnership's property
and allocated to that limited partner. The determination of whether a limited
partner possesses suspended tax losses, tax credits, or other items of tax
benefit that may reduce any gain resulting from the sale will depend upon each
limited partner's individual circumstances. Limited partners are urged to
consult with their tax advisors in this regard.
DISTRIBUTIONS OF CASH. A distribution of cash by the Partnership to a limited
partner will be treated as an amount realized from a sale of the limited
partner's interest in the Partnership and will result in taxable gain only to
the extent that the distribution exceeds the limited partner's adjusted tax
basis in his, her, or its partnership interest. Otherwise, distributions will be
tax free, and the adjusted basis of the limited partner's partnership interest
will be decreased, but not below zero.
Generally, any gain recognized by a limited partner arising from a cash
distribution by the Partnership will be capital gain. Nevertheless, to the
extent that a portion of that gain is attributable to "unrealized receivables"
of the Partnership, including depreciation recapture, or to certain inventory
items described in I.R.C. Section 751, such gain will be taxed as ordinary
income. The General Partner does not believe that any portion of a limited
partner's gain on the distribution of cash from this sale will be taxed to the
limited partner as ordinary income.
PROCEEDS AVAILABLE FOR DISTRIBUTION TO THE LIMITED PARTNERS FROM THE SALE OF THE
PROPERTY AFTER REPAYMENT OF THE PARTNERSHIP'S DEBTS MAY BE LESS THAN THE GAIN
RECOGNIZED BY THE PARTNERSHIP (AS A RESULT OF THE SALE) THAT IS ALLOCABLE TO THE
PARTNERS, GAIN RECOGNIZED BY THE PARTNERS AS A RESULT OF ANY CASH DISTRIBUTIONS
FROM THE PARTNERSHIP, AND ANY TAX LIABILITY RESULTING FROM THE FOREGOING.
ACCORDINGLY, LIMITED PARTNERS MAY BE REQUIRED TO USE FUNDS FROM SOURCES OTHER
THAN THE PARTNERSHIP IN ORDER TO PAY ANY TAX LIABILITIES THAT MAY ARISE AS A
RESULT OF THE RECOGNITION OF GAIN.
TAX CONSEQUENCES IF THE PROPERTY IS NOT SOLD. THE PARTNERSHIP HAS RECOVERED
ROUGHLY ONE-HALF OF THE BASIS OF THE PROPERTY THROUGH DEPRECIATION FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES. THE PARTNERSHIP DOES NOT HAVE RELIABLE
ESTIMATES OF WHAT FUTURE DISTRIBUTIONS FROM THE OPERATION OF THE PROPERTY MAY
BE. AS A RESULT, IT IS POSSIBLE THAT CONTINUED OPERATION OF THE PROPERTY WILL
GENERATE TAXABLE INCOME TO THE LIMITED PARTNERS, SINCE THERE
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MAY NOT BE ADEQUATE DEPRECIATION AND OTHER DEDUCTIONS EQUAL TO OR GREATER THAN
THE INCOME GENERATED FROM THE PROPERTY. THE GENERAL PARTNER DOES NOT HAVE
RELIABLE ESTIMATES OF FUTURE CASH FLOW FROM THE PROPERTY. IT IS POSSIBLE THAT
THERE WILL NOT BE ANY CASH AVAILABLE FOR DISTRIBUTION SINCE ALL OR SUBSTANTIALLY
ALL OF THE PROPERTY'S CASH FLOW MAY BE USED TO SERVICE THE PARTNERSHIP'S
LIABILITIES. TAX LIABILITIES RESULTING FROM ALLOCATION OF INCOME TO LIMITED
PARTNERS FROM THE PARTNERSHIP MAY EXCEED CASH DISTRIBUTIONS BY THE PARTNERSHIP.
Accordingly, limited partners may be required to use funds from sources other
than the Partnership in order to pay any tax liabilities that may arise as a
result of the Partnership's continued operation of the Property. The Partnership
also will continue to incur the administrative costs of operating the
Partnership, including the cost of preparing and filing a partnership tax
return. If a limited partner possesses suspended tax losses, tax credits, or
other items of tax benefit, such items may potentially be used to reduce any tax
liability that arises with respect to any taxable net income as a result of the
continued operation of the Property by the Partnership. Limited partners are
urged to consult their tax advisors in this regard.
NO APPRAISAL RIGHTS
Limited partners are not entitled to dissenters' appraisal rights under
applicable law or the partnership agreement in connection with the sale.
REGULATORY APPROVALS
Other than the filing and distribution of this information statement, no
regulatory approvals are required for the sale.
PLANS AFTER THE SALE
Upon completion of the sale of the Property and after the payment of the
transaction-related costs and other outstanding obligations, the Partnership
will continue to hold and operate its remaining apartment complex known as
Lakewood Apartments located in Harris County, Texas. The General Partner is
currently planning to sell the Lakewood Apartments in the first quarter of 2005
upon terms and conditions subsequently to be approved by the General Partner.
PARTNERSHIP BUSINESS
The Partnership is a publicly held limited partnership organized under the
California Uniform Limited Partnership Act on July 29, 1984. Angeles Realty
Corporation II, a California corporation, is the general partner of the
Partnership (the "General Partner"). The General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust. The partnership agreement provides that the Partnership
is to terminate on December 31, 2035, unless terminated before such date.
The Partnership's primary business is to operate and hold real estate properties
for investment. The Partnership currently continues to own and operate two
apartment properties. See below for a description of the Partnership's
properties.
The Partnership, through its public offering of limited partnership units, sold
12,425 limited partnership units aggregating $12,425,000. The General Partner
contributed capital in the
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amount of $1,000 for a 1% interest in the Partnership. Since its initial
offering, the General Partner has not received, nor are the limited partners
required to make, additional capital contributions. The General Partner intends
to maximize the operating results and, ultimately, the net realizable value of
each of the Partnership's properties in order to achieve the best possible
return for the limited partners. Such results may best be achieved by holding
and operating the properties or through property sales or exchanges,
refinancings, debt restructurings or relinquishment of the assets. The
Partnership evaluates each of its holdings periodically to determine the most
appropriate strategy for each of the assets.
The Partnership has no employees. Management and administrative services are
performed by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner provides such property management services.
PARTNERSHIP PROPERTIES
The following table sets forth the Partnership's investments in properties:
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Lake Meadows, Garland, Texas 03/31/1988 Fee ownership, subject to Apartment - 96 units
a first mortgage
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Lakewood, Tomball, Texas 11/01/1989 Fee ownership, subject to Apartment - 256 units
a first mortgage
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SUMMARY OF THE LAKE MEADOWS PURCHASE AND SALE AGREEMENT
The following summarizes the material terms and conditions of the Purchase and
Sale Agreement, for the Property.
THE PURCHASED ASSETS
The Seller has agreed to sell to the Buyer all of the Seller's interest in and
to the Property, together with all the buildings and improvements located
thereon and certain associated property.
EXCLUSIONS FROM THE SALE OF THE PROPERTY
The Property expressly excludes cash or other funds; refunds, rebates or other
claims, or any interest thereon, for periods or events occurring prior to the
closing; utility and similar deposits; insurance or other prepaid items; the
Seller's proprietary books and records; any right, title or interest in or to
the AIMCO Marks; any Buyer's Access computer and/or software; AIMCO Benchmark
Series Books; Connect: Remote Horizon Software; any other software installed on
any computer transferred as part of the sale; equipment leased by the Seller and
the interest of the Seller in any equipment provided to the Property for use,
but not owned or leased by the Seller; or property owned or leased by any tenant
or guest, employee or other person furnishing goods or services to the Property;
or property and equipment owned by the Seller, which in the
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ordinary course of business of the Property is not used exclusively for the
business, operation or management of the Property.
ASSUMED LIABILITIES
The Buyer agreed to assume the Seller's liabilities and obligations under the
property contracts and the leases after the closing.
THE EXISTING LOAN
The outstanding principal balance of the existing loan from Federal National
Mortgage Association as of December 31, 2003 was approximately $2,071,000. The
outstanding principal balance of the loan at closing shall be paid out of the
balance of the purchase price due at the closing.
PURCHASE PRICE
The purchase price for the Property is $4,350,000, payable as follows: (i) a
$43,500 deposit upon the execution of the agreement to be held in escrow until
the closing, (ii) an additional $43,500 deposit upon the expiration of the
Buyer's due diligence period for its examination of the Property to be held in
escrow until the closing, and (iii) the balance of the purchase price at the
closing. The amount of the then-outstanding principal balance of the loan shall
be paid from the proceeds of the purchase price due at the closing and will
reduce the cash at closing payable to the Seller. The $43,500 initial deposit
shall be refundable in the event that the Buyer terminates the agreement during
the Buyer's due diligence period. If the Buyer does not terminate the agreement,
all of the $43,500 initial deposit, along with the second $43,500 deposit, shall
become non-refundable upon the expiration of the Buyer's due diligence period;
provided, however, that if the agreement is terminated due to a default of or
breach by the Seller of the agreement and the Buyer chooses to seek damages in
lieu of specific performance, then both deposits shall be returned to the Buyer.
CLOSING
The sale of the Property will take place no later than 75 days following the
expiration of the Buyer's due diligence period. The Seller may extend the
closing (i) for up to 30 days to satisfy a condition to be satisfied by the
Seller or (ii) such later date as is mutually acceptable to the Seller and the
Buyer.
REPRESENTATIONS AND WARRANTIES
The agreement contains the customary seller representations and warranties by
the Seller, including, without limitation, representations regarding corporate
existence and qualification; corporate authority; non-contravention of existing
contracts; possessory interest in the Property; litigation; governmental
violations; defaults under property contracts; accuracy of operating reports;
hazardous or toxic materials; and insurance policies.
The agreement also contains customary Buyer representations and warranties by
the Buyer, including, without limitation, representations and warranties
regarding corporate existence and
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qualification; corporate authority; non-contravention of existing contracts;
litigation; and non-reliance upon the Seller's representations and warranties
other than those in the agreement.
COVENANTS
The Seller has agreed that from the date of the agreement through the closing,
it will continue to operate the Property in the ordinary course of business and
subject to the following covenants:
o the Seller will not voluntarily create or cause any lien or
encumbrance to attach to the Property between the date of the
agreement and the closing date, without the prior consent of the
Buyer.
o The Seller may enter into new contracts or leases, renew existing
leases or modify, terminate or accept the surrender or forfeiture of
any of the leases, modify any contracts, or institute and prosecute
any available remedies for default under any such leases or contracts
without first obtaining the written consent of the Buyer, as long as
any such new or modified contracts or any new or renewed leases are in
the ordinary course of business and do not have a term in excess of
one year, without the Buyer's prior written consent. Additionally, in
the case of new or modified contracts, such contracts must be
terminable on thirty (30) days or less notice without penalty and such
contracts must not be modified to revise the termination provisions.
CONDITIONS
The Seller's obligation to complete the sale of the Property is subject to
satisfaction of the following conditions on or before the closing unless waived
in whole or in part by the Seller:
o All of the documents and funds required to be delivered by the Buyer
to the Seller at the closing shall have been delivered;
o Each of the representations, warranties and covenants of the Buyer
shall be true in all material respects as of the closing; and
o The Buyer shall have complied with, fulfilled and performed in all
material respects each of the covenants, terms and conditions to be
complied with, fulfilled or performed by the Buyer.
The Buyer's obligation to complete the sale of the Property is subject to
satisfaction of the following conditions on or before the closing unless waived
in whole or in part by the Buyer:
o All of the documents required to be delivered by the Seller to the
Buyer at the closing shall have been delivered;
o Each of the representations, warranties and covenants of the Seller
shall be true in all material respects as of the closing;
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o The Seller shall have complied with, fulfilled and performed in all
material respects each of the covenants, terms and conditions to be
complied with, fulfilled or performed by the Seller; and
o As of May 5, 2004, the actual occupancy level of the Property shall
not have decreased by more than 15% from the actual occupancy level on
the effective date of the Purchase and Sale Agreement.
TERMINATION AND DEFAULT
During the Buyer's due diligence period for its examination of the Property, the
Buyer may terminate the agreement for any reason or no reason. If the Buyer
terminates the agreement during the Buyer's due diligence period, then the
initial $43,500 deposit shall be returned to the Buyer.
The agreement may be terminated at any time after the expiration of the Buyer's
due diligence period through the closing:
o By the Seller, if the Buyer defaults in its obligations hereunder to
(a) deliver any of the deposits, (b) deliver to the Seller the
required closing deliveries specified under the agreement, or (c)
deliver the purchase price at the time required by the agreement and
close on the purchase of the Property on the closing. The Seller may
also terminate the agreement if the Buyer defaults in any of its
representations, warranties or obligations; and
o By the Buyer, if the Seller defaults in its representations,
warranties, covenants, or obligations under the agreement, including
selling the Property.
If the Seller terminates the agreement due to a default of or breach by the
Buyer, then the Seller is entitled to keep all the Buyer's deposits as
liquidated damages. If the Buyer terminates the agreement due to a default or
breach of the Seller, then the Buyer may choose to either (i) recover the
Buyer's deposits, or (ii) seek specific performance for the conveyance of the
Property to the Buyer.
EXPENSES AND CLOSING COSTS
The Seller shall pay the base premium for the title policy, the cost of
recording any instruments required to discharge any liens or encumbrances
against the Property, and one-half of the customary closing costs of the escrow
agent for the sale of the Property. The Buyer shall pay any transfer, sales,
use, gross receipts or similar taxes, any premiums or fees required to be paid
by the Buyer with respect to its title policy for the Property, and one-half of
the customary closing costs of the escrow agent for the sale of the Property.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
Only one information statement is being delivered to multiple limited partners
sharing an address unless the Partnership has received contrary instructions
from one or more of the limited partners.
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The Partnership will undertake to deliver promptly upon written or oral request
a separate copy of this information statement to a limited partner at a shared
address to which the Partnership delivered a single copy of the information
statement. If a limited partner wishes to notify the Partnership that he or she
wishes to receive a separate copy of this information statement, the limited
partner may contact the Partnership as follows:
By mail: Angeles Opportunity Properties, Ltd.
Stanford Place 3, 4582 S. Ulster Street Parkway, Suite 1100
Denver, CO 80237
By telephone: (888) 789-8600
A limited partner may also use the above telephone number, facsimile number or
mailing address to notify the Partnership that limited partners sharing an
address request delivery of a single copy of this information statement if they
are receiving multiple copies of information statements.
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