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 June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-16209
ANGELES PARTNERS 16
(Exact name of small business issuer as specified in its charter)
California 95-4106417
(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 (803) 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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES PARTNERS 16
BALANCE SHEET
(Unaudited)
June 30, 1995
Assets
Cash:
Unrestricted $ 814,695
Restricted--tenant security deposits 61,750
Accounts receivable 8,842
Escrow for taxes 239,953
Restricted escrows 1,439,055
Other assets 228,923
Investment properties:
Land $ 1,075,589
Buildings and related personal
property 10,566,293
11,641,882
Less accumulated depreciation (2,861,661) 8,780,221
$11,573,439
Liabilities and Partners' (Deficit)
Liabilities
Accounts payable $ 29,248
Tenant security deposits 64,877
Accrued taxes 321,994
Other liabilities 2,651,644
Notes payable, including $2,446,947
in default 13,680,446
Partners' Deficit
General partner $ (169,549)
Limited partners' capital (14,033
units issued and outstanding) (5,005,221) (5,174,770)
$11,573,439
See Accompanying Notes to Financial Statements
1
b) ANGELES PARTNERS 16
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenues:
Rental income $ 687,162 $ 813,919 $1,546,174 $ 1,739,346
Other income 47,228 32,686 93,714 88,553
Total revenues 734,390 846,605 1,639,888 1,827,899
Expenses:
Operating 979,773 225,222 1,234,258 519,015
General and administrative 49,856 72,163 94,074 138,572
Property management fees 40,059 42,952 77,465 92,758
Maintenance 85,285 64,944 150,094 151,654
Depreciation 167,156 165,329 328,092 330,081
Amortization 6,331 1,717 11,833 3,433
Interest 447,478 473,728 919,764 934,938
Property taxes 255,521 332,125 531,935 581,621
Bad debt expense (recovery) -- 57,157 (4,226) 25,110
Tenant reimbursements (234,606) (363,442) (298,142) (826,805)
Total expenses 1,796,853 1,071,895 3,045,147 1,950,377
Loss before gain on sale
of investment property
and extraordinary item (1,062,463) (225,290) (1,405,259) (122,478)
Gain on sale of investment
property 610,767 -- 610,767 --
Loss before extraordinary
item (451,696) -- (794,492) --
Extraordinary item - gain
on early extinguishment
of debt 56,203 -- 56,203 --
Net loss $ (395,493) $ (225,290) $ (738,289) $ (122,478)
Net loss allocated
to general partner (1%) $ (3,955) $ (2,253) $ (7,383) $ (1,225)
Net loss allocated
to limited partners (99%) (391,538) (223,037) (730,906) (121,253)
$ (395,493) $ (225,290) $ (738,289) $ (122,478)
See Accompanying Notes to Financial Statements
2
b) ANGELES PARTNERS 16
STATEMENTS OF OPERATIONS - (Continued)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Per limited partnership unit:
Loss before
extraordinary item $ (31.87) $ (15.88) $ (56.05) $ (8.63)
Extraordinary item 3.97 -- 3.97 --
Net loss $ (27.90) $ (15.88) $ (52.08) $ (8.63)
See Accompanying Notes to Financial Statements
3
c) ANGELES PARTNERS 16
STATEMENT OF CHANGES IN PARTNERS' (DEFICIT)
(Unaudited)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital
contributions 14,050 $ 1,000 $14,050,000 $14,051,000
Partners' deficit at
December 31, 1994 14,033 $(162,166) $(4,274,315) $(4,436,481)
Net loss for the six months
ended June 30, 1995 -- (7,383) (730,906) (738,289)
Partners' deficit at
June 30, 1995 14,033 $(169,549) $(5,005,221) $(5,174,770)
See Accompanying Notes to Financial Statements
4
d) ANGELES PARTNERS 16
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net loss $ (738,289) $ (122,478)
Adjustments to reconcile net loss to net
cash (used in) provided by operating
activities:
Depreciation 328,092 330,081
Amortization of loan costs and leasing
commissions 25,179 17,776
Gain on sale of investment property (610,767) --
Bad debt (recovery) expense (4,226) 25,110
Extraordinary item - gain on early
extinguishment of debt (56,203) --
Change in accounts:
Restricted cash 7,986 (8,811)
Accounts receivable 43,898 (215,101)
Escrows for taxes 68,253 61,193
Other assets (40,874) --
Accounts payable 1,767 (74,163)
Tenant security deposit liabilities 6,891 1,673
Accrued taxes (21,505) (523,883)
Other liabilities (246,977) 703,907
Net cash (used in) provided by
operating activities (1,236,775) 195,304
Cash flows from investing activities:
Property improvements and replacements (269,206) (19,987)
Proceeds from sale of investment property 9,862,641 --
Deposits to restricted escrows (1,345,580) (43,725)
Withdrawals from restricted escrows 83,546 --
Net cash provided by (used in)
investing activities 8,331,401 (63,712)
See Accompanying Notes to Financial Statements
5
d) ANGELES PARTNERS 16
STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from financing activities:
Repayment of notes payable $(8,035,528) $ --
Payments on notes payable (17,659) (39,837)
Net cash used in financing activities (8,053,187) (39,837)
Net (decrease) increase in cash (958,561) 91,755
Cash at beginning of period 1,773,256 983,119
Cash at end of period $ 814,695 $1,074,874
Supplemental disclosure of cash flow
flow information:
Cash paid for interest $ 1,889,668 $ 236,598
See Accompanying Notes to Financial Statements
6
e) ANGELES PARTNERS 16
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Going Concern
The financial statements have been prepared assuming the Partnership
will continue as a going concern. The Partnership has incurred
recurring operating losses and continues to suffer from inadequate
liquidity. In addition, there are limited identified capital resources
available to the Partnership. As a result, the Partnership has not had
cash available to perform the substantial rehabilitation necessary at
each of the investment properties.
The Partnership is in default on $2,446,947 of its indebtedness due
to its inability to make interest and principal payments when due. The
debt is unsecured debt of the Partnership payable to Angeles Mortgage
Investment Trust ("AMIT").
On June 12, 1995, the Partnership sold the investment property, North
Prior Industrial Park, for $10,450,000 to an unrelated third party. The
net proceeds were used to pay the first mortgage and related accrued
interest. Accrued interest of $56,203 related to the first mortgage was
forgiven, and a total gain of $610,767 was realized on the sale. A
principal payment of $117,384 was made on the AMIT debt, which will now
become unsecured debt of the Partnership. (See Note D for further
details). Prior to the sale, this property had been in receivership.
The Partnership is presently paying non-debt related expenses of the
properties, is current on its mortgages on its other two investment
properties and is negotiating forbearance agreements with AMIT on the
debt in default.
As a result of the above conditions, there is substantial doubt about
the Partnership's ability to continue as a going concern. The financial
statements do not include any adjustments to reflect the possible future
effects on the recoverability or classification of assets or amounts or
classification of liabilities that may result from these uncertainties.
Note B - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period
7
B - Basis of Presentation (continued)
ended June 30, 1995, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1995. For
further information, refer to the financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-KSB for
the fiscal year ended December 31, 1994.
Certain reclassifications have been made to the June 30, 1994,
information to conform to the June 30, 1995, presentation.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments
to affiliates for services and as reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following
payments were made to the General Partner and affiliates during the six
months ended June 30, 1995 and 1994:
1995 1994
Property management fees $77,465 $92,758
Reimbursement for services of affiliates 46,681 80,964
Marketing services 112 595
The Partnership insures its properties under a master policy through
an agency and insurer unaffiliated with the General Partner. An
affiliate of the 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 General Partner, who receives payment on these
obligations from the agent. The amount of the Partnership's insurance
premiums accruing to the benefit of the affiliate of the General Partner
by virtue of the agent's obligations is not significant.
8
Note C - Transactions with Affiliated Parties (continued)
In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware
limited partnership was organized to acquire and hold the obligations
evidencing the working capital loan previously provided to the
Partnership by Angeles Capital Investments, Inc. ("ACII"). Angeles
Corporation ("Angeles") is the 99% limited partner of AAP and Angeles
Acceptance Directives, Inc. ("AAD"), an affiliate of the 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 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.
This working capital loan funded the Partnership's operating deficits
in prior years. Total indebtedness, which is included as a note
payable, was $1,516,789 at June 30, 1995, and June 30, 1994, 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 expense for this loan was $82,791 and $54,984 for the six
months ended June 30, 1995 and 1994, respectively.
AMIT currently holds two unsecured note receivables from the
Partnership. Total indebtedness of $2,446,947 and $2,564,331 was in
default at June 30, 1995, and June 30, 1994, respectively. A principal
payment of $117,384 was made as a result of the sale of North Prior on
June 12, 1995. Total interest expense on this financing was $220,622
and $193,415 for the six months ended June 30, 1995 and 1994,
respectively. Accrued interest was $939,560 at June 30, 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% 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 33% 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% of the
vote). Between the date of acquisition of these shares (November 24,
1992) and March 31, 1995, MAE GP has 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. However, MAE GP may
choose to vote these shares as it deems appropriate in the future.
9
Note C - Transactions with Affiliated Parties (continued)
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, 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 the 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 D - Contingencies
On June 12, 1995, North Prior Industrial Park was sold for
$10,450,000 to an unrelated party. The net proceeds were used to pay
off the first mortgage and related accrued interest. Accrued interest
of $56,203 related to the first mortgage was forgiven. Proceeds were
also used to pay down the AMIT debt in the amount of $117,384. A gain
was recognized on the sale of $610,767. The AMIT debt that had been the
second mortgage of the property became unsecured debt of the
Partnership, the principal balance of which is $1,587,420, which is
currently in default. As required by the sales agreement the
Partnership has set up three escrows as described below:
Tenant Improvements Escrow - This $200,000 escrow is being held pending
completion of tenant improvements that were begun by the receiver prior
to the sale. As the improvement projects are completed the funds will
be disbursed. The projects are expected to be completed prior to
December 31, 1995. All funds are expected to be used in the improvement
projects; however, any remaining funds will be used to reduce the AMIT
debt discussed above.
Environmental Escrow - This $900,000 escrow was established for costs
associated with fuel oil contamination at the property. In January
1993, a local fuel oil distributor pumped fuel oil into a testing well
instead of into the storage tank at North Prior Industrial Park. The
Partnership notified the necessary authorities and engaged an
environmental engineering firm to develop a plan of action to clean up
the site. The
10
NOTE D - Contingencies (continued)
cost of the clean up, which is not covered by insurance, is estimated to
be approximately $900,000 over a five year period. A liability was
recorded for $200,000 in 1993, an additional liability was recorded
during the three month period ended June 30, 1995, for the amount of
$746,488. During 1994, the Partnership paid $46,488 relating to the
remediation; a balance of $900,000 is included in "Other liabilities" at
June 30, 1995. The Partnership entered into an Environmental
Undertaking and Indemnity Agreement with the buyer of the property
limiting the Partnership's liability with regard to the clean up of this
site to the balance of the escrow account. This agreement will
terminate when the Partnership receives a "Site Closure Letter" from the
Minnesota Pollution and Control Agency. Upon receipt of this letter,
any remaining funds in the escrow account will be used to pay down the
AMIT debt discussed above. In January 1995, the holder of the first
mortgage, along with the receiver, initiated two separate lawsuits
against the Partnership, among others, for damages sustained as a result
of the above. The General Partner believes that the former holder of
the first mortgage will not pursue their lawsuit. The General Partner
also believes that prior to December 31, 1995, the Partnership will be
substituted in as the Plaintiff in the lawsuit initiated by the former
receiver in a suit filed against the fuel distributor, among others.
However, the outcome of these claims is uncertain and their effect on
the Partnership cannot presently be determined.
North Prior Industrial Park also had ground water contamination that
originated off site. In 1994 the Minnesota Pollution and Control Agency
issued a "No Further Action" letter to the party responsible for causing
the problem. There have been no claims against the Partnership for this
matter.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of two apartment
complexes. The following table sets forth the average occupancy of the
properties for the six months ended June 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
Whispering Pines Apartments
Fitchburg, Wisconsin 94% 99%
Silver Ridge Apartments
Maplewood, Minnesota 92% 89%
The Partnership realized a net loss for the three and six months
ended June 30, 1995, of $395,493 and $738,289, respectively as compared
to a net loss for the three and six months ended June 30, 1994, of
$225,290 and $122,478 respectively. The increase in the net loss in
1995 as compared to 1994 is due to the accrual of $746,488 in the second
quarter of 1995 for the estimated costs associated with the
environmental clean up of North Prior Industrial Park (See Note D for
additional information). Partially offsetting this expense is the gain
recognized on the sale of North Prior Industrial Park on June 12, 1995
(See discussion below).
Rental income decreased for the three and six months ended June 30,
1995, as compared to the three and six months ended June 30, 1994, due
to the sale of North Prior on June 12, 1995, resulting in the loss of
rental revenue at this property for the remainder of the month of June.
Also contributing to the decrease in rental income was the decrease in
occupancy at Whispering Pines Apartments, partially offset by the
increase in occupancy at Silver Ridge Apartments.
Operating expenses increased due to the estimated clean up costs at
North Prior, as discussed above, which was partially offset by decreases
in gas bills, administrative costs, and liability insurance at North
Prior Industrial Park for the three and six months ended June 30, 1995,
versus the three and six months ended June 30, 1994. General and
administrative expenses decreased primarily due to decreased cost
reimbursements for partnership accounting, asset management and investor
services. The decrease in property management fees is attributable to
the decrease in rental income, as such fees are based on revenue.
Amortization expense increased for the three and six months ended June
30, 1995, as compared to the three and six months ended June 30, 1994,
due to the addition of lease commissions at North Prior Industrial Park
during the first six months of 1995. Property tax expense decreased due
to lower tax bills at North Prior Industrial Park. The bad debt
recovery for the six months ended June 30, 1995, relates to past due
amounts received by North Prior Industrial Park that had been previously
reserved. The bad debt expense for the three and six months ended June
30, 1994, can be attributed to the reserving of accounts receivable at
North Prior Industrial Park that were considered uncollectible.
Finally, more than offsetting the above decreases in expense was the
decrease in tenant reimbursements for the three and six months ended
June 30, 1995, as compared to the three and six months ended June 30,
12
1994. The decreases in operating and tax expenses contributed to the
decrease in tenant reimbursements. Furthermore, due to changes in
management companies of North Prior Industrial Park, the detailed data
needed to accurately estimate the receivable was not available and,
therefore, tenant reimbursements were underestimated in 1993 resulting
in a large amount of recoveries in the first six months of 1994.
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from
increases in expenses. As part of this plan the General Partner
attempts to protect the Partnership from the burden of inflation-related
increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, due to changing market conditions, which can
result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General
Partner will be able to sustain such a plan.
At June 30, 1995, the Partnership had unrestricted cash of $814,695
versus $1,074,874 at June 30, 1994. Net cash used in operating
activities increased for the six months ended June 30, 1995, due to the
increase in other liabilities. Net cash provided by investing
activities increased due to the proceeds from the sale of North Prior
Industrial Park. Net cash used in financing activities increased due to
payments made on mortgage principal balances from the proceeds of the
sale of North Prior Industrial Park.
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the level of
capital expenditures required at the various properties to adequately
maintain the physical assets. Such assets are currently thought to be
sufficient for any near-term needs of the Partnership.
The financial statements have been prepared assuming the Partnership
will continue as a going concern. The Partnership has incurred
recurring operating losses and continues to suffer from inadequate
liquidity. In addition, there are limited identified capital resources
available to the Partnership. As a result, the Partnership has not had
cash available to perform the substantial rehabilitation necessary at
each of the investment properties.
The Partnership is in default on $2,446,947 of its indebtedness due
to its inability to make interest and principal payments when due. The
debt is unsecured debt of the Partnership payable to Angeles Mortgage
Investment Trust ("AMIT").
On June 12, 1995, the Partnership sold the investment property, North
Prior Industrial Park, for $10,450,000 to an unrelated third party. The
net proceeds were used to pay the first mortgage and related accrued
interest. Accrued interest of $56,203 related to the first mortgage was
forgiven, and a total gain of $610,767 was realized on the sale. A
principal payment of $117,384 was made on the AMIT debt, which will now
become unsecured debt of the Partnership. (See Note D for further
details).
13
The Partnership is presently paying non-debt related expenses of the
properties, is current on its mortgages on its other two investment
properties and is negotiating forbearance agreements with AMIT on the
debt in default.
As a result of the above conditions, there is substantial doubt about
the Partnership's ability to continue as a going concern. The financial
statements do not include any adjustments to reflect the possible future
effects on the recoverability or classification of assets or amounts or
classification of liabilities that may result from these uncertainties.
The second mortgage secured by the Silver Ridge Apartments property
in the amount of $775,000 matures in December 1995. The General Partner
intends to refinance this indebtedness.
14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In January 1993, a local fuel oil distributor pumped fuel oil into a
testing well instead of into the storage tank at North Prior Industrial
Park. The Partnership notified the necessary authorities and engaged an
environmental engineering firm to develop a plan of action to clean up
the site. The cost of the clean up, which is not covered by insurance,
is estimated to be approximately $900,000 over a five year period. A
liability was recorded for $200,000 in 1993, an additional liability was
recorded during the three month period ended June 30, 1995, for the
amount of $746,488. During 1994, the Partnership paid $46,488 relating
to the remediation; a balance of $900,000 is included in "Other
liabilities" at June 30, 1995. The Partnership entered into an
Environmental Undertaking and Indemnity Agreement with the buyer of the
property limiting the Partnership's liability with regard to the clean
up of this site to the balance of the escrow account. This agreement
will terminate when the Partnership receives a "Site Closure Letter"
from the Minnesota Pollution and Control Agency. Upon receipt of this
letter, any remaining funds in the escrow account will be used to pay
down the AMIT debt discussed above. In January 1995, the holder of the
first mortgage, along with the receiver, initiated two separate lawsuits
against the Partnership, among others, for damages sustained as a result
of the above. The General Partner believes that the former holder of
the first mortgage will not pursue their lawsuit. The General Partner
also believes that prior to December 31, 1995, the Partnership will be
substituted in as the Plaintiff in the lawsuit initiated by the former
receiver in a suit filed against the fuel distributor, among others.
However, the outcome of these claims is uncertain and their effect on
the Partnership cannot presently be determined.
AMIT, a real estate investment trust, made a loan to the Partnership
in October 1992 in the amount of $1,879,804, secured by the
Partnership's real property known as North Prior Industrial Park, on a
non-recourse basis. In January 1993, the Partnership repaid $175,000 in
principal on this loan. As mentioned previously, the Partnership paid
$117,384 in principal on this loan from the sales proceeds of this
property. The Partnership believed that the loan was a non-recourse
obligation. AMIT has asserted that the loan is recourse by virtue of a
certain amendment purportedly entered into as of November 1, 1992, but
which the Partnership has been informed and believes was actually
executed in December 1992. The Partnership has been further informed
and believes that the amendment may have been executed at the direction
of Angeles by an individual in his purported capacity as an officer of
the General Partner of the Partnership at a time when such person was
not in fact an officer of such entity. Accordingly, the Partnership has
filed a Proof of Claim in the Angeles bankruptcy proceeding with respect
to such purported amendment. Additionally, the Partnership filed a
Proof of Claim in the Angeles Funding Corporation and Angeles Real
Estate Corporation bankruptcy proceedings on similar grounds. Both
Angeles Funding Corporation and Angeles Real Estate Corporation are
affiliates of Angeles. Subsequently, the Partnership has determined
that the original note agreement was in fact recourse and therefore, the
Partnership's Proofs of Claim will be withdrawn.
15
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% 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 33% 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% of the
vote). Between the date of acquisition of these shares (November 24,
1992) and March 31, 1995, MAE GP has 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. However, MAE GP may
choose to vote these shares as it deems appropriate in the future.
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, 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 the 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.
The Registrant is unaware of any other pending or outstanding
litigation that is not of a routine nature. The 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:
10.11 Purchase Agreement with Exhibits between Angeles Partners
16 and North Prior, L.L.C. dated March 3, 1993, documenting the
sale of North Prior Industrial Park.
10.12 First Amendment to Purchase Agreement with Exhibits
between Angeles Partners 16 and North Prior, L.L.C. dated
June 12, 1995, documenting the sale of North Prior Industrial Park.
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10.13 Assignment and Assumption of Leases with Exhibits between
Angeles Partners 16 and North Prior, L.L.C. dated June 12, 1995.
10.14 Assignment and Assumption of Service Contracts with
Exhibits between Angeles Partners 16 and North Prior Industrial,
L.L.C. dated June 12, 1995.
10.15 Assignment of Permits and Warranties with Exhibits
between Angeles Partners 16 and North Prior, L.L.C. dated
June 12, 1995.
10.16 Assignment of Rents and Leases with Exhibits between
Angeles Partners 16 and Towle Real Estate Company dated
June 12, 1995.
10.17 Assignment of Service Contracts with Exhibits between
Angeles Partners 16 and Towle Real Estate Company dated
June 12, 1995.
10.18 Assignment of Permits and Warranties with Exhibits
between Angeles Partners 16 and Towle Real Estate Company
dated June 12, 1995.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
A Form 8-K dated June 12, 1995, was filed reporting the
sale of North Prior Industrial Park, located at 429 North Prior
Avenue, 475 North Prior Avenue, and 545 North Prior Avenue in St.
Paul, Minnesota.
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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 16
By: Angeles Realty Corporation II
General Partner
By:
Carroll D. Vinson
President
By:
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: August 14, 1995
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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 16
By: Angeles Realty Corporation II
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long
Robert D. Long
Controller and Principal
Accounting Officer
Date: August 11, 1995
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