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 September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-13083
CONSOLIDATED CAPITAL PROPERTIES V
(Exact name of small business issuer as specified in its charter)
California 94-2918560
(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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 686
Restricted - tenant security deposits 99
Investments 108
Accounts receivable 29
Escrows for taxes and insurance 185
Restricted escrows 290
Other assets 348
Investment properties:
Land $ 1,969
Buildings and related personal property 18,253
20,222
Less accumulated depreciation (12,782) 7,440
$ 9,185
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 12
Tenant security deposits 101
Accrued taxes 304
Other liabilities 206
Mortgage notes payable 10,604
Partners' Deficit
General partner $ (19)
Special limited partners (55)
Limited partners (179,617 units
issued and outstanding) (1,968) (2,042)
$ 9,185
See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues:
Rental income $1,008 $1,227 $2,992 $ 3,550
Other income 27 31 124 217
Total revenues 1,035 1,258 3,116 3,767
Expenses:
Operating 343 490 1,099 1,591
General and administrative 60 67 196 270
Maintenance 139 241 379 610
Depreciation 286 345 853 988
Interest 233 335 726 1,009
Property taxes 96 145 272 448
Total expenses 1,157 1,623 3,525 4,916
Loss before extraordinary item (122) (365) (409) (1,149)
Extraordinary loss on refinancing (22) - (22) --
Net loss (144) (365) (431) (1,149)
Net loss allocated to
general partners (.2%) $ -- $ (1) $ (1) $ (2)
Net loss allocated to
limited partners (99.8%) (144) (364) (430) (1,147)
$ (144) $ (365) $ (431) $(1,149)
Net loss per limited
partnership unit:
Loss before extraordinary item $ (.68) $(2.03) $(2.27) $ (6.39)
Extraordinary loss on
refinancing (.12) -- (.12) --
Net loss per limited
partnership unit $ (.80) $(2.03) $(2.39) $ (6.39)
<FN>
See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Nine Months Ended September 30, 1996
(in thousands, except unit data)
Limited Special
Partnership General Limited Limited
Units Partner Partners Partners Total
Original capital
contributions 180,037 $ 1 $ -- $45,009 $45,010
Partners' deficit at December
31, 1995 179,617 $ (18) $ (56) $(1,537) $(1,611)
Amortization of
timing difference (Note D) -- -- 1 (1) --
Net loss for the
nine months ended
September 30, 1996 -- (1) -- (430) (431)
Partners' deficit at
September 30, 1996 179,617 $ (19) $ (55) $(1,968) $(2,042)
<FN>
See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net loss $ (431) $(1,149)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 853 988
Amortization of lease commissions, discounts,
and loan costs 117 127
Casualty gain -- (32)
Extraordinary loss on refinancing 22 --
Change in accounts:
Restricted cash 9 (57)
Accounts receivable (7) (51)
Escrows for taxes and insurance 9 74
Other assets 18 9
Accounts payable (216) 171
Tenant security deposit liabilities (16) (9)
Accrued taxes (26) (71)
Other liabilities (41) 169
Net cash provided by
operating activities 291 169
Cash flows from investing activities:
Property improvements and replacements (155) (403)
Deposits to restricted escrows (213) (42)
Receipts from restricted escrows -- 26
Proceeds from sale of investments 100 398
Net insurance proceeds on casualty item -- 32
Net cash (used in) provided by
investing activities (268) 11
Cash flows from financing activities:
Payments on mortgage notes payable (166) (76)
Repayment of mortgage note payable (2,925) --
Proceeds from long-term borrowings 2,800 --
Loan costs paid (102) --
Prepayment penalty (22) --
Net cash used in financing activities (415) (76)
Net (decrease) increase in cash and cash equivalents (392) 104
Cash and cash equivalents at beginning of period 1,078 240
Cash and cash equivalents at end of period $ 686 $ 344
Supplemental disclosure of cash flow information:
Cash paid for interest $ 681 $ 812
<FN>
See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL PROPERTIES V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Consolidated Capital
Properties V ("the Partnership" or "Registrant") 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 ConCap Equities, Inc. (the "General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine month periods ended September 30, 1996, are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1996. 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, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Investments
Investments consisting primarily of U.S. Treasury Notes with original maturities
of more than 90 days, are considered to be held-to-maturity securities.
NOTE B - TRANSACTIONS WITH RELATED PARTIES
The Partnership has paid property management fees based upon collected gross
rental revenues for property management services in each of the nine month
periods ended September 30, 1996 and 1995. In December 1994, affiliates of the
General Partner assumed day-to-day property management responsibilities for all
of the Partnership's properties with the exception of the Fourth and Race Tower,
which was managed by a third party until it was sold in December 1995. Property
management fees of approximately $152,000 and $160,000 were paid to affiliates
of the General Partner for each of the nine months ended September 30, 1996 and
1995, respectively. These fees are included in operating expenses.
The Partnership Agreement also provides for reimbursement to the General Partner
and its affiliates for costs incurred in connection with the administration of
Partnership activities. Reimbursements for services of affiliates of
approximately $127,000 and $144,000 were paid to the General Partner and its
affiliates during each of the nine months ended September 30, 1996 and 1995,
respectively.
During the nine months ended September 30, 1996, the Partnership paid an
affiliate of the General Partner approximately $12,000 for loan costs which were
capitalized and included in other assets in the accompanying Consolidated
Balance Sheet. These loan costs related primarily to the refinancing of the
Sutton Place Apartments (See "Note F").
NOTE B - TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
In July 1995, the Partnership began insuring 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.
NOTE C - COMMITMENT
The Partnership is required to maintain working capital reserves for normal
repairs, replacements, working capital and contingencies of not less than 5% of
Net Invested Capital as defined in the Partnership Agreement. In the event
expenditures are made from these reserves, operating revenue shall be allocated
to such reserves to the extent necessary to maintain the foregoing level. Cash
and cash equivalents, tenant security deposits and investments totalling
approximately $893,000, are less than the reserve requirement of approximately
$1,761,000 at September 30, 1996. The Partnership intends to replenish the
working capital reserve from cash flow from operations after consideration of
any capital improvement needs of the properties. The Partnership's recent cash
flows from operations, however, have not been sufficient to replenish the
reserve and there is no assurance that future levels of cash flow from
operations will be adequate to accomplish this objective. The working capital
requirement must be met prior to any consideration for distributions to the
partners.
NOTE D - CHANGE IN STATUS OF NON-CORPORATE GENERAL PARTNER
In the year ended December 31, 1991, the Partnership Agreement was amended to
convert the General Partner interests held by the non-corporate General Partner,
Consolidated Capital Group ("CCG"), to that of special limited partners
("Special Limited Partners"). The Special Limited Partners do not have a vote
and do not have any of the other rights of a Limited Partner except the right to
inspect the Partnership's books and records; however, the Special Limited
Partners will retain the economic interest in the Partnership which they
previously owned as a general partner. ConCap Equities, Inc. ("CEI") became the
sole general partner of the Partnership effective December 31, 1991. In
connection with CCG's conversion, a special allocation of gross income was made
to the Special Limited Partners in order to eliminate their tax basis negative
capital account.
After the conversion, the various owners of interests in the Special Limited
Partners transferred portions of their interests to CEI so that CEI now holds
a .2% interest in all allocable items of income, loss and distribution. The
difference between the Special Limited Partners' capital accounts for
financial statement and tax reporting purposes is being amortized as the
components of the timing differences which created the balance reverse.
NOTE E - DEBT RESTRUCTURING
The Partnership restructured the debt on the 51 North High Building and made
a principal prepayment (without penalty) of $700,000 in January 1996. In
addition to this payment, the lender reduced the note's face amount by an
additional $700,000 and the stated interest rate of the note was reduced from
13.5% to 9%. The maturity date of June 1, 2004, was unchanged.
The debt restructuring was accounted for as a modification of terms. The
total future cash payments under the restructured loan exceed the carrying
value of the loan as of the date of restructure. Consequently, the carrying
amount of the loan was reduced only by the $700,000 principal prepayment
actually paid with no gain being recognized on the restructuring. Interest
on the restructured debt accrues at an imputed rate of 4%, the rate required
to equate the present value of the total future cash payments under the new
terms to the carrying amount of the loan at the date of restructure.
To facilitate the debt restructuring of the 51 North High Building in 1996,
the property was placed into a lower-tier partnership known as 51 North High
Street, L.P. in which the Partnership is the 99.99% limited partner. The
Partnership retained substantially all economic benefits from the property.
NOTE F - NOTE REFINANCING
In July 1996, to facilitate the refinancing of the first mortgage
indebtedness secured by the Sutton Place Apartments, the property was
transferred to a lower-tier partnership known as Sutton Place CCPV, L.P., in
which the Partnership is the 99.99% limited partner. The Partnership
retained substantially all economic benefits from the property.
Under the terms of the refinancing agreement which was completed September 6,
1996, the new $2.8 million mortgage note which bears interest at 9.125% and
matures in October 2003, replaced the previous mortgage note of approximately
$2.2 million. As a result of the refinancing, the Partnership incurred a
$22,000 prepayment penalty which resulted in an extraordinary loss on
refinancing. In conjunction with the refinancing, a capital improvement
reserve of approximately $164,000 was established and approximately $102,000
in loan costs were incurred. These loan costs will be amortized over the
life of the loan.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two apartment complexes and
one commercial property. The following table sets forth the average occupancy
of the properties for the nine months ended September 30, 1996 and 1995:
Average Occupancy
1996 1995
Aspen Ridge Apartments
Chicago, Illinois 94% 91%
Sutton Place Apartments
Corpus Christi, Texas 93% 90%
51 North High Street Building
Columbus, Ohio 89% 85%
The occupancy increase at Aspen Ridge Apartments is due to an improved tenant
base from stricter qualification procedures which have resulted in more stable
occupancy levels. The occupancy increase at Sutton Place Apartments resulted
from additional military troops being relocated to Corpus Christi. The increase
in occupancy at the 51 North High Street Building is due to existing tenants
leasing additional space.
The Partnership realized a loss before extraordinary item of $122,000 and
$409,000 for the three and nine months ended September 30, 1996, respectively,
compared to a loss of $365,000 and $1,149,000 for the three and nine
months ended September 30, 1995, respectively. The decreased loss before
extraordinary item primarily resulted from the sale of the Fourth and Race Tower
office building in December 1995.
The sale of Fourth and Race Tower resulted in decreases in rental and other
income. Other income also decreased due to lower lease cancellation fees,
cleaning and damage fees and fewer late charges at the Sutton Place Apartments
due to a stronger tenant base. Additionally, the Partnership received no
dividends on its investment in Southmark Preferred Stock during 1996 which
further reduced other income. The Partnership received approximately $21,000 in
dividends during the nine months ended September 30, 1995. These decreases in
other income were partially offset by a property tax refund received during the
nine months ended September 30, 1996, resulting from an appeal of the 1994 taxes
for the 51 North High Street Building. Property operations, maintenance,
depreciation and property taxes also decreased due to the Fourth and Race Tower
sale. General and administrative expenses decreased due to reduced expense
reimbursements as well as reduced legal costs. Expense reimbursements were
higher in 1995 as a result of the costs associated with the Dallas partnership
administration staff. Legal costs were higher in 1995 related to the marketing
for sale of the Fourth and Race Tower. The decrease in interest expense is due
to a debt restructure which lowered the imputed interest rate substantially and
a principal payment of $700,000 at 51 North High in January 1996. (See "Note E"
in the Notes to Consolidated Financial Statements in "Item 1"). The decrease in
tax expense is a result of the reduction in the assessed value of the 51 North
High Street Building in 1996 and the sale of the Fourth and Race Tower in
December of 1995.
The $22,000 extraordinary loss on refinancing realized during the three months
ended September 30, 1996, related to the refinancing of Sutton Place Apartments.
Through this refinancing, a new $2,800,000 mortgage note, which bears interest
at 9.125% and matures in October 2003, was obtained. As a result of the
refinancing, the Partnership realized a $22,000 prepayment penalty resulting in
the extraordinary loss.
During the nine months ended September 30, 1995, the Partnership realized a
casualty gain as a result of a fire at the Fourth and Race Tower on June 5,
1995. The total insurance proceeds received exceeded the total estimated costs
of replacing the equipment destroyed resulting in a casualty gain of $32,000
which is included in other income.
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 expense. 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 September 30, 1996, the Partnership held cash and cash equivalents of
$686,000 compared to $344,000 at September 30, 1995. Net cash provided by
operating activities increased primarily due to the elimination of the negative
cash flows of the Fourth and Race Tower subsequent to the building sale in late
1995, as well as paying $131,000 less in interest for 1996 compared to 1995,
partially offset by increased payments of certain repair and maintenance items
related to painting and other unit interior and exterior maintenance incurred in
December of 1995. Net cash used in investing activities increased primarily due
to increased deposits to restricted escrows resulting from the Sutton Place
refinancing as well as a reduction in long-term investments maturing in 1996,
partially offset by reduced property improvements and replacements. Net cash
used in financing activities increased due primarily to the payment on the 51
North High Street Building debt in January 1996, and the refinancing of the
Sutton Place Apartments mortgage as noted above.
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 property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of $10,604,000, net of discount, matures at various times with
balloon payments due at maturity, at which time the properties will either be
refinanced or sold. Future cash distributions will depend on the levels of net
cash generated from operations, reserve requirements, capital expenditure
requirements, property sales and the availability of cash reserves. During each
of the nine months ended September 30, 1996 and 1995, no distributions were
declared or paid.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
Exhibit 10.21, Promissory Note dated September 6, 1996, between Sutton Place
CCPV, L.P., a South Carolina limited partnership and First Union National
Bank of North Carolina, a national banking association.
(b) Reports on Form 8-K.
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.
CONSOLIDATED CAPITAL PROPERTIES V
By: CONCAP EQUITIES, INC.
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: November 7, 1996