FORM 10-QSB-- QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-11574
SHELTER PROPERTIES V
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0721855
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
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)
SHELTER PROPERTIES V
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2001
Assets
Cash and cash equivalents $ 3,671
Receivables and deposits 1,427
Restricted escrows 2,889
Other assets 1,266
Investment properties:
Land $ 4,242
Buildings and related personal property 76,723
80,965
Less accumulated depreciation (48,680) 32,285
$ 41,538
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 501
Tenant security deposit liabilities 293
Accrued property taxes 401
Other liabilities 454
Due to Corporate General Partner 255
Mortgage notes payable 44,361
Partners' Deficit
General partners $ (385)
Limited partners (52,538 units
issued and outstanding) (4,342) (4,727)
$ 41,538
See Accompanying Notes to Consolidated Financial Statements
b)
SHELTER PROPERTIES V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Revenues:
Rental income $ 3,262 $ 3,410 $ 6,553 $ 6,820
Other income 340 333 713 568
Casualty gain -- -- 121 --
Total revenues 3,602 3,743 7,387 7,388
Expenses:
Operating 1,355 1,354 2,807 2,755
General and administrative 143 105 278 220
Depreciation 742 668 1,474 1,354
Interest 727 762 1,497 1,524
Property taxes 221 215 429 387
Total expenses 3,188 3,104 6,485 6,240
Income before extraordinary item 414 639 902 1,148
Extraordinary loss on early
extinguishment of debt (74) -- (74) --
Net income $ 340 $ 639 $ 828 $ 1,148
Net income allocated to
general partners (1%) $ 3 $ 6 $ 8 $ 11
Net income allocated to
limited partners (99%) 337 633 820 1,137
$ 340 $ 639 $ 828 $ 1,148
Per limited partnership unit:
Income before extraordinary
item $ 7.80 $12.05 $17.00 $ 21.64
Extraordinary item (1.39) -- (1.39) --
Net income $ 6.41 $ 12.05 $ 15.61 $ 21.64
Distributions per limited
partnership unit $ 16.18 $144.18 $ 30.59 $144.18
See Accompanying Notes to Consolidated Financial Statements
c)
SHELTER PROPERTIES V
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 52,538 $ 2 $52,538 $52,540
Partners' deficit at
December 31, 2000 52,538 $ (336) $(3,555) $(3,891)
Distributions to partners -- (57) (1,607) (1,664)
Net income for the six months
ended June 30, 2001 -- 8 820 828
Partners' deficit at June 30, 2001 52,538 $ (385) $(4,342) $(4,727)
See Accompanying Notes to Consolidated Financial Statements
d)
SHELTER PROPERTIES V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2001 2000
Cash flows from operating activities:
Net income $ 828 $ 1,148
Adjustments to reconcile net income
to net cash provided by operating activities:
Casualty gain (121) --
Depreciation 1,474 1,354
Amortization of discounts and loan costs 50 99
Extraordinary loss on early extinguishment of debt 74 --
Change in accounts:
Receivables and deposits (364) (734)
Other assets (110) (56)
Accounts payable (240) (862)
Tenant security deposit liabilities 12 28
Accrued property taxes 141 (20)
Due to General Partner 255 --
Other liabilities (142) (390)
Net cash provided by operating
activities 1,857 567
Cash flows from investing activities:
Property improvements and replacements (2,604) (1,488)
Net deposits to restricted escrows (110) (2)
Settlement for defective property improvements 153 --
Insurance proceeds received, net 121 2,644
Net cash (used in) provided by investing
activities (2,440) 1,154
Cash flows from financing activities:
Payments on mortgage notes payable (355) (339)
Loan costs paid (563) (83)
Proceeds from mortgage notes payable 11,342 --
Repayment of mortgage notes payable (7,050) --
Distributions to partners (1,664) (7,592)
Net cash provided by (used in) financing
activities 1,710 (8,014)
Net increase (decrease) in cash and cash equivalents 1,127 (6,293)
Cash and cash equivalents at beginning of period 2,544 8,852
Cash and cash equivalents at end of period $ 3,671 $ 2,559
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 1,543 $ 1,425
Supplemental disclosure of non-cash activity:
Property improvements and replacements in accounts
payable $ 343 $ --
At December 31, 2000 and 1999, approximately $221,000 and $145,000,
respectively, of property improvements and replacements were included in
accounts payable.
See Accompanying Notes to Consolidated Financial Statements
e)
SHELTER PROPERTIES V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Shelter
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. The general partner responsible for management of the
Partnership's business is Shelter Realty V Corporation (the "Corporate General
Partner"). In the opinion of the Corporate General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ended June 30, 2001 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2001. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Partnership's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000. Shelter Realty V Corporation is an affiliate of Apartment
Investment and Management Company ("AIMCO"), a publicly traded real estate
investment trust.
Certain reclassifications have been made to the 2000 balances to conform to the
2001 presentation.
Principles of Consolidation:
The financial statements include all the accounts of the Partnership and its two
99.99% owned partnerships. The Corporate General Partner of the consolidated
partnerships is Shelter Realty V Corporation. Shelter Realty V Corporation may
be removed as the general partner of the consolidated partnerships by the
Registrant; therefore, the consolidated partnerships are controlled and
consolidated by the Registrant. All significant interpartnership balances have
been eliminated.
Segment Reporting:
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual financial statements and required that those enterprises report
selected information about operating segments in interim financial reports. It
also established standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The Corporate General Partner
believes that segment-based disclosures will not result in a more meaningful
presentation than the consolidated financial statements as currently presented.
Note B - Reconciliation of Cash Flows
The following is a reconciliation of the subtotal on the accompanying
consolidated statements of cash flows captioned "net cash provided by operating
activities" to "net cash from operations", as defined in the Partnership
Agreement. However, "net cash from operations" should not be considered an
alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
Six Months Ended
June 30,
(in thousands)
2001 2000
Net cash provided by
operating activities $ 1,857 $ 567
Payments on mortgage notes
payable (355) (339)
Property improvements and
replacements (2,604) (1,488)
Change in restricted escrows, net (110) (2)
Changes in reserves for net
operating liabilities 448 2,034
Releases from (additions to)
operating reserves 764 (772)
Net cash from operations $ -- $ --
The Corporate General Partner released previously reserved funds of
approximately $764,000 at June 30, 2001 and reserved approximately $772,000 at
June 30, 2000 to fund capital improvements and repairs at the Partnership's
seven investment properties.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following amounts were
paid or accrued to the Corporate General Partner and affiliates during the six
months ended June 30, 2001 and 2000 (in thousands):
June 30,
2001 2000
Property management fees (included in
operating expenses) $ 363 $ 358
Reimbursement for services of affiliates
(included in operating and general and
administrative expenses and investment 436 155
properties)
Loan costs (included in other assets) 283 --
Due to Corporate General Partner 255 --
During the six months ended June 30, 2001 and 2000, affiliates of the Corporate
General Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $363,000 and $358,000 for the
six months ended June 30, 2001 and 2000, respectively.
Affiliates of the Corporate General Partner received reimbursement of
accountable administrative expenses amounting to approximately $436,000 and
$155,000 for the six months ended June 30, 2001 and 2000, respectively. Included
in these expenses for the six months ended June 30, 2001 and 2000 is
approximately $240,000 and $23,000 respectively, in reimbursements for
construction oversight costs.
For services provided in connection with the refinancing of four of the
Partnership's investment properties, the Corporate General Partner was paid
approximately $283,000 during the six months ended June 30, 2001. These costs
were capitalized and are included in other assets on the consolidated balance
sheet.
In accordance with the Partnership Agreement, the Corporate General Partner has
loaned the Partnership funds to cover reconstruction expense at Tar River
Estates Apartments. At June 30, 2001 the amount of the outstanding loans and
accrued interest was approximately $255,000 and is included in Due to Corporate
General Partner. Interest is charged at the prime rate plus 2%. Interest expense
was approximately $2,000 for the six months ended June 30, 2001. There were no
loans from the Corporate General Partner or associated interest expense during
the six months ended June 30, 2000. Subsequent to June 30, 2001 this loan
balance was repaid by the Partnership with a portion of the refinance proceeds
received on the two properties that refinanced on June 28, 2001, as discussed in
"Note E".
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates own 36,859 limited partnership units in
the Partnership representing 70.16% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO either through private purchases or tender
offers. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Corporate General Partner. As a
result of its ownership of 70.16% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Corporate General Partner because of its
affiliation with the Corporate General Partner.
Note D - Casualty Event
In September 1999, Tar River Estates Apartments was damaged by severe flooding
which affected certain areas of North Carolina. It is estimated that the
property has incurred approximately $6,323,000 in damages as a result of this
flooding. As of June 30, 2001, insurance proceeds of approximately $5,316,000
have been received to cover lost rents and damage to the property. A portion of
the property is currently undergoing reconstruction. The Partnership is
currently negotiating with the city of Greenville, North Carolina to potentially
condemn a portion of the land and sell it to the city. If this transaction takes
place, the portion of the property previously located on this land will not be
reconstructed. As part of the reconstruction process, the Partnership is
capitalizing the portion of the interest expense associated with the assets
under reconstruction. As of June 30, 2001 approximately $95,000 of interest
expense has been capitalized.
In July 1999, Woodland Village Apartments experienced a fire, which resulted in
the destruction of eight apartment units. The property incurred damages of
approximately $448,000 and estimated lost rents of approximately $36,000.
Insurance proceeds of approximately $332,000 were received during the year ended
December 31, 1999 to cover the damages and lost rents, resulting in a casualty
gain in 1999 of $210,000. The repairs were completed and an additional gain of
approximately $121,000 was recorded during the six months ended June 30, 2001.
Note E - Refinancing and Extraordinary Loss
On June 28, 2001, the Partnership refinanced the mortgage notes encumbering Lake
Johnson Mews Apartments and Millhopper Village Apartments. The refinancings
replaced indebtedness of approximately $4,350,000 at Lake Johnson Mews
Apartments and $2,700,000 at Millhopper Village Apartments, with new mortgages
in the amounts of $7,117,000 and $4,225,000, respectively. The new mortgages
both carry a stated interest rate of 7.43% as compared to 7.33% on the previous
loans. Payments of principal and interest on the new mortgage loans are due
monthly until the loans mature on July 1, 2021. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately $38,000
at Lake Johnson Mews Apartments and approximately $36,000 at Millhopper Village
Apartments due to the write-off of unamortized loan costs. Total capitalized
loan costs for the new mortgages were approximately $221,000 for Lake Johnson
Mews Apartments and approximately $167,000 for Millhopper Village Apartments at
June 30, 2001.
On December 15, 2000, the Partnership refinanced the mortgage notes at The
Lexington Green Apartments. Gross proceeds from refinancing were $7,020,000 of
which approximately $3,272,000 was used to pay off the existing first and second
mortgage notes. The new note requires monthly principal and interest payments at
a fixed interest rate of 7.22% and matures January 1, 2021. The old debt carried
fixed interest rates of 7.60% with maturities of November 15, 2002. Total
capitalized loan costs for the new mortgage was approximately $195,000 for the
year ended December 31, 2000. Additional loan costs of approximately $4,000 were
capitalized during the six months ended June 30, 2001.
During October and November 1999, the Partnership refinanced the mortgage notes
at Foxfire and Old Salem Apartments, respectively. Gross proceeds from the
refinancings were $7,200,000 and $10,157,000, respectively, of which
approximately $4,519,000 and $6,287,000, respectively, was used to pay off the
existing mortgage notes. The new notes require monthly principal and interest
payments at fixed interest rates of 7.79% for Foxfire Apartments and 8.02% for
Old Salem Apartments and mature November 1, and December 1, 2019, respectively.
The old debt carried fixed interest rates of 7.50% and 10.375% with maturities
of May 1999 and December 2016, respectively. Total capitalized loan costs at
December 31, 1999 were approximately $143,000. An additional $81,000 was
capitalized during the year ended December 31, 2000 and an additional $171,000
was capitalized during the six months ended June 30, 2001.
Note F - Distributions
During the six months ended June 30, 2001, cash distributions from operations of
approximately $1,664,000 were paid (approximately $1,607,000 to the limited
partners, or $30.59 per limited partnership unit). In connection with the
transfer of funds from the majority owned sub-tier limited partnership to the
Partnership, approximately $41,000 was distributed to the general partner of the
majority owned sub-tier limited partnership. During the six months ended June
30, 2000, cash distributions of approximately $6,177,000 were paid to the
limited partners ($117.57 per limited partnership unit) from refinancing
proceeds and approximately $1,415,000 (approximately $1,398,000 to the limited
partners, or $26.61 per limited partnership unit) was paid from operations.
Subsequent to June 30, 2001, the Partnership declared and paid a distribution of
proceeds from the refinancings of Lake Johnson Mews Apartments and Millhopper
Village Apartments of approximately $2,610,000 ($49.68 per limited partnership
unit) to the limited partners.
Note G - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of 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 seek monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Corporate General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. Plaintiffs have until
August 16, 2001 to file a fourth amended complaint. The Corporate General
Partner does not anticipate that any costs, whether legal or settlement costs,
associated with this case will be material to the Partnership's overall
operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussions of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of seven apartment complexes.
The following table sets forth the average occupancy of the properties for the
six months ended June 30, 2001 and 2000:
June 30,
Property 2001 2000
Foxfire Apartments
Atlanta, Georgia 94% 95%
Old Salem Apartments
Charlottesville, Virginia 97% 97%
Woodland Village Apartments
Columbia, South Carolina 94% 92%
Lake Johnson Mews Apartments
Raleigh, North Carolina 92% 93%
The Lexington Green Apartments
Sarasota, Florida 97% 97%
Millhopper Village Apartments
Gainesville, Florida 94% 94%
Tar River Estates Apartments
Greenville, North Carolina (1) 62% 35%
(1) During September 1999, Tar River Estates Apartments was damaged by severe
flooding which affected certain areas of North Carolina. The property has
incurred extensive damage as a result of the flooding causing portions of
the property to be unavailable for occupancy since September 1999. It is
expected that the costs incurred will be fully covered by insurance. The
occupancy for the units not damaged at the property was 82% at June 30,
2001. The Corporate General Partner is currently reconstructing a portion
of the property.
Results of Operations
The Registrant's net income for the three and six months ended June 30, 2001 was
approximately $340,000 and $828,000, respectively, as compared to approximately
$639,000 and $1,148,000 for the three and six months ended June 30, 2000. The
decrease in net income for the three months ended June 30, 2001 is due to a
decrease in total revenues, an increase in total expenses, and an extraordinary
loss on the early extinguishment of debt as a result of the refinancing of the
mortgages at Lake Johnson Mews Apartments and Millhopper Village Apartments (as
discussed in "Liquidity and Capital Resources"). The decrease in net income for
the six months ended June 30, 2001 is due to an increase in total expenses and
the extraordinary loss on early extinguishment of debt. The decrease in total
revenues for the three months ended June 30, 2001 is due to a decrease in rental
income which was partially offset by an increase in other income. Total revenues
remained relatively constant for the six months ended June 30, 2001, as a
decrease in rental income was offset by an increase in other income and the
recognition of a gain resulting from the casualty at Woodland Village Apartments
(as discussed below). The decrease in rental income for the three and six months
ended June 30, 2001 is due to the receipt of insurance proceeds in 2000 to cover
lost rents as a result of the casualty at Tar River Estates Apartments (as
discussed below) which more than offset an increase in occupancy at Woodland
Village Apartments and an increase in the average rental rates at all of the
Partnership's investment properties. Other income increased primarily due to an
increase in tenant reimbursements, which was partially offset by a decrease in
interest income as a result of lower average cash balances in interest bearing
accounts.
Total expenses increased for the three and six months ended June 30, 2001 due to
increases in general and administrative expenses, depreciation expense and
property tax expense, partially offset by a decrease in interest expense.
Depreciation expense increased as a result of recent capital improvements
completed at all of the Partnership's investment properties. The increase in
property tax expense is due to the timing of the receipt of tax bills, which
affected the tax accruals recorded for the respective periods. Interest expense
decreased due to the reconstruction project at Tar River due to certain interest
costs being capitalized (see discussion below). This reduction was partially
offset by increased interest expense at Lexington Green Apartments due to the
refinance in December 2000 with a larger loan balance. For the six months ended
June 30, 2001, operating expenses also increased due primarily to increased
payroll related expenses at Lake Johnson Mews Apartments, Old Salem Apartments,
and Woodland Village Apartments, increased utility bills at Old Salem Apartments
and increased hazard insurance expense at all the Partnership's properties.
These increases were partially offset by reduced maintenance expenses at all the
Partnership's properties.
General and administrative expenses increased primarily due to an increase in
the costs of services included in management reimbursements to the Corporate
General Partner as allowed under the Partnership Agreement. Also included in
general and administrative expense at both June 30, 2001 and 2000 are costs
associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audits and appraisals required by the
Partnership Agreement.
In September 1999, Tar River Estates Apartments was damaged by severe flooding
which affected certain areas of North Carolina. It is estimated that the
property has incurred approximately $6,323,000 in damages as a result of this
flooding. As of June 30, 2001, insurance proceeds of approximately $5,316,000
have been received to cover lost rents and damage to the property. A portion of
the property is currently undergoing reconstruction. The Partnership is
currently negotiating with the city of Greenville, North Carolina to potentially
condemn a portion of the land and sell it to the city. If this transaction takes
place, the portion of the property previously located on this land will not be
reconstructed. As part of the reconstruction process, the Partnership is
capitalizing the portion of the interest expense associated with the assets
under reconstruction. As of June 30, 2001 approximately $95,000 of interest
expense has been capitalized.
In July 1999, Woodland Village Apartments experienced a fire, which resulted in
the destruction of eight apartment units. The property incurred damages of
approximately $448,000 and estimated lost rents of approximately $36,000.
Insurance proceeds of approximately $332,000 were received during the year ended
December 31, 1999 to cover the damages and lost rents, resulting in a casualty
gain in 1999 of $210,000. The repairs were completed and an additional gain of
approximately $121,000 was recorded during the six months ended June 30, 2001.
As part of the ongoing business plan of the Registrant, the Corporate 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 Corporate 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 Corporate General Partner will be able to sustain such a
plan.
Liquidity and Capital Resources
At June 30, 2001, the Partnership had cash and cash equivalents of approximately
$3,671,000 compared to approximately $2,559,000 at June 30, 2000. The increase
in cash and cash equivalents of approximately $1,127,000 for the six months
ended June 30, 2001, from the Partnership's calendar year end, is due to
approximately $1,857,000 of cash provided by operating activities and
approximately $1,710,000 of cash provided by financing activities, which was
partially offset by approximately $2,440,000 of cash used in investing
activities. Cash provided by financing activities consisted of net proceeds
received as a result of the refinancing of the mortgages of Lake Johnson Mews
Apartments and Millhopper Village Apartments, which was partially offset by the
repayment of the existing mortgages at Lake Johnson Mews Apartments and
Millhopper Village Apartments, and to a lesser extent, distributions to
partners, loan costs related to the refinancing of the mortgages encumbering
four of the Partnerships investment properties, and payments of principal made
on the mortgages encumbering the Registrant's properties. Cash used in investing
activities consisted of property improvements and replacements and net deposits
to escrow accounts maintained by the mortgage lender, partially offset by a
settlement received for defective materials used in a construction project at
The Lexington Green Apartments and insurance proceeds received for the fire at
Woodland Village Apartments. The Registrant invests its working capital reserves
in interest bearing accounts.
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 investment properties to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state, local, legal and regulatory requirements. Capital improvements
planned for each of the Registrant's properties are detailed below.
Millhopper Village Apartments: For 2001, the Partnership has budgeted
approximately $59,000 for capital improvements, consisting primarily of air
conditioning unit and floor covering replacements. The Partnership completed
approximately $34,000 in capital expenditures at Millhopper Village Apartments
for the six months ended June 30, 2001, consisting primarily of floor covering
replacement. These improvements were funded from replacement reserves and
operations.
Foxfire Apartments: For 2001, the Partnership has budgeted approximately $79,000
for capital improvements, consisting primarily of floor covering replacement.
The Partnership completed approximately $76,000 in capital expenditures at
Foxfire Apartments for the six months ended June 30, 2001, consisting primarily
of structural improvements, and floor covering replacement. These improvements
were funded from operations.
Lake Johnson Mews Apartments: For 2001, the Partnership has budgeted
approximately $297,000 for capital improvements, consisting primarily of
structural improvements and floor covering and appliance replacements. The
Partnership completed approximately $41,000 in capital expenditures at Lake
Johnson Mews Apartments for the six months ended June 30, 2001, consisting
primarily of structural improvements, cabinet replacements, and floor covering
replacement. These improvements were funded from replacement reserves and
operations.
Woodland Village Apartments: For 2001, the Partnership has budgeted
approximately $224,000 for capital improvements, consisting primarily of
exterior painting, floor covering and appliance replacements and air
conditioning unit upgrades. The Partnership completed approximately $221,000 in
capital expenditures for the six months ended June 30, 2001, consisting
primarily of repairs related to the fire which occurred July 1999, interior
building improvements, and floor covering replacement. These improvements were
funded from operations, replacement reserves, and insurance proceeds.
The Lexington Green Apartments: For 2001, the Partnership has budgeted
approximately $332,000 for capital improvements, consisting primarily of
exterior painting, floor covering and appliance replacements, and air
conditioning unit upgrades. The Partnership completed approximately $80,000 in
capital expenditures at Lexington Green Apartments for the six months ended June
30, 2001, consisting primarily of plumbing upgrades, and floor covering, cabinet
and appliance replacements. These improvements were funded primarily from
operations.
Tar River Estates Apartments: For 2001, the Partnership has budgeted
approximately $280,000 for capital improvements consisting primarily of floor
covering replacement and other exterior and interior building improvements
associated with the repairs required due to severe flood damage which occurred
during September 1999 at Tar River Estates Apartments. The Partnership completed
approximately $2,181,000 in capital expenditures for the six months ended June
30, 2001, consisting primarily of floor covering replacement and other exterior
and interior building improvements associated with repairs required due to
severe flood damage which occurred during September 1999. These improvements
were funded from replacement reserves and insurance proceeds.
Old Salem Apartments: For 2001, the Partnership has budgeted approximately
$198,000 for capital improvements, consisting primarily of floor covering and
appliance replacements, structural improvements, and air conditioning unit
replacement. The Partnership completed approximately $93,000 in capital
expenditures at Old Salem Apartments for the six months ended June 30, 2001,
consisting primarily of heating and air conditioning unit replacements, floor
covering replacement, appliances and electrical upgrades. These improvements
were funded from operations.
The additional capital expenditures will be incurred only if cash is available
from operations and from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $44,361,000 net of discount, is amortized over
varying periods with required balloon payments ranging from November 15, 2002 to
July 1, 2021. The Corporate General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such properties through foreclosure.
On June 28, 2001, the Partnership refinanced the mortgage notes encumbering Lake
Johnson Mews Apartments and Millhopper Village Apartments. The refinancings
replaced indebtedness of approximately $4,350,000 at Lake Johnson Mews
Apartments and $2,700,000 at Millhopper Village Apartments, with new mortgages
in the amounts of $7,117,000 and $4,225,000, respectively. The new mortgages
both carry a stated interest rate of 7.43% as compared to 7.33% on the previous
loans. Payments of principal and interest on the new mortgage loans are due
monthly until the loans mature on July 1, 2021. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately $38,000
at Lake Johnson Mews Apartments and approximately $36,000 at Millhopper Village
Apartments due to the write-off of unamortized loan costs. Total capitalized
loan costs for the new mortgages were approximately $221,000 for Lake Johnson
Mews Apartments and approximately $167,000 for Millhopper Village Apartments at
June 30, 2001.
On December 15, 2000, the Partnership refinanced the mortgage notes at The
Lexington Green Apartments. Gross proceeds from refinancing were $7,020,000 of
which approximately $3,272,000 was used to pay off the existing first and second
mortgage notes. The new note requires monthly principal and interest payments at
a fixed interest rate of 7.22% and matures January 1, 2021. The old debt carried
fixed interest rates of 7.60% with maturities of November 15, 2002. Total
capitalized loan costs for the new mortgage was approximately $195,000 for the
year ended December 31, 2000. Additional loan costs of approximately $4,000 were
capitalized during the six months ended June 30, 2001.
During October and November 1999, the Partnership refinanced the mortgage notes
at Foxfire and Old Salem Apartments, respectively. Gross proceeds from the
refinancings were $7,200,000 and $10,157,000, respectively, of which
approximately $4,519,000 and $6,287,000, respectively, was used to pay off the
existing mortgage notes. The new notes require monthly principal and interest
payments at fixed interest rates of 7.79% for Foxfire Apartments and 8.02% for
Old Salem Apartments and mature November 1, and December 1, 2019, respectively.
The old debt carried fixed interest rates of 7.50% and 10.375% with maturities
of May 1999 and December 2016, respectively. Total capitalized loan costs at
December 31, 1999 were approximately $143,000. An additional $81,000 was
capitalized during the year ended December 31, 2000 and an additional $171,000
was capitalized during the six months ended June 30, 2001.
During the six months ended June 30, 2001, cash distributions from operations of
approximately $1,664,000 were paid (approximately $1,607,000 to the limited
partners, or $30.59 per limited partnership unit). In connection with the
transfer of funds from the majority owned sub-tier limited partnership to the
Partnership, approximately $41,000 was distributed to the general partner of the
majority owned sub-tier limited partnership. During the six months ended June
30, 2000, cash distributions of approximately $6,177,000 were paid to the
limited partners ($117.57 per limited partnership unit) from refinancing
proceeds and approximately $1,415,000 (approximately $1,398,000 to the limited
partners, or $26.61 per limited partnership unit) was paid from operations.
Subsequent to June 30, 2001, the Partnership declared and paid a distribution of
proceeds from the refinancings of Lake Johnson Mews Apartments and Millhopper
Village Apartments of approximately $2,610,000 ($49.68 per limited partnership
unit) to the limited partners. Future cash distributions will depend on the
levels of net cash generated from operations, the availability of cash reserves,
and the timing of debt maturities, refinancings and/or property sales. The
Partnership's distribution policy is reviewed on a quarterly basis. There can be
no assurance, however, that the Partnership will generate sufficient funds from
operations, after required capital improvement expenditures, to permit any
additional distributions to its partners during the remainder of 2001 or
subsequent periods. In addition, the Partnership may be restricted from making
distributions by the requirement to deposit in the reserve account maintained by
the mortgage lender for Tar River Estates a minimum of $400 and a maximum of
$1,000 per apartment unit for a total of $160,800 to $402,000. As of June 30,
2001, the reserve account totaled approximately $162,000.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates own 36,859 limited partnership units in
the Partnership representing 70.16% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO either through private purchases or tender
offers. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Corporate General Partner. As a
result of its ownership of 70.16% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Corporate General Partner because of its
affiliation with the Corporate General Partner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of 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 seek monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Corporate General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. Plaintiffs have until
August 16, 2001 to file a fourth amended complaint. The Corporate General
Partner does not anticipate that any costs, whether legal or settlement costs,
associated with this case will be material to the Partnership's overall
operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 10(iii)o, Multifamily Note dated June 28, 2001, by and
between Shelter Properties V Limited Partnership, a South
Carolina limited partnership, and GMAC Commercial Mortgage
Corporation, relating to Lake Johnson Mews Apartments.
Exhibit 10(iii)p, Multifamily Note dated June 28, 2001, by and
between Shelter Properties V Limited Partnership, a South
Carolina limited partnership, and GMAC Commercial Mortgage
Corporation, relating to Millhopper Village Apartments.
b) Reports on Form 8-K:
None filed during the quarter ended June 30, 2001.
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.
SHELTER PROPERTIES V
By: Shelter Realty V Corporation
Corporate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: August 13, 2001
Exhibit 10(iii)o
FHLMC Loan No. 002692589
Lake Johnson Mews Apartments
MULTIFAMILY NOTE
(NORTH CAROLINA - REVISION DATE 11-01-2000)
US $7,117,000.00 As of June 27, 2001
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Seven Million One
Hundred Seventeen Thousand and 00/100 Dollars (US $7,117,000.00), with interest
on the unpaid principal balance at the annual rate of Seven and Four Hundred
Thirty Thousandths percent (7.430%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, and any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 200
Witmer Road, Post Office Box 809, Horsham, Pennsylvania 19044, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Fifty-Seven Thousand Twenty-Nine and 83/100 Dollars (US $57,029.83),
shall be payable on the first day of each month beginning on August 1, 2001,
until the entire unpaid principal balance evidenced by this Note is fully paid.
(c) Any accrued interest remaining past due for 30 days or more may, at Lender's
discretion, be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on July 1, 2021 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(d) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower (except if notice is
required by applicable law, then after such notice). Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
fifteen (15) days after the amount is due (unless applicable law requires a
longer period of time before a late charge may be imposed, in which event such
longer period shall be substituted), Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to four percent (4%) of such
amount (unless applicable law requires a lesser amount be charged, in which
event such lesser amount shall be substituted). Borrower acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the loan evidenced by this Note (the "Loan"), and
that it is extremely difficult and impractical to determine those additional
expenses. Borrower agrees that the late charge payable pursuant to this
Paragraph represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional expenses
Lender will incur by reason of such late payment. The late charge is payable in
addition to, and not in lieu of, any interest payable at the Default Rate
pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for thirty (30) days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "Default Rate") equal to the lesser of four (4) percentage points
above the rate stated in the first paragraph of this Note and the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment under this Note is delinquent for more than thirty (30)
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment under this Note is delinquent for more than thirty (30) days
or any other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk. Borrower agrees that the increase in the
rate of interest payable under this Note to the Default Rate represents a fair
and reasonable estimate, taking into account all circumstances existing on the
date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including reasonable attorneys' fees and
expenses, fees and out-of-pocket expenses of expert witnesses and the costs of
conducting any independent audit of Borrower's books and records to determine
the amount for which Borrower has personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding. To the fullest extent permitted by
applicable law, in any action to enforce Borrower's personal liability under
this Paragraph 9, Borrower waives any right to set off the value of the
Mortgaged Property against such personal liability.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment (any
receipt by Lender of principal, other than principal required to be paid in
monthly installments pursuant to Paragraph 3(b), prior to the scheduled Maturity
Date set forth in Paragraph 3(c)) under this Note as provided below: (1)
Borrower may voluntarily prepay all of the unpaid principal balance of this Note
on a Business Day designated as the date for such prepayment in a written notice
from Borrower to Lender given at least 30 days prior to the date of such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Paragraph 10(c). For all purposes including the accrual of interest, any
prepayment received by Lender on any day other than the last calendar day of the
month shall be deemed to have been received on the last calendar day of such
month. For purposes of this Note, a "Business Day" means any day other than a
Saturday, Sunday or any other day on which Lender is not open for business.
Unless expressly provided for in the Loan Documents, Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
However, if a partial prepayment is provided for in the Loan Documents or is
accepted by Lender in Lender's discretion, a prepayment premium calculated
pursuant to Paragraph 10(c) shall be due and payable by Borrower.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Paragraph 10(c).
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made during the period from
one hundred eighty (180) days before the scheduled Maturity Date to the
scheduled Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Any prepayment premium payable under this Note shall be computed as follows:
(1) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be
whichever is the greater of subparagraphs (i) and (ii) below:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid, by (B) the
excess (if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate
of this Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the
date on which the prepayment is made; in the case of the application
by Lender of collateral or security to a portion of the principal
balance, the date of such application; and in any other case, the
date on which Lender accelerates the unpaid principal balance of
this Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield
rate as of the date 5 Business Days before the Prepayment Date, on
the 9.250% U.S. Treasury Security due February 1, 2016, as reported
in The Wall Street Journal, expressed as a decimal calculated to
five digits. In the event that no yield is published on the
applicable date for the Treasury Security used to determine the
Assumed Reinvestment Rate, Lender, in its discretion, shall select
the non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present
value the costs resulting to Lender from the difference in interest
rates during the months remaining in the Yield Maintenance Period,
using the Assumed Reinvestment Rate as the discount rate, with
monthly compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(2) If the prepayment is made after the expiration of the Yield Maintenance
Period but before the period set forth in Paragraph 10(b)(A) above, the
prepayment premium shall be 1.0% of the unpaid principal balance of this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth in this Note represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. To the fullest extent allowed by applicable law,
Borrower shall pay all expenses and costs, including reasonable attorneys' fees
and expenses (including those of Lender's in-house attorneys), fees and
out-of-pocket expenses of expert witnesses and costs of investigation, incurred
by Lender as a result of any default under this Note or in connection with
efforts to collect any amount due under this Note, or to enforce the provisions
of any of the other Loan Documents, including those incurred in post-judgment
collection efforts and in any bankruptcy proceeding (including any action for
relief from the automatic stay of any bankruptcy proceeding) or judicial or
non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. Neither this Note nor any of the other Loan Documents shall be
construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate greater than the maximum interest rate
permitted to be charged under applicable law. If any applicable law limiting the
amount of interest or other charges permitted to be collected from Borrower in
connection with the Loan is interpreted so that any interest or other charge
provided for in any Loan Document, whether considered separately or together
with other charges provided for in any other Loan Document, violates that law,
and Borrower is entitled to the benefit of that law, that interest or charge is
hereby reduced to the extent necessary to eliminate that violation. The amounts,
if any, previously paid to Lender in excess of the permitted amounts shall be
applied by Lender to reduce the unpaid principal balance of this Note. For the
purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family, household, or agricultural
purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices; Written Modifications. All notices, demands and other
communications required or permitted to be given by Lender to Borrower pursuant
to this Note shall be given in accordance with Section 31 of the Security
Instrument. Any modification or amendment to this Note shall be ineffective
unless in writing signed by the party sought to be charged with such
modification or amendment; provided, however, that in the event of a Transfer
under the terms of the Security Instrument, any or some or all of the
Modifications to Multifamily Note may be modified or rendered void by Lender at
Lender's option by notice to Borrower/transferee.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBIT. The following Exhibit is attached to this Note:
-----
X Exhibit A Modifications to Multifamily Note
-----
IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
SHELTER PROPERTIES V LIMITED PARTNERSHIP, a
South Carolina limited partnership
By:Shelter Realty V Corporation, a South
Carolina corporation, its general partner
By: ________________________________
Patti K. Fielding
Senior Vice President
-----------------
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF ___________________
________________, WITHOUT RECOURSE, THIS ____ DAY
OF _________, 2001.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By: _______________________________
Donald W. Marshall
Vice President
EXHIBIT A
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of Paragraph 8 of the Note ("Default Rate") is hereby
deleted and replaced with the following:
So long as (a) any monthly installment under this Note remains
past due for more than thirty (30) days or (b) any other event of
Default has occurred and is continuing, interest under this Note
shall accrue on the unpaid principal balance from the earlier of the
due date of the first unpaid monthly installment or the occurrence
of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of (1) the maximum interest rate
which may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents, assessments or other charges in accordance with the terms
of the Security Instrument.
3. Paragraph 19 is modified by deleting: "; provided, however, that in the
event of a Transfer under the terms of the Security Instrument, any or
some or all of the Modifications to Multifamily Note may be modified or
rendered void by Lender at Lender's option by notice to
Borrower/transferee" in the last sentence of the Paragraph; and by adding
the following new sentence:
The Modifications to Multifamily Note set forth in this Exhibit A
shall be null and void unless title to the Mortgaged Property is
vested in an entity whose Controlling Interest(s) are directly or
indirectly held by AIMCO REIT or AIMCO OP. The capitalized terms
used in this paragraph are defined in the Security Instrument.
Last revised 11/00
Exhibit 10(iii)p
EXHIBIT C
FHLMC Loan No. 002544555
Millhopper Village Apartments
MULTIFAMILY NOTE
(MULTISTATE - REVISION DATE 11-01-2000)
US $4,225,000.00 As of June 27, 2001
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Four Million Two
Hundred Twenty-Five Thousand and 00/100 Dollars (US $4,225,000.00), with
interest on the unpaid principal balance at the annual rate of Seven and Four
Hundred Thirty Thousandths percent (7.430%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, and any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 200
Witmer Road, Post Office Box 809, Horsham, Pennsylvania 19044, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Thirty-Three Thousand Eight Hundred Fifty-Five and 70/100 Dollars (US
$33,855.70), shall be payable on the first day of each month beginning on August
1, 2001, until the entire unpaid principal balance evidenced by this Note is
fully paid.
(c) Any accrued interest remaining past due for 30 days or more may, at Lender's
discretion, be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on July 1, 2021 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(d) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower (except if notice is
required by applicable law, then after such notice). Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due (unless applicable law requires a longer
period of time before a late charge may be imposed, in which event such longer
period shall be substituted), Borrower shall pay to Lender, immediately and
without demand by Lender, a late charge equal to five percent (5%) of such
amount (unless applicable law requires a lesser amount be charged, in which
event such lesser amount shall be substituted). Borrower acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the loan evidenced by this Note (the "Loan"), and
that it is extremely difficult and impractical to determine those additional
expenses. Borrower agrees that the late charge payable pursuant to this
Paragraph represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional expenses
Lender will incur by reason of such late payment. The late charge is payable in
addition to, and not in lieu of, any interest payable at the Default Rate
pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for thirty (30) days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "Default Rate") equal to the lesser of four (4) percentage points
above the rate stated in the first paragraph of this Note and the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment under this Note is delinquent for more than thirty (30)
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment under this Note is delinquent for more than thirty (30) days
or any other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk. Borrower agrees that the increase in the
rate of interest payable under this Note to the Default Rate represents a fair
and reasonable estimate, taking into account all circumstances existing on the
date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding. To the fullest extent permitted by
applicable law, in any action to enforce Borrower's personal liability under
this Paragraph 9, Borrower waives any right to set off the value of the
Mortgaged Property against such personal liability.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment (any
receipt by Lender of principal, other than principal required to be paid in
monthly installments pursuant to Paragraph 3(b), prior to the scheduled Maturity
Date set forth in Paragraph 3(c)) under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on a Business Day designated as the date for such prepayment in a written
notice from Borrower to Lender given at least 30 days prior to the date of such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Paragraph 10(c). For all purposes including the accrual of interest, any
prepayment received by Lender on any day other than the last calendar day of the
month shall be deemed to have been received on the last calendar day of such
month. For purposes of this Note, a "Business Day" means any day other than a
Saturday, Sunday or any other day on which Lender is not open for business.
Unless expressly provided for in the Loan Documents, Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
However, if a partial prepayment is provided for in the Loan Documents or is
accepted by Lender in Lender's discretion, a prepayment premium calculated
pursuant to Paragraph 10(c) shall be due and payable by Borrower.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Paragraph 10(c).
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made during the period from
one hundred eighty (180) days before the scheduled Maturity Date to the
scheduled Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Any prepayment premium payable under this Note shall be computed as follows:
(1) If the prepayment is made between the date of this Note and the
date that is 180 months after the first day of the first calendar month
following the date of this Note (the "Yield Maintenance Period"), the prepayment
premium shall be whichever is the greater of subparagraphs (i) and (ii) below:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid, by (B) the excess
(if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate
of this Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in the case of the application by
Lender of collateral or security to a portion of the principal
balance, the date of such application; and in any other case, the
date on which Lender accelerates the unpaid principal balance of
this Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
9.250% U.S. Treasury Security due February 1, 2016, as reported in
The Wall Street Journal, expressed as a decimal calculated to five
digits. In the event that no yield is published on the applicable
date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(2) If the prepayment is made after the expiration of the Yield
Maintenance Period but before the period set forth in Paragraph 10(b)(A) above,
the prepayment premium shall be 1.0% of the unpaid principal balance of this
Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth in this Note represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. To the fullest extent allowed by applicable law,
Borrower shall pay all expenses and costs, including fees and out-of-pocket
expenses of attorneys (including Lender's in-house attorneys) and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. Neither this Note nor any of the other Loan Documents shall be
construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate greater than the maximum interest rate
permitted to be charged under applicable law. If any applicable law limiting the
amount of interest or other charges permitted to be collected from Borrower in
connection with the Loan is interpreted so that any interest or other charge
provided for in any Loan Document, whether considered separately or together
with other charges provided for in any other Loan Document, violates that law,
and Borrower is entitled to the benefit of that law, that interest or charge is
hereby reduced to the extent necessary to eliminate that violation. The amounts,
if any, previously paid to Lender in excess of the permitted amounts shall be
applied by Lender to reduce the unpaid principal balance of this Note. For the
purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family, household or
agricultural purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not
Business Days.
17. Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
19. Notices; Written Modifications. All notices, demands and other
communications required or permitted to be given by Lender to Borrower pursuant
to this Note shall be given in accordance with Section 31 of the Security
Instrument. Any modification or amendment to this Note shall be ineffective
unless in writing signed by the party sought to be charged with such
modification or amendment; provided, however, that in the event of a Transfer
under the terms of the Security Instrument, any or some or all of the
Modifications to Multifamily Note may be modified or rendered void by Lender at
Lender's option by notice to Borrower/transferee.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBIT. The following Exhibit is attached to this Note:
-----
X Exhibit A Modifications to Multifamily Note
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IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
SHELTER PROPERTIES V LIMITED PARTNERSHIP,
a South Carolina limited partnership
By: Shelter Realty V Corporation, a
South Carolina corporation, doing
business in Florida as Shelter Realty
V Corporation of South Carolina, its
general partner
By: ______________________
Patti K. Fielding
Senior Vice President
--------------
Borrower's Social Security/Employer ID
Number
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS THE ____ DAY OF ____, 2001.
GMAC COMMERCIAL MORTGAGE
CORPORATION, a California
corporation
By:_________________________________
Donald W. Marshall
Vice President
EXHIBIT A
MODIFICATIONS TO MULTIFAMILY NOTE
Modifications to Multifamily Note
1. The first sentence of Paragraph 8 of the Note ("Default Rate") is hereby
deleted and replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph
(4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents, assessments or other charges in accordance with the terms
of the Security Instrument.
3. Paragraph 19 is modified by deleting: "; provided, however, that in the
event of a Transfer under the terms of the Security Instrument, any or
some or all of the Modifications to Multifamily Note may be modified or
rendered void by Lender at Lender's option by notice to
Borrower/transferee" in the last sentence of the Paragraph; and by adding
the following new sentence:
The Modifications to Multifamily Note set forth in this Exhibit A
shall be null and void unless title to the Mortgaged Property is
vested in an entity whose Controlling Interest(s) are directly or
indirectly held by AIMCO REIT or AIMCO OP. The capitalized terms
used in this paragraph are defined in the Security Instrument.