UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________to _________
Commission file number 0-11574
SHELTER PROPERTIES V LIMITED PARTNERSHIP
(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, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
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 ___
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes __ No X_
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SHELTER PROPERTIES V LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2005
Assets
Cash and cash equivalents $ 972
Receivables and deposits 590
Restricted escrows 281
Other assets 1,042
Investment properties:
Land $ 1,883
Buildings and related personal property 61,579
63,462
Less accumulated depreciation (40,740) 22,722
Assets held for sale (Note A) 1,873
$ 27,480
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 253
Tenant security deposit liabilities 154
Accrued property taxes 268
Other liabilities 555
Mortgage notes payable 26,934
Liabilities related to assets held for sale (Note A) 3,858
Partners' Deficit
General partners $ (232)
Limited partners (52,538 units
issued and outstanding) (4,310) (4,542)
$ 27,480
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES V LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(Restated) (Restated)
Revenues:
Rental income $ 1,951 $ 1,942 $ 5,883 $ 5,711
Other income 249 183 727 627
Casualty gains (Note F) -- 20 -- 58
Total revenues 2,200 2,145 6,610 6,396
Expenses:
Operating 1,046 1,073 3,121 2,887
General and administrative 117 111 338 303
Depreciation 613 547 1,725 1,700
Interest 502 531 1,661 1,615
Property taxes 145 140 429 407
Total expenses 2,423 2,402 7,274 6,912
Loss from continuing operations (223) (257) (664) (516)
Loss from discontinued
operations (Note A) (1,763) (48) (3,568) (146)
Gain from sale of discontinued
operations (Notes A and C) 5,310 -- 19,186 --
Net income (loss) $ 3,324 $ (305) $14,954 $ (662)
Net income (loss) allocated to
general partners (1%) $ 33 $ (3) $ 150 $ (7)
Net income (loss) allocated to
limited partners (99%) 3,291 (302) 14,804 (655)
$ 3,324 $ (305) $14,954 $ (662)
Per limited partnership unit:
Loss from continuing operations $ (4.21) $ (4.84) $(12.52) $ (9.71)
Loss from discontinued operations (33.21) (0.91) (67.23) (2.76)
Gain from sale of discontinued
operations 100.06 -- 361.53 --
Net income (loss) $ 62.64 $ (5.75) $281.78 $(12.47)
Distributions per limited
partnership unit $126.08 $ -- $126.08 $ --
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES V LIMITED PARTNERSHIP
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, 2004 52,538 $ (381) $(12,490) $(12,871)
Distributions to partners -- (1) (6,624) (6,625)
Net income for the nine months
ended September 30, 2005 -- 150 14,804 14,954
Partners' deficit at
September 30, 2005 52,538 $ (232) $ (4,310) $ (4,542)
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES V LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2005 2004
Cash flows from operating activities:
Net income (loss) $ 14,954 $ (662)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Gain from sale of discontinued operations (19,186) --
Casualty gains (16) (58)
Depreciation 2,267 2,525
Amortization of loan costs 53 59
Loss on early extinguishment of debt 3,610 --
Bad debt expense 121 217
Change in accounts:
Receivables and deposits (264) (246)
Other assets -- (292)
Accounts payable (145) 1
Tenant security deposit liabilities (100) (27)
Accrued property taxes 246 298
Due to affiliates (90) --
Other liabilities (521) (7)
Net cash provided by operating activities 929 1,808
Cash flows from investing activities:
Property improvements and replacements (3,152) (1,084)
Net proceeds from sale of discontinued operations 24,943 --
Net deposits to restricted escrows (4) (1)
Insurance proceeds received -- 71
Net cash provided by (used in) investing
activities 21,787 (1,014)
Cash flows from financing activities:
Payments on mortgage notes payable (1,018) (981)
Repayment of mortgage notes payable (12,336) --
Advances from affiliate 323 150
Payments on advances from affiliate (3,226) (150)
Distributions to partners (6,625) --
Net cash used in financing activities (22,882) (981)
Net decrease in cash and cash equivalents (166) (187)
Cash and cash equivalents at beginning of period 1,138 458
Cash and cash equivalents at end of period $ 972 $ 271
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,515 $ 2,424
Supplemental disclosure of non-cash activity:
Property improvements and replacements included in
accounts payable $ 237 $ 1,125
At December 31, 2004, approximately $726,000 of property improvements and
replacements were included in accounts payable and are included in property
improvements and replacements for the nine months ended September 30, 2005.
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES V LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Shelter
Properties V Limited Partnership (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 nine month
periods ended September 30, 2005 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2005. 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, 2004. The Corporate General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust. The other general partner of the
partnership, AIMCO Properties, L.P., is also an affiliate of AIMCO.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying consolidated statements of operations for the three and nine months
ended September 30, 2004 have been restated as of January 1, 2004 to reflect the
operations of The Lexington Green Apartments, Foxfire Apartments, and Millhopper
Village Apartments as loss from discontinued operations. The Partnership sold
The Lexington Green Apartments to a third party in June 2005 and the Partnership
sold Foxfire Apartments to a third party in August 2005 (see Note C). The
Partnership has entered into a contract to sell Millhopper Village Apartments to
a third party in November 2005. In accordance with SFAS No. 144, the assets and
liabilities of Millhopper Apartments have been classified as held for sale at
September 30, 2005 on the consolidated balance sheet.
Note B - Reconciliation of Cash Flows
As required by the Partnership Agreement, the following is a reconciliation of
"Net cash provided by operating activities" in the accompanying consolidated
statements of cash flows 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 (loss) as an indicator of the
Partnership's operating performance or to cash flows as a measure of liquidity.
Nine Months Ended
September 30,
(in thousands)
2005 2004
Net cash provided by operating activities $ 929 $ 1,808
Payments on mortgage notes payable (1,018) (981)
Property improvements and replacements (3,152) (1,084)
Change in restricted escrows, net (4) (1)
Changes in reserves for net operating
liabilities 874 273
Additional reserves -- (15)
Net cash used in operations $ (2,371) $ --
The Corporate General Partner reserved approximately $15,000 during the nine
months ended September 30, 2004 to fund capital improvements at the
Partnership's investment properties.
Note C - Disposition of Investment Properties
On June 29, 2005, the Partnership sold The Lexington Green Apartments to a third
party for a gross sale price of approximately $19,200,000. The net proceeds
realized by the Partnership were approximately $17,061,000 after payment of
closing costs and a prepayment penalty owed by the Partnership and paid by the
buyer. The Partnership used approximately $6,204,000 of the net proceeds to
repay the mortgage encumbering the property. The Partnership realized a gain of
approximately $13,876,000 as a result of the sale during the nine months ended
September 30, 2005, which is included in gain from sale of discontinued
operations. In addition, the Partnership recorded a loss on the early
extinguishment of debt of approximately $1,863,000 as a result of the write off
of unamortized loan costs and a prepayment penalty, which is included in loss
from discontinued operations. The property's operations, loss of approximately
$1,702,000 for the nine months ended September 30, 2005 and income of
approximately $3,000 and $26,000 for the three and nine months ended September
30, 2004, respectively, are included in loss from discontinued operations. Also
included in loss from discontinued operations are revenues of approximately
$1,296,000 for the nine months ended September 30, 2005 and approximately
$536,000 and $1,674,000 for the three and nine months ended September 30, 2004,
respectively.
On August 1, 2005, the Partnership sold Foxfire Apartments to a third party for
a gross sale price of approximately $9,725,000. The net proceeds realized by the
Partnership were approximately $7,882,000 after payment of closing costs and a
prepayment penalty owed by the Partnership and paid by the buyer. The
Partnership used approximately $6,132,000 of the net proceeds to repay the
mortgage encumbering the property. As a result of the sale, the Partnership
recorded a gain of approximately $5,310,000 for the three and nine months ended
September 30, 2005, which is included in gain from sale of discontinued
operations. In addition, the Partnership recorded a loss on the early
extinguishment of debt of approximately $1,747,000 as a result of the write off
of unamortized loan costs and a prepayment penalty, which is included in loss
from discontinued operations. The property's operations, loss of approximately
$1,852,000 and $2,011,000 for the three and nine months ended September 30,
2005, respectively, and loss of approximately $57,000 and $203,000 for the three
and nine months ended September 30, 2004, respectively, are included in loss
from discontinued operations. Also included in loss from discontinued operations
are revenues of approximately $112,000 and $1,038,000 for the three and nine
months ended September 30, 2005, respectively, and approximately $472,000 and
$1,384,000 for the three and nine months ended September 30, 2004, respectively.
The Partnership has entered into a contract to sell Millhopper Village
Apartments to a third party in November 2005 for a purchase price of
approximately $10,400,000. The property's operations, income of approximately
$89,000 and $145,000 for the three and nine months ended September 30, 2005,
respectively, and income of approximately $6,000 and $31,000 for the three and
nine months ended September 30, 2004, respectively, are included in loss from
discontinued operations. Also included in loss from discontinued operations are
revenues of approximately $302,000 and $894,000 for the three and nine months
ended September 30, 2005, respectively, and approximately $285,000 and $832,000
for the three and nine months ended September 30, 2004, respectively.
Note D - Transactions with Affiliated Parties
The Partnership has no employees and depends on the Corporate General Partner
and its affiliates for the management and administration of all Partnership
activities. The Partnership Agreement provides for certain payments to
affiliates for services and reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
Affiliates of the Corporate General Partner receive 5% of gross receipts from
all of the Partnership's investment properties as compensation for providing
property management services. The Partnership paid to such affiliates
approximately $492,000 and $514,000 for the nine months ended September 30, 2005
and 2004, respectively, which are included in operating expenses and loss from
discontinued operations.
In accordance with the Partnership Agreement, during the fourth quarter of 2004,
the Corporate General Partner advanced approximately $1,949,000 to the
Partnership to fund the redevelopment project at Lake Johnson Mews Apartments
and approximately $954,000 to fund operating expenses and real estate taxes at
four of the Partnership's investment properties. During the nine months ended
September 30, 2005, the Corporate General Partner advanced approximately
$199,000 to the Partnership to fund the redevelopment project at Lake Johnson
Mews Apartments and approximately $124,000 to fund real estate taxes and capital
expenditures at Lake Johnson Mews Apartments and Foxfire Apartments. The
Corporate General Partner advanced approximately $150,000 to the Partnership to
fund real estate taxes at Woodland Village Apartments during the nine months
ended September 30, 2004. Interest was accrued at 10.0% on the redevelopment
advances and the prime rate plus 2% (8.75% at September 30, 2005) for all other
advances. Interest expense was approximately $139,000 and $1,000 for the nine
months ended September 30, 2005 and 2004, respectively. During the nine months
ended September 30, 2005 and 2004, the Partnership made payments on advances of
approximately $3,226,000 and $150,000, respectively, and related interest of
$160,000 and $1,000, respectively, with proceeds from the sale of The Lexington
Green Apartments and cash from operations, respectively. There were no
outstanding advances or associated accrued interest due to an affiliate of the
Corporate General Partner at September 30, 2005.
Affiliates of the Corporate General Partner charged the Partnership for
reimbursement of accountable administrative expenses amounting to approximately
$396,000 and $264,000 for the nine months ended September 30, 2005 and 2004,
respectively, which are included in general and administrative expenses,
investment properties, assets held for sale, and gain from sale of discontinued
operations. The portion of these reimbursements included in investment
properties, assets held for sale, and gain from sale of discontinued operations
for the nine months ended September 30, 2005 and 2004 are fees related to
construction management services provided by an affiliate of the Corporate
General Partner of approximately $149,000 and $43,000, respectively. The
construction management service fees are calculated based on a percentage of
additions to investment properties.
Pursuant to the Partnership Agreement, the Corporate General Partner is entitled
to a commission of up to 1% for its assistance in the sale of a property.
Payment of such commission is subordinate to the limited partners receiving a
cumulative 7% return on their investment and their original capital
contribution. It is not presently expected that the limited partners will
receive these returns when the Partnership terminates. Accordingly, no
commission was accrued related to the June 2005 sale of The Lexington Green
Apartments or the August 2005 sale of Foxfire Apartments.
The Partnership insures its properties up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers' compensation, property casualty, general
liability and vehicle liability. The Partnership insures its properties above
the AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the Corporate General Partner. During the nine months ended
September 30, 2005 and 2004, the Partnership was charged by AIMCO and its
affiliates approximately $205,000 and $193,000, respectively, for insurance
coverage and fees associated with policy claims administration.
Note E - Distributions
The Partnership distributed the following amounts during the nine months ended
September 30, 2005 and 2004 (in thousands, except per unit data):
Per Limited Per Limited
Nine Months Ended Partnership Nine Months Ended Partnership
September 30, 2005 Unit September 30, 2004 Unit
Sale (1) $ 5,578 $106.15 $ -- $ --
Sale (2) 1,047 19.93 -- --
$ 6,625 $126.08 $ -- $ --
(1) Proceeds from the sale of The Lexington Green Apartments in June 2005. (2)
Proceeds from the sale of Foxfire Apartments in August 2005.
Note F - Casualty Events
The Partnership incurred clean up costs of approximately $9,000 at The Lexington
Green Apartments for Hurricanes Frances and Jeanne which were not covered by
insurance for the year ended December 31, 2004. The Partnership incurred
additional clean up costs of approximately $15,000 and $26,000, which were not
covered by insurance, for the nine months ended September 30, 2005 which are
reflected in loss from discontinued operations. The Partnership also recognized
a casualty gain of approximately $16,000 due to a change in the estimated
building damages at The Lexington Green Apartments, which is reflected in loss
from discontinued operations for the nine months ended September 30, 2005.
On May 19, 2004, Old Salem Apartments suffered fire damage to one unit. The
property incurred damages of approximately $41,000. During the three and nine
months ended September 30, 2004, the Partnership recognized a casualty gain of
approximately $20,000 as a result of the receipt of insurance proceeds of
approximately $26,000 offset by the write-off of the undepreciated damaged
assets of approximately $6,000.
On September 18, 2003, Old Salem Apartments suffered hurricane damage, causing
minor damage to 29 units. The property incurred damages of approximately
$46,000. During the nine months ended September 30, 2004, the Partnership
recognized a casualty gain of approximately $38,000 as a result of the receipt
of insurance proceeds of approximately $45,000, offset by the write-off of the
undepreciated damaged assets of approximately $7,000.
Note G - Redevelopment of Property
During the year ended December 31, 2004, the Corporate General Partner began a
major redevelopment project at Lake Johnson Mews Apartments. The property has
had difficulty staying competitive and needed to be updated. Therefore, in an
effort to increase occupancy and remain competitive in the local market, a
significant redevelopment project has been started and is expected to be
completed in January 2006 at a total cost of approximately $4,059,000. The
project is being funded from advances from an affiliate of the Corporate General
Partner and cash from operations. During the construction period, certain
expenses are being capitalized and depreciated over the remaining life of the
property. During the nine months ended September 30, 2005, approximately $43,000
of interest, approximately $3,000 of real estate taxes, and approximately $2,000
of other construction period costs were capitalized.
Note H - Contingencies
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Corporate General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Corporate General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint captioned Heller v.
Insignia Financial Group (the "Heller action") was filed against the same
defendants that are named in the Nuanes action. On or about August 6, 2001,
plaintiffs filed a first amended complaint. The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary duty, unfair competition, conversion, unjust enrichment, and
judicial dissolution. On January 28, 2002, the trial court granted defendants
motion to strike the complaint. Plaintiffs took an appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. On June 13, 2003, the
court granted final approval of the settlement and entered judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeals reversed the trial court's order striking
the first amended complaint.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
The Corporate General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
AIMCO Properties L.P. and NHP Management Company, both affiliates of the
Corporate General Partner, are defendants in a lawsuit alleging that they
willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay
maintenance workers overtime for all hours worked in excess of forty per week.
The complaint, filed in the United States District Court for the District of
Columbia, attempts to bring a collective action under the FLSA and seeks to
certify state subclasses in California, Maryland, and the District of Columbia.
Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP
Management Company failed to compensate maintenance workers for time that they
were required to be "on-call". Additionally, the complaint alleges AIMCO
Properties L.P. and NHP Management Company failed to comply with the FLSA in
compensating maintenance workers for time that they worked in excess of 40 hours
in a week. In June 2005 the Court conditionally certified the collective action
on both the on-call and overtime issues, which allows the plaintiffs to provide
notice of the collective action to all non-exempt maintenance workers from
August 7, 2000 through the present. Those employees will have the opportunity to
opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management
Company will have the opportunity to move to decertify the collective action.
Because the court denied plaintiffs' motion to certify state subclasses, on
September 26, 2005, the plaintiffs filed a class action with the same
allegations in the Superior Court of California (Contra Costa County). Although
the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not
believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Corporate General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's consolidated financial condition or
results of operations.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
Environmental
Various Federal, state and local laws subject property owners or operators to
liability for management, and the costs of removal or remediation, of certain
hazardous substances present on a property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the hazardous substances. The presence of, or the
failure to manage or remedy properly, hazardous substances may adversely affect
occupancy at affected apartment communities and the ability to sell or finance
affected properties. In addition to the costs associated with investigation and
remediation actions brought by government agencies, and potential fines or
penalties imposed by such agencies in conjunction therewith, the presence of
hazardous substances on a property could result in claims by private plaintiffs
for personal injury, disease, disability or other infirmities. Various laws also
impose liability for the cost of removal, remediation or disposal of hazardous
substances through a licensed disposal or treatment facility. Anyone who
arranges for the disposal or treatment of hazardous substances is potentially
liable under such laws. These laws often impose liability whether or not the
person arranging for the disposal ever owned or operated the disposal facility.
In connection with the ownership, operation and management of its properties,
the Partnership could potentially be liable for environmental liabilities or
costs associated with its properties.
Mold
The Partnership is aware of lawsuits against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims arising from the presence of mold and for personal injury
claims related to mold exposure. Affiliates of the Corporate General Partner
have implemented a national policy and procedures to prevent or eliminate mold
from its properties and the Corporate General Partner believes that these
measures will minimize the effects that mold could have on residents. To date,
the Partnership has not incurred any material costs or liabilities relating to
claims of mold exposure or to abate mold conditions. Because the law regarding
mold is unsettled and subject to change the Corporate General Partner can make
no assurance that liabilities resulting from the presence of or exposure to mold
will not have a material adverse effect on the Partnership's consolidated
financial condition or results of operations.
SEC Investigation
The Central Regional Office of the United States Securities and Exchange
Commission (the "SEC") continues its formal investigation relating to certain
matters. Although the staff of the SEC is not limited in the areas that it may
investigate, AIMCO believes the areas of investigation have included AIMCO's
miscalculated monthly net rental income figures in third quarter 2003,
forecasted guidance, accounts payable, rent concessions, vendor rebates,
capitalization of payroll and certain other costs, tax credit transactions, and
tender offers for limited partnership interests. AIMCO is cooperating fully.
AIMCO is not able to predict when the investigation will be resolved. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Corporate General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's consolidated financial condition or
results of operations.
Note I - Subsequent Events
Subsequent to September 30, 2005, the Partnership entered into a Purchase and
Sale Contract to sell Woodland Village Apartments to a third party for a
purchase price of approximately $13,163,000. The anticipated closing date for
the transaction is January 31, 2006. At September 30, 2005, the carrying amounts
of the mortgage note payable and investment property for Woodland Village
Apartments are approximately $7,206,000 and $4,174,000, respectively. The
operating results of Woodland Village Apartments for the three and nine months
ended September 30, 2005 were losses of approximately $16,000 and $3,000,
respectively, which included revenues of approximately $628,000 and $1,828,000,
respectively. The operating results of the property for the three and nine
months ended September 30, 2004 were losses of approximately $50,000 and
$65,000, respectively, which included revenues of approximately $568,000 and
$1,690,000, respectively.
Subsequent to September 30, 2005, the Partnership entered into a Purchase and
Sale Contract to sell Old Salem Apartments to a third party for a purchase price
of approximately $31,600,000. The anticipated closing date for the transaction
is January 12, 2006. At September 30, 2005, the carrying amounts of the mortgage
note payable and investment property for Old Salem Apartments are approximately
$8,655,000 and $5,252,000, respectively. The operating results of Old Salem
Apartments for the three and nine months ended September 30, 2005 were income of
approximately $60,000 and $156,000, respectively, which included revenues of
approximately $808,000 and $2,444,000, respectively. The operating results of
the property for the three and nine months ended September 30, 2004 were income
of approximately $96,000 and $264,000, respectively, which included revenues of
approximately $811,000 and $2,475,000, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of five apartment complexes, one
of which is classified as held for sale at September 30, 2005 (as discussed in
"Results of Operations"). The following table sets forth the average occupancy
of the remaining properties for the nine months ended September 30, 2005 and
2004:
September 30,
Property 2005 2004
Old Salem Apartments
Charlottesville, Virginia 93% 92%
Woodland Village Apartments
Columbia, South Carolina (1) 96% 87%
Lake Johnson Mews Apartments
Raleigh, North Carolina (2) 84% 88%
Tar River Estates Apartments
Greenville, North Carolina (3) 95% 90%
(1) The Corporate General Partner attributes the increase in occupancy at
Woodland Village Apartments to increased marketing and resident retention
efforts.
(2) The Corporate General Partner attributes the decrease in occupancy at Lake
Johnson Mews Apartments to a decrease in customer traffic as a result of
ongoing construction during the redevelopment period (as discussed in
"Results of Operations").
(3) The Corporate General Partner attributes the increase in occupancy at Tar
River Estates Apartments to increased marketing and resident retention
efforts.
The Partnership's financial results depend upon a number of factors including
the ability to attract and maintain tenants at the investment properties,
interest rates on mortgage loans, costs incurred to operate the investment
properties, general economic conditions and weather. As part of the ongoing
business plan of the Partnership, the Corporate General Partner monitors the
rental market environment of its investment properties to assess the feasibility
of increasing rents, maintaining or increasing occupancy levels and protecting
the Partnership from increases in expenses. As part of this plan, the 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, the Corporate General Partner may use
rental concessions and rental rate reductions to offset softening market
conditions; accordingly, there is no guarantee that the Corporate General
Partner will be able to sustain such a plan. Further, a number of factors that
are outside the control of the Partnership, such as the local economic climate
and weather can adversely or positively affect the Partnership's financial
results.
Results of Operations
The Partnership's net income for the three and nine months ended September 30,
2005 was approximately $3,324,000 and $14,954,000 respectively, as compared to
net loss of approximately $305,000 and $662,000 for the three and nine months
ended September 30, 2004, respectively. The Partnership sold The Lexington Green
Apartments to a third party in June 2005 and the Partnership sold Foxfire
Apartments to a third party in August 2005. The Partnership has entered into a
contract to sell Millhopper Village Apartments to a third party in November
2005. In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the
assets and liabilities of Millhopper Village Apartments have been classified as
held for sale at September 30, 2005. The operations of Foxfire Apartments, The
Lexington Green Apartments, and Millhopper Village Apartments, loss of
approximately $1,763,000 and $3,568,000 for the three and nine months ended
September 30, 2005, respectively, and loss of approximately $48,000 and $146,000
for the three and nine months ended September 30, 2004, respectively, are shown
as loss from discontinued operations. Included in loss from discontinued
operations are revenues of approximately $414,000 and $3,228,000 for the three
and nine months ended September 30, 2005, respectively and approximately
$1,293,000 and $3,890,000 for the three and nine months ended September 30,
2004.
On June 29, 2005 the Partnership sold The Lexington Green Apartments to a third
party for a gross sale price of approximately $19,200,000. The net proceeds
realized by the Partnership were approximately $17,061,000 after the payment of
closing costs and a prepayment penalty owed by the Partnership and paid by the
buyer. The Partnership used approximately $6,204,000 of the net proceeds to
repay the mortgage encumbering the property. The Partnership realized a gain of
approximately $13,876,000 as a result of the sale during the nine months ended
September 30, 2005, which is included in gain from sale of discontinued
operations. In addition the Partnership recorded a loss on the early
extinguishment of debt of approximately $1,863,000 as a result of the write off
of unamortized loan costs and a prepayment penalty, which is included in loss
from discontinued operations.
On August 1, 2005 the Partnership sold Foxfire Apartments to a third party for a
gross sale price of approximately $9,725,000. The net proceeds realized by the
Partnership were approximately $7,882,000 after the payment of closing costs and
a prepayment penalty owed by the Partnership and paid by the buyer. The
Partnership used approximately $6,132,000 of the net proceeds to repay the
mortgage encumbering the property. The Partnership realized a gain of
approximately $5,310,000 as a result of the sale during the three and nine
months ended September 30, 2005, which is included in gain from sale of
discontinued operations. In addition the Partnership recorded a loss on the
early extinguishment of debt of approximately $1,747,000 as a result of the
write off of unamortized loan costs and a prepayment penalty, which is included
in loss from discontinued operations.
The Partnership's loss from continuing operations for the three and nine months
ended September 30, 2005 was approximately $223,000 and $664,000, respectively,
compared to loss from continuing operations of approximately $257,000 and
$516,000 for the three and nine months ended September 30, 2004, respectively.
The decrease in loss from continuing operations for the three months ended
September 30, 2005 is due to an increase in total revenues. The increase in loss
from continuing operations for the nine months ended September 30, 2005 is due
to an increase in total expenses, partially offset by an increase in total
revenues. Total expenses remained relatively constant for the three months ended
September 30, 2005, as increases in depreciation, general and administrative,
and property tax expenses were offset by decreases in both operating and
interest expense. The decrease in operating expenses for the three months ended
September 30, 2005 is primarily due to decreases in cleanup costs associated
with the 2004 fire at Old Salem Apartments (as discussed below) and hazard
insurance expense at all of the Partnership's investment properties. The
decrease in interest expense for the three months ended September 30, 2005 is
primarily a result of scheduled principal payments made on the mortgages
encumbering the Partnership's investment properties, which reduced the carrying
balance of the loans. The increase in total expenses for the nine months ended
September 30, 2005 is due to increases in operating, general and administrative,
depreciation, interest, and property tax expenses. The increase in operating
expenses for the nine months ended September 30, 2005 is primarily due to
increases in payroll related expenses at Woodland Village Apartments and Tar
River Estates Apartments, utility expenses at Woodland Village Apartments and
Old Salem Apartments, and telephone sales at all of the Partnership's
properties. The increase in depreciation expense for both the three and nine
months ended September 30, 2005 is due to property improvements and replacements
placed into service at the Partnership's investment properties during the past
twelve months. Interest expense increased for the nine months ended September
30, 2005 primarily due to an increase in interest expense on advances from an
affiliate of the Corporate General Partner, partially offset by scheduled
principal payments made on the mortgages encumbering the Partnership's
investment properties, which reduced the carrying balance of the loans, and
interest capitalized at Lake Johnson Mews Apartments due to a redevelopment
project at the property which required units to be vacated during the nine
months ended September 30, 2005 in order to expedite construction. The increase
in property tax expense for both periods is primarily due to an increase in the
assessed value of Tar River Estates Apartments. The increase in general and
administrative expenses for both the three and nine months ended September 30,
2005 is due to increases in the cost of services included in the management
reimbursements to the Corporate General Partner as allowed under the Partnership
Agreement. Also included in general and administrative expenses for the three
and nine months ended September 30, 2005 and 2004 are costs associated with the
quarterly and annual communications with investors and regulatory agencies and
the annual audit required by the Partnership Agreement.
The increase in total revenues for both the three and nine months ended
September 30, 2005 is due to increases in both rental and other income,
partially offset by the recognition of casualty gains in 2004 (as discussed
below). The increase in rental income for the three months ended September 30,
2005 is primarily due to an increase in the average rental rate at Lake Johnson
Mews Apartments and Old Salem Apartments, partially offset by decreases in
occupancy at Lake Johnson Mews Apartments and the average rental rate at
Woodland Village Apartments. The increase in rental income for the nine months
ended September 30, 2005 is primarily due to increases in occupancy at Old Salem
Apartments, Woodland Village Apartments and Tar River Estates Apartments and the
average rental rate at Lake Johnson Mews Apartments and Tar River Estates
Apartments, partially offset by decreases in occupancy at Lake Johnson Mews
Apartments and the average rental rate at Woodland Village Apartments. The
increase in other income for the three months ended September 30, 2005 is
primarily due to an increase in utility reimbursements at Old Salem Apartments
and Woodland Village Apartments. The increase in other income for the nine
months ended September 30, 2005 is primarily due to increases in student housing
fees at Tar River Estates Apartments and utility reimbursements at Old Salem
Apartments and Woodland Village Apartments, partially offset by a decrease in
lease cancellation fees at all of the Partnership's investment properties.
The Partnership incurred clean up costs of approximately $9,000 at The Lexington
Green Apartments for Hurricanes Frances and Jeanne which were not covered by
insurance for the year ended December 31, 2004. The Partnership incurred
additional clean up costs of approximately $15,000 and $26,000, which were not
covered by insurance, for the nine months ended September 30, 2005, which are
reflected in loss from discontinued operations. The Partnership also recognized
a casualty gain of approximately $16,000 due to a change in the estimated
building damages at The Lexington Green Apartments, which is reflected in loss
from discontinued operations for the nine months ended September 30, 2005.
On May 19, 2004, Old Salem Apartments suffered fire damage to one unit. The
property incurred damages of approximately $41,000. During the three and nine
months ended September 30, 2004, the Partnership recognized a casualty gain of
approximately $20,000 as a result of the receipt of insurance proceeds of
approximately $26,000 offset by the write-off of the undepreciated damaged
assets of approximately $6,000.
On September 18, 2003, Old Salem Apartments suffered hurricane damage, causing
minor damage to 29 units. The property incurred damages of approximately
$46,000. During the nine months ended September 30, 2004, the Partnership
recognized a casualty gain of approximately $38,000 as a result of the receipt
of insurance proceeds of approximately $45,000, offset by the write-off of the
undepreciated damaged assets of approximately $7,000.
During the year ended December 31, 2004, the Corporate General Partner began a
major redevelopment project at Lake Johnson Mews Apartments. The property has
had difficulty staying competitive and needed to be updated. Therefore, in an
effort to increase occupancy and remain competitive in the local market, a
significant redevelopment project has been started and is expected to be
completed in January 2006 at a total cost of approximately $4,059,000. The
project is being funded from advances from an affiliate of the Corporate General
Partner and cash from operations. During the construction period, certain
expenses are being capitalized and depreciated over the remaining life of the
property. During the nine months ended September 30, 2005, approximately $43,000
of interest, approximately $3,000 of real estate taxes, and approximately $2,000
of other construction period costs were capitalized.
Liquidity and Capital Resources
At September 30, 2005, the Partnership had cash and cash equivalents of
approximately $972,000, compared to approximately $271,000 at September 30,
2004. The decrease in cash and cash equivalents of approximately $166,000, from
the Partnership's year ended December 31, 2004, is due to approximately
$22,882,000 of cash used in financing activities, partially offset by
approximately $21,787,000 of cash provided by investing activities and
approximately $929,000 of cash provided by operating activities. Cash used in
financing activities consisted of the repayment of the mortgages encumbering The
Lexington Green Apartments and Foxfire Apartments, payments on advances from an
affiliate of the Corporate General Partner, payments of principal made on the
mortgages encumbering the Partnership's investment properties, and distributions
to partners, partially offset by advances from an affiliate of the Corporate
General Partner. Cash provided by investing activities consisted of net proceeds
from the sales of The Lexington Green Apartments and Foxfire Apartments,
partially offset by property improvements and replacements and net deposits to
escrow accounts maintained by the mortgage lenders. The Partnership 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 Partnership and to comply with
Federal, state, and local legal and regulatory requirements. The Corporate
General Partner monitors developments in the area of legal and regulatory
compliance. For example, the Sarbanes-Oxley Act of 2002 mandates or suggests
additional compliance measures with regard to governance, disclosure, audit and
other areas. In light of these changes, the Partnership expects that it will
incur higher expenses related to compliance. Capital improvements planned for
each of the Partnership's properties are detailed below.
Millhopper Village Apartments: During the nine months ended September 30, 2005,
the Partnership completed approximately $253,000 of capital improvements at
Millhopper Village Apartments, consisting primarily of roof replacement, siding,
exterior painting, parking area improvements, gutter replacement and floor
covering replacement. These improvements were funded from operations. The
Partnership has entered into a contract to sell Millhopper Village Apartments to
a third party in November 2005.
Foxfire Apartments: During the nine months ended September 30, 2005, the
Partnership completed approximately $109,000 of capital improvements at Foxfire
Apartments, consisting primarily of recreational facility upgrades and floor
covering replacement. These improvements were funded from operations and
advances from an affiliate of the Corporate General Partner. The Partnership
sold Foxfire Apartments to a third party on August 1, 2005.
Lake Johnson Mews Apartments: During the nine months ended September 30, 2005,
the Partnership completed approximately $817,000 of capital improvements at Lake
Johnson Mews Apartments arising from the redevelopment of the property which
includes capitalization of construction period interest of approximately
$43,000, real estate taxes of approximately $3,000 and other construction period
costs of approximately $2,000. Additional capital improvements of approximately
$133,000 consisted primarily of major landscaping and floor covering
replacement. These improvements were funded from operations and advances from an
affiliate of the Corporate General Partner. The property is currently undergoing
a redevelopment project in order to remain competitive with other properties in
the area in the effort to increase occupancy at the property. Based on current
redevelopment plans, the Corporate General Partner anticipates the redevelopment
to be complete in January 2006 at a total cost of approximately $4,059,000. The
project is being funded from advances from an affiliate of the Corporate General
Partner and cash from operations. The Partnership regularly evaluates the
capital improvement needs of the property. The Partnership currently expects to
budget approximately $691,000 for property redevelopment during the remainder of
2005. While the Partnership has no other material commitments for property
improvements and replacements, certain routine capital expenditures are
anticipated during 2005. Such capital expenditures will depend on the physical
condition of the property as well as anticipated cash flow generated by the
property.
Woodland Village Apartments: During the nine months ended September 30, 2005,
the Partnership completed approximately $216,000 of capital improvements at
Woodland Village Apartments, consisting primarily of swimming pool upgrades,
roof replacement, interior improvements, and floor covering replacement. These
improvements were funded from operations. The Partnership regularly evaluates
the capital improvement needs of the property. While the Partnership has no
material commitments for property improvements and replacements, certain routine
capital expenditures are anticipated during 2005. Such capital expenditures will
depend on the physical condition of the property as well as anticipated cash
flow generated by the property.
The Lexington Green Apartments: During the nine months ended September 30, 2005,
the Partnership completed approximately $191,000 of capital improvements at The
Lexington Green Apartments, consisting primarily of balcony upgrades and floor
covering replacement. These improvements were funded from operations. The
Partnership sold The Lexington Green Apartments to a third party on June 29,
2005.
Tar River Estates Apartments: During the nine months ended September 30, 2005,
the Partnership completed approximately $163,000 of capital improvements at Tar
River Estates Apartments, consisting primarily of plumbing upgrades, interior
improvements, and floor covering replacement. These improvements were funded
from operations. The Partnership regularly evaluates the capital improvement
needs of the property. While the Partnership has no material commitments for
property improvements and replacements, certain routine capital expenditures are
anticipated during 2005. Such capital expenditures will depend on the physical
condition of the property as well as anticipated cash flow generated by the
property.
Old Salem Apartments: During the nine months ended September 30, 2005, the
Partnership completed approximately $781,000 of capital improvements at Old
Salem Apartments, consisting primarily of siding, exterior painting, swimming
pool upgrades, major landscaping, interior improvements, structural
improvements, plumbing upgrades, heating and air conditioning upgrades, floor
covering replacement, and construction related to the May 2004 fire, as
discussed in "Results of Operations". These improvements were funded from
operations. The Partnership regularly evaluates the capital improvement needs of
the property. The Partnership currently expects to spend approximately $101,000
during the remainder of 2005 to remedy moisture infiltration to two units and
exterior improvements. While the Partnership has no other material commitments
for property improvements and replacements, certain routine capital expenditures
are anticipated during 2005. Such capital expenditures will depend on the
physical condition of the property as well as anticipated cash flow generated by
the property.
The capital expenditures will be incurred only if cash is available from
operations and from Partnership reserves. To the extent that capital
improvements are completed, the Partnership's distributable cash flow, if any,
may be adversely affected at least in the short term.
The Partnership's assets are thought to be sufficient for any near-term needs
(exclusive of capital improvements) of the Partnership. The mortgage
indebtedness encumbering all of the Partnership's investment properties not
classified as held for sale of approximately $26,934,000 is amortized over
varying periods with maturity dates ranging from December 1, 2019 to January 1,
2022, at which time the loans are scheduled to be fully amortized.
Subsequent to September 30, 2005, the Partnership entered into a Purchase and
Sale Contract to sell Woodland Village Apartments to a third party for a
purchase price of approximately $13,163,000. The anticipated closing date for
the transaction is January 31, 2006. At September 30, 2005, the carrying amounts
of the mortgage note payable and investment property for Woodland Village
Apartments are approximately $7,206,000 and $4,174,000, respectively. The
operating results of Woodland Village Apartments for the three and nine months
ended September 30, 2005 were losses of approximately $16,000 and $3,000,
respectively, which included revenues of approximately $628,000 and $1,828,000,
respectively. The operating results of the property for the three and nine
months ended September 30, 2004 were losses of approximately $50,000 and
$65,000, respectively, which included revenues of approximately $568,000 and
$1,690,000, respectively.
Subsequent to September 30, 2005, the Partnership entered into a Purchase and
Sale Contract to sell Old Salem Apartments to a third party for a purchase price
of approximately $31,600,000. The anticipated closing date for the transaction
is January 12, 2006. At September 30, 2005, the carrying amounts of the mortgage
note payable and investment property for Old Salem Apartments are approximately
$8,655,000 and $5,252,000, respectively. The operating results of Old Salem
Apartments for the three and nine months ended September 30, 2005 were income of
approximately $60,000 and $156,000, respectively, which included revenues of
approximately $808,000 and $2,444,000, respectively. The operating results of
the property for the three and nine months ended September 30, 2004 were income
of approximately $96,000 and $264,000, respectively, which included revenues of
approximately $811,000 and $2,475,000, respectively.
The Partnership distributed the following amounts during the nine months ended
September 30, 2005 and 2004 (in thousands, except per unit data):
Per Limited Per Limited
Nine Months Ended Partnership Nine Months Ended Partnership
September 30, 2005 Unit September 30, 2004 Unit
Sale (1) $ 5,578 $106.15 $ -- $ --
Sale (2) 1,047 19.93 -- --
$ 6,625 $126.08 $ -- $ --
(1) Proceeds from the sale of The Lexington Green Apartments in June 2005. (2)
Proceeds from the sale of Foxfire Apartments in August 2005.
Future cash distributions will depend on the levels of net cash generated from
operations and the timing of property refinancings and/or property sales. The
Partnership's cash available for distribution is reviewed on a monthly basis.
There can be no assurance, however, that the Partnership will generate
sufficient funds from operations, after required capital improvement
expenditures, to permit additional distributions to its partners in 2005 or
subsequent periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 39,243 limited partnership units
(the "Units") in the Partnership representing 74.69% of the outstanding Units at
September 30, 2005. 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 Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the Corporate General Partner. As a result of its ownership of 74.69% of
the outstanding Units, AIMCO and its affiliates are in a position to control all
voting decisions with respect to the Partnership. Although the Corporate General
Partner owes fiduciary duties to the limited partners of the Partnership, the
Corporate General Partner also owes fiduciary duties to AIMCO as its sole
stockholder. As a result, the duties of the Corporate General Partner, as
corporate general partner, to the Partnership and its limited partners may come
into conflict with the duties of the Corporate General Partner to AIMCO as its
sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which require the
Partnership to make estimates and assumptions. The Partnership believes that of
its significant accounting policies, the following may involve a higher degree
of judgment and complexity.
Impairment of Long-Lived Assets
The Partnership's investment properties are recorded at cost, less accumulated
depreciation, unless considered impaired. If events or circumstances indicate
that the carrying amount of a property may be impaired, the Partnership will
make an assessment of its recoverability by estimating the undiscounted future
cash flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, changes in the national, regional and local economic climate; local
conditions, such as an oversupply of multifamily properties; competition from
other available multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area.
Rental income attributable to leases, net of any concessions, is recognized on a
straight-line basis over the term of the lease. The Partnership evaluates all
accounts receivable from residents and establishes an allowance, after the
application of security deposits, for accounts greater than 30 days past due on
current tenants and all receivables due from former tenants.
ITEM 3. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the Corporate General Partner, who are the equivalent of the Partnership's
principal executive officer and principal financial officer, respectively, has
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, the principal
executive officer and principal financial officer of the Corporate General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have concluded that, as of the
end of such period, the Partnership's disclosure controls and procedures are
effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
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. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Corporate General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Corporate General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint captioned Heller v.
Insignia Financial Group (the "Heller action") was filed against the same
defendants that are named in the Nuanes action. On or about August 6, 2001,
plaintiffs filed a first amended complaint. The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary duty, unfair competition, conversion, unjust enrichment, and
judicial dissolution. On January 28, 2002, the trial court granted defendants
motion to strike the complaint. Plaintiffs took an appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. On June 13, 2003, the
court granted final approval of the settlement and entered judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeal reversed the trial court's order striking the
first amended complaint.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
The Corporate General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
AIMCO Properties L.P. and NHP Management Company, both affiliates of the
Corporate General Partner, are defendants in a lawsuit alleging that they
willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay
maintenance workers overtime for all hours worked in excess of forty per week.
The complaint, filed in the United States District Court for the District of
Columbia, attempts to bring a collective action under the FLSA and seeks to
certify state subclasses in California, Maryland, and the District of Columbia.
Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP
Management Company failed to compensate maintenance workers for time that they
were required to be "on-call". Additionally, the complaint alleges AIMCO
Properties L.P. and NHP Management Company failed to comply with the FLSA in
compensating maintenance workers for time that they worked in excess of 40 hours
in a week. In June 2005 the Court conditionally certified the collective action
on both the on-call and overtime issues, which allows the plaintiffs to provide
notice of the collective action to all non-exempt maintenance workers from
August 7, 2000 through the present. Those employees will have the opportunity to
opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management
Company will have the opportunity to move to decertify the collective action.
Because the court denied plaintiffs' motion to certify state subclasses, on
September 26, 2005, the plaintiffs filed a class action with the same
allegations in the Superior Court of California (Contra Costa County). Although
the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not
believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Corporate General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's consolidated financial condition or
results of operations.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
See Exhibit Index.
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 LIMITED PARTNERSHIP
By: Shelter Realty V Corporation
Corporate General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Stephen B. Waters
Stephen B. Waters
Vice President
Date: November 14, 2005
SHELTER PROPERTIES V LIMITED PARTNERSHIP
EXHIBIT INDEX
3 See Exhibit 4(a)
3.1 Second Amended and Restated Bylaws of IPT, dated October 2,
1998 (incorporated by reference to Current Report on Form 8-K,
dated October 1, 1998).
4 (a) Amended and Restated Certificate and Agreement of Limited
Partnership (included as Exhibit A to the Prospectus of
Registrant dated May 27, 1983 contained in Amendment No. 1
to Registration Statement No. 2-81308, of Registrant filed
June 8, 1982 (the "Prospectus") and incorporated herein by
reference.)
(b) Subscription Agreement and Signature Page (included as
Exhibits 4(A) and 4 (B) to the Registration Statement,
incorporated herein by reference).
10(i) Contracts related to acquisition of properties.
(b) Purchase Agreement dated May 14, 1983 between Old Salem and
U.S. Shelter Corporation to acquire Old Salem Apartments.*
(c) Purchase Agreement dated April 21, 1983 between Europco
Management Company of America and U.S. Shelter Corporation to
acquire Woodland Village Apartments.*
(d) Purchase Agreement dated May 6, 1983 between Europco
Management Company of America and U.S. Shelter Corporation
to acquire Lake Johnson Mews.*
*Filed as Exhibits 12(a) through 12(d), respectively, to
Amendment No. 1 of Registration Statement No. 2-81308 of
Registrant filed May 24, 1983 and incorporated herein by
reference.
(f) Purchase Agreement dated August 26, 1983 between James S.
Quincey and U.S. Shelter Corporation to acquire Millhopper
Village Apartments. (Filed as Exhibit 12(F) to Post-Effective
Amendment No. 1 of Registration Statement No. 2-81308 of
Registrant filed October 13, 1983 and incorporated herein by
reference).
(h) Purchase Agreement dated December 14, 1983 between Virginia
Real Estate Investors and U.S. Shelter Corporation to acquire
Tar River Estates. (Filed as Exhibit 10(B) to Form 8-K of
Registrant dated December 8, 1983 and incorporated herein by
reference).
(ii) Contracts related to the disposition of properties.
(a) Purchase and Sale Contract between New Shelter V Limited
Partnership, a Delaware limited partnership, as Seller, and
Forest Acquisition Fund, LLC, a Massachusetts limited
liability company, as Purchaser, effective May 2, 2005 filed
as exhibit 10(ii)a to the Registrant's Current Report on Form
8-K dated May 2, 2005 and incorporated herein by reference.
(b) Purchase and Sale Contract between Foxfire Apartments V
Limited Partnership, a South Carolina limited partnership, as
Seller, and The Bethany Group, LLC, a California limited
liability company, as Purchaser, effective May 12, 2005, filed
as exhibit 10(ii)b to the Registrant's Current Report on Form
8-K dated August 1, 2005 and incorporated herein by reference.
(c) First Amendment to Purchase and Sale Contract between Foxfire
Apartments V Limited Partnership, a South Carolina Limited
Partnership, as Seller, and The Bethany Group, LLC, a
California limited liability company, as Purchaser, effective
July 1, 2005, filed as exhibit 10(ii)c to the Registrant's
Current Report on Form 8-K dated August 1, 2005 and
incorporated herein by reference.
(d) Purchase and Sale Contract between Shelter Properties V, a
South Carolina limited partnership, and Magnum Realty, LLC, a
Florida limited liability company, dated July 15, 2005, filed
as exhibit 10(ii)d to the Registrant's Current Report on Form
8-K dated July 15, 2005 and incorporated herein by reference.
(e) Amendment of Purchase and Sale Contract between Shelter
Properties V Limited Partnership, a South Carolina limited
partnership and Magnum Realty, LLC, a Florida limited
liability company, dated October 10, 2005.
(iii) Contracts related to refinancing of debt:
(m) Multifamily Note secured by a Mortgage or Deed of Trust dated
November 10, 1999, between Shelter Properties V Limited
Partnership and GMAC Commercial Mortgage Corporation relating
to Old Salem Apartments. (Filed as Exhibit 10(iii)m to Form
10-KSB of Registrant for period ended November 30, 1999 and
incorporated herein by reference).
(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. (Filed as Exhibit
10(iii)o to Form 10-QSB of Registrant filed on August 13, 2001
and incorporated herein by reference).
(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. (Filed as Exhibit
10(iii)p to Form 10-QSB of Registrant filed on August 13, 2001
and incorporated herein by reference).
(q) Multifamily Note dated August 30, 2001, by and between Shelter
Properties V Limited Partnership, a South Carolina limited
partnership, and GMAC Commercial Mortgage Corporation,
relating to Woodland Village Apartments. (Filed as Exhibit
10(iii)q to Form 10-QSB of Registrant filed on November 13,
2001 and incorporated herein by reference).
(r) Multifamily Note dated December 28, 2001, by and between New
Shelter V Limited Partnership, a South Carolina limited
partnership, and Lend Lease Mortgage Capital, LP, a Texas
limited partnership. (Filed as Exhibit 10(iii)r to Form 8-K of
Registrant filed on January 14, 2002 and incorporated herein
by reference).
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of equivalent of Chief Financial Officer pursuant to
Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the equivalent of the Chief Executive
Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
V Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
small business issuer, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based
on such evaluation; and
(c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's
ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business
issuer's internal control over financial reporting.
Date: November 14, 2005
/s/Martha L. Long
Martha L. Long
Senior Vice President of
Shelter Realty V Corporation,
equivalent of the chief
executive officer of the
Partnership
Exhibit 31.2
CERTIFICATION
I, Stephen B. Waters, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
V Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
small business issuer, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based
on such evaluation; and
(c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's
ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business
issuer's internal control over financial reporting.
Date: November 14, 2005
/s/Stephen B. Waters
Stephen B. Waters
Vice President of Shelter
Realty V Corporation,
equivalent of the chief
financial officer of the
Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of Shelter Properties V
Limited Partnership (the "Partnership"), for the quarterly period ended
September 30, 2005 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), Martha L. Long, as the equivalent of the chief
executive officer of the Partnership, and Stephen B. Waters, as the equivalent
of the chief financial officer of the Partnership, each hereby certifies,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Martha L. Long
Name: Martha L. Long
Date: November 14, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: November 14, 2005
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 10(ii)(e)
AMENDMENT OF PURCHASE AND SALE CONTRACT
(Millhopper Village Apartments, Florida)
THIS AMENDMENT OF PURCHASE AND SALE CONTRACT ("Amendment") is entered into
as of the 10th day of October, 2005 (the "Effective Date") by and between
SHELTER PROPERTIES V LIMITED PARTNERSHIP, a South Carolina limited partnership,
having a principal address at 4582 South Ulster Street Parkway, Suite 1100,
Denver, Colorado 80237 ("Seller") and MAGNUM REALTY, LLC, a Florida limited
liability company, having a principal address at 1666 John F. Kennedy Causeway,
Suite 606, North Bay Village, Florida 33141 ("Purchaser").
RECITALS
A. Seller and Purchaser entered into a Purchase and Sale Contract dated as of
July 15, 2005 (the "Contract"), pursuant to which Seller agreed to sell to
Purchaser, and Purchaser agreed to buy from Seller the Property (as defined in
the Contract).
B. Pursuant to the Contract, Purchaser delivered to Escrow Agent an Initial
Deposit in the amount of $200,000, and an Additional Deposit in the amount of
$50,000 (collectively, the "Earnest Money"), which Earnest Money continues to be
held by Escrow Agent.
C. Pursuant to the Contract, Purchaser extended the Closing Date from October 3,
2005, to October 28, 2005, and in connection therewith, Purchaser delivered to
Escrow Agent a non-refundable Purchaser's Closing Extension Deposit in the
amount of $50,000, which Purchaser's Closing Extension Deposit continues to be
held by Escrow Agent.
D. Seller and Purchaser have agreed to modify the terms of the Contract as set
forth in this Amendment.
E. All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Contract.
NOW THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
Seller and Purchaser agree as follows:
AGREEMENTS
1. Closing Date. Subject to the extension rights of Seller as more particularly
set forth in Section 5.1 of the Contract, the Closing Date is hereby extended
from October 28, 2005, to November 29, 2005.
2. Closing Extension Deposit. Concurrently with the execution of this Amendment,
Purchaser shall deliver to Escrow Agent a deposit in the amount of $200,000
("Purchaser's Second Closing Extension Deposit"), which amount when received by
Escrow Agent shall be added to the Deposit under the Contract, shall be
non-refundable (except as otherwise expressly provided for in the Contract with
respect to the Deposit), and shall be held, credited and disbursed in the same
manner as provided hereunder with respect to the Deposit.
3. Release of Deposit. Concurrently with the execution of this Amendment, the
$250,000 Earnest Money and the $50,000 Purchaser's Closing Extension Deposit,
shall become immediately non-refundable and released to Seller by Escrow Agent
without any further requirement by Escrow Agent (the Earnest Money and
Purchaser's Closing Extension Deposit are collectively referred to herein as the
"Non-Refundable Amount"); provided, however, the Non-Refundable Amount will
apply to the Purchase Price if and when the Closing occurs.
4. Effectiveness of Contract. Except as modified by this Amendment, all the
terms of the Contract shall remain unchanged and in full force and effect.
5. Counterparts. This Amendment may be executed in counterparts, and all
counterparts together shall be construed as one document.
6. Telecopied Signatures. A counterpart of this Amendment signed by one party to
this Amendment and telecopied to the other party to this Amendment or its
counsel (i) shall have the same effect as an original signed counterpart of this
Amendment, and (ii) shall be conclusive proof, admissible in judicial
proceedings, of such party's execution of this Amendment.
[ Remaining Page Intentionally Left Blank ]
IN WITNESS WHEREOF, Seller and Purchaser have entered into this Amendment
of Purchase and Sale Contract as of the date first above stated.
Seller:
SHELTER PROPERTIES V LIMITED PARTNERSHIP,
a South Carolina limited partnership
By: Shelter Realty V Corporation,
a South Carolina corporation
its managing general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
Purchaser:
MAGNUM REALTY, LLC,
a Florida limited liability company
By: /s/Scottt Slota
Name: Scott Slota
Title:Managing Member