FORM 10-QSB--QUARTERLY 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
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended May 31, 1997
or
[ ] 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 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.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
May 31, 1997
Assets
Cash:
Unrestricted $ 3,190
Restricted--tenant security deposits 395
Accounts receivable 26
Escrow for taxes and insurance 443
Restricted escrows 1,127
Other assets 859
Investment properties:
Land $ 4,242
Buildings and related personal property 70,438
74,680
Less accumulated depreciation (38,929) 35,751
$41,791
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 140
Tenant security deposits 395
Accrued taxes 305
Other liabilities 374
Mortgage notes payable 31,703
Partners' Capital (Deficit) $ (319)
General partners
Limited partners (52,538 units
issued and outstanding) 9,193 8,874
$41,791
See Accompanying Notes to Consolidated Financial Statements
b) SHELTER PROPERTIES V LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
May 31, May 31,
1997 1996 1997 1996
Revenues:
Rental income $3,163 $2,973 $6,271 $5,973
Interest income 40 51 97 97
Other income 190 121 343 240
Total revenues 3,393 3,145 6,711 6,310
Expenses:
Operating 1,147 1,001 2,197 1,986
General and administrative 96 107 167 181
Maintenance 473 465 948 840
Depreciation 747 754 1,482 1,494
Interest 694 670 1,389 1,348
Property taxes 203 205 412 407
Total expenses 3,360 3,202 6,595 6,256
Net (loss) income $ 33 $ (57) $ 116 $ 54
Net (loss) income allocated to
general partners (1%) $ -- $ (1) $ 1 $ 1
Net (loss) income allocated to
limited partners (99%) 33 (56) 115 53
$ 33 $ (57) $ 116 $ 54
Net (loss) income per limited
partnership unit $ 0.63 $(1.08) $ 2.19 $ 1.01
See Accompanying Notes to Consolidated Financial Statements
c) SHELTER PROPERTIES V LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (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) capital
at November 30, 1996 52,538 (315) 12,593 12,278
Net income for the six
months ended May 31, 1997 -- 1 115 116
Partners' distributions paid -- (5) (3,515) (3,520)
Partners' (deficit) capital
at May 31, 1997 52,538 $(319) $ 9,193 $ 8,874
See Accompanying Notes to Consolidated Financial Statements
d) SHELTER PROPERTIES V LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
May 31,
1997 1996
Cash flows from operating activities:
Net income $ 116 $ 54
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,482 1,494
Amortization of discounts and loan costs 89 69
Change in accounts:
Restricted cash (24) (33)
Accounts receivable (1) 15
Escrows for taxes and insurance (29) (193)
Other assets (12) 80
Accounts payable (227) (256)
Tenant security deposit liabilities 24 31
Accrued taxes 37 146
Other liabilities (165) (11)
Net cash provided by operating activities 1,290 1,396
Cash flows from investing activities:
Property improvements and replacements (619) (454)
Deposits to restricted escrows investments (123) (55)
Receipts from restricted escrows 280 63
Net cash used in investing activities (462) (446)
Cash flows from financing activities:
Payments on mortgage notes payable (214) (401)
Loan costs paid (12) --
Partners' distributions (3,520) (500)
Net cash used in financing activities (3,746) (901)
Net increase in cash (2,918) 49
Cash at beginning of period 6,108 3,256
Cash at end of period $ 3,190 $3,305
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,266 $1,278
See Accompanying Notes to Consolidated Financial Statements
e) SHELTER PROPERTIES V LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of the Corporate General Partner, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended May 31, 1997,
are not necessarily indicative of the results that may be expected for the
fiscal year ending November 30, 1997. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-KSB for the year ended November 30, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - RECONCILIATION OF CASH FLOWS
The following is a reconciliation of the subtotal on the accompanying statements
of cash flows captioned "net cash provided by operating activities" to "net cash
used in operations," as defined in the partnership agreement. However, "net
cash used in 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
May 31,
1997 1996
(in thousands)
Net cash provided by operating activities $ 1,290 $1,396
Payments on mortgage notes payable (214) (401)
Property improvements and replacements (619) (454)
Change in restricted escrows, net 157 8
Changes in reserves for net operating
liabilities 398 221
Additional reserves (1,015) (771)
Net cash used in operations $ (3) $ (1)
The Corporate General Partner reserved an additional $1,015,000 at May 31, 1997,
to fund the capital improvement projects at Woodland Village, Lake Johnson Mews
and Millhopper Village as required pursuant to the terms of the refinancings in
November 1996. Also, the Corporate General Partner reserved this amount to fund
the continuing capital improvements and repairs at the four other properties.
At May 31, 1996, the Corporate General Partner reserved an additional $771,000
to fund continuing capital improvements and prepare for the refinancings of
Woodland Village, Lake Johnson Mews and Millhopper Village.
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 payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with
Insignia Financial Group, Inc. and its affiliates were incurred in 1997 and 1996
(in thousands):
For the Six Months Ended
May 31,
1997 1996
Property management fees $330 $313
Reimbursement for services of affiliates 156 104
Included in "Reimbursement for services of affiliates" for the six months ended
May 31, 1997, is approximately $39,000 in reimbursements for construction
oversight costs.
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Corporate General Partner. An affiliate of
the Corporate General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the Corporate General
Partner, who receives payments on these obligations from the agent. The amount
of the Partnership's insurance premiums accruing to the benefit of the affiliate
of the Corporate General Partner by virtue of the agent's obligations is not
significant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of seven apartment complexes.
The following table sets forth the average occupancy of the properties for the
quarters ended May 31, 1997 and 1996:
Average
Occupancy
1997 1996
Foxfire Apartments
Atlanta, Georgia 92% 94%
Old Salem Apartments
Charlottesville, Virginia 94% 83%
Woodland Village Apartments
Columbia, South Carolina 87% 92%
Lake Johnson Mews
Raleigh, North Carolina 93% 95%
The Lexington Apartments
Sarasota, Florida 97% 96%
Millhopper Village Apartments
Gainesville, Florida 93% 98%
Tar River Estates
Greenville, North Carolina 92% 88%
The Corporate General Partner attributes the increase in occupancy at Old Salem
Apartments as a result of management's intensified marketing efforts. The
decrease in occupancy at Woodland Village Apartments is primarily due to tenants
purchasing homes in the area. The decrease in occupancy at Lake Johnson Mews is
attributed to new apartment construction in the area which has resulted in
increased competition. The occupancy at Tar River Estates increased in response
to a greater amenity package at the complex as compared to that of the local
competition. The decrease in occupancy at Millhopper Village Apartments is due
to aggressive rental rate increases which are now being slightly offset by
concessions.
The Partnership's net income for the six months ended May 31, 1997, was
approximately $116,000 with the second quarter having net income of
approximately $33,000. The Partnership reported net income of approximately
$54,000 and a net loss of approximately $57,000 for the corresponding periods of
1996. The increases in net income were due to increased rental rates at all of
the investment properties and increased occupancy at three of the seven
investment properties. Also contributing to the increase in net income were
increases in other income due to increased collection of utilities and lease
cancellation fees as a result of an increased effort by management. Partially
offsetting the increases in net income were increases in operating expense and
maintenance expense for the three and six month periods ended May 31, 1997. The
increase in maintenance expense occurred at six of the seven properties within
the Partnership. The majority of the increase resulted from extensive
landscaping improvements at Foxfire and Lake Johnson Mews that included sod and
new landscaping timbers. These improvements were done in an effort to improve
curb appeal and increase occupancy at these two properties. In addition to the
landscaping, the exterior patios and balconies were also repaired at Lexington
Apartments. The increase in operating expense was due to increased concessions
and advertising at five of the seven investment properties in hopes of
maintaining or improving current occupancy levels.
Included in maintenance expense in 1997 and 1996 are approximately $233,000 and
$157,000, respectively, of major repairs and maintenance comprised mainly
exterior building improvements, major landscaping and exterior painting
expenses.
As part of the ongoing business plan of the Partnership, 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
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, 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.
At May 31, 1997, the Partnership reported unrestricted cash of approximately
$3,190,000 compared to approximately $3,305,000 at May 31, 1996. Net cash
provided by operating activities decreased as a result of decreases in accrued
taxes and other liabilities due to the timing of payments to taxing authorities
and vendors. Net cash used in investing activities remained consistent with the
prior year. However, capital expenditures increased by approximately $165,000,
which was offset by increased net receipts from restricted escrows. Net cash
used in financing activities increased as a result of the distribution which was
made in the first quarter of 1997.
As required by the 1996 refinancings of Woodland Village, Lake Johnson Mews and
Millhopper Village, certain improvements will be performed in 1997. These
projects include repaving and restriping the parking lots, resurfacing the
pools, exterior painting, new roofs, floor covering replacement, appliance
replacement and various ADA conversions. These projects will be funded out of
the capital reserve accounts. The Partnership has no material capital programs
scheduled to be performed in 1997 at the other four properties, although certain
routine capital and maintenance expenditures have been budgeted.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of approximately $31,703,000, net of discount, is amortized over
varying periods with required balloon payments ranging from February 1, 1999, to
December 10, 2016, at which time the properties will either be refinanced or
sold. During the first six months of 1997 the Partnership made a distribution
of approximately $3,520,000. The Partnership made no distributions during the
corresponding period of 1996. Future cash distributions will depend on the
levels of net cash generated from operations, property sales, and the
availability of cash reserves.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K filed during the quarter ended May 31, 1996:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES V LIMITED PARTNERSHIP
By: Shelter Realty V Corporation
Corporate General Partner
By:/s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President
By:/s/Ronald Uretta
Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date: July 7, 1997