FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] 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 0-13083
CONSOLIDATED CAPITAL PROPERTIES V
(Exact name of small business issuer as specified in its charter)
California 94-2918560
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except for unit data)
September 30, 1995
Assets
Cash and cash equivalents $ 400
Securities available for sale 307
Prepaid and other assets 613
Investment properties:
Land $ 2,393
Buildings and personal property 23,685
26,078
Less accumulated depreciation (16,311) 9,767
$11,087
Liabilities and Partners' Deficit
Liabilities
Accounts payable and accrued expenses $ 865
Mortgage notes and interest payable 10,915
Partners' Deficit
General partner $ (16)
Special limited partners (57)
Limited partners (179,617 units
issued and outstanding) (620) (693)
$11,087
[FN]
See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenues:
Rental income $1,283 $1,174 $ 3,666 $ 3,609
Interest and dividend income 7 37 48 110
Total revenues 1,290 1,211 3,714 3,719
Expenses:
Property operations 902 821 2,597 2,442
Depreciation and
amortization 351 385 1,019 1,181
Interest 335 380 1,009 1,177
Administrative 67 72 270 182
Total expenses 1,655 1,658 4,895 4,982
Loss from operations (365) (447) (1,181) (1,263)
Gain on sale of securities
available for sale -- 12 -- 12
Casualty Gain -- -- 32 --
Other income (Note E) -- -- -- 67
Loss before extraordinary item -- (435) -- (1,184)
Extraordinary item (Note F) -- 275 -- 275
Net loss $ (365) $ (160) $(1,149) $ (909)
Net loss allocated to general
partners (.2%) $ (1) $ -- $ (2) $ (2)
Net loss allocated to limited
partners (99.8%) (364) (160) (1,147) (907)
$ (365) $ (160) $(1,149) $ (909)
Net loss per limited
partnership unit:
Loss before extraordinary item $(2.03) $(2.42) $ (6.39) $ (6.58)
Extraordinary item -- 1.53 -- 1.53
Net loss $(2.03) $ (.89) $ (6.39) $ (5.05)
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Nine Months Ended September 30, 1995
(in thousands, except unit data)
Limited Special
Partnership General Limited Limited
Units Partners Partner Partners Total
Original capital contributions 180,037 $ 1 $ -- $45,009 $45,010
Partners' deficit at
December 31, 1994 179,617 $ (14) $ (58) $ 528 $ 456
Net loss for the nine months
ended September 30, 1995 -- (2) -- (1,147) (1,149)
Amortization of timing
difference (Note D) -- -- 1 (1) --
Partners' deficit at
September 30, 1995 179,617 $ (16) $ (57) $ (620) $ (693)
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Net loss $(1,149) $ (909)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities
Depreciation and amortization of lease
commissions, discounts and loan costs 1,115 1,286
Casualty gain (32) --
Extraordinary item -- (275)
Gain on sale of securities available
for sale -- (12)
Change in accounts:
Prepaids and other assets 31 (65)
Accounts payable and accrued expenses 159 (192)
Interest payable 101 52
Net cash provided by (used in)
operating activities 225 (115)
Cash flows from investing activities:
Deposits to restricted escrows (42) --
Receipts from restricted escrows 26 --
Property improvements and replacements (403) (356)
Purchases of securities available for sale -- (441)
Proceeds from sale of securities available
for sale 398 1,303
Net insurance proceeds on casualty item 32 --
Net cash provided by investing
activities 11 506
Cash flows from financing activities:
Payments on mortgage notes payable (76) (83)
Proceeds from refinancing -- 5,150
Repayment of note payable -- (5,530)
Direct financing costs -- (134)
Net cash used in financing activities (76) (597)
Net increase (decrease) in cash 160 (206)
Cash at beginning of period 240 438
Cash at end of period $ 400 $ 232
Supplemental disclosure of cash flow information:
Cash paid for interest $ 812 $ 1,060
See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL PROPERTIES V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the annual report on Form 10-K for the fiscal year ended December 31, 1994, for
Consolidated Capital Properties V (the "Partnership").
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Consolidation
The Partnership's financial statements include the accounts of two wholly-
owned limited partnerships (Aspen Ridge Associates, Ltd. and Race Street
Associates, Ltd.). All intercompany transactions have been eliminated.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash includes cash on hand, demand
deposits and money market funds.
Net Loss Per Weighted Average Limited Partnership Unit
Net loss per weighted average Limited Partnership Unit is computed by
dividing the net loss allocated to the Limited Partners by the weighted average
number of Units outstanding. Per Unit information has been computed based on
weighted average Units outstanding of 179,617 for the nine months ended
September 30, 1995 and 1994.
Note B - Related Party Transactions
The Partnership has paid property management fees noted below based upon
collected gross rental revenues ("Rental Revenues") for property management
services in each of the nine month periods ended September 30, 1995 and 1994,
respectively. For the nine months ended September 30, 1994, a portion of such
property management fees equal to 4% of Rental Revenues was paid to the property
management companies performing day-to-day property management services and a
portion equal to 1% of Rental Revenues was paid to Partnership Services, Inc.
("PSI") for advisory services related to day-to-day operations. In January
1994, Coventry Properties, Inc. ("Coventry"), an affiliate of the General
Partner, assumed day-to-day property management responsibilities for one of the
Partnership's properties under the same management fee arrangement as the
unaffiliated management company. In late December 1994, an affiliate of
Insignia Financial Group, Inc. ("Insignia") assumed day-to-day property
management responsibilities for all of the Partnership's properties with the
exception of the Fourth and Race Tower which is managed by a third party. Fees
accrued or paid to Insignia and affiliates for the nine months ended September
30, 1995, and fees accrued or paid to PSI and Coventry for the nine months ended
September 30, 1994, have been reflected in the following table as compensation
to related parties in the applicable periods:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Property management fees $188 $76
The Partnership Agreement also provides for reimbursement to the General
Partner and its affiliates for costs incurred in connection with the
administration of Partnership activities. The General Partner and its
affiliates, which includes Coventry for the nine months ended September 30,
1994, received reimbursements as reflected in the following table:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Reimbursement for services of affiliates $141 $102
In July 1995, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner, who
receives payment on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
General Partner by virtue of the agent's obligations is not significant.
Note C - Commitment
The Partnership is required to maintain working capital reserves for normal
repairs, replacements, working capital and contingencies of not less than 5% of
Net Invested Capital as defined in the Partnership Agreement. In the event
expenditures are made from these reserves, operating revenue shall be allocated
to such reserves to the extent necessary to maintain the foregoing level.
Reserves, consisting of cash and cash equivalents and securities available for
sale totalling $707,000, are less than the reserve requirement of $1,761,000 at
September 30, 1995. The Partnership intends to replenish the working capital
reserve from cash flow from operations, however, the Partnership's recent cash
flows from operations have not been sufficient to replenish the reserve and
there is no assurance that future levels of cash flow from operations will be
adequate to accomplish this objective. The working capital requirement must be
met prior to any distributions to the partners.
Note D - Change in Status of Non-Corporate General Partner
In the year ended December 31, 1991, the Partnership Agreement was amended to
convert the General Partner interests held by the non-corporate General Partner,
Consolidated Capital Group ("CCG"), to that of a special Limited Partner
("Special Limited Partner"). The Special Limited Partner does not have a vote
and does not have any of the other rights of a Limited Partner except the right
to inspect the Partnership's books and records; however, the Special Limited
Partner will retain the economic interest in the Partnership which it previously
owned as general partner. ConCap Equities, Inc. ("CEI") became the sole general
partner of the Partnership effective December 31, 1991. In connection with
CCG's conversion, a special allocation of gross income was made to the Special
Limited Partner in order to eliminate its tax basis negative capital account.
After the conversion, the various owners of interests in the Special Limited
Partner transferred portions of their interests to CEI so that CEI now holds a
.2% interest in all allocable items of income, loss and distribution. The
difference between the Special Limited Partner's capital accounts for financial
statement and tax reporting purposes is being amortized to the Limited Partners'
capital accounts as the components of the timing differences which created the
balance reversal.
Note E - Other Income
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark Corporation's Chapter 11 bankruptcy proceeding.
These claims related to Southmark Corporation's activities while it exercised
control (directly, or indirectly through its affiliates) over the Partnership.
Note E - Other Income - continued
The Bankruptcy Court set the Partnership's and the other affiliated
partnerships' allowed claim at $11 million, in the aggregate. In March 1994,
the Partnership received 1,078 shares of Southmark Corporation Redeemable Series
A Preferred Stock and 7,882 shares of Southmark Corporation New Common Stock
with an aggregate market value on the date of receipt of approximately $8,000
and approximately $59,000 in cash representing the Partnership's share of the
recovery, based on its pro rata share of the claims filed.
Note F - Notes Payable
In April 1994, the Partnership refinanced approximately $4.5 million of
mortgage debt secured by the Aspen Ridge Apartments. In order to facilitate the
refinancing, title to the property was transferred to a wholly-owned limited
partnership, Aspen Ridge Associates, Ltd., in April 1994. Under the terms of
the refinancing agreement, the new mortgage note of approximately $5.2 million
bears interest at 9.875% and matures in May 2001. After repayment of the
existing debt, payment of refinancing and closing costs, and establishment of a
capital improvement escrow, the Partnership received net proceeds of $455,000.
At December 31, 1993, the Partnership was obligated under two mortgage notes
payable aggregating approximately $1.6 million secured by the Fourth and Race
Office Building. During 1994, the General Partner and the lender negotiated an
arrangement which provided for prepayment of the notes at a substantial
discount. The Partnership capitalized on the discount opportunity in September
1994, by paying $1 million to the lender in full settlement of the mortgage
debts. The Partnership recognized an extraordinary gain of $275,000 on the
transaction, related to the debt extinguishment and a non-cash expense
amortizing the remaining mortgage discount. The General Partner has begun
negotiations to sell the Fourth and Race Office Building in an effort to realize
the Partnership's equity in the property.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two apartment complexes
and two commercial properties. The following table sets forth the average
occupancy of the properties for the nine months ended September 30, 1995 and
1994:
Average
Occupancy
1995 1994
Aspen Ridge Apartments
West Chicago, Illinois 91% 96%
Fourth and Race Tower
Cincinnati, Ohio 59% 59%
Sutton Place Apartments
Corpus Christi, Texas 90% 94%
51 North High Street Building
Columbus, Ohio 85% 82%
The occupancy decrease at the Aspen Ridge Apartments is due to increased
competition in the local market as a result of new townhouses being built. The
occupancy decrease at the Sutton Place Apartments is primarily due to the
closing of a naval base in the Corpus Christi market.
The Partnership realized a loss from operations of $1,181,000 for the nine
months ended September 30, 1995, compared to a loss from operations of
$1,263,000 for the nine months ended September 30, 1994. For the three months
ended September 30, 1995, the Partnership realized a loss from operations of
$365,000 compared to a loss from operations of $447,000 for the three months
ended September 30, 1994.
Interest income decreased for the three and nine months ended September 30,
1995, compared to the three and nine months ended September 30, 1994, as a
result of lower cash balances available for investment. This decrease was
partially offset by increased dividends received on the Partnership's investment
in Southmark preferred stock in 1995. Depreciation and amortization expense
decreased due to the reduced carrying values of depreciable assets resulting
from the valuation adjustments recorded in prior years. Interest expense
decreased due primarily to the repayment of approximately $1.6 million in
mortgage notes payable which were secured by the Fourth and Race Tower in
September of 1994. Administrative expenses increased for the nine months ended
September 30, 1995, compared to the nine months ended September 30, 1994, due to
increased expense reimbursements related to the combined efforts of the Dallas
and Greenville partnership administration staffs during the transition period in
the first and second quarters of 1995. The reimbursements for the Dallas office
were $84,000 for the nine months ended September 30, 1995.
The increased costs related to the transition efforts were incurred to
minimize any disruption in the year-end reporting function including the
financial reporting and K-1 preparation and distribution. The General Partner
expects recurring administrative expenses to be reduced now that the management
transition is completed.
For the nine months ended September 30, 1995, the Partnership realized a
casualty gain as a result of a fire at the Fourth and Race Tower on June 5,
1995. The total insurance proceeds received as of September 30, 1995, were
$68,000, with $15,000 remaining to be received. These proceeds exceed the total
estimated costs of replacing the equipment destroyed, resulting in a casualty
gain of $32,000.
Other income realized in the nine months ended September 30, 1994, related to
the receipt of the Partnership's pro rata share of the claims filed in
Southmark's Chapter 11 bankruptcy proceeding (See Note E to the Consolidated
Financial Statements in Item 1).
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
As of September 30, 1995, the Partnership held cash of $400,000 compared to
$232,000 at September 30, 1994. Net cash provided by operating activities
increased primarily due to the Partnership paying $248,000 less in interest for
1995 compared to 1994, as well as reduced payments of outstanding payables. Net
cash provided by investing activities decreased primarily due to reduced
proceeds from the sale of securities. Net cash used in financing activities
decreased due to the repayment of the Fourth and Race Tower's note in 1994.
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 meet other operating needs of the Partnership. The General Partner is
currently in negotiations to sell the Fourth and Race Tower, and the remaining
assets are currently thought to be sufficient for any near-term needs of the
Partnership. The mortgage indebtedness of approximately $10.8 million, net of
discount, matures at various times with balloon payments due at maturity, at
which time the properties will either be refinanced or sold. Future cash
distributions will depend on the levels of net cash generated from operations,
capital expenditure requirements, property sales and the availability of cash
reserves. During the first nine months of 1995 or 1994, no distributions were
declared or paid.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is
not of a routine nature. The General Partner of the Partnership believes that
all such pending or outstanding litigation will be resolved without a material
adverse effect upon the business, financial condition, or operations of the
Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
(b) Reports on Form 8-K.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL PROPERTIES V
By: CONCAP EQUITIES, INC.
General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 13, 1995