United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended February 29, 1996
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: 0-014341
HUTTON/CONAM REALTY INVESTORS 5
Exact Name of Registrant as Specified in its Charter
California
11-2712111
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the Registrant (1) has 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 ____
Consolidated Balance Sheets At February 29, At November 30,
1996 1995
Assets
Investments in real estate:
Land $ 4,941,450 $ 4,941,450
Buildings and improvements 26,588,897 26,463,000
31,530,347 31,404,450
Less accumulated depreciation (11,425,525) (11,159,740)
20,104,822 20,244,710
Cash and cash equivalents 1,992,129 2,253,221
Restricted cash 262,004 219,436
Other assets, net of accumulated amortization
of $75,319 in 1996 and $67,249 in 1995 216,106 194,815
Total Assets $22,575,061 $22,912,182
Liabilities and Partners' Capital
Liabilities:
Mortgage payable $6,378,982 $6,404,612
Distribution payable 439,974 439,974
Accounts payable and accrued expenses 221,325 292,734
Due to general partners and affiliates 31,726 40,653
Security deposits 134,528 136,245
Total Liabilities 7,206,535 7,314,218
Partners' Capital:
General partners 187,772 190,066
Limited partners 15,180,754 15,407,898
Total Partners' Capital 15,368,526 15,597,964
Total Liabilities and
Partners' Capital $22,575,061 $22,912,182
Consolidated Statement of Partners' Capital
For the three months ended February 29, 1996
Limited General
Partners Partners Total
Balance at December 1, 1995 $15,407,898 $190,066 $15,597,964
Net income 204,031 6,505 210,536
Cash distributions (431,175) (8,799) (439,974)
Balance at February 29, 1996 $15,180,754 $187,772 $15,368,526
Consolidated Statements of Operations
For the three months ended February 29 and February 28, 1996 1995
Income
Rental $1,167,533 $1,098,697
Interest 26,455 28,111
Total Income 1,193,988 1,126,808
Expenses
Property operating 550,558 499,545
Depreciation and amortization 273,855 290,239
Interest 123,925 125,830
General and administrative 35,114 32,669
Total Expenses 983,452 948,283
Net income $ 210,536 $ 178,525
Net Income Allocated:
To the General Partners $ 6,505 $ 3,570
To the Limited Partners 204,031 174,955
$ 210,536 $ 178,525
Per limited partnership unit
(57,490 outstanding) $3.55 $3.04
Consolidated Statements of Cash Flows
For the three months ended February 29 and February 28, 1996 1995
Cash Flows From Operating Activities
Net income $ 210,536 $ 178,525
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 273,855 290,239
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Fundings to restricted cash (42,568) (42,704)
Other assets (29,361) (17,190)
Accounts payable and accrued expenses (71,409) (81,254)
Due to general partners and affiliates (8,927) 2,398
Security deposits (1,717) 1,670
Net cash provided by operating activities 330,409 331,684
Cash Flows From Investing Activities
Additions to real estate (125,897) 0
Net cash used for investing activities (125,897) 0
Cash Flows From Financing Activities
Mortgage principal payments (25,630) (23,725)
Distributions (439,974) (381,311)
Net cash used for financing activities (465,604) (405,036)
Net decrease in cash and cash equivalents (261,092) (73,352)
Cash and cash equivalents, beginning of period 2,253,221 2,219,395
Cash and cash equivalents, end of period $1,992,129 $2,146,043
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 123,925 $ 125,830
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1995 audited consolidated financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of February 29, 1996 and the results of operations and
cash flows for the three months ended February 29, 1996 and February 28, 1995
and the statement of changes in partners' capital for the three months ended
February 29, 1996. Results of operations for the periods are not necessarily
indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1995, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
At February 29, 1996, the Partnership had cash and cash equivalents of
$1,992,129 which were invested in unaffiliated money market funds, compared
with $2,253,221 at November 30, 1995. The decrease reflects mortgage principal
payments, additions to real estate and cash distributions to Partners exceeding
cash provided by operating activities during the first quarter of fiscal 1996.
During 1996, the General Partners are implementing an extensive improvement
program at Lakeview Village and The Hamptons at Quail Hollow, to upgrade the
properties. This program, which includes roof repairs at Lakeview Village and
exterior painting and asphalt repairs at The Hamptons, is intended to protect
the properties' position within their respective markets, which are growing
increasingly competitive with the addition of new apartment properties, and
position the properties for increases in revenue and market value. These
improvements will be funded from the Partnership's cash reserves.
The General Partners declared a regular cash distribution of $7.50 per Unit for
the quarter ended February 29, 1996 which will be paid to investors on or about
April 15, 1996. The level of future distributions will be evaluated on a
quarterly basis and will depend on the Partnership's operating results and
future cash needs. It is anticipated that cash from reserves may be required
to fund a portion of the distributions during 1996 as a result of capital
expenditures required at two of the Partnership's properties.
Given favorable market conditions, particularly in the Raleigh, North Carolina
area, the General Partners will begin marketing Canterbury Park for sale. There
can be no assurances that a sale will be completed or that any particular price
for the property can be obtained.
The Partnership was informed by an unaffiliated third party that such party
desired a list of the Partnership's Unitholders in order to consider commencing
a tender offer for up to 4.9% of the outstanding Units. In response to such
request, the Partnership entered into a letter agreement pursuant to which,
among other things, the Partnership will receive advance written notice of such
tender offer and such party agreed to purchase no more than 4.9% of the
outstanding Units.
Results of Operations
Partnership operations for the three months ended February 29, 1996 generated
net income of $210,536 compared with net income of $178,525 for the
corresponding period in fiscal 1995. The increase in net income was primarily
attributable to higher rental income at the Partnership's three properties,
which was partially offset by an increase in property operating expense.
Rental income totaled $1,167,533 for the three months ended February 29, 1996
compared with $1,098,697 for the corresponding period in fiscal 1995. The
increase is primarily attributable to higher rental rates at all three of the
Partnership's properties, and higher occupancy at Lakeview Village.
Property operating expenses for the three months ended February 29, 1996
totaled $550,558 compared with $499,545 for the corresponding period in fiscal
1995. The increase is attributable to higher repairs and maintenance expenses
at Lakeview Village and The Hamptons at Quail Hollow, due to painting and
carpet replacement.
During the first three months of fiscal 1996 and 1995, average occupancy levels
at the Partnership's properties were as follows:
Property 1996 1995
Canterbury Park 97% 97%
The Hamptons at Quail Hollow 95% 95%
Lakeview Village 97% 92%
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K -
On March 15, 1996, based upon, among other things, the advice of
Partnership counsel, Skadden, Arps, Slate, Meagher & Flom, the General
Partners adopted a resolution that states, among other things, if a
Change of Control (as defined below) occurs, the General Partners may
distribute the Partnership's cash balances not required for its
ordinary course day-to-day operations. "Change of Control" means any
purchase or offer to purchase more than 10% of the Units that is not
approved in advance by the General Partners. In determining the amount
of the distribution, the General Partners may take into account all
material factors. In addition, the Partnership will not be obligated
to make any distribution to any partner and no partner will be entitled
to receive any distribution until the General Partners have declared
the distribution and established a record date and distribution date
for the distribution. The Partnership filed a form 8-K disclosing this
resolution on March 21, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HUTTON/CONAM REALTY INVESTORS 5
BY: RI 5 Real Estate Services, Inc.
General Partner
Date: April 15, 1996 BY: /s/ Paul L. Abbott
Director, President, Chief
Executive Officer and
Chief Financial Officer