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 May 31, 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 I.R.S. Employer Identification No.
Incorporation or Organization
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 May 31, At November 30,
1996 1995
Assets
Investments in real estate:
Land $ 4,941,450 $ 4,941,450
Buildings and improvements 26,751,766 26,463,000
31,693,216 31,404,450
Less accumulated depreciation (11,688,732) (11,159,740)
20,004,484 20,244,710
Cash and cash equivalents 1,939,723 2,253,221
Restricted cash 304,509 219,436
Other assets, net of accumulated amortization
of $83,389 in 1996 and $67,249 in 1995 170,407 194,815
Total Assets $ 22,419,123 $ 22,912,182
Liabilities and Partners' Capital
Liabilities:
Mortgage payable $ 6,352,851 $ 6,404,612
Distribution payable 439,974 439,974
Accounts payable and accrued expenses 259,850 292,734
Due to general partners and affiliates 45,971 40,653
Security deposits 139,995 136,245
Total Liabilities 7,238,641 7,314,218
Partners' Capital:
General Partners 185,891 190,066
Limited Partners 14,994,591 15,407,898
Total Partners' Capital 15,180,482 15,597,964
Total Liabilities and Partners' Capital $ 22,419,123 $ 22,912,182
Consolidated Statement of Partners' Capital
For the six months ended May 31, 1996
Limited General
Partners Partners Total
Balance at December 1, 1995 $15,407,898 $190,066 $15,597,964
Net income 449,043 13,423 462,466
Cash distributions (862,350) (17,598) (879,948)
Balance at May 31, 1996 $14,994,591 $185,891 $15,180,482
Consolidated Statements of Operations
Three months ended May 31, Six months ended May 31,
1996 1995 1996 1995
Income
Rental $1,166,105 $1,116,752 $2,333,638 $2,215,449
Interest 23,707 29,674 50,162 57,785
Total Income 1,189,812 1,146,426 2,383,800 2,273,234
Expenses
Property operating 510,907 506,595 1,061,465 1,006,140
Depreciation and
amortization 271,277 290,240 545,132 580,479
Interest 123,424 125,367 247,349 251,197
General and
administrative 32,274 28,252 67,388 60,921
Total Expenses 937,882 950,454 1,921,334 1,898,737
Net Income $ 251,930 $ 195,972 $ 462,466 $ 374,497
Net Income Allocated:
To the General Partners $ 6,918 $ 3,920 $ 13,423 $ 7,490
To the Limited Partners 245,012 192,052 449,043 367,007
$251,930 $195,972 $462,466 $374,497
Per limited partnership unit
(57,490 outstanding) $4.26 $3.34 $7.81 $6.38
Consolidated Statements of Cash Flows
For the six months ended May 31, 1996 1995
Cash Flows From Operating Activities:
Net income $ 462,466 $ 374,497
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 545,132 580,479
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Fundings to restricted cash (85,073) (78,106)
Other assets 8,268 4,033
Accounts payable and accrued expenses (32,884) (38,647)
Due to general partners and affiliates 5,318 2,974
Security deposits 3,750 3,984
Net cash provided by operating activities 906,977 849,214
Cash Flows From Investing Activities:
Additions to real estate (288,766) --
Net cash used for investing activities (288,766) --
Cash Flows From Financing Activities:
Mortgage principal payments (51,761) (47,913)
Distributions (879,948) (821,286)
Net cash used for financing activities (931,709) (869,199)
Net decrease in cash and cash equivalents (313,498) (19,985)
Cash and cash equivalents, beginning of period 2,253,221 2,219,395
Cash and cash equivalents, end of period $1,939,723 $2,199,410
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 247,349 $ 251,197
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 May 31, 1996
and the results of operations and cash flows for the six months
ended May 31, 1996 and 1995 and the statement of partners'
capital for the six months ended May 31, 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 May 31, 1996, the Partnership had cash and cash equivalents of
$1,939,723 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 half of fiscal 1996.
The Partnership also maintains a restricted cash balance, which
totaled $304,509 at May 31, 1996, representing escrows for real
estate taxes and insurance required under the terms of the
Lakeview Village mortgage.
The General Partners initiated an 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. Thus far, the roof repairs at Lakeview Village and
asphalt repairs at the Hamptons at Quail Hollow are complete,
with the other repairs currently underway.
The General Partners declared a regular cash distribution of
$7.50 per Unit for the quarter ended May 31, 1996 which will be
paid to investors on or about July 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
expenditures required at two of the Partnership's properties.
The General Partners have engaged a commercial real estate broker
to market the Canterbury Park property located in Raleigh, North
Carolina. The General Partners are currently in negotiations
with several qualified buyers, however, there can be no assurance
that a sale will be completed or that any particular price for
the property can be obtained. In the event that a sale is not
consummated, the Partnership will continue to hold the property
as an investment.
Results of Operations
Partnership operations for the three and six months ended May 31,
1996 generated net income of $251,930 and $462,466, respectively,
compared with net income of $195,972 and $374,497, respectively,
for the corresponding period in fiscal 1995. The increases in
net income are primarily attributable to higher rental income at
the Partnership's three properties, partially offset by an
increase in property operating expense.
Rental income totaled $1,166,105 and $2,333,638, respectively,
for the three and six months ended May 31, 1996 compared with
$1,116,752 and $2,215,449, respectively, for the corresponding
period in fiscal 1995. The increases are 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 and six months ended
May 31, 1996 totaled $510,907 and $1,061,465, respectively,
compared with $506,595 and $1,006,140 respectively, for the
corresponding periods in fiscal 1995. The increases are
attributable to higher repairs and maintenance expenses at
Lakeview Village and The Hamptons at Quail Hollow, primarily due
to painting and interior carpet replacement.
During the first six months of fiscal 1996 and 1995, average
occupancy levels at the Partnership's properties were as follows:
Property 1996 1995
Canterbury Park 96% 96%
The Hamptons at Quail Hollow 95% 96%
Lakeview Village 97% 94%
Part II Other Information
Items 1-4 Not applicable.
Item 5 Other Information.
An offer dated April 19, 1996, was sent by Equity
Resource Fund XVIII ("Fund XVIII") to limited partners
of the Partnership to purchase up to 4.8% of their
limited partnership interests for $185 per unit prior
to the expiration of the offer on May 19, 1996.
On June 3, 1996, the General Partners of the
Partnership sent a letter to limited partners
recommending against the offer because the price was
inadequate especially in view of the Net Asset Value of
the units.
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: July 15, 1996 BY: /s/ Paul L. Abbott
Director, President, Chief
Executive Officer and
Chief Financial Officer