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, 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: 0-014341 HUTTON/CONAM REALTY INVESTORS 5 Exact Name of Registrant as Specified in its Charter California 11-2712111 State or Other Jurisdiction I.R.S. Employer of Incorporation or Organization 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 May 31, At November 30, 1997 1996 Assets Investments in real estate: Land $ 3,780,687 $ 3,780,687 Buildings and improvements 22,125,028 22,125,028 25,905,715 25,905,715 Less accumulated depreciation (10,476,730) (10,055,068) 15,428,985 15,850,647 Property held for disposition --- 3,687,584 Cash and cash equivalents 1,967,153 2,121,544 Restricted cash 310,626 225,415 Other assets, net of accumulated amortization of $115,668 in 1997 and $99,528 in 1996 145,193 167,504 Total Assets $17,851,957 $22,052,694 Liabilities and Partners' Capital Liabilities: Mortgage payable $ 6,243,134 $ 6,299,052 Distribution payable 351,980 439,974 Accounts payable and accrued expenses 430,292 309,475 Due to general partners and affiliates 14,692 19,613 Security deposits 97,755 129,482 Total Liabilities 7,137,853 7,197,596 Partners' Capital: General Partners 175,410 182,637 Limited Partners (57,490 units outstanding) 10,538,694 14,672,461 Total Partners' Capital 10,714,104 14,855,098 Total Liabilities and Partners' Capital $17,851,957 $22,052,694 CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL	 For the six months ended May 31, 1997 General Limited Partners Partners Total Balance at November 30, 1996 $ 182,637 $14,672,461 $14,855,098 Net income 6,852 2,707,543 2,714,395 Cash distributions (14,079) (6,841,310) (6,855,389) Balance at May 31, 1997 $ 175,410 $10,538,694 $10,714,104 CONSOLIDATED STATEMENTS OF OPERATIONS Three months Six months ended May 31, ended May 31, 1997 1996 1997 1996 Income Rental $ 884,396 $ 1,166,105 $ 1,836,941 $ 2,333,638 Interest and other 21,841 23,707 83,683 50,162 Total Income 906,237 1,189,812 1,920,624 2,383,800 Expenses Property operating 489,193 510,907 1,014,697 1,061,465 Depreciation and amortization 218,901 271,277 437,802 545,132 Interest 121,326 123,424 243,192 247,349 General and administrative 53,078 32,274 93,179 67,388 Total Expenses 882,498 937,882 1,788,870 1,921,334 Income from operations 23,739 251,930 131,754 462,466 Gain on sale of property --- --- 2,582,641 --- Net Income $ 23,739 $ 251,930 $ 2,714,395 $ 462,466 Net Income Allocated: To the General Partners $ 2,583 $ 6,918 $ 6,852 $ 13,423 To the Limited Partners 21,156 245,012 2,707,543 449,043 $ 23,739 $ 251,930 $ 2,714,395 $ 462,466 Per limited partnership unit (57,490 outstanding) Income from operations $.37 $4.26 $ 2.18 $ 7.81 Gain on sale of property --- --- 44.92 --- $.37 $ 4.26 $ 47.10 $ 7.81 CONSOLIDATED STATEMENTS OF CASH FLOWS	 For the six months ended May 31, 1997 1996 Cash Flows From Operating Activities: Net income $ 2,714,395 $ 462,466 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 437,802 545,132 Gain on sale of property (2,582,641) --- Increase (decrease) in cash arising from changes in operating assets and liabilities: Fundings to restricted cash (85,211) (85,073) Other assets 6,171 8,268 Accounts payable and accrued expenses 120,817 (28,687) Due to general partners and affiliates (4,921) 1,121 Security deposits (31,727) 3,750 Net cash provided by operating activities 574,685 906,977 Cash Flows From Investing Activities: Net proceeds from sale of property 6,270,225 --- Additions to real estate --- (288,766) Net cash provided by (used for) investing activities 6,270,225 (288,766) Cash Flows From Financing Activities: Distributions (6,943,383) (879,948) Mortgage principal payments (55,918) (51,761) Net cash used for financing activities (6,999,301) (931,709) Net decrease in cash and cash equivalents (154,391) (313,498) Cash and cash equivalents, beginning of period 2,121,544 2,253,221 Cash and cash equivalents, end of period $ 1,967,153 $ 1,939,723 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 243,192 $ 247,349 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The unaudited interim consolidated financial statements should be read in conjunction with the Partnership's annual 1996 audited consolidated financial statements within Form 10-K. The unaudited interim consolidated financial statements include all normal and reoccurring adjustments which are, in the opinion of management, necessary to present a fair statement of financial position as of May 31, 1997 and the results of operations for the three and six months ended May 31, 1997 and 1996 and the consolidated statements of cash flows and partners' capital for the six months ended May 31, 1997. Results of operations for the periods are not necessarily indicative of the results to be expected for the full year. Certain prior year amounts have been reclassified in order to conform to the current year's presentation. The following significant event has occurred subsequent to fiscal year 1996, which requires disclosure in this interim report per Regulation S-X, Rule 10-01, Paragraph (a)(5): Sale of Property On December 10, 1996, the Partnership closed on the sale of Canterbury Park Apartments ("Canterbury Park"). Canterbury Park sold for $6,387,300 to Burcam Capital I, L.L.C., a North Carolina limited liability company (the "Buyer"), which is unaffiliated with the Partnership. The selling price was determined by arm's length negotiations between the Partnership and the Buyer. The transaction resulted in a gain on sale for Canterbury Park of $2,582,641, which is reflected in the Partnership's consolidated statements of operations for the six months ended May 31, 1997. On January 24, 1997, the General Partners paid a special distribution of $6,151,430, representing the net proceeds from the sale of Canterbury Park, to the Limited Partners. Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources At May 31, 1997, the Partnership had cash and cash equivalents of $1,967,153 which were invested in unaffiliated money market funds, compared with $2,121,544 at November 30, 1996. The decrease reflects mortgage principal payments and cash distributions to Partners exceeding proceeds from the sale of Canterbury Park (discussed below) and cash provided by operating activities during the first half of fiscal 1997. On December 10, 1996, the Partnership closed on the sale of Canterbury Park. Canterbury Park sold for $6,387,300 to Burcam Capital I, L.L.C., a North Carolina limited liability company (the "Buyer"), which is unaffiliated with the Partnership. The selling price was determined by arm's length negotiations between the Partnership and the Buyer. The transaction resulted in a gain on sale for Canterbury Park of $2,582,641, which is reflected in the Partnership's consolidated statement of operations in the first six months of the 1997 fiscal year. On January 24, 1997, the General Partners paid a special distribution of $6,151,430, or $107.00 per unit, representing the net proceeds from the sale of Canterbury Park, to the Limited Partners. The Partnership's restricted cash balance totaled $310,626 at May 31, 1997, compared to $225,415 at November 30, 1996. The increase is primary attributable to contributions made to an escrow account for the purpose of funding real estate taxes as required under the terms of the Lakeview Village mortgage. Accounts payable and accrued expenses totaled $430,292 at May 31, 1997, compared to $309,475 at November 30, 1996. The increase is primarily attributable to North Carolina state withholding tax requirements relating to the special distribution paid to the Limited Partners from the sale proceeds of Canterbury Park. The sale of Canterbury Park is also the primary reason for the decrease in the Partnership's security deposits and due to general partners and affiliates balances at May 31, 1997, compared to the amount of such balances at November 30, 1996. Due to general partners and affiliates represents property management fees owed by the Partnership. The General Partners declared a regular cash distribution of $6 per Unit for the quarter ended May 31, 1997 which will be paid to investors on or about July 15, 1997. The General Partners will determine the amount of future quarterly distributions based on the Partnership's available cash flow and future cash needs. A portion of the 1997 second quarter cash distribution was funded from the Partnership's cash reserves as a result of capital expenditures required at the Partnership's properties. Results of Operations Partnership operations for the three and six months ended May 31, 1997 generated net income of $23,739 and $2,714,395, respectively, compared with net income of $251,930 and $462,466, respectively, for the corresponding periods in fiscal 1996. The increase in the first half of 1997 was primarily attributable to the gain on sale of Canterbury Park. Income from operations for the three and six months ended May 31, 1997 was $23,739 and $131,754, respectively, compared with $251,930 and $462,466, respectively, for the corresponding periods in fiscal 1996. The decrease is primarily due to the sale of Canterbury Park and the corresponding reduction in rental income, and, to a lesser extent, a decline in occupancy at Lakeview Village, resulting in decreased rental income at the property. Rental income totaled $884,396 and $1,836,941, respectively, for the three and six months ended May 31, 1997 compared with $1,166,105 and $2,333,638, respectively, for the corresponding periods in fiscal 1996, down primarily as a result of the sale of Canterbury Park on December 10, 1996, and a decline in occupancy at Lakeview Village. Interest and other income totaled $21,841 and $83,683, respectively, for the three and six months ended May 31, 1997 compared with $23,707 and $50,162, respectively, for the corresponding periods in fiscal 1996. The increase in the first half of 1997 is primarily due to an increase in the Partnership's average cash balance due to the sale of Canterbury Park. Property operating expenses for the three and six months ended May 31, 1997 totaled $489,193 and $1,014,697, respectively, compared with $510,907 and $1,061,465, respectively, for the corresponding periods in fiscal 1996. The decrease for both periods is attributable to the sale of Canterbury Park, and to a decrease in repairs and maintenance expense at The Hamptons at Quail Hollow, partially offset by an increase in repairs and maintenance at Lakeview Village primarily as a result of parking lot and roof repairs. The sale of Canterbury Park is also the primary reason for the decrease in depreciation and amortization expense for the three and six months ended May 31, 1997, which totaled $218,901 and $437,802, respectively, compared to $271,277 and $545,132, respectively, for the corresponding periods in fiscal 1996. General and administrative expenses for the three and six months ended May 31, 1997 were $53,078 and $93,179, respectively, compared to $32,274 and $67,388, respectively, for the same periods in 1996. During the 1997 periods, certain expenses incurred by an unaffiliated third party service provider in servicing the Partnership, which were voluntarily absorbed by affiliates of RI 5 Real Estate Services Inc. in prior periods, were reimbursed to RI 5 Real Estate Services Inc. and its affiliates. During the first six months of fiscal 1997 and 1996, average occupancy levels at the Partnership's properties were as follows: Property 1997 1996 The Hamptons at Quail Hollow 92% 95% Lakeview Village 87% 97% 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 - No reports on Form 8-K were filed during the quarter ended May 31, 1997. 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, 1997 BY: /s/ Paul L. Abbott Paul L. Abbott Director, President, Chief Executive Officer and Chief Financial Officer