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, 1999
or
Transition Report Pursuant to Section 13 of 15(d) of the Securities
- --- Exchange Act of 1934 For the transition period from ____ to ____
COMMISSION FILE NUMBER: 0-014341
CONAM REALTY INVESTORS 5 L.P.
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EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
California 11-2712111
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STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER IDENTIFICATION NO.
INCORPORATION OR ORGANIZATION
1764 San Diego Avenue
San Diego, CA 92110 Attn. Robert J. Svatos 92110-1906
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ADDRESS OF PRINCIPAL EXECUTIVE OFFICES ZIP CODE
(619) 297-6771
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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
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CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statement
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CONSOLIDATED BALANCE SHEETS AT MAY 31, AT NOVEMBER 30,
1999 1998
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ASSETS
Investments in real estate:
Land $ - $ 3,780,687
Buildings and improvements - 22,419,500
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- 26,200,187
Less accumulated depreciation - (11,507,294)
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- 14,692,893
Cash and cash equivalents 998,834 424,001
Restricted cash - 261,132
Other assets, net of accumulated amortization
of $0 in 1999 and $164,087 in 1998 125,019 347,073
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TOTAL ASSETS $ 1,123,853 $ 15,725,099
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage payable $ - $ 6,072,451
Distribution payable 500,384 -
Accounts payable and accrued expenses 81,250 387,989
Due to general partner and affiliates - 16,038
Security deposits - 73,629
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Total Liabilities 581,634 6,550,107
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Partners' Capital:
General Partner 11,131 182,795
Limited Partners (57,490 Units outstanding) 531,088 8,992,197
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Total Partners' Capital 542,219 9,174,992
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,123,853 $ 15,725,099
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SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
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CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
MAY 31, MAY 31,
1999 1998 1999 1998
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INCOME
Rental $ - $ 884,396 $ 614,349 $1,919,104
Interest and other 8,125 21,841 87,861 23,465
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Total Income 8,125 906,237 702,210 1,942,569
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EXPENSES
Property operating - 489,193 363,493 1,022,055
Depreciation and amortization - 218,901 110,544 441,025
Interest - 121,326 78,229 238,701
General and administrative 34,671 53,078 62,900 82,559
Write-off of assets - - 36,555 146,839
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Total Expenses 34,671 882,498 651,721 1,931,179
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Income (Loss) from operations (26,546) 23,739 50,489 11,390
Gain on sale of properties - - 11,103,411 -
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Income (Loss) before extraordinary loss (26,546) 23,739 11,153,900 11,390
Extraordinary loss from
debt extinguishment - - (382,458) -
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NET INCOME (LOSS) $ (26,546) $ 23,739 $10,771,442 $ 11,390
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NET INCOME (LOSS) ALLOCATED:
To the General Partner $ (531) $ 2,583 $ (170,324) $ 4,638
To the Limited Partners (26,015) 21,156 10,941,766 6,752
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NET INCOME (LOSS) $ (26,546) $ 23,739 $10,771,442 $ 11,390
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PER LIMITED PARTNERSHIP UNIT
(57,490 UNITS OUTSTANDING)
Income (Loss) from operations $ (0.45) $ 0.37 $ 3.77 $ 0.12
Gain on sale of properties - - 193.14 -
Extraordinary loss from
debt extinguishment - - (6.59) -
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NET INCOME (LOSS) $ (0.45) $ 0.37 $ 190.32 $ 0.12
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
GENERAL LIMITED
FOR THE SIX MONTHS ENDED MAY 31, PARTNER PARTNERS TOTAL
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BALANCE AT NOVEMBER 30, 1998 182,795 8,992,197 9,174,992
Net income (loss) (170,324) 10,941,766 10,771,442
Distributions ($337.50 per Limited Partner Unit) (1,340) (19,402,875) (19,404,215)
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BALANCE AT MAY 31, 1999 $ 11,131 $ 531,088 $ 542,219
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SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,771,442 $ 11,390
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 110,544 441,025
Write-off of assets 36,555 146,839
Gain on sale of properties (11,103,411) -
debt extinguishment 382,458 -
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Fundings to restricted cash (40,516) (84,022)
Release of restricted cash 301,648 -
Other assets 150,584 (295,322)
Accounts payable and accrued expenses (306,739) 8,511
Due to general partner and affiliates (16,038) 764
Security deposits (73,629) (775)
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Net cash provided by operating activities 212,898 228,410
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of properties 25,764,800 -
Insurance recovery from fire damage - 254,945
Additions to real estate (111,560) (673,504)
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Net cash provided by (used in) investing activities 25,653,240 (418,559)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (18,903,831) (710,998)
Prepayment penalty (315,023) -
Mortgage principal payments (6,072,451) (50,176)
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Net cash used in financing activities (25,291,305) (761,174)
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Net increase (decrease) in cash and cash equivalents 574,833 (951,323)
Cash and cash equivalents, beginning of period 424,001 1,424,876
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 998,834 $ 473,553
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 78,229 $ 199,080
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Write-off of buildings and improvements $ 75,413 $(385,037)
Write-off of accumulated depreciation $ (38,858) $ 138,198
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SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1998 audited consolidated
financial statements within Form 10-K.
The unaudited interim consolidated financial statements include all normal
and recurring adjustments which are, in the opinion of management, necessary
to present a fair statement of financial position as of May 31, 1999 and the
results of operations for the three and six months ended May 31, 1999 and
1998, cash flow for the six months ended May 31, 1999 and 1998, and the
consolidated statement of partners' capital for the six months ended May 31,
1999. Results of operations are not necessarily indicative of the results to
be expected for the full year.
The Partnership has sold its remaining investments in real estate. The sale
and liquidation plan was approved by the Unitholders through a consent
solicitation statement as of January 15, 1999 and the sale of the properties
was completed on January 29, 1999.
For assets sold or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in net income for the period.
Within 30 days of the completion of the sale of the properties, the
Partnership declared a cash distribution representing substantially all of
the net proceeds from sale and substantially all of the remaining cash from
operations of the Partnership less an amount for costs and contingencies
associated with the sale and liquidation of the Partnership.
No other significant events have occurred subsequent to fiscal year 1998, and
no material contingencies exist, which would require disclosure in this
interim report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
On February 26, 1999, the Partnership declared a cash distribution in the
amounts of $19,402,875 to the Limited Partner Unitholders ($337.50 per Unit)
and $1,340 to the General Partner, which amounts were equal to substantially
all of the net proceeds from the sale (the "Sale") of the Partnership's
remaining investments in real estate ("Properties") together with other
available cash from operations of the Partnership less an amount for costs
associated with the liquidation of the Partnership and other contingencies.
In order to meet North Carolina's non-resident income tax withholding
requirements, $500,384 of the Limited Partners Unitholders distribution was
withheld and is payable to the State of North Carolina. As a result of the
Sale and distribution, cash and cash equivalents comprise substantially all
of the remaining assets of the Partnership. The General Partner believes that
the Partnership has sufficient cash to meet the needs of the Partnership for
any contingencies or costs associated with the Sale and the final liquidation
of the Partnership.
As a result of the Sale of the remaining Properties, the only source of
revenue prior to final liquidation will be the interest generated on the
remaining cash balances. The remaining cash is invested in an unaffiliated
highly liquid money market fund.
At May 31, 1999, the Partnership had cash and cash equivalents of $998,834
compared with $424,001 at November 30, 1998. The increase in cash and cash
equivalents is due to the Sale of the Properties and the subsequent
distribution of substantially all of the net proceeds thereof and other
Partnership cash. Remaining cash available, if any, after the satisfaction of
all Partnership obligations will be distributed pursuant to the Partnership
agreement.
RESULTS OF OPERATIONS
Partnership net income (loss) for the three and six months ended May 31, 1999
was ($26,546) and $10,771,442, respectively, compared to $23,739 and $11,390
for the corresponding periods in fiscal 1998. The increased loss for the
three months ended May 31, 1999 is primarily attributable to the lack of
income due to the Sale of the Properties. The increase in income for the six
month period is primarily attributable to the gain on the Sale.
The Partnership generated operating income (losses) for the three and six
months ended May 31, 1999 of ($26,546) and $50,489, respectively, compared to
$23,739 and $11,390, respectively, for the corresponding periods in fiscal
1998. Total income for the three and six months ended May 31, 1999 totaled
$8,125 and $702,210, respectively, compared with $906,237 and $1,942,569,
respectively, for the corresponding period in fiscal 1998. The decreased
total income is primarily attributable to the decrease in rental income
attributable to the Sale on January 29, 1999, partially offset by interest
income earned on the proceeds from the Sale prior to distributions to the
Unitholders.
Total expenses for the three and six months ended May 31, 1999 were $34,671
and $651,721, respectively, compared to $882,498 and $1,931,179,
respectively, for the corresponding periods in fiscal 1998. The decrease in
total expenses is primarily attributable to the Sale.
General and administrative expenses for the three and six months ended May
31, 1999 were $34,671 and $62,900, respectively, compared to $53,078 and
$82,559, respectively, for the corresponding periods in fiscal 1998. The
decrease in general and administrative expenses is primarily attributable to
lower fees charged for printing, mailing and investor relations.
YEAR 2000
Due to the consummation of the Sale the Partnership is no longer engaged in
the operation of real properties or any other business. As a result of the
foregoing, and in view of the General Partner's plan to complete the full
liquidation of the Partnership prior to January 1, 2000, the Partnership has
no exposure to Year 2000 issues.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risks
Due to the consummation of the Sale and its mortgage indebtedness was repaid,
the Partnership has no exposure to interest rate risk. In addition, the
Partnership is expected to be liquidated during 1999.
PART II - OTHER INFORMATION
ITEMS 1-5. Not applicable
ITEM 6. Exhibits & Reports on Form 8-K
(a) Exhibits
3.1 Amendment, dated January 18, 1999 to Partnership's Second
Amended and Restated Certificate and Agreement of Limited
Partnership (included as, and incorporated herein by
reference to, Exhibit 4.1 to the Partnership's Report on Form
8-K filed on February 16, 1999).
10.1 Agreement for Purchase and Sale and Joint Escrow Instructions
between Lakeview Village at Ponte Vedra Lakes Joint Venture
and DOC Investors, L.L.C. dated January 26, 1999 with respect
to Lakeview Village Apartments (included as, and incorporated
herein by reference to, Exhibit 10.2 to the Partnership's
Report on Form 8-K filed on February 16, 1999).
10.2 Agreement for Purchase and Sale and Joint Escrow Instructions
between The Hamptons Joint Venture and Lend Lease Real Estate
Investments, Inc. dated December 15, 1998, and amendment
thereto, and assignment thereof, with respect to Hamptons at
Quail Hollow Apartments (included as, and incorporated herein
by reference to, Exhibit 10.1 to the Partnership's Report on
Form 8-K filed on February 16, 1999).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
May 31, 1999.
(27)Financial Data Schedule
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 hereunto duly authorized.
CONAM PROPERTY SERVICES IV, LTD.
General Partner of ConAm Realty Investors 5 L.P.
BY: CONTINENTAL AMERICAN DEVELOPMENT, INC.
GENERAL PARTNER
Date: July 13, 1999 BY: /s/ DANIEL J. EPSTEIN
Daniel J. Epstein
Director, President, and Principal
Executive Officer
Date: July 13, 1999 BY: /s/ ROBERT J. SVATOS
Robert J. Svatos
Vice President and Director