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 JUNE 30, 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: 0-10223
CONAM REALTY INVESTORS 81 L.P.
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EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
California 13-3069026
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STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION I.R.S. EMPLOYER IDENTIFICATION NO.
1764 San Diego Avenue
SAN DIEGO, CA 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 81 L.P.
AND CONSOLIDATED VENTURES
PART 1 - FINANCIAL INFORMATION
ITEM 1 Financial Statements
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CONSOLIDATED BALANCE SHEETS AT JUNE 30, AT DECEMBER 31,
1999 1998
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ASSETS
Investments in real estate:
Land $ - $ 3,630,175
Buildings and improvements - 17,984,707
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- 21,614,882
Less accumulated depreciation - (11,739,275)
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- 9,875,607
Cash and cash equivalents 418,669 1,578,924
Restricted cash - 410,262
Mortgage fees, net of accumulated amortization
of $0 in 1999 and $321,697 in 1998 - 34,020
Other assets 10,899 158,544
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TOTAL ASSETS $ 429,568 $ 12,057,357
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgages payable $ - $ 9,718,148
Accounts payable and accrued expenses 67,491 307,101
Due to general partner and affiliates - 14,966
Interest payable - 68,837
Security deposits - 68,378
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Total Liabilities 67,491 10,177,430
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Partners' Capital (Deficit):
General Partner (165,856) (298,566)
Limited Partners (78,290 Units outstanding) 527,933 2,178,493
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Total Partners' Capital 362,077 1,879,927
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 429,568 $ 12,057,357
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SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
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CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
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INCOME
Rental $ - $ 845,161 $ 265,290 $ 1,694,013
Interest and other 4,765 18,711 68,511 30,336
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Total Income 4,765 863,872 333,801 1,724,349
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EXPENSES
Property operating - 352,669 174,764 699,635
Depreciation and amortization - 192,457 32,070 384,913
Interest - 208,047 61,890 416,731
General and administrative 49,466 46,287 81,603 87,331
Write-off of assets - 1,892 - 1,892
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Total Expenses 49,466 801,352 350,327 1,590,502
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Income (Loss) from operations (44,701) 62,520 (16,526) 133,847
Gain on sale of properties - - 12,274,841 -
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Income (Loss) before extraordinary items (44,701) 62,520 12,258,315 133,847
Extraordinary loss from debt extinguishment - - (129,068) -
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NET INCOME (LOSS) $ (44,701) $ 62,520 $ 12,129,247 $ 133,847
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NET INCOME (LOSS) ALLOCATED:
To the General Partner $ (447) $ (4,013) $ 274,782 $ 13,385
To the Limited Partners (44,254) 66,533 11,854,465 120,462
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NET INCOME (LOSS) $ (44,701) $ 62,520 $ 12,129,247 $ 133,847
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PER LIMITED PARTNERSHIP UNIT
(78,290 LIMITED PARTNER UNITS OUTSTANDING)
Income (Loss) from operations $ (0.56) $ 0.85 $ (0.20) $ 1.54
Extraordinary loss from debt extinguishment - - (1.65) -
Gain on sale of properties - - 153.27 -
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NET INCOME (LOSS) $ (0.56) $ 0.85 $ 151.42 $ 1.54
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1999
GENERAL LIMITED
PARTNER PARTNERS TOTAL
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BALANCE (DEFICIT) AT DECEMBER 31, 1998 $ (298,566) $ 2,178,493 $ 1,879,927
Net income 274,782 11,854,465 12,129,247
Distributions ($172.50 per Limited Partner Unit) (142,072) (13,505,025) (13,647,097)
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BALANCE (DEFICIT) AT JUNE 30, 1999 $ (165,856) $ 527,933 $ 362,077
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SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,129,247 $ 133,847
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 32,070 384,913
Gain on sale of properties (12,274,841) -
Extraordinary loss from debt extinguishment 129,068 -
Write-off of assets - 1,892
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Fundings to restricted cash - (125,529)
Release of restricted cash 410,262 187,366
Mortgage fees - (24,000)
Other assets 147,645 (25,627)
Accounts payable and accrued expenses (239,610) (2,174)
Due to general partner and affiliates (14,966) 286
Interest payable (68,837) 69,278
Security deposits (68,378) (7,551)
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Net cash provided by (used in) operating activities 181,660 592,701
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (12,032) (6,248)
Net proceeds from sale of properties 22,035,362 -
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Net cash provided by (used in ) investing activities 22,023,330 (6,248)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (13,647,097) (334,907)
Mortgage principal payments (9,718,148) (49,883)
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Net cash used in financing activities (23,365,245) (384,790)
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Net increase (decrease) in cash and cash equivalents (1,160,255) 201,663
Cash and cash equivalents, beginning of period 1,578,924 1,388,845
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 418,669 $ 1,590,508
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION-
Cash paid during the period for interest $ 130,727 $ 347,453
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Write-off of buildings and improvements $ - $ (3,942)
Write-off of accumulated depreciation $ - $ 2,050
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SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
CONAM REALTY INVESTORS 81 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 June 30, 1999 and
the results of operations for the three and six months ended June 30, 1999
and 1998, cash flow for the six months ended June 30, 1999 and 1998, and the
consolidated statement of partners' capital for the six months ended June
30, 1999. Results for the six months ended June 30, 1999 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.
Certain first quarter 1999 amounts have been reclassified to conform with
the presentation adopted in the current quarter.
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 81 L.P.
AND CONSOLIDATED VENTURES
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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 cash distributions in the amounts
of $13,505,025 to the Limited Partner Unitholders ($72.50 per Unit) and $142,072
to the General Partner, which amounts represent 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. As a result of the Sale and
distribution, cash and cash equivalents and other assets comprise 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 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 June 30, 1999, the Partnership had cash and cash equivalents of $418,669
compared with $1,578,924 at December 31, 1998. The decrease 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. As
required by the Partnership agreement, upon final liquidation of the
Partnership, the general partner is to contribute $201,260 ("GP Contribution")
to the Partnership, which represents distributions of net proceeds from Sale or
refinancing previously received by the General Partner. Remaining cash
available, if any, after the contribution by the General Partner and 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 June 30, 1999
was ($44,701) and $12,129,247, respectively, compared to $62,520 and $133,847
for the corresponding periods in fiscal 1998. The decreased income for the three
months ended June 30, 1999 is primarily attributable to the Sale of the
Properties. The increase in income for the six month period is primarily
attributable to the gain on the Sale of the properties.
The Partnership generated operating losses for the three and six months ended
June 30, 1999 of $44,701 and $16,526, respectively, compared to operating income
of $62,520 and $133,847, respectively, for the corresponding periods in fiscal
1998. Total income for the three and six months ended June 30, 1999 totaled
$4,765 and $333,801, respectively, compared with $863,872 and $1,724,349,
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 June 30, 1999 were $49,466 and
$350,327, respectively, compared to $801,352 and $1,590,502, respectively, for
the corresponding periods in fiscal 1998. The decrease in total expenses is
primarily attributable to the Sale of the properties.
General and administrative expenses for the three and six months ended June 30,
1999 were $49,466 and $81,603, respectively, compared to $46,287 and $87,331,
respectively, for the corresponding periods in fiscal 1998. The decrease in
general and administrative expenses for the six months ended June 30, 1999, is
primarily attributable to a reduction in printing, mailing and investor
relations expenses. The change for the three months ended June 30, 1999 as
compared to June 30, 1998 was not significant.
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 the repayment of its mortgage
indebtedness, 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 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 RI81 Las Colinas Limited Partnership
and DOC Investors, L.L.C. dated January 26, 1999 with
respect to the Sale of Las Colinas Apartments I & II
(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).
10.2 Agreement for Purchase and Sale and Joint Escrow
Instructions between Tierra Catalina Limited Partnership
and DOC Investors, L.L.C. dated January 26, 1999 with
respect to the Sale of Tierra Catalina (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).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 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, LTD.
General Partner of ConAm Realty Investors 81 L.P.
BY: CONTINENTAL AMERICAN DEVELOPMENT, INC.
GENERAL PARTNER
Date: August 10, 1999 BY:/s/ DANIEL J. EPSTEIN
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Daniel J. Epstein
Director, President, and Principal Executive
Officer
Date: August 10, 1999 BY:/s/ ROBERT J. SVATOS
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Robert J. Svatos
Vice President and Director