<PAGE>
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 MARCH 31, 1998
or
Transition Report Pursuant to Section 13 of 15(d) of the
- ------------------ Securities Exchange Act of 1934
For the transition period from to
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COMMISSION FILE NUMBER: 0-10223
CONAM REALTY INVESTORS 81 L.P.
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
California 13-3069026
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STATE OR OTHER JURISDICTION OF INCORPORATION I.R.S. EMPLOYER IDENTIFICATION NO.
OR ORGANIZATION
1764 San Diego Avenue
San Diego, CA Attn. Robert J. Svatos 92110-1906
- ------------------------------------- ----------
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES ZIP CODE
(619)-297-6771
--------------
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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<PAGE>
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS AT MARCH 31, AT DECEMBER 31,
1998 1997
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<S> <C> <C>
ASSETS
Investments in real estate:
Land $ 3,630,176 $ 3,630,176
Buildings and improvements 17,975,266 17,975,266
---------------------------------
21,605,442 21,605,442
Less accumulated depreciation (11,202,145) (11,022,393)
---------------------------------
10,403,297 10,583,049
Cash and cash equivalents 1,566,284 1,388,845
Restricted cash 453,337 430,849
Mortgage fees, net of accumulated amortization
of $283,584 in 1998 and $270,880 in 1997 72,133 84,837
Other assets 15,102 7,162
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TOTAL ASSETS $ 12,510,153 $ 12,494,742
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- --------------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage payable 9,810,519 9,830,261
Distribution payable 173,978 160,929
Accounts payable and accrued expenses 259,246 202,484
Interest payable 69,491 -
Security deposits 76,656 78,834
Due to general partner and affiliates 14,477 13,797
---------------------------------
Total Liabilities 10,404,367 10,286,305
---------------------------------
Partners' Capital (Deficit):
General Partner (265,715) (265,715)
Limited Partners (78,290 Units outstanding) 2,371,501 2,474,152
---------------------------------
Total Partners' Capital 2,105,786 2,208,437
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 12,510,153 $ 12,494,742
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCOME
Rental $ 848,852 $ 804,210
Interest and other 11,625 37,423
---------------------------------
Total Income 860,477 841,633
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EXPENSES
Property operating 346,966 310,466
Interest 208,684 211,097
Depreciation and amortization 192,456 192,457
General and administrative 41,044 49,636
---------------------------------
Total Expenses 789,150 763,656
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NET INCOME $ 71,327 $ 77,977
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NET INCOME ALLOCATED:
To the General Partner $ 17,398 $ 16,093
To the Limited Partners 53,929 61,904
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NET INCOME $ 71,327 $ 77,997
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PER LIMITED PARTNERSHIP UNIT (78,290 UNITS OUTSTANDING)
Net Income $ 0.69 $ 0.79
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE (DEFICIT) AT DECEMBER 31, 1997 $ (265,715) $ 2,474,152 $ 2,208,437
Net income 17,398 53,929 71,327
Distributions ($2.00 per Unit) (17,398) (156,580) (173,978)
- --------------------------------------------------------------------------------------------------------------
BALANCE (DEFICIT) AT MARCH 31, 1998 $ (265,715) $ 2,371,501 $ 2,105,786
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 71,327 $ 77,997
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 192,456 192,457
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Fundings to restricted cash (29,817) (99,298)
Transfers from restricted cash 7,329 -
Other assets (7,940) 5,360
Accounts payable and accrued expenses 56,762 63,954
Interest payable 69,491 -
Security deposits (2,178) 1,085
Due to general partner and affiliates 680 947
--------------------------------
Net cash provided by operating activities 358,110 242,502
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (160,929) (1,478,811)
Mortgage principal payments (19,742) (27,305)
--------------------------------
Net cash used for financing activities (180,671) (1,506,116)
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Net increase (decrease) in cash and cash equivalents 177,439 (1,263,614)
Cash and cash equivalents, beginning of period 1,388,845 2,741,077
- --------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,566,284 $ 1,477,463
- --------------------------------------------------------------------------------------------------------------
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 139,193 $ 211,097
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</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1997 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 March 31, 1998 and the
results of operations and cash flows for the three months ended March 31, 1998
and 1997 and the consolidated statement of partners' capital for the three
months ended March 31, 1998. Results of operations for the period are not
necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to the year ended December 31,
1997, and no material contingencies exist, which would require disclosure in
this interim report per Regulation S-X, Rule 10-01, Paragraph (a) (5).
<PAGE>
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Partnership had cash and cash equivalents of $1,566,284
which were invested in unaffiliated money market funds, compared with $1,388,845
at December 31, 1997. The increase reflects the excess of cash provided from
operations net of distributions and mortgage payments. The Partnership's
restricted cash balance totaled $453,337 at March 31, 1998 compared to $430,849
at December 31, 1997. The increase is primarily attributable to contributions
made to an escrow account for the purpose of funding insurance, real estate
taxes, and property replacements and repairs as required under the terms of the
current mortgage loans.
The General Partner declared a regular cash distribution of $2.00 per Unit for
the quarter ended March 31, 1998 which is to be paid on or about May 15,1998.
The General Partner will determine the amount of future quarterly distributions
based on the Partnership's available cash flow and future cash needs.
RESULTS OF OPERATIONS
Partnership operations for the three months ended March 31,1998 generated net
income of $71,327 compared with net income of $77,997 for the corresponding
period in 1997. The decrease for the three month period is primarily
attributable to a decrease in interest income and an increase in property
operating expenses, partially offset by an increase in rental revenue.
Rental income totaled $848,852 for the three months ended March 31,1998
compared with $804,210 for the corresponding period in 1997, due to higher
overall occupancy levels resulting from reduced turnover at Tierra Catalina
Apartments and increased rents at Las Colinas Apartments I & II.
Interest and other income totaled $11,625 for the three months ended March
31,1998 compared with $37,423 for the corresponding period in 1997. The
decrease for the three month period ended March 31, 1998 is primarily due to
lower average cash balances than the corresponding period in 1997 which included
the proceeds from the sale of Ridge Park.
Property operating expenses for the three months ended March 31,1998 totaled
$346,966 compared with $310,446 for the corresponding period in 1997. The
increase is primarily attributable to a higher repair and maintenance and
utilities expense at Las Colinas Apartments I & II.
During the first three months of 1998 and 1997, average occupancy levels at the
Partnership's properties were as follows:
<TABLE>
<CAPTION>
PROPERTY 1998 1997
-------------------------------------------------
<S> <C> <C>
Las Colinas Apartments I & II 97% 98%
Tierra Catalina Apartments 97% 92%
-------------------------------------------------
</TABLE>
<PAGE>
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
PART II OTHER INFORMATION
ITEMS 1-5 Not applicable
ITEMS 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 March 31, 1998.
<PAGE>
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: May 13, 1998 BY:/s/ DANIEL J. EPSTEIN
-----------------
Daniel J. Epstein
Director, President, and
Principal Executive Officer
Date: May 13, 1998 BY:/s/ ROBERT J. SVATOS
----------------
Robert J. Svatos
Vice President and Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,566,284
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 21,605,442
<DEPRECIATION> 11,202,145
<TOTAL-ASSETS> 12,510,153
<CURRENT-LIABILITIES> 593,848
<BONDS> 9,810,519
0
0
<COMMON> 0
<OTHER-SE> 2,105,786
<TOTAL-LIABILITY-AND-EQUITY> 12,510,153
<SALES> 848,852
<TOTAL-REVENUES> 860,477
<CGS> 0
<TOTAL-COSTS> 346,966
<OTHER-EXPENSES> 233,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208,684
<INCOME-PRETAX> 71,327
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,327
<EPS-PRIMARY> 0.69
<EPS-DILUTED> 0.69
</TABLE>
