<PAGE>
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the
X Securities Exchange Act of 1934
- ----------
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
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.
----------------------------------------------------
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
CALIFORNIA 13-3069026
---------- ----------
STATE OR OTHER JURISDICTION OF I.R.S.
INCORPORATION OR ORGANIZATION EMPLOYER IDENTIFICATION NO.
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 JUNE 30, AT DECEMBER 31,
1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in real estate:
Land $ 3,630,176 $ 3,630,176
Buildings and improvements 17,977,572 17,975,266
--------------------------
21,607,748 21,605,442
Less accumulated depreciation (11,379,848) (11,022,393)
--------------------------
10,227,900 10,583,049
Cash and cash equivalents 1,590,508 1,388,845
Restricted cash 369,012 430,849
Mortgage fees, net of accumulated amortization
of $296,288 in 1998 and $270,880 in 1997 83,429 84,837
Other assets 32,789 7,162
- -----------------------------------------------------------------------------
TOTAL ASSETS $ 12,303,638 $ 12,494,742
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgages payable 9,780,378 9,830,261
Distribution payable 173,978 160,929
Accounts payable and accrued expenses 200,310 202,484
Due to general partner and affiliates 14,083 13,797
Interest payable 69,278 -
Security deposits 71,283 78,834
--------------------------
Total Liabilities 10,309,310 10,286,305
--------------------------
Partners' Capital (Deficit):
General Partner (287,126) (265,715)
Limited Partners (78,290 Units outstanding) 2,281,454 2,474,152
--------------------------
Total Partners' Capital 1,994,328 2,208,437
- -----------------------------------------------------------------------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 12,303,638 $ 12,494,742
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1998 1997 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME
Rental $ 845,161 $ 773,527 $ 1,694,013 $ 1,577,737
Interest and other 18,711 20,550 30,336 57,973
------------------------------------------------------
Total Income 863,872 794,077 1,724,349 1,635,710
- ------------------------------------------------------------------------------------
EXPENSES
Property operating 352,669 398,412 699,635 708,858
Depreciation and amortization 192,457 192,457 384,913 384,913
Interest 208,047 210,513 416,731 421,610
General and administrative 46,287 45,621 87,331 95,258
Write-off of assets 1,892 - 1,892 -
------------------------------------------------------
Total Expenses 801,352 847,003 1,590,502 1,610,639
- ------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 62,520 $ (52,926) $ 133,847 $ 25,071
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
NET INCOME (LOSS) ALLOCATED:
To the General Partner $ (4,013) $ (529) $ 13,385 $ 32,186
To the Limited Partners 66,533 (52,397) 120,462 (7,115)
------------------------------------------------------
NET INCOME (LOSS) $ 62,520 $ (52,926) $ 133,847 $ 25,071
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
PER LIMITED PARTNERSHIP UNIT
(78,290 UNITS OUTSTANDING)
NET INCOME (LOSS) $ 0.85 $ (0.67) $ 1.54 $ (0.09)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<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 13,385 120,462 133,847
Distributions ($4.00 per Unit) (34,796) (313,160) (347,956)
- ------------------------------------------------------------------------------------
BALANCE (DEFICIT) AT JUNE 30, 1998 $ (287,126) $ 2,281,454 $ 1,994,328
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 133,847 $ 25,071
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 384,913 384,913
Write-off of assets 1,892 -
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Fundings to restricted cash (125,529) (198,283)
Release of restricted cash 187,366 174,888
Mortgage fees (24,000) -
Other assets (25,627) (6,788)
Accounts payable and accrued expenses (2,174) 1,190
Interest payable 69,278 -
Due to general partner and affiliates 286 (317)
Security deposits (7,551) 4,229
-------------------------
Net cash provided by operating activities 592,701 384,903
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES-
Additions to real estate (6,248) -
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (334,907) (1,639,740)
Mortgage principal payments (49,883) (55,194)
-------------------------
Net cash used for financing activities (384,790) (1,694,934)
- --------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 201,663 (1,310,031)
Cash and cash equivalents, beginning of period 1,388,845 2,741,077
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $1,590,508 $ 1,431,046
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION-
Cash paid during the period for interest $ 347,453 $ 421,610
- --------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING ACTIVITIES:
Write-off of buildings and improvements $ (3,942) $ -
Write-off of accumulated depreciation $ 2,050 $ -
- --------------------------------------------------------------------------------
</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 June 30, 1998 and the
results of operations and cash flows for the three and six months ended June
30, 1998 and 1997 and the consolidated statement of partners' capital for the
six months ended June 30, 1998. Results of operations 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 June 30, 1998, the Partnership had cash and cash equivalents of $1,590,508
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 principal
payments. The Partnership's restricted cash balance totaled $369,012 at June
30, 1998 compared to $430,849 at December 31, 1997. The decrease is
primarily attributable to the net effect of contributions to an escrow
account less payments made from that 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 June 30, 1998 which is to be paid in August, 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 and six months ended June 30, 1998
generated net income of $62,520 and $133,847, respectively, compared with a
net loss of $(52,926) and net income of $25,071, respectively, for the
corresponding periods in 1997. The increase for the three and six month
periods is primarily attributable to an increase in rental revenue and a
decrease in property operating and general and administrative expenses.
Rental income totaled $845,161 and $1,694,013 for the three and six months
ended June 30, 1998 compared with $773,527 and $1,577,737, respectively, for
the corresponding periods in 1997. The increase is due to higher overall
occupancy levels at both properties and increased rents at Las Colinas
Apartments I & II.
Interest and other income totaled $18,711 and $30,336, respectively, for the
three and six months ended June 30, 1998 compared with $20,550 and $57,973
for the corresponding periods in 1997. The decrease for the three and six
month periods ended June 30, 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 prior to their distribution.
Property operating expenses for the three and six months ended June 30, 1998
totaled $352,669 and $699,635, respectively, compared with $398,412 and
$708,858, respectively, for the corresponding periods in 1997. The decrease
is primarily attributable to lower repair and maintenance expenses partially
offset by higher utilities expenses.
During the first six 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% 96%
Tierra Catalina Apartments 96% 89%
-------------------------------------------------
</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 June 30, 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: July 30, 1998 BY: /s/ DANIEL J. EPSTEIN
----------------------------------------
Daniel J. Epstein
Director, President, and Principal Executive
Officer
Date: July 30, 1998 BY: /s/ ROBERT J. SVATOS
----------------------------------------
Robert J. Svatos
Vice President and Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,959,520
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 21,607,748
<DEPRECIATION> 11,379,848
<TOTAL-ASSETS> 12,303,638
<CURRENT-LIABILITIES> 528,932
<BONDS> 9,780,378
0
0
<COMMON> 0
<OTHER-SE> 1,994,328
<TOTAL-LIABILITY-AND-EQUITY> 12,303,638
<SALES> 1,694,013
<TOTAL-REVENUES> 1,724,349
<CGS> 0
<TOTAL-COSTS> 699,635
<OTHER-EXPENSES> 474,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 416,731
<INCOME-PRETAX> 133,847
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 133,847
<EPS-PRIMARY> 1.54
<EPS-DILUTED> 1.54
</TABLE>
