<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, 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.
----------------------------------------------------
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
California 13-3069026
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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 92110-1906
- ------------- ----------
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
----- -----
<PAGE>
CONAM REALTY INVESTORS 81 L.P.
AND CONSOLIDATED VENTURES
PART 1 - FINANCIAL INFORMATION
ITEM 1 Financial Statements
<TABLE>
<CAPTION>
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CONSOLIDATED BALANCE SHEETS AT MARCH 31, AT DECEMBER 31,
1999 1998
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<S> <C> <C>
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 502,314 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 15,023 158,544
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TOTAL ASSETS $ 517,337 $ 12,057,357
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgages payable $ - $ 9,718,148
Accounts payable and accrued expenses 110,559 307,101
Due to general partner and affiliates - 14,966
Interest payable - 68,837
Security deposits - 68,378
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Total Liabilities 110,559 10,177,430
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Partners' Capital (Deficit):
General Partner (162,873) (298,566)
Limited Partners (78,290 Units outstanding) 569,651 2,178,493
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Total Partners' Capital 406,778 1,879,927
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 517,337 $ 12,057,357
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</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 1998
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<S> <C> <C>
INCOME
Rental $ 265,290 $ 848,852
Interest and other 63,746 11,625
--------------------------------------------
Total Income 329,036 860,477
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EXPENSES
Property operating 174,764 346,966
Depreciation and amortization 32,070 192,457
Interest 61,890 208,684
General and administrative 32,137 41,043
--------------------------------------------
Total Expenses 300,861 789,150
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Income from operations 28,175 71,327
Gain on sale of properties 12,274,841 -
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Income before extraordinary items 12,303,016 71,327
Extraordinary loss from debt extinguishment (129,068) -
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NET INCOME $ 12,173,948 $ 71,327
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NET INCOME ALLOCATED:
To the General Partner $ 277,765 $ 17,398
To the Limited Partners 11,896,183 53,929
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NET INCOME $ 12,173,948 $ 71,327
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PER LIMITED PARTNERSHIP UNIT
(78,290 UNITS OUTSTANDING)
Income from operations $ (0.33) $ 0.69
Extraordinary loss from debt extinguishment (1.65) -
Gain on sale of properties 153.27 -
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NET INCOME $ 151.29 $ 0.69
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</TABLE>
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1999
GENERAL LIMITED
PARTNER PARTNERS TOTAL
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE (DEFICIT) AT DECEMBER 31, 1998 $ (298,566) $ 2,178,493 $ 1,879,927
Net income 277,765 11,896,183 12,173,948
Distributions ($172.50 per Unit) (142,072) (13,505,025) (13,647,097)
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BALANCE (DEFICIT) AT MARCH 31, 1999 $ (162,873) $ 569,651 $ 406,778
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------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 1998
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,173,948 $ 71,327
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 32,070 192,456
Gain on sale of properties (12,274,841) -
Extraordinary loss from debt extinguishment 129,068 -
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Fundings to restricted cash - (29,817)
Release of restricted cash 410,262 7,329
Other assets 143,521 (7,940)
Accounts payable and accrued expenses (196,542) 56,762
Due to general partner and affiliates (14,966) 680
Interest payable (68,837) 69,491
Security deposits (68,378) (2,178)
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Net cash provided by operating activities 265,305 358,110
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (12,032) -
Net proceeds from sale of properties 22,035,362 -
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Net cash provided by investing activities 22,023,330 -
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (13,647,097) (160,929)
Mortgage principal payments (9,718,148) (19,742)
-------------------------------------------
Net cash used in financing activities (23,365,245) (180,671)
-------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (1,076,610) 177,439
Cash and cash equivalents, beginning of period 1,578,924 1,388,845
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 502,314 $ 1,566,284
-------------------------------------------------------------------------------------------------------------
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION-
Cash paid during the period for interest $ 130,727 $ 139,193
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</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
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 March 31,
1999 and the results of operations and cash flows for the three months
ended March 31, 1999 and 1998 and the consolidated statement of partners'
capital for the three months ended March 31, 1999. Results of operations
are not necessarily indicative of the results to be expected for the full
year.
The Partnership 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).
<PAGE>
CONAM REALTY INVESTORS 81 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 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 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 March 31, 1999, the Partnership had cash and cash equivalents of $502,314
compared with $1,578,924 at December 31, 1998. The decrease in cash and cash
equivalents is due to the distribution of the proceeds from the Sale and cash
from operations. The General Partner believes that the Partnership has
sufficient cash to meet the needs of the Partnership for any contingencies or
costs associated with Sale and the final liquidation of the Partnership. As
required by the Partnership agreement, upon the final liquidation of the
Partnership, the general partner will contribute $201,260 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 of the general partner and the satisfaction of all
Partnership obligations, will be distributed pursuant to the Partnership
agreement.
RESULTS OF OPERATIONS
Partnership net income for the three months ended March 31, 1999 was $12,173,948
compared to $71,327 for the corresponding period in 1998. The increase for the
three months ended March 31, 1999 is primarily attributable to the gain on the
Sale.
For the three months ended March 31, 1999, the Partnership generated operating
income of $28,175 compared to $71,327 for the corresponding period in 1998.
Rental income totaled $265,290 for the three months ended March 31, 1999
compared with $848,852 for the corresponding period in 1998. Partnership
expenses for the three months ended March 31, 1999 totaled $300,861 compared
with $789,150 for the corresponding period in 1998. For the three months ended
March 31, 1999, the decreased income from operations, rental income and
partnership expenses are primarily attributable to the Sale on January 29, 1999.
YEAR 2000
Due to the consummation of the Sale in January 1999, 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.
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures About Market Risks
Since the Partnership sold its remaining properties on January 29, 1999 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 1-3. Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders.
Pursuant to a Consent Solicitation Statement dated December 16,
1998, the Unitholders were asked to approve two proposals as
follows: (i) the sale of all of the Partnership's remaining real
estate investments to DOC Investors, L.L.C. (the "Sale"); and
(ii) an amendment to the Partnership's partnership agreement to
permit sales of Partnership properties to affiliates of the
General Partner if the terms of the sale are approved by the
Unitholders (the "Amendment"). By its terms, the consent
solicitation was to terminate on January 15, 1999, unless such
date was extended by the General Partner for an aggregate of up
to an additional 40 days. Since both the Sale and the Amendment
were approved by the requisite majority-in-interest of the
Unitholders (i.e., at least 39,146 Units) as of January 15, 1999,
the consent solicitation terminated on such date. Upon
termination of the consent solicitation, the results of the
consent solicitation were as follows: (i) With respect to the
Sale - 49,776 Units "FOR;" 1,154 Units "AGAINST;" and 290 Units
"ABSTAIN;" and (ii) with respect to the Amendment - 49,321 Units
"FOR;" 1,419 Units "AGAINST;" and 480 Units "ABSTAIN." The
foregoing results do not include any votes received after the
termination of the consent solicitation.
ITEM 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 R181 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).
<PAGE>
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
On February 16, 1999, the Partnership filed a Form 8-K for the
purpose of disclosing the consummation of the sale of all of its
real property investments on January 29, 1999 to DOC Investors,
L.L.C. No other reports on Form 8-K were filed during the quarter
ended March 31, 1999.
(27) Financial Data Schedule
<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 14, 1999 BY:/s/ DANIEL J. EPSTEIN
-----------------
Daniel J. Epstein
Director, President, and Principal Executive
Officer
Date: May 14, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 502,314
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 517,337
<CURRENT-LIABILITIES> 110,559
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 406,778
<TOTAL-LIABILITY-AND-EQUITY> 517,337
<SALES> 265,290
<TOTAL-REVENUES> 329,036
<CGS> 0
<TOTAL-COSTS> 174,764
<OTHER-EXPENSES> 64,207
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,890
<INCOME-PRETAX> 12,303,016
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (129,068)
<CHANGES> 0
<NET-INCOME> 12,173,948
<EPS-PRIMARY> 151.29
<EPS-DILUTED> 151.29
</TABLE>
