<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 MAY 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 ____
COMMISSION FILE NUMBER: 0-13330
CONAM REALTY PENSION INVESTORS
------------------------------
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
New York 11-2673854
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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
- -------------------------------------------- ----------
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 PENSION INVESTORS
<TABLE>
<CAPTION>
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BALANCE SHEETS AT MAY 31, AT NOVEMBER 30,
1998 1997
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<S> <C> <C>
ASSETS
Investments in real estate:
Properties:
Land $ 1,200,000 $ 1,200,000
Buildings and improvements 4,816,989 4,800,000
-------------------------------------
6,016,989 6,000,000
Less accumulated depreciation (124,113) (27,943)
-------------------------------------
5,892,876 5,972,057
Mortgage loan investment - 5,200,650
-------------------------------------
5,892,876 11,172,707
Cash and cash equivalents 517,102 1,029,577
Interest receivable - deferred, net of valuation allowance
of $1,399,890 in 1997 - 449,350
Other assets 514,493 53,504
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TOTAL ASSETS $ 6,924,471 $ 12,705,138
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- ---------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Distribution payable $ - $ 253,921
Accounts payable and accrued expenses 135,322 183,988
Due to general partner and affiliates 4,558 4,339
Deferred income - loan modification fees - 897
Security deposits 32,671 33,625
-------------------------------------
Total Liabilities 172,551 476,770
-------------------------------------
Partners' Capital:
General Partner 132,361 186,621
Limited Partners (96,490 Units outstanding) 6,619,559 12,041,747
-------------------------------------
Total Partners' Capital 6,751,920 12,228,368
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 6,924,471 $ 12,705,138
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</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY PENSION INVESTORS
<TABLE>
<CAPTION>
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STATEMENT OF OPERATIONS
THREE MONTHS ENDED MAY 31, SIX MONTHS ENDED MAY 31,
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME
Rental $ 283,404 $ 680,147 $ 550,433 $ 1,348,095
Mortgage interest 23,011 205,613 133,525 411,226
Interest and other income 9,997 18,178 20,759 37,183
Loan modification fees 4,334 5,131 13,898 10,262
----------------------------------------------------------------------
Total Income 320,746 909,069 718,615 1,806,766
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EXPENSES
Property operating 169,353 346,902 290,565 668,120
Provision for losses - 205,613 - 411,226
Depreciation 48,170 - 96,170 42,196
General and administrative 72,431 64,317 104,836 125,968
----------------------------------------------------------------------
Total Expenses 289,954 616,832 491,571 1,247,510
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NET INCOME $ 30,792 $ 292,237 $ 227,044 $ 559,256
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NET INCOME ALLOCATED:
To the General Partner $ 307 $ 10,867 $ 2,270 $ 25,906
To the Limited Partners 30,485 281,370 224,774 533,350
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$ 30,792 $ 292,237 $ 227,044 $ 559,256
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PER LIMITED PARTNERSHIP UNIT
(96,490 UNITS OUTSTANDING) $ 0.32 $ 2.92 $ 2.33 $ 5.53
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</TABLE>
STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED MAY 31, 1998
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE AT NOVEMBER 30, 1997 $ 186,621 $ 12,041,747 $ 12,228,368
Net income 2,270 224,774 227,044
Distributions (56,530) (5,646,962) (5,703,492)
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BALANCE AT MAY 31, 1998 $ 132,361 $ 6,619,559 $ 6,751,920
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- --------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY PENSION INVESTORS
<TABLE>
<CAPTION>
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- -----------------------------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 227,044 $ 559,256
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for losses - 411,226
Depreciation 96,170 42,196
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Interest receivable - deferred, net 449,350 (411,226)
Other assets (460,989) (3,677)
Accounts payable and accrued expenses (48,666) (93,353)
Due to general partner and affiliates 219 682
Deferred income - loan modification fees (897) (10,262)
Security deposits (954) (2,743)
------------------------------------
Net cash provided by operating activities 261,277 492,099
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to buildings and improvements (16,989) -
Collection of mortgage loan receivable 5,200,650 -
------------------------------------
Net cash flows provided by investing activities 5,183,661 -
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (5,957,413) (761,763)
- -----------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (512,475) (269,664)
Cash and cash equivalents, beginning of period 1,029,577 1,818,059
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 517,102 $ 1,548,395
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</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY PENSION ENVESTORS
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NOTES TO THE FINANCIAL STATEMENTS
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1997 audited financial statements within Form 10-K.
The unaudited interim 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, 1998 and the results of operations
for the three and six months ended May 31, 1998 and 1997, cash flows for the six
months ended May 31, 1998 and 1997, and the statement of partners' capital for
the six months ended May 31, 1998. Results of operations for the periods are not
necessarily indicative of the results to be expected for the full year.
The following significant event has occurred subsequent to November 30, 1997,
which would require disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a) (5).
On March 19, 1998 ConAm Realty Pension Investors received $5,673,011 as final
payment in full of its mortgage loan and interest receivable, from Southridge
Partners I, a New York limited partnership. This payment included all principal
($5,200,650) and interest ($472,361) due in accordance with the loan
modification agreement.
On March 19, 1998, the general partner declared a special cash distribution of
$58.00 per Unit regarding the proceeds received from the repayment of the above
mortgage loan investment. The distribution was paid on March 27, 1998.
<PAGE>
CONAM REALTY PENSION INVESTORS
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1998, the Partnership had cash and cash equivalents of $517,102
which were invested in money market funds, compared with $1,029,577 at
November 30, 1997. The decrease in cash and cash equivalents reflects cash
distributions to partners exceeding cash provided by operating activities
during the first two quarters of fiscal 1998. The increase in other assets
is primarily attributable to amounts due from the state of North Carolina
regarding an overpayment of non-resident withholdings and to an increase in a
deposit required by the Internal Revenue Service. The Partnership expects
sufficient cash to be generated from operations to meet its current operating
expenses.
On March 19, 1998, the General Partner declared a special cash distribution of
the net proceeds received from the collection of the mortgage loan and interest
receivable from Southridge Partners I. The distribution was $58.00 per Unit and
was paid on March 27, 1998. The General Partner has suspended distributions
this quarter to make significant capital improvements and increase reserves. 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 May 31, 1998 generated
net income of $30,792 and $227,044 respectively, compared with net income of
$292,237 and $559,256, respectively, for the corresponding periods in fiscal
1997. The decrease for the six month period is primarily attributable to
reduced rental income resulting from the sales of two properties, Bryn Athyn and
Chaparosa Apartments, in September, 1997 and August, 1997, respectively,
partially offset by a reduction in property operating expenses.
Rental income totaled $283,404 and $ 550,433 for the three and six months ended
May 31, 1998 compared with $680,147 and $1,348,095 for the corresponding periods
in fiscal 1997. The decrease for the three and six-months periods is due to
the net effect of the sale of Bryn Athyn and Chaparosa Apartments, offset by the
acquisition through a deed in lieu of foreclosure of Oaktree Village Apartments
in September, 1997.
Mortgage interest income totaled $23,011 and $133,525 for the three and six
months ended May 31, 1998 compared with $0 and $0, net of provision for losses
of $205,613 and $411,226, for the corresponding periods in fiscal 1997. The
increase is attributable to the collection of interest income earned on the
Partnership's mortgage loan investment during the six months ended May 31, 1998.
Property operating expenses for the three and six months ended May 31, 1998
totaled $169,353 and $290,565 compared with $346,902 and $668,120 for the
corresponding periods in fiscal 1997. The decrease is attributable to the
net effect resulting from the sales of Bryn Athyn and Chaparosa Apartments,
and the acquisition through a deed in lieu of foreclosure of Oaktree Village
Apartments.
During the first six months of fiscal 1998 and 1997, average occupancy levels at
the Partnership's properties and at the properties securing the Partnership's
loans were as follows:
<TABLE>
<CAPTION>
Investments in Real Estate 1998 1997
-------------------------- ---- ----
<S> <C> <C>
Oaktree Village Apartments 95% -
Bryn Athyn Apartments - 97%
Chaparosa Apartments - 97%
Mortgage Loan Investments
-------------------------
Park View Village Apartments - 97%
Oaktree Village Apartments - 91%
</TABLE>
<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 III, LTD.
General Partner of ConAm Realty Pension Investors
BY: CONTINENTAL AMERICAN DEVELOPMENT, INC.
GENERAL PARTNER
Date: July 13, 1998 BY:/s/ DANIEL J. EPSTEIN
-----------------
Daniel J. Epstein
Director, President, and
Principal Executive Officer
Date: July 13, 1998 BY:/s/ ROBERT J. SVATOS
----------------
Robert J. Svatos
Chief Financial Officer
<PAGE>
CONAM REALTY PENSION INVESTORS
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
On April 6, 1998, ConAm Realty Pension Investors filed a Form 8-K
regarding the collection of $5,673,011 on March 19, 1998 as final
payment in full of its mortgage loan and interest receivable,
from Southridge Partners I, a New York limited partnership. This
payment included all principal ($5,200,650) and interest
($472,361) due in accordance with the loan modification
agreement.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> MAY-31-1998
<CASH> 517,102
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 514,493
<PP&E> 6,016,989
<DEPRECIATION> 124,113
<TOTAL-ASSETS> 6,924,471
<CURRENT-LIABILITIES> 172,551
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,751,920
<TOTAL-LIABILITY-AND-EQUITY> 6,924,471
<SALES> 550,433
<TOTAL-REVENUES> 718,615
<CGS> 0
<TOTAL-COSTS> 290,565
<OTHER-EXPENSES> 201,006
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 227,044
<INCOME-TAX> 0
<INCOME-CONTINUING> 227,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 227,044
<EPS-PRIMARY> 2.33
<EPS-DILUTED> 2.33
</TABLE>
