FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(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, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-11574
SHELTER PROPERTIES V
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0721855
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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____
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
SHELTER PROPERTIES V
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2000
Assets
Cash and cash equivalents $ 9,757
Receivables and deposits 356
Restricted escrows 605
Other assets 753
Investment properties:
Land $ 4,242
Buildings and related personal property 72,567
76,809
Less accumulated depreciation (45,003) 31,806
$ 43,277
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 127
Tenant security deposit liabilities 282
Accrued property taxes 221
Other liabilities 655
Mortgage notes payable 37,038
Partners' (Deficit) Capital
General partners $ (334)
Limited partners (52,538 units
issued and outstanding) 5,288 4,954
$ 43,277
See Accompanying Notes to Consolidated Financial Statements
b)
SHELTER PROPERTIES V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended One Month Ended
March 31, December 31,
2000 1999 1999 1998
Revenues:
Rental income $3,410 $3,428 $ 1,143 $ 1,146
Other income 235 202 52 69
Total revenues 3,645 3,630 1,195 1,215
Expenses:
Operating 1,401 1,385 415 385
General and administrative 115 93 22 29
Depreciation 686 712 241 251
Interest 762 676 256 226
Property taxes 172 219 77 74
Total expenses 3,136 3,085 1,011 965
Net income $ 509 $ 545 $ 184 $ 250
Net income allocated to
general partners (1%) $ 5 $ 5 $ 2 $ 3
Net income allocated to
limited partners (99%) 504 540 182 247
$ 509 $ 545 $ 184 $ 250
Net income per limited
partnership unit $ 9.59 $10.28 $ 3.46 $ 4.70
Distributions per limited
partnership unit $ -- $35.80 $ -- $ --
See Accompanying Notes to Consolidated Financial Statements
c)
SHELTER PROPERTIES V
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 52,538 $ 2 $ 52,538 $52,540
Partners' (deficit) capital at
November 30, 1998 52,538 $ (327) $ 5,696 $ 5,369
Net income for the one month ended
December 31, 1998 -- 3 247 250
Partners' (deficit) capital at
December 31, 1998 52,538 (324) 5,943 5,619
Net income for the three months
ended March 31, 1999 -- 5 540 545
Distributions to partners (21) (1,881) (1,902)
Partners' (deficit) capital at
March 31, 1999 52,538 $ (340) $ 4,602 $ 4,262
Partners' (deficit) capital
at November 30, 1999 52,538 $ (341) $ 4,602 $ 4,261
Net income for the one month ended
December 31, 1999 -- 2 182 184
Partners' (deficit) capital at
December 31, 1999 52,538 (339) 4,784 4,445
Net income for the three months
ended March 31, 2000 -- 5 504 509
Partners' (deficit) capital
at March 31, 2000 52,538 $ (334) $ 5,288 $ 4,954
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
d)
SHELTER PROPERTIES V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended One Month Ended
March 31, December 31,
2000 1999 1999 1998
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net income $ 509 $ 545 $ 184 $ 250
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation 686 712 241 251
Amortization of discounts
and loan costs 50 45 17 15
Change in accounts:
Receivables and deposits 410 46 316 211
Other assets (147) (125) 58 20
Accounts payable (1,256) (22) (431) (85)
Tenant security deposit
liabilities 8 4 2 4
Accrued property taxes (190) (137) 30 (40)
Other liabilities (309) 12 (122) 20
Net cash (used in) provided
by operating activities (239) 1,080 295 646
Cash flows from investing activities:
Property improvements and replacements (528) (185) (320) (59)
Net withdrawals from restricted escrows 46 36 307 32
Insurance proceeds received, net 1,867 -- 502 --
Net cash (used in) provided
by investing activities 1,385 (149) 489 (27)
Cash flows from financing activities:
Payments on mortgage notes payable (170) (125) (38) (42)
Loan costs paid (71) (10) -- --
Partners' distributions -- (1,902) -- (1,118)
Net cash used in financing
activities (241) (2,037) (38) (1,160)
Net increase (decrease) in cash and cash
equivalents 905 (1,106) 746 (541)
Cash and cash equivalents at beginning
of period 8,852 2,892 8,106 3,433
Cash and cash equivalents at end
of period $ 9,757 $ 1,786 $ 8,852 $ 2,892
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 712 $ 631 $ 239 $ 211
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
SHELTER PROPERTIES V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Shelter
Properties V (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Shelter Realty V Corporation (the
"Corporate General Partner"), all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the one and three month periods ended December 31, 1999
and March 31, 2000, respectively, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-KSB for the
fiscal year ended November 30, 1999.
Change in Fiscal Year End:
On January 3, 2000, the Partnership elected to change its fiscal year end from
November 30 to December 31, effective for the period ending December 31, 1999,
as announced in its Form 8-K filed on January 3, 2000. This Quarterly Report on
Form 10-QSB presents the unaudited results of the Partnership's operations for
the first fiscal quarter ended March 31, 2000 and for the one month transition
period covering December 1, 1999 through December 31, 1999.
Principles of Consolidation:
The financial statements include all the accounts of the Partnership and its two
99.99% owned partnerships. The Corporate General Partner of the consolidated
partnerships is Shelter Realty V Corporation. Shelter Realty V Corporation may
be removed as the general partner of the consolidated partnership by the
Registrant; therefore, the consolidated partnerships are controlled and
consolidated by the Registrant. All significant interpartnership balances have
been eliminated.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Corporate General Partner. The Corporate General Partner does not believe
that this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note C - Reconciliation of Cash Flows
The following is a reconciliation of the subtotal on the accompanying
consolidated statements of cash flows captioned "net cash provided by operating
activities" to "net cash from operations", as defined in the Partnership
Agreement. However, "net cash from operations" should not be considered an
alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
<TABLE>
<CAPTION>
Three Months Ended One Month Ended
March 31, December 31,
(in thousands) (in thousands)
2000 1999 1999 1998
Net cash (used in) provided by
<S> <C> <C> <C> <C>
operating activities $ (239) $ 1,080 $ 295 $ 646
Payments on mortgage notes
payable (170) (125) (38) (42)
Property improvements and
replacements (528) (185) (320) (59)
Change in restricted escrows, net 46 36 307 32
Changes in reserves for net
operating liabilities 1,484 222 147 (130)
Additional operating reserves (593) -- (391) --
Net cash used in operations $ -- $ 1,028 $ -- $ 447
</TABLE>
The Corporate General Partner reserved an additional $593,000 at March 31, 2000
and $391,000 at December 31, 1999 to fund capital improvements and repairs at
the Partnership's seven investment properties.
Note D - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
made to the Corporate General Partner and affiliates during the three months
ended March 31, 2000 and 1999 and one month period ended December 31, 1999 and
1998 (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999 1999 1998
Property management fees (included in
<S> <C> <C> <C> <C>
operating expense) $ 175 $ 182 $ 57 $ 59
Reimbursement for services of affiliates
(included in operating, general and
administrative expenses and investment 74 54 36 18
properties)
</TABLE>
During the three months ended March 31, 2000 and 1999 and one month ended
December 31, 1999 and 1998, affiliates of the Corporate General Partner were
entitled to receive 5% of gross receipts from all of the Registrant's properties
for providing property management services. The Registrant paid to such
affiliates approximately $175,000 and $182,000 for the three months ended March
31, 2000 and 1999, and approximately $57,000 and $59,000 for the one month
periods ended December 31, 1999 and 1998, respectively.
Affiliates of the Corporate General Partner received reimbursement of
accountable administrative expenses amounting to approximately $74,000 and
$54,000 for the three months ended March 31, 2000 and 1999, respectively and
approximately $36,000 and $18,000 for the one month periods ended December 31,
1999 and 1998, respectively.
AIMCO and its affiliates currently own 33,480 limited partnership units in the
Partnership representing 63.73% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 63.73% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Corporate General Partner because of their
affiliation with the Corporate General Partner.
Note E - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of seven apartment complexes
located in Florida (2), South Carolina (1), Virginia (1), Georgia(1), and North
Carolina (2). The Partnership rents apartment units to tenants for terms that
are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the year ended November 30, 1999.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
is managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the three month periods ended March 31, 2000 and 1999 is
shown in the tables below. The "Other" column includes partnership
administration related items and income and expense not allocated to the
reportable segment.
March 31, 2000 Residential Other Totals
(in thousands)
Rental income $ 3,410 $ -- $ 3,410
Other income 164 71 235
Interest expense 762 -- 762
Depreciation 686 -- 686
General and administrative expense -- 115 115
Segment profit (loss) 553 (44) 509
Total assets 37,064 6,213 43,277
Capital expenditures for
investment properties 528 -- 528
March 31, 1999 Residential Other Totals
(in thousands)
Rental income $ 3,428 $ -- $ 3,428
Other income 191 11 202
Interest expense 676 -- 676
Depreciation 712 -- 712
General and administrative expense -- 93 93
Segment profit (loss) 627 (82) 545
Total assets 35,682 710 36,392
Capital expenditures for
investment properties 185 -- 185
Segment information for the one month periods ended December 31, 1999 and 1998,
is shown in the tables below.
December 31, 1999 Residential Other Totals
(in thousands)
Rental income $ 1,143 $ -- $ 1,143
Other income 34 18 52
Interest expense 256 -- 256
Depreciation 241 -- 241
General and administrative expense -- 22 22
Segment profit (loss) 188 (4) 184
Total assets 38,012 6,655 44,667
Capital expenditures for
investment properties 320 -- 320
December 31, 1998 Residential Other Totals
(in thousands)
Rental income $ 1,146 $ -- $ 1,146
Other income 58 11 69
Interest expense 226 -- 226
Depreciation 251 -- 251
General and administrative expense -- 29 29
Segment profit (loss) 268 (18) 250
Total assets 36,663 1,337 38,000
Capital expenditures for
investment properties 59 -- 59
Note F - Casualty Event
In September 1999, Tar River Estates Apartments, was damaged by severe flooding
which affected certain areas of North Carolina. It is estimated that the
property has incurred approximately $6,323,000 in damages as a result of this
flooding. As of March 31, 2000, insurance proceeds of approximately $2,464,000
have been received to cover lost rents and damage to the property. It is
anticipated that the costs incurred to restore the property will be fully
covered by insurance.
Note G - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Corporate General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement, settling claims, subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999. Prior to the December 10, 1999 hearing the Court received various
objections to the settlement, including a challenge to the Court's preliminary
approval based upon the alleged lack of authority of class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Corporate General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. The
Corporate General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussions of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of seven apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended March 31, 2000 and 1999 and for the one month periods ended
December 31, 1999 and 1998:
<TABLE>
<CAPTION>
March 31, December 31,
Property 2000 1999 1999 1998
Foxfire Apartments
<S> <C> <C> <C> <C>
Atlanta, Georgia 94% 94% 95% 94%
Old Salem Apartments
Charlottesville, Virginia 98% 96% 97% 95%
Woodland Village Apartments
Columbia, South Carolina (2) 92% 95% 91% 95%
Lake Johnson Mews Apartments
Raleigh, North Carolina 93% 94% 94% 96%
The Lexington Green Apartments
Sarasota, Florida 97% 98% 97% 96%
Millhopper Village Apartments
Gainesville, Florida (3) 93% 95% 96% 92%
Tar River Estates Apartments
Greenville, North Carolina (1) 35% 96% 36% 97%
</TABLE>
(1) During September 1999, Tar River Estates was damaged by severe flooding
which affected certain areas of North Carolina. The property has incurred
extensive damage as a result of the flooding causing portions of the
property to be unavailable for occupancy since September 1999. It is
anticipated that the costs incurred to restore the property will be fully
covered by insurance. The occupancy for the units not damaged at the
property was 93% at March 31, 2000 and approximately 97% at December 31,
1999. The Corporate General Partner has completed discussions relating to
the redevelopment of the property and has begun reconstruction of the
property.
(2) The decrease in occupancy at Woodland Village Apartments for both periods
is attributed to tenants purchasing new homes at the current low mortgage
interest rates.
(3) Millhopper Village is located in a very competitive market area.
Fluctuations in occupancy are attributed to the timing of lease
expirations and the degree to which concessions are being offered by the
property and its competitors.
Results of Operations
The Registrant's net income for the three months ended March 31, 2000 was
approximately $509,000 compared to approximately $545,000 for the three months
ended March 31, 1999. The decrease in net income for the three months ended
March 31, 2000 is due to an increase in total expenses which was partially
offset by an increase in total revenues. The increase in total expenses is due
primarily to an increase in interest expense and, to a lesser extent, an
increase in general and administrative expense. The increase in interest expense
is due primarily to the refinancing of the debt encumbering Old Salem Apartments
and Foxfire Apartments (as discussed below). General and administrative expenses
increased primarily as a result of an increase in audit fees and costs
associated with the Partnership's communications with investors.
The increase in total expenses was partially offset by decreases in property tax
and depreciation expenses. The decrease in property tax expense is due to the
timing of the receipt of tax bills which affected the tax accruals recorded for
the respective periods. The decrease in depreciation expense is due primarily to
the write-off of a building and the related depreciation at Tar River Estates
Apartments due to damage sustained as a result of flooding in 1999. Operating
expenses remained relatively constant for the comparable period.
Total revenues increased as a result of an increase in other income. Other
income increased as a result of an increase in interest income as a result of an
increase in cash maintained in interest bearing accounts. The increase in other
income was partially offset by a decrease in rental income as a result of a
decrease in occupancy at five of the Partnership's investment properties which
more than offset the increase in average rental rates at all of the properties.
The Registrant's net income for the one month period ended December 31, 1999 was
approximately $184,000 compared to approximately $250,000 for the one month
period ended December 31, 1998. The decrease in net income for the one month
period ended December 31, 1999 is due to an increase in total expenses and a
decrease in total revenues. The increase in total expenses is due to an increase
in interest and operating expenses partially offset by a decrease in
depreciation and general and administrative expenses. Interest expense increased
as a result of the refinancing of the debt encumbering Old Salem Apartments and
Foxfire Apartments (as discussed below). The increase in operating expense is
due primarily to an increase in payroll related expenses at the Partnership's
investment properties. Property tax expense remained relatively constant for the
comparable periods. The decrease in depreciation expense is due primarily to the
write-off of a building and the related depreciation at Tar River Estates
Apartments due to damage sustained as a result of flooding in 1999. General and
administrative expenses decreased primarily due to a decrease in expenses
related to the Partnership's communications with investors. Total revenues
decreased for the comparable period due to a decrease in miscellaneous income
received at the properties. Rental income remained relatively constant for the
comparable periods.
Included in general and administrative expense at both the three months ended
March 31, 2000 and 1999 and at both the one month periods ended December 31,
1999 and 1998 are management reimbursements to the Corporate General Partner
allowed under the Partnership Agreement. In addition, costs associated with the
quarterly and annual communications with investors and regulatory agencies and
the annual audits and appraisals required by the Partnership Agreement are also
included.
As part of the ongoing business plan of the Registrant, the Corporate General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Corporate General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due to
changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Corporate General Partner will be able to sustain such a
plan.
Liquidity and Capital Resources
At March 31, 2000, the Registrant had cash and cash equivalents of approximately
$9,757,000 as compared to approximately $1,786,000 at March 31, 1999. The
increase in cash and cash equivalents of approximately $905,000 for the three
months ended March 31, 2000, from the Partnership's year ended December 31, 1999
is primarily due to approximately $1,385,000 of cash provided by investing
activities, which was partially offset by approximately $239,000 of cash used in
operating activities and approximately $241,000 of cash used in financing
activities. Cash provided by investing activities consisted of the receipt of
insurance proceeds and to a lesser extent, net withdrawals from escrow accounts
maintained by the mortgage lender which was partially offset by property
improvements and replacements. Cash used in financing activities consisted
primarily of payments of principal made on the mortgages encumbering the
Registrant's properties, and to a lesser extent, loan costs related to the
refinancing of the mortgages encumbering Old Salem Apartments and Foxfire
Apartments. The Partnership invests its working capital reserves in money market
accounts.
At December 31, 1999, the Registrant had cash and cash equivalents of
approximately $8,852,000 as compared to approximately $2,892,000 at December 31,
1998. The increase in cash and cash equivalents of approximately $746,000 for
the one month ended December 31, 1999, from the Partnership's former fiscal year
end, November 30, 1999, is primarily due to approximately $295,000 of cash
provided by operating activities and $489,000 of cash provided by investing
activities, which was partially offset by approximately $38,000 of cash used in
financing activities. Cash provided by investing activities consisted of the
receipt of insurance proceeds and net withdrawals from escrow accounts
maintained by the mortgage lender which was partially offset by property
improvements and replacements. Cash used in financing activities consisted of
payments of principal made on the mortgages encumbering the Registrant's
properties.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the investment properties to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state, and local, legal and regulatory requirements. Capital
improvements planned for each of the Registrant's properties are detailed below.
Millhopper Village Apartments: For 2000, the Partnership has budgeted
approximately $44,000 for capital improvements, consisting primarily of
appliance and floor covering replacements and HVAC unit replacements. The
Partnership completed approximately $19,000 and $ 30,000 in capital expenditures
for the one month ended December 31, 1999 and the three months ended March 31,
2000, respectively. These improvements were funded primarily from partnership
reserves and operations. The capital expenditures incurred consisted primarily
of electrical improvements, pool upgrades, major landscaping and floor covering
replacements.
Foxfire Apartments: For 2000, the Partnership has budgeted approximately
$134,000 for capital improvements, consisting primarily of parking area and
swimming pool improvements, floor covering and appliance replacements and other
interior building improvements. The Partnership completed approximately $100,000
and $60,000 in capital expenditures for the one month ended December 31, 1999
and the three months ended March 31, 2000, respectively. These improvements were
funded primarily from partnership reserves and operations. The capital
expenditures incurred consisted primarily of exterior painting, structural
upgrades, floor covering and appliance replacements and other interior
improvements.
Lake Johnson Mews Apartments: For 2000, the Partnership has budgeted
approximately $105,000 for capital improvements, consisting primarily of
structural improvements, HVAC upgrades and floor covering and appliance
replacements. The Partnership completed approximately $6,000 and $27,000 in
capital expenditures for the one month ended December 31, 1999 and the three
months ended March 31, 2000, respectively. These improvements were funded
primarily from operations. The capital expenditures incurred consisted primarily
of appliance and floor covering replacements.
Woodland Village Apartments: For 2000, the Partnership has budgeted
approximately $286,000 for capital improvements, consisting primarily of
exterior painting, floor covering replacements and other interior and exterior
building improvements. The Partnership completed approximately $34,000 and
$132,000 in capital expenditures for the one month ended December 31, 1999 and
the three months ended March 31, 2000, respectively. These improvements were
funded primarily from Partnership reserves and operations. The capital
expenditures incurred consisted primarily of floor covering replacements and
other exterior building improvements.
The Lexington Green Apartments: For 2000, the Partnership has budgeted
approximately $224,000 for capital improvements, consisting primarily of
plumbing improvements, swimming pool upgrades, floor covering and appliance
replacements and structural improvements. The Partnership completed
approximately $81,000 and $75,000 in capital expenditures for the one month
ended December 31, 1999 and the three months ended March 31, 2000, respectively.
These improvements were funded primarily from operations. The capital
expenditures incurred consisted primarily of plumbing and swimming pool
upgrades, recreation facilities upgrades, and floor covering and appliance
replacements.
Tar River Estates Apartments: For 2000, the Partnership has budgeted
approximately $135,000 for capital improvements, consisting primarily of HVAC
unit upgrades and floor covering and appliance replacements and structural
improvements. The Partnership completed approximately $36,000 and $91,000 in
capital expenditures for the one month ended December 31, 1999 and the three
months ended March 31, 2000, respectively. These improvements were funded
primarily from operations. The capital expenditures incurred consisted primarily
of floor covering and appliance replacements and other exterior and interior
building improvements associated with the repairs required due to the severe
flood damage which occurred during September 1999.
Old Salem Apartments: For 2000, the Partnership has budgeted approximately
$213,000 for capital improvements, consisting primarily of parking lot
improvements, floor covering and appliance replacements, structural
improvements, and other interior and exterior improvements. The Partnership
completed approximately $44,000 and $113,000 in capital expenditures for the one
month ended December 31, 1999 and the three months ended March 31, 2000,
respectively. These improvements were funded primarily from Partnership reserves
and operations. The capital expenditures incurred consisted primarily of major
landscaping, floor covering and appliance replacements, structural improvements
and other exterior and interior building improvements.
The additional capital expenditures will be incurred only if cash is available
from operations and from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $37,038,000 net of discount, is amortized over
varying periods with required balloon payments ranging from November 15, 2002 to
December 1, 2019. The Corporate General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such properties through foreclosure.
During October and November 1999, the Partnership refinanced the mortgage notes
at Foxfire and Old Salem Apartments, respectively. Gross proceeds from the
refinancings were $7,200,000 and $10,157,000, respectively, of which
approximately $4,519,000 and $6,287,000 respectively was used to pay off the
existing mortgage notes. The new notes require monthly principal and interest
payments at fixed interest rates of 7.79% for Foxfire Apartments and 8.02% for
Old Salem Apartments. The old debt carried fixed interest rates of 7.50% and
10.375% with maturities beginning in May 1999.
During the three months ended March 31, 1999, cash distributions of
approximately $1,902,000 ($1,881,000 of which was paid to the limited partners
which was $35.80 per limited partnership unit) was paid from operations. For the
one month ended December 31, 1998, $1,118,000 was paid to the partners which
related to a payable at November 30, 1998. No cash distributions were made for
the three months ended March 31, 2000 and one month ended December 31, 1999.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings and/or property sales. The Partnership's distribution
policy is reviewed on a quarterly basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations, after
planned capital improvement expenditures, to permit additional distributions to
its partners during the remainder of 2000 or subsequent periods. In addition,
the Partnership may be restricted from making distributions if the amount in the
reserve account for each property maintained by the mortgage lender for The
Lexington Green Apartments and Tar River Estates Apartments is less than $400
per apartment unit for each respective property for a total of $267,600. As of
March 31, 1999, the reserve accounts were fully funded with approximately
$339,800 on deposit with the mortgage lender.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Part I - Financial Information, Item I. Financial Statements, Note B - Transfer
of Control"). The plaintiffs seek monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the
Corporate General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement, settling claims, subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999. Prior to the December 10, 1999 hearing the Court received various
objections to the settlement, including a challenge to the Court's preliminary
approval based upon the alleged lack of authority of class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Corporate General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. The
Corporate General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
Current Report on Form 8-K dated January 3, 2000, filed on
January 12, 2000, disclosing change in fiscal year end from
November to December.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES V
By: Shelter Realty V Corporation
Corporate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: May 15, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SHELTER
PROPERTIES V 2000 First Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000712753
<NAME> SHELTER PROPERTIES V
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 9,757
<SECURITIES> 0
<RECEIVABLES> 356
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 76,809
<DEPRECIATION> 45,003
<TOTAL-ASSETS> 43,277
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 37,038
0
0
<COMMON> 0
<OTHER-SE> 4,954
<TOTAL-LIABILITY-AND-EQUITY> 43,277
<SALES> 0
<TOTAL-REVENUES> 3,645
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 762
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 509
<EPS-BASIC> 9.59 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
