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
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-13083
CONSOLIDATED CAPITAL PROPERTIES V
(Exact name of small business issuer as specified in its charter)
California 94-2918560
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
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)
CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1998
Assets
Cash and cash equivalents $ 877
Investments 4
Receivable and deposits 313
Restricted escrows 388
Other assets 266
Investment properties:
Land $ 1,969
Buildings and related personal property 19,302
21,271
Less accumulated depreciation (14,606) 6,665
$ 8,513
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 121
Tenant security deposit liabilities 59
Accrued property taxes 398
Other liabilities 131
Mortgage notes payable 11,078
Partners' Deficit
General partner $ (21)
Special limited partners (52)
Limited partners (179,537.20 units (3,201)
issued and outstanding) (3,274)
$ 8,513
See Accompanying Notes to Consolidated Financial Statements
b)
CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Rental income $1,058 $1,024 $2,122 $2,103
Other income 59 46 105 111
Total revenues 1,117 1,070 2,227 2,214
Expenses:
Operating 552 477 1,016 1,079
General and administrative 51 45 99 86
Depreciation 278 270 549 538
Interest 213 204 421 410
Property taxes 122 91 242 201
Total expenses 1,216 1,087 2,327 2,314
Net loss $ (99) $ (17) $ (100) $ (100)
Net loss allocated to
general partner (.2%) $ -- $ -- $ -- $ --
Net loss allocated to
limited partners (99.8%) (99) (17) (100) (100)
Net loss $ (99) $ (17) $ (100) $ (100)
Net loss per limited
partnership unit: $ (.55) $ (.09) $ (.56) $ (.56)
See Accompanying Notes to Consolidated Financial Statements
c)
CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited Special
Partnership General Limited Limited
Units Partner Partners Partners Total
Original capital
Contributions 180,037 $ 1 $ -- $45,009 $45,010
Partners deficit at
December 31, 1997 179,537.20 $ (21) $ (52) $(3,101) $(3,174)
Net loss for the six months
ended June 30, 1998 -- -- -- (100) (100)
Partners' deficit at
June 30, 1998 179,537.20 $ (21) $ (52) $(3,201) $(3,274)
See Accompanying Notes to Consolidated Financial Statements
d)
CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Net loss $ (100) $ (100)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 549 538
Amortization of lease commission,
loan costs, and debt forgiveness 8 33
Change in accounts:
Receivables and deposits 144 76
Other assets (2) (18)
Accounts payable (38) 98
Tenant security deposit liabilities (3) (19)
Accrued property taxes (67) (47)
Other liabilities (28) (20)
Net cash provided by operating activities 463 541
Cash flows from investing activities:
Property improvements and replacements (278) (252)
Withdrawals from restricted escrows 59 229
Dividend received on investments -- 3
Proceeds from sale of investments 100 --
Net cash used in investing activities (119) (20)
Cash flows from financing activities:
Payments on mortgage notes payable (41) (84)
Loan costs paid -- (9)
Net cash used in financing activities (41) (93)
Net increase in cash and cash equivalents 303 428
Cash and cash equivalents at beginning of period 574 292
Cash and cash equivalents at end of period $ 877 $ 720
Supplemental disclosure of cash flow information:
Cash paid for interest $ 399 $ 402
See Accompanying Notes to Consolidated Financial Statements
e)
CONSOLIDATED CAPITAL PROPERTIES V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Consolidated Capital
Properties V (the "Partnership") 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 ConCap Equities, Inc. (the "General Partner"), all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six months ended June 30,
1998, are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1998. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-KSB for the fiscal year ended December 31, 1997.
Investments consist of Equity Securities stock and are considered to be held-to-
maturity securities.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
NOTE B - TRANSACTIONS WITH RELATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the Partnership
activities, as provided for in the Partnership Agreement. The General Partner
is wholly-owned by Insignia Properties Trust ("IPT"), an affiliate of Insignia
Financial Group, Inc. ("Insignia").
The Partnership has paid property management fees based upon collected gross
rental revenues for property management services in each of the six months ended
June 30, 1998 and 1997. Property management fees of approximately $116,000 and
$108,000 were paid to affiliates of the General Partner for each of the six
months ended June 30, 1998 and 1997, respectively. These fees are included in
operating expenses.
The Partnership Agreement also provides for reimbursement to the General Partner
and its affiliates for costs incurred in connection with the administration of
Partnership activities. Reimbursements for services of affiliates of
approximately $59,000 and $64,000 were paid to the General Partner and its
affiliates during each of the six months ended June 30, 1998 and 1997,
respectively. Included in these reimbursements is approximately $1,000 and
$8,000 of construction oversight reimbursement for the six months ended June 30,
1998 and 1997, respectively. These reimbursements are included in operating and
general and administrative expenses. Also, during the six months ended June 30,
1998 and 1997, approximately $6,000 and $14,000, respectively, of leasing
commissions were paid to an affiliate of Insignia. Leasing commissions are
capitalized and included in other assets.
During the six months ended June 30, 1997, the Partnership paid an affiliate of
the General Partner approximately $5,500 for loan costs which were capitalized
and included in other assets in the accompanying Consolidated Balance Sheet.
These loan costs related to the refinancing of the Aspen Ridge Apartments during
the fourth quarter of 1996.
For the period from January 1, 1997 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
General Partner with an insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the master policy. The agent assumed the financial
obligations to the affiliate of the General Partner which receives payment on
these obligations from the agent. The amount of the Partnership's insurance
premiums accruing to the benefit of the affiliate of the General Partner by
virtue of the agent's obligations was not significant.
During December 1997, Insignia affiliates (the "Purchaser") commenced tender
offers for limited partnership interests in ten real estate limited partnerships
(including the Partnership) in which various Insignia affiliates act as general
partner. The Purchaser offered to purchase up to 70,000 of the outstanding
units of limited partnership interest in the Partnership, at $30 per Unit, net
to the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated December 19, 1997 (the "Offer to Purchase") and the
related Assignment of Partnership Interest attached as Exhibits (a)(1) and
(a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally
filed with the Securities and Exchange Commission on December 19, 1997. Because
of the existing and potential future conflicts of interest (described in the
Partnership's Statements on Schedule 14D-9 filed with the Securities and
Exchange Commission), neither the Partnership nor the General Partner expressed
any opinion as to the Offer to Purchase and made no recommendation as to whether
unit holders should tender their units in response to the Offer to Purchase. In
addition, because of these conflicts of interest, including as a result of the
Purchaser's affiliation with various Insignia affiliates that provide property
management services to the Partnership's properties, the manner in which the
Purchaser votes its limited partner interests in the Partnership may not always
be consistent with the best interests of the other limited partners. During
February 1998, the tender offers were completed and Insignia Properties, L.P.,
an affiliate of Insignia, tendered 43,795.8 units of limited partnership
interest in the Partnership. As a result, Insignia Properties L.P. owns
44,005.8 units.
On July 30, 1998, an Insignia affiliate commenced tender offers for limited
partnership interests in five real estate limited partnerships (including the
Partnership) in which Insignia affiliates act as general partner. The Purchaser
offered to purchase up to 40,000 of the outstanding units of limited partnership
interest in the Partnership, at $33 per unit, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
July 30, 1998 (the "Offer to Purchase") and the related Assignment of
Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to
the Tender Offer Statement on Schedule 14D-1 originally filed with the
Securities and Exchange Commission on July 30, 1998. Because of the existing and
potential future conflicts of interest (described in the Partnership's
Statements on Schedule 14D-9 filed with the Securities and Exchange Commission),
neither the Partnership nor the General Partner expressed any opinion as to the
Offer to Purchase and made no recommendation as to whether unit holders should
tender their units in response to the Offer to Purchase. In addition, because
of these conflicts of interest, including as a result of the Purchaser's
affiliation with various Insignia affiliates that provide property management
services to the Partnership's properties, the manner in which the Purchaser
votes its limited partner interest in the Partnership may not always be
consistent with the best interest of the other limited partners.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
the third quarter of 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the General Partner of the Partnership.
NOTE C - COMMITMENT
The Partnership is required to maintain working capital reserves for normal
repairs, replacements, working capital and contingencies of not less than 5% of
Net Invested Capital, as defined in the Partnership Agreement. In the event
expenditures are made from these reserves, operating revenue shall be allocated
to such reserves to the extent necessary to maintain the foregoing level. Cash
and cash equivalents, tenant security deposits and investments totaling
approximately $941,000, are less than the reserve requirement of approximately
$1,760,000 at June 30, 1998. The Partnership intends to replenish the working
capital reserve from cash flow from operations after consideration of any
capital improvement needs of the properties. The Partnership's recent cash
flows from operations, however, have not been sufficient to replenish the
reserve and there is no assurance that future levels of cash flow from
operations will be adequate to accomplish this objective. The working capital
requirement must be met prior to any consideration for distributions to the
partners.
NOTE D - CHANGE IN STATUS OF NON-CORPORATE GENERAL PARTNER
In the year ended December 31, 1991, the Partnership Agreement was amended to
convert the General Partner interests held by the non-corporate General Partner,
Consolidated Capital Group ("CCG"), to that of a special limited partner
("Special Limited Partners"). The Special Limited Partners do not have a vote
and do not have any of the other rights of a Limited Partner except the right to
inspect the Partnership's books and records; however, the Special Limited
Partners will retain the economic interest in the Partnership which they
previously owned as general partner. ConCap Equities, Inc. ("CEI") became the
sole general partner of the Partnership effective December 31, 1991. In
connection with CCG's conversion, a special allocation of gross income was made
to the Special Limited Partners in order to eliminate their tax basis negative
capital accounts.
After the conversion, the various owners of interests in the Special Limited
Partners transferred portions of their interests to CEI so that CEI now holds a
.2% interest in all allocable items of income, loss and distribution. The
difference between the Special Limited Partners' capital accounts for financial
statement and tax reporting purposes is being amortized as the components of the
timing differences which created the balance reverse.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
The Partnership's investment properties consist of two apartment complexes and
one commercial property. The following table sets forth the average occupancy
of the properties for the six months ended June 30, 1998 and 1997:
Average
Occupancy
1998 1997
Aspen Ridge Apartments
Chicago, Illinois 93% 95%
Sutton Place Apartments
Corpus Christi, Texas 91% 95%
51 North High Street Building
Columbus, Ohio 100% 94%
The General Partner attributes the decrease in occupancy at Aspen Ridge
Apartments to the purchase of new homes and several tenant evictions. The
decrease in occupancy at Sutton Place Apartments is attributed to the purchase
of new homes and the addition of new apartment complexes in the area. The
General Partner attributes the increase in occupancy at the 51 North High Street
Building to existing tenants leasing additional space and the addition of new
tenants.
Results of Operations
The Partnership realized a net loss of approximately $99,000 and $100,000 during
the three and six months ended June 30, 1998, respectively, compared to a net
loss of approximately $17,000 and $100,000 for three and six months ended June
30, 1997, respectively. The increase in net loss for the three months ended
June 30, 1998 is attributable to an increase in operating expense and property
taxes partially offset by an increase in rental income. The increase in
operating expenses for the second three months of 1998 as compared to the same
period of 1997 is due to the timing of expenses incurred during the two periods.
For the six months ended June 30, 1998, operating expenses decreased as compared
to the same period of 1997. This is primarily due to a decrease in maintenance
expenses as noted below. The increase in property taxes is due to an increase
in the assessed value at Sutton Place and an increase in tax rates at Aspen
Ridge which occurred during the second half of 1997. The increase in rental
income for the three months ended June 30, 1998 is due to rate increases at all
of the Partnership's properties. The increase in occupancy at 51 North High
Street along with rate increases at both Aspen Ridge and Sutton Place offset the
decreases in occupancy during the second quarter of 1998 at both Aspen Ridge and
Sutton Place.
Included in operating expense for the six months ended June 30, 1998, is
approximately $15,000 of major repairs and maintenance comprised primarily of
tennis court repairs and major landscaping at Aspen Ridge and Sutton Place
Apartments. Included in operating expense for the six months ended June 30,
1997, is approximately $88,000 of major repairs and maintenance comprised
primarily of gutter repairs, exterior building improvements and exterior
painting at Sutton Place Apartments.
As part of the ongoing business plan of the Partnership, the 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 expenses. As part of
this plan, the 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
General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At June 30, 1998, the Partnership had cash and cash equivalents of approximately
$877,000, compared to approximately $720,000 at June 30, 1997. The net
increases in cash and cash equivalents for the six months ended June 30, 1998
and 1997 are $303,000 and $428,000, respectively. Net cash provided by
operating activities decreased due to a decrease in accounts payable resulting
from the timing of payments to vendors. Partially offsetting this is a decrease
in receivables and deposits as a result of collection of tenant receivables.
Net cash used in investing activities increased due to the decrease in
withdrawals from restricted escrows as a result of less repair work being
performed for the first six months of 1998 offset by the maturity of US Treasury
Notes in 1998. Net cash used in financing activities decreased due to the
amortization of restructured debt on the 51 North High Street Building.
The Partnership is required to maintain working capital reserves for normal
repairs, replacements, working capital and contingencies of not less than 5% of
Net Invested Capital, as defined in the Partnership Agreement. In the event
expenditures are made from these reserves, operating revenue shall be allocated
to such reserves to the extent necessary to maintain the foregoing level. Cash
and cash equivalents, tenant security deposits and investments totaling
approximately $941,000 are less than the reserve requirement of approximately
$1,760,000 at June 30, 1998. The Partnership intends to replenish the working
capital reserve from cash flow from operations after consideration of any
capital improvement needs of the properties. The Partnership's recent cash
flows from operations, however, have not been sufficient to replenish the
reserve and there is no assurance that future levels of cash flow from
operations will be adequate to accomplish this objective. The working capital
requirement must be met prior to any consideration for distributions to the
partners.
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 properties to adequately maintain the physical
assets and other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of approximately $11,078,000, net of discount, matures at
various times with balloon payments due at maturity, at which time the
properties will either be sold or the mortgage refinanced. Future cash
distributions will depend on the levels of net cash generated from operations,
capital expenditure requirements, property sales and the availability of cash
reserves. During the six months ended June 30, 1998, and June 30, 1997, no
distributions were declared or paid.
Year 2000
The Partnership is dependent upon the General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The General Partner believes that with modifications to
existing software and conversions to new software, the Year 2000 Issue will not
pose significant operational problems for its computer systems. However, if such
modifications and conversions are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the
Partnership.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 2. LEGAL PROCEEDING
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 General Partner and several of their affiliated
partnerships and corporate entities. The complaint 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 and its 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 as well as a recently announced agreement between
Insignia and Apartment Investment and Management Company. The complaint seeks
monetary damages and equitable relief, including judicial dissolution of the
Partnership. The General Partner believes the action to be without merit, and
intends to vigorously defend it. On June 24, 1998, the General Partner filed a
motion seeking dismissal of the action.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Corporate General Partner believes that all
such pending or outstanding litigation will be resolved without a material
adverse effect upon the business, financial condition or operations of the
Partnership.
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.
None.
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.
CONSOLIDATED CAPITAL PROPERTIES V
By: CONCAP EQUITIES, INC.
General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ron Uretta
Vice President and Treasurer
Date: August 3, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Consolidated Capital Properties V 1998 Second Quarter 10-QSB and is qualified
in its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000725614
<NAME> CONSOLIDATED CAPITAL PROPERTIES V
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 877
<SECURITIES> 0
<RECEIVABLES> 313
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 21,271
<DEPRECIATION> 14,606
<TOTAL-ASSETS> 8,513
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,078
0
0
<COMMON> 0
<OTHER-SE> (3,274)
<TOTAL-LIABILITY-AND-EQUITY> 8,513
<SALES> 0
<TOTAL-REVENUES> 2,227
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,327
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 421
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (100)
<EPS-PRIMARY> .56<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
