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 March 31, 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)
March 31, 1998
Assets
Cash and cash equivalents $ 753
Investments 4
Receivables and deposits 353
Restricted escrows 436
Other assets 274
Investment properties:
Land $ 1,969
Buildings and related personal property 19,093
21,062
Less accumulated depreciation (14,328) 6,734
$ 8,554
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 57
Tenant security deposit liabilities 59
Accrued taxes 400
Other liabilities 110
Mortgage notes payable 11,103
Partners' Deficit
General partner $ (21)
Special limited partners (52)
Limited partners (179,537.20 units
issued and outstanding) (3,102) (3,175)
$ 8,554
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
March 31,
1998 1997
Revenues:
Rental income $1,064 $1,079
Other income 46 65
Total revenues 1,110 1,144
Expenses:
Operating 464 602
General and administrative 48 41
Depreciation 271 268
Interest 208 206
Property taxes 120 110
Total expenses 1,111 1,227
Net loss $ (1) $ (83)
Net loss allocated to general partner (.2%) $ -- $ --
Net loss allocated to limited partners (99.8%) (1) (83)
$ (1) $ (83)
Net loss per limited partnership unit: $ -- $ (.46)
See Accompanying Notes to Consolidated Financial Statements
c)
CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Three Months Ended March 31, 1998
(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
three months ended
March 31, 1998 -- -- -- (1) (1)
Partners' deficit at
March 31, 1998 179,537.20 $ (21) $ (52) $ (3,102) $(3,175)
See Accompanying Notes to Consolidated Financial Statements
d)
CONSOLIDATED CAPITAL PROPERTIES V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1998 1997
Cash flows from operating activities:
Net loss $ (1) $ (83)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 271 268
Amortization of lease commissions, loan costs,
and debt forgiveness (2) 17
Change in accounts:
Receivables and deposits 104 178
Other assets 11 --
Accounts payable (102) (1)
Tenant security deposit liabilities (3) (8)
Accrued property taxes (65) (22)
Other liabilities (49) (26)
Net cash provided by operating activities 164 323
Cash flows from investing activities:
Property improvements and replacements (69) (115)
Net decrease in restricted escrows 11 121
Proceeds from sale of investments 100 --
Net cash provided by investing activities 42 6
Cash flows from financing activities:
Payments on mortgage notes payable (27) (47)
Loan costs paid -- (10)
Net cash used in financing activities (27) (57)
Net increase in cash and cash equivalents 179 272
Cash and cash equivalents at beginning of period 574 292
Cash and cash equivalents at end of period $ 753 $ 564
Supplemental disclosure of cash flow information:
Cash paid for interest $ 211 $ 206
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 consolidated 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 months ended
March 31, 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 three months
ended March 31, 1998 and 1997. Property management fees of approximately
$59,000 and $53,000 were paid to affiliates of the General Partner for each of
the three months ended March 31, 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 $30,000 and $37,000 were paid to the General Partner and its
affiliates during each of the three months ended March 31, 1998 and 1997,
respectively. Included in these reimbursements is approximately $2,000 of
construction oversight reimbursement for 1997. No such costs have been incurred
to date for 1998. These reimbursements are included in operating and general
and administrative expenses. Also during the three months ended March 31, 1998
and 1997, approximately $1,000 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 three months ended March 31, 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 March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, 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 $816,000, are less than the reserve requirement of approximately
$1,760,000 at March 31, 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 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 special limited partners
("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 it
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
Partner 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 three months ended March 31, 1998 and 1997:
1998 1997
Aspen Ridge Apartments
Chicago, Illinois 94% 94%
Sutton Place Apartments
Corpus Christi, Texas 92% 95%
51 North High Street Building
Columbus, Ohio 100% 94%
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. 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.
Results of Operations
The Partnership realized a net loss of approximately $1,000 during the three
months ended March 31, 1998, compared to a net loss of approximately $83,000
during the three months ended March 31, 1997. The decrease in net loss resulted
primarily from decreased operating expenses. Operating expense decreased due to
a decrease in utility expenses at both 51 North High and Aspen Ridge in addition
to a decrease in maintenance expenses at Sutton Place and 51 North High. The
decrease in maintenance expense of approximately $82,000 related to major
repairs and maintenance comprised primarily of gutter repairs, exterior building
improvements and exterior painting at Sutton Place apartments and repairs on
HVAC units at 51 North High. There were no major repairs and maintenance for
the three months ended March 31, 1998.
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 March 31, 1998, the Partnership had cash and cash equivalents of
approximately $753,000 compared to approximately $564,000 at March 31, 1997.
The net increase in cash and cash equivalents for the three months ended March
31, 1998 and 1997 is $179,000 and $272,000, respectively. Net cash provided by
operating activities decreased due to the decrease in accounts payable resulting
from the timing of payments to vendors. The decrease is also attributable to
the decrease in cash provided by receivables and deposits due to an increase in
required tax and insurance escrows. Net cash provided by investing activities
increased primarily due to the maturity of US Treasury Notes offset by a
decrease in net withdrawals from restricted escrows. Net cash used in financing
activities decreased due to the amortization of restructured debt on the 51
North High 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 $816,000, are less than the reserve requirement of approximately
$1,760,000 at March 31, 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 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 property 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 $11,103,000, net of discount, matures at various
times with balloon payments due at maturity, at which time the properties will
either be sold or the mortgages 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
three months ended March 31, 1998, and March 31, 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 was only recently served with the complaint
which it believes to be without merit, and intends to vigorously defend the
action.
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 Partnership
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/Director
By: /s/ Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: May 1, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Consolidated Capital Properties V 1998 First 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 753
<SECURITIES> 0
<RECEIVABLES> 353
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 21,062
<DEPRECIATION> 14,328
<TOTAL-ASSETS> 8,554
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,103
0
0
<COMMON> 0
<OTHER-SE> (3,175)
<TOTAL-LIABILITY-AND-EQUITY> 8,554
<SALES> 0
<TOTAL-REVENUES> 1,110
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,111
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
</FN>
</TABLE>
