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 August 31, 1997
or
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: 0-014341
HUTTON/CONAM REALTY INVESTORS 5
Exact Name of Registrant as Specified in its Charter
California 11-2712111
State or Other Jurisdiction I.R.S. Employer
of Incorporation or Organization Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
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 ____
Consolidated Balance Sheets At August 31, At November 30,
1997 1996
Assets
Investments in real estate:
Land $ 3,780,687 $ 3,780,687
Buildings and improvements 22,125,028 22,125,028
25,905,715 25,905,715
Less accumulated depreciation (10,687,560) (10,055,068)
15,218,155 15,850,647
Property held for disposition --- 3,687,584
Cash and cash equivalents 1,726,684 2,121,544
Restricted cash 363,061 225,415
Other assets, net of accumulated amortization
of $123,738 in 1997 and $99,528 in 1996 136,884 167,504
Total Assets $17,444,784 $22,052,694
Liabilities and Partners' Capital
Liabilities:
Mortgage payable $ 6,214,353 $ 6,299,052
Distribution payable 351,981 439,974
Accounts payable and accrued expenses 504,599 309,475
Due to general partners and affiliates 16,032 19,613
Security deposits 93,946 129,482
Total Liabilities 7,180,911 7,197,596
Partners' Capital:
General Partners 168,513 182,637
Limited Partners (57,490 units outstanding) 10,095,360 14,672,461
Total Partners' Capital 10,263,873 14,855,098
Total Liabilities and Partners' Capital $17,444,784 $22,052,694
Consolidated Statement of Partners' Capital
For the nine months ended August 31, 1997
General Limited
Partners Partners Total
Balance at November 30, 1996 $182,637 $14,672,461 $14,855,098
Net income 6,995 2,609,149 2,616,144
Cash distributions (21,119) (7,186,250) (7,207,369)
Balance at August 31, 1997 $168,513 $10,095,360 $10,263,873
Consolidated Statements of Operations
Three months ended Nine months ended
August 31, August 31,
1997 1996 1997 1996
Income
Rental $ 930,876 $1,187,558 $2,767,817 $3,521,196
Interest and other 28,981 27,885 112,664 78,047
Total Income 959,857 1,215,443 2,880,481 3,599,243
Expenses
Property operating 685,518 494,462 1,700,215 1,555,927
Depreciation and amortization 218,900 263,491 656,702 808,623
Interest 120,776 122,916 363,968 370,265
General and administrative 32,914 50,631 126,093 118,019
Total Expenses 1,058,108 931,500 2,846,978 2,852,834
Income (Loss) from operations (98,251) 283,943 33,503 746,409
Gain on sale of property --- --- 2,582,641 ---
Net Income (Loss) $(98,251) $283,943 $2,616,144 $ 746,409
Net Income (Loss) Allocated:
To the General Partners $ 143 $ 7,240 $ 6,995 $ 20,663
To the Limited Partners (98,394) 276,703 2,609,149 725,746
$(98,251) $283,943 $2,616,144 $ 746,409
Per limited partnership unit
(57,490 outstanding)
Income (loss) from operations $(1.71) $4.81 $ .46 $12.62
Gain on sale of property --- --- 44.92 ---
$(1.71) $4.81 $45.38 $12.62
Consolidated Statements of Cash Flows
For the nine months ended August 31, 1997 1996
Cash Flows From Operating Activities:
Net income $2,616,144 $ 746,409
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 656,702 808,623
Gain on sale of property (2,582,641) ---
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Fundings to restricted cash (137,646) (127,608)
Other assets 6,410 8,653
Accounts payable and accrued expenses 195,124 49,600
Due to general partners and affiliates (3,581) 10,930
Security deposits (35,536) (513)
Net cash provided by operating activities 714,976 1,496,094
Cash Flows From Investing Activities:
Net proceeds from sale of property 6,270,225 ---
Additions to real estate --- (288,766)
Net cash provided by (used for) investing activities 6,270,225 (288,766)
Cash Flows From Financing Activities:
Distributions (7,295,362) (1,319,923)
Mortgage principal payments (84,699) (78,401)
Net cash used for financing activities (7,380,061) (1,398,324)
Net decrease in cash and cash equivalents (394,860) (190,996)
Cash and cash equivalents, beginning of period 2,121,544 2,253,221
Cash and cash equivalents, end of period $1,726,684 $2,062,225
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 363,968 $ 370,265
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1996 audited consolidated financial
statements within Form 10-K.
The unaudited interim consolidated financial statements include all normal and
reoccurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of August 31, 1997 and the
results of operations for the three and nine months ended August 31, 1997 and
1996 and the consolidated statements of cash flows and partners' capital for
the nine months ended August 31, 1997. Results of operations for the periods
are not necessarily indicative of the results to be expected for the full year.
Certain prior year amounts have been reclassified in order to conform to the
current year's presentation.
On August 29, 1997 ConAm Property Services IV, Ltd. ("CPS IV"), a co-general
partner of the Partnership, executed a contract to acquire RI 5 Real Estate
Services Inc.'s co-general partner interest in the Partnership. As a result,
upon the closing of this transaction CPS IV will become the sole general
partner of the Partnership. See Part II, Item 5 of this 10-Q for additional
information.
The following significant event has occurred subsequent to fiscal year 1996,
which requires disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a)(5):
Sale of Property
On December 10, 1996, the Partnership closed on the sale of Canterbury Park
Apartments ("Canterbury Park"). Canterbury Park sold for $6,387,300 to Burcam
Capital I, L.L.C., a North Carolina limited liability company (the "Buyer"),
which is unaffiliated with the Partnership. The selling price was determined
by arm's length negotiations between the Partnership and the Buyer. The
transaction resulted in a gain on sale for Canterbury Park of $2,582,641, which
is reflected in the Partnership's consolidated statements of operations for the
nine months ended August 31, 1997.
On January 24, 1997, the General Partners paid a special distribution of
$6,151,430, representing the net proceeds from the sale of Canterbury Park, to
the Limited Partners.
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At August 31, 1997, the Partnership had cash and cash equivalents of $1,726,684
which were invested in unaffiliated money market funds, compared with
$2,121,544 at November 30, 1996. The decrease reflects mortgage principal
payments and cash distributions to Partners exceeding proceeds from the
December 1996 sale of Canterbury Park and cash provided by operating activities
during the first nine months of fiscal 1997.
The Partnership's restricted cash balance totaled $363,061 at August 31, 1997,
compared to $225,415 at November 30, 1996. The increase is primarily
attributable to contributions made to an escrow account for the purpose of
funding real estate taxes as required under the terms of the Lakeview Village
mortgage.
Accounts payable and accrued expenses totaled $504,599 at August 31, 1997,
compared to $309,475 at November 30, 1996. The increase is primarily
attributable to North Carolina state withholding tax requirements relating to
the special distribution paid to the Limited Partners from the sale proceeds of
Canterbury Park.
The sale of Canterbury Park is also the primary reason for the decrease in the
Partnership's security deposits and due to general partners and affiliates
balances at August 31, 1997, compared to the amount of such balances at
November 30, 1996.
The General Partners declared a regular cash distribution of $6 per Unit for
the quarter ended August 31, 1997 which will be paid to investors on or about
October 22, 1997. The General Partners 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 nine months ended August 31, 1997
generated a net loss of $98,251 and net income of $2,616,144, respectively,
compared with net income of $283,943 and $746,409, respectively, for the
corresponding periods in fiscal 1996. The increase for the nine month period
is primarily attributable to the gain on the sale of Canterbury Park. Income
(loss) from operations for the three and nine months ended August 31, 1997 was
$(98,251) and $33,503, respectively, compared with $283,943 and $746,409,
respectively, for the corresponding periods in fiscal 1996. The decrease is
primarily due to the sale of Canterbury Park and the corresponding reduction in
rental income and, to a lesser extent, an increase in repairs and maintenance
expense at Lakeview Village, and a decline in occupancy at Lakeview Village,
resulting in decreased rental income at the property.
Rental income totaled $930,876 and $2,767,817 for the three and nine months
ended August 31, 1997, compared with $1,187,558 and $3,521,196, respectively,
for the corresponding periods in fiscal 1996, down primarily as a result of the
sale of Canterbury Park on December 10, 1996, and a decline in occupancy at
Lakeview Village.
Interest and other income totaled $28,981 and $112,664, respectively, for the
three and nine months ended August 31, 1997 compared with $27,885 and $78,047,
respectively, for the corresponding periods in fiscal 1996. The increase for
the nine- month period is primarily due to an increase in the Partnership's
average cash balance due to the sale of Canterbury Park.
Property operating expenses for the three and nine months ended August 31, 1997
totaled $685,518 and $1,700,215, respectively, compared with $494,462 and
$1,555,927, respectively, for the corresponding periods in fiscal 1996. The
increases for both periods are primarily attributable to an increase in repairs
and maintenance at Lakeview Village primarily as a result of roof repairs.
The sale of Canterbury Park is the primary reason for the decrease in
depreciation and amortization expense for the three and nine months ended
August 31, 1997, which totaled $218,900 and $656,702, respectively, compared to
$263,491 and $808,623, respectively, for the corresponding periods in fiscal
1996.
General and administrative expenses for the three and nine months ended August
31, 1997 were $32,914 and $126,093, respectively, compared to $50,631 and
$118,019, respectively, for the same periods in 1996. The decrease for the
three-month period is primarily attributable to a decrease in audit fees and
the timing of accruals during the 1996 period of certain administrative and
professional fees. The increase for the nine-month period is primarily
attributable to the reimbursement of certain expenses incurred by an
unaffiliated third party service provider in servicing the Partnership, which
were voluntarily absorbed by affiliates of RI 5 Real Estate Services Inc. in
prior periods. During the 1997 periods, such expenses were reimbursed to RI 5
Real Estate Services Inc. and its affiliates.
During the first nine months of fiscal 1997 and 1996, average occupancy levels
at the Partnership's properties were as follows:
Property 1997 1996
The Hamptons at Quail Hollow 96% 96%
Lakeview Village 89% 97%
Part II Other Information
Items 1-4 Not applicable.
Item 5 Other Information
ConAm Property Services IV, Ltd. ("CPS IV") and RI 5 Real Estate
Services Inc.'s ("RI 5") have served as co- general partners of the
Partnership since its inception. On August 29, 1997, CPS IV
executed a contract to acquire RI 5's co-general partner interest
in the Partnership. As a result, upon the closing of this
transaction CPS IV will become the sole general partner of the
Partnership.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K -
No reports on Form 8-K were filed during the quarter
ended August 31, 1997.
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, thereunto duly authorized.
HUTTON/CONAM REALTY INVESTORS 5
BY: RI 5 Real Estate Services Inc.
General Partner
Date: October 15, 1997 BY: /s/ Doreen D. Odell
Director, President, Chief Executive
Officer and Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Nov-30-1997
<PERIOD-END> August-31-1997
<CASH> 1,726,684
<SECURITIES> 000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 25,905,715
<DEPRECIATION> 10,687,560
<TOTAL-ASSETS> 17,444,784
<CURRENT-LIABILITIES> 966,558
<BONDS> 6,214,353
<COMMON> 000
000
000
<OTHER-SE> 10,263,873
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<SALES> 2,767,817
<TOTAL-REVENUES> 2,880,481
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<OTHER-EXPENSES> 782,795
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<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
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<NET-INCOME> 2,616,144
<EPS-PRIMARY> 45.38
<EPS-DILUTED> 45.38
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