<PAGE>
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
- --------- Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1998
or
- --------- Transition Report Pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____ to ____
COMMISSION FILE NUMBER: 0-014341
CONAM REALTY INVESTORS 5 L.P.
-----------------------------
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
California 11-2712111
---------- ----------
STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER IDENTIFICATION NO.
INCORPORATION OR ORGANIZATION
1764 San Diego Avenue
San Diego, CA 92110 Attn. Robert J. Svatos 92110-1906
- -------------------------------------------- ----------
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES ZIP CODE
(619) 297-6771
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
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<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS AT AUGUST 31, AT NOVEMBER 30,
1998 1997
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<S> <C> <C>
ASSETS
Investments in real estate:
Land $ 3,780,687 $ 3,780,687
Buildings and improvements 22,414,640 22,271,530
------------------------------
26,195,327 26,052,217
Less accumulated depreciation (11,299,129) (10,808,639)
------------------------------
14,896,198 15,243,578
Cash and cash equivalents 496,046 1,424,876
Restricted cash 363,408 224,210
Other assets, net of accumulated amortization
of $156,017 in 1998 and $131,808 in 1997 315,268 128,814
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TOTAL ASSETS $ 16,070,920 $ 17,021,478
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage payable 6,103,944 6,185,012
Distribution payable 351,980 359,019
Accounts payable and accrued expenses 439,922 388,948
Due to general partner and affiliates 17,151 15,811
Security deposits 82,135 89,448
------------------------------
Total Liabilities 6,995,132 7,038,238
------------------------------
Partners' Capital:
General Partner 179,360 190,878
Limited Partners (57,490 Units outstanding) 8,896,428 9,792,362
------------------------------
Total Partners' Capital 9,075,788 9,983,240
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 16,070,920 $ 17,021,478
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</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
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- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
INCOME
Rental $ 1,052,937 $ 930,876 $ 2,972,041 $ 2,767,817
Interest and other 7,136 28,981 30,601 112,664
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Total Income 1,060,073 959,857 3,002,642 2,880,481
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EXPENSES
Property operating 523,974 685,518 1,546,029 1,700,215
Depreciation and amortization 222,052 218,900 663,077 656,702
Interest 118,465 120,776 357,166 363,968
General and administrative 48,337 32,914 130,896 126,093
Write-off of assets 10,148 - 156,987 -
------------------------------------------------------------
Total Expenses 922,976 1,058,108 2,854,155 2,846,978
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Income (Loss) from operations 137,097 (98,251) 148,487 33,503
Gain on sale of property - - - 2,582,641
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NET INCOME (LOSS) $ 137,097 $ (98,251) $ 148,487 $ 2,616,144
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NET INCOME (LOSS) ALLOCATED:
To the General Partner $ 4,963 $ 143 $ 9,601 $ 6,995
To the Limited Partners 132,134 (98,394) 138,886 2,609,149
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NET INCOME (LOSS) $ 137,097 $ (98,251) $ 148,487 $ 2,616,144
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PER LIMITED PARTNERSHIP UNIT
(57,490 UNITS OUTSTANDING)
Income (Loss) from operations $ 2.30 $ (1.71) $ 2.42 $ 0.46
Gain on sale of property - - - 44.92
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NET INCOME (LOSS) $ 2.30 $ (1.71) $ 2.42 $ 45.38
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</TABLE>
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED AUGUST 31,
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE AT NOVEMBER 30, 1997 $ 190,878 $ 9,792,362 $ 9,983,240
Net income 9,601 138,886 148,487
Distributions ($18.00 per Unit) (21,119) (1,034,820) (1,055,939)
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BALANCE AT AUGUST 31, 1998 $179,360 $8,896,428 $9,075,788
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</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED AUGUST 31, 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 148,487 $ 2,616,144
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 663,077 656,702
Write-off of assets 156,987 -
Gain on sale of property - (2,582,641)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Fundings to restricted cash (139,198) (137,646)
Other assets (210,663) 6,410
Accounts payable and accrued expenses 50,974 195,124
Due to general partner and affiliates 1,340 (3,581)
Security deposits (7,313) (35,536)
---------------------------
Net cash provided by operating activities 663,691 714,976
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of property - 6,270,225
Additions to real estate (703,420) -
Insurance recovery from fire damage 254,945 -
---------------------------
Net cash provided by (used for) investing activities (448,475) 6,270,225
- ------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (1,062,978) (7,295,362)
Mortgage principal payments (81,068) (84,699)
---------------------------
Net cash used for financing activities (1,144,046) (7,380,061)
- ------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (928,830) (394,860)
Cash and cash equivalents, beginning of period 1,424,876 2,121,544
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 496,046 $ 1,726,684
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 317,745 $ 363,968
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Write-off of buildings and improvements $ (305,365) $ -
Write-off of accumulated depreciation $ 148,378 $ -
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</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
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- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's 1997 annual report.
The unaudited interim consolidated financial statements include all normal and
recurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of August 31, 1998 and the
results of operations for the three and nine months ended August 31, 1998 and
1997 and the consolidated statement of partners' capital and cash flows for the
nine months ended August 31, 1998. Results of operations for the period are not
necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1997, and no
material contingencies exist, which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At August 31, 1998, the Partnership had cash and cash equivalents of $496,046
which were invested in money market funds, compared with $1,424,876 at November
30, 1997. The decrease reflects mortgage principal payments, additions to real
estate, tax payments and cash distributions to Partners exceeding cash provided
by operating activities during the first nine months of fiscal 1998. The
increase in other assets is primarily attributable to amounts due from the state
of North Carolina regarding an overpayment of non-resident withholdings and to
an increase in a deposit required by the Internal Revenue Service. The
Partnership expects sufficient cash to be generated from operations to meet its
current operating expenses.
The Partnership's restricted cash balance totaled $363,408 at August 31, 1998
compared to $224,210 at November 30, 1997. 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.
The Partnership received insurance proceeds of $254,945 resulting from fire
damage to eight units at Lakeview Village. The insurance proceeds were
sufficient to cover the cost of the restoration work.
The General Partner declared a regular cash distribution of $6.00 per Unit for
the quarter ended August 31, 1998 which is to be paid in October, 1998. The
General Partner will determine the amount of future quarterly distributions
based on the Partnership's available cash flow and future cash needs.
RESULTS OF OPERATIONS
The Partnership generated net income of $137,097 and $148,487, for the three and
nine months ended August 31,1998 respectively. This compares with a net loss of
($98,251) and net income of $2,616,144 for the corresponding periods in fiscal
1997. The decrease for the nine-month period is primarily attributable to the
gain on the sale of Canterbury Park on December 10, 1996. Income from
operations for the three and nine months ended August 31, 1998 was $137,097 and
$148,487, respectively, compared with the (loss) income from operations of
($98,251) and $33,503, respectively, for the corresponding period in fiscal
1997. The increase for the three and nine-month periods is primarily due to an
increase in rental income and a decrease in property operating expenses,
somewhat offset by an increase in write-off of assets as they are replaced.
Rental income totaled $1,052,937 and $2,972,041, respectively, for the three and
nine months ended August 31,1998 compared with $930,876 and $2,767,817,
respectively, for the corresponding periods in fiscal 1997. The increase is due
to stable occupancy with increased base rents at The Hamptons at Quail Hollow
and increased occupancy at Lakeview Village.
Interest and other income totaled $7,136 and $30,601, respectively, for the
three and nine months ended August 31,1998 compared with $28,981 and $112,664,
respectively, for the corresponding period in fiscal 1997. The decrease for the
three and nine-month periods is primarily due to a decrease in the
Partnership's average cash balance due to distributions resulting from the sale
of Canterbury Park.
Property operating expenses for the three and nine months ended August 31,1998
totaled $523,974 and $1,546,029, respectively, compared with $685,518 and
$1,700,215, respectively, for the corresponding periods in fiscal 1997. The
decrease for the three and nine-month periods is primarily attributable to
decreased repairs and maintenance at Lakeview Village and The Hamptons at Quail
Hollow and by the sale of Canterbury Park.
During the first nine months of fiscal 1998 and 1997, average occupancy levels
at the Partnership's properties were as follows:
<TABLE>
<CAPTION>
PROPERTY 1998 1997
-------------------------------------------------
<S> <C> <C>
The Hamptons at Quail Hollow 96% 96%
Lakeview Village 94% 89%
-------------------------------------------------
</TABLE>
The occupancy at The Hamptons at Quail Hollow has remained constant in a highly
competitive environment. The increase in occupancy at Lakeview Village is
primarily attributable to increased marketing efforts and continued upgrading of
units.
<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
OTHER INFORMATION
PART II Not applicable
ITEMS 1-5 Exhibits
ITEMS 6 (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, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONAM PROPERTY SERVICES IV, LTD.
General Partner of ConAm Realty Investors 5 L.P.
BY: CONTINENTAL AMERICAN DEVELOPMENT, INC.
GENERAL PARTNER
Date: October 13, 1998 BY:/s/ DANIEL J. EPSTEIN
---------------------
Daniel J. Epstein
Director, President, and Principal
Executive Officer
Date: October 13, 1998 BY:/s/ ROBERT J. SVATOS
--------------------
Robert J. Svatos
Vice President and Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> AUG-31-1998
<CASH> 859,454
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,195,327
<DEPRECIATION> 11,299,129
<TOTAL-ASSETS> 16,070,970
<CURRENT-LIABILITIES> 891,188
<BONDS> 6,103,944
0
0
<COMMON> 0
<OTHER-SE> 9,075,788
<TOTAL-LIABILITY-AND-EQUITY> 16,070,920
<SALES> 2,972,041
<TOTAL-REVENUES> 3,002,642
<CGS> 0
<TOTAL-COSTS> 1,546,029
<OTHER-EXPENSES> 950,960
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 357,166
<INCOME-PRETAX> 148,487
<INCOME-TAX> 0
<INCOME-CONTINUING> 148,487
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 148,487
<EPS-PRIMARY> 2.42
<EPS-DILUTED> 2.42
</TABLE>
