<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 MAY 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
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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
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ADDRESS OF PRINCIPAL EXECUTIVE OFFICES ZIP CODE
(619) 297-6771
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
---- -----
<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
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CONSOLIDATED BALANCE SHEETS AT MAY 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 22,405,052 22,271,530
---------------------------------------------
26,185,739 26,052,217
Less accumulated depreciation (11,095,327) (10,808,639)
---------------------------------------------
15,090,412 15,243,578
Cash and cash equivalents 473,553 1,424,876
Restricted cash 308,232 224,210
Other assets, net of accumulated amortization
of $147,947 in 1998 and $131,808 in 1997 407,997 128,814
-------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 16,280,194 $ 17,021,478
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgages payable 6,134,836 6,185,012
Distribution payable 351,980 359,019
Accounts payable and accrued expenses 397,459 388,948
Due to general partner and affiliates 16,575 15,811
Security deposits 88,673 89,448
---------------------------------------------
Total Liabilities 6,989,523 7,038,238
---------------------------------------------
Partners' Capital:
General Partner 181,437 190,878
Limited Partners (57,490 Units outstanding) 9,109,234 9,792,362
---------------------------------------------
Total Partners' Capital 9,290,671 9,983,240
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 16,280,194 $ 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
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MAY 31, SIX MONTHS ENDED MAY 31,
1998 1997 1998 1997
----------------------- -----------------------
<S> <C> <C> <C> <C>
INCOME
Rental $ 971,660 $884,396 $1,919,104 $1,836,941
Interest and other 11,753 21,841 23,465 83,683
----------------------- -----------------------
Total Income 983,413 906,237 1,942,569 1,920,624
----------------------- -----------------------
EXPENSES
Property operating 567,746 489,193 1,022,055 1,014,697
Depreciation and amortization 220,852 218,901 441,025 437,802
Interest 119,059 121,326 238,701 243,192
General and administrative 62,087 53,078 82,559 93,179
Write-off of assets 79,742 - 146,839 -
----------------------- -----------------------
Total Expenses 1,049,486 882,498 1,931,179 1,788,870
----------------------- -----------------------
Income (Loss) from operations (66,073) 23,739 11,390 131,754
Gain on sale of property - - - 2,582,641
----------------------- -----------------------
NET INCOME (LOSS) $ (66,073) $ 23,739 $ 11,390 $2,714,395
----------------------- -----------------------
----------------------- -----------------------
NET INCOME (LOSS) ALLOCATED:
To the General Partner $ 968 $ 2,583 $ 4,638 $ 6,852
To the Limited Partners (67,041) 21,156 6,752 2,707,543
----------------------- -----------------------
$ (66,073) $ 23,739 $ 11,390 $2,714,395
----------------------- -----------------------
----------------------- -----------------------
PER LIMITED PARTNERSHIP UNIT
(57,490 UNITS OUTSTANDING)
Income (Loss)
from operations $ (1.17) $ 0.37 $ 0.12 $ 2.18
Gain on sale of property - - - 44.92
----------------------- -----------------------
NET INCOME (LOSS) $ (1.17) $ 0.37 $ 0.12 $ 47.10
----------------------- -----------------------
----------------------- -----------------------
- --------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED MAY 31, 1998
<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 4,638 6,752 11,390
Distributions ($12.00 per Unit) (14,079) (689,880) (703,959)
- ------------------------------------------------------------------------------
BALANCE AT MAY 31, 1998 $ 181,437 $ 9,109,234 $ 9,290,671
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 1998 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,390 $ 2,714,395
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 441,025 437,802
Write-off of assets 146,839 -
Gain on sale of property - (2,582,641)
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Fundings to restricted cash (84,022) (85,211)
Other assets (295,322) 6,171
Accounts payable and accrued expenses 8,511 120,817
Due to general partner and affiliates 764 (4,921)
Security deposits (775) (31,727)
-------------------------------
Net cash provided by operating activities 228,410 574,685
- ----------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of property - 6,270,225
Additions to real estate (673,504) -
Insurance recovery from fire damage 254,945
-------------------------------
Net cash provided by (used for) investing activities (418,559) 6,270,225
- ----------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (710,998) (6,943,383)
Mortgage principal payments (50,176) (55,918)
-------------------------------
Net cash used for financing activities (761,174) (6,999,301)
- ----------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (951,323) (154,391)
Cash and cash equivalents, beginning of period 1,424,876 2,121,544
- ----------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 473,553 $ 1,967,153
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 199,080 $ 243,192
- ----------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING ACTIVITIES:
Write-off of buildings and improvements $ (285,037) $ -
Write-off of accumulated depreciation $ 138,198 $ -
- ----------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONAM REALTY INVESTORS 5 L.P.
AND CONSOLIDATED VENTURES
- -------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1997 audited consolidated financial
statements within Form 10-K.
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 May 31, 1998 and the
results of operations for the three and six months ended May 31, 1998 and
1997 and the consolidated statement of partners' capital and cash flows for
the six months ended May 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>
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1998, the Partnership had cash and cash equivalents of $473,553
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 six 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 $308,232 at May 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 May 31, 1998 which is to be paid in July, 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 a net loss of ($66,073) and net income of $11,390,
for the three and six months ended May 31, 1998, respectively. This compares
with net income of $23,739 and $2,714,395 for the corresponding periods in
fiscal 1997. The decrease for the six-month period is primarily attributable
to the gain on the sale of Canterbury Park on December 10, 1996. Income
(loss) from operations for the three and six months ended May 31, 1998 was
($66,073) and $11,390, respectively, compared with income from operations of
$23,739 and $131,754, respectively, for the corresponding period in fiscal
1997. The decrease for the three and six-month periods is primarily due to a
decrease in interest and other income, a write-off of assets, and an increase
in property operating expenses, somewhat offset by an increase in rental
income.
Rental income totaled $971,660 and $1,919,104, respectively, for the three
and six months ended May 31, 1998 compared with $884,396 and $1,836,941
respectively, for the corresponding periods in fiscal 1997. The increase is
due to the increased occupancy rates at both properties, and rent increases
at Lakeview Village.
Interest and other income totaled $11,753 and $23,465, respectively, for the
three and six months ended May 31, 1998 compared with $21,841 and $83,683,
respectively, for the corresponding period in fiscal 1997. The decrease for
the three and six-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 six months ended May 31, 1998
totaled $567,746 and $1,022,055, respectively, compared with $489,193 and
$1,014,697, respectively, for the corresponding periods in fiscal 1997. The
increase for the three and six-month periods is primarily attributable to
increased repairs and maintenance at Lakeview Village somewhat offset by the
sale of Canterbury Park.
During the first six 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 94% 92%
Lakeview Village 93% 87%
----------------------------------------------------
</TABLE>
The increase at The Hamptons at Quail Hollow is attributable to the granting
of rent concessions due to the highly competitive market; the increase in
occupancy at Lakeview Village is primarily attributable to increased
marketing efforts and rent increases.
<PAGE>
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 May 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: July 14, 1998 BY: /s/ DANIEL J. EPSTEIN
-----------------------------------
Daniel J. Epstein
Director, President, and Principal
Executive Officer
Date: July 14, 1998 BY: /s/ ROBERT J. SVATOS
------------------------------------
Robert J. Svatos
Vice President and Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> MAY-31-1998
<CASH> 781,785
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,185,739
<DEPRECIATION> 11,095,327
<TOTAL-ASSETS> 16,280,194
<CURRENT-LIABILITIES> 854,687
<BONDS> 6,134,836
0
0
<COMMON> 0
<OTHER-SE> 9,290,671
<TOTAL-LIABILITY-AND-EQUITY> 16,280,194
<SALES> 1,919,104
<TOTAL-REVENUES> 1,942,569
<CGS> 0
<TOTAL-COSTS> 1,022,055
<OTHER-EXPENSES> 670,423
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 238,701
<INCOME-PRETAX> 11,390
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,390
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
</TABLE>
