<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 FEBRUARY 28,1998
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
CONAM REALTY INVESTORS 5 L.P.
-----------------------------
formerly known as
HUTTON/CONAM REALTY INVESTORS 5
-------------------------------
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
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>
CONSOLIDATED BALANCE SHEETS AT FEBRUARY 28, AT NOVEMBER 30,
1998 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in real estate:
Land $ 3,780,687 $ 3,780,687
Buildings and improvements 22,332,385 22,271,530
----------------------------------
26,113,072 26,052,217
Less accumulated depreciation (10,958,807) (10,808,639)
----------------------------------
15,154,265 15,243,578
Cash and cash equivalents 1,022,726 1,424,876
Restricted cash 258,822 224,210
Other assets, net of accumulated amortization
of $139,878 in 1998 and $131,808 in 1997 361,478 128,814
- -------------------------------------------------------------------------------------------
TOTAL ASSETS $ 16,797,291 $ 17,021,478
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage payable 6,165,136 6,185,012
Distribution payable 351,980 359,019
Accounts payable and accrued expenses 468,630 388,948
Due to general partner and affiliates 16,217 15,811
Security deposits 86,605 89,448
---------------------------------
Total Liabilities 7,088,568 7,038,238
---------------------------------
Partners' Capital:
General Partner 187,508 190,878
Limited Partners (57,490 Units outstanding) 9,521,215 9,792,362
---------------------------------
Total Partners' Capital 9,708,723 9,983,240
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 16,797,291 $ 17,021,478
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</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
FOR THE THREE MONTHS ENDED FEBRUARY 28,
1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
INCOME
Rental $ 947,444 $ 952,545
Interest and other 11,712 61,842
---------------------------------
Total Income 959,156 1,014,387
- ------------------------------------------------------------------------------------------
EXPENSES
Property operating 454,309 525,504
Depreciation and amortization 220,173 218,901
Interest 119,642 121,866
General and administrative 20,472 40,101
Write-off of assets 67,097 -
---------------------------------
Total Expenses 881,693 906,372
- ------------------------------------------------------------------------------------------
Income from operations 77,463 108,015
Gain on sale of property - 2,582,641
- ------------------------------------------------------------------------------------------
NET INCOME $ 77,463 $ 2,690,656
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
NET INCOME ALLOCATED:
To the General Partner $ 3,670 $ 4,269
To the Limited Partners 73,793 2,686,387
- ------------------------------------------------------------------------------------------
$ 77,463 $ 2,690,656
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
PER LIMITED PARTNERSHIP UNIT (57,490 UNITS OUTSTANDING)
Income from operations $ 1.28 $ 1.81
Gain on sale of property - 44.92
- ------------------------------------------------------------------------------------------
NET INCOME $ 1.28 $ 46.73
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED FEBRUARY 28, 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 3,670 73,793 77,463
Distributions ($6.00 per Unit) (7,040) (344,940) (351,980)
- ----------------------------------------------------------------------------------------------
BALANCE AT FEBRUARY 28, 1998 $ 187,508 $ 9,521,215 $ 9,708,723
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</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 THREE MONTHS ENDED FEBRUARY 28, 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 77,463 $ 2,690,656
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 220,173 218,901
Write-off of assets 67,097 -
Gain on sale of property - (2,582,641)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Fundings to restricted cash (34,612) (40,317)
Other assets (240,734) 12,278
Accounts payable and accrued expenses 79,682 3,283
Due to general partners and affiliates 406 (4,423)
Security deposits (2,843) (23,060)
-------------------------------------
Net cash provided by operating activities 166,632 274,677
- ----------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of property - 6,270,225
Additions to real estate (189,887) -
-------------------------------------
Net cash provided by (used for) investing activities (189,887) 6,270,225
- ----------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (359,019) (6,591,404)
Mortgage principal payments (19,876) (27,689)
-------------------------------------
Net cash used for financing activities (378,895) (6,619,093)
- ----------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (402,150) (74,191)
Cash and cash equivalents, beginning of period 1,424,876 2,121,544
- ----------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,022,726 $ 2,047,353
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 79,826 $ 121,866
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING ACTIVITIES:
Write-off of buildings and improvements $ (129,032) $ -
Write-off of accumulated depreciation $ 61,935 $ -
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</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
reoccurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of February 28, 1998 and the
results of operations and cash flows for the three months ended February 28,
1998 and 1997 and the consolidated statement of partners' capital for the three
months ended February 28, 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 February 28, 1998, the Partnership had cash and cash equivalents of
$1,022,726 which were invested in unaffiliated money market funds, compared with
$1,424,876 at November 30, 1997. The decrease reflects mortgage principal
payments, additions to real estate, and cash distributions to Partners exceeding
cash provided by operating activities during the first quarter of 1998.
The Partnership's restricted cash balance totaled $258,822 at February 28,
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 recorded a receivable, which is included in other assets, in the
first quarter for $224,000 for insurance proceeds resulting from fire damage to
eight units at Lakeview Village. Repairs to the property are substantially
completed and, except for a $5,000 deductible, the insurance proceeds will cover
the cost of the restoration work.
The General Partner declared a regular cash distribution of $6 per Unit for the
quarter ended February 28, 1998 which is to be paid in April, 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
Partnership operations for the three months ended February 28,1998 generated net
income of $77,463 compared with net income of $2,690,656 for the corresponding
period in fiscal 1997. The decrease for the three month period is primarily
attributable to the gain on the sale of Canterbury Park on December 10, 1996.
Income from operations for the three months ended February 28, 1998 was $77,463
compared with $108,015 for the corresponding period in fiscal 1997. The
decrease is primarily due to a decrease in interest and other income and an
increase in write-off of assets partially offset by a decrease in property
operating expenses.
Rental income totaled $947,444 for the three months ended February 28,1998
compared with $952,545 for the corresponding period in fiscal 1997. The decrease
is due to the net effect of the sale of Canterbury Park partially offset by an
increase in rental income from Lakeview Village and The Hamptons at Quail
Hollow.
Interest and other income totaled $11,712 for the three months ended February
28,1998 compared with $61,842 for the corresponding period in fiscal 1997. The
decrease for the three month period 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 months ended February 28,1998 totaled
$454,309 compared with $525,504 for the corresponding period in fiscal 1997.
The decrease is primarily attributable to a decrease in repairs and maintenance
at Lakeview Village.
During the first three 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% 94%
Lakeview Village 93% 88%
------------------------------------------------
</TABLE>
The increase in Lakeview Village is primarily attributable to increased
marketing efforts.
<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
On December 15, 1997 ConAm Realty Investors 5 L.P. filed a
Form 8-K (amended on December 17, 1997 by Form 8-K/A)
regarding its change of auditors from Coopers & Lybrand
L.L.P. to KPMG Peat Marwick LLP. The response from Coopers &
Lybrand L.L.P. indicated that there were no disagreements on
any matters of accounting principles or practices, financial
statement disclosure, or auditing scope procedure.
On February 3, 1998 ConAm Realty Investors 5 L.P. filed a
Form 8-K regarding a change in the general partner ownership
and the name change from Hutton/ConAm Realty Investors 5 to
ConAm Realty Investors 5 L.P.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> NOV-30-1997
<PERIOD-END> FEB-28-1998
<CASH> 1,281,548
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,113,072
<DEPRECIATION> 10,958,807
<TOTAL-ASSETS> 16,797,291
<CURRENT-LIABILITIES> 923,432
<BONDS> 6,165,136
0
0
<COMMON> 0
<OTHER-SE> 9,708,723
<TOTAL-LIABILITY-AND-EQUITY> 16,797,291
<SALES> 947,444
<TOTAL-REVENUES> 959,156
<CGS> 0
<TOTAL-COSTS> 454,309
<OTHER-EXPENSES> 307,742
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 119,642
<INCOME-PRETAX> 77,463
<INCOME-TAX> 0
<INCOME-CONTINUING> 77,463
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,463
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
