<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, 1999
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
--------------
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
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statement
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS AT FEBRUARY 28, AT NOVEMBER 30,
1999 1998
<S> <C> <C>
ASSETS
Investments in real estate:
Land $ - $ 3,780,687
Buildings and improvements - 22,419,500
--------------------------------------------------
- 26,200,187
Less accumulated depreciation - (11,507,294)
--------------------------------------------------
- 14,692,893
Cash and cash equivalents 19,948,438 424,001
Restricted cash - 261,132
Other assets, net of accumulated amortization
of $0 in 1999 and $164,087 in 1998 208,145 347,073
-----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 20,156,583 $ 15,725,099
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage payable $ - $ 6,072,451
Distribution payable 19,404,215 -
Accounts payable and accrued expenses 183,603 387,989
Due to general partner and affiliates - 16,038
Security deposits - 73,629
--------------------------------------------------
Total Liabilities 19,587,818 6,550,107
--------------------------------------------------
Partners' Capital:
General Partner 11,662 182,795
Limited Partners (57,490 Units outstanding) 557,103 8,992,197
--------------------------------------------------
Total Partners' Capital 568,765 9,174,992
-----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 20,156,583 $ 15,725,099
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCOME
Rental $ 614,349 $ 947,444
Interest and other 79,736 11,712
--------------------------------------------------
Total Income 694,085 959,156
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Property operating 363,493 454,309
Depreciation and amortization 110,544 220,173
Interest 78,229 119,642
General and administrative 28,229 20,472
Write-off of assets 36,555 67,097
--------------------------------------------------
Total Expenses 617,050 881,693
- ------------------------------------------------------------------------------------------------------------------------------
Income from operations 77,035 77,463
Gain on sale of properties 11,103,411 -
- ------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary loss 11,180,446 77,463
Extraordinary loss from debt extinguishment (382,458) -
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 10,797,988 $ 77,463
-----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) ALLOCATED:
To the General Partner $ (169,793) $ 3,670
To the Limited Partners 10,967,781 73,793
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 10,797,988 $ 77,463
-----------------------------------------------------------------------------------------------------------------------------
PER LIMITED PARTNERSHIP UNIT
(57,490 UNITS OUTSTANDING)
Income from operations $ 4.23 $ 1.28
Gain on sale of properties 193.14 -
Extraordinary loss from debt extinguishment (6.59) -
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 190.78 $ 1.28
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED FEBRUARY 28, 1999 GENERAL LIMITED
PARTNER PARTNERS TOTAL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE AT NOVEMBER 30, 1998 182,795 8,992,197 9,174,992
Net income (loss) (169,793) 10,967,781 10,797,988
Distributions ($337.50 per Unit) (1,340) (19,402,875) (19,404,215)
- -----------------------------------------------------------------------------------------------------------------------------
BALANCE AT FEBRUARY 28, 1999 $ 11,662 $ 557,103 $ 568,765
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,797,988 $ 77,463
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 110,544 220,173
Write-off of assets 36,555 67,097
Gain on sale of properties (11,103,411) -
Extraordinary loss from debt extinguishment 382,458 -
Increase (decrease) in cash arising from changes in operating assets and
liabilities:
Fundings to restricted cash (40,516) (34,612)
Release of restricted cash 301,648 -
Other assets 67,458 (240,734)
Accounts payable and accrued expenses (204,386) 79,682
Due to general partner and affiliates (16,038) 406
Security deposits (73,629) (2,843)
-------------------------------------------------
Net cash provided by operating activities 258,671 166,632
- ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of properties 25,764,800 -
Additions to real estate (111,560) (189,887)
-------------------------------------------------
Net cash provided by (used in) investing activities 25,653,240 (189,887)
- ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions - (359,019)
Prepayment penalty (315,023) -
Mortgage principal payments (6,072,451) (19,876)
-------------------------------------------------
Net cash used in financing activities (6,387,474) (378,895)
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 19,524,437 (402,150)
Cash and cash equivalents, beginning of period 424,001 1,424,876
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 19,948,438 $ 1,022,726
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 78,229 $ 79,826
- ------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Write-off of buildings and improvements $ 75,413 $ (129,032)
Write-off of accumulated depreciation $ (38,858) $ 61,935
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1998 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 February 28, 1999 and the
results of operations and cash flows for the three months ended February 28,
1999 and 1998 and the consolidated statement of partners' capital for the three
months ended February 28, 1999. Results of operations are not necessarily
indicative of the results to be expected for the full year.
The Partnership sold its remaining investments in real estate. The sale and
liquidation plan was approved by the Unitholders through a consent solicitation
statement as of January 15, 1999 and the sale of the properties was completed on
January 29, 1999.
For assets sold or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in net income for the period.
Within 30 days of the completion of the sale of the properties, the Partnership
declared a cash distribution representing substantially all of the net proceeds
from sale and substantially all of the remaining assets of the Partnership less
an amount for costs and contingencies associated with the sale and liquidation
of the Partnership.
No other significant events have occurred subsequent to fiscal year 1998, and no
material contingencies exist, which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a) (5).
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
LIQUIDITY AND CAPITAL RESOURCES
On February 26, 1999, the Partnership declared a cash distribution in the
amount of $19,402,875 to the Limited Partner Unitholders ($337.50 per Unit)
and $1,340 to the General Partner, which amounts were equal to substantially
all of the net proceeds from the sale (the "Sale") of the remaining
Partnership's investments in real estate ("Properties"), together with other
available cash of the Partnership less an amount for costs associated with
the Sale and liquidation and other contingencies. Immediately following the
distribution, the Partnership had a cash and cash equivalents balance of
$544,223. The General Partner believes that the Partnership has sufficient
cash to meet the obligations of the Partnership for any contingencies or
costs associated with Sale and the final liquidation of the Partnership.
As a result of the Sale of the remaining Properties, the Partnership's only
source of revenue prior to final liquidation will be the interest generated on
the remaining cash after the initial distribution. The remaining cash is
invested in an unaffiliated highly liquid money market fund.
At February 28, 1999, the Partnership had cash and cash equivalents of
$19,948,438 compared with $424,001 at November 30, 1998. The increase in cash
and cash equivalents is due to receipt of the proceeds from the Sale.
Remaining cash available after all obligations have been satisfied, if any,
will be distributed to the Unitholders.
RESULTS OF OPERATIONS
Partnership net income for the three months ended February 28, 1999 was
$10,797,988 compared to $77,463 for the corresponding period in fiscal 1998. The
increase for the three months ended February 28, 1999 is primarily attributable
to the gain on the Sale of the Partnership's Properties.
For the three months ended February 28, 1999 the Partnership generated
operating income of $77,035 compared to $77,463 for the corresponding period
in fiscal 1998. Rental income totaled $614,349 for the three months ended
February 28, 1999 compared with $947,444 for the corresponding period in
fiscal 1998. Partnership expenses for the three months ended February 28,
1999 totaled $617,050 compared with $881,693 for the corresponding period in
fiscal 1998. The decrease for fiscal 1999 in operating income, rental income
and all expense categories is primarily attributable to the Sale on January
29, 1999.
YEAR 2000
Due to the consummation of the Sale in January 1999, the Partnership is no
longer engaged in the operation of real properties or any other business. As a
result of the foregoing, and in view of the General Partner's plan to complete
the full liquidation of the Partnership prior to January 1, 2000, the
Partnership has no exposure to Year 2000 issues.
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures About Market Risks
Since the Partnership sold its remaining properties on January 29, 1999 and its
mortgage indebtedness was repaid, the Partnership has no exposure to interest
rate risk. In addition, the Partnership is expected to be liquidated during
1999.
PART II - OTHER INFORMATION
ITEMS 1-3. Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Pursuant to a Consent Solicitation Statement dated December
16, 1998, the Unitholders were asked to approve two proposals
as follows: (i) the sale of all of the Partnership's
remaining real estate investments to DOC Investors, L.L.C.
(the "Sale"); and (ii) an amendment to the Partnership's
partnership agreement to permit sales of Partnership
properties to affiliates of the General Partner if the terms
of the sale are approved by the Unitholders (the
"Amendment"). By its terms, the consent solicitation was to
terminate on January 15, 1999, unless such date was extended
by the General Partner for an aggregate of up to an
additional 40 days. Since both the Sale and the Amendment
were approved by the requisite majority-in-interest of the
Unitholders (i.e., at least 28,746 Units) as of January 15,
1999, the consent solicitation terminated on such date. Upon
termination of the consent solicitation, the results of the
consent solicitation were as follows: (i) With respect to the
Sale - 35,705 Units "FOR;" 528 Units "AGAINST;" and 82 Units
"ABSTAIN;" and (ii) with respect to the Amendment - 35,192
Units "FOR;" 929 Units "AGAINST;" and 194 Units "ABSTAIN."
The foregoing results do not include any votes received after
the termination of the consent solicitation.
ITEM 5. Not applicable
ITEM 6. Exhibits & Reports on Form 8-K
(a) Exhibits
3.1 Amendment, dated January 18, 1999 to Partnership's Second
Amended and Restated Certificate and Agreement of Limited
Partnership (included as, and incorporated herein by
reference to, Exhibit 4.1 to the Partnership's Report on Form
8-K filed on February 16, 1999).
10.1 Agreement for Purchase and Sale and Joint Escrow Instructions
between Lakeview Village at Ponte Vedra Lakes Joint Venture
and Doc Investors, L.L.C. dated January 26, 1999 with respect
to Lakeview Village Apartments (included as, and incorporated
herein by reference to, Exhibit 10.2 to the Partnership's
Report on Form 8-K filed on February 16, 1999). February 16,
1999).
10.2 Agreement for Purchase and Sale and Joint Escrow Instructions
between The Hamptons Joint Venture and Lend Lease Real Estate
Investments, Inc. dated December 15, 1998, and amendment
thereto, and assignment thereof, with respect to Hamptons at
Quail Hollow Apartments (included as, and incorporated herein
by reference to, Exhibit 10.1 to the Partnership's Report on
Form 8-K filed on February 16, 1999).
(b) Reports on Form 8-K
On February 16, 1999, the Partnership filed a Form 8-K for
the purpose of disclosing the
<PAGE>
consummation of the sale of all of its real property
investments on January 29, 1999 to DOC Investors, L.L.C.
No other reports on Form 8-K were filed during the quarter
ended February 28, 1999.
(27) Financial Data Schedule
<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: April 14, 1999 BY:/s/ DANIEL J. EPSTEIN
Daniel J. Epstein
Director, President, and Principal Executive
Officer
Date: April 14, 1999 BY:/s/ ROBERT J. SVATOS
Robert J. Svatos
Vice President and Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 19,948,438
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,156,583
<CURRENT-LIABILITIES> 19,587,818
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 568,765
<TOTAL-LIABILITY-AND-EQUITY> 20,156,583
<SALES> 614,349
<TOTAL-REVENUES> 694,085
<CGS> 0
<TOTAL-COSTS> 363,493
<OTHER-EXPENSES> 175,328
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,229
<INCOME-PRETAX> 77,035
<INCOME-TAX> 0
<INCOME-CONTINUING> 77,035
<DISCONTINUED> 11,103,411
<EXTRAORDINARY> (382,458)
<CHANGES> 0
<NET-INCOME> 10,797,988
<EPS-PRIMARY> 190.78
<EPS-DILUTED> 190.78
</TABLE>