FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
June 30, 1998 0-16561
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
(Exact Name of Registrant as specified in its charter)
Delaware 16-1275925
(State of Formation) (IRS Employer Identification Number)
2350 North Forest Road
Suite 12 A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-0280
Indicate by a 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_____
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-Q or any
amendment to this Form 10-Q. (X)
As of June 30, 1998 the issuer had 21,002.8 units of limited partnership
interest outstanding. The aggregate value of the units of limited partnership
interest held by non-affiliates of the Registrant was $21,001,800.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------ ---------------------
<S> <C> <C>
Balance Sheets -
June 30, 1998 and December 31, 1997 3
Statements of Operations -
Three Months Ended June 30, 1998 and 1997 4
Statements of Operations -
Six Months Ended June 30, 1998 and 1997 5
Statements of Cash Flows -
Six Months Ended June 30, 1998 and 1997 6
Statements of Partners' (Deficit) Capital -
Six Months Ended June 30, 1998 and 1997 7
Notes to Financial Statements 8 - 20
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
- ------- -----------------------------------------------
CONDITION & RESULTS OF OPERATIONS 21 - 22
----------------------------------
</TABLE>
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
BALANCE SHEETS
--------------
June 30, 1998 and December 31, 1997
-----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
- ------
Property, at cost:
Land $ 2,435,519 $ 2,435,519
Buildings and improvements 25,949,385 25,722,116
Furniture, fixtures and equipment 512,500 512,500
---------------- -----------------
28,897,404 28,670,135
Less accumulated depreciation 9,658,896 9,010,190
---------------- -----------------
Property, net 19,238,508 19,659,945
Investment in land 397,946 397,946
Cash 1,628,002 2,165,489
Investments in mutual funds 1,865,786 1,695,559
Accounts receivable, net of allowance for doubtful
accounts of $201,331 and $140,390, respectively 370,973 202,412
Mortgage escrow 565,571 356,953
Mortgage costs, net of accumulated amortization
of $621,064 and $566,754 421,353 421,663
Leasing commissions, net of accumulated amortization
of $577,443 and $541,456 242,267 227,750
Other assets 230,245 115,394
---------------- -----------------
Total Assets $ 24,960,651 $ 25,243,111
================ =================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgages and notes payable $ 18,330,651 $ 18,507,664
Accounts payable and accrued expenses 742,004 723,160
Accrued interest 169,000 159,020
Security deposits and prepaid rents 245,626 257,485
---------------- -----------------
Total Liabilities 19,487,281 19,647,329
---------------- -----------------
Partners' (Deficit) Capital:
General partners (247,736) (244,064)
Limited partners 5,721,106 5,839,846
---------------- -----------------
Total Partners' Capital 5,473,370 5,595,782
---------------- -----------------
Total Liabilities and Partners' Capital $ 24,960,651 $ 25,243,111
================ =================
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended June 30, 1998 and 1997
-----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 1,410,381 $ 1,686,270
Interest and other income 240,784 146,562
------------------ ------------------
Total income 1,651,165 1,832,832
------------------ ------------------
Expenses:
Property operations 480,181 691,547
Interest 503,997 602,117
Depreciation and amortization 529,258 575,683
Administrative:
Paid to affiliates 43,959 152,591
Other 175,939 143,705
------------------ ------------------
Total expenses 1,733,334 2,165,643
------------------ ------------------
Loss before allocated loss from joint venture (82,169) (332,811)
Allocated income (loss) from joint ventures - 1,387
------------------ ------------------
Net loss $ (82,169) $ (331,424)
================== ==================
Loss per limited partnership unit $ (3.79) $ (15.31)
================== ==================
Distributions per limited partnership unit $ - $ -
================== ==================
Weighted average number of
limited partnership units
outstanding 21,002.8 21,002.8
================== ==================
</TABLE>
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 2,118,755 $ 3,326,848
Interest and other income 331,674 250,286
---------------- -----------------
Total income 2,450,429 3,577,134
---------------- -----------------
Expenses:
Property operations 778,559 1,511,110
Interest 710,817 1,132,675
Depreciation and amortization 739,003 937,141
Administrative:
Paid to affiliates 148,569 303,956
Other 195,893 310,469
---------------- -----------------
Total expenses 2,572,841 4,195,351
---------------- -----------------
Loss before allocated loss from joint venture (122,412) (618,217)
Allocated loss from joint ventures - (244,621)
---------------- -----------------
Net loss $ (122,412) $ (862,838)
================ =================
Loss per limited partnership unit $ (5.65) $ (39.85)
================ =================
Distributions per limited partnership unit $ - $ -
================ =================
Weighted average number of
limited partnership units
outstanding 21,002.8 21,002.8
================ =================
</TABLE>
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1998 1997
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (122,412) $ (862,838)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 739,003 937,141
Net loss from joint ventures - 244,621
Changes in operating assets and liabilities:
Accounts receivable (168,561) (24,618)
Leasing commissions (50,504) (9,563)
Other assets (114,851) (21,093)
Accounts payable and accrued expenses 18,844 11,428
Accrued interest 9,980 (11,247)
Security deposits and prepaid rent (11,859) 12,127
---------------- -----------------
Net cash provided by operating activities 299,640 275,958
---------------- -----------------
Cash flow from investing activities:
Investments in mutual funds (170,227) -
Accounts receivable - affiliates - 17,233
Mortgage escrow (208,618) (901,146)
Investment in land - -
Capital expenditures (227,269) (59,465)
---------------- -----------------
Net cash (used in) investing activities (606,114) (943,378)
---------------- -----------------
Cash flows from financing activities:
Accounts payable - affiliates - 20,084
Principal payments on mortgages and notes (177,013) (95,058)
Mortgage costs related to refinancing (54,000) (866,926)
Mortgage proceeds - 2,365,199
---------------- -----------------
Net cash (used in) provided by financing activities (231,013) 1,423,299
---------------- -----------------
(Decrease) increase in cash (537,487) 755,879
Cash - beginning of period 2,165,489 800,741
---------------- -----------------
Cash - end of period $ 1,628,002 $ 1,556,620
================ =================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 700,837 $ 1,143,922
================ =================
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
-----------------------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
General
Partners Limited Partners
Amount Units Amount
------ ----- ------
<S> <C> <C> <C>
Balance, January 1, 1997 $ (459,529) 21,002.8 $ 3,754,082
Net loss (25,885) - (836,953)
--------------- --------------- -----------------
Balance, June 30, 1997 $ (485,414) 21,002.8 $ 2,917,129
=============== =============== =================
Balance, January 1, 1998 $ (244,064) 21,002.8 $ 5,839,846
Net loss (3,672) - (118,740)
--------------- --------------- -----------------
Balance, June 30, 1998 $ (247,736) 21,002.8 $ 5,721,106
=============== =============== =================
</TABLE>
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
(Unaudited)
1. GENERAL PARTNERS' DISCLOSURE
----------------------------
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership V, all adjustments necessary for a fair presentation of
the Partnership's financial position, results of operations and changes in
cash flows for the six month periods ended June 30, 1998 and 1997, have
been made in the financial statements. Such financial statements are
unaudited and subject to any year-end adjustments which may be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
--------------------------------------
Realmark Property Investors Limited Partnership V (the "Partnership"), a
Delaware Limited Partnership, was formed on February 28, 1986, to invest in
a diversified portfolio of income-producing real estate investments.
In July 1986, the Partnership commenced the public offering of units of
limited partnership interest. Other than matters relating to organization,
it had no business activities and, accordingly, had not incurred any
expenses or earned any income until the first interim closing (minimum
closing) of the offering, which occurred on December 5, 1986. As of
December 31, 1987, 20,999.8 units of limited partnership interest were sold
and outstanding, excluding 3 units held by an affiliate of the General
Partners. The offering terminated on October 31, 1987 with gross offering
proceeds of $20,999,800. The General Partners are Realmark Properties,
Inc., a wholly-owned subsidiary of J.M. Jayson & Company, Inc. and Joseph
M. Jayson, the Individual General Partner. Joseph M. Jayson is the sole
shareholder of J.M. Jayson & Company, Inc.
Under the partnership agreement, the general partners and their affiliates
can receive compensation for services rendered and reimbursement for
expenses incurred on behalf of the Partnership.
-8-
<PAGE>
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
-------------------------------------------------
Net income or loss and proceeds arising from a sale or refinancing shall be
distributed first to the limited partners in amounts equivalent to a 7%
return on the average of their adjusted capital contributions, then an
amount equal to their capital contributions, then an amount equal to an
additional 5% of the average of their adjusted capital contributions after
the general partners receive a disposition fee, then to all partners in an
amount equal to their respective positive capital balances and, finally, in
the ratio of 87% to the limited partners and 13% to the general partners.
The partnership agreement also provides that distribution of funds,
revenues, costs and expenses arising from partnership activities, exclusive
of any sale or refinancing activities, are to be allocated 97% to the
limited partners and 3% to the general partners.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
Property and Depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. Expenditures for maintenance and
repairs are expensed as incurred, and major renewals and betterment's are
capitalized. The Accelerated Cost Recovery System and Modified Accelerated
Cost Recovery System are used to determine depreciation expense for tax
purposes.
Investments in Real Estate Joint Ventures
-----------------------------------------
The investments in real estate joint ventures are accounted for on the
equity method.
-9-
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-----------------------------------------------------
Rental Income
-------------
Leases for residential properties have terms of one year or less.
Commercial leases generally have terms of from one to five years. Rental
income is recognized on the straight line method over the term of the
lease.
Investments in Mutual Funds
---------------------------
The investments in mutual funds are stated at fair value, which
approximates cost, at June 30, 1998.
Mortgage Costs
--------------
Amortization of other assets includes amortizing mortgage costs that are
incurred in obtaining property mortgage financing and are being amortized
over the terms of the respective mortgages.
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
----------------------------------------------
In May 1987 the Partnership acquired a 65,334 square foot office building
(The Paddock Building) located in Nashville, Tennessee for a purchase price
of $3,163,323, which included $148,683 in acquisition fees.
In December 1987 the Partnership acquired a 192 unit apartment complex
(Williamsburg) located in Columbus, Indiana for a purchase price of
$3,525,692, which included $285,369 in acquisition fees.
In February 1988 the Partnership acquired a 215 unit apartment complex (The
Fountains) located in Westchester, Ohio for a purchase price of $5,293,068,
which included $330,155 in acquisition fees.
In May 1988 the Partnership acquired a 100 unit apartment complex (Pelham
East) located in Greenville, South Carolina for a purchase price of
$2,011,927, which included $90,216 in acquisition fees. In March 1990 the
Partnership sold the apartment complex for a sale price of $2,435,000.
In May 1988 the Partnership acquired a 205 unit apartment complex (Camelot
East) located in Louisville, Kentucky for a purchase price of $6,328,363,
which included $362,540 in acquisition fees.
-10-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
----------------------------------------------------------
In June 1988 the Partnership acquired a 100 unit apartment complex (O'Hara)
located in Greenville, South Carolina for a purchase price of $2,529,390,
which included $498,728 in acquisition fees.
In July 1988 the Partnership acquired a 158 unit apartment complex (Wayne
Estates) located in Huber Heights, Ohio for a purchase price of $4,250,013,
which included $793,507 in acquisition fees.
In April 1989 the Partnership acquired a 102 unit apartment complex
(Jackson Park) located in Seymour, Indiana for a purchase price of
$1,911,585, which included $111,585 in acquisition fees.
In June 1991 the Partnership acquired a 115,021 square foot office complex
(Commercial Park West) located in Research Triangle Park, North Carolina
for a purchase price of $5,773,633, which included $273,663 in acquisition
fees.
In September 1992 Inducon East Phase III Joint Venture (the "Phase III
Venture") was formed pursuant to an agreement dated September 8, 1992
between the Partnership and Inducon Corporation. The primary purpose of the
Phase III Venture is to acquire land and construct office/warehouse
buildings as income-producing property. The development, located in
Amherst, New York, consists of 4.2 acres of land and two buildings
measuring approximately 25,200 and 21,300 square feet, respectively. As of
June 30, 1998, both buildings have been fully constructed and placed in
service.
In November 1997, the Partnership acquired an additional 50% interest in
Inducon East and Inducon East Phase III through a buyout of the other joint
venturers. At June 30, 1998, the Partnership owned 100% of the properties.
In December 1997, the Partnership sold Williamsburg North, the Fountains,
O'Hara, Wayne Estates and Jackson Park for a total purchase price of
$16,107,000, which generated a net gain for financial statement purposes of
$5,009,787. The properties were sold to U.S. Apartments LLC, a wholly-owned
affiliate of Joseph M. Jayson, Individual General Partner.
In June 1997, the Partnership entered into a plan to dispose of the
property, plant and equipment of Camelot East with a carrying amount of
$3,825,147 at June 30, 1997. Management had determined that a sale of the
property was in the best interests of the limited partners. An agreement
was signed with a potential buyer for the purchase of the property. The
agreement expired in October 1997. No additional agreements were signed
thereafter.
-11-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
---------------------------------------------------------
Financial Accounting Standards Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of
(the "Statement") requires that assets to be disposed of be recorded at the
lower of carrying value or fair value, less costs to sell. The Statement
also requires that such assets not be depreciated during the disposal
period, as the assets will be recovered through sale rather than through
operations. In accordance with this Statement, the long-lived assets of the
Partnership, classified as held for sale on the balance sheet, are recorded
at the carrying amount which is the lower of carrying value or fair value
less costs to sell, and have not been depreciated during the disposal
period. Depreciation expense was not recorded during the disposal period
for Camelot East Apartments.
5. INVESTMENT IN LAND
------------------
The Partnership owns approximately 96 acres of vacant land in Amherst, New
York. The investment totaled $397,946 and $373,282 as of June 30, 1998 and
1997, respectively. The balance as of June 30, 1998 approximates the
investment's fair value.
6. INVESTMENTS IN JOINT VENTURES
-----------------------------
Inducon East Joint Venture (the "Venture") was formed pursuant to an
agreement dated April 22, 1987 between the Partnership and Curtlaw
Corporation, a New York Corporation (the "Corporation"). The primary
purpose of the Venture is to acquire land and construct office/warehouse
buildings as income-producing property. The development consists of two
parcels of land measuring approximately 8.4 acres for Phase I and 6.3 acres
for Phase II. Phase I consists of two (2) buildings of approximately 38,000
and 52,000 square feet, while Phase II consists of four (4) buildings
totaling approximately 75,000 square feet, with each building approximately
19,000 square feet
The Partnership contributed capital of $2,744,901 to the Venture. The
remaining funds needed to complete Phase I came from a $3,950,000 taxable
industrial revenue bond which the Venture received in 1989. The Venture
completed the financing of Phase II with an additional $3,200,000 taxable
industrial revenue bond.
The total cost of Phase I and Phase II was approximately $4,425,000 and
$4,600,000, respectively.
The Joint Venture agreement provided for the following:
-12-
<PAGE>
INVESTMENTS IN JOINT VENTURES (CONTINUED)
----------------------------------------
Ownership of the Joint Venture was to be divided equally between the
Partnership and Curtlaw. The Joint Venture agreement provided that the
Partnership was to be allocated 95% of any losses incurred.
Net cash flow from the Joint Venture was to be distributed in the following
order:
To the Partnership until it had received a return of 7% per annum on
its underwritten equity (the Partnership's "underwritten equity" is
defined to be the initial contributable capital divided by
sixty-five (65) percent). To the extent a 7% return is not received
from year to year, it will accumulate and be paid from the next
available cash flow.
To Curtlaw in an amount equal to that paid to the other Partnership.
No amount was to accumulate in favor of the other venturer.
Any remaining amount was to be divided equally.
To the extent there were net proceeds from any sale or refinancing of the
subject property, said net proceeds were to be payable in the following
order of priority:
To the Partnership to the extent the 7% per annum return on its
underwritten equity is unpaid.
Next, to the Partnership until it had received an overall 9%
cumulative return on its underwritten equity.
Next, to the Partnership until it had received an amount equal to
its total underwritten equity, reduced by any prior distribution of
sale, finance or refinancing proceeds.
Next, to the Partnership until it had received a cumulative 20% per
year return on its total underwritten equity.
Thereafter, any remaining net proceeds were to be divided 50% to the
Partnership and 50% to Curtlaw.
In November 1997, the Partnership acquired the interest of Curtlaw
Corporation for $40,000. At June 30, 1998, the Partnership owned 100% of
the Inducon East property. The property began to be consolidated in the
Partnership's financial statements beginning November 1, 1997.
-13-
<PAGE>
INVESTMENTS IN JOINT VENTURES (CONTINUED)
----------------------------------------
Inducon East Phase III Joint Venture (the "Phase III Venture") was formed
pursuant to an agreement dated September 8, 1992 between the Partnership
and Inducon Corporation. The primary purpose of the Phase III Venture is to
acquire land and construct office/warehouse buildings as income producing
property. The proposed development consists of 4.2 acres of land and two
buildings with approximately 25,200 and 21,300 square feet, respectively.
As of June 30, 1998, both buildings have been fully constructed and placed
in service.
The Partnership has contributed $1,582,316 to the Phase III Venture. The
remaining funds needed to complete construction came from a $750,000
construction loan. The balance of this loan at June 30, 1998 is $454,591.
The total cost of the Phase III Venture was approximately $2,450,000.
The Joint Venture agreement provided for the following:
Ownership of the Joint Venture was to be divided equally between the
Partnership and the Corporation. The Joint Venture agreement provided that
income and losses be allocated 95% to the Partnership and 5% to the
Corporation. Net cash flow from the Joint Venture was to be distributed to
the Partnership and the Corporation in accordance with the terms of the
Joint Venture agreement.
In November 1997, the Partnership acquired the interest of Inducon
Corporation for $40,000. At June 30, 1998, the Partnership owned 100% of
the Inducon East Phase III property. The property began to be consolidated
in the Partnership's financial statements beginning November 1, 1997.
-14-
<PAGE>
7. MORTGAGES AND NOTES PAYABLE
---------------------------
The Partnership has the following mortgages and notes payable:
The Paddock Building
--------------------
An 8.75% mortgage with a balance of $1,575,684 and $1,654,001 at June 30,
1998 and 1997, respectively, which provides for annual principal and
interest payments of $219,612 payable in equal monthly installments with a
final payment of $1,589,511 initially due in June 1998; this mortgage was
extended to September 30, 1998. Also, a 10% demand note with a balance of
$180,000 as of June 30, 1998 and 1997 providing for monthly interest
payments of $1,500.
The Williamsburg North Apartments
---------------------------------
The property's mortgage outstanding of $1,833,241 at June 30, 1997 was
refinanced during 1997. The mortgage was assumed by the buyer when the
property was sold in December 1997.
The Fountains Apartments
------------------------
The property's mortgage outstanding of $3,900,000 at June 30, 1997 was
refinanced during May 1997. The mortgage was assumed by the buyer when the
property was sold in December 1997.
Camelot East Apartments
-----------------------
A mortgage with a balance of $4,871,608 at June 30, 1998, providing for
monthly principal and interest payments of $33,927, bearing interest at
7.4%. The note matures November 2027.
A mortgage with a balance of $4,900,000 at June 30, 1997, providing for
interest payments only, bearing interest at 9.1875%. The note was to mature
in June 1999 but was subsequently converted to a term loan.
O'Hara Apartments
-----------------
The property's mortgage outstanding of $1,600,000 at June 30, 1997 was
refinanced during May 1997. The mortgage was assumed by the buyer when the
property was sold in December 1997.
-15-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
--------------------------------------
Wayne Estates Apartments
------------------------
The property's mortgage outstanding of $3,095,000 at June 30, 1997 was
refinanced during May 1997. The mortgage was assumed by the buyer when the
property was sold in December 1997.
Jackson Park
------------
The property's mortgage outstanding of $1,600,000 at June 30, 1997 was
refinanced during May 1997. The mortgage was assumed by the buyer when the
property was sold in December 1997.
Commercial Park West
--------------------
A mortgage with a balance of $5,400,000 at June 30, 1998 requiring interest
only payments for a term of two years at a rate equivalent to 300 basis
points over the thirty-day LIBOR rate (9.1875% at June 30, 1998). The loan
may at any time during the two years be converted to a thirty year fixed
mortgage.
A 9.25% mortgage with a balance of $4,845,491 at June 30, 1997, which
provided for interest only payments through June 1995. On July 1, 1995,
interest changed to 10% with annual principal and interest payments of
$516,012 payable in equal monthly installments. The remaining balance of
$4,691,234 was to be due June 2001. This mortgage was refinanced during
1998 and the balance was paid in full.
Inducon East
------------
The construction of the property's buildings were financed through proceeds
of $3,200,000 and $750,000, 10.25% revenue bonds issued by the Town of
Amherst Industrial Development Agency, both payable through November 1999.
The principal balance due on the bonds at June 30, 1998 was $2,848,871 and
$664,854, respectively. The principal balances at June 30, 1997 were
$2,908,530 and $679,194, respectively. Collateral on the bonds is the
property, an assignment of leases and subleases, a security interest in
machinery and equipment, and a conditional guarantee.
Additional financing was obtained through proceeds of a $3,200,000, 9.45%
bond issued by the Town of Amherst Industrial Development Agency, payable
through December 1999. The principal balance due on the bond at June 30,
1998 and 1997 was $2,914,007 and $2,975,000, respectively. Collateral is
the property and an assignment of rents.
-16-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
--------------------------------------
Inducon East Phase III
----------------------
Construction was financed through $750,000 demand loans. In the absence of
such a demand, the terms of the loans require monthly principal and
interest payments of $14,888 at a rate of prime plus 1.5% (10% at June 30,
1998) with a five year amortization. The loans are collateralized by the
building. Draws on the loans totaled $454,591 and $563,465 at June 30, 1998
and 1997, respectively.
The mortgages described above are secured by the individual complexes to
which they relate.
The Partnership's mortgages and note payable are of a non-recourse nature.
The aggregate maturities of mortgages and note payable for each of the next
five years and thereafter are as follows:
Year Amount
---- ------
1998 $ 2,535,296
1999 6,411,061
2000 91,707
2001 4,763,161
2002 56,964
Thereafter 4,649,475
--------------
TOTAL $ 18,507,664
==============
8. FAIR VALUE OF FINANCIAL INTERESTS
---------------------------------
Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value of certain financial instruments. The fair value of cash,
accounts receivable, accounts payable, accrued expenses, accounts payable -
affiliates and deposit liabilities approximate the carrying value due to
the short-term nature of these instruments.
Management has determined that the estimated fair values of the mortgages
payable on Commercial Park West and Camelot East, with carrying values of
$5,400,000 and $4,871,608 at June 30, 1998, respectively, are believed to
approximate their carrying value since new mortgages were obtained
recently.
-17-
<PAGE>
FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
----------------------------------------------
The fair value of the mortgage and note payable on The Paddock cannot be
determined because it is uncertain if a comparable mortgage could be
obtained in the current market due to its current occupancy level of only
85% at June 30, 1998.
The fair value of the mortgage payable on Inducon East cannot be determined
at June 30, 1998 because it is uncertain if comparable bonds could be
obtained in the current market. The bonds were issued by the Amherst
Industrial Development Agency.
The fair market values of the construction loans payable on Inducon East
Phase III approximate their carrying values as they are due and payable on
demand and have adjustable interest rates.
9. RELATED PARTY TRANSACTIONS
--------------------------
Management fees for the management of certain of the Partnership's
properties are paid to an affiliate of the General Partners. The management
agreement provides for 5% of gross monthly receipts of the complexes to be
paid as fees for administering the operations of the properties. These fees
totaled $100,198 and $151,123 for the six months ended June 30, 1998 and
1997, respectively.
Accounts payable - affiliates amounted to $0 and $20,084 at June 30, 1998
and 1997 respectively. The amount due is payable on demand.
The Partnership entered into a management agreement with unrelated third
parties for the management of The Paddock and Commercial Park West. The
agreements provide for the payment of a management fee equal to 3% and 2%
of monthly gross rental income, respectively.
According to the terms of the Partnership Agreement, the Corporate General
Partner is also entitled to receive a partnership management fee equal to
7% of net cash flow (as defined in the Partnership Agreement). This fee
totaled approximately $0 for the six months ended June 30, 1998.
Computer service charges for the partnerships are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $1,700 and $10,000 for the six months ended
June 30, 1998 and 1997, respectively.
-18-
<PAGE>
10. INCOME TAXES
------------
No provision has been made for income taxes since the income or loss of the
partnership is to be included in the tax returns of the Individual
Partners.
The tax returns of the Partnership are subject to examination by the
Federal and state taxing authorities. Under federal and state income tax
laws, regulations and rulings, certain types of transactions may be
accorded varying interpretations and, accordingly, reported partnership
amounts could be changed as a result of any such examination.
The reconciliation of net loss for the six months ended June 30, 1998 and
1997 as reported in the statements of operations, and as would be reported
for tax purposes, is as follows:
June 30, June 30,
1997 1997
---- ----
Net loss - statement of operations $ (122,412) $ (862,838)
Add to (deduct from):
Difference in depreciation 200,000 125,980
Difference in investment in
Joint Ventures - 56,700
Allowance for doubtful accounts 20,000 87,715
------------ -------------
Net income (loss) - tax return purposes $ 97,588 $ (592,443)
============ ============
-19-
<PAGE>
INCOME TAXES (CONTINUED)
-----------------------
The reconciliation of Partners' Capital as of June 30, 1998 and December
31, 1997 as reported in the balance sheet, and as reported for tax
purposes, is as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
Partners' Capital - balance sheet $ 5,473,370 $ 5,595,782
Add to (deduct from):
Accumulated difference in
depreciation 2,440,303 2,240,303
Gain on sale of properties (905,955) (905,955)
Accumulated difference in investments
in Joint Ventures 543,845 543,845
Syndication fees 2,352,797 2,352,797
Accumulated difference in amortization
of organization costs 21,738 21,738
Other nondeductible expenses ( 198,605) (218,605)
------------- -------------
Partners' Capital -
tax return purposes $ 9,727,493 $ 9,629,905
============= =============
</TABLE>
-20-
<PAGE>
PART II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS.
---------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership still maintains sufficient cash to enable it to not only fund
current operations, but also to provide for future capital improvements. No
distributions to partners were made in either the first six months of 1998 or
1997. The General Partner hopes to resume making distributions at some time
during the remainder of 1998 or possibly at the beginning of 1999.
Occupancies at the properties in the Partnership continued in most locations to
be favorable (i.e., exceeding 90 percent on average). The Paddock is expected to
be refinanced during the next quarter of 1998, further improving cash flow in
the Partnership due to anticipated decreases in debt service payments.
Management continues to actively pursue new tenants by making capital
improvements to the properties and through the use of rental promotions and
concessions. Capital improvements including painting, installation of new
carpeting and new appliances at Camelot East Apartments and improvements to
building exteriors are all currently in process.
Management also continues to search for buyers for the properties in the
Partnership as this is deemed to be in the best interest of the Limited
Partners.
Results of Operations
- ---------------------
Partnership operations for the three month period ended June 30, 1998 resulted
in a net loss of $82,169 or $3.79 per limited partnership unit compared to a
loss of $331,424 or $15.31 per limited partnership unit for the same period in
1997. The Partnership operations for the six month period ended June 30, 1998
resulted in a net loss of $122,412 or $5.65 per limited partnership unit versus
a six month 1997 net loss of $862,838 or $39.85 per unit.
Tax basis income for the six month period ended June 30, 1998 amounted to
$97,588 or $4.51 per limited partnership unit compared to a tax loss of $592,443
or $27.36 per unit for the corresponding period in 1997.
-21-
<PAGE>
Results of Operations (continued)
- ---------------------------------
Total revenue for the three month period ended June 30, 1998 amounted to
$1,651,165 decreasing approximately $182,000 from the three month period ended
June 30, 1997. For the first six months of 1998 there was a decrease in total
partnership revenue of slightly more than $1,126,000 as compared to the same
period in 1997. The majority of the decrease is due to the sale of five
residential properties from this Partnership in December 1997 (i.e., in the six
month period ended June 30, 1997 there were five more properties included in
both income and expenses). The five properties that were sold at the end of 1997
averaged a total of 56% of the Partnership's total revenues for the previous
three years. The reason that a more sizable decrease between the quarters ended
June 30, 1998 and 1997 is not noted is because the Inducon East and Inducon
Phase III joint ventures are reported separately as unconsolidated joint
ventures in 1997 and are not reported as such for 1998 since the Partnership now
owns 100% of the ventures. Occupancy at the commercial properties in the
Partnership, specifically The Paddock and Commercial Park West, continue to
remain high, and therefore cash flow from operations remains positive for the
six months ended June 30, 1998.
For the six month period ended June 30, 1998, expenses totaled $2,572,841. For
the quarter ended June 30, 1998, Partnership expenses amounted to $1,733,334,
almost double those of the first quarter of 1998. The increase in expenses
between the first and second quarter of 1998 is largely due to physical
improvements made to the properties to make them more appealing as the typically
busy rental season (i.e., the summer and fall months) approaches. Improvements
to the outside of the properties, such as painting and parking lot sealing, were
started as soon as the weather permitted. Management plans to continue such
improvements, so higher than usual property operation costs, specifically
repairs, maintenance and payroll, are expected during the next quarter of 1998.
Management continues to stress the importance of the physical appearance of the
properties as a means of improving occupancy.
For the six month period ended June 30, 1997, the Inducon East Joint Venture
generated a net loss of $236,925. For the six months ended June 30, 1998, this
property, which is now 100% owned by the Partnership, incurred a diminutive net
loss of $2,579.
The Inducon East Phase III Joint Venture generated a net loss of $20,571 for the
six month period ended June 30, 1997. Net income for the property, which is now
owned 100% by the Partnership, for the six month period ended June 30, 1998
amounted to $73,642.
-22-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership is not party to, nor is it the subject of, any material pending
legal proceedings other than ordinary routine litigation incidental to the
Partnership's business.
Item 2, 3, 4 and 5
- ------------------
Not applicable.
Item 6 - Exhibits and reports on Form 8-K
- -----------------------------------------
None.
-23-
<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, thereunto duly authorized.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP V
By: /s/ Joseph M. Jayson 8/12/98
------------------------------ ------------------------
Joseph M. Jayson, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/ Joseph M. Jayson 8/12/98
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/ Michael J. Colmerauer 8/12/98
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
-24-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Realmark Property Investors Limited Partnership V for
the six months ended June 30, 1998, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,628,002
<SECURITIES> 1,865,786
<RECEIVABLES> 572,304
<ALLOWANCES> 201,331
<INVENTORY> 0
<CURRENT-ASSETS> 4,660,577
<PP&E> 28,897,404
<DEPRECIATION> 9,658,896
<TOTAL-ASSETS> 24,960,651
<CURRENT-LIABILITIES> 1,156,630
<BONDS> 18,330,651
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,960,651
<SALES> 0
<TOTAL-REVENUES> 2,450,429
<CGS> 0
<TOTAL-COSTS> 2,572,841
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 710,817
<INCOME-PRETAX> (122,412)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (122,412)
<EPS-PRIMARY> (5.65)
<EPS-DILUTED> 0
</TABLE>
