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
September 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 September 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
- ------- ---------------------
Balance Sheets -
<S> <C>
September 30, 1998 and December 31, 1997 3
Statements of Operations -
Three Months Ended September 30, 1998 and 1997 4
Statements of Operations -
Nine Months Ended September 30, 1998 and 1997 5
Statements of Cash Flows -
Nine Months Ended September 30, 1998 and 1997 6
Statements of Partners' (Deficit) Capital -
Nine Months Ended September 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
--------------
September 30, 1998 and December 31, 1997
----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
ASSETS
- ------
Property, at cost:
<S> <C> <C>
Land and improvements $ 2,435,519 $ 2,435,519
Buildings and improvements 25,730,935 25,722,116
Furniture, fixtures and equipment 512,500 512,500
---------------- -----------------
28,678,954 28,670,135
Less accumulated depreciation 10,006,760 9,010,190
---------------- -----------------
Property, net 18,672,194 19,659,945
Investment in land 397,946 397,946
Cash 1,910,555 2,165,489
Investments in mutual funds 1,934,771 1,695,559
Accounts receivable, net of allowance for doubtful
accounts of $211,958 and $140,390, respectively 319,985 202,412
Mortgage escrow 617,784 356,953
Mortgage costs, net of accumulated amortization
of $648,638 and $566,754 414,279 421,663
Leasing commissions, net of accumulated amortization
of $595,437 and $541,456 215,835 227,750
Other assets 180,249 115,394
---------------- -----------------
Total Assets $ 24,663,598 $ 25,243,111
================ =================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgages and notes payable $ 18,212,905 $ 18,507,664
Accounts payable and accrued expenses 1,031,331 723,160
Accrued interest 203,543 159,020
Security deposits and prepaid rents 244,930 257,485
---------------- -----------------
Total Liabilities 19,692,709 19,647,329
---------------- -----------------
Partners' (Deficit) Capital:
General partners (262,811) (244,064)
Limited partners 5,233,700 5,839,846
---------------- -----------------
Total Partners' Capital 4,970,889 5,595,782
---------------- -----------------
Total Liabilities and Partners' Capital $ 24,663,598 $ 25,243,111
================ =================
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended September 30, 1998 and 1997
----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1998 1997
---- ----
Income:
<S> <C> <C>
Rental $ 1,033,976 $ 1,648,968
Interest and other income 155,457 79,959
------------------ ------------------
Total income 1,189,433 1,728,927
------------------ ------------------
Expenses:
Property operations 790,457 808,729
Interest 359,999 547,083
Depreciation and amortization 403,703 390,136
Administrative:
Paid to affiliates 29,350 138,267
Other 108,405 114,421
------------------ ------------------
Total expenses 1,691,914 1,998,636
------------------ ------------------
Loss before allocated loss from joint venture (502,481) (269,709)
Allocated income (loss) from joint ventures - (51,203)
------------------ ------------------
Net loss $ (502,481) $ (320,912)
================== ==================
Loss per limited partnership unit $ (23.21) $ (14.82)
================== ==================
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
------------------------
Nine Months Ended September 30, 1998 and 1997
---------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
---- ----
Income:
<S> <C> <C>
Rental $ 3,152,731 $ 4,975,816
Interest and other income 487,131 330,245
---------------- -----------------
Total income 3,639,862 5,306,061
---------------- -----------------
Expenses:
Property operations 1,569,016 2,319,839
Interest 1,070,816 1,679,758
Depreciation and amortization 1,142,706 1,327,277
Administrative:
Paid to affiliates 177,919 442,223
Other 304,298 424,890
---------------- -----------------
Total expenses 4,264,755 6,193,987
---------------- -----------------
Loss before allocated loss from joint venture (624,893) (887,926)
Allocated loss from joint ventures - (295,824)
---------------- -----------------
Net loss $ (624,893) $ (1,183,750)
================ =================
Loss per limited partnership unit $ (28.86) $ (54.67)
================ =================
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
------------------------
Nine Months Ended September 30, 1998 and 1997
---------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
---- ----
Cash flow from operating activities:
<S> <C> <C>
Net loss $ (624,893) $ (1,183,750)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,142,706 1,327,277
Net loss from joint ventures - 295,824
Changes in operating assets and liabilities:
Accounts receivable (117,573) (33,546)
Leasing commissions (52,337) (82,890)
Other assets (64,855) (48,993)
Accounts payable and accrued expenses 308,171 262,563
Accrued interest 44,523 17,116
Security deposits and prepaid rent (12,555) (482)
---------------- -----------------
Net cash provided by operating activities 623,187 553,119
---------------- -----------------
Cash flow from investing activities:
Investments in mutual funds (239,212) -
Accounts receivable - affiliates - 17,233
Mortgage escrow (260,831) (1,305,052)
Capital expenditures (8,819) (486,037)
---------------- -----------------
Net cash (used in) investing activities (508,862) (1,773,856)
---------------- -----------------
Cash flows from financing activities:
Accounts payable - affiliates - 43,561
Principal payments on mortgages and notes (294,759) (137,502)
Mortgage costs related to refinancing (74,500) (981,836)
Mortgage proceeds - 3,031,958
---------------- -----------------
Net cash (used in) provided by financing activities (369,259) 1,956,181
---------------- -----------------
(Decrease) increase in cash (254,934) 735,444
Cash - beginning of period 2,165,489 800,741
---------------- -----------------
Cash - end of period $ 1,910,555 $ 1,536,185
================ =================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 1,026,293 $ 1,662,642
================ =================
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
-----------------------------------------
Nine Months Ended September 30, 1998 and 1997
---------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
<S> <C> <C> <C> <C>
Balance, January 1, 1997 $ (459,529) 21,002.8 $ 3,754,082
Net loss (35,513) - (1,148,238)
------------------ --------------- -----------------
Balance, September 30, 1997 $ (495,042) 21,002.8 $ 2,605,844
================== =============== =================
Balance, January 1, 1998 $ (244,064) 21,002.8 $ 5,839,846
Net loss (18,747) - (606,146)
------------------ --------------- -----------------
Balance, September 30, 1998 $ (262,811) 21,002.8 $ 5,233,700
================== =============== =================
</TABLE>
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Nine Months Ended September 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 nine month periods ended September 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
-------------
eases 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 September 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
September 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 September 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 as of September 30, 1998 and 1997.
The balance as of September 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 September 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 September 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 September 30, 1998 is
$448,580.
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 September 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 $1,566,205 and $1,635,144 at September
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
initially extended to September 30, 1998 and then again to December 1,
1998. Also, a 10% demand note with a balance of $180,000 as of September
30, 1998 and 1997 providing for monthly interest payments of $1,500.
The Williamsburg North Apartments
---------------------------------
The property's mortgage outstanding of $2,500,000 at September 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 $3,895,346 at September 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 $4,831,897 at September 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 September 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 $1,598,016 at September 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 $3,091,162 at September 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 $1,597,753 at September 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 $4,811,354 at September 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 September 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 $4,834,629 at September 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 September 30, 1998 was
$3,466,849. The principal balances at September 30, 1997 totaled
$3,564,011. 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 September
30, 1998 and 1997 was $2,914,007 and $2,975,000, respectively. Collateral
is the property and an assignment of rents. Management is currently in the
process of refinancing the loans/mortgages on this property.
-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 September
30, 1998) with a five year amortization. The loans are collateralized by
the building. Draws on the loans totaled $448,580 and $554,711 at September
30, 1998 and 1997, respectively. Management is currently in the process of
refinancing the loan on this property.
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
$4,811,354 and $4,831,897 at September 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
70% at September 30, 1998.
The fair value of the mortgage payable on Inducon East cannot be determined
at September 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 $148,590 and $265,889 for the nine months ended September 30, 1998
and 1997, respectively.
Accounts payable - affiliates amounted to $0 and $43,561 at September 30,
1998 and 1997 respectively. The amount due was 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 nine months ended September 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 $2,550 and $10,000 for the nine months ended
September 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 nine months ended September 30, 1998
and 1997 as reported in the statements of operations, and as would be
reported for tax purposes, is as follows:
<TABLE>
<CAPTION>
September 30, September 30,
1998 1997
---- ----
<S> <C> <C>
Net loss - statement of operations $ (624,893) $(1,183,750)
Add to (deduct from):
Difference in depreciation 300,000 188,970
Difference in investment in
Joint Ventures - 85,050
Allowance for doubtful accounts 30,000 131,572
------------- -------------
Net (loss) - tax return purposes $ (294,893) $ (778,158)
============= =============
</TABLE>
-19-
<PAGE>
INCOME TAXES (CONTINUED)
------------------------
The reconciliation of Partners' Capital as of September 30, 1998 and
December 31, 1997 as reported in the balance sheet, and as reported for tax
purposes, is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
<S> <C> <C>
Partners' Capital - balance sheet $ 4,970,889 $ 5,595,782
Add to (deduct from):
Accumulated difference in
depreciation 2,540,303 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 ( 188,605) (218,605)
---------------- ---------------
Partners' Capital -
tax return purposes $ 9,335,012 $ 9,629,905
================ ===============
</TABLE>
-20-
<PAGE>
PART II MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION ANDRESULTS 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 nine months of 1998 or
1997. The General Partner hopes to resume making distributions at some time
during 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 and both
Inducon complexes are expected to be refinanced during the last 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. Such work is
being funded through capital improvement reserves set up with lenders.
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 September 30, 1998
resulted in a net loss of $502,481 or $23.21 per limited partnership unit
compared to a loss of $320,912 or $14.82 per limited partnership unit for the
same period in 1997. The Partnership operations for the nine month period ended
September 30, 1998 resulted in a net loss of $624,893 or $28.86 per limited
partnership unit versus a nine month 1998 net loss of $1,183,750 or $54.67 per
unit.
The tax basis loss for the nine month period ended September 30, 1998 amounted
to $294,893 or $13.62 per limited partnership unit compared to a tax loss of
$778,158 or $35.94 per unit for the corresponding period in 1997.
-21-
<PAGE>
Results of Operations (continued)
- ---------------------------------
Total revenue for the three month period ended September 30, 1998 amounted to
$1,189,433 decreasing approximately $539,500 from the three month period ended
September 30, 1997 when total revenue amounted to $1,728,927. For the first nine
months of 1998 there was a decrease in total partnership revenue of slightly
more than $1,666,200 as compared to the same period in 1997; total revenue for
the nine month periods ended September 30, 1998 and 1997 were $3,639,862 and
$5,306,061, respectively. The majority of the decrease is due to the sale of
five residential properties from this Partnership in December 1997 (i.e., in the
nine month period ended September 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 September 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 (with the exception of The Paddock), specifically
Commercial Park West, continue to remain high, and therefore cash flow from
operations remains positive for the nine months ended September 30, 1998.
For the nine month period ended September 30, 1998, expenses totaled $4,264,755.
For the quarter ended September 30, 1998, Partnership expenses amounted to
$1,691,914. The increase in expenses between the different quarters of 1998 is
largely due to physical improvements made to the properties to make them more
appealing in order to increase (and maintain, where applicable) occupancy
levels. Improvements to the outside of the properties, such as painting and
parking lot sealing, will continue as long as the weather permits. Management
plans to continue such improvements, so higher than usual property operation
costs, specifically repairs, maintenance and payroll, are expected to continue
into the early part of 1999. Management continues to stress the importance of
the physical appearance of the properties as a means of improving occupancy.
For the nine month period ended September 30, 1997, the Inducon East Joint
Venture generated a net loss of $296,897. For the nine months ended September
30, 1998, this property, which is now 100% owned by the Partnership, incurred a
relatively minor net loss of $14,665.
The Inducon East Phase III Joint Venture generated a net loss of $14,497 for the
nine month period ended September 30, 1997. Net income for the property, which
is now owned 100% by the Partnership, for the nine month period ended September
30, 1998 amounted to $83,164.
-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 November 13, 1998
---------------------- -----------------
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 November 13, 1998
---------------------- -----------------
Joseph M. Jayson, Date
President and Director
/s/ Michael J. Colmerauer November 13, 1998
--------------------------- -----------------
Michael J. Colmerauer Date
Secretary
<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 nine months ended September 30, 1998, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,910,555
<SECURITIES> 1,934,771
<RECEIVABLES> 531,943
<ALLOWANCES> 211,958
<INVENTORY> 0
<CURRENT-ASSETS> 4,963,345
<PP&E> 28,678,954
<DEPRECIATION> 10,006,760
<TOTAL-ASSETS> 24,663,598
<CURRENT-LIABILITIES> 1,479,804
<BONDS> 18,212,905
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,663,598
<SALES> 0
<TOTAL-REVENUES> 3,639,862
<CGS> 0
<TOTAL-COSTS> 4,264,755
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,070,816
<INCOME-PRETAX> (624,893)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (624,893)
<EPS-PRIMARY> (28.86)
<EPS-DILUTED> 0
</TABLE>
