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, 1999 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, 1999 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.
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
INDEX
-----
PAGE NO.
--------
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PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
June 30, 1999 and December 31, 1998 3
Statements of Operations -
Three Months Ended June 30, 1999 and 1998 4
Statements of Operations -
Six Months Ended June 30, 1999 and 1998 5
Statements of Cash Flows -
Six Months Ended June 30, 1999 and 1998 6
Statements of Partners' (Deficit) Capital -
Six Months Ended June 30, 1999 and 1998 7
Notes to Financial Statements 8 - 19
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
- ------- FINANCIAL CONDITION & RESULTS OF OPERATIONS 20 - 22
--------------------------------------------
PART III: FINANCIAL DATA SCHEDULE
- --------- -----------------------
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-2-
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
BALANCE SHEETS
--------------
June 30, 1999 and December 31, 1998
-----------------------------------
(Unaudited)
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
- ------
Property, at cost:
Land $ 2,435,519 $ 2,435,519
Buildings and improvements 26,244,778 26,089,842
Furniture, fixtures and equipment 513,807 513,807
----------------- ----------------
29,194,104 29,039,168
Less accumulated depreciation 10,894,487 10,222,305
----------------- ----------------
Property, net 18,299,617 18,816,863
Investment in land 417,473 417,473
Cash 312,911 188,887
Accounts receivable, net of allowance for doubtful
accounts of $78,010 and $81,000, respectively 123,747 75,023
Accounts receivable - affiliates 59,655 -
Mortgage escrow 1,085,530 980,981
Mortgage costs, net of accumulated amortization
of $197,870 and $143,560 812,752 839,242
Leasing commissions, net of accumulated amortization
of $662,738 and $623,785 146,239 185,192
Other assets 37,343 104,035
----------------- ----------------
Total Assets $ 21,295,267 $ 21,607,696
================= ================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgages payable $ 19,946,534 $ 20,035,113
Accounts payable and accrued expenses 709,097 345,593
Accounts payable - affiliates - 185,272
Accrued interest 43,217 65,418
Security deposits and prepaid rents 245,959 218,831
----------------- ----------------
Total Liabilities 20,944,807 20,850,227
----------------- ----------------
Partners' (Deficit) Capital:
General partners (401,423) (389,213)
Limited partners 751,883 1,146,682
----------------- ----------------
Total Partners' Capital 350,460 757,469
----------------- ----------------
Total Liabilities and Partners' Capital $ 21,295,267 $ 21,607,696
================= ================
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See notes to financial statements
-3-
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended June 30, 1999 and 1998
-----------------------------------------
(Unaudited)
Three Months Three Months
Ended Ended
June 30, June 30,
1999 1998
---- ----
<S> <C> <C>
Income:
Rental $1,084,232 $ 1,410,381
Interest and other income 157,397 240,784
------------------ ------------------
Total income 1,241,629 1,651,165
------------------ ------------------
Expenses:
Property operations 462,327 480,181
Interest 393,382 503,997
Depreciation and amortization 378,042 529,258
Administrative:
To affiliates 70,137 43,959
Other 97,055 175,939
------------------ ------------------
Total expenses 1,400,943 1,733,334
------------------ ------------------
Net loss $ (159,314) $ (82,169)
================== ==================
Loss per limited partnership unit $ (7.36) $ (3.79)
================== ==================
Distributions per limited partnership unit $ - $ -
================== ==================
Weighted average number of
limited partnership units
outstanding 21,002.8 21,002.8
================== ==================
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See notes to financial statements
-4-
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Six Months Ended June 30, 1999 and 1998
---------------------------------------
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1999 1998
---- ----
<S> <C> <C>
Income:
Rental $ 2,189,209 $2,118,755
Interest and other income 304,158 331,674
----------------- ----------------
Total income 2,493,367 2,450,429
----------------- ----------------
Expenses:
Property operations 1,040,496 778,559
Interest 779,398 710,817
Depreciation and amortization 756,085 739,003
Administrative:
To affiliates 173,110 148,569
Other 151,287 195,893
----------------- ----------------
Total expenses 2,900,376 2,572,841
----------------- ----------------
Net loss $ (407,009) $ (122,412)
================= ================
Loss per limited partnership unit $ (18.80) $ (5.65)
================= ================
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-
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
Six Months Ended June 30, 1999 and 1998
---------------------------------------
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1999 1998
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $(407,009) $ (122,412)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 756,085 739,003
Changes in operating assets and liabilities:
Accounts receivable (48,724) (168,561)
Leasing commissions - (50,504)
Other assets 66,692 (114,851)
Accounts payable and accrued expenses 363,504 18,844
Accrued interest (22,201) 9,980
Security deposits and prepaid rent 27,128 (11,859)
----------------- ----------------
Net cash provided by operating activities 735,475 299,640
----------------- ----------------
Cash flow from investing activities:
Investments in mutual funds - (170,227)
Accounts receivable - affiliates (59,655) -
Mortgage escrow (104,549) (208,618)
Capital expenditures (154,936) (227,269)
----------------- ----------------
Net cash used in investing activities (319,140) (606,114)
----------------- ----------------
Cash flows from financing activities:
Accounts payable - affiliates (185,272) -
Principal payments on mortgages and notes (88,579) (177,013)
Mortgage costs related to refinancing (18,460) (54,000)
----------------- ----------------
Net cash used in financing activities (292,311) (231,013)
----------------- ----------------
Increase (decrease) in cash 124,024 (537,487)
Cash - beginning of period 188,887 2,165,489
----------------- ----------------
Cash - end of period $ 312,911 $ 1,628,002
================= ================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 801,599 $ 700,837
================= ================
</TABLE>
See notes to financial statements
-6-
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
-----------------------------------------
Six Months Ended June 30, 1999 and 1998
---------------------------------------
(Unaudited)
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
<S> <C> <C> <C>
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
================= ============== ==================
Balance, January 1, 1999 $ (389,213) 21,002.8 $ 1,146,682
Net loss (12,210) - (394,799)
----------------- -------------- ------------------
Balance, June 30, 1999 $ (401,423) 21,002.8 $ 751,883
================= ============== ==================
</TABLE>
See notes to financial statements
-7-
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Six Months Ended June 30, 1999 and 1998
---------------------------------------
(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, 1999 and
1998, 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-
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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.
-9-
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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.
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.
Comprehensive Income
--------------------
The Partnership has adopted Statement of Financial Accounting Standards
(SFAS) No. 130, Reporting Comprehensive Income. SFAS 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements.
Comprehensive income is defined as "the change in equity of a business
during a period from transactions and other events and circumstances
from non-owner sources". Other than net income (loss), the Partnership
has no other sources of comprehensive income.
Segment Information
-------------------
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information establishes standards for the way public business
enterprises report information about operating segments in annual
financial statements. The Partnership's only operating segment is the
ownership and operation of income-producing real property for the
benefit of its limited partners.
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.
-10-
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ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
----------------------------------------------------------
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.
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.
-11-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
----------------------------------------------------------
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.
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.
5. INVESTMENT IN LAND
------------------
The Partnership owns approximately 96 acres of vacant land in Amherst,
New York. The investment totaled $417,473 and $397,946 as of June 30,
1999 and 1998, respectively. The balance as of June 30, 1999
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
-12-
<PAGE>
INVESTMENTS IN JOINT VENTURES (CONTINUED)
-----------------------------------------
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:
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.
-13-
<PAGE>
INVESTMENTS IN JOINT VENTURES (CONTINUED)
-----------------------------------------
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. The Partnership now owns 100% of the Inducon
East property. The property began to be consolidated in the
Partnership's financial statements beginning November 1, 1997.
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.
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 was
$454,591. The loan was paid in full when the new loan described in Note
7 was obtained.
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. The Partnership now owns 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-
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7. MORTGAGES AND NOTES PAYABLE
---------------------------
The Partnership has the following mortgages payable:
The Paddock Building
--------------------
The mortgage outstanding at June 30, 1999 of $1,688,558 provides for
monthly principal and interest payments $12,785 including interest at
7.70%. The mortgage matures January 2009 with a balloon payment of
approximately $1,375,000.
An 8.75% mortgage with a balance of $1,575,684 at June 30, 1998, 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 providing for monthly interest payments of $1,500. The mortgage and
note were refinanced later in 1998.
Camelot East Apartments
-----------------------
A mortgage with a balance of $4,829,892 and $4,871,608 at June 30, 1999
and 1998, respectively, 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.
Commercial Park West
--------------------
The mortgage outstanding (bridge loan) with a balance of $5,400,000 at
June 30, 1999 and 1998 provides for monthly interest only payments for a
term of two years at a rate equivalent to 350 basis points over the
thirty-day LIBOR rate. The loan may at any time during the two years be
converted to a thirty year fixed mortgage. The mortgage matures March
2000.
Inducon East
------------
The mortgage outstanding at June 30, 1999 of $6,158,500 provides for
monthly principal and interest payments of $46,827 including interest at
7.74%. The mortgage matures January 2029.
The previous mortgage on this property was refinanced in 1998.
-15-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
---------------------------------------
Inducon East Phase III
----------------------
The mortgage outstanding at June 30, 1999 of $1,864,585 provides for
monthly principal and interest payments of $14,150 including interest at
7.74%. The mortgage matures January 2029.
The previous loans on this property were refinanced in 1998.
The mortgages described above are secured by the individual complexes to
which they relate.
The Partnership's mortgages are of a non-recourse nature.
The aggregate maturities of mortgages payable for each of the next five
years and thereafter are as follows:
Year Amount
---- ------
1999 $ 171,503
2000 5,596,594
2001 216,749
2002 228,952
2003 247,077
Thereafter 13,574,238
----------
TOTAL $20,035,113
===========
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.
-16-
<PAGE>
FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
------------------------------------------------
Management has determined that the estimated fair values of the
mortgages payable on Commercial Park West, The Paddock, Inducon East and
Inducon East Phase III with carrying values of approximately $5,400,000,
$1,688,000, $6,158,500 and $1,865,000 at June 30, 1999, respectively,
are believed to approximate their carrying value since new mortgages
were obtained recently.
The fair value of the mortgage payable on Camelot East approximates its
carrying value of approximately $4,830,000 because the mortgage has a
variable interest rate.
Refer to Note 6 for a description of the terms of the mortgages.
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 approximately $97,536 and $100,198 for
the six months ended June 30, 1999 and 1998, respectively.
Accounts receivable - affiliates amounted to $59,655 at June 30, 1999.
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).
No such fee has been paid or accrued by the Partnership for the six
months ended June 30, 1999 and 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 approximately $3,300 for both the six months
ended June 30, 1999 and 1998.
-17-
<PAGE>
RELATED PARTY TRANSACTIONS
--------------------------
Partnership accounting and portfolio management fees, investor services
fees and brokerage fees are allocated based on total assets, the number
of partners, and number of units, respectively. In addition to the
above, other property specific expenses, such as payroll, benefits, etc.
are charged to property operations on the Statement of Operations.
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, 1999
and 1998 as reported in the statements of operations, and as would be
reported for tax purposes, is as follows:
<TABLE>
<CAPTION>
June 30, June 30,
1999 1998
---- ----
<S> <C> <C>
Net loss - statement of operations $ (407,009) $ (122,412)
Add to (deduct from):
Difference in depreciation 200,000 200,000
Allowance for doubtful accounts 170,000 20,000
------------ -----------
Net (loss) income - tax return purposes $ ( 37,009) $ 97,588
============ ===========
</TABLE>
-18-
<PAGE>
INCOME TAXES (CONTINUED)
------------------------
The reconciliation of Partners' Capital as of June 30, 1999 and December
31, 1998 as reported in the balance sheet, and as reported for tax
purposes, is as follows:
June 30, December 31,
1999 1998
---- ----
Partners' Capital - balance sheet $ 350,460 $ 757,469
Add to (deduct from):
Accumulated difference in
depreciation 2,840,073 2,640,073
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 299,095 129,095
----------- -----------
Partners' Capital -
tax return purposes $ 5,502,053 $ 5,539,062
=========== ===========
11. SUBSEQUENT EVENTS
-----------------
On September 9, 1999, the Partnership obtained a new mortgage on
Commercial Park West. The principal balance is $6 million with monthly
payments including interest at 8.07%. The note is to be amortized over a
period of 30 years and matures October 11, 2009. The previous mortgage
was paid in full upon the refinancing with no gain or loss being
recognized.
-19-
<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 1999 or
1998. The General Partner hopes to resume making distributions at some time
during the remainder of 1999 or possibly at the beginning of 2000.
Occupancies at the properties in the Partnership continued in most locations to
be favorable (i.e., exceeding 90 percent on average). Commercial Park West was
successfully refinanced during the third quarter of 1999; the principal balance
on the mortgage was increased and the interest rate obtained is believed by
management to be very favorable compared to what is being offered in the market.
Management continues to actively pursue new tenants by making capital
improvements to the properties and through the use, although somewhat limited,
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 or planned.
Capital improvement reserves set up with lenders have funded much of the work
being done at the properties.
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.
The Partnership has conducted a review of its computer systems to identify the
systems that could be affected by the "year 2000 issue" and has substantially
developed an implementation plan to resolve such issues. The year 2000 issue is
the result of computer programs being written using two digits rather than four
digits to define the applicable year. Computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities. Management has discussed with outside independent computer
consultants its readiness for the Year 2000. The majority of the software in use
is either "2000 compliant" or will be with little adaptation and at no
significant cost per information provided by their software providers.
Management has also engaged a computer firm to re-write its tax software making
it Year 2000 compliant. This work began May 1, 1999 and is expected to take
three months. Management has a complete inventory of its computers and feels
that the cost of replacing those which will not be "2000 compliant" will be
relatively minor (i.e., most likely under $20,000).
-20-
<PAGE>
Liquidity and Capital Resources (continued)
- --------------------------------------------
Non-informational systems have also been evaluated and management feels that
there will be little, if any, cost to preparing these for the Year 2000 (i.e.,
most likely under $20,000). Management expects to be fully Year 2000 compliant
with all testing done by October 31, 1999. The Partnership is working on a
contingency plan in the unlikely event that its systems do not operate as
planned. It is management's belief that in the unlikely event that its
informational systems do not operate as planned in the year 2000, all records
could be maintained manually until the problems with its systems are resolved.
Management feels that its external vendors, suppliers and customers, for the
most part, will be unaffected by the Year 2000 as most do not rely on
information systems in their businesses.
Results of Operations
- ---------------------
Partnership operations for the three month period ended June 30, 1999 resulted
in a net loss of $159,314 or $7.36 per limited partnership unit compared to a
loss of $82,169 or $3.79 per limited partnership unit for the same period in
1998. The Partnership operations for the six month period ended June 30, 1999
resulted in a net loss of $407,009 or $18.80 per limited partnership unit versus
a six month 1998 net loss of $122,412 or $5.65 per unit.
Tax basis loss for the six month period ended June 30, 1999 amounted to $37,009
or $1.71 per limited partnership unit compared to taxable income of $97,588 or
$4.51 per unit for the corresponding period in 1998.
Total revenue for the three month period ended June 30, 1999 amounted to
$1,241,629 decreasing approximately $410,000 from the three month period ended
June 30, 1998. For the first six months of 1999 there was an increase in total
partnership revenue of slightly more than $43,000 as compared to the same period
in 1998. Rental income is responsible for the entire increase during the six
month period. The increase in rental income is due to increased occupancy at the
Inducon properties and the stepped-up leases at all commercial properties in
this Partnership. Occupancy at the commercial properties in the Partnership,
specifically Commercial Park West, continues to remain high, and therefore cash
flow from operations remains positive for the six months ended June 30, 1999.
-21-
<PAGE>
Results of Operations (continued)
- ----------------------------------
For the six month period ended June 30, 1999, expenses totaled $2,900,376 as
compared to a total of $2,572,841 for the six months ended June 30, 1998. For
the quarter ended June 30, 1999, Partnership expenses amounted to $1,400,943, a
decrease of approximately $332,000 from the same quarter of 1998. Property
operations costs increased approximately $262,000 between the six months ended
June 30, 1999 and 1998 when such expenses totaled $1,040,496 and $778,559,
respectively. The increase in expenses between the two six month periods is
largely due to physical improvements made to the properties to make them more
appealing to potential renters. Improvements to the outside of the properties,
such as painting and parking lot sealing, have either been completed, are in
process, or are being bid out by management. Management plans to continue
improvements such as interior and exterior painting, carpet replacement,
appliance replacement (at the one residential property remaining in the
Partnership), etc., so higher than usual property operation costs, specifically
repairs, maintenance and payroll, are expected during the remaining six months
of 1999. Management continues to stress the importance of the physical
appearance of the properties as a means of improving occupancy. Other expenses
(i.e., other than property operations) incurred by the Partnership remained
fairly consistent between the six months ended June 30, 1999 and 1998. An
increase in interest expense of approximately $68,000 was the result of an
increase in the principal balance of the Partnership's mortgages. Also, a slight
decrease in total administrative expenses totaling approximately $20,000 was
noted between the two six month periods; this decrease was not found to be
attributed in large part to any one specific expense and/or property.
-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 September 30, 1999
--------------------- ------------------
Joseph M. Jayson, Date
Individual General Partner and
Principal Financial Officer
-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, 1999, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 312,911
<SECURITIES> 0
<RECEIVABLES> 261,412
<ALLOWANCES> 78,010
<INVENTORY> 0
<CURRENT-ASSETS> 1,619,186
<PP&E> 29,194,104
<DEPRECIATION> 10,894,487
<TOTAL-ASSETS> 21,295,267
<CURRENT-LIABILITIES> 998,273
<BONDS> 19,946,534
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,295,267
<SALES> 0
<TOTAL-REVENUES> 2,493,367
<CGS> 0
<TOTAL-COSTS> 2,900,376
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 779,398
<INCOME-PRETAX> (407,009)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (407,009)
<EPS-BASIC> (18.80)
<EPS-DILUTED> 0
</TABLE>
