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
March 31, 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 March 31, 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.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
INDEX
-----
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
March 31, 1999 and December 31, 1998 3
Statements of Operations -
Three Months Ended March 31, 1999 and 1998 4
Statements of Cash Flows -
Three Months Ended March 31, 1999 and 1998 5
Statements of Partners' (Deficit) Capital -
Three Months Ended March 31, 1999 and 1998 6
Notes to Financial Statements 7 - 18
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
- -------- -------------------------------------
FINANCIAL CONDITION & RESULTS OF OPERATIONS 19 - 21
-------------------------------------------
PART III: FINANCIAL DATA SCHEDULE 24
- --------- -----------------------
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
BALANCE SHEETS
--------------
March 31, 1999 and December 31, 1998
------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
ASSETS
- ------
<S> <C> <C>
Property, at cost:
Land $ 2,439,519 $ 2,435,519
Buildings and improvements 26,095,216 26,089,842
Furniture, fixtures and equipment 513,807 513,807
----------------- -----------------
29,048,542 29,039,168
Less accumulated depreciation 10,558,005 10,222,305
----------------- -----------------
Property, net 18,490,537 18,816,863
Investment in land 417,473 417,473
Cash 369,423 188,887
Accounts receivable, net of allowance for doubtful
accounts of $80,315 and $81,000, respectively 86,205 75,023
Mortgage escrow 1,104,977 980,981
Mortgage costs, net of accumulated amortization
of $170,715 and $143,560 825,151 839,242
Leasing commissions, net of accumulated amortization
of $643,261 and $623,785 165,716 185,192
Other assets 74,413 104,035
----------------- -----------------
Total Assets $ 21,533,895 $ 21,607,696
================= =================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgages payable $ 19,990,346 $ 20,035,113
Accounts payable and accrued expenses 538,977 345,593
Accounts payable - affiliates 207,044 185,272
Accrued interest 43,229 65,418
Security deposits and prepaid rents 244,525 218,831
----------------- -----------------
Total Liabilities 21,024,121 20,850,227
----------------- -----------------
Partners' (Deficit) Capital:
General partners (396,644) (389,213)
Limited partners 906,418 1,146,682
----------------- -----------------
Total Partners' Capital 509,774 757,469
----------------- -----------------
Total Liabilities and Partners' Capital $ 21,533,895 $ 21,607,696
================= =================
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1999 and 1998
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
Income:
Rental $ 1,104,977 $ 708,374
Interest and other income 146,761 90,890
----------------- -----------------
Total income 1,251,738 799,264
----------------- -----------------
Expenses:
Property operations 578,169 298,378
Interest 386,016 206,820
Depreciation and amortization 378,043 209,745
Administrative:
To affiliates 102,973 104,610
Other 54,232 19,954
----------------- -----------------
Total expenses 1,499,433 839,507
----------------- -----------------
Net loss $ (247,695) $ (40,243)
================= =================
Loss per limited partnership unit $ (11.44) $ (1.86)
================= =================
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 CASH FLOWS
------------------------
Three Months Ended March 31, 1999 and 1998
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (247,695) $ (40,243)
Adjustments to reconcile net loss to net cash
provided by (used in) operating
activities:
Depreciation and amortization 378,043 209,745
Changes in operating assets and liabilities:
Accounts receivable (11,182) 150,023
Leasing commissions - -
Other assets 29,622 (896,133)
Accounts payable and accrued expenses 193,384 (341,057)
Accrued interest (22,189) (54,417)
Security deposits and prepaid rent 25,694 (96,021)
----------------- -----------------
Net cash provided by (used in) operating activities 345,677 (1,068,103)
----------------- -----------------
Cash flow from investing activities:
Mortgage escrow (123,996) (87,349)
Capital expenditures (9,374) 8,900,390
----------------- -----------------
Net cash (used in) provided by investing activities (133,370) 8,813,041
----------------- -----------------
Cash flows from financing activities:
Accounts payable - affiliates 21,772 -
Principal payments on mortgages and notes (44,767) (7,029,607)
Mortgage costs related to refinancing (8,776) 6,074
----------------- -----------------
Net cash (used in) financing activities (31,771) (7,023,533)
----------------- -----------------
Increase in cash 180,536 721,405
Cash - beginning of period 188,887 2,619,704
----------------- -----------------
Cash - end of period $ 369,423 $ 3,341,109
================= =================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 408,205 $ 261,237
================= =================
</TABLE>
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
-----------------------------------------
Three Months Ended March 31, 1999 and 1998
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
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
(1,207) -- (39,036)
---------------- --------------- ------------------
Balance, March 31, 1998 $ (245,271) 21,002.8 $ 5,800,810
================ =============== ==================
Balance, January 1, 1999 $ (389,213) 21,002.8 $ 1,146,682
Net loss
(7,431) -- (240,264)
---------------- --------------- ------------------
Balance, March 31, 1999 $ (396,644) 21,002.8 $ 906,418
================ =============== ==================
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Three Months Ended March 31, 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 three month periods ended March 31, 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.
-7-
<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.
-8-
<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 March 31, 1999.
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.
-9-
<PAGE>
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 $3,163,324, 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 which generated a net gain for financial statement purposes
of $572,562.
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.
-10-
<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. The Partnership owns 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 March 31,
1999 and 1998, respectively. The balance as of March 31, 1999
approximates the investment's fair value.
-11-
<PAGE>
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.
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.
In November 1997, the Partnership acquired the interest of Curtlaw
Corporation for $40,000. The Partnership owns 100% of the Inducon East
property. The property began to be consolidated in the Partnership's
financial statements beginning November 1, 1997.
-12-
<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.
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 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.
7. MORTGAGES AND NOTES PAYABLE
---------------------------
The Partnership has the following mortgages and notes payable:
The Paddock Building
--------------------
The mortgage outstanding at March 31, 1999 of $1,694,334 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.
-13-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
---------------------------------------
The Paddock Building (Continued)
--------------------------------
An 8.75% mortgage with a balance of $1,566,205 and $1,596,172 at March
31, 1998, which provided 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 March 31, 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 $4,837,082 and $4,885,043 at March 31, 1999
and 1998, respectively, providing for monthly principal and interest
payments of $33,927, bearing interest at 7.4%. The mortgage matures
November 2027.
Commercial Park West
--------------------
The mortgage outstanding (bridge loan) with a balance of $5,400,000 at
March 31, 1999 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 (9.1875% at March 31, 1999). The loan may at any time during
the two years be converted to a thirty year fixed mortgage. The mortgage
matures March 2000.
A 9.25% mortgage with a balance of $4,783,309 at March 31, 1998, 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 mortgage outstanding at March 31, 1999 of $6,188,056 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.
-14-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
---------------------------------------
Inducon East Phase III
----------------------
The mortgage outstanding at March 31, 1999 of $1,870,874 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 was refinanced in 1998.
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
---- ------
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.
-15-
<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 $5,400,000, $1,694,334,
$6,188,056 and $1,870,874 at March 31, 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 $4,837,000 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, provided such amount is not in excess of the competitive
rate for the same geographic area. These fees totaled approximately
$47,588 and $29,712 for the three months ended March 31, 1999 and 1998,
respectively.
Accounts payable - affiliates amounted to $207,044 and $0 at March 31,
1999 and 1998 respectively. The amount due is payable on demand.
Interest charged on amounts due to affiliates is accrued at the rate of
11% per annum compounded quarterly based on the average outstanding
balance.
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 three
months ended March 31, 1999 and 1998.
-16-
<PAGE>
RELATED PARTY TRANSACTIONS (CONTINUED)
--------------------------------------
Computer service charges for the Partnership are paid or accrued to an
affiliate of the General Partner based, in part, upon the number of
apartment units and complexes. Such amounts totaled $1,673 and $5,000
for the three months ended March 31, 1999 and 1998, respectively.
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 three months ended March 31, 1999
and 1998 as reported in the statements of operations, and as would be
reported for tax purposes, is as follows:
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
Net loss - statement of operations $ (247,695) $ (40,243)
Add to (deduct from):
Difference in depreciation 100,000 32,335
Difference in investment in
Joint Ventures -- 28,323
Allowance for doubtful accounts 85,000 30,223
------------- -----------
Net (loss) income - tax return purposes $ (62,695) $ 50,638
============ ===========
</TABLE>
-17-
<PAGE>
INCOME TAXES (CONTINUED)
------------------------
The reconciliation of Partners' Capital as of March 31, 1999 and
December 31, 1998 as reported in the balance sheet, and as reported for
tax purposes, is as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Partners' Capital - balance sheet $ 509,774 $ 757,469
Add to (deduct from):
Accumulated difference in
depreciation 2,740,073 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 214,095 129,095
------------ -----------
Partners' Capital -
tax return purposes $ 5,476,367 $ 5,539,062
============ ===========
</TABLE>
-18-
<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 three months of 1999 or
1998. The General Partner hopes to resume making distributions, although it is
not certain when the Partnership will be in such a position..
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 were refinanced during the last quarter of 1998, further
improving cash flow in the Partnership due to anticipated decreases in debt
service payments resulting from lower interest rates. 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.
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.
-19-
<PAGE>
Liquidity and Capital Resources (Continued)
- -------------------------------------------
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). 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 September 30,
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 March 31, 1999 resulted
in a net loss of $247,695 or $11.44 per limited partnership unit compared to a
loss of $40,243 or $1.86 per limited partnership unit for the same period in
1998.
The tax basis loss for the three month period ended March 31, 1999 amounted to
$62,695 or $2.90 per limited partnership unit compared to taxable income of
$50,638 or $2.34 per unit for the corresponding period in 1998.
Total revenue for the three month period ended March 31, 1999 amounted to
$1,251,738 increasing approximately $450,000 from the three month period ended
March 31, 1998 when total revenue amounted to $799,264. The majority of the
increase is the result of an increase in rental income; rental income increased
approximately $397,000 or 56% between the three months ended March 31, 1999 and
1998 when such income totaled $1,104,977 and $708,374, respectively. 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. Interest and other income also increased between the three months
ended March 31, 1999 and 1998 when such income reported totaled $146,761 and
$90,890, respectively; this increase totaled approximately $56,000 or 61%. The
most significant contributors to this increase were the increased late charges
and income from cable service now provided to tenants at Camelot East
Apartments. 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 was positive for the three months
ended March 31, 1999.
-20-
<PAGE>
Results of Operations (Continued)
- ---------------------------------
For the three month period ended March 31, 1999, expenses totaled $1,499,433.
For the quarter ended March 31, 1998, Partnership expenses amounted to $839,507.
The increase in expenses between the different quarters of 1999 and 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 paving and/or sealing, are scheduled to continue. Management plans
to continue such improvements, so higher than usual property operation costs,
specifically repairs, maintenance and payroll, are expected to continue into the
middle part of 1999. Management continues to stress the importance of the
physical appearance of the properties as a means of improving occupancy.
Additionally, interior improvements including, but not limited to, carpeting and
painting are constantly being done as needed. Increased other administrative
expenses resulted primarily from increased advertising and promotional expenses,
increased legal expenses, and increased management fees paid to other than
affiliated parties of the General Partners.
-21-
<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.
-22-
<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 July 26, 1999
--------------------- -------------
Joseph M. Jayson, Date
Individual General Partner and
Principal Financial Officer
-23-
<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 three months ended March 31, 1999, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<CASH> 369,423
<SECURITIES> 0
<RECEIVABLES> 166,520
<ALLOWANCES> 80,315
<INVENTORY> 0
<CURRENT-ASSETS> 1,635,018
<PP&E> 29,048,542
<DEPRECIATION> 10,558,005
<TOTAL-ASSETS> 21,533,895
<CURRENT-LIABILITIES> 1,033,775
<BONDS> 19,990,346
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,533,895
<SALES> 0
<TOTAL-REVENUES> 1,251,738
<CGS> 0
<TOTAL-COSTS> 1,499,433
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 386,016
<INCOME-PRETAX> (247,695)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (247,695)
<EPS-BASIC> (11.44)
<EPS-DILUTED> 0
</TABLE>
