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, 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 September 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.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C> <C>
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
September 30, 1999 and December 31, 1998 3
Statements of Operations -
Three Months Ended September 30, 1999 and 1998 4
Statements of Operations -
Nine Months Ended September 30, 1999 and 1998 5
Statements of Cash Flows -
Nine Months Ended September 30, 1999 and 1998 6
Statements of Partners' (Deficit) Capital -
Nine Months Ended September 30, 1999 and 1998 7
Notes to Financial Statements 8 - 20
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF
--------------------------------
OPERATIONS 20 - 22
----------
PART III: FINANCIAL DATA SCHEDULE 25
- --------- -----------------------
</TABLE>
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
BALANCE SHEETS
--------------
September 30, 1999 and December 31, 1998
----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
ASSETS
- ------
<S> <C> <C>
Property, at cost:
Land and improvements $ 2,439,519 $ 2,435,519
Buildings and improvements 26,382,494 26,089,842
Furniture, fixtures and equipment 513,807 513,807
------------ ------------
29,335,820 29,039,168
Less accumulated depreciation 11,140,642 10,222,305
------------ ------------
Property, net 18,195,178 18,816,863
Investment in land 417,473 417,473
Cash 992,509 188,887
Accounts receivable, net of allowance for doubtful
accounts of $95,133 and $81,000, respectively 118,825 75,023
Accounts receivable - affiliates 122,930 --
Mortgage escrow 591,297 980,981
Mortgage costs, net of accumulated amortization
of $129,531 and $143,560 791,144 839,242
Leasing commissions, net of accumulated amortization
of $682,214 and $623,785 126,763 185,192
Other assets 220,241 104,035
------------ ------------
Total Assets $ 21,576,360 $ 21,607,696
============ ============
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgages payable $ 20,481,774 $ 20,035,113
Accounts payable and accrued expenses 576,802 345,593
Accounts payable - affiliates -- 185,272
Accrued interest 64,079 65,418
Security deposits and prepaid rents 276,927 218,831
------------ ------------
Total Liabilities 21,399,582 20,850,227
------------ ------------
Partners' (Deficit) Capital:
General partners (406,634) (389,213)
Limited partners 583,412 1,146,682
------------ ------------
Total Partners' Capital 176,778 757,469
------------ ------------
Total Liabilities and Partners' Capital $ 21,576,360 $ 21,607,696
============ ============
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended September 30, 1999 and 1998
----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1999 1998
---- ----
<S> <C> <C>
Income:
Rental $ 1,147,972 $ 1,033,976
Interest and other income 174,615 155,457
----------- -----------
Total income 1,322,587 1,189,433
----------- -----------
Expenses:
Property operations 625,204 790,457
Interest 363,581 359,999
Depreciation and amortization 402,438 403,703
Administrative:
To affiliates (40,927) 29,350
Other 145,973 108,405
----------- -----------
Total expenses 1,496,269 1,691,914
----------- -----------
Net loss $ (173,682) $ (502,481)
=========== ===========
Loss per limited partnership unit $ (8.02) $ (23.21)
=========== ===========
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, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1999 1998
---- ----
<S> <C> <C>
Income:
Rental $ 3,337,181 $ 3,152,731
Interest and other income 478,773 487,131
----------- -----------
Total income 3,815,954 3,639,862
----------- -----------
Expenses:
Property operations 1,665,700 1,569,016
Interest 1,142,979 1,070,816
Depreciation and amortization 1,158,523 1,142,706
Administrative:
To affiliates 132,183 177,919
Other 297,260 304,298
----------- -----------
Total expenses 4,396,645 4,264,755
----------- -----------
Net loss $ (580,691) $ (624,893)
=========== ===========
Loss per limited partnership unit $ (26.82) $ (28.86)
=========== ===========
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
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
Nine Months Ended September 30, 1999 and 1998
---------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1999 1998
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (580,691) $ (624,893)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,158,523 1,142,706
Changes in operating assets and liabilities:
Accounts receivable (43,802) (117,573)
Leasing commissions -- (52,337)
Other assets (115,793) (64,855)
Accounts payable and accrued expenses 231,209 308,171
Accrued interest (1,339) 44,523
Security deposits and prepaid rent 58,096 (12,555)
----------- -----------
Net cash provided by operating activities 706,203 623,187
----------- -----------
Cash flow from investing activities:
Investments in mutual funds -- (239,212)
Accounts receivable - affiliates (122,930) --
Mortgage escrow 389,684 (260,831)
Capital expenditures (296,652) (8,819)
----------- -----------
Net cash used in investing activities (29,898) (508,862)
----------- -----------
Cash flows from financing activities:
Accounts payable - affiliates (185,272) --
Principal payments on mortgages (322,173) (294,759)
Mortgage costs related to refinancing (134,072) (74,500)
Mortgage proceeds 768,834 --
----------- -----------
Net cash provided by (used in) financing activities 127,317 (369,259)
----------- -----------
Increase (decrease) in cash 803,622 (254,934)
Cash - beginning of period 188,887 2,165,489
----------- -----------
Cash - end of period $ 992,509 $ 1,910,555
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 1,144,318 $ 1,026,293
=========== ===========
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
-----------------------------------------
Nine Months Ended September 30, 1999 and 1998
---------------------------------------------
(Unaudited)
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
Balance, January 1, 1998 $ (459,529) 21,002.8 $ 3,754,082
Net loss (18,747) -- (606,146)
----------- -------- -----------
Balance, September 30, 1998 $ (478,276) 21,002.8 $ 3,147,935
=========== ======== ===========
Balance, January 1, 1999 $ (389,213) 21,002.8 $ 1,146,682
Net loss (17,421) -- (563,270)
----------- -------- -----------
Balance, September 30, 1999 $ (406,634) 21,002.8 $ 583,412
=========== ======== ===========
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP V
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Nine Months Ended September 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 nine month periods ended September 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-
<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.
-9-
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-------------------------------------------------------
Rental Income
-------------
Leases for residential properties have terms of one year or less.
Commercial leases generally have terms of from one to five years. Rental
income is recognized on the straight line method over the term of the
lease.
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.
-10-
<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 $3,163,323, 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.
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. 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 as of September 30, 1999 and
1998. The balance as of September 30, 1999 approximates the investment's
fair value.
-12-
<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.
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.
-13-
<PAGE>
INVESTMENTS IN JOINT VENTURES (CONTINUED)
------------------------------------------
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. 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.
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 described in Note 7.
-14-
<PAGE>
INVESTMENTS IN JOINT VENTURES (CONTINUED)
------------------------------------------
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 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 September 30, 1999 of $1,682,671 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 $1,566,205 at September 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 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
providing for monthly interest payments of $1,500. The mortgage and note
were refinanced later in 1998.
-15-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
----------------------------------------
Camelot East Apartments
-----------------------
A mortgage with a balance of $4,791,616 and $4,831,897 at September 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.
Commercial Park West
--------------------
A mortgage with a balance of $6,000,000 at September 30, 1999 providing
for monthly principal and interest payments of $44,319, bearing interest
at 8.07%. The note matures October 2029.
A mortgage (bridge loan) with a balance of $5,400,000 at September 30,
1998 requiring 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 September 30, 1998). The loan could at any time during the two years
be converted to a thirty year fixed mortgage. This mortgage was
refinanced with no gain or loss being recorded in September 1999.
Inducon East
------------
The mortgage outstanding at September 30, 1999 of $6,149,313 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.
Inducon East Phase III
----------------------
The mortgage outstanding at September 30, 1999 of $1,858,173 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.
-16-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
----------------------------------------
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.
Management has determined that the estimated fair values of the
mortgages payable on Commercial Park West, Camelot East, Inducon East
and Inducon East Phase III with carrying values of approximately
$6,000,000, $4,791,616, $6,149,313 and $1,858,173 at September 30, 1999,
respectively, are believed to approximate their carrying value since new
mortgages were obtained recently.
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, 1999.
-17-
<PAGE>
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 $49,592 and $148,590 for
the nine months ended September 30, 1999 and 1998, respectively.
Accounts receivable - affiliates amounted to $122,930 and $0 at
September 30, 1999 and 1998, respectively. The amount is due and payable
on demand.
Accounts payable - affiliates amounted to $0 and $185,272 at September
30, 1999 and 1998, 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).
). No such fee has been paid or accrued by the Partnership for the nine
months ended September 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 $4,950 for both the nine
months ended September 30, 1999 and 1998.
-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,
1999 and 1998 as reported in the statements of operations, and as would
be reported for tax purposes, is as follows:
September 30, September 30,
1999 1998
---- ----
Net loss - statement of operations (580,691) $ (624,893)
Add to (deduct from):
Difference in depreciation 300,000 300,000
Allowance for doubtful accounts 250,000 30,000
--------- ----------
Net (loss) - tax return purposes $ (30,691) $ (294,893)
========= ==========
The reconciliation of Partners' Capital as of September 30, 1999 and
December 31, 1998 as reported in the balance sheet, and as reported for
tax purposes, is as follows:
September 30, December 31,
1999 1998
---- ----
Partners' Capital - balance sheet $ 176,778 $ 757,469
Add to (deduct from):
Accumulated difference in
depreciation 2,940,303 2,640,303
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 379,095 129,095
---------- -----------
Partners' Capital -
tax return purposes $5,508,601 $ 5,539,292
========== ===========
-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 nine months of 1999 or
1999. The General Partner hopes to resume making distributions at some time
during the year 2000, but this is dependent on future cash flow generated from
operations.
Management continues to actively pursue new tenants by making capital
improvements (both capitalizable and non-capitalizable) 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 successfully refinanced the two-year bridge loan on Commercial
Park West during September 1999. Upon obtaining the new financing, the previous
mortgage was paid in full with no gain or loss resulting. The result of the
refinancing was additional cash provided by the new mortgage and a fixed, lower
interest rate. be used to cover the costs of the necessary improvements and
future tenant improvements at these commercial buildings.
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 be
complete by December 1, 1999. 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 December 1, 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 September 30, 1999
resulted in a net loss of $173,682 or $8.02 per limited partnership unit
compared to a loss of $502,481 or $23.21 per limited partnership unit for the
same period in 1998. The Partnership operations for the nine month period ended
September 30, 1999 resulted in a net loss of $580,691 or $26.82 per limited
partnership unit versus a nine month 1999 net loss of $624,893 or $28.86 per
unit.
The tax basis loss for the nine month period ended September 30, 1999 amounted
to $30,691 or $1.42 per limited partnership unit compared to a tax loss of
$294,893 or $13.62 per unit for the corresponding period in 1998.
-21-
<PAGE>
Results of Operations (continued)
- ----------------------------------
Total revenue for the three month period ended September 30, 1999 amounted to
$1,322,587 increasing approximately $133,000 from the three month period ended
September 30, 1998 when total revenue amounted to $1,189,433. For the first nine
months of 1999 there was an increase in total partnership revenue of
approximately $176,000 as compared to the same period in 1998; total revenue for
the nine month periods ended September 30, 1999 and 1998 were $3,815,954 and
$3,639,862, respectively. The increase in total income is fully attributable to
increased rental revenues generated at Commercial Park West in Durham, North
Carolina. 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, 1999.
For the nine month periods ended September 30, 1999 and 1997, expenses totaled
$4,396,645 and $4,264,755, respectively; for the quarters ended September 30,
1999 and 1998, partnership expenses amounted to $1,496,269 and $1,691,914,
respectively. The increase in expenses between the third quarter 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 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 the year 2000. Management continues to stress the
importance of the physical appearance of the properties as a means of improving
occupancy. Total expenses for the nine months ended September 30, 1999 increased
approximately $132,000 or 3% from those reported during the same period in 1998.
The increase is primarily attributed to increased property operations expenses
as previously described. For example, increased payroll and related costs,
repairs and maintenance and contracted services totaling approximately $18,000,
$152,000 and $21,000, respectively were all incurred at Camelot East Apartments
between the nine months ended September 30, 1999 and 1998.
-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 17, 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 nine months ended September 30, 1999, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 992,509
<SECURITIES> 0
<RECEIVABLES> 336,888
<ALLOWANCES> 95,133
<INVENTORY> 0
<CURRENT-ASSETS> 2,045,802
<PP&E> 29,335,820
<DEPRECIATION> 11,140,642
<TOTAL-ASSETS> 21,576,360
<CURRENT-LIABILITIES> 917,808
<BONDS> 20,481,774
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,576,360
<SALES> 0
<TOTAL-REVENUES> 3,815,954
<CGS> 0
<TOTAL-COSTS> 4,396,645
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,142,979
<INCOME-PRETAX> (580,691)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (580,691)
<EPS-BASIC> (26.82)
<EPS-DILUTED> 0
</TABLE>
