<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1998
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ................to...............
Commission file number 0-16642
WINDSOR PARK PROPERTIES 5, A CALIFORNIA LIMITED PARTNERSHIP
---------------------------------------------------------------
(Exact name of small business issuer in its charter)
California 33-0243223
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6430 South Quebec Street, Englewood, Colorado 80111
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 741-3707
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Units of Limited
----------------
Partnership Interest
--------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [_]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $661,415
DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional small business disclosure format (check one): Yes [_] No [X]
1
<PAGE>
TABLE OF CONTENTS
PART I
------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 1. Description of Business 3
Item 2. Description of Properties 5
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II
-------
Item 5. Market for the Partnership's Units and Related Security Holder
Matters 7
Item 6. Management's Discussion and Analysis 8
Item 7. Financial Statements 10
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 22
PART III
--------
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of The Exchange Act 22
Item 10. Executive Compensation 23
Item 11. Security Ownership of Certain Beneficial Owners and Management 23
Item 12. Certain Relationships and Related Transactions 24
Item 13. Exhibits and Reports on Form 8-K 25
SIGNATURES 26
</TABLE>
2
<PAGE>
PART I
------
Item 1. DESCRIPTION OF BUSINESS
-----------------------
Certain matters discussed under the captions "Description of Business,"
"Description of Properties" "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Annual Report on Form
10-KSB may constitute forward-looking statements for purposes of Section 21E of
the Securities Exchange Act of 1934, as amended, and as such involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Windsor Park Properties 5, a California
Limited Partnership to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
Business Development
- --------------------
Windsor Park Properties 5, a California Limited Partnership (the "Partnership"),
was formed in June 1987 pursuant to the provisions of the California Uniform
Limited Partnership Act. The general partners of the Partnership are The
Windsor Corporation, a California Corporation, ("The Windsor Corporation") and
John A. Coseo, Jr. In September, 1997, Chateau Communities, Inc. ("Chateau"), a
publicly held real estate investment trust, purchased all of the outstanding
Capital Stock of The Windsor Corporation for 101,239 Common Shares of Chateau,
and $750,000 in cash. Following the purchase of The Windsor Corporation,
Chateau appointed a new Board of Directors and elected Steven G. Waite as
President of The Windsor Corporation. The Partnership term is set to expire in
December 2001; however, the Partnership may either be dissolved and liquidated
earlier or extended under certain circumstances. The Partnership may be
extended at the recommendation of the general partners with approval of a
majority of the limited partners.
The Partnership was organized to acquire and hold existing manufactured home
communities for investment. Its principal investment objectives are to provide
to the Limited Partners: (i) distributions of cash from operations, (ii)
preservation, protection and eventual return of the limited partners'
investment, and (iii) realization of appreciation in the value of the properties
acquired.
The Partnership was funded through a public offering of 300,000 limited
partnership units ("Units"). A total of 243,729 Units were sold for gross
proceeds aggregating $24,372,900. In addition, the General Partners purchased
1,000 Units with a $100,000 note. The offering commenced in September 1987 and
terminated in September 1988. The net proceeds from the offering were originally
expended for the acquisition of undivided interests in nine fully-developed
manufactured home communities located in Arizona, Florida, Louisiana, Georgia,
Michigan, and Washington. The Partnership paid all cash for these properties.
The Partnership was organized in September 1987 and, thus, many of our current
limited partners have held an investment in the Partnership for more than 11
years. The General Partners believe that many of the limited partners would like
to have the opportunity to achieve liquidity in their investment in the
Partnership. Accordingly, the General Partners are currently exploring possible
strategic alternatives for the Partnership with a view towards providing
limited partners with the opportunity to achieve liquidity in their investment.
There can, however, be no assurances that any proposal determined by the General
Partners to be in the best interests of the limited partners will be consummated
or that the Partnership will not continue in its current form until the end of
its stated term.
The Partnership owns interests in the following manufactured home communities at
December 31, 1998:
<TABLE>
<CAPTION>
Date
Name of Property Ownership % Acquired Location
- ---------------- ----------- -------- --------
<S> <C> <C> <C>
Lakeside 100% July 1988 Lithia Springs, Georgia
Plantation Estates 100% December 1988 Douglasville, Georgia
Town and Country Estates 42% January 1989 Tucson, Arizona
Rancho Margate 26% September 1995 Margate, Florida
Winter Haven 26% October 1995 Winter Haven, Florida
Apache East 9% February 1997 Phoenix, Arizona
Denali Park 9% February 1997 Phoenix, Arizona
</TABLE>
The above described ownership interests where the Partnership owns less than
100% of a Property, consist of ownership interests in joint ventures of limited
partnerships that own one or more manufactured home communities.
No further property financings or investment property acquisitions are planned
by the general partners.
The overall occupancy of the seven communities owned by the Partnership at
December 31, 1998 was approximately 95%. The General Partners continue to
maintain the properties in good condition and promote them to improve occupancy.
3
<PAGE>
Business of Issuer
- ------------------
The Partnership is currently in the business of managing, and eventually
selling, the existing manufactured home communities. Competitors of the
Partnership include other public and private limited partnerships, individuals,
corporations, and other entities engaged in real estate investment activities.
Competition for such properties varies with changes in the supply or demand for
similar or competing properties in a given area, changes in interest rates and
the availability of mortgage funds, and changes in tax, real estate,
environmental, and zoning laws.
Partnership profitability depends in part on maximizing occupancy and rental
rates in its manufactured home communities. Rents and occupancy rates are
affected by both changes in general economic conditions and changes in local
conditions such as levels of employment, supply of other comparable units or
competitive housing alternatives, zoning laws, and the availability and cost of
energy and transportation.
All of the Partnership's properties are located in or near large urban areas.
Accordingly, they compete for rentals not only with other manufactured home
communities but with apartments and any other form of low cost housing that
might exist.
The Partnership's profitability also depends on the minimization of both
property and partnership administration expenses. Expenses are affected by
changes in general economic trends and changes in local conditions such as
prevailing wages, utility rates, insurance costs, and real estate taxation
practices.
The Partnership has no employees. Partnership administrative services are
provided by The Windsor Corporation, which is reimbursed for costs incurred on
behalf of the Partnership. Chateau Communities, Inc. employs all of the
properties' on-site personnel and is reimbursed by the Partnership for all such
costs.
4
<PAGE>
Item 2. DESCRIPTION OF PROPERTIES
-------------------------
The Partnership owns interests in seven properties at December 31, 1998. The
Partnership operates the properties as manufactured home communities, renting
space to manufactured home tenants on a month-to-month basis. The properties
compete for rentals with other manufactured home communities and apartments in
their local markets. All properties are encumbered. It is the General Partners'
opinion that the properties are in good condition and are adequately insured.
<TABLE>
<CAPTION>
Rancho Lakeside
--------
Margate Lithia Winter Haven
------- ------------
Margate, Springs, Winter Haven,
Location Florida Georgia Florida
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of Ownership 26% 100% 26%
Date Acquired 9/95 7/88 10/95
Acreage 29 31 30
Number of Spaces 245 103 238
Monthly Rents (1) $ 364 $ 201 $ 224
Occupancy Level:
December 31, 1998 97% 96% 98%
Real estate taxes $ 158,000 $ 12,700 $ 36,900
Federal tax basis (3) $1,617,000 $1,175,500 $ 739,500
Mortgage Information:
Balance payable $3,626,300 $1,097,000 $1,593,900
Interest rate 8.92% 8.23% 8.92%
Amortization period 30 years -- 30 years
Maturity date 7/23 9/02 6/23
Balance due at maturity $ 0 $1,097,000 $ 0
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Town and
Plantation Country
Estates Estates Apache East
------- ------- -----------
Douglasville, Tucson, Phoenix,
Location Georgia Arizona Arizona
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of Ownership 100% 42% 9%
Date Acquired 12/88 1/89 2/97
Acreage 23 38 16
Number of Spaces 138 320 123
Monthly Rents (1) $ 193 $ 221 $ 220
Occupancy Level:
December 31, 1998 91% 96% 93%
Real estate taxes $ 13,000 $ 34,300 $ 17,500
Federal tax basis (3) $1,187,600 $1,472,000 $ 195,600
Mortgage Information:
Balance payable (2) $1,550,000 $3,009,400
Interest rate (2) 8.23% 8.38%
Amortization period (2) -- 24 years
Maturity date (2) 9/02 3/06
Balance due at maturity (2) $1,550,000 $2,583,200
<CAPTION>
Denali
Park
----
Phoenix,
Location Arizona
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Percentage of Ownership 9%
Date Acquired 2/97
Acreage 33
Number of Spaces 162
Monthly Rents (1) $ 205
Occupancy Level:
December 31, 1998 91%
Real estate taxes $ 24,100
Federal tax basis (3) $ 252,300
Mortgage Information:
Balance payable (4)
Interest rate (4)
Amortization period (4)
Maturity date (4)
Balance due at maturity (4)
</TABLE>
(1) Average rental rates in effect on December 31, 1998.
(2) Same mortgage note payable as Lakeside.
(3) For income tax purposes, the properties and their components are
depreciated using both straight-line and accelerated methods over useful
lives ranging from 5 to 40 years.
(4) Same mortgage note payable as Apache East.
6
<PAGE>
Item 3. LEGAL PROCEEDINGS
-----------------
There are no pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Partnership is a party or of which any
of its properties is the subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There were no matters submitted to security holders for a vote during the fourth
quarter of the fiscal year covered by this report.
PART II
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Item 5. MARKET FOR THE PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS
----------------------------------------------------------------------
A public market for the Partnership's units does not exist and is not likely to
develop. As of December 31, 1998, there were approximately 2,900 holders of
record holding an aggregate of 235,716 units.
Cash distributions paid to limited partners since December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Per $1,000
Originally
Date Paid Amount (1) Invested (2)
- --------- ---------- ------------
<S> <C> <C>
August 1998 $ 96,900 $3.96
February 1998 $ 97,500 $3.98
August 1997 $100,000 $4.09
February 1997 $100,000 $4.09
</TABLE>
(1) Amounts exclude General Partner participation.
(2) Computed based on $24,472,900 original investment.
Cash distributions paid to the General Partners since December 31, 1996 were
$4,000.
7
<PAGE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
The following discussion should be read in conjunction with the financial
statements and Notes thereto included elsewhere in this Annual Report. Certain
statements in this discussion constitute "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Partnership or industry to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary sources of cash during the years ended December 31,
1998 and 1997 were from the operations of its properties, cash distributions
from joint ventures and limited partnerships. The primary uses of cash during
the same period were for investments in joint ventures and cash distributions to
partners.
At December 31, 1998, the Partnership's total mortgage debt, including its
proportionate share of joint venture debt, was $3,376,100 consisting entirely of
variable rate debt. The average rate of interest on this debt was 8.52% at
December 31, 1998. The Partnership and the affiliated entities are jointly and
severally liable for the full amounts of the loans obtained jointly.
The future sources of cash for the Partnership will be provided from property
operations, cash reserves and ultimately from the sale of property. The future
uses of cash will be for Partnership administration, capital expenditures, cash
distributions to partners and debt service. The General Partners believe that
the future sources of cash are sufficient to meet the working capital
requirements of the Partnership for the foreseeable future.
Results of Operations
- ---------------------
The Partnership realized net income of $98,300 ($0.41 per limited partnership
unit) for the year ended December 31, 1998 and $9,200 ($0.04 per limited
partnership unit) for the year ended December 31, 1997.
Rent and utilities revenues increased from $470,700 in 1997 to $527,800 in 1998.
This increase was primarily due to rent increases and an overall occupancy
increase of the Partnership's two wholly-owned properties from 90% at December
31, 1997 to 94% at December 31, 1998.
Equity in earnings of joint ventures represents the Partnership's share of the
net income of the Town and Country Estates, Rancho Margate, Winter Haven, Apache
East and Denali Park communities. Equity in earnings of joint ventures
increased from $68,600 in 1997 to $102,700 in 1998, due mainly to the increased
occupancy at Apache East and Denali Park. The overall occupancy of the
Partnership's five joint venture properties was 95% at December 31, 1998.
Interest income remained relatively unchanged from 1997 to 1998.
Property operating costs decreased slightly from $266,000 in 1997 to $253,500 in
1998.
Interest expense remained relatively flat in 1998 from the same period in
1997 due to the same level of borrowing.
General and administrative expense increased slightly from $83,700 in 1997 to
$92,500 in 1998.
Inflation
- ---------
All of the leases or terms of tenants' occupancies at the properties allow for
at least annual rental adjustments. In addition, all of these are month-to-month
and enable the Partnership to seek market rentals upon reletting the sites. Such
leases generally minimize the risk to the Partnership of any adverse effect of
inflation.
8
<PAGE>
Year 2000 Compliance
- --------------------
The General Partners have assessed the impact of the Year 2000 Issue on its
reporting systems and operations. The Year 2000 Issue exists because many
computer systems and applications abbreviate dates by eliminating the first two
digits of the year, assuming that these two digits are always "19". As a result,
date-sensitive computer programs may recognize a date using "00" as the year
1900 rather than the year 2000. Unless corrected, the potential exists for
computer system failures or incorrect processing of financial and operational
information, which could disrupt operations.
Substantially all of the computer systems and applications and operating systems
in use in The Windsor Corporation and the properties have been, or are in the
process of being upgraded and modified. The Partnership is of the opinion that,
in connection with those upgrades and modifications, it has addressed applicable
Year 2000 Issues as they might affect the computer systems and applications
located in the Partnership's offices and properties. The Partnership anticipates
that implementation of solutions to any Year 2000 Issue which it may discover
will require the expenditure of sums which the Partnership does not expect to be
material.
The Partnership is exposed to the risk that one or more of its vendors or
service providers may experience Year 2000 problems which impact the ability of
such vendor or service provider to provide goods and services. Due to the
availability of alternative suppliers, this is not considered as significant a
risk with respect to the suppliers of goods. The disruption of certain
services, however, such as utilities, could, depending upon the extent of the
disruption, have a material adverse impact on the Partnership's operations. To
date, the Partnership is not aware of any vendor or service provider Year 2000
issue that management believes would have a material adverse impact on the
Partnership's operations. The Partnership, however, has no means of ensuring
that its vendors or service providers will be Year 2000 ready. The inability of
vendors or service providers to complete the Year 2000 resolution process in a
timely fashion could have an adverse impact on the Partnership, and the effect
of non-compliance by vendors or service providers is not determinable at this
time. Residents who pay rent to the Partnership do not pose Year 2000 problems
for the Partnership given the type and nature of the Partnership's properties
and residents.
Widespread disruptions in the national or international economy, including
disruptions affecting the financial markets, resulting from Year 2000 issues, or
in certain industries, such as commercial or investment banks, could also have
an adverse impact on the Partnership. The likelihood and effect of such
disruptions is not determinable at this time.
The Partnership expects to have all systems appropriately modified before any
significant processing malfunctions could occur and does not expect the Year
2000 Issue will materially impact the financial condition or operations of the
Partnership.
9
<PAGE>
Item 7. FINANCIAL STATEMENTS
--------------------
The following financial statements are filed as a part of this report:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants 11
Balance Sheet as of December 31, 1998 12
Statements of Operations for the years ended
December 31, 1998 and 1997 13
Statements of Partners' Equity for the years ended
December 31, 1998 and 1997 14
Statements of Cash Flows for the years ended
December 31, 1998 and 1997 15
Notes to Financial Statements 16
</TABLE>
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Partners of Windsor Park Properties 5,
(a California Limited Partnership)
In our opinion, the accompanying balance sheet and the related statements of
operations, partnership's equity and cash flows present fairly, in all material
respects, the financial position of Windsor Park Properties 5, a California
Limited Partnership (the "Partnership") at December 31, 1998, and the results of
its operations and its cash flows for each of the two years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Denver, Colorado
March 19, 1999
11
<PAGE>
<TABLE>
<CAPTION>
WINDSOR PARK PROPERTIES 5
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
December 31, 1998
----------------------
<S> <C>
ASSETS
- ------
Property held for investment, net $ 2,604,300
Investments in joint ventures and limited partnerships 2,162,800
Cash and cash equivalents 482,700
Deferred financing costs, net 33,800
Other assets 21,400
----------------------
Total Assets $ 5,305,000
======================
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage note payable $ 1,097,000
Accounts payable 900
Accrued expenses 71,200
Tenant deposits and other liabilities 28,600
Due to general partners and affiliates 7,100
----------------------
Total Liabilities 1,204,800
----------------------
Commitments and Contingencies(Note 8) --
Partners' Equity:
Limited partners 4,079,300
General partners 20,900
----------------------
Total Partners' Equity 4,100,200
----------------------
Total Liabilities and Partners' Equity $ 5,305,000
======================
</TABLE>
See Accompanying Notes to Financial Statements
12
<PAGE>
WINDSOR PARK PROPERTIES 5
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
For The Year Ended December 31,
-------------------------------------
1998 1997
------------- ----------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 527,800 $ 470,700
Equity in earnings of joint ventures and limited partnerships 102,700 68,600
Interest 20,700 19,900
Other 10,200 12,400
------------- ----------------
661,400 571,600
------------- ----------------
COSTS AND EXPENSES
- ------------------
Property operating 253,500 266,000
Depreciation 114,000 108,100
Interest 103,100 104,600
General and administrative:
Related parties 24,400 46,600
Other 68,100 37,100
------------- ----------------
563,100 562,400
------------- ----------------
Net income $ 98,300 $ 9,200
============= ================
Net income - general partners $ 1,000 $ 100
============= ================
Net income - limited partners $ 97,300 $ 9,100
============= ================
Basic and diluted earnings per limited partnership unit $ .41 $ .04
============= ================
</TABLE>
See Accompanying Notes to Financial Statements
13
<PAGE>
WINDSOR PARK PROPERTIES 5
-------------------------
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997
----------------------------------------------
<TABLE>
<CAPTION>
Units
Subscription
General Limited Note
Partners Partners Receivable Total
------------ ------------ ---------------- --------------
<S> <C> <C> <C> <C>
Balance at
December 31, 1996 $ 23,800 $ 4,428,900 $ (100,000) $ 4,352,700
Cash distributions (2,000) (200,000) (202,000)
Net income 100 9,100 9,200
Repayment of
Subscription Note 100,000 100,000
Repurchase of limited
partnership units (20,000) (20,000)
------------ ------------ -------------- --------------
Balance at
December 31, 1997 21,900 4,218,000 - 4,239,900
------------ ------------ -------------- --------------
Cash distributions (2,000) (194,400) (196,400)
Net income 1,000 97,300 98,300
Repurchase of limited
partnership units (41,600) (41,600)
------------ ------------ -------------- --------------
Balance at
December 31, 1998 $ 20,900 $ 4,079,300 - $ 4,100,200
============ ============= ============== ==============
</TABLE>
See Accompanying Notes to Financial Statements
14
<PAGE>
WINDSOR PARK PROPERTIES 5
-------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
For The Year Ended December 31,
------------------------------------------
1998 1997
--------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 98,300 $ 92,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 114,000 108,100
Equity in earnings of joint ventures and limited partnerships (102,700) (68,600)
Joint ventures' and limited partnerships cash distributions 102,700 68,600
Amortization of deferred financing costs 9,000 9,000
Loss on sale of property held for investment 5,300
Changes in operating assets and liabilities:
Decrease in other assets 7,500 17,100
Decrease in accounts payable (4,000) (15,000)
(Decrease) increase in due to General Partners and affiliates (13,900) 21,000
Increase (decrease) in accrued expenses 51,900 (9,400)
Decrease in tenant deposits and other liabilities (6,300) (1,600)
--------------- -----------
Net cash provided by operating activities 256,500 143,700
--------------- -----------
Cash flows from investing activities:
Joint ventures' and limited partnerships cash distributions 166,600 61,200
Increase in property held for investment (74,400) (15,400)
Investments in joint ventures and limited partnerships (4,900) (225,200)
Proceeds from sale of property held for investment - 10,800
--------------- -----------
Net cash provided by (used in) investing activities 87,300 (168,600)
--------------- -----------
Cash flows from financing activities:
Cash distributions (196,400) (202,000)
Repurchase of limited partnership units (41,600) (20,000)
Payment of deferred financing costs - -
Proceeds from payment of subscription receivable - 100,000
--------------- -----------
Net cash used in financing activities (235,000) (122,000)
--------------- -----------
Net increase (decrease) in cash and cash equivalents 105,800 (146,900)
Cash and cash equivalents at beginning of year 376,900 523,800
--------------- -----------
Cash and cash equivalents at end of year $ 482,700 376,900
=============== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for
interest (none capitalized) $ 95,693 103,314
=============== ===========
</TABLE>
See Accompanying Notes to Financial Statements
15
<PAGE>
WINDSOR PARK PROPERTIES 5
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------------------
The Partnership
- ---------------
Windsor Park Properties 5, a California Limited Partnership (the"Partnership"),
was formed in June 1987 for the purpose of acquiring and holding existing
manufactured home communities for investment. The general partners of the
Partnership are The Windsor Corporation ("TWC"), a California corporation, and
John A. Coseo, Jr. In September 1997, Chateau Communities Inc., ("Chateau"), a
publicly held real estate investment trust, purchased 100 percent of the shares
of The Windsor Corporation.
The Partnership was funded through a public offering of 244,729 limited
partnership units at $100 per unit which commenced in September 1987 and
terminated in September 1988. The Partnership term is set to expire in December
2001; however, the Partnership may either be dissolved earlier or extended under
certain circumstances. The Partnership may be extended at the recommendation of
the General Partners with approval of a majority of the limited partners.
Property Held For Investment
- ----------------------------
Property held for investment is carried at cost unless facts and circumstances
indicate that the carrying value of the property may be impaired. Impairment is
determined by comparing the estimated future cash flows (undiscounted and
without interest charges) from an individual property to its carrying value. If
such cash flows are less than the property's carrying value, the carrying value
of the project is written down to its estimated fair value. No such writedowns
were recorded for the years ended December 31, 1998 or 1997.
Property held for investment is depreciated over various estimated useful lives
(buildings and improvements - 5 to 20 years; fixtures and equipment - 3 to 5
years) using the straight-line method. When assets are sold or otherwise
disposed of, the cost and related accumulated depreciation are removed from the
accounts, and any gain or loss is included in net income. Repairs and
maintenance are charged to operations as incurred.
Investments in Joint Ventures and Limited Partnerships
- ------------------------------------------------------
The investments in joint ventures are accounted for utilizing the equity method
as the properties are subject to joint control requiring approval or mutual
agreement of the investees. The investment in limited partnerships is also
accounted for utilizing the equity method as the Limited Partners have
significant rights.
16
<PAGE>
Financing Costs
- ---------------
Financing costs are amortized to interest expense over the life of the note
utilizing a method, which approximates the effective interest method.
Income Taxes
- ------------
Under provisions of the Internal Revenue Code and the California Revenue and
Taxation Code, partnerships are generally not subject to income taxes. The tax
effect of any income or loss accrues to the individual partners.
Basic and Diluted Earnings per Limited Partnership Unit
- -------------------------------------------------------
Basic and diluted earnings per limited partnership unit are calculated based on
the weighted average number of limited partnership units outstanding during the
year and the net income allocated to the limited partners. Basic and diluted
earnings per limited partnership unit are the same, as the Partnership has no
dilutive securities. The weighted average number of limited partnership units
outstanding during the years ended December 31, 1998 and 1997 was 237,277 and
239,644, respectively.
Statements of Cash Flows
- ------------------------
For purposes of the statements of cash flows, the Partnership considers all
highly-liquid instruments purchased with an original maturity of three months or
less to be cash equivalents.
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.
Revenue Recognition
- -------------------
Rental income is recognized when earned and due from residents. The leases
entered into by residents for the rental of a site are generally for terms not
longer than one year and renewable upon the consent of both parties or, in some
instances, as provided by statute.
17
<PAGE>
NOTE 2. PARTNERSHIP AGREEMENT
---------------------
In accordance with the Partnership Agreement, the maximum liability of the
Limited Partners is the amount of their capital contributions. The number of
limited partnership units outstanding at December 31, 1998 and 1997 was 235,716
and 238,637, respectively, which represented capital contributions of
$23,571,600 and $23,863,700, respectively. During the years ended December 31,
1998 and 1997, the Partnership repurchased 2,921 units and 1,997 units,
respectively, for $41,600 and $20,000, respectively from the limited partners.
The general partners owned 1,039 units at both December 31, 1998 and 1997.
The General Partners are entitled to receive from the Partnership various fees
and compensation which are summarized as follows:
Operational Stage
- -----------------
The profits, losses and cash distributions of the Partnership during the
operational stage are allocated 99% to the Limited Partners and 1% to the
General Partners.
The Partnership reimburses TWC for certain direct expenses and employee,
executive and administrative time incurred on the Partnership's behalf. The
Partnership was charged $24,400 and $52,800 for such costs during the years
ended December 31, 1998 and 1997, respectively. These costs are included in
property operating and general and administrative expenses in the accompanying
statements of operations. As of December 31, 1998, the partnership owed TWC
$7,100.
Liquidation Stage
- -----------------
During the Partnership's liquidation stage, the total compensation paid to all
persons for the sale of investment properties is limited to competitive real
estate commissions, not to exceed 6% of the contract price for the sale of the
property. The general partners may receive up to one-half of the competitive
real estate commission, not to exceed 3%, if they provide a substantial amount
of services in the sales effort. The general partners' commission is
subordinated to the limited partners' receiving a 9% cumulative, non-compounded
annual return (Preferred Return) on their original capital investments. No
commissions were paid to the General Partners during the years ended December
31, 1998 and 1997.
The general partners receive 1% of cash distributions from the sale or financing
of Partnership properties. This participation increases to 15% after the
Limited Partners have received their original invested capital plus their
Preferred Return.
The general partnership properties. However, if applicable, profits on sale will
first be allocated 100% to the General Partners to the extent of their negative
capital account.
The general partners received cash distributions of $2,000 for each of the years
ended December 31, 1998 and 1997.
18
<PAGE>
NOTE 3. PROPERTY HELD FOR INVESTMENT
----------------------------
Property held for investment consists of two manufactured home communities
summarized as follows:
<TABLE>
<CAPTION>
Name of Property Date Acquired Location
---------------- ------------- --------
<S> <C> <C>
Lakeside July 15, 1988 Lithia Springs, Georgia
Plantation Estates December 30, 1988 Douglasville, Georgia
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
--------------------
<S> <C>
Land $ 1,507,800
Buildings and improvements 2,128,700
Fixtures and equipment 45,600
--------------------
3,682,100
Less accumulated depreciation (1,077,800)
--------------------
$ 2,604,300
====================
</TABLE>
NOTE 4. INVESTMENTS IN JOINT VENTURES AND LIMTED PARTNERSHIPS
-----------------------------------------------------
The Partnership's investments in joint ventures consist of interests in five
manufactured home communities summarized as follows:
<TABLE>
<CAPTION>
Ownership
Name of Property Percentage Date Acquired Location
- ---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Town and Country Estates 42% January 17, 1989 Tucson, Arizona
Rancho Margate 26% September 20, 1995 Margate, Florida
Winter Haven 26% October 11, 1995 Winter Haven, Florida
Apache East 9% February 18 1997 Phoenix, Arizona
Denali Park 9% February 18, 1997 Phoenix, Arizona
</TABLE>
The remaining interests in the communities are owned by affiliated California
limited partnerships, which have the same general partners as the Partnership.
In February 1997, the Partnership purchased a 9% interest in the Apache East
Estates and Denali Park Estates manufactured home communities located in
Phoenix, Arizona. The remaining interests in the communities were purchased by
affiliated entities. The Partnership's cost of its equity interest in the
communities was $207,000. In connection with the purchase, the limited
partnership obtained a $3,040,000 loan, collateralized by the communities.
19
<PAGE>
The combined condensed financial position and results of operations of the joint
ventures and limited partnerships are as follows (unaudited):
<TABLE>
<CAPTION>
Financial Position
- ------------------
December 31, 1998
--------------------
<S> <C>
Property held for investment, net $ 17,973,800
Cash 82,700
Other assets 295,300
--------------------
Total assets $ 18,351,800
====================
Mortgage notes payable $ 9,779,600
Accounts payable 11,400
Other liabilities 205,900
--------------------
Total liabilities 9,996,900
Partners' equity 8,355,000
--------------------
Total liabilities and partners' equity $ 18,351,900
====================
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------
Results of Operations 1998 1997
- --------------------- ----------------- ------------------
<S> <C> <C>
Property revenues $ 3,174,300 $ 2,937,600
----------------- ------------------
Expenses:
Property operating 1,491,000 1,428,100
Interest 917,200 837,700
Depreciation 587,700 550,800
----------------- ------------------
2,995,900 2,816,600
----------------- ------------------
Net income $ 178,400 $ 121,100
================= ==================
</TABLE>
NOTE 5: MORTGAGE NOTE PAYABLE
---------------------
The Partnership obtained a $1,097,000 mortgage loan collateralized by the
Lakeside and Plantation Estates communities. The loan is payable in monthly
interest only installments bearing interest at 90-day LIBOR plus 2.95% (8.23% at
December 31, 1998) and is due in September 2002.
20
<PAGE>
NOTE 6. DISTRIBUTIONS TO LIMITED PARTNERS
---------------------------------
Distributions to limited partners in excess of net income allocated to limited
partners are considered a return of capital. A breakdown of cash distributions
to the Limited Partners for the years ended December 31, 1998 and 1997 follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------- ----------------------------------
Per Per
Amount Unit Amount Unit
------ ---- ------ ----
<S> <C> <C> <C> <C>
Net income
- - Limited Partners $ 97,300 $ .41 $ 9,100 $ .04
Return of capital 97,100 .41 190,900 .79
------------------- ---------- -------------- ---------
Total Distributions $ 194,400 $ .82 $ 200,000 $ .83
=================== ========== ============== =========
</TABLE>
NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
The carrying amounts of cash equivalents, other assets, accounts payable,
accrued expenses and other liabilities approximate fair value because of the
short maturity of the financial instruments. The mortgage note payable bears
interest at a variable rate indexed to LIBOR; therefore, the General Partners
believe the carrying value of the note approximates fair value.
NOTE 8. CONTINGENCIES
-------------
The Partnership, as an owner of real estate, is subject to various environmental
laws. Compliance by the Partnership with existing laws has not had a material
effect on the results of operations, financial condition or cash flows of the
Partnership, nor does management believe it will have a material impact in the
future.
The Partnership is jointly and severally liable for $9,779,600 of debt issued by
affiliated entities in which it has a joint venture or limited partnership
investment.
NOTE 9. RELATED PARTY TRANSACTIONS
--------------------------
Chateau and/or its predecessor have been providing property management services
to the Partnership since 1992. For this service, Chateau is paid a property
management fee, which is based on a percentage of actual gross receipts of the
properties. The total management fees paid to Chateau were $26,500 and $23,800
for the years ended December 31, 1998 and 1997, respectively. In addition
certain direct expenses are paid by Chateau on behalf of the Partnership and
then reimbursed by the Partnership. These amounts were $62,600 and $54,900 for
the years ended December 31, 1998 and 1997, respectively.
21
<PAGE>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
There were no disagreements over accounting or financial disclosure with the
independent accountants for the Partnership.
PART III
--------
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
--------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------
The general partners of the Partnership are The Windsor Corporation and John A.
Coseo, Jr.
In July 1994, The Windsor Corporation merged into Windsor Group, Inc., a
majority-owned subsidiary. In conjunction with the merger, Windsor Group, Inc.
changed its name to The Windsor Corporation, (hereafter, "The Windsor
Corporation").
These entities were incorporated in 1977 and 1992, respectively, to engage in
the real estate syndication business. Historically, they have concentrated
solely on the acquisition, management, and sale of fully-developed manufactured
home communities through the investment programs which they sponsor.
The executive officers of The Windsor Corporation do not receive direct
compensation from the Partnership in these capacities and are only required to
spend such time on the Partnership's affairs as is deemed necessary.
Substantial amounts of these officers' time is spent on matters unrelated to the
Partnership.
The names, ages, and nature of the positions held by the directors and executive
officers of The Windsor Corporation follow:
<TABLE>
<CAPTION>
Name Age Office
------------------------ -------- -------------------------------
<S> <C> <C>
Steven G. Waite 44 President and Director
Gary P. McDaniel 53 Director
C.G. Kellogg 55 Director
</TABLE>
A brief background of the general partners, directors and certain executive
officers of The Windsor Corporation follows.
Steven G. Waite (44) joined The Windsor Corporation in August 1997 as President.
Since 1991, until his involvement with Windsor, Mr. Waite served as Vice
President/General Manager of the Communities Division at Clayton Homes. He was
responsible for the original start up of this division, and subsequently built
it into a successful and profitable area of Clayton Homes, expanding from eight
communities to 67 communities. In addition, Mr. Waite has over eight years of
experience in the manufactured home community-lending arena. He earned a
Bachelor of Arts degree from the University of Colorado and a Master of Business
Administration from the University of Alabama. Mr. Waite is active in the
Manufactured Housing Institute.
Gary P. McDaniel (53) a director of The Windsor Corporation, has been Chief
Executive Officer and a director of Chateau Communities, Inc. ("Chateau") since
February 1997. He served as the Chairman of the Board, President and Chief
Executive Officer for ROC Communities, Inc., which merged with Chateau in 1997.
Since 1993, he has been an executive and shareholder of ROC and its predecessors
since 1979, and has been active in the manufactured home industry since 1972.
Mr. McDaniel is also a trustee of N'Tandem Trust, which is advised by The
Windsor Corporation. Mr. McDaniel has been active in several state and national
manufactured home associations, including associations in Florida and Colorado.
In 1996, he was named "Industry Person of the Year" by the National Manufactured
Housing Industry Association. Mr. McDaniel is on the Board of Directors of the
Manufactured Housing Institute. He is a graduate of the University of Wyoming
and served as a Captain in the United States Air Force.
22
<PAGE>
C.G. ("Jeff") Kellogg (55) has been President and a director of Chateau since
its inception and was Chief Executive Officer of Chateau from its inception to
February 1997. For the five years preceding the formation of Chateau, Mr.
Kellogg was President and Chief Operating Officer of Chateau Estates. He is
extremely active in local and national industry associations, often in
leadership positions. Mr. Kellogg is a past President of the Michigan
Manufactured Housing Association and served on the Manufactured Housing
Institute's Community Operations Committee. He is a graduate of Michigan
Technological University with a B.S. in Civil Engineering.
John A. Coseo, Jr. (59) the other general partner of the Partnership was the
founder of The Windsor Corporation in 1977 and has been actively involved in all
facets of the manufactured housing business since that time, Mr. Coseo resigned
from his positions as director and executive officer of The Windsor Corporation
in 1997. From 1979 to the present, Mr. Coseo has acted as general partner or
advisor in the acquisition and management of 56 manufactured home communities
throughout the United States. Mr. Coseo is a general partner of seven limited
partnerships which have registered their securities under the Securities and
Exchange Act of 1934.
Item 10. EXECUTIVE COMPENSATION
----------------------
The Partnership has not paid and does not propose to pay any remuneration or
retirement benefits to John A. Coseo, Jr. and the directors or executive
officers of The Windsor Corporation. Refer to Item 12 (Certain Relationships
and Related Transactions) for cash distributions and expense reimbursements paid
to The Windsor Corporation by the Partnership.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
No person is known by the Partnership to be the beneficial owner of
more than 5% of the limited partnership units.
(b) Security Ownership of Management
The following table presents certain information regarding the number
of units owned, directly or indirectly, by (i) each General Partner
and (ii) all General Partners as a group as of December 31, 1998:
<TABLE>
<CAPTION>
Amount and Nature of Percent of Class
Title of Class Beneficial Owner Beneficial Ownership
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Units of Limited John A. Coseo, Jr.,
Partnership Interest a General Partner 39 .017%
Units of Limited The Windsor Corporation,
Partnership Interest a General Partner 1,000 .424%
----- ----
Units of Limited All General Partners as
Partnership Interest a group 1,039 .441%
===== ====
</TABLE>
23
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The following table reflects all compensation paid to the general partners
during the years ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
Form of Compensation and Entity Receiving 1998 1997
- ----------------------------------------- ---- ----
<S> <C> <C>
Expense reimbursement - The Windsor Corporation $24,400 $52,800
Cash distributions - The Windsor Corporation $ 2,000 $ 2,000
</TABLE>
24
<PAGE>
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits and Index of Exhibits
(3) - Certificate and Agreement of Limited Partnership filed as
Exhibit A to Registration Statement No. 33-15878 and
incorporated herein by reference.
(27) - Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last quarter of
the period covered by this Form 10-KSB.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on this 31st day of
March, 1999.
WINDSOR PARK PROPERTIES 5
A California Limited Partnership by:
THE WINDSOR CORPORATION
By: /s/Steven G. Waite
-----------------------------------
STEVEN G. WAITE
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/Steven G. Waite President of The Windsor Corporation, March 31, 1999
- -------------------------------
STEVEN G. WAITE a general partner.
/s/Gary P. McDaniel Director of The Windsor Corporation, a March 31, 1999
- -------------------------------
GARY P. MCDANIEL general partner.
/s/C.G. Kellogg Director of The Windsor Corporation, a March 31, 1999
- -------------------------------
C.G. KELLOGG general partner.
/s/John A. Coseo, Jr. General Partner March 31, 1999
- -------------------------------
JOHN A. COSEO, JR.
</TABLE>
26
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 482,700
<SECURITIES> 0
<RECEIVABLES> 21,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,604,300
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,305,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,097,000
0
0
<COMMON> 0
<OTHER-SE> 4,100,200
<TOTAL-LIABILITY-AND-EQUITY> 5,305,000
<SALES> 0
<TOTAL-REVENUES> 661,400
<CGS> 0
<TOTAL-COSTS> 253,500
<OTHER-EXPENSES> 206,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 103,100
<INCOME-PRETAX> 98,300
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,300
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
