-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NfvGVDrTUrg/7qavpUg0wgtjbqIiMaA1Xwbavc3LfCeeDyFcc1P8vLxRxgKsKp+x X/XhVIGTKy8siiJcQrRIDw== 0000711642-00-000181.txt : 20000517 0000711642-00-000181.hdr.sgml : 20000517 ACCESSION NUMBER: 0000711642-00-000181 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHELTER PROPERTIES V LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000712753 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 570721855 STATE OF INCORPORATION: CA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-11574 FILM NUMBER: 636775 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 FORMER COMPANY: FORMER CONFORMED NAME: SHELTER PROPERTIES V DATE OF NAME CHANGE: 19871022 10QSB 1 FIRST QUARTER OF 2000 FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 0-11574 SHELTER PROPERTIES V (Exact name of small business issuer as specified in its charter) South Carolina 57-0721855 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) Issuer's telephone number (864) 239-1000 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____ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) SHELTER PROPERTIES V CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 2000 Assets Cash and cash equivalents $ 9,757 Receivables and deposits 356 Restricted escrows 605 Other assets 753 Investment properties: Land $ 4,242 Buildings and related personal property 72,567 76,809 Less accumulated depreciation (45,003) 31,806 $ 43,277 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 127 Tenant security deposit liabilities 282 Accrued property taxes 221 Other liabilities 655 Mortgage notes payable 37,038 Partners' (Deficit) Capital General partners $ (334) Limited partners (52,538 units issued and outstanding) 5,288 4,954 $ 43,277 See Accompanying Notes to Consolidated Financial Statements b) SHELTER PROPERTIES V CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended One Month Ended March 31, December 31, 2000 1999 1999 1998 Revenues: Rental income $3,410 $3,428 $ 1,143 $ 1,146 Other income 235 202 52 69 Total revenues 3,645 3,630 1,195 1,215 Expenses: Operating 1,401 1,385 415 385 General and administrative 115 93 22 29 Depreciation 686 712 241 251 Interest 762 676 256 226 Property taxes 172 219 77 74 Total expenses 3,136 3,085 1,011 965 Net income $ 509 $ 545 $ 184 $ 250 Net income allocated to general partners (1%) $ 5 $ 5 $ 2 $ 3 Net income allocated to limited partners (99%) 504 540 182 247 $ 509 $ 545 $ 184 $ 250 Net income per limited partnership unit $ 9.59 $10.28 $ 3.46 $ 4.70 Distributions per limited partnership unit $ -- $35.80 $ -- $ -- See Accompanying Notes to Consolidated Financial Statements c) SHELTER PROPERTIES V CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 52,538 $ 2 $ 52,538 $52,540 Partners' (deficit) capital at November 30, 1998 52,538 $ (327) $ 5,696 $ 5,369 Net income for the one month ended December 31, 1998 -- 3 247 250 Partners' (deficit) capital at December 31, 1998 52,538 (324) 5,943 5,619 Net income for the three months ended March 31, 1999 -- 5 540 545 Distributions to partners (21) (1,881) (1,902) Partners' (deficit) capital at March 31, 1999 52,538 $ (340) $ 4,602 $ 4,262 Partners' (deficit) capital at November 30, 1999 52,538 $ (341) $ 4,602 $ 4,261 Net income for the one month ended December 31, 1999 -- 2 182 184 Partners' (deficit) capital at December 31, 1999 52,538 (339) 4,784 4,445 Net income for the three months ended March 31, 2000 -- 5 504 509 Partners' (deficit) capital at March 31, 2000 52,538 $ (334) $ 5,288 $ 4,954 See Accompanying Notes to Consolidated Financial Statements
d) SHELTER PROPERTIES V CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended One Month Ended March 31, December 31, 2000 1999 1999 1998 Cash flows from operating activities: Net income $ 509 $ 545 $ 184 $ 250 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 686 712 241 251 Amortization of discounts and loan costs 50 45 17 15 Change in accounts: Receivables and deposits 410 46 316 211 Other assets (147) (125) 58 20 Accounts payable (1,256) (22) (431) (85) Tenant security deposit liabilities 8 4 2 4 Accrued property taxes (190) (137) 30 (40) Other liabilities (309) 12 (122) 20 Net cash (used in) provided by operating activities (239) 1,080 295 646 Cash flows from investing activities: Property improvements and replacements (528) (185) (320) (59) Net withdrawals from restricted escrows 46 36 307 32 Insurance proceeds received, net 1,867 -- 502 -- Net cash (used in) provided by investing activities 1,385 (149) 489 (27) Cash flows from financing activities: Payments on mortgage notes payable (170) (125) (38) (42) Loan costs paid (71) (10) -- -- Partners' distributions -- (1,902) -- (1,118) Net cash used in financing activities (241) (2,037) (38) (1,160) Net increase (decrease) in cash and cash equivalents 905 (1,106) 746 (541) Cash and cash equivalents at beginning of period 8,852 2,892 8,106 3,433 Cash and cash equivalents at end of period $ 9,757 $ 1,786 $ 8,852 $ 2,892 Supplemental disclosure of cash flow information: Cash paid for interest $ 712 $ 631 $ 239 $ 211 See Accompanying Notes to Consolidated Financial Statements
e) SHELTER PROPERTIES V NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Shelter Properties V (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Shelter Realty V Corporation (the "Corporate General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the one and three month periods ended December 31, 1999 and March 31, 2000, respectively, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended November 30, 1999. Change in Fiscal Year End: On January 3, 2000, the Partnership elected to change its fiscal year end from November 30 to December 31, effective for the period ending December 31, 1999, as announced in its Form 8-K filed on January 3, 2000. This Quarterly Report on Form 10-QSB presents the unaudited results of the Partnership's operations for the first fiscal quarter ended March 31, 2000 and for the one month transition period covering December 1, 1999 through December 31, 1999. Principles of Consolidation: The financial statements include all the accounts of the Partnership and its two 99.99% owned partnerships. The Corporate General Partner of the consolidated partnerships is Shelter Realty V Corporation. Shelter Realty V Corporation may be removed as the general partner of the consolidated partnership by the Registrant; therefore, the consolidated partnerships are controlled and consolidated by the Registrant. All significant interpartnership balances have been eliminated. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the Corporate General Partner. The Corporate General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Reconciliation of Cash Flows The following is a reconciliation of the subtotal on the accompanying consolidated statements of cash flows captioned "net cash provided by operating activities" to "net cash from operations", as defined in the Partnership Agreement. However, "net cash from operations" should not be considered an alternative to net income as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity.
Three Months Ended One Month Ended March 31, December 31, (in thousands) (in thousands) 2000 1999 1999 1998 Net cash (used in) provided by operating activities $ (239) $ 1,080 $ 295 $ 646 Payments on mortgage notes payable (170) (125) (38) (42) Property improvements and replacements (528) (185) (320) (59) Change in restricted escrows, net 46 36 307 32 Changes in reserves for net operating liabilities 1,484 222 147 (130) Additional operating reserves (593) -- (391) -- Net cash used in operations $ -- $ 1,028 $ -- $ 447
The Corporate General Partner reserved an additional $593,000 at March 31, 2000 and $391,000 at December 31, 1999 to fund capital improvements and repairs at the Partnership's seven investment properties. Note D - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Corporate General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the Corporate General Partner and affiliates during the three months ended March 31, 2000 and 1999 and one month period ended December 31, 1999 and 1998 (in thousands):
March 31, December 31, 2000 1999 1999 1998 Property management fees (included in operating expense) $ 175 $ 182 $ 57 $ 59 Reimbursement for services of affiliates (included in operating, general and administrative expenses and investment 74 54 36 18 properties)
During the three months ended March 31, 2000 and 1999 and one month ended December 31, 1999 and 1998, affiliates of the Corporate General Partner were entitled to receive 5% of gross receipts from all of the Registrant's properties for providing property management services. The Registrant paid to such affiliates approximately $175,000 and $182,000 for the three months ended March 31, 2000 and 1999, and approximately $57,000 and $59,000 for the one month periods ended December 31, 1999 and 1998, respectively. Affiliates of the Corporate General Partner received reimbursement of accountable administrative expenses amounting to approximately $74,000 and $54,000 for the three months ended March 31, 2000 and 1999, respectively and approximately $36,000 and $18,000 for the one month periods ended December 31, 1999 and 1998, respectively. AIMCO and its affiliates currently own 33,480 limited partnership units in the Partnership representing 63.73% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. As a result of its ownership of 63.73% of the outstanding units, AIMCO is in a position to influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Corporate General Partner because of their affiliation with the Corporate General Partner. Note E - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has one reportable segment: residential properties. The Partnership's residential property segment consists of seven apartment complexes located in Florida (2), South Carolina (1), Virginia (1), Georgia(1), and North Carolina (2). The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those of the Partnership as described in the Partnership's Annual Report on Form 10-KSB for the year ended November 30, 1999. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segment consists of investment properties that offer similar products and services. Although each of the investment properties is managed separately, they have been aggregated into one segment as they provide services with similar types of products and customers. Segment information for the three month periods ended March 31, 2000 and 1999 is shown in the tables below. The "Other" column includes partnership administration related items and income and expense not allocated to the reportable segment. March 31, 2000 Residential Other Totals (in thousands) Rental income $ 3,410 $ -- $ 3,410 Other income 164 71 235 Interest expense 762 -- 762 Depreciation 686 -- 686 General and administrative expense -- 115 115 Segment profit (loss) 553 (44) 509 Total assets 37,064 6,213 43,277 Capital expenditures for investment properties 528 -- 528 March 31, 1999 Residential Other Totals (in thousands) Rental income $ 3,428 $ -- $ 3,428 Other income 191 11 202 Interest expense 676 -- 676 Depreciation 712 -- 712 General and administrative expense -- 93 93 Segment profit (loss) 627 (82) 545 Total assets 35,682 710 36,392 Capital expenditures for investment properties 185 -- 185 Segment information for the one month periods ended December 31, 1999 and 1998, is shown in the tables below. December 31, 1999 Residential Other Totals (in thousands) Rental income $ 1,143 $ -- $ 1,143 Other income 34 18 52 Interest expense 256 -- 256 Depreciation 241 -- 241 General and administrative expense -- 22 22 Segment profit (loss) 188 (4) 184 Total assets 38,012 6,655 44,667 Capital expenditures for investment properties 320 -- 320 December 31, 1998 Residential Other Totals (in thousands) Rental income $ 1,146 $ -- $ 1,146 Other income 58 11 69 Interest expense 226 -- 226 Depreciation 251 -- 251 General and administrative expense -- 29 29 Segment profit (loss) 268 (18) 250 Total assets 36,663 1,337 38,000 Capital expenditures for investment properties 59 -- 59 Note F - Casualty Event In September 1999, Tar River Estates Apartments, was damaged by severe flooding which affected certain areas of North Carolina. It is estimated that the property has incurred approximately $6,323,000 in damages as a result of this flooding. As of March 31, 2000, insurance proceeds of approximately $2,464,000 have been received to cover lost rents and damage to the property. It is anticipated that the costs incurred to restore the property will be fully covered by insurance. Note G - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Note B - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Corporate General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of class plaintiffs' counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The Corporate General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussions of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operation. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of seven apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended March 31, 2000 and 1999 and for the one month periods ended December 31, 1999 and 1998:
March 31, December 31, Property 2000 1999 1999 1998 Foxfire Apartments Atlanta, Georgia 94% 94% 95% 94% Old Salem Apartments Charlottesville, Virginia 98% 96% 97% 95% Woodland Village Apartments Columbia, South Carolina (2) 92% 95% 91% 95% Lake Johnson Mews Apartments Raleigh, North Carolina 93% 94% 94% 96% The Lexington Green Apartments Sarasota, Florida 97% 98% 97% 96% Millhopper Village Apartments Gainesville, Florida (3) 93% 95% 96% 92% Tar River Estates Apartments Greenville, North Carolina (1) 35% 96% 36% 97%
(1) During September 1999, Tar River Estates was damaged by severe flooding which affected certain areas of North Carolina. The property has incurred extensive damage as a result of the flooding causing portions of the property to be unavailable for occupancy since September 1999. It is anticipated that the costs incurred to restore the property will be fully covered by insurance. The occupancy for the units not damaged at the property was 93% at March 31, 2000 and approximately 97% at December 31, 1999. The Corporate General Partner has completed discussions relating to the redevelopment of the property and has begun reconstruction of the property. (2) The decrease in occupancy at Woodland Village Apartments for both periods is attributed to tenants purchasing new homes at the current low mortgage interest rates. (3) Millhopper Village is located in a very competitive market area. Fluctuations in occupancy are attributed to the timing of lease expirations and the degree to which concessions are being offered by the property and its competitors. Results of Operations The Registrant's net income for the three months ended March 31, 2000 was approximately $509,000 compared to approximately $545,000 for the three months ended March 31, 1999. The decrease in net income for the three months ended March 31, 2000 is due to an increase in total expenses which was partially offset by an increase in total revenues. The increase in total expenses is due primarily to an increase in interest expense and, to a lesser extent, an increase in general and administrative expense. The increase in interest expense is due primarily to the refinancing of the debt encumbering Old Salem Apartments and Foxfire Apartments (as discussed below). General and administrative expenses increased primarily as a result of an increase in audit fees and costs associated with the Partnership's communications with investors. The increase in total expenses was partially offset by decreases in property tax and depreciation expenses. The decrease in property tax expense is due to the timing of the receipt of tax bills which affected the tax accruals recorded for the respective periods. The decrease in depreciation expense is due primarily to the write-off of a building and the related depreciation at Tar River Estates Apartments due to damage sustained as a result of flooding in 1999. Operating expenses remained relatively constant for the comparable period. Total revenues increased as a result of an increase in other income. Other income increased as a result of an increase in interest income as a result of an increase in cash maintained in interest bearing accounts. The increase in other income was partially offset by a decrease in rental income as a result of a decrease in occupancy at five of the Partnership's investment properties which more than offset the increase in average rental rates at all of the properties. The Registrant's net income for the one month period ended December 31, 1999 was approximately $184,000 compared to approximately $250,000 for the one month period ended December 31, 1998. The decrease in net income for the one month period ended December 31, 1999 is due to an increase in total expenses and a decrease in total revenues. The increase in total expenses is due to an increase in interest and operating expenses partially offset by a decrease in depreciation and general and administrative expenses. Interest expense increased as a result of the refinancing of the debt encumbering Old Salem Apartments and Foxfire Apartments (as discussed below). The increase in operating expense is due primarily to an increase in payroll related expenses at the Partnership's investment properties. Property tax expense remained relatively constant for the comparable periods. The decrease in depreciation expense is due primarily to the write-off of a building and the related depreciation at Tar River Estates Apartments due to damage sustained as a result of flooding in 1999. General and administrative expenses decreased primarily due to a decrease in expenses related to the Partnership's communications with investors. Total revenues decreased for the comparable period due to a decrease in miscellaneous income received at the properties. Rental income remained relatively constant for the comparable periods. Included in general and administrative expense at both the three months ended March 31, 2000 and 1999 and at both the one month periods ended December 31, 1999 and 1998 are management reimbursements to the Corporate General Partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audits and appraisals required by the Partnership Agreement are also included. As part of the ongoing business plan of the Registrant, the Corporate General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Corporate General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Corporate General Partner will be able to sustain such a plan. Liquidity and Capital Resources At March 31, 2000, the Registrant had cash and cash equivalents of approximately $9,757,000 as compared to approximately $1,786,000 at March 31, 1999. The increase in cash and cash equivalents of approximately $905,000 for the three months ended March 31, 2000, from the Partnership's year ended December 31, 1999 is primarily due to approximately $1,385,000 of cash provided by investing activities, which was partially offset by approximately $239,000 of cash used in operating activities and approximately $241,000 of cash used in financing activities. Cash provided by investing activities consisted of the receipt of insurance proceeds and to a lesser extent, net withdrawals from escrow accounts maintained by the mortgage lender which was partially offset by property improvements and replacements. Cash used in financing activities consisted primarily of payments of principal made on the mortgages encumbering the Registrant's properties, and to a lesser extent, loan costs related to the refinancing of the mortgages encumbering Old Salem Apartments and Foxfire Apartments. The Partnership invests its working capital reserves in money market accounts. At December 31, 1999, the Registrant had cash and cash equivalents of approximately $8,852,000 as compared to approximately $2,892,000 at December 31, 1998. The increase in cash and cash equivalents of approximately $746,000 for the one month ended December 31, 1999, from the Partnership's former fiscal year end, November 30, 1999, is primarily due to approximately $295,000 of cash provided by operating activities and $489,000 of cash provided by investing activities, which was partially offset by approximately $38,000 of cash used in financing activities. Cash provided by investing activities consisted of the receipt of insurance proceeds and net withdrawals from escrow accounts maintained by the mortgage lender which was partially offset by property improvements and replacements. Cash used in financing activities consisted of payments of principal made on the mortgages encumbering the Registrant's properties. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the investment properties to adequately maintain the physical assets and other operating needs of the Registrant and to comply with Federal, state, and local, legal and regulatory requirements. Capital improvements planned for each of the Registrant's properties are detailed below. Millhopper Village Apartments: For 2000, the Partnership has budgeted approximately $44,000 for capital improvements, consisting primarily of appliance and floor covering replacements and HVAC unit replacements. The Partnership completed approximately $19,000 and $ 30,000 in capital expenditures for the one month ended December 31, 1999 and the three months ended March 31, 2000, respectively. These improvements were funded primarily from partnership reserves and operations. The capital expenditures incurred consisted primarily of electrical improvements, pool upgrades, major landscaping and floor covering replacements. Foxfire Apartments: For 2000, the Partnership has budgeted approximately $134,000 for capital improvements, consisting primarily of parking area and swimming pool improvements, floor covering and appliance replacements and other interior building improvements. The Partnership completed approximately $100,000 and $60,000 in capital expenditures for the one month ended December 31, 1999 and the three months ended March 31, 2000, respectively. These improvements were funded primarily from partnership reserves and operations. The capital expenditures incurred consisted primarily of exterior painting, structural upgrades, floor covering and appliance replacements and other interior improvements. Lake Johnson Mews Apartments: For 2000, the Partnership has budgeted approximately $105,000 for capital improvements, consisting primarily of structural improvements, HVAC upgrades and floor covering and appliance replacements. The Partnership completed approximately $6,000 and $27,000 in capital expenditures for the one month ended December 31, 1999 and the three months ended March 31, 2000, respectively. These improvements were funded primarily from operations. The capital expenditures incurred consisted primarily of appliance and floor covering replacements. Woodland Village Apartments: For 2000, the Partnership has budgeted approximately $286,000 for capital improvements, consisting primarily of exterior painting, floor covering replacements and other interior and exterior building improvements. The Partnership completed approximately $34,000 and $132,000 in capital expenditures for the one month ended December 31, 1999 and the three months ended March 31, 2000, respectively. These improvements were funded primarily from Partnership reserves and operations. The capital expenditures incurred consisted primarily of floor covering replacements and other exterior building improvements. The Lexington Green Apartments: For 2000, the Partnership has budgeted approximately $224,000 for capital improvements, consisting primarily of plumbing improvements, swimming pool upgrades, floor covering and appliance replacements and structural improvements. The Partnership completed approximately $81,000 and $75,000 in capital expenditures for the one month ended December 31, 1999 and the three months ended March 31, 2000, respectively. These improvements were funded primarily from operations. The capital expenditures incurred consisted primarily of plumbing and swimming pool upgrades, recreation facilities upgrades, and floor covering and appliance replacements. Tar River Estates Apartments: For 2000, the Partnership has budgeted approximately $135,000 for capital improvements, consisting primarily of HVAC unit upgrades and floor covering and appliance replacements and structural improvements. The Partnership completed approximately $36,000 and $91,000 in capital expenditures for the one month ended December 31, 1999 and the three months ended March 31, 2000, respectively. These improvements were funded primarily from operations. The capital expenditures incurred consisted primarily of floor covering and appliance replacements and other exterior and interior building improvements associated with the repairs required due to the severe flood damage which occurred during September 1999. Old Salem Apartments: For 2000, the Partnership has budgeted approximately $213,000 for capital improvements, consisting primarily of parking lot improvements, floor covering and appliance replacements, structural improvements, and other interior and exterior improvements. The Partnership completed approximately $44,000 and $113,000 in capital expenditures for the one month ended December 31, 1999 and the three months ended March 31, 2000, respectively. These improvements were funded primarily from Partnership reserves and operations. The capital expenditures incurred consisted primarily of major landscaping, floor covering and appliance replacements, structural improvements and other exterior and interior building improvements. The additional capital expenditures will be incurred only if cash is available from operations and from Partnership reserves. To the extent that such budgeted capital improvements are completed, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. The Registrant's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Registrant. The mortgage indebtedness of approximately $37,038,000 net of discount, is amortized over varying periods with required balloon payments ranging from November 15, 2002 to December 1, 2019. The Corporate General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Registrant will risk losing such properties through foreclosure. During October and November 1999, the Partnership refinanced the mortgage notes at Foxfire and Old Salem Apartments, respectively. Gross proceeds from the refinancings were $7,200,000 and $10,157,000, respectively, of which approximately $4,519,000 and $6,287,000 respectively was used to pay off the existing mortgage notes. The new notes require monthly principal and interest payments at fixed interest rates of 7.79% for Foxfire Apartments and 8.02% for Old Salem Apartments. The old debt carried fixed interest rates of 7.50% and 10.375% with maturities beginning in May 1999. During the three months ended March 31, 1999, cash distributions of approximately $1,902,000 ($1,881,000 of which was paid to the limited partners which was $35.80 per limited partnership unit) was paid from operations. For the one month ended December 31, 1998, $1,118,000 was paid to the partners which related to a payable at November 30, 1998. No cash distributions were made for the three months ended March 31, 2000 and one month ended December 31, 1999. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings and/or property sales. The Partnership's distribution policy is reviewed on a quarterly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after planned capital improvement expenditures, to permit additional distributions to its partners during the remainder of 2000 or subsequent periods. In addition, the Partnership may be restricted from making distributions if the amount in the reserve account for each property maintained by the mortgage lender for The Lexington Green Apartments and Tar River Estates Apartments is less than $400 per apartment unit for each respective property for a total of $267,600. As of March 31, 1999, the reserve accounts were fully funded with approximately $339,800 on deposit with the mortgage lender. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Part I - Financial Information, Item I. Financial Statements, Note B - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Corporate General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of class plaintiffs' counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The Corporate General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: Current Report on Form 8-K dated January 3, 2000, filed on January 12, 2000, disclosing change in fiscal year end from November to December. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHELTER PROPERTIES V By: Shelter Realty V Corporation Corporate General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: May 15, 2000 EX-27 2 FIRST QUARTER 10-QSB
5 This schedule contains summary financial information extracted from SHELTER PROPERTIES V 2000 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000712753 SHELTER PROPERTIES V 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 9,757 0 356 0 0 0 76,809 45,003 43,277 0 37,038 0 0 0 4,954 43,277 0 3,645 0 0 3,136 0 762 0 0 0 0 0 0 509 9.59 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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