10QSB 1 sp5.txt SP5 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, 2001 [ ] 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, 2001
Assets Cash and cash equivalents $ 1,966 Receivables and deposits 680 Restricted escrows 2,641 Other assets 1,039 Investment properties: Land $ 4,242 Buildings and related personal property 74,931 79,173 Less accumulated depreciation (47,938) 31,235 $ 37,561 Liabilities and Partners' Deficit Liabilities Accounts payable $ 191 Tenant security deposit liabilities 281 Accrued property taxes 228 Other liabilities 700 Due to Corporate General Partner 119 Mortgage notes payable 40,245 Partners' Deficit General partners $ (374) Limited partners (52,538 units issued and outstanding) (3,829) (4,203) $ 37,561 See Accompanying Notes to Consolidated Financial Statements
b) SHELTER PROPERTIES V CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 2001 2000 Revenues: Rental income $3,291 $3,410 Other income 373 235 Casualty gain 121 -- Total revenues 3,785 3,645 Expenses: Operating 1,452 1,401 General and administrative 135 115 Depreciation 732 686 Interest 770 762 Property taxes 208 172 Total expenses 3,297 3,136 Net income $ 488 $ 509 Net income allocated to general partners (1%) $ 5 $ 5 Net income allocated to limited partners (99%) 483 504 $ 488 $ 509 Net income per limited partnership unit $ 9.19 $ 9.59 Distributions per limited partnership unit $14.41 $ -- See Accompanying Notes to Consolidated Financial Statements SHELTER PROPERTIES V CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (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 at December 31, 2000 52,538 $ (336) $(3,555) $(3,891) Distributions to partners -- (43) (757) (800) Net income for the three months ended March 31, 2001 -- 5 483 488 Partners' deficit at March 31, 2001 52,538 $ (374) $(3,829) $(4,203) See Accompanying Notes to Consolidated Financial Statements
d) SHELTER PROPERTIES V CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 2001 2000 Cash flows from operating activities: Net income $ 488 $ 509 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 732 686 Amortization of discounts and loan costs 38 50 Casualty gain (121) -- Change in accounts: Receivables and deposits 409 410 Other assets (199) (147) Accounts payable (207) (1,111) Tenant security deposit liabilities -- 8 Accrued property taxes (32) (190) Due to Corporate General Partner 119 -- Other liabilities 104 (309) Net cash provided by (used in) operating activities 1,331 (94) Cash flows from investing activities: Property improvements and replacements (1,155) (673) Net withdrawals from restricted escrows 138 46 Settlement for defective property improvements 153 -- Insurance proceeds received, net 95 1,867 Net cash (used in) provided by investing activities (769) 1,240 Cash flows from financing activities: Payments on mortgage notes payable (169) (170) Loan costs paid (171) (71) Partners' distributions (800) -- Net cash used in financing activities (1,140) (241) Net (decrease) increase in cash and cash equivalents (578) 905 Cash and cash equivalents at beginning of period 2,544 8,852 Cash and cash equivalents at end of period $ 1,966 $ 9,757 Supplemental disclosure of cash flow information: Cash paid for interest $ 727 $ 712 At December 31, 2000 and 1999, approximately $221,000 and $145,000, respectively, of property improvements and replacements were included in accounts payable. 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. The general partner responsible for management of the Partnership's business is Shelter Realty V Corporation (the "Corporate General Partner"), a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. In the opinion of the Corporate General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. 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 December 31, 2000. Certain reclassifications have been made to the 2000 balances to conform to the 2001 presentation. 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 partnerships by the Registrant; therefore, the consolidated partnerships are controlled and consolidated by the Registrant. All significant interpartnership balances have been eliminated. Segment Reporting: Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment. The Corporate General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the consolidated financial statements as currently presented. Note B - 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 March 31, (in thousands) 2001 2000 Net cash provided by (used in) operating activities $ 1,331 $ (94) Payments on mortgage notes payable (169) (170) Property improvements and replacements (1,155) (673) Change in restricted escrows, net 138 46 Changes in reserves for net operating liabilities (194) 1,339 Releases from (additions to) operating reserves 659 (448) Net cash from operations $ 610 $ -- The Corporate General Partner released previously reserved funds of approximately $659,000 at March 31, 2001. The Corporate General Partner reserved approximately $448,000 at March 31, 2000 to fund capital improvements and repairs at the Partnership's seven investment properties. Note C - 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 amounts were paid or accrued to the Corporate General Partner and affiliates during the three months ended March 31, 2001 and 2000 (in thousands):
March 31, 2001 2000 Property management fees (included in operating expense) $ 179 $ 175 Reimbursement for services of affiliates (included in operating, general and administrative expenses and investment 99 74 properties) Refinancing fees (included in capitalized loan costs) 170 -- Due to Corporate General Partner 119 --
During the three months ended March 31, 2001 and 2000, 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 $179,000 and $175,000 for the three months ended March 31, 2001 and 2000, respectively. Affiliates of the Corporate General Partner received reimbursement of accountable administrative expenses amounting to approximately $99,000 and $74,000 for the three months ended March 31, 2001 and 2000, respectively. For services provided in connection with the refinancing of two of the Partnership's investment properties, the Corporate General Partner was paid total commissions related to the refinancings of approximately $170,000 during the three months ended March 31, 2001. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates own 36,768 limited partnership units in the Partnership representing 69.98% 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 acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of 69.98% 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 its affiliation with the Corporate General Partner. Note D - 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, 2001, insurance proceeds of approximately $5,316,000 have been received to cover lost rents and damage to the property. The property is currently undergoing reconstruction. In July 1999, Woodland Village Apartments experienced a fire, which resulted in the destruction of eight apartment units. The property incurred damages of approximately $448,000 and estimated lost rents of approximately $36,000. Insurance proceeds of approximately $332,000 were received during the year ended December 31, 1999 to cover the damages and lost rents, resulting in a casualty gain in 1999 of $210,000. The repairs were completed and an additional gain of approximately $121,000 was recorded during the three months ended March 31, 2001. Note E - Distributions During the three months ended March 31, 2001, cash distributions from operations of approximately $800,000 were paid (approximately $757,000 to the limited partners, or $14.41 per limited partnership unit). In connection with the transfer of funds from the majority owned sub-tier limited partnership to the Partnership, approximately $38,000 was distributed to the general partner of the majority owned sub-tier limited partnership. No distributions were paid to the partners during the three months ended March 31, 2000. Subsequent to March 31, 2001, the Partnership declared and paid a distribution from operations of approximately $610,000 (approximately $601,000 to the limited partners, or $11.44 per limited partnership unit) to the partners. Note F - 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, its 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 of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. 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 court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, 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 prior lead counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the Corporate General Partner and its affiliates filed a demurrer to the third amended complaint. The demurrer is scheduled to be heard on May 14, 2001. The Court has also scheduled a hearing on a motion for class certification for August 27, 2001. Plaintiffs must file their motion for class certification no later than June 15, 2001. 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, 2001 and 2000: March 31, Property 2001 2000 Foxfire Apartments Atlanta, Georgia 94% 94% Old Salem Apartments Charlottesville, Virginia 98% 98% Woodland Village Apartments Columbia, South Carolina (2) 95% 92% Lake Johnson Mews Apartments Raleigh, North Carolina 92% 93% The Lexington Green Apartments Sarasota, Florida 98% 97% Millhopper Village Apartments Gainesville, Florida (2) 96% 93% Tar River Estates Greenville, North Carolina 54% 35% (1) (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 expected that the costs incurred will be fully covered by insurance. The occupancy for the units not damaged at the property was 87% at March 31, 2001. The Corporate General Partner is currently reconstructing the property. (2) The Corporate General Partner attributes the increases in occupancy at Woodland Village Apartments and Millhopper Village Apartments to increased marketing efforts. Results of Operations The Registrant's net income for the three months ended March 31, 2001 was approximately $488,000 compared to approximately $509,000 for the three months ended March 31, 2000. The decrease in net income for the three months ended March 31, 2001 is due to an increase in total expenses which was partially offset by an increase in total revenues. Total expenses increased primarily due to increases in operating, depreciation, and property tax expenses, and to a lesser extent, increases in general and administrative and interest expenses. The increase in operating expenses is primarily due to increases in payroll expenses at most of the Partnership's investment properties and utility expenses at Old Salem Apartments. The increase in operating expenses was partially offset by a decrease in maintenance expenses at most of the Partnership's investment properties. Depreciation expense increased as a result of recent capital improvements performed at all of the Partnership's investment properties. The increase 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. Interest expense increased as a result of the refinancing of the debt encumbering The Lexington Green Apartments which increased the debt balance (as discussed below). General and administrative expenses increased primarily due to an increase in the costs of services included in management reimbursements to the Corporate General Partner as allowed under the Partnership Agreement. Also included in general and administrative expense at both March 31, 2001 and 2000 are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audits and appraisals required by the Partnership Agreement. Total revenues increased due to an increase in other income and the recognition of a gain resulting from the casualty at Woodland Village Apartments (as discussed below). Other income increased primarily due to an increase in tenant reimbursements, which was partially offset by a decrease in interest income as a result of lower average cash balances invested in interest bearing accounts. The increase in total revenues was partially offset by a decrease in the rental income. The decrease in rental income is primarily due to the receipt of insurance proceeds in 2000 to cover lost rents as a result of the casualty at Tar River Estates (as discussed below), which more than offset increases in occupancy at three of the Partnership's investment properties and increases in the average rental rates at six of the Partnership's investment properties. 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, 2001, insurance proceeds of approximately $5,316,000 have been received to cover lost rents and damage to the property. The property is currently undergoing reconstruction. In July 1999, Woodland Village Apartments experienced a fire, which resulted in the destruction of eight apartment units. The property incurred damages of approximately $448,000 and estimated lost rents of approximately $36,000. Insurance proceeds of approximately $332,000 were received during the year ended December 31, 1999 to cover the damages and lost rents, resulting in a casualty gain in 1999 of $210,000. The repairs were completed and an additional gain of approximately $121,000 was recorded during the three months ended March 31, 2001. 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, 2001, the Registrant had cash and cash equivalents of approximately $1,966,000 as compared to approximately $9,757,000 at March 31, 2000. The decrease in cash and cash equivalents of approximately $578,000 for the three months ended March 31, 2001, from the Partnership's calendar year end, is due to approximately $1,140,000 of cash used in financing activities and approximately $769,000 of cash used in investing activities which was partially offset by approximately $1,331,000 of cash provided by operating activities. Cash used in financing activities consisted primarily of partner distributions, loan costs related to the refinancing of the mortgages encumbering Old Salem Apartments and Foxfire Apartments and payments of principal made on the mortgages encumbering the Registrant's properties. Cash used in investing activities consisted of property improvements and replacements, partially offset by a settlement received for defective materials used in a construction project at The Lexington Green Apartments, net receipts from escrow accounts maintained by the mortgage lender, and insurance proceeds received for the fire at Woodland Village Apartments. The Partnership invests its working capital reserves in interest bearing accounts. 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 2001, the Partnership has budgeted approximately $40,000 for capital improvements, consisting primarily of floor covering and air conditioning unit replacements. The Partnership completed approximately $32,000 in capital expenditures at Millhopper Village Apartments for the three months ended March 31, 2001, consisting primarily of floor covering replacements. These improvements were funded from operations and replacement reserves. Foxfire Apartments: For 2001, the Partnership has budgeted approximately $73,000 for capital improvements, consisting primarily of floor covering replacement. The Partnership completed approximately $26,000 in capital expenditures at Foxfire Apartments for the three months ended March 31, 2001, consisting primarily of floor covering replacements. These improvements were funded from operations. Lake Johnson Mews Apartments: For 2001, the Partnership has budgeted approximately $66,000 for capital improvements, consisting primarily of floor covering replacements and interior building improvements. The Partnership completed approximately $18,000 in capital expenditures at Lake Johnson Mews Apartments for the three months ended March 31, 2001, consisting primarily of interior building improvement and floor covering replacements. These improvements were funded from replacement reserves. Woodland Village Apartments: For 2001, the Partnership has budgeted approximately $238,000 for capital improvements, consisting primarily of floor covering and appliance replacements. The Partnership completed approximately $168,000 in capital expenditures at Woodland Village Apartments for the three months ended March 31, 2001, consisting primarily of repairs related to the fire which occurred July 1999, interior building improvements, and floor covering replacements. These improvements were funded from operations and insurance proceeds. The Lexington Green Apartments: For 2001, the Partnership has budgeted approximately $332,000 for capital improvements, consisting primarily of floor covering and air conditioning unit repairs and interior building improvements. The Partnership completed approximately $35,000 in capital expenditures at The Lexington Green Apartments for the three months ended March 31, 2001, consisting primarily of cabinet replacements and floor covering replacements. These improvements were funded from operations. Tar River Estates Apartments: For 2001, the Partnership has budgeted approximately $441,000 for capital improvements, consisting primarily of air conditioning upgrades, floor covering replacements, and other exterior and interior building improvements associated with repairs required due to severe flood damage which occurred during September 1999. The Partnership completed approximately $617,000 in capital expenditures at Tar River Estates for the three months ended March 31, 2001, consisting primarily of floor covering replacements and other exterior and interior building improvements associated with repairs required due to severe flood damage which occurred during September 1999. These improvements were funded from replacement reserves and insurance proceeds. Old Salem Apartments: For 2001, the Partnership has budgeted approximately $154,000 for capital improvements, consisting primarily of air conditioning upgrades, floor covering replacements, and interior building improvements. The Partnership completed approximately $38,000 in capital expenditures at Old Salem Apartments for the three months ended March 31, 2001, consisting primarily of floor covering replacements and HVAC upgrades. These improvements were funded from operations. 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 $40,245,000 net of discount, is amortized over varying periods with required balloon payments ranging from November 15, 2002 to January 1, 2021. 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. On December 15, 2000, the Partnership refinanced the mortgage notes at The Lexington Green Apartments. Gross proceeds from refinancing were $7,020,000 of which approximately $3,272,000 was used to pay off the existing first and second mortgage notes. The new note requires monthly principal and interest payments at a fixed interest rate of 7.22% and matures January 1, 2021. The old debt carried fixed interest rates of 7.60% with maturities of November 15, 2002. During the three months ended March 31, 2001, cash distributions from operations of approximately $800,000 were paid (approximately $757,000 to the limited partners, or $14.41 per limited partnership unit). In connection with the transfer of funds from the majority owned sub-tier limited partnership to the Partnership, approximately $38,000 was distributed to the general partner of the majority owned sub-tier limited partnership. No distributions were paid to the partners during the three months ended March 31, 2000. Subsequent to March 31, 2001, the Partnership declared and paid a distribution from operations of approximately $610,000 (approximately $601,000 to the limited partners, or $11.44 per limited partnership unit) to the partners. 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 required capital improvement expenditures, to permit any additional distributions to its partners during the remainder of 2001 or subsequent periods. In addition, the Partnership may be restricted from making distributions by the requirement to deposit in the reserve account maintained by the mortgage lender for Tar River Estates a minimum of $400 and a maximum of $1,000 per apartment unit for a total of $160,800 to $402,000. As of March 31, 2001, the reserve account totaled approximately $162,000. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates own 36,768 limited partnership units in the Partnership representing 69.98% 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 acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of 69.98% 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 its affiliation with the Corporate General Partner. PART II - OTHER INFORMATION ITEM 1. 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, its 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 of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. 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 court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, 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 prior lead counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the Corporate General Partner and its affiliates filed a demurrer to the third amended complaint. The demurrer is scheduled to be heard on May 14, 2001. The Court has also scheduled a hearing on a motion for class certification for August 27, 2001. Plaintiffs must file their motion for class certification no later than June 15, 2001. 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: None. b) Reports on Form 8-K: None filed during the quarter ended March 31, 2001. 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, 2001