-----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, O+SJzwcOm9VOI/p7q06rnWhD+/LWAH7YbGVEyt3tY78nNM6UvIVIfU8zOIjqhJ11 TKxee26d2ppLTJdDnTOJQg== 0000711642-98-000030.txt : 19980714 0000711642-98-000030.hdr.sgml : 19980714 ACCESSION NUMBER: 0000711642-98-000030 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980713 SROS: NONE 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: SC FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-11574 FILM NUMBER: 98665056 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FIN'L PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA CITY: GREENVILLE STATE: SC ZIP: 29603 FORMER COMPANY: FORMER CONFORMED NAME: SHELTER PROPERTIES V DATE OF NAME CHANGE: 19871022 10QSB 1 FORM 10-QSB--QUARTERLY 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 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1998 or [ ] 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 LIMITED PARTNERSHIP (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.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 Issuer's telephone number 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 LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) May 31, 1998 Assets Cash and cash equivalents $ 3,848 Receivables and deposits 928 Restricted escrows 1,054 Other assets 642 Investment properties: Land $ 4,242 Buildings and related personal property 71,420 75,662 Less accumulated depreciation (41,914) 33,748 $40,220 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 86 Tenant security deposit liabilities 392 Accrued property taxes 360 Other liabilities 445 Mortgage notes payable 31,315 Partners' Capital (Deficit) $ (326) General partners Limited partners (52,538 units issued and outstanding) 7,948 7,622 $40,220 See Accompanying Notes to Consolidated Financial Statements b) SHELTER PROPERTIES V LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data) Three Months Ended Six Months Ended May 31, May 31, 1998 1997 1998 1997 Revenues: Rental income $3,284 $3,107 $6,568 $6,198 Other income 230 230 433 440 Total revenues 3,514 3,337 7,001 6,638 Expenses: Operating 1,495 1,564 2,875 3,072 General and administrative 97 96 202 167 Depreciation 730 747 1,450 1,482 Interest 685 694 1,369 1,389 Property taxes 219 203 420 412 Total expenses 3,226 3,304 6,316 6,522 Net income $ 288 $ 33 $ 685 $ 116 Net income allocated to general partners (1%) $ 3 $ -- $ 7 $ 1 Net income allocated to limited partners (99%) 285 33 678 115 $ 288 $ 33 $ 685 $ 116 Net income per limited partnership unit $ 5.42 $ 0.63 $12.90 $ 2.19 See Accompanying Notes to Consolidated Financial Statements c) SHELTER PROPERTIES V LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (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) capital at November 30, 1997 52,538 $(333) $ 7,825 $ 7,492 Net income for the six months ended May 31, 1998 -- 7 678 685 Partners' distributions paid -- -- (555) (555) Partners' (deficit) capital at May 31, 1998 52,538 $(326) $ 7,948 $ 7,622 See Accompanying Notes to Consolidated Financial Statements d) SHELTER PROPERTIES V LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six Months Ended May 31, 1998 1997 Cash flows from operating activities: Net income $ 685 $ 116 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,450 1,482 Amortization of discounts and loan costs 90 89 Change in accounts: Receivables and deposits (202) (20) Other assets 97 (43) Accounts payable (59) (231) Tenant security deposit liabilities 30 29 Accrued property taxes 152 37 Other liabilities 9 (167) Net cash provided by operating activities 2,252 1,292 Cash flows from investing activities: Property improvements and replacements (409) (619) Withdrawals from restricted escrows 195 158 Net cash used in investing activities (214) (461) Cash flows from financing activities: Payments on mortgage notes payable (232) (214) Loan costs paid -- (12) Partners' distributions (1,305) (3,520) Net cash used in financing activities (1,537) (3,746) Net increase (decrease) in cash 501 (2,915) Cash and cash equivalents at beginning of period 3,347 6,103 Cash and cash equivalents at end of period $ 3,848 $ 3,188 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,280 $ 1,266 See Accompanying Notes to Consolidated Financial Statements e) SHELTER PROPERTIES V LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Shelter Properties V (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 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 six month period ended May 31, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending November 30, 1998. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended November 30, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. Note B - Reconciliation of Cash Flows The following is a reconciliation of the subtotal on the accompanying statements of cash flows captioned "net cash provided by operating activities" to "net cash used in operations," as defined in the Partnership Agreement. However, "net cash used in 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. Six Months Ended May 31, 1998 1997 (in thousands) Net cash provided by operating activities $ 2,252 $ 1,292 Payments on mortgage notes payable (232) (214) Property improvements and replacements (409) (619) Change in restricted escrows, net 195 158 Changes in reserves for net operating liabilities (27) 395 Additional reserves (1,779) (1,015) Net cash used in operations $ -- $ (3) At May 31, 1998, the Corporate General Partner reserved an additional $1,779,000 to fund continuing capital improvements and repairs at all of the properties. At May 31, 1997, the Corporate General Partner reserved an additional $699,000 to fund capital improvement projects at the three properties refinanced in November 1996, as required by the lender, along with funding continuing capital improvements and repairs at the four other 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 Corporate General Partner is wholly-owned by Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with Insignia Financial Group, Inc. and its affiliates were incurred in 1998 and 1997: Six Months Ended May 31, 1998 1997 (in thousands) Property management fees (included in operating expenses) $351 $330 Reimbursement for services of affiliates (included in general and administrative expenses and investment properties) (1) 126 156 (1) Included in "Reimbursements for Services of Affiliates" for 1998 and 1997 is approximately $4,000 and $39,000, in reimbursements for construction oversight costs. For the period of December 1, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the Corporate General Partner with an insurer unaffiliated with the Corporate General Partner. An affiliate of the Corporate General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Corporate General Partner, which receives payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Corporate General Partner by virtue of the agent's obligations was not significant. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the Corporate General Partner of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of seven apartment complexes. The following table sets forth the average occupancy of the properties for the quarters ended May 31, 1998 and 1997: Average Occupancy 1998 1997 Foxfire Apartments Atlanta, Georgia 93% 92% Old Salem Apartments Charlottesville, Virginia 94% 94% Woodland Village Apartments Columbia, South Carolina 91% 87% Lake Johnson Mews Raleigh, North Carolina 94% 93% The Lexington Apartments Sarasota, Florida 96% 97% Millhopper Village Apartments Gainesville, Florida 96% 93% Tar River Estates Greenville, North Carolina 97% 92% The Corporate General Partner attributes the increase in occupancy at Millhopper Village Apartments to exterior renovations. The increase in occupancy at Tar River Estates is attributable to a decrease in new construction in the submarket and to exterior and interior improvements completed over the last two years. The increase in occupancy at Woodland Village is a result of management's intensified marketing efforts. Results of Operations The Partnership's net income for the six months ended May 31, 1998, was approximately $685,000 compared to approximately $116,000 for the corresponding period in 1997. The Partnership reported net income of approximately $288,000 for the three months ended May 31, 1998, compared to net income of $33,000 for the corresponding period in 1997. The increase in net income is primarily attributable to an increase in rental income and a decrease in operating expenses. The increase in rental income is due predominately to the increase in average occupancy at five of the Partnership's seven properties. The decrease in operating expenses is due to a decrease in maintenance expenses due to preventative repairs to exterior patios and balconies which were performed at Lexington Green and extensive landscaping improvements at Foxfire, Lake Johnson Mews, Tar River Estates and The Lexington, all of which were performed in 1997. Offsetting the above increases in net income was an increase in general and administrative expenses due to increases in audit fees and general partner reimbursements. Included in operating expenses for the six months ended May 31, 1998 is approximately $55,000 of major repairs and maintenance comprised primarily of exterior building repairs, major landscaping and window coverings. For the six months ended May 31, 1997 operating expenses included approximately $233,000 of major repairs and maintenance comprised primarily of exterior building repairs, exterior painting, and major landscaping. As part of the ongoing business plan of the Partnership, 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 expenses. 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 Reserves At May 31, 1998, the Partnership had cash and cash equivalents of approximately $3,848,000 compared to approximately $3,188,000 at May 31, 1997. The net increase (decrease) in cash and cash equivalents for the six months ended May 31, 1998 and 1997 is $501,000 and $(2,915,000), respectively. Net cash provided by operating activities increased due to the increase in net income as discussed above, along with increases in accounts payable, accrued property taxes, and other liabilities due to the timing of payments to creditors. Offsetting the above is an increase in receivables and deposits as a result of an increase in tax and insurance escrows. Net cash used in investing activities decreased as a result of a decrease in property improvements and replacements and by an increase in withdrawals from reserved escrows. Net cash used in financing activities decreased as a result of a decrease in partners' distributions. Distributions were larger for the six months ended May 31, 1997 due to the distribution of excess funds from the refinancing of three properties in November 1996. 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 property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $31,315,000, net of discount, is amortized over varying periods with required balloon payments ranging from February 1, 1999, to November 1, 2003, at which time the properties will either be refinanced or sold. During the first six months of 1998 the Partnership distributed approximately $1,305,000 to the partners, $750,000 of which was accrued at November 30, 1997. The remaining $555,000 was from refinancing proceeds and accordingly was distributed entirely to the limited partners. The Partnership made a distribution during the corresponding period of 1997 of approximately $3,520,000. The Corporate General Partner anticipates making a distribution of approximately $1,000,000 during September or October of 1998. Future cash distributions will depend on the levels of net cash generated from operations, property sales, and the availability of cash reserves. Year 2000 The Partnership is dependent upon the Corporate General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The Corporate General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDING 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 complaint 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 its 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 as well as a recently announced agreement between Insignia and Apartment Investment and Management Company. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. The Corporate General Partner was only recently served with the complaint which it believes to be without merit, and intends to vigorously defend the action. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The Corporate General Partner believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition or operations of the Partnership. 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 filed during the quarter ended May 31, 1998: None. 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 LIMITED PARTNERSHIP By: Shelter Realty V Corporation Corporate General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President/Director By: /s/Ronald Uretta Ronald Uretta Vice President/Treasurer Date: July 13, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties V Limited Partnership 1998 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000712753 SHELTER PROPERTIES V LIMITED PARTNERSHIP 1,000 6-MOS NOV-30-1998 MAY-31-1998 3,848 0 0 0 0 0 75,662 (41,914) 40,220 0 31,315 0 0 0 7,622 40,220 0 7,001 0 0 6,316 0 1,369 0 0 0 0 0 0 685 12.90 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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