-----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, Uu81UCMHruJ5CBXdnau6tYwMNKZnrGfBWKtlqBBStYSv774tVDD8XldJCNllwnyC xKtrf66qNydSvQj91GlgPg== 0000712753-96-000003.txt : 19960712 0000712753-96-000003.hdr.sgml : 19960712 ACCESSION NUMBER: 0000712753-96-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960711 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: 1934 Act SEC FILE NUMBER: 000-11574 FILM NUMBER: 96593416 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 (As last amended by 34-32231, eff. 6/3/93.) 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, 1996 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) (Zip Code) 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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) SHELTER PROPERTIES V LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET (Unaudited) May 31, 1996 Assets Cash: Unrestricted $ 3,305,020 Restricted--tenant security deposits 391,984 Accounts receivable 25,633 Escrow for taxes and insurance 515,051 Restricted escrows 735,430 Other assets 559,968 Investment properties: Land $ 4,241,860 Buildings and related personal property 69,037,930 73,279,790 Less accumulated depreciation (35,895,416) 37,384,374 $42,917,460 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 189,808 Tenant security deposits 391,984 Accrued taxes 342,260 Other liabilities 574,016 Mortgage notes payable 28,606,370 Partners' (Deficit) Capital General partners $ (309,583) Limited partners (52,538 units issued and outstanding) 13,122,605 12,813,022 $42,917,460 See Accompanying Notes to Consolidated Financial Statements b) SHELTER PROPERTIES V LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended May 31, May 31, 1996 1995 1996 1995 Revenues: Rental income $2,972,767 $2,938,587 $5,973,022 $5,910,939 Other income 172,096 188,269 336,844 345,544 Casualty gains -- 181,845 -- 213,794 Total revenues 3,144,863 3,308,701 6,309,866 6,470,277 Expenses: Operating 1,007,657 1,020,967 1,992,731 1,978,009 General and administrative 107,139 159,254 181,249 244,764 Maintenance 458,727 450,739 833,322 765,736 Depreciation 754,224 712,799 1,494,009 1,414,360 Interest 669,112 694,493 1,347,599 1,392,034 Property taxes 205,342 200,443 407,412 390,412 Total expenses 3,202,201 3,238,695 6,256,322 6,185,315 Net (loss) income $ (57,338) $ 70,006 $ 53,544 $ 284,962 Net (loss) income allocated to general partners (1%) $ (573) $ 699 $ 535 $ 2,850 Net (loss) income allocated to limited partners (99%) (56,765) 69,307 53,009 282,112 $ (57,338) $ 70,006 $ 53,544 $ 284,962 Net (loss) income per limited partnership unit $ (1.08) $ 1.32 $ 1.01 $ 5.37 See Accompanying Notes to Consolidated Financial Statements
c) SHELTER PROPERTIES V LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS'(DEFICIT) CAPITAL (Unaudited)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 52,538 $ 2,000 $52,538,000 $52,540,000 Partners' (deficit) capital at November 30, 1995 52,538 $(310,118) $13,569,584 $13,259,466 Distributions paid to partners -- (499,988) (499,988) Net income for the six months ended May 31, 1996 535 53,009 53,544 Partners' (deficit) capital at May 31, 1996 52,538 $(309,583) $13,122,605 $12,813,022 See Accompanying Notes to Consolidated Financial Statements
d) SHELTER PROPERTIES V LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended May 31, 1996 1995 Cash flows from operating activities: Net income $ 53,544 $ 284,962 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,494,009 1,414,360 Amortization of discounts and loan costs 69,676 82,804 Casualty gains -- (213,794) Change in accounts: Restricted cash (33,256) (40,006) Accounts receivable 15,797 (6,062) Escrows for taxes and insurance (193,372) 136,935 Other assets 80,175 (60,826) Accounts payable (256,030) (104,764) Tenant security deposit liabilities 31,079 20,307 Accrued taxes 145,923 (113,758) Other liabilities (11,475) 20,255 Net cash provided by operating activities 1,396,070 1,420,413 Cash flows from investing activities: Property improvements and replacements (453,708) (653,134) Deposits to restricted escrows investments (54,731) (52,379) Receipts from restricted escrows 62,719 187,300 Insurance proceeds from property damage -- 13,974 Net cash used in investing activities (445,720) (504,239) Cash flows from financing activities: Payments on mortgage notes payable (401,483) (366,861) Partners' distributions (499,988) (252,036) Net cash used in financing activities (901,471) (618,897) Net increase in cash 48,879 297,277 Cash at beginning of period 3,256,141 3,245,424 Cash at end of period $3,305,020 $3,542,701 Supplemental disclosure of cash flow information: Cash paid for interest $1,277,923 $1,309,230 See Accompanying Notes to Consolidated Financial Statements
d) SHELTER PROPERTIES V LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS - continued (Unaudited) SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY Property Damage Accounts receivable and accounts payable were adjusted by $360,268 and $62,831, respectively, at May 31, 1995, for non-cash amounts in connection with property damage. Also, buildings and improvements and accumulated depreciation were adjusted by $146,340 and $62,697, respectively, in connection with the property damage which resulted in a casualty gain. 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 financial statements 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 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, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending November 30, 1996. 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, 1995. Cash and Cash Equivalents: Unrestricted - Unrestricted cash includes cash on hand and in banks, money market funds and Certificates of Deposit with original maturities of less than 90 days. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Restricted cash - tenant security deposits - The Partnership requires security deposits from lessees for the duration of the lease and such deposits are considered restricted cash. Deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Certain reclassifications have been made to the 1995 information to conform to the 1996 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. Note B - Reconciliation of Cash Flows - continued For the Six Months Ended May 31, 1996 1995 Net cash provided by operating activities $1,396,070 $1,420,413 Payments on mortgage notes payable (401,483) (366,861) Property improvements and replacements (453,708) (653,134) Change in restricted escrows, net 7,988 134,921 Changes in reserves for net operating liabilities 221,159 147,919 Insurance proceeds from property damage -- 13,974 Additional reserves (771,000) (735,000) Net cash used in operations $ (974) $ (37,768) The General Partner reserved an additional $771,000 at May 31, 1996, to fund continuing capital improvements and prepare for the possible refinancings of Woodland Village, Lake Johnson Mews and Millhopper Village. In 1995 the General Partner believed it to be in the best interest of the Partnership to reserve an additional $735,000 to fund continuing capital improvements at the seven 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 payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Balances and other transactions with Insignia Financial Group, Inc. and its affiliates in 1996 and 1995 are as follows: For the Six Months Ended May 31, 1996 1995 Property management fees $313,187 $307,558 Reimbursement for services of affiliates 104,218 102,750 Note C - Transactions with Affiliated Parties - continued The Partnership insures its properties under a master policy through an agency and 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 current year's master policy. The current agent assumed the financial obligations to the affiliate of the Corporate General Partner, who receives payments 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 is not significant. Note D - Contingencies The Corporate General Partner owns 100 Limited Partnership Units ("Units"). On or about April 26 and 27, 1995, six entities ("Affiliated Purchaser") affiliated with the Partnership commenced tender offers for limited partner interests in six limited partnerships, including the Partnership (collectively, the "Shelter Properties Partnerships"). On May 27, 1995, the Affiliated Purchaser acquired 13,171 units of the Partnership pursuant to the tender offer. On or about May 12, 1995, in the United States District Court for the District of South Carolina, certain limited partners of the Shelter Properties Partnerships commenced a lawsuit, on behalf of themselves, on behalf of a putative class of plaintiffs, and derivatively on behalf of the partnerships, challenging the actions taken by defendants (including Insignia, the acquiring entities and certain officers of Insignia) in the management of the Shelter Properties Partnerships and in connection with the tender offers and certain other matters. The plaintiffs alleged that, among other things: (i) the defendants intentionally mismanaged the partnerships and acted contrary to the limited partners' best interests by prolonging the existence of the partnerships in order to perpetuate the revenues derived by Insignia (an affiliate of the Corporate General Partner) and its affiliates from the partnerships, (ii) the defendants' actions reduced the demand for the partnerships' limited partner interests in the limited resale market by artificially depressing the trading prices for limited partners' interests in order to create a favorable environment for the tender offers; (iii) through the tender offers, the acquiring entities sought to acquire effective voting control over the partnerships while paying highly inadequate prices; and (iv) the documents disseminated to the class in connection with the tender offers contained false and misleading statements and omissions of material facts concerning such issues as the advantages to limited partners of tendering pursuant to the tender offers, the true value of the interest, the true financial condition of the partnerships, the factors affecting the likelihood that properties owned by the partnerships will be sold or liquidated in the near future, the liquidity and true value of the limited partner interests, the reasons for the limited secondary market for limited partner interests, and the true nature of the market for the underlying real estate assets owned by the partnerships, all in violation of the federal securities laws. Note D - Contingencies - continued On September 27, 1995, the parties entered into a stipulation to settle the matter. The principal terms of the stipulation require supplemental payments to tendering limited partners aggregating approximately $6 million to be paid by Affiliated Purchaser, of which approximately $2,084,000 is Shelter Properties V's portion; waiver by the Shelter Properties Partnership's general partners of any right to certain proceeds from a sale or refinancing of the partnerships' properties; some restrictions on Insignia's ability to vote the limited partner interests it acquired; payment of $1.25 million (which amount is divided among the various partnerships and acquiring entities) for plaintiffs' attorney fees and expenses in the litigation; and general releases of all the defendants. On June 24, 1996, after notice to the class and a hearing on the fairness and adequacy of notice and the terms of settlement, the court approved the settlement. If no appeal is taken within thirty days, the settlement will become effective. No class member appeared at the hearing to oppose the settlement and thus it appears that an appeal is unlikely. While approximately 60 unit holders opted out of the settlement, no more than 1% of the unit holders in any one of the Partnerships opted out. Note E - Casualty Gains The Partnership recorded a casualty gain during 1995 resulting from a fire at Woodland Village Apartments to the roof and interiors of four units. The damage resulted in a gain of $31,761 arising from proceeds from the Partnership's insurance carrier of $73,056 which exceeded the basis of the property plus expenses to replace the roof and interiors damaged. The Partnership also recorded a casualty gain at Old Salem Apartments resulting from a fire in the basement and interiors of nine units located within the same building. The damage resulted in a gain of $182,033 arising from proceeds from the Partnership's insurance carrier of $284,743 which exceeded the basis of the property plus expenses to replace the interiors of the building damaged. 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, 1996 and 1995: Average Occupancy 1996 1995 Foxfire Apartments Atlanta, Georgia 94% 96% Old Salem Apartments Charlottesville, Virginia 83% 92% Woodland Village Apartments Columbia, South Carolina 92% 94% Lake Johnson Mews Raleigh, North Carolina 95% 98% The Lexington Apartments Sarasota, Florida 96% 96% Millhopper Village Apartments Gainesville, Florida 98% 98% Tar River Estates Greenville, North Carolina 88% 90% The Corporate General Partner attributes the decrease in occupancy at Old Salem Apartments to the property billing utilities to the tenants. The Corporate General Partner believes occupancy will improve with the new tenants who will be willing to pay utilities in the near future. The Corporate General Partner attributes the decrease in occupancy at Lake Johnson Mews to new construction in the local area. The Partnership's net income for the six months ended May 31, 1996, was $53,544 with the second quarter having a net loss of $57,338. The Partnership reported net income of $284,962 and $70,006 for the corresponding periods of 1995. The decrease in net income for the six months and the increase in net loss for the three months ended May 31, 1996, is primarily due to the casualty gains of $213,794 recorded in 1995 which resulted from fires at Woodland Village and Old Salem Apartments. Also, other income decreased during the second quarter of 1996 as lease cancellation and cleaning and damage fees decreased as a result of tenants fulfilling lease obligations. Partially offsetting the decrease in income for the six months ended May 31, 1996, was a decrease in general and administrative expense due to a decrease in cost associated with the tender offers in 1995. The Partnership recorded a casualty gain during 1995 resulting from a fire to the roof and interiors of four units at Woodland Village Apartments. The damage resulted in a gain of $31,761 arising from proceeds from the Partnership's insurance carrier of $73,056 which exceeded the basis of the property plus expenses to replace the roof and interiors damaged. The Partnership also recorded a casualty gain at Old Salem Apartments resulting from a fire in the basement and interiors of nine units located within the same building. The damage resulted in a gain of $182,033 arising from proceeds from the Partnership's insurance carrier of $284,743 which exceeded the basis of the property plus expenses to replace the interiors of the building damaged. 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. At May 31, 1996, the Partnership reported unrestricted cash of $3,305,020 compared to $3,542,701 at May 31, 1995. Net cash provided by operating activities decreased as a result of the increase in the use of cash for accounts payable due to timing of payments to vendors. Net cash used in investing activities decreased as a result of a decrease in property improvements and replacements due to costs incurred as a result of the casualties in 1995. Offsetting this decrease was a decrease in net receipts from restricted escrows and insurance proceeds in 1996 as compared to 1995. Net cash used in financing activities increased due to an increase in partners' distributions and principal payments on mortgage notes payable in 1996. The Partnership has no material capital programs scheduled to be performed in 1996, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve account. 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 $28,606,370, net of discount, is amortized over varying periods with required balloon payments ranging from January 1, 1997, to December 10, 2016, at which time the properties will either be refinanced or sold. The Corporate General Partner is currently assessing the feasibility of refinancing the mortgages encumbering Woodland Village, Lake Johnson Mews and Millhopper Village. Future cash distributions will depend on the levels of net cash generated from operations, property sales, and the availability of cash reserves. During the six months ended May 31, 1996 and 1995, the Partnership made distributions of $499,988 and $252,036. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEDURES The Corporate General Partner owns 100 Limited Partnership Units ("Units"). On or about April 26 and 27, 1995, six entities ("Affiliated Purchaser") affiliated with the Partnership commenced tender offers for limited partner interests in six limited partnerships, including the Partnership (collectively, the "Shelter Properties Partnerships"). On May 27, 1995, the Affiliated Purchaser acquired 13,171 units of the Partnership pursuant to the tender offer. On or about May 12, 1995, in the United States District Court for the District of South Carolina, certain limited partners of the Shelter Properties Partnerships commenced a lawsuit, on behalf of themselves, on behalf of a putative class of plaintiffs, and derivatively on behalf of the partnerships, challenging the actions taken by defendants (including Insignia, the acquiring entities and certain officers of Insignia) in the management of the Shelter Properties Partnerships and in connection with the tender offers and certain other matters. The plaintiffs alleged that, among other things: (i) the defendants intentionally mismanaged the partnerships and acted contrary to the limited partners' best interests by prolonging the existence of the partnerships in order to perpetuate the revenues derived by Insignia (an affiliate of the Corporate General Partner) and its affiliates from the partnerships, (ii) the defendants' actions reduced the demand for the partnerships' limited partner interests in the limited resale market by artificially depressing the trading prices for limited partners interests in order to create a favorable environment for the tender offers; (iii) through the tender offers, the acquiring entities sought to acquire effective voting control over the partnerships while paying highly inadequate prices; and (iv) the documents disseminated to the class in connection with the tender offers contained false and misleading statements and omissions of material facts concerning such issues as the advantages to limited partners of tendering pursuant to the tender offers, the true value of the interest, the true financial condition of the partnerships, the factors affecting the likelihood that properties owned by the partnerships will be sold or liquidated in the near future, the liquidity and true value of the limited partner interests, the reasons for the limited secondary market for limited partner interests, and the true nature of the market for the underlying real estate assets owned by the partnerships, all in violation of the federal securities laws. On September 27, 1995, the parties entered into a stipulation to settle the matter. The principal terms of the stipulation require supplemental payments to tendering limited partners aggregating approximately $6 million to be paid by Affiliated Purchaser, of which approximately $2,084,000 is Shelter Properties V's portion; waiver by the Shelter Properties Partnership's general partners of any right to certain proceeds from a sale or refinancing of the partnerships' properties; some restrictions on Insignia's ability to vote the limited partner interests it acquired; payment of $1.25 million (which amount is divided among the various partnerships and acquiring entities) for plaintiffs' attorney fees and expenses in the litigation; and general releases of all the defendants. On June 24, 1996, after notice to the class and a hearing on the fairness and adequacy of notice and the terms of settlement, the court approved the settlement. If no appeal is taken within thirty days, the settlement will become effective. No class member appeared at the hearing to oppose the settlement and thus it appears that an appeal is unlikely. While approximately 60 unit holders opted out of the settlement, no more than 1% of the unit holders in any one of the Partnerships opted out. 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, 1996: 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 By:/s/Ronald Uretta Ronald Uretta Principal Financial Officer and Principal Accounting Officer Date: July 11, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties V Limited Partnership 1996 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000712753 SHELTER PROPERTIES V LIMITED PARTNERSHIP 1 6-MOS NOV-30-1996 MAY-31-1996 3,305,020 0 25,633 0 0 0 73,279,790 35,895,416 42,917,460 0 28,606,370 0 0 0 12,813,022 42,917,460 0 6,309,866 0 0 6,256,322 0 1,347,599 0 0 0 0 0 0 53,544 1.01 0 The Partnership has an unclassfied balance sheet.
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