-----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, VabzGVOxGS813hAn2/y+yF7iYBbEBIHysxv5hpXcLfsrXmNQTGC5T1mgzxXaDRfq uKqnvkaEDdDXGb8icGmZ/A== 0000355804-98-000003.txt : 19980325 0000355804-98-000003.hdr.sgml : 19980325 ACCESSION NUMBER: 0000355804-98-000003 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980324 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES V CENTRAL INDEX KEY: 0000725614 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942918560 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-13083 FILM NUMBER: 98571367 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: POST OFFICE BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10KSB 1 FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) FORM 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the fiscal year ended December 31, 1997 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from.........to......... Commission file number 0-13083 CONSOLIDATED CAPITAL PROPERTIES V (Name of small business issuer in its charter) California 94-2918560 (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 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Units of Limited Partnership Interest (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year: $4,424,000 State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests, as of a specified date within the past 60 days: Market value information for the Registrant's partnership interests is not available. Should a trading market develop for these interests, it is the General Partner's belief that the aggregate market value of the voting partnership interests would not exceed $25,000,000. PART I ITEM 1. DESCRIPTION OF BUSINESS Consolidated Capital Properties V (the "Partnership" or "Registrant") was organized on June 30, 1983, as a limited partnership under the California Uniform Limited Partnership Act. On December 15, 1983, the Partnership registered with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933 (File No. 2-85850) and commenced a public offering for sale of $100,000,000 of Units, with the general partners' right to increase the offering to $200,000,000. The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The Partnership subsequently filed a Form 8-A Registration Statement with the SEC and registered its Units under the Securities Exchange Act of 1934 (File No. 0-13083) in March 1985. The sale of Units closed on December 6, 1984, with 180,037 Units sold at $250 each, or gross proceeds of approximately $45,009,000 to the Partnership. By the end of fiscal 1985, approximately 61% of the proceeds raised had been invested in eleven properties. Of the remaining 39%, 11% was required for organizational and offering expenses, sales commissions and acquisition fees, and 28% was retained in Partnership reserves for project improvements and working capital as required by the Partnership Agreement. The General Partner of the Partnership is ConCap Equities, Inc., a Delaware corporation (the "General Partner" or "CEI"). The principal place of business for the Partnership and for the General Partner is One Insignia Financial Plaza, Greenville, South Carolina 29602. The Partnership's primary business and only industry segment is real estate related operations. The Partnership was formed to acquire, own, operate and ultimately dispose of income-producing real properties for the benefit of its partners. At December 31, 1997, the Partnership owns three properties as described in "Item 2 - Description of Property." Previously, the Partnership disposed of eight properties. See "Item 6 - Management's Discussion and Analysis or Plan of Operations," for a discussion of Partnership liquidity and capital resources. The real estate business is highly competitive. The Registrant's real property investments are subject to competition from similar types of properties in the vicinities in which they are located and the Partnership is not a significant factor in its industry. In addition, various limited partnerships have been formed by related parties to engage in business which may be competitive with the Registrant. The Registrant has no employees. Management and administrative services are performed by affiliates of Insignia Financial Group, Inc. ("Insignia"), an affiliate of the General Partner. The property manager is responsible for the day-to-day operations of each property. The General Partner has also selected an affiliate of Insignia to provide real estate advisory and asset management services to the Partnership. As advisor, such affiliate provides all partnership accounting and administrative services, investment management, and supervisory services over property management and leasing. For a further discussion of property and partnership management, see "Item 12". Upon the Partnership's formation in 1983, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Group ("CCG"), a California general partnership, was the non-corporate general partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, CEI acquired CCEC's general partner interests in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing general partner in all 16 partnerships. The selection of CEI as the sole managing general partner was approved by a majority of the limited partners in the Partnership and in each of the Affiliated Partnerships pursuant to a solicitation of the Limited Partners dated August 10, 1990. As part of this solicitation, the Limited Partners also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership and approved conversion of the general partner interest of the non-corporate general partner, CCG, to that of a special limited partner ("Special Limited Partner") without voting and without other rights of a limited partner except for the economic interest previously held as a general partner. Pursuant to an amendment to the Partnership Agreement, the non-corporate general partner interest of CCG was converted to that of a Special Limited Partner and CEI became the sole general partner of the Partnership on December 31, 1991. Prior to December 1994 all of CEI's outstanding stock was owned by GII Realty, Inc. In December 1994, the parent of GII Realty, Inc., entered into a transaction (the "Insignia Transaction") in which an affiliate of Insignia Financial Group, Inc. ("Insignia") acquired an option (exercisable in whole or in part from time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that stock. As a part of the Insignia Transaction, the Insignia affiliate also acquired all of the outstanding stock of Partnership Services, Inc., an asset management entity, and an affiliate of Insignia acquired all of the outstanding stock of Coventry Properties, Inc., a property management entity. In addition, confidentiality, non-competition, and standstill arrangements were entered into between certain of the parties. Those arrangements, among other things, prohibit GII Realty's former sole shareholder from purchasing Partnership Units for a period of three years. On October 24, 1995, the Insignia affiliate exercised the remaining portion of its option to purchase all of the remaining outstanding capital stock of GII Realty, Inc. All of CEI's outstanding stock is now owned by Insignia Properties Trust, an affiliate of Insignia. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, 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 General Partner of the Partnership. During December 1997, Insignia affiliates (the "Purchaser") commenced tender offers for limited partnership interests in ten real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 70,000 of the outstanding units of limited partnership interest in the Partnership, at $30 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 19, 1997 (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on December 19, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. In addition, because of these conflicts of interest, including as a result of the Purchaser's affiliation with various Insignia affiliates that provide property management services to the Partnership's properties, the manner in which the Purchaser votes its limited partner interests in the Partnership may not always be consistent with the best interests of the other limited partners. During February 1998, the tender offers were completed and Insignia Properties, L.P., an affiliate of Insignia, tendered 43,795.8 units of limited partnership interest in the Partnership. As a result, Insignia Properties, L.P. owns 44,005.8 units as of February 1998. ITEM 2. DESCRIPTION OF PROPERTY The Partnership originally acquired eleven properties, of which seven were sold, and one has been foreclosed upon by the lender in years prior to 1997. As of December 31, 1997, the Partnership owned two apartment complexes and one office building as described below:
Date of Property Purchase Type of Ownership Use Aspen Ridge Apartments 08/09/84 Fee ownership subject Apartment - West Chicago, Illinois to first mortgage 253 units Sutton Place Apartments 07/06/84 Fee ownership subject Apartment - Corpus Christi, Texas to first mortgage 201 units 51 North High Building 12/20/84 Fee ownership subject Office Bldg. Columbus, Ohio to first mortgage approximately 86,000 sq.ft.
SCHEDULE OF PROPERTIES: (dollar amounts in thousands)
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis Aspen Ridge $ 8,301 $ 5,419 5-19 years S/L $3,057 Sutton Place 5,972 3,887 5-19 years S/L 2,774 51 North High 6,720 4,751 3-19 years S/L 3,243 Totals $20,993 $14,057 $9,074 See "Note A" of the Consolidated Financial Statements included in "Item 7" for a description of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES: (dollar amounts in thousands) Principal Principal Balance At Balance December 31, Interest Maturity Due At Property 1997 Rate Date Maturity Aspen Ridge $ 5,750 7.33% 11/03 $ 5,750 Sutton Place 2,772 9.125% 10/03 2,581 51 North High 2,623 9.0% 06/04 1,687 $11,145 The Partnership restructured the debt on the 51 North High Building and made a principal prepayment (without penalty) of $700,000 in January 1996. In addition to this payment, the lender reduced the note's face amount by an additional $700,000 and the stated interest rate of the note was reduced from 13.5% to 9%. The maturity date of June 1, 2004, was unchanged. The debt restructuring was accounted for as a modification of terms. The total future cash payments under the restructured loan exceed the carrying value of the loan as of the date of restructure. Consequently, the carrying amount of the loan was reduced only by the $700,000 principal prepayment actually paid with no gain being recognized on the restructuring. Interest on the restructured debt accrues at an imputed rate of 4%, the rate required to equate the present value of the total future cash payments under the new terms to the carrying amount of the loan at the date of restructure. To facilitate the debt restructuring of the 51 North High Street Building in 1996, the property was placed into a lower-tier partnership known as 51 North High Street, L.P., a wholly-owned subsidiary of the Partnership. The Partnership retained substantially all economic benefits from the property. In July 1996, to facilitate the refinancing of the first mortgage indebtedness secured by the Sutton Place Apartments, the property was transferred to a lower- tier partnership known as Sutton Place CCPV, L.P., a wholly-owned subsidiary of the Partnership. The Partnership retained substantially all economic benefits from the property. Under the terms of the refinancing agreement which was completed in September 1996, the new $2,800,000 mortgage note which bears interest at 9.125% and matures in October 2003, replaced the previous mortgage note of approximately $2,200,000. As a result of the refinancing, the Partnership incurred a $22,000 prepayment penalty which resulted in an extraordinary loss on refinancing. In conjunction with the refinancing, a capital improvement reserve of approximately $164,000 was established and approximately $102,000 in loan costs were incurred. These loan costs are included in other assets and are being amortized over the term of the loan. In November 1996, the Partnership refinanced the mortgage encumbering Aspen Ridge Apartments. The total mortgage indebtedness of approximately $5,016,000 on the previous note was carried at a stated interest rate of 9.88%. The new mortgage indebtedness of $5,750,000 carries a stated interest rate of 7.33% with a balloon payment due November 1, 2003. An extraordinary loss on refinancing of approximately $253,000 was realized in 1996 due to the payment of approximately $126,000 in prepayment penalties and a loss of approximately $127,000 on the write-off of unamortized loan costs. In conjunction with the refinancing, a capital improvement reserve of approximately $588,000 was established and approximately $126,000 in loan costs were incurred. Additional loan costs of $9,000 were incurred during the first quarter of 1997. These loan costs are included in other assets and are being amortized over the term of the loan. SCHEDULE OF RENTAL RATES AND OCCUPANCY: Average Annual Average Rental Rates Occupancy Property 1997 1996 1997 1996 Aspen Ridge $8,153 $7,852 95% 93% Sutton Place 6,013 5,801 94% 93% 51 North High 14.74 14.23 95% 89% The average annual rental rate for 51 North High Street is per square foot. The rate is per unit for the apartment properties. The General Partner attributes the increase in occupancy at 51 North High to existing tenants leasing additional space and the addition of new tenants. As noted under "Item 1. Description of Business," the real estate industry is highly competitive. All of the Partnership's properties are subject to competition from other retail centers and apartment complexes in the area. The General Partner believes that all of the properties are adequately insured. The multifamily residential properties' lease terms are for one year or less. No residential tenant leases 10% or more of the available rental space. The following is a schedule of lease expirations for the years 1998-2007 (dollar amounts in thousands): Number of % of Gross Expirations Square Feet Annual Rent Annual Rent 51 North High 1998 2 4,665 $ 79 6.6% 1999 4 72,592 1,015 85.0% 2000 2 2,217 41 3.4% 2001-2002 0 -- -- -- 2003 1 1,785 28 2.4% 2004-2006 0 -- -- -- 2007 1 1,733 31 2.6% The following schedule presents information on tenants leasing 10% or more of the leasable square footage for 51 North High: Square Footage Annual Rent Per Lease Nature of Business Leased Square Foot Expiration Government Agency 54,666 $14.48 6/30/99 Bank 14,306 12.35 5/31/99 SCHEDULE OF REAL ESTATE TAXES AND RATES: (dollar amounts in thousands): 1997 1997 Billings Rate Aspen Ridge Apartments (1) $ 243 8.5% Sutton Place Apartments 147 3.0% 51 North High Building 70 5.4% (1) Estimate is based on 1996 billing, since 1997 bill has not been received. ITEM 3. LEGAL PROCEEDINGS The Partnership is unaware of any pending or outstanding litigation that is not of a routine nature. The General Partner of the Partnership 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the year ended December 31, 1997, no matters were submitted to a vote of the security holders through the solicitation of proxies or otherwise. PART II ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED SECURITY HOLDER MATTERS (A) No established public trading market for the Partnership's Units exists nor is one expected to develop. (B) Title of Class Number of Unit Holders of Record 179,537 Limited Partnership Units 5,212 as of December 31, 1997 There were no cash distributions to the Partners during 1997 or 1996. No distributions are expected to be made in 1998 since the Partnership's working capital reserves did not meet the 5% of Net Invested Capital requirement. Cumulative distributions to the Limited Partners since the inception of the Partnership totaled approximately $9,800,000 at December 31, 1997. See also "Item 6 - Management's Discussion and Analysis of Financial Condition and Results of Operations." ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. Results of Operations The Partnership had a net loss of approximately $411,000 for the year ended December 31, 1997 compared to approximately $1,152,000 for the corresponding period in 1996. The decrease in net loss is primarily due to increases in rental income and other income and decreases in general and administrative, depreciation and interest expenses. These decreased expenses were partially offset by increased property taxes. Rental income increased due to rental rate increases at the Partnership's investment properties and due to higher occupancy levels at all of the Partnership's investment properties. Other income also increased due to increases in interest income. Interest income increased primarily as a result of interest earned on capital improvement and reserve escrows for the Aspen Ridge Apartment. These escrow accounts increased due to the 1996 refinancing requirements. General and administrative costs decreased due to additional fees in 1996 related to the 1995 sale of Fourth & Race and legal costs resulting from the 1996 loan modification of the 51 North High Street Building. The decrease in interest expense is due to a principal payment of $700,000 on the debt secured by the 51 North High Street Building in 1996. Additionally, the interest rate on the debt was reduced. In addition, the mortgage notes secured by Sutton Place Apartments and Aspen Ridge Apartments were refinanced during 1996 at lower interest rates. The decrease in depreciation expense is primarily due to assets totaling approximately $5,000,000 becoming fully depreciated in 1996. The increase in property taxes is due to the increase in the assessed value at Sutton Place Apartments. The $275,000 loss on refinancing relates to the refinancing of Sutton Place Apartments during the third quarter of 1996 and the refinancing of Aspen Ridge Apartments during the fourth quarter of 1996. Through the Sutton Place refinancing, a new $2,800,000 mortgage note, which bears interest at 9.125% and matures in October of 2003, was obtained. As a result of the refinancing, the Partnership incurred a $22,000 prepayment penalty, which resulted in an extraordinary loss on refinancing. The Aspen Ridge refinancing resulted in a $5,750,000 new mortgage note with interest only payments bearing a 7.33% rate and maturing in November of 2003. The Partnership realized an extraordinary loss on refinancing due to the payment of a prepayment penalty of approximately $126,000 and approximately $127,000 on the write-off of unamortized loan costs. Included in operating expenses for the year ended December 31, 1997 is approximately $175,000 of major repairs and maintenance comprised primarily of gutter repairs, exterior building improvements and exterior painting. Included in operating expenses for the year ended December 31, 1996 is approximately $353,000 of major repairs and maintenance comprised primarily of gutter repairs, exterior building improvements and exterior painting. As part of the ongoing business plan of the Partnership, the 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 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 General Partner will be able to sustain such a plan. Liquidity and Capital Resources At December 31, 1997, the Partnership held cash and cash equivalents of approximately $574,000 compared to approximately $292,000 at December 31, 1996. The net increase (decrease) in cash and cash equivalents for the years ended December 31, 1997 and 1996 is $282,000 and ($786,000), respectively. Net cash provided by operating activities increased due to the timing of payments of operating expenses out of accounts payable, the decrease in net loss, as discussed above, and the decrease in prepaid rental payments included in other liabilities. Net cash used in investing activities decreased primarily due to receipts from the capital improvement escrow for capital improvements. This decrease is partially offset by increases in property additions at the Aspen Ridge Apartments for roof replacements and for installation of an alarm system. There was also an increase in property additions at the Sutton Place Apartments for exterior capital improvements to the property. Net cash used in financing activities increased primarily due to the refinancing of the Sutton Place Apartments and the Aspen Ridge Apartment mortgages in 1996 as discussed above. The Partnership is required to maintain working capital reserves for normal repairs, replacements, working capital and contingencies of not less than 5% of Net Invested Capital as defined in the Partnership Agreement. In the event expenditures are made from these reserves, operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Cash and cash equivalents, tenant security deposits and investments totaling approximately $741,000, are less than the reserve requirement of approximately $1,760,000 at December 31, 1997. The Partnership intends to replenish the working capital reserve from cash flow from operations after consideration of any capital improvement needs of the properties. The Partnership's recent cash flows from operations, however, have not been sufficient to replenish the reserve and there is no assurance that future levels of cash flow from operations will be adequate to accomplish this objective. The working capital requirement must be met prior to any distributions to the partners. 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 properties to adequately maintain the physical assets and meet other operating needs of the Partnership. The mortgage indebtedness of approximately $11,145,000, matures at various times with balloon payments due at maturity, at which time the properties will either be refinanced or sold. Future cash distributions will depend on the levels of net cash generated from operations, capital expenditure requirements, property sales and the availability of cash reserves. No distributions were declared or paid during 1997 or 1996. Year 2000 The Partnership is dependent upon the 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 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 annual 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 annual 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. ITEM 7. FINANCIAL STATEMENTS CONSOLIDATED CAPITAL PROPERTIES V LIST OF FINANCIAL STATEMENTS Report of Ernst & Young LLP, Independent Auditors Consolidated Balance Sheet - December 31, 1997 Consolidated Statements of Operations - Years ended December 31, 1997 and 1996 Consolidated Statements of Changes in Partners Deficit - Years ended December 31, 1997 and 1996 Consolidated Statements of Cash Flows - Years ended December 31, 1997 and 1996 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Consolidated Capital Properties V We have audited the accompanying consolidated balance sheet of Consolidated Capital Properties V as of December 31, 1997, and the related consolidated statements of operations, changes in partners' deficit and cash flows for each of the two years in the period ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Consolidated Capital Properties V at December 31, 1997, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ ERNST & YOUNG LLP Greenville, South Carolina January 29, 1998, except for Note J, as to which the date is March 17, 1998 CONSOLIDATED CAPITAL PROPERTIES V CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 1997 Assets Cash and cash equivalents $ 574 Investments 104 Receivables and deposits 457 Restricted escrows 447 Other assets 298 Investment properties: Land $ 1,969 Buildings and personal property 19,024 20,993 Less accumulated depreciation (14,057) 6,936 $ 8,816 Liabilities and Partners' Deficit Liabilities Accounts payable $ 159 Tenant security deposit liabilities 62 Accrued property taxes 465 Other liabilities 159 Mortgage notes payable 11,145 Partners' Deficit General partner $ (21) Special limited partners (52) Limited partners (179,537.20 units issued and outstanding) (3,101) (3,174) $ 8,816 See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES V CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data) Years Ended December 31, 1997 1996 Revenues: Rental income $ 4,220 $ 3,985 Other income 204 167 Total revenues 4,424 4,152 Expenses: Operating 2,281 2,304 General and administrative 186 250 Depreciation 1,098 1,143 Interest 818 959 Property taxes 452 373 Total expenses 4,835 5,029 Loss before extraordinary item (411) (877) Extraordinary item - loss on early extinguishment of debt -- (275) Net loss $ (411) $(1,152) Net loss allocated to general partners (.2%) $ (1) $ (2) Net loss allocated to limited partners (99.8%) (410) (1,150) $ (411) $(1,152) Per limited partnership unit: Loss before extraordinary item $ (2.28) $ (4.87) Extraordinary item -- (1.53) Net loss per limited partnership unit $ (2.28) $ (6.40) See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES V CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (in thousands, except unit data)
Limited Special Partnership General Limited Limited Units Partner Partners Partners Total Original capital contributions 180,037 $ 1 $ -- $45,009 $45,010 Partners' deficit at December 31, 1995 179,537.20 $ (18) $ (56) $(1,537) $(1,611) Amortization of timing differences -- -- 2 (2) -- Net loss for the year ended December 31, 1996 -- (2) -- (1,150) (1,152) Partners' deficit at December 31, 1996 179,537.20 (20) (54) (2,689) (2,763) Amortization of timing difference (Note D) -- -- 2 (2) -- Net loss for the year ended December 31, 1997 -- (1) -- (410) (411) Partners' deficit at December 31, 1997 179,537.20 $ (21) $ (52) $(3,101) $(3,174) See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES V CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 1997 1996 Cash flows from operating activities: Net loss $ (411) $(1,152) Adjustments to reconcile net loss to net activities: cash provided by operating activities: Depreciation 1,098 1,143 Amortization of lease commissions, discounts, loan costs and debt forgiveness (14) 136 Loss on disposal of property 43 -- Interest added to mortgage note payable -- 2 Extraordinary loss on refinancing -- 275 Change in accounts: Receivables and deposits (80) 8 Other assets (66) (11) Accounts payable 75 (145) Tenant security deposit liabilities (33) (22) Accrued property taxes 59 76 Other liabilities 8 (95) Net cash provided by operating activities 679 215 Cash flows from investing activities: Property improvements and replacements (786) (294) Net decrease (increase) in restricted escrows 457 (828) Proceeds from sale of investments -- 100 Dividends received on investments 3 -- Net cash used in investing activities (326) (1,022) Cash flows from financing activities: Payments on mortgage notes payable (62) (212) Repayment of mortgage note payable -- (7,941) Proceeds from long-term borrowings -- 8,550 Loan costs paid (9) (228) Prepayment penalty -- (148) Net cash (used in) provided by financing activities (71) 21 Net increase (decrease) in cash and cash equivalents 282 (786) Cash and cash equivalents at beginning of period 292 1,078 Cash and cash equivalents at end of period $ 574 $ 292 Supplemental disclosure of cash flow information: Cash paid for interest $ 783 $ 889 See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES V NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Consolidated Capital Properties V, a California limited partnership (the "Partnership" or "Registrant"), was formed on June 30, 1983, to acquire and operate commercial and residential properties. As of December 31, 1997, the Partnership owns two residential properties and one commercial property located in or near major urban areas in the United States. At the time of the Partnership's formation in 1983, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Group ("CCG"), a California general partnership, was the non-corporate general partner. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. As part of its reorganization plan, ConCap Equities, Inc., (the "General Partner" or "CEI") acquired CCEC's general partner interests in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing general partner in all 16 partnerships. As part of the solicitation for approval of CEI as general partner, the limited partners also approved the conversion of CCG from a general partner to a special limited partner, thereby leaving CEI as the sole general partner of the Partnership. Prior to December 1994 all of CEI's outstanding stock was owned by GII Realty, Inc. In December 1994, the parent of GII Realty, Inc., entered into a transaction (the "Insignia Transaction") in which among other things, an affiliate of Insignia Financial Group, Inc. ("Insignia") acquired an option (exercisable in whole or in part from time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that stock. As a part of the Insignia Transaction, the Insignia affiliate acquired all of the outstanding stock of Partnership Services, Inc., an asset management entity and an affiliate of Insignia acquired all of the outstanding stock of Coventry Properties, Inc., a property management entity. In addition, confidentiality, non-competition, and standstill arrangements were entered into between certain of the parties. Those arrangements, among other things, prohibit GII Realty's former sole shareholder from purchasing Partnership Units for a period of three years. On October 24, 1995, the Insignia affiliate exercised the remaining portion of its option to purchase all of the remaining outstanding capital stock of GII Realty, Inc. All of CEI's outstanding stock is now owned by Insignia Properties Trust, an affiliate of Insignia. The principal place of business for the Partnership and for the General Partner is One Insignia Financial Plaza, Greenville, South Carolina. Principles of Consolidation The Partnership's consolidated financial statements include the accounts of its lower-tier limited partnerships (Aspen Ridge Associates, Ltd., Sutton Place CCPV, L.P. and 51 North High Street, L.P.). At December 31, 1997, the General Partner's interest in each of these three limited partnerships was transferred to three wholly owned (by the Registrant) Limited Liability Companies making the limited partnerships wholly owned by the Registrant. All significant interpartnership balances have been eliminated. Investment Properties Investment properties are stated at cost. Acquisition fees are capitalized as a cost of real estate. The Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. For the years ended December 31, 1997 and 1996, no adjustments for impairment of value were recorded. Depreciation Buildings and improvements are depreciated on the straight-line method over the estimated useful lives of the assets, ranging from 3 to 19 years. Tenant improvements are depreciated over the term of the respective lease. Cash and cash equivalents Includes cash on hand and in banks, demand deposits and money market funds with original maturities of ninety days or less. At certain times the amount of cash deposited at a bank may exceed the limit on insured deposits. Tenant Security Deposits The Partnership requires security deposits from lessees for the duration of the lease and such deposits, totaling approximately $63,000 at December 31, 1997, are included in receivables and deposits. The security deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Restricted Escrows Aspen Ridge maintains a repair and maintenance escrow, included in restricted escrows, of approximately $85,000 at December 31, 1997. Aspen Ridge and Sutton Place hold capital improvement reserves of approximately $315,000 and $47,000, respectively, at December 31, 1997, which were established in the 1996 refinancing (see "Note E - Mortgage Notes Payable"). These escrows are included in restricted escrows. Investments The Partnership has adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Investments, consisting primarily of U.S. Treasury notes with original maturities more than ninety days, are considered to be held- to-maturity securities. As the Investments' fair value approximate their cost, any unrealized gains or losses are immaterial and therefore have not been recorded in the accompanying financial statements. The cost of Investments sold is determined using the specific identification method. The Investments mature as follows (dollar amounts in thousands): Description Cost Maturity U.S. Treasury Notes $ 100 February 1998 Equity Securities 4 N/A $ 104 Fair Value of Financial Instruments The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The fair value of the Partnership's long term debt, after discounting the scheduled loan payments at an estimated borrowing rate currently available to the Partnership approximates its carrying value. Rental Income The Partnership leases its residential property under short-term operating leases. Lease terms are generally one year or less in duration. Commercial office property leases vary from one to ten years. For leases with scheduled rental increases, rental income is recognized on a straight-line basis over the life of the applicable leases. Loan Costs Loan costs are amortized using the straight-line method over the terms of the related mortgage notes. Unamortized loan costs are included in other assets. Lease Commissions Lease commissions are capitalized and amortized using the straight-line method over the term of the applicable lease. Unamortized lease commissions are included in other assets. Allocation of Net Income and Net Loss The Partnership Agreement provides for net income and net losses for both financial and tax reporting purposes to be allocated 99.8% to the Limited Partners and .2% to the General Partner. Advertising Costs Advertising costs of approximately $87,000 in 1997 and $63,000 in 1996 are charged to expenses as incurred and are included in operating expenses. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - RELATED PARTY TRANSACTIONS The Partnership has no employees and is dependent on the General Partner and affiliates of Insignia for the management and administration of all of the Partnership activities, as provided for in the Partnership agreement. The Partnership has paid property management fees based upon collected gross rental revenues for property management services in each of the years ended December 31, 1997 and 1996. Property management fees of approximately $215,000 and $204,000 were paid to affiliates of the General Partner for each of the years ended December 31, 1997 and 1996, respectively. These fees are included in operating expenses. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. Reimbursements for services of affiliates of approximately $151,000 and $158,000 were paid to the General Partner and its affiliates during each of the years ended December 31, 1997 and 1996, respectively. Included in these reimbursements are approximately $33,000 and $4,000 of construction oversight reimbursement in 1997 and 1996, respectively. These reimbursements are primarily included in operating, general and administrative expenses and investment properties. During the year ended December 31, 1997 and 1996, respectively, the Partnership paid affiliates of the General Partner approximately $5,500 and $36,000 for loan costs which were capitalized and included in other assets in the accompanying Consolidated Balance Sheet. These loan costs related to the refinancing of the Aspen Ridge Apartments. Additionally, the Partnership paid $69,000 and $9,000 to affiliates of the general partner for lease commissions on the Partnership's commercial property. These lease commissions are included in other assets and amortized over the term of the respective leases. For the period from January 1, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the 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 General Partner who received payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. During December 1997, Insignia affiliates (the "Purchaser") commenced tender offers for limited partnership interests in ten real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 70,000 of the outstanding units of limited partnership interest in the Partnership, at $30 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 19, 1997 (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on December 19, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. In addition, because of these conflicts of interest, including as a result of the Purchaser's affiliation with various Insignia affiliates that provide property management services to the Partnership's properties, the manner in which the Purchaser votes its limited partner interests in the Partnership may not always be consistent with the best interests of the other limited partners. During February 1998, the tender offers were completed and Insignia Properties, L.P., an affiliate of Insignia, tendered 43,795.8 units of limited partnership interest in the Partnership. As a result, Insignia Properties L.P. owns 44,005.8 units. NOTE C - COMMITMENT The Partnership is required to maintain working capital reserves for normal repairs, replacements, working capital and contingencies of not less than 5% of Net Invested Capital as defined in the Partnership Agreement. In the event expenditures are made from these reserves, operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Cash and cash equivalents, tenant security deposits and investments totaling approximately $741,000, are less than the reserve requirement of approximately $1,760,000 at December 31, 1997. The Partnership intends to replenish the working capital reserve from cash flow from operations after consideration of any capital improvement needs of the properties. The Partnership's recent cash flows from operations, however, have not been sufficient to replenish the reserve and there is no assurance that future levels of cash flow from operations will be adequate to accomplish this objective. The working capital requirement must be met prior to any distributions to the partners. NOTE D - CHANGE IN STATUS OF NON-CORPORATE GENERAL PARTNER In the year ended December 31, 1991, the Partnership Agreement was amended to convert the General Partner interests held by the non-corporate General Partner, CCG, to that of special limited partners ("Special Limited Partners"). The Special Limited Partners do not have a vote and do not have any of the other rights of a Limited Partner except the right to inspect the Partnership's books and records; however, the Special Limited Partners will retain the economic interest in the Partnership which it previously owned as general partner. CEI became the sole general partner of the Partnership effective December 31, 1991. In connection with CCG's conversion, a special allocation of gross income was made to the Special Limited Partners in order to eliminate their tax basis negative capital account. After the conversion, the various owners of interests in the Special Limited Partners transferred portions of their interests to CEI so that CEI now holds a 2% interest in all allocable items of income, loss and distribution. The difference between the Special Limited Partners' capital accounts for financial statement and tax reporting purposes is being amortized to the Limited Partners' capital accounts as the components of the timing differences which created the balance reverse. NOTE E - MORTGAGE NOTES PAYABLE The principle terms of mortgage notes payable are as follows (dollar amounts in thousands): Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At Property 1997 Interest Rate Date Maturity Aspen Ridge $ 5,750 $ 35 7.33% 11/03 $5,750 Sutton Place 2,772 23 9.125% 10/03 2,581 51 North High 2,623 19 9.0% 06/04 1,687 $11,145 $ 77 Scheduled maturities of principal are as follows (dollars in thousands): Years Ending December 31, 1998 $ 157 1999 165 2000 173 2001 182 2002 191 Thereafter 10,277 $11,145 The Partnership restructured the debt on the 51 North High Building and made a principal prepayment (without penalty) of $700,000 in January 1996. In addition to this payment, the lender reduced the note's face amount by an additional $700,000 and the stated interest rate of the note was reduced from 13.5% to 9%. The maturity date of June 1, 2004, was unchanged. The debt restructuring was accounted for as a modification of terms. The total future cash payments under the restructured loan exceed the carrying value of the loan as of the date of restructure. Consequently, the carrying amount of the loan was reduced only by the $700,000 principal prepayment actually paid with no gain being recognized on the restructuring. Interest on the restructured debt accrues at an imputed rate of 4%, the rate required to equate the present value of the total future cash payments under the new terms to the carrying amount of the loan at the date of restructure. To facilitate the debt restructuring of the 51 North High Street Building in 1996, the property was placed into a lower-tier partnership known as 51 North High Street, L.P. a wholly-owned subsidiary of the Partnership. The Partnership retained substantially all economic benefits from the property. In July 1996, to facilitate the refinancing of the first mortgage indebtedness secured by the Sutton Place Apartments, the property was transferred to a lower- tier partnership known as Sutton Place CCPV, L.P., a wholly-owned subsidiary of the Partnership. The Partnership retained substantially all economic benefits from the property. Under the terms of the refinancing agreement which was completed in September 1996, the new $2,800,000 mortgage note which bears interest at 9.125% and matures in October 2003, replaced the previous mortgage note of approximately $2,200,000. As a result of the refinancing, the Partnership incurred a $22,000 prepayment penalty which resulted in an extraordinary loss on refinancing. In conjunction with the refinancing, a capital improvement reserve of approximately $164,000 was established and approximately $102,000 in loan costs were incurred. These loan costs are included in other assets and will be amortized over the term of the loan. In November 1996, the Partnership refinanced the mortgage encumbering Aspen Ridge Apartments. The total mortgage indebtedness of approximately $5,016,000 on the previous note was carried at a stated interest rate of 9.88%. The new mortgage indebtedness of $5,750,000 carries a stated interest rate of 7.33% with a balloon payment due November 1, 2003. An extraordinary loss on refinancing of approximately $253,000 was realized in 1996 due to the payment of approximately $126,000 in prepayment penalties and a loss of approximately $127,000 on the write-off of unamortized loan costs. In conjunction with the refinancing, a capital improvement reserve of approximately $588,000 was established and approximately $126,000 in loan costs were incurred. Additional loan costs of $9,000 were incurred during the first quarter of 1997. These loan costs are included in other assets and will be amortized over the term of the loan. NOTE F - OPERATING LEASES Tenants of 51 North High are responsible for their own utilities and maintenance of their space and payment of their proportionate share of common area maintenance, utilities, insurance and real estate taxes. A portion of the real estate taxes, insurance, and common area maintenance expenses are paid directly by the Partnership. The Partnership is then reimbursed by the tenants for their proportionate share. The future minimum rental payments to be received under operating leases that have initial or remaining noncancellable lease terms in excess of one year as of December 31, 1997, are as follows (in thousands): Years Ending December 31, 1998 $1,166 1999 648 2000 119 2001 83 2002 62 Thereafter 135 $2,213 NOTE G - MAJOR TENANTS Rents from tenants exceeding 10% of rental income in 1997 or 1996 were as follows (dollar amounts in thousands): 1997 1996 Amount Percent Amount Percent Government Agency $ 723 17% $ 737 18% NOTE H - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (dollar amounts in thousands) Initial Cost To Partnership Buildings Cost and Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition Aspen Ridge $ 5,750 $ 593 $ 6,383 $1,325 Sutton Place 2,772 905 4,091 976 51 North High 2,623 561 5,157 1,002 Totals $11,145 $2,059 $15,631 $3,303
Gross Amount At Which Carried At December 31, 1997 Buildings And Related Personal Accumulated Date Depreciable Description Land Property Total Depreciation Acquired Life-Years Aspen Ridge $ 593 $ 7,708 $ 8,301 $ 5,419 08/09/84 5-19 Sutton Place 850 5,122 5,972 3,887 07/06/84 5-19 51 North High 526 6,194 6,720 4,751 12/20/84 3-19 Totals $1,969 $19,024 $20,993 $14,057
Reconciliation of "Investment Properties and Accumulated Depreciation" (in thousands): Years Ended December 31, 1997 1996 Investment Properties Balance at beginning of year $20,362 $20,068 Property improvements 786 294 Disposals of property (155) -- Balance at end of year $20,993 $20,362 Accumulated Depreciation Balance at beginning of year $13,071 $11,928 Additions charged to expense 1,098 1,143 Disposals of property (112) -- Balance at end of year $14,057 $13,071 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1997 and 1996, is approximately $23,208,000 and $22,422,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 1997 and 1996, is approximately $14,134,000 and $13,303,000, respectively. NOTE I - INCOME TAXES Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. The following is a reconciliation of reported net loss and Federal taxable loss (in thousands, except unit data): For the Years Ended December 31, 1997 1996 Net loss as reported $ (411) $(1,152) Add (deduct): Depreciation differences 266 267 Unearned income 41 (33) Loss on disposition of fixed assets 43 -- Other 2 75 Accruals and prepaids (12) 18 Federal taxable loss $ (71) $ (825) Federal taxable loss per limited partnership unit $ (.39) $ (4.41) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): Net deficiency as reported $(3,174) Land and buildings 2,216 Accumulated depreciation (78) Syndication and distribution costs 4,935 Other (374) Net assets - Federal tax basis $ 3,525 NOTE J - SUBSEQUENT EVENT On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, 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 General Partner of the Partnership. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT The Registrant has no officers or directors. The General Partner manages and controls the Registrant and has general responsibility and authority in all matters affecting its business. The names of the directors and executive officers of ConCap Equities Inc. ("CEI"), the Partnership's General Partner, their ages and the nature of all positions with CEI presently held by them are set forth below. There are no family relationships between or among any officers and directors. Name Age Position William H. Jarrard, Jr. 51 President/Director Ronald Uretta 41 Vice President/Treasurer Martha L. Long 38 Controller Robert D. Long, Jr. 30 Vice President Daniel M. LeBey 32 Vice President/Secretary Kelley M. Buechler 40 Assistant Secretary William H. Jarrard, Jr. has been President and Director of the General Partner since December 1996. He has acted as Senior Vice President of Insignia Properties Trust ("IPT"), parent of the CEI since May 1997. Mr. Jarrard previously acted as Managing Director - Partnership Administration of Insignia from January 1991 through September 1997 and served as Managing Director - Partnership Administration and Asset Management from July 1994 until January 1996. Ronald Uretta has been Vice President/Treasurer of the General Partner since December 1996 and Insignia's Treasurer since January 1992. Since August 1996, he has also served as Insignia's Chief Operating Officer. He has also served as Insignia's Secretary from January 1992 to June 1996 and as Insignia's Chief Financial Officer from January 1992 to August 1996. Martha L. Long has been Controller of the General Partner since December 1996 and Senior Vice President - Finance and Controller of Insignia since January 1997. In June 1994, Ms. Long joined Insignia as its Controller and was promoted to Senior Vice President - Finance in January 1997. Prior to that time, she was Senior Vice President and Controller of the First Savings Bank in Greenville, South Carolina. Robert D. Long, Jr. has been Vice President of the General Partner since January 2, 1998. Mr. Long joined Metropolitan Asset Enhancement, L.P. ("MAE"), an affiliate of Insignia, in September 1993. Since 1994 he has acted as Vice President and Chief Accounting Officer of the MAE subsidiaries. Mr. Long was an accountant for Insignia until joining MAE in 1993. Prior to joining Insignia, Mr. Long was an auditor for the State of Tennessee and was associated with the accounting firm of Harsman Lewis and Associates. Daniel M. LeBey has been Vice President and Secretary of the General Partner since January 29, 1998 and Insignia's Assistant Secretary since April 30, 1997. Since July 1996 he has also served as Insignia's Associate General Counsel. From September 1992 until June 1996, Mr. LeBey was an attorney with the law firm of Alston & Bird LLP, Atlanta, Georgia. Kelley M. Buechler has been Assistant Secretary of the General Partner since June 1996 and Assistant Secretary of Insignia since January 1991. ITEM 10. EXECUTIVE COMPENSATION No direct compensation was paid or payable by the Partnership to directors or officers (since it does not have any directors or officers) for the year ended December 31, 1997, nor was any direct compensation paid or payable by the Partnership to directors or officers of the General Partner for the year ended December 31, 1997. The Partnership has no plans to pay any such remuneration to any directors or officers of the General Partner in the future. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Security Ownership of Certain Beneficial Owners Except as provided below, as of February 28, 1998, no person or entity was known to CEI to own of record or beneficially more than five percent of the Units of the Partnership. Number of Percent Name and Address Units Of Total Insignia Properties, L.P. 44,005.80 24.51% One Insignia Financial Plaza Greenville, SC 29602 Insignia Properties, L.P. is an affiliate of Insignia. (See Item 1). (b) Beneficial Owners of Management Neither CEI nor any of the directors or officers or associates of CEI own any Units of the Partnership of record or beneficially. (c) Changes in Control Beneficial Owners of CEI As of December 31, 1997, the following entity was known to CEI to be the beneficial owners of more than 5 percent (5%) of its common stock: Number of Percent Name and Address CEI Shares Of Total Insignia Properties Trust 100,000 100% One Insignia Financial Plaza Greenville, SC 29602 Insignia Properties Trust is an affiliate of Insignia (See "Item 1"). On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, 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 General Partner of the Partnership. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Transactions with Current Management and Others Except for the transactions described below, neither CEI nor any of its directors, officers or associates, or any associates of any of them, has had any interest in any other transaction to which the Partnership is a party. The Partnership has no employees and is dependent on the General Partner and affiliates of Insignia for the management and administration of all of the partnership activities, as provided for in the Partnership Agreement. The Partnership has paid property management fees based upon collected gross rental revenues for property management services in each of the years ended December 31, 1997 and 1996. Property management fees of approximately $215,000 and $204,000 were paid to affiliates of the General Partner for each of the years ended December 31, 1997 and 1996, respectively. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. Reimbursements for services of affiliates of approximately $151,000 and $158,000 were paid to the General Partner and its affiliates during each of the years ended December 31, 1997 and 1996, respectively. Included in these reimbursements are approximately $33,000 and $4,000 of construction oversight reimbursement in 1997 and 1996, respectively. During the year ended December 31, 1997 and 1996, respectively, the Partnership paid affiliates of the General Partner approximately $5,500 and $36,000 for loan costs which were capitalized. These loan costs related to the refinancing of the Aspen Ridge Apartments. Additionally, the Partnership paid $69,000 and $9,000 to affiliates of the general partner for lease commissions on the Partnership's commercial property. These lease commissions are included in other assets and amortized over the term of the respective leases. For the period from January 1, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the 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 General Partner who received payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. During December 1997, Insignia affiliates (the "Purchaser") commenced tender offers for limited partnership interests in ten real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 70,000 of the outstanding units of limited partnership interest in the Partnership, at $30 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 19, 1997 (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on December 19, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. In addition, because of these conflicts of interest, including as a result of the Purchaser's affiliation with various Insignia affiliates that provide property management services to the Partnership's properties, the manner in which the Purchaser votes its limited partner interests in the Partnership may not always be consistent with the best interests of the other limited partners. During February 1998, the tender offers were completed and Insignia Properties, L.P. tendered 43,795.8 units of limited partnership interest in the Partnership. As a result, Insignia Properties, L.P. owns 44,005.8 units as of February 1998. All of the above-referenced agreements with affiliates of CEI and related parties of the Partnership are subject to the conditions and limitations imposed by the Partnership Agreement. Conversion of Non-Corporate General Partner Special Allocation In the year ended December 31, 1991, the Partnership Agreement was amended to convert the general partner interest held by the non-corporate general partner, CCG, to that of special limited partners ("Special Limited Partners"). The Special Limited Partners do not have a vote and do not have any of the other rights of a Limited Partner except the right to inspect the Partnership's books and record; however, the Special Limited Partners will retain the economic interest in the Partnership which it previously owned as general partner. CEI became the sole general partner of the Partnership effective as of December 31, 1991. In connection with CCG's conversion, a special allocation of gross income was made to the Special Limited Partners in order to eliminate their tax basis negative capital account. After the conversion, the various owners of interests in the Special Limited Partner transferred portions of their interest to CEI so that CEI now holds a .2 percent interest in all allocable items of income, loss and distribution. The difference between the Special Limited Partners' capital accounts for financial statement and tax reporting purposes is being amortized to the Limited Partners' capital account as the components of the timing differences which created the balance reverse. ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. See Exhibit Index contained herein for listing of exhibits. (b) Reports on Form 8-K filed during the fourth quarter of 1997: None. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED CAPITAL PROPERTIES V By: CONCAP EQUITIES, INC. General Partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President/Director By: /s/ Ronald Uretta Ronald Uretta Vice President/Treasurer Date: March 23, 1998 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. /s/ William H. Jarrard, Jr. President/Director William H. Jarrard, Jr. /s/ Ronald Uretta Vice President/Treasurer Ronald Uretta INDEX OF EXHIBITS EXHIBIT NO. DOCUMENT DESCRIPTION 3 Certificate of Limited Partnership, as amended to date. 10.1 Property Management Agreement No. 109 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.2 Property Management Agreement No. 308 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.3 Property Management Agreement No. 406 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.4 Bill of Sale and Assignment dated October 23, 1990, by and between CCEC and ConCap Services Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.5 Assignment and Assumption Agreement dated October 23, 1990, by and between CCEC and ConCap Management Limited Partnership ("CCMLP") (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.6 Assignment and Agreement as to Certain Property Management Services dated October 23, 1990 by and between CCMLP and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.7 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and The Hayman Company (100 Series of Property Management Contracts)(Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.8 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and Metro ConCap, Inc.(300 Series of Property Management Contracts)(Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.9 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and R&B Realty Group (400 Series of Property Management Contracts)(Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.10 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and Metro ConCap, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.11 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and The Hayman Company. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.12 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and R&B Apartment Management Company, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.13 Investor Services Agreement dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.14 Assignment and Assumption Agreement (Investor Services Agreement) dated October 23, 1990, by and between CCEC and ConCap Services Company (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1990). 10.15 Letter of Notice dated December 20, 1991, from Partnership Services, Inc. ("PSI") to the Partnership regarding the change in ownership and dissolution of the ConCap Services Company whereby PSI assumed the Investor Services Agreement. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1990). 10.16 Financial Services Agreement dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.17 Assignment and Assumption Agreement (Financial Services Agreement) dated October 23, 1990, by and between CCEC and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.18 Letter of Notice dated December 20, 1991, from PSI to the Partnership regarding the change in ownership and dissolution of ConCap Capital Company whereby PSI assumed the Financial Services Agreement. (Incorporated by reference to the Annual Report on Form 10-k for the year ended December 31, 1991). 10.19 Stock and Asset Purchase Agreement, dated December 8, 1994 (the "Gordon Agreement"), among MAE-ICC, Inc. ("MAE- ICC"), Gordon Realty Inc. ("Gordon"), GII Realty, Inc. ("GII Realty"), and certain other parties. (Incorporated by reference to Form 8-K dated December 8, 1994). 10.20 Exercise of the Option (as defined in the Gordon Agreement), dated December 8, 1994, between MAE-ICC and Gordon. (Incorporated by reference to Form 8-K dated December 8, 1994) 10.21 Exercise of the remaining portion of the Option (as defined in the Gordon Agreement), dated December 8, 1994, between MAE-ICC and Gordon. (Incorporated by reference to Form 8-K dated October 24, 1995). 10.22 Promissory Note dated September 6, 1996, between Sutton Place CCPV, L.P., a South Carolina limited partnership and First Union National Bank of North Carolina, a national banking association. 10.23 Multifamily Note dated November 1, 1996 between Aspen Ridge Associates, ltd., a Texas Limited Partnership and Lehman Brothers Holdings, Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings, Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings, Inc. 11 Statement regarding computation of Net Income per Limited Partnership Unit (Incorporated by reference to Note 1 of Item 8 - Financial Statements of this Form 10-K). 16.1 Letter, dated August 12, 1992, from Ernst & Young to the Securities and Exchange Commission regarding change in certifying accountant. (Incorporated by reference to Form 8-K dated August 6, 1992). 16.2 Letter dated May 9, 1995 from the Registrant's former independent accountant regarding its concurrence with the statements made by the Registrant regarding a change in the certifying accountant. (Incorporated by reference to Form 8-K dated May 3, 1995) EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Properties V 1997 Year-End 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000725614 CONSOLIDATED CAPITAL PROPERTIES V 1,000 12-MOS DEC-31-1997 DEC-31-1997 574 0 0 0 0 0 20,993 14,057 8,816 0 11,145 0 0 0 (3,174) 8,816 0 4,424 0 0 4,835 0 818 0 0 0 0 0 0 (411) (2.28) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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