-----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, TMQ6zwOGoxC9mf3Iv/8bD4MY+PfG5t3vhxDL4V1aEkri6L3r/M4LYXM4/VEEO49x BOrkRjKC0mgUVTKZ7Yt29A== 0000792181-98-000005.txt : 19980804 0000792181-98-000005.hdr.sgml : 19980804 ACCESSION NUMBER: 0000792181-98-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980803 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-13083 FILM NUMBER: 98676372 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 10QSB 1 FORM 10-QSB.--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-13083 CONSOLIDATED CAPITAL PROPERTIES V (Exact name of small business issuer as specified in its charter) California 94-2918560 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL PROPERTIES V CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 1998 Assets Cash and cash equivalents $ 877 Investments 4 Receivable and deposits 313 Restricted escrows 388 Other assets 266 Investment properties: Land $ 1,969 Buildings and related personal property 19,302 21,271 Less accumulated depreciation (14,606) 6,665 $ 8,513 Liabilities and Partners' Deficit Liabilities Accounts payable $ 121 Tenant security deposit liabilities 59 Accrued property taxes 398 Other liabilities 131 Mortgage notes payable 11,078 Partners' Deficit General partner $ (21) Special limited partners (52) Limited partners (179,537.20 units (3,201) issued and outstanding) (3,274) $ 8,513 See Accompanying Notes to Consolidated Financial Statements b) CONSOLIDATED CAPITAL PROPERTIES V CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 Revenues: Rental income $1,058 $1,024 $2,122 $2,103 Other income 59 46 105 111 Total revenues 1,117 1,070 2,227 2,214 Expenses: Operating 552 477 1,016 1,079 General and administrative 51 45 99 86 Depreciation 278 270 549 538 Interest 213 204 421 410 Property taxes 122 91 242 201 Total expenses 1,216 1,087 2,327 2,314 Net loss $ (99) $ (17) $ (100) $ (100) Net loss allocated to general partner (.2%) $ -- $ -- $ -- $ -- Net loss allocated to limited partners (99.8%) (99) (17) (100) (100) Net loss $ (99) $ (17) $ (100) $ (100) Net loss per limited partnership unit: $ (.55) $ (.09) $ (.56) $ (.56) See Accompanying Notes to Consolidated Financial Statements c) CONSOLIDATED CAPITAL PROPERTIES V CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (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, 1997 179,537.20 $ (21) $ (52) $(3,101) $(3,174) Net loss for the six months ended June 30, 1998 -- -- -- (100) (100) Partners' deficit at June 30, 1998 179,537.20 $ (21) $ (52) $(3,201) $(3,274) See Accompanying Notes to Consolidated Financial Statements d) CONSOLIDATED CAPITAL PROPERTIES V CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six Months Ended June 30, 1998 1997 Cash flows from operating activities: Net loss $ (100) $ (100) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 549 538 Amortization of lease commission, loan costs, and debt forgiveness 8 33 Change in accounts: Receivables and deposits 144 76 Other assets (2) (18) Accounts payable (38) 98 Tenant security deposit liabilities (3) (19) Accrued property taxes (67) (47) Other liabilities (28) (20) Net cash provided by operating activities 463 541 Cash flows from investing activities: Property improvements and replacements (278) (252) Withdrawals from restricted escrows 59 229 Dividend received on investments -- 3 Proceeds from sale of investments 100 -- Net cash used in investing activities (119) (20) Cash flows from financing activities: Payments on mortgage notes payable (41) (84) Loan costs paid -- (9) Net cash used in financing activities (41) (93) Net increase in cash and cash equivalents 303 428 Cash and cash equivalents at beginning of period 574 292 Cash and cash equivalents at end of period $ 877 $ 720 Supplemental disclosure of cash flow information: Cash paid for interest $ 399 $ 402 See Accompanying Notes to Consolidated Financial Statements e) CONSOLIDATED CAPITAL PROPERTIES V NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of Consolidated Capital Properties V (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and 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 ConCap Equities, Inc. (the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1997. Investments consist of Equity Securities stock and are considered to be held-to- maturity securities. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE B - TRANSACTIONS WITH RELATED PARTIES The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all of the Partnership activities, as provided for in the Partnership Agreement. The General Partner is wholly-owned by Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership has paid property management fees based upon collected gross rental revenues for property management services in each of the six months ended June 30, 1998 and 1997. Property management fees of approximately $116,000 and $108,000 were paid to affiliates of the General Partner for each of the six months ended June 30, 1998 and 1997, 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 $59,000 and $64,000 were paid to the General Partner and its affiliates during each of the six months ended June 30, 1998 and 1997, respectively. Included in these reimbursements is approximately $1,000 and $8,000 of construction oversight reimbursement for the six months ended June 30, 1998 and 1997, respectively. These reimbursements are included in operating and general and administrative expenses. Also, during the six months ended June 30, 1998 and 1997, approximately $6,000 and $14,000, respectively, of leasing commissions were paid to an affiliate of Insignia. Leasing commissions are capitalized and included in other assets. During the six months ended June 30, 1997, the Partnership paid an affiliate of the General Partner approximately $5,500 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 during the fourth quarter of 1996. For the period from January 1, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the General Partner with an 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 which receives payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the 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. On July 30, 1998, an Insignia affiliate commenced tender offers for limited partnership interests in five real estate limited partnerships (including the Partnership) in which Insignia affiliates act as general partner. The Purchaser offered to purchase up to 40,000 of the outstanding units of limited partnership interest in the Partnership, at $33 per unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 30, 1998 (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 July 30, 1998. 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 interest in the Partnership may not always be consistent with the best interest of the other limited partners. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. 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 $941,000, are less than the reserve requirement of approximately $1,760,000 at June 30, 1998. 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 consideration for 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, Consolidated Capital Group ("CCG"), to that of a special limited partner ("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 they previously owned as general partner. ConCap Equities, Inc. ("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 accounts. 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 as the components of the timing differences which created the balance reverse. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. The Partnership's investment properties consist of two apartment complexes and one commercial property. The following table sets forth the average occupancy of the properties for the six months ended June 30, 1998 and 1997: Average Occupancy 1998 1997 Aspen Ridge Apartments Chicago, Illinois 93% 95% Sutton Place Apartments Corpus Christi, Texas 91% 95% 51 North High Street Building Columbus, Ohio 100% 94% The General Partner attributes the decrease in occupancy at Aspen Ridge Apartments to the purchase of new homes and several tenant evictions. The decrease in occupancy at Sutton Place Apartments is attributed to the purchase of new homes and the addition of new apartment complexes in the area. The General Partner attributes the increase in occupancy at the 51 North High Street Building to existing tenants leasing additional space and the addition of new tenants. Results of Operations The Partnership realized a net loss of approximately $99,000 and $100,000 during the three and six months ended June 30, 1998, respectively, compared to a net loss of approximately $17,000 and $100,000 for three and six months ended June 30, 1997, respectively. The increase in net loss for the three months ended June 30, 1998 is attributable to an increase in operating expense and property taxes partially offset by an increase in rental income. The increase in operating expenses for the second three months of 1998 as compared to the same period of 1997 is due to the timing of expenses incurred during the two periods. For the six months ended June 30, 1998, operating expenses decreased as compared to the same period of 1997. This is primarily due to a decrease in maintenance expenses as noted below. The increase in property taxes is due to an increase in the assessed value at Sutton Place and an increase in tax rates at Aspen Ridge which occurred during the second half of 1997. The increase in rental income for the three months ended June 30, 1998 is due to rate increases at all of the Partnership's properties. The increase in occupancy at 51 North High Street along with rate increases at both Aspen Ridge and Sutton Place offset the decreases in occupancy during the second quarter of 1998 at both Aspen Ridge and Sutton Place. Included in operating expense for the six months ended June 30, 1998, is approximately $15,000 of major repairs and maintenance comprised primarily of tennis court repairs and major landscaping at Aspen Ridge and Sutton Place Apartments. Included in operating expense for the six months ended June 30, 1997, is approximately $88,000 of major repairs and maintenance comprised primarily of gutter repairs, exterior building improvements and exterior painting at Sutton Place Apartments. 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 June 30, 1998, the Partnership had cash and cash equivalents of approximately $877,000, compared to approximately $720,000 at June 30, 1997. The net increases in cash and cash equivalents for the six months ended June 30, 1998 and 1997 are $303,000 and $428,000, respectively. Net cash provided by operating activities decreased due to a decrease in accounts payable resulting from the timing of payments to vendors. Partially offsetting this is a decrease in receivables and deposits as a result of collection of tenant receivables. Net cash used in investing activities increased due to the decrease in withdrawals from restricted escrows as a result of less repair work being performed for the first six months of 1998 offset by the maturity of US Treasury Notes in 1998. Net cash used in financing activities decreased due to the amortization of restructured debt on the 51 North High Street Building. 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 $941,000 are less than the reserve requirement of approximately $1,760,000 at June 30, 1998. 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 consideration for 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 other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $11,078,000, net of discount, matures at various times with balloon payments due at maturity, at which time the properties will either be sold or the mortgage refinanced. 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. During the six months ended June 30, 1998, and June 30, 1997, no distributions were declared or paid. 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 quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION ITEM 2. LEGAL PROCEEDING In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia and its affiliates of interests in certain general partner entities, past tender offers by Insignia affiliates to acquire limited partnership units, the management of partnerships by Insignia affiliates as well as a recently announced agreement between Insignia and Apartment Investment and Management Company. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. The General Partner believes the action to be without merit, and intends to vigorously defend it. On June 24, 1998, the General Partner filed a motion seeking dismissal of the action. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The Corporate General Partner believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a)Exhibits. Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. (b)Reports on Form 8-K. 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. CONSOLIDATED CAPITAL PROPERTIES V By: CONCAP EQUITIES, INC. General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ron Uretta Vice President and Treasurer Date: August 3, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Properties V 1998 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000725614 CONSOLIDATED CAPITAL PROPERTIES V 1,000 6-MOS DEC-31-1998 JUN-30-1998 877 0 313 0 0 0 21,271 14,606 8,513 0 11,078 0 0 0 (3,274) 8,513 0 2,227 0 0 2,327 0 421 0 0 0 0 0 0 (100) .56 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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