FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2003
Commission File Number: 0-16561
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - V
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(Exact name of registrant as specified in its charter)
Delaware 16-1275925
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(State of organization) (IRS Employer Identification No.)
2350 North Forest Road, Suite 12A, Getzville, New York 14068
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(Address of principal executive offices)
(716) 636-0280
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(Registrant's telephone number)
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
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Condensed Consolidated Balance Sheets
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(Unaudited)
September 30, December 31,
2003 2002
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Assets
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Cost of property and equipment, all held for sale $ 23,566,151 23,508,061
Less accumulated depreciation 9,079,734 9,079,734
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14,486,417 14,428,327
Cash and equivalents 37,628 273,847
Other assets 2,624,261 2,931,380
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Total assets $ 17,148,306 17,633,554
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Liabilities and Partners' Equity
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Mortgage loans payable 14,867,347 15,042,196
Accounts payable and accrued expenses 354,379 233,411
Payable to affiliates 307,170 --
Other liabilities 154,902 190,944
Partners' equity 1,464,508 2,167,003
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Total liabilities and partners' equity $ 17,148,306 17,633,554
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Condensed Consolidated Statements of Operations
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(Unaudited)
Three months ended Sept 30, Nine months ended Sept. 30,
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2003 2002 2003 2002
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Rental income $ 341,336 725,348 1,160,245 2,712,377
Other income 196,570 188,668 650,074 611,254
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Total income 537,906 914,016 1,810,319 3,323,631
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Property operating costs 368,763 511,945 1,078,259 1,570,623
Administrative expense - affiliates 96,731 137,237 317,684 437,448
Other administrative expense 55,960 27,341 197,800 201,379
Interest 303,352 315,628 919,071 1,119,517
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Total expenses 824,806 992,151 2,512,814 3,328,967
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Income (loss) before gain on
sale of property (286,900) (78,135) (702,495) (5,336)
Gain on sale of property -- 2,726,861 -- 2,726,861
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Net income (loss) $ (286,900) 2,648,726 (702,495) 2,721,525
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Net income (loss) per limited partnership unit $ (13.25) 109.34 (32.44) 112.70
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Weighted average limited partnership units
outstanding 21,003 21,003 21,003 21,003
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Condensed Consolidated Statements of Cash Flows
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(Unaudited)
Nine months ended September 30,
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2003 2002
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Cash provided (used) by:
Operating activities:
Net income (loss) $ (702,495) 2,721,525
Adjustments:
Gain on sale of property -- (2,726,861)
Other, principally changes in other assets and liabilities 699,215 (171,328)
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Net cash used in operating activities (3,280) (176,664)
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Investing activities:
Additions to property and equipment (58,090) (75,898)
Net proceeds from sale of property -- 5,873,316
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Net cash provided (used) by investing activities (58,090) 5,797,418
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Financing activities - principal payments on mortgage loans (174,849) (4,874,191)
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Net increase (decrease) in cash and equivalents (236,219) 746,563
Cash and equivalents at beginning of period 273,847 662,069
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Cash and equivalents at end of period $ 37,628 1,408,632
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Notes to Consolidated Financial Statements
Nine months ended September 30, 2003 and 2002
(Unaudited)
Organization
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Realmark Property Investors Limited Partnership - V (the Partnership), a
Delaware limited partnership, was formed on February 28, 1986, to invest in a
diversified portfolio of income-producing real estate investments. The general
partners are Realmark Properties, Inc. (the corporate general partner) and
Joseph M. Jayson (the individual general partner). Joseph M. Jayson is the sole
shareholder of J.M. Jayson & Company, Inc. Realmark Properties, Inc. is a
wholly-owned subsidiary of J.M. Jayson & Company, Inc. Under the partnership
agreement, the general partners and their affiliates can receive compensation
for services rendered and reimbursement for expenses incurred on behalf of the
Partnership.
Basis of Presentation
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The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the instructions to Form 10-Q. Accordingly, they do
not include all of the information and notes required by accounting principles
generally accepted in the United States of America for complete financial
statements. The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation, have been included. The Partnership's significant
accounting policies are set forth in its December 31, 2002 Form 10-K. The
interim financial statements should be read in conjunction with the financial
statements included therein. The interim results should not be considered
indicative of the annual results.
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Property and Equipment
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At September 30, 2003, the Partnership owned and operated five commercial
properties. All of the properties are being actively marketed for sale and,
therefore, are not being depreciated. Depreciation not recorded on these
properties for the three and nine months ended September 30, 2003 was
approximately $208,000 and $626,000, respectively. Depreciation not recorded for
the three and nine months ended September 30, 2002 was approximately $226,000
and $756,000, respectively.
Current Accounting Pronouncements
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In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 is
applicable immediately for variable interest entities created after January 31,
2003. For variable interest entities created before February 1, 2003, the
provisions of FIN 46 are applicable no later than December 15, 2003. The
Partnership has not created any variable interest entities after January 31,
2003. The Partnership does not believe that the Interpretation will have a
material impact on its consolidated financial statements.
In May 2003, the Financial Accounting Standards Board issued SFAS No. 150
"Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equities." SFAS No. 150 changes the accounting for certain
financial instruments that, under previous guidance, could be classified as
equity or "mezzanine" equity, by now requiring those instruments to be
classified as liabilities (or assets in some circumstances) in the Consolidated
Balance Sheets. Further, SFAS No. 150 requires disclosure regarding the terms of
those instruments and settlement alternatives. This statement is effective for
financial instruments entered into or modified after May 31, 2003 and is
effective for all other financial instruments as of the first interim period
beginning after June 15, 2003. The Partnership has evaluated SFAS No. 150 and
determined that it does not have an impact on its consolidated financial
statements.
PART I - Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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Liquidity and Capital Resources
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Effective January 1, 2001, management began formally marketing all remaining
properties in the Partnership for sale. In the third quarter of 2003, the
Partnership continued to experience difficulties generating sufficient cash to
cover its financial obligations. In the first nine months of 2003, cash
decreased approximately $236,000. As a result of the sale of Camelot East
Apartments (Camelot) on July 31, 2002, a distribution of $850,000 was made to
the limited partners in December 2002. In accordance with the settlement of the
lawsuit (Part II, Item 1), it is anticipated that with the sale of the remaining
properties, the Partnership may be in a position to make distributions to the
limited partners.
Results of Operations
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For the nine months ended September 30, 2003, the Partnership's operations
produced an operating loss of approximately $702,000. Excluding Camelot,
comparable pro forma results for the same 2002 period would have resulted in an
operating profit of approximately $310,000. The most significant reason for the
decrease in net income was due to lower occupancy at three of the commercial
properties. Other income (excluding Camelot) increased approximately $72,000
mainly due to increased common area maintenance fees. Excluding Camelot, total
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expenses for the partnership decreased $281,000 due to increased property
operating costs of $105,000, decreased administrative expenses of $53,000 and
decreased interest expense of $229,000. The increase in property operating costs
was mainly attributable to increased payroll expenses. The most significant
contribution to the decrease in administrative expenses was a decrease in
management fees, as a result of the decrease in rental income. Interest expense
decreased due to the sale of Camelot and the declining outstanding principal
balance of mortgages for all properties.
PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
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The Partnership invests in only short term money market instruments, in amounts
in excess of daily working cash requirements. The rates of earnings on those
investments increase or decrease in line with general movement of interest
rates. The mortgage loans on the Partnership's properties is fixed-rate and
therefore, is not subject market risk.
PART I - Item 4. Controls and Procedures
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Disclosure Controls and Procedures: The Partnership's management, with the
participation of the Partnership's Individual General Partner and Principal
Financial Officer, has evaluated the effectiveness of the Partnership's
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this report. Based on such evaluation, the Partnership's
Individual General Partner and Principal Financial Officer have concluded that,
as of the end of such period, the Partnership's disclosure controls and
procedures are effective.
Internal Control Over Financial Reporting: There have been no changes in the
Partnership's internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934, as amended) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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As previously reported, the Partnership, as a nominal defendant, the General
Partners of the Partnership and of affiliated public partnerships (the "Realmark
Partnerships") and the officers and directors of the Corporate General Partner,
as defendants, had been involved in a class action litigation in New York State
court. The Partnership's settlement of this litigation is described in its
Annual Report on Form 10-K for the year ended December 31, 2002.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
31. Certification Pursuant to Rule 13a-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP - V
November 14, 2003 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
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