<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------------------------------------------
or
[ _ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from____________________________to____________________
Commission File Number 0-8914
-----------
UNIVERSITY REAL ESTATE PARTNERSHIP V
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3240567
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Crescent Court, Suite 1300, Dallas, Texas 75201
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(214) 871-3933
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former address, if changed since last report)
Indicate by 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 __
-----
1
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UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Page
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<S> <C>
Part I - Financial Information
Item 1 - Condensed Financial Statements:
(a) Condensed Balance Sheets as of June 30, 1995
and December 31, 1994 3
(b) Condensed Statements of Operations for the three and
six months ended June 30, 1995 and 1994 4
(c) Condensed Statements of Cash Flows for the six months
ended June 30, 1995 and 1994 5
(d) Notes to Condensed Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures (pursuant to General Instruction E) 11
All other items called for by the instructions are
omitted as they are either inapplicable, not
required, or the information is included in
the Condensed Financial Statements or Notes thereto.
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
- ------- ------------------------------
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(Unaudited) 1994
------------- -------------
<S> <C> <C>
ASSETS
- ------
Real estate investments
Land $ 5,255,247 $ 5,255,247
Buildings and improvements 13,669,170 13,579,798
------------- -------------
18,924,417 18,835,045
Less: Accumulated depreciation and
amortization (7,268,074) (7,035,146)
------------- -------------
11,656,343 11,799,899
------------- -------------
Note receivable - 750,000
Cash and cash equivalents (including $19,870 and $21,695
for security deposits at June 30, 1995 and
December 31, 1994, respectively) 64,031 197,283
Accounts receivable, net of allowance for doubtful
accounts of $121,700 and $72,740 at June 30, 1995
and December 31, 1994, respectively 70,520 84,929
Deferred borrowing costs, net of accumulated amortization
of $72,376 and $65,895 at June 30, 1995 and
December 31, 1994, respectively 122,066 128,547
Prepaid expenses and other assets 319,062 283,287
Repossessed real estate held for resale 1,422,391 1,422,391
------------- -------------
$ 13,654,413 $ 14,666,336
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Mortgage notes payable, net of discounts $ 9,652,234 $ 9,453,587
Note payable to Southmark affiliate 379,325 1,086,554
Accrued mortgage interest 38,443 253,110
Accrued property taxes 301,346 279,892
Accounts payable and accrued expenses 92,287 85,951
Accounts payable - affiliates - 20,894
Subordinated real estate commissions 549,218 549,218
Security deposits 41,482 36,702
------------- -------------
11,054,335 11,765,908
------------- -------------
Partners' equity (deficit)
Limited Partners - 50,000 units authorized; 34,453 units
issued and outstanding (17,733 Income units and 16,720
Growth/Shelter units) 3,125,381 3,422,728
General Partner (525,303) (522,300)
------------- -------------
2,600,078 2,900,428
------------- -------------
$ 13,654,413 $ 14,666,336
============= =============
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 650,030 $ 585,822 $ 1,253,792 $ 1,152,149
Interest 6,738 91,728 135,364 184,007
Other income 32,053 - 32,053 -
------------ ------------ ------------ ------------
Total revenues 688,821 677,550 1,421,209 1,336,156
------------ ------------ ------------ ------------
Expenses:
Interest 252,574 278,736 588,301 537,245
Depreciation and amortization 120,561 111,755 239,017 222,996
Property taxes 42,253 30,757 81,438 68,562
Other property operations 326,949 259,502 624,415 518,969
General and administrative 134,870 236,281 263,388 366,104
------------ ------------ ------------ ------------
Total expenses 877,207 917,031 1,796,559 1,713,876
------------ ------------ ------------ ------------
Loss before extraordinary item (188,386) (239,481) (375,350) (377,720)
Extraordinary item - gain on
debt forgiveness 75,000 - 75,000 -
------------ ------------ ------------ ------------
Net loss $ (113,386) $ (239,481) $ (300,350) $ (377,720)
============ ============ ============ ============
Net loss allocated to general
partners $ (1,134) $ (2,395) $ (3,003) $ (3,777)
Net loss allocated to limited
partners (112,252) (237,086) (297,347) (373,943)
------------ ------------ ------------ ------------
Net loss $ (113,386) $ (239,481) $ (300,350) $ (377,720)
============ ============ ============ ============
Net loss per limited partnership
unit $ (3.26) $ (6.88) $ (8.63) $ (10.85)
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed financial statements.
4
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UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
1995 1994
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants $ 1,272,981 $ 918,465
Cash paid to suppliers and affiliates (935,550) (807,419)
Interest received 135,364 184,007
Interest paid (486,903) (390,997)
Property taxes paid (10,471) (68,562)
Property tax refund 32,053 -
-------------- -------------
Net cash provided by (used in) operating activities 7,474 (164,506)
-------------- -------------
Cash flows from investing activities:
Additions to real estate investments (89,373) (22,095)
Sale of Las Oficinas note receivable 750,000 -
Net cash received as a result of repossession of real estate - 58,656
-------------- -------------
Net cash provided by investing activities 660,627 36,561
-------------- -------------
Cash flows from financing activities:
Principal payments on mortgage notes payable (104,502) (145,447)
Principal payment on note payable to Southmark affiliate (750,000) -
Advance from line of credit 53,149 -
-------------- -------------
Net cash used in financing activities (801,353) (145,447)
-------------- -------------
Net decrease in cash and cash equivalents (133,252) (273,392)
Cash and cash equivalents at beginning of period 197,283 474,483
-------------- -------------
Cash and cash equivalents at end of period $ 64,031 $ 201,091
============== =============
</TABLE>
See accompanying notes to condensed financial statements.
5
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UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Loss to Net Cash Provided by (Used in)
Operating Activities
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------------
1995 1994
------------- --------------
<S> <C> <C>
Net loss $ (300,350) $ (377,720)
------------- --------------
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 239,017 222,996
Amortization of discounts on mortgage notes payable - 18,343
Amortization of deferred borrowing costs 6,481 -
Interest and fees added to note payable to Southmark affiliate 117,772 127,905
Gain on forgiveness of debt (75,000) -
Changes in assets and liabilities:
Accounts receivable 14,409 (222,157)
Prepaid expenses and other assets (41,864) 44,419
Accounts payable and accrued expenses 15,011 116,121
Accounts payable to affiliates (20,894) (82,886)
Accrued mortgage interest (22,855) -
Accrued property taxes 70,967 -
Security deposits 4,780 (11,527)
------------- --------------
Total adjustments 307,824 213,214
------------- --------------
Net cash provided by (used in) operating activities $ 7,474 $ (164,506)
============= ==============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
On March 31, 1995, the Partnership converted $250,000 of accrued liabilities
into a note payable.
See accompanying notes to condensed financial statements.
6
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UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. 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 management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 1995 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1995. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1994. The December 31, 1994 condensed
balance sheet was derived from audited numbers.
Certain reclassifications have been made to the 1994 balances to conform to the
1995 presentation.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------
The general partner of the Partnership is University Advisory Company ("UAC" or
the "General Partner"), a California general partnership. Southmark Commercial
Management, Inc., a wholly-owned subsidiary of Southmark Corporation
("Southmark"), and Southmark Investors, Inc., a second-tier subsidiary of
Southmark, are the two general partners of UAC. On March 9, 1993, Southmark and
several of its affiliates (including the General Partner) entered into an asset
purchase agreement with SHL Acquisition Corp. III, a Texas corporation, and its
permitted assigns (collectively "SHL") to acquire various general and limited
partnership interests, among other things, owned by Southmark and its
affiliates. On December 16, 1993, SHL entered into an Assignment of Rights and
Option Agreement with Hampton Realty Partners, L.P. ("Hampton"), a Texas limited
partnership, whereby Hampton acquired the right to purchase the option assets,
among other things, subject to the approval of the Limited Partners. On
December 30, 1994, Hampton entered into an Assignment and Assumption Agreement
with JKD Financial Management, Inc. ("JKD"), a Texas corporation, whereby, among
other things, JKD obtained Hampton's right to acquire the general partner
interest in the Partnership. JKD currently oversees the management of the
Partnership.
NOTE 3 - MODIFICATION OF GLASSHOUSE SQUARE MORTGAGES PAYABLE
- ------------------------------------------------------------
On January 17, 1995, the lender filed a notice of default in San Diego County
related to the Glasshouse Square mortgages payable. On March 27, 1995, the
mortgages were modified and a forbearance agreement was executed whereby the
lender agreed to discontinue foreclosure proceedings. The first lien mortgage
is payable in varying monthly installments of principal and interest, bearing
interest at 9.5% per annum and maturing in December 2000. The second lien
mortgage payable requires monthly interest only payments in the amount of
$6,595, bearing interest at 11% per annum and maturing in December 2000.
Principal balances for the first and second lien mortgages as of June 30, 1995,
were $7,339,526 and $1,492,431, respectively. In addition to the mortgage
modifications and forbearance agreement, on March 27, 1995, the lender granted
the Partnership a line of credit for the maximum amount of $400,000 bearing
interest at 9.5% per annum payable in full on December 1, 2000. The line of
credit is restricted to Glasshouse Square for the use of mortgage payment
shortfalls, tenant improvements, leasing commissions, and a monument sign. The
line of credit is secured by a deed of trust. As of June 30, 1995, the
Partnership has borrowed $53,149 against the line of credit.
NOTE 4 - NOTE PAYABLE
- ---------------------
On March 31, 1995, the Partnership executed a note payable secured by the
Washington Towne Apartments for a principal amount of $250,000, bearing interest
at 11.5% per annum with one payment of principal and interest in the amount of
$2,476 due May 1, 1995 and all remaining outstanding principal and accrued
interest originally due and payable June 1, 1995. The lender subsequently
extended the maturity date and on September 13, 1995, the
7
<PAGE>
Partnership paid all outstanding principal and accrued interest as a result of
the refinancing of the Washington Towne Apartments.
NOTE 5 - SALE OF THE LAS OFICINAS NOTE RECEIVABLE
- -------------------------------------------------
On April 7, 1995, the Las Oficinas note receivable for $1,100,000 was sold to a
third party for $750,000. The valuation loss was recorded as of the
modification date, December 1, 1994.
NOTE 6 - PRINCIPAL PREPAYMENT AND FORGIVENESS OF DEBT - NOTE PAYABLE TO
- -----------------------------------------------------------------------
SOUTHMARK AFFILIATE
- -------------------
On April 11, 1995, the Partnership made a principal prepayment in the amount of
$750,000 on the note payable to a Southmark affiliate, secured by the Bank of
San Pedro Office Building. In consideration for this principal prepayment,
Southmark reduced the remaining unpaid principal balance of the note payable by
$75,000 and extended the maturity date for an additional 90 days.
NOTE 7 - SUBSEQUENT EVENTS
- --------------------------
Glasshouse Square Major Tenant
- ------------------------------
During 1995, Silo California, a major tenant at Glasshouse Square, ceased retail
operations. In September 1995, Silo California defaulted on the lease. On
November 20, 1995, a summons was issued to Silo California by the Partnership
notifying them of litigation proceedings in regards to the default on their
lease.
Sale of the Bank of San Pedro Office Building
- ---------------------------------------------
On July 20, 1995, the Partnership sold the Bank of San Pedro Office Building for
$1,350,000. The Partnership received partial consideration from the sale in the
form of a note receivable for $350,000, bearing interest at 9% per annum with
interest only payments due monthly, secured by a second lien deed of trust on
the Bank of San Pedro Office Building, maturing on July 20, 1998. On the date
of sale, all remaining principal and accrued interest due on the promissory note
payable to Southmark was paid.
Maturity and Refinance of the Mortgage Note Payable for Washington Towne
- ------------------------------------------------------------------------
Apartments
- ----------
The mortgage payable on the Washington Towne Apartments matured in June 1995.
In September 1995, the Partnership obtained a mortgage loan payable in the
amount of $1,750,000 from a new lender. In order to preserve the Partnership's
ownership interest in the Washington Towne Apartments and in order to satisfy
the new lender's structural requirements with respect to the refinancing of the
mortgage note payable, the Partnership contributed the property on September 13,
1995 to an affiliated entity, Washington Towne Apartments, LLC, a Georgia
limited liability company. The Partnership is the owner of all the capital
stock of Washington Towne, Inc. The Partnership is the 99% member and
Washington Towne, Inc. is the 1% managing member of Washington Towne Apartments,
LLC. Therefore, the Partnership effectively retained a 100% interest in the
property. In connection with the contribution of the property to Washington
Towne Apartments, LLC, the lender provided sufficient funds to satisfy the
matured loan obligation and to provide for certain property improvements.
Property improvements are expected to be completed prior to the end of the first
quarter of 1996 and should significantly enhance the value of the property.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The Partnership's net loss for the six months ended June 30, 1995 was $300,350.
The net loss for the same period in 1994 was $377,720. Total revenues for the
six months ended June 30, 1995 were $1,421,209 versus $1,336,156 for the same
period in 1994. The increase in total revenues in 1995 is primarily
attributable to revenues earned from the Bank of San Pedro Office Building that
was repossessed in June 1994 and fees of $86,000 earned from modification of the
Las Oficinas note receivable.
8
<PAGE>
Total expenses for the six months ended June 30, 1995 were $1,796,559 versus
$1,713,876 for the same period in 1994. The increase in expenses in 1995 is
primarily due to an increase in interest expenses due to extension fees incurred
on the Bank of San Pedro Office Building promissory note payable to Southmark.
Other property operations increased due to increased expenses as a result of the
Bank of San Pedro Office Building repossession during the second quarter of
1994.
During the six months ended June 30, 1995, the Partnership recorded a decrease
in cash of $133,252 versus a decrease of $273,392 for the same period in 1994.
The statement of cash flows included an increase in cash provided by operating
activities of $171,980 primarily due to increased revenues earned from the Bank
of San Pedro Office Building that was repossessed in June 1994 and fees of
$86,000 earned from modification of the Las Oficinas note receivable. The
statement of cash flows included an increase in cash provided by investing
activities of $624,066 due to the sale of the Las Oficinas note receivable on
April 7, 1995 for $750,000. The statement of cash flows included an increase in
cash used in financing activities of $655,906, primarily due to a principal
prepayment of $750,000 on the note payable to a Southmark affiliate.
Should operations deteriorate and present resources not be adequate for current
needs, the Partnership has no outside lines of credit on which to draw for its
working capital needs. Neither the General Partner and its affiliates nor JKD
have any obligation to provide financial support to the Partnership.
Accordingly, continued operation of the Partnership is dependent on the
Partnership being able to generate cash from operations or sale of its remaining
operating properties or negotiated reductions in requirements related to
outstanding debt obligations.
Washington Towne Apartments - Atlanta, Georgia
- ----------------------------------------------
Average occupancy for the six months ended June 30, 1995 was 92% versus 86% for
the same period in 1994. Management is of the opinion that the increase in
occupancy is due to the property implementing an aggressive marketing campaign.
In September 1995, the Partnership obtained a mortgage loan payable in the
amount of $1,750,000 from a new lender. In order to preserve the Partnership's
ownership interest in the Washington Towne Apartments and in order to satisfy
the new lender's structural requirements with respect to the refinancing of the
mortgage note payable, the Partnership contributed the property on September 13,
1995 to an affiliated entity, Washington Towne Apartments, LLC, a Georgia
limited liability company. The Partnership is the owner of all the capital
stock of Washington Towne, Inc. The Partnership is the 99% member and
Washington Towne, Inc. is the 1% managing member of Washington Towne Apartments,
LLC. Therefore, the Partnership effectively retained a 100% interest in the
property. In connection with the contribution of the property to Washington
Towne Apartments, LLC, the lender provided sufficient funds to satisfy the
matured loan obligation and to provide for certain property improvements.
Property improvements are expected to be completed prior to the end of the first
quarter of 1996 and should significantly enhance the value of the property.
Glasshouse Square - San Diego, California
- -----------------------------------------
Average occupancy for the three months ended June 30, 1995 was 75% versus 77%
for the same period in 1994.
Management does not believe that the County of San Diego will take further
action regarding the alleged leaking of petroleum products from underground
storage tanks on the Garcia's Tract and part of Glasshouse Square parking lot.
Therefore, this situation should not have a material effect on the Partnership.
Bank of San Pedro Office Building - Long Beach, California
- ----------------------------------------------------------
On June 20, 1994, the Partnership repossessed the Bank of San Pedro Office
Building in lieu of foreclosure as a result of a Settlement Agreement between
the Partnership and the borrower. The land, buildings, and improvements were
recorded on the Partnership's books at $1,422,391. This is the net note
receivable balance plus the book value of certain assets and liabilities
acquired at the date of repossession, which approximated net realizable value.
The promissory note payable to Southmark on the property dated June 10, 1994 was
due in ninety days and had three ninety-day extensions. After repossession, the
Partnership immediately began the process of selling the property by soliciting
potential buyers. On July 20, 1995, the Bank of San Pedro was sold and all
outstanding principal and accrued interest on the note payable to Southmark was
paid.
9
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits.
Exhibit Page
Number Description Number
------ ----------- ------
3. and 4. Limited Partnership Agreement (Incorporated
by reference to Registration Statement No. 2-
74914 on Form S-11 filed by Registrant). N/A
11. Statement regarding computation of Net Loss
per Limited Partnership Unit: Net Loss per
Limited Partnership Unit is computed by
dividing net loss allocated to the Limited
Partners by the number of Limited Partnership
Units outstanding. Per unit information has
been computed based on 20,452 Limited
Partnership Units outstanding in 1994 and 1993. N/A
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended June 30, 1995.
10
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SIGNATURES
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.
UNIVERSITY REAL ESTATE PARTNERSHIP V
By: UNIVERSITY ADVISORY COMPANY
General Partner
By: SOUTHMARK INVESTORS, INC.
a General Partner
December 6, 1995 By: /s/ Glen Adams
- ---------------------------------- -----------------------------------
Date Glen Adams, President
Southmark Investors, Inc.
December 6, 1995 By: /s/ Charles B. Brewer
- ---------------------------------- -----------------------------------
Date Charles B. Brewer, Executive Vice
President and Principal Financial
Officer Southmark Investors, Inc.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 64,031
<SECURITIES> 0
<RECEIVABLES> 192,220
<ALLOWANCES> 121,700
<INVENTORY> 0
<CURRENT-ASSETS> 134,551
<PP&E> 18,924,417
<DEPRECIATION> 7,268,074
<TOTAL-ASSETS> 13,654,413
<CURRENT-LIABILITIES> 92,287
<BONDS> 10,031,559
<COMMON> 0
0
0
<OTHER-SE> 2,600,078
<TOTAL-LIABILITY-AND-EQUITY> 13,654,413
<SALES> 0
<TOTAL-REVENUES> 1,421,209
<CGS> 0
<TOTAL-COSTS> 705,853
<OTHER-EXPENSES> 502,405
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 588,301
<INCOME-PRETAX> (375,350)
<INCOME-TAX> 0
<INCOME-CONTINUING> (375,350)
<DISCONTINUED> 0
<EXTRAORDINARY> 75,000
<CHANGES> 0
<NET-INCOME> (300,350)
<EPS-PRIMARY> (8.63)
<EPS-DILUTED> 0
</TABLE>
