<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, 1996
-------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File Number 0-8914
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UNIVERSITY REAL ESTATE PARTNERSHIP V
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3240567
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Ross Avenue, Suite 4600, Dallas, Texas 75201
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(Address of principal executive offices) (Zip code)
(214) 740-2209
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(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, 1996
Page
----
Part I - Financial Information
Item 1 - Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as
of June 30, 1996 and December 31, 1995 3
(b) Condensed Consolidated Statements of
Operations for the three and six months
ended June 30, 1996 and 1995 4
(c) Condensed Consolidated Statements of Cash
Flows for the six months ended June 30,
1996 and 1995 5
(d) Notes to Condensed Consolidated Financial
Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K 8
Signatures (pursuant to General Instruction E) 9
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 Consolidated Financial Statements or
Notes thereto.
2
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PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------- -------------------------------------------
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
------------ -------------
<S> <C> <C>
ASSETS
- ------
Real estate investments
Land $ 5,255,247 $ 5,255,247
Buildings and improvements 14,034,094 13,929,173
----------- -----------
19,289,341 19,184,420
Less: Accumulated depreciation and
amortization (7,769,494) (7,510,725)
----------- -----------
11,519,847 11,673,695
----------- -----------
Note receivable 250,000 250,000
Cash and cash equivalents (including $19,737 and $17,990
for security deposits at June 30, 1996 and
December 31, 1995, respectively) 501,695 660,562
Accounts receivable, net of allowance for doubtful accounts
of $107,044 at June 30, 1996 and December 31, 1995 36,446 54,916
Deferred borrowing costs, net of accumulated amortization
of $97,092 and $83,280 at June 30, 1996 and
December 31, 1995, respectively 248,984 262,796
Prepaid expenses and other assets 484,826 514,303
----------- -----------
$13,041,798 $13,416,272
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net of discounts $10,798,292 $10,674,931
Accrued mortgage interest 130,468 86,568
Accrued property taxes 169,718 98,828
Accounts payable and accrued expenses 120,142 156,500
Subordinated real estate commissions 549,218 549,218
Security deposits 25,678 48,932
----------- -----------
11,793,516 11,614,977
----------- -----------
Partners' equity (deficit)
Limited Partners - 50,000 units authorized; 34,353 units
issued and outstanding (17,733 Income units and 16,620
Growth/Shelter units) 1,787,103 2,334,586
General Partner (538,821) (533,291)
----------- -----------
1,248,282 1,801,295
----------- -----------
$13,041,798 $13,416,272
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ------------------------
1996 1995 1996 1995
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 512,065 $ 650,030 $ 980,093 $1,253,792
Interest 10,815 6,738 16,387 135,364
Other income - 32,053 - 32,053
--------- --------- ---------- ----------
Total revenues 522,880 688,821 996,480 1,421,209
--------- --------- ---------- ----------
Expenses:
Interest 258,673 252,574 508,664 581,820
Depreciation and amortization 141,670 120,561 279,260 245,498
Property taxes 35,445 42,253 49,414 81,438
Other property operations 240,913 326,949 483,426 624,415
General and administrative 105,227 134,870 228,729 263,388
--------- --------- ---------- ----------
Total expenses 781,928 877,207 1,549,493 1,796,559
--------- --------- ---------- ----------
Loss before extraordinary item (259,048) (188,386) (553,013) (375,350)
Extraordinary item - gain on
debt forgiveness - 75,000 - 75,000
--------- --------- ---------- ----------
Net loss $(259,048) $(113,386) $ (553,013) $ (300,350)
========= ========= ========== ==========
Net loss allocable to General
Partners $ (2,590) $ (1,134) $ (5,530) $ (3,003)
Net loss allocable to Limited
Partners (256,458) (112,252) (547,483) (297,347)
--------- --------- ---------- ----------
Net loss $(259,048) $(113,386) $ (553,013) $ (300,350)
========= ========= ========== ==========
Net loss per Limited Partnership
Unit $ (7.47) $ ( 3.26) $ (15.94) $ (8.63)
========= ========= ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Net loss $(553,013) $(300,350)
--------- ---------
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 279,260 245,498
Interest and fees added to note payable to Southmark affiliate - 117,772
Gain on forgiveness of debt - (75,000)
Changes in assets and liabilities:
Accounts receivable 18,469 14,409
Prepaid expenses and other assets 22,798 (41,864)
Accounts payable and accrued expenses (36,358) (5,883)
Accrued mortgage interest 43,900 (22,855)
Accrued property taxes 70,890 70,967
Security deposits (23,254) 4,780
--------- ---------
Total adjustments 375,705 307,824
--------- ---------
Net cash (used in) provided by operating activities (177,308) 7,474
--------- ---------
Cash flows from investing activities:
Additions to real estate investments (104,920) (89,373)
Sale of Las Oficinas note receivable - 750,000
--------- ---------
Net cash (used in) provided by investing activities (104,920) 660,627
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage notes payable (52,370) (104,502)
Principal payment on note payable to Southmark affiliate - (750,000)
Advances from line of credit 175,731 53,149
--------- ---------
Net cash provided by (used in) financing activities 123,361 (801,353)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (158,867) (133,252)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 660,562 197,283
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 501,695 $ 64,031
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed consolidated 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, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996. 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, 1995. The December 31, 1995 condensed
consolidated balance sheet was derived from audited numbers.
Certain reclassifications have been made to the 1995 balances to conform to the
1996 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. ("SCM") and Southmark Investors, Inc. ("SII"), both wholly-
owned subsidiaries of Southmark Corporation ("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 sell 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 of Option Agreement with JKD Financial
Management, Inc. ("JKD"), a Texas corporation, whereby, among other things, JKD
obtained the right to acquire Hampton's rights to proxy into the Partnership
subject to the approval of the Limited Partners. JKD currently oversees the
management of the Partnership.
On January 29, 1996, SCM and SII entered into a purchase agreement to sell their
partnership interests in UAC to OS Holdings, Inc. ("OS"), a Texas corporation,
and JKD, respectively. The transfer documents were executed January 31, 1996,
and placed into escrow. The transfer would not be effective until certain
conditions precedent were satisfied and, if the conditions precedent were not
satisfied by April 29, 1996, the transfer documents would be returned to SCM and
SII and the transfer would not occur. On April 29, 1996, the purchase agreement
was amended to facilitate the substitution of OS General Partner Company
("OSGPC"), a Texas corporation, for JKD and to extend the escrow period through
June 30, 1996. On June 25, 1996, a Second Amendment of Escrow Agreement was
entered into to extend the escrow period through August 31, 1996.
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, 1996 was $553,013.
The net loss for the same period in 1995 was $300,350. Total revenues for the
six months ended June 30, 1996 were $996,480 versus $1,421,209 for the same
period in 1995. The decrease in total revenues in 1996 is primarily
attributable to the sale of the Bank of San Pedro Office Building on July 20,
1995.
Total expenses for the six months ended June 30, 1996 were $1,549,493 versus
$1,796,559 for the same period in 1995. The decrease in expenses in 1996 is
primarily due to a decrease in interest expenses due to extension fees incurred
on the Bank of San Pedro Office Building promissory note payable to Southmark in
1995. Other property operations decreased due to the sale of the Bank of San
Pedro Office Building on July 20, 1995.
6
<PAGE>
During the six months ended June 30, 1996, the Partnership recorded a decrease
in cash of $158,867 versus a decrease of $133,252 for the same period in 1995.
The statement of cash flows included an increase in cash used in operating
activities of $184,782 due to an increase in escrows used for property
improvements, an increase in Glasshouse Square accrued mortgage interest related
to additional advances, and a decrease in revenues earned from the Bank of San
Pedro Office Building that was sold on July 20, 1995. The statement of cash
flows included an increase in cash used in investing activities of $765,547 due
to increased property improvements in 1996 and 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 provided by financing activities of $924,714, primarily due
to a reduction in principal repayments of mortgage notes payable, an increase of
$122,582 in the draw on the line of credit related to the Glasshouse Square
mortgage payable and a principal prepayment of $750,000 on the note payable to a
Southmark affiliate in 1995.
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, 1996 was 98% versus 92% for
the same period in 1995.
This increase in occupancy is primarily due to property improvements completed
in the first quarter of 1996 which have significantly enhanced the value of the
property.
Glasshouse Square - San Diego, California
- -----------------------------------------
Average occupancy for the six months ended June 30, 1996 was 85% versus 75% for
the same period in 1995. This increase in occupancy is primarily due to the
execution of a lease with Ultrazone in May 1995. During this time, the leasable
space was resurveyed and the leasable square footage was increased to
approximately 97,381.
In 1996, additional testing was conducted by the environmental engineers
regarding the alleged leaking of petroleum products from underground storage
tanks on the Garcia's Tract and part of Glasshouse Square parking lot. The
engineers determined there was no "free product" at the portions of the site
that were tested and, also, no human health risk exists at this time.
Management does not believe that the County of San Diego will take further
action. Therefore, this situation should not have a material effect on the
Partnership.
7
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits.
Exhibit
Number Description
------ -----------
3. and 4. Limited Partnership Agreement (Incorporated by
reference to Registration Statement No. 2-74914
on Form S-11 filed by Registrant).
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 34,353 and
34,453 Limited Partnership Units outstanding in 1996
and 1995.
16. Letter dated July 18, 1995 from Price Waterhouse with
respect to a change in certifying accountant.
Incorporated by reference to Form 8-K - Current
Report for the period ending September 30, 1995, as
filed with the Securities and Exchange Commission on
July 24, 1995.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended June 30, 1996.
8
<PAGE>
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
August 13, 1996 By: /s/ Glen Adams
- ------------------------- ---------------------------------------------
Date Glen Adams, President
Southmark Investors, Inc.
August 13, 1996 By: /s/ Charles B. Brewer
- ------------------------- ---------------------------------------------
Date Charles B. Brewer, Executive Vice President
and Principal and Accounting Financial
Officer Southmark Investors, Inc.
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 501,695
<SECURITIES> 0
<RECEIVABLES> 393,490
<ALLOWANCES> 107,044
<INVENTORY> 0
<CURRENT-ASSETS> 538,141
<PP&E> 19,289,341
<DEPRECIATION> 7,769,494
<TOTAL-ASSETS> 13,041,798
<CURRENT-LIABILITIES> 262,142
<BONDS> 10,987,978
0
0
<COMMON> 0
<OTHER-SE> 1,248,282
<TOTAL-LIABILITY-AND-EQUITY> 13,041,798
<SALES> 0
<TOTAL-REVENUES> 996,480
<CGS> 0
<TOTAL-COSTS> 532,840
<OTHER-EXPENSES> 507,989
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 508,664
<INCOME-PRETAX> (553,013)
<INCOME-TAX> 0
<INCOME-CONTINUING> (553,013)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (553,013)
<EPS-PRIMARY> (15.94)
<EPS-DILUTED> 0
</TABLE>
