<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 March 31, 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
------------
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.)
2001 Ross Avenue, Suite 4600, Dallas, Texas 75201
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(214) 740-2209
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
200 Crescent Court, Suite 1300, Dallas, Texas 75201
- --------------------------------------------------------------------------------
(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 No X
------ ------
1
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
Page
----
Part I - Financial Information
Item 1 - Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of
March 31, 1996 and December 31, 1995 3
(b) Condensed Consolidated Statements of Operations
for the three months ended March 31, 1996 and 1995 4
(c) Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------- -------------------------------------------
(a) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1996 December 31,
(Unaudited) 1995
------------ -------------
<S> <C> <C>
ASSETS
- ------
Real estate investments
Land $ 5,255,247 $ 5,255,247
Buildings and improvements 14,002,427 13,929,173
----------- -----------
19,257,674 19,184,420
Less: Accumulated depreciation and
amortization (7,638,202) (7,510,725)
----------- -----------
11,619,472 11,673,695
----------- -----------
Note receivable 250,000 250,000
Cash and cash equivalents (including $18,381 and $17,990
for security deposits at March 31, 1996 and
December 31, 1995, respectively) 511,297 660,562
Accounts receivable, net of allowance for doubtful accounts of
$107,044 at March 31, 1996 and December 31, 1995 72,790 54,916
Deferred borrowing costs, net of accumulated amortization
of $90,054 and $83,280 at March 31, 1996 and
December 31, 1995, respectively 256,022 262,796
Prepaid expenses and other assets 542,940 514,303
----------- -----------
$13,252,521 $13,416,272
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net of discounts $10,795,914 $10,674,931
Accrued mortgage interest 107,932 86,568
Accrued property taxes 134,273 98,828
Accounts payable and accrued expenses 133,532 156,500
Subordinated real estate commissions 549,218 549,218
Security deposits 24,323 48,932
----------- -----------
11,745,192 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) 2,043,560 2,334,586
General Partner (536,231) (533,291)
----------- -----------
1,507,329 1,801,295
----------- -----------
$13,252,521 $13,416,272
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
(b) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
--------- --------
<S> <C> <C>
Revenues:
Rental income $ 468,028 $ 603,762
Interest 5,572 128,626
--------- ---------
Total revenues 473,600 732,388
--------- ---------
Expenses:
Interest 249,991 335,727
Depreciation and amortization 137,590 118,456
Property taxes 13,969 39,185
Other property operations 242,514 297,466
General and administrative 123,502 128,518
--------- ---------
Total expenses 767,566 919,352
--------- ---------
Net loss $(293,966) $(186,964)
========= =========
Net loss allocable to General Partner $ (2,940) $ (1,870)
Net loss allocable to Limited Partners (291,026) (185,094)
--------- ---------
Net loss $(293,966) $(186,964)
========= =========
Net loss per Limited Partnership Unit: $ (8.47) $ (5.37)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
(c) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Net loss $(293,966) $(186,964)
--------- ---------
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 137,590 121,698
Interest and fees added to note payable to Southmark affiliate - 106,235
Changes in assets and liabilities:
Accounts receivable (17,874) 6,621
Prepaid expenses and other assets (31,977) 4,565
Accounts payable and accrued expenses (22,968) (7,289)
Accrued mortgage interest 21,364 (52,089)
Accrued property taxes 35,445 28,714
Security deposits (24,609) 102
--------- ---------
Total adjustments 96,971 208,557
--------- ---------
Net cash (used in) provided by operating activities (196,995) 21,593
--------- ---------
Cash flows from investing activities:
Additions to real estate investments (73,253) (36,712)
--------- ---------
Net cash (used in) investing activities (73,253) (36,712)
--------- ---------
Cash flows from financing activities:
Advances from line of credit 146,141 -
Principal payments on mortgage notes payable (25,158) (62,352)
--------- ---------
Net cash provided by (used in) financing activities 120,983 (62,352)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (149,265) (77,471)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 660,562 197,283
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 511,297 $ 119,812
========= =========
</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 three months ended March 31, 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 three months ended March 31, 1996 was
$293,966. The net loss for the same period in 1995 was $186,964. Total
revenues for the three months ended March 31, 1996 were $473,600 versus $732,388
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 three months ended March 31, 1996 were $767,566 versus
$919,352 for the same period in 1995. The decrease in expenses in 1996 is
primarily due to an 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 three months ended March 31, 1996, the Partnership recorded a
decrease in cash of $149,265 versus a decrease of $77,471 for the same period in
1995. The statement of cash flows included an increase in cash used in
operating activities of $218,588 primarily due to decreased 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 $36,541 due to increased property improvements in 1996. The
statement of cash flows included an increase in cash provided by financing
activities of $183,335, primarily due to less principal repayments of mortgage
notes payable and an increase of $146,141 in the draw on the line of credit
related to the Glasshouse Square mortgage payable.
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 three months ended March 31, 1996 was 94% versus 95%
for the same period in 1995. This decrease in occupancy is primarily due to
property improvements which have been completed prior to the end of the first
quarter of 1996 and have significantly enhanced the value of the property.
Glasshouse Square - San Diego, California
- -----------------------------------------
Average occupancy for the three months ended March 31, 1996 was 81% 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.
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.
Bank of San Pedro Note Receivable
- ---------------------------------
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 and net cash of
$291,562.
As of March 30, 1996, the borrower on the note receivable ceased making
regularly scheduled debt payments constituting an event of default. The
borrower has currently cured the default situation; however, a provision for
loss in the amount of $100,000 was recorded in 1995 to reflect the market value
of the real estate.
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, respectively.
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 March 31, 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
July 30, 1996 By: /s/ Glen Adams
- ------------------------- ----------------------------------------------
Date Glen Adams, President
Southmark Investors, Inc.
July 30, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 511,297
<SECURITIES> 0
<RECEIVABLES> 429,834
<ALLOWANCES> 107,044
<INVENTORY> 0
<CURRENT-ASSETS> 584,087
<PP&E> 19,257,674
<DEPRECIATION> 7,638,202
<TOTAL-ASSETS> 13,252,521
<CURRENT-LIABILITIES> 241,464
<BONDS> 11,345,132
0
0
<COMMON> 0
<OTHER-SE> 1,507,329
<TOTAL-LIABILITY-AND-EQUITY> 13,252,521
<SALES> 0
<TOTAL-REVENUES> 473,600
<CGS> 0
<TOTAL-COSTS> 256,483
<OTHER-EXPENSES> 261,092
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 249,991
<INCOME-PRETAX> (293,966)
<INCOME-TAX> 0
<INCOME-CONTINUING> (293,966)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (293,966)
<EPS-PRIMARY> (8.47)
<EPS-DILUTED> 0
</TABLE>
