<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 September 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
-----------
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) 740-2200
- --------------------------------------------------------------------------------
(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
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I - Financial Information
Item 1 - Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 3
(b) Condensed Consolidated Statements of Operations for the three and
nine months ended September 30, 1996 and 1995 4
(c) Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1996 and 1995 5
(d) Notes to Condensed Consolidated Financial Statements 6
Item 2 - Managements Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K 7
Signatures (pursuant to General Instruction E) 9
</TABLE>
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
- ------- -------------------------------------------
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1996 December 31,
(Unaudited) 1995
-------------- -------------
<S> <C> <C>
ASSETS
- ------
Real estate investments
Land $ 5,255,247 $ 5,255,247
Buildings and improvements 14,043,315 13,929,173
----------- -----------
19,298,562 19,184,420
Less: Accumulated depreciation and
amortization (7,892,576) (7,510,725)
----------- -----------
11,405,986 11,673,695
Note receivable 250,000 250,000
Cash and cash equivalents (including $19,911and $17,990
for security deposits at September 30, 1996 and
December 31, 1995, respectively) 264,037 660,562
Accounts receivable, net of allowance for doubtful accounts
of $107,044 at September 30, 1996 and December 31, 1995 43,697 54,916
Deferred borrowing costs, net of accumulated amortization
of $104,395 and $83,280 at September 30, 1996 and
December 31, 1995, respectively 241,946 262,796
Prepaid expenses and other assets 552,644 514,303
----------- -----------
$12,758,310 $13,416,272
=========== ===========
LIABILITIES AND PARTNERS EQUITY (DEFICIT)
- -----------------------------------------
Mortgage notes payable, net of discounts $10,771,612 $10,674,931
Accrued mortgage interest 151,633 86,568
Accrued property taxes 63,101 98,828
Accounts payable and accrued expenses 195,699 156,500
Subordinated real estate commissions 549,218 549,218
Security deposits 24,710 48,932
----------- -----------
11,755,973 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) 1,543,617 2,334,586
General Partner (541,280) (533,291)
----------- -----------
1,002,337 1,801,295
----------- -----------
$12,758,310 $13,416,272
=========== ===========
</TABLE>
3
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ------------------------
1996 1995 1996 1995
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 624,038 $ 539,653 $1,604,130 $1,793,445
Interest 8,183 7,418 24,569 142,782
Other income - 150 - 32,203
--------- --------- ---------- ----------
Total revenues 632,221 547,221 1,628,699 1,968,430
--------- --------- ---------- ----------
Expenses:
Interest 259,014 248,147 767,678 836,448
Depreciation and amortization 142,070 123,005 421,594 362,022
Property taxes 35,445 49,869 84,859 131,307
Other property operations 335,745 283,431 819,171 907,846
General and administrative 105,892 99,832 334,355 363,220
--------- --------- ---------- ----------
Total expenses 878,166 804,284 2,427,657 2,600,843
--------- --------- ---------- ----------
Net operating loss (245,945) (257,063) (798,958) (632,413)
Other income (expense):
Loss on sale of repossessed
real estate - (121,518) - (121,518)
--------- --------- ---------- ----------
Loss before extraordinary item (245,945) (378,581) (798,958) (753,931)
Extraordinary items - gain on
debt forgiveness - - - 75,000
--------- --------- ---------- ----------
Net loss $(245,945) $(378,581) $ (798,958) $ (678,931)
========= ========= ========== ==========
Net loss allocable to General
Partners $ (2,459) $ (3,786) $ (7,990) $ (6,789)
Net loss allocable to Limited
Partners (243,486) (374,795) (790,968) (672,142)
--------- --------- ---------- ----------
Net loss $(245,945) $(378,581) $ (798,958) $ (678,931)
========= ========= ========== ==========
Net loss per Limited Partnership
Unit $ (7.09) $ (10.88) $ (23.02) $ (19.51)
========= ========= ========== ==========
</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>
Nine Months Ended
September 30,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Net loss $(798,958) $(678,931)
--------- ---------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 421,595 371,744
Interest and fees added to note payable to Southmark affiliate - 120,040
Gain on forgiveness of debt - (75,000)
Loss on sale of repossessed real estate - 121,518
Changes in assets and liabilities:
Accounts receivable 11,219 (27,068)
Prepaid expenses and other assets (57,234) (55,391)
Accounts payable and accrued expenses 39,198 33,540
Accrued mortgage interest 65,065 4,091
Accrued property taxes (35,727) 120,836
Security deposits (24,222) 20,063
--------- ---------
Total adjustments 419,894 634,373
--------- ---------
Net cash used in operating activities (379,064) (44,558)
--------- ---------
Cash flows from investing activities:
Additions to real estate investments (114,142) (133,401)
Sale of Las Oficinas note receivable - 750,000
Sale of repossessed real estate - 291,562
--------- ---------
Net cash (used in) provided by investing activities (114,142) 908,161
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage notes payable (79,051) (150,414)
Principal payment on note payable to Southmark affiliate - (750,000)
Advances from line of credit 175,732 73,387
Cash received on the refinance of the mortgage note
payable for Washington Towne Apartments - 604,663
Borrowing costs incurred on the refinance of mortgage
note payable - (83,205)
--------- ---------
Net cash provided by (used in) financing activities 96,681 (305,569)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (396,525) 558,034
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 660,562 197,283
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 264,037 $ 755,317
========= =========
</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 nine months ended September 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 Partnerships 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 Hamptons 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. On August 21,
1996 a Third Amendment of Escrow Agreement was entered into to further extend
the escrow period through December 15, 1996.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
----------------------------------------------------------------------
OF OPERATIONS
-------------
The Partnerships net loss for the nine months ended September 30, 1996 was
$798,958. The net loss for the same period in 1995 was $678,931. Total
revenues for the nine months ended September 30, 1996 were $1,628,699 versus
$1,968,430 for the same period in 1995. The decrease in total revenues in 1996
is primarily attributable to the loss of rental income from the Bank of San
Pedro Office Building which was sold in July 1995.
6
<PAGE>
Total expenses for the nine months ended September 30, 1996 were $2,427,657
versus $2,600,843 for the same period in 1995. The decrease in expenses in 1996
primarily relates to the decrease in interest expense due to extension fees
incurred on the Bank of San Pedro Office Building promissory note payable to
Southmark in 1995. Other property operation expenses decreased for the same
period due to the sale of the Bank of San Pedro Office Building on July 20,1995.
During the nine months ended September 30, 1996, the Partnership recorded a
decrease in cash and cash equivalents of $396,525 versus an increase of $558,034
for the same period in 1995. The statement of cash flows included an increase
in cash used in operating activities of $334,506 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 also included an increase in cash used in
investing activities of $1,022,303 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 also included an increase in cash
provided by financing activities of $402,250, primarily due to a reduction in
principal repayments of mortgage notes payable, an increase of $175,732 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 nine months ended September 30, 1996 and 1995 was 94%.
Glasshouse Square - San Diego, California
- -----------------------------------------
Average occupancy for the nine months ended September 30, 1996 was 86% versus
82% for the same period in 1995. This increase in occupancy is primarily due to
the execution of a lease with Ultrazone in May 1995.
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.
7
<PAGE>
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 September 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
November 13, 1996 By: /s/ Charles B. Brewer,
- -------------------------------- -----------------------------------
Date Charles B. Brewer, President and
Principal and Accounting Financial
Officer
Southmark Investors, Inc.
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 264,037
<SECURITIES> 0
<RECEIVABLES> 293,697
<ALLOWANCES> 107,044
<INVENTORY> 0
<CURRENT-ASSETS> 552,644
<PP&E> 19,298,562
<DEPRECIATION> 7,892,576
<TOTAL-ASSETS> 12,758,310
<CURRENT-LIABILITIES> 984,361
<BONDS> 10,771,612
0
0
<COMMON> 0
<OTHER-SE> 1,002,337
<TOTAL-LIABILITY-AND-EQUITY> 12,758,310
<SALES> 0
<TOTAL-REVENUES> 632,221
<CGS> 0
<TOTAL-COSTS> 619,152
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 259,014
<INCOME-PRETAX> (245,945)
<INCOME-TAX> 0
<INCOME-CONTINUING> (245,945)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (245,945)
<EPS-PRIMARY> 0
<EPS-DILUTED> (7.09)
</TABLE>
