<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995
---------------------------------------------------
[ ] 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)
200 Crescent Court, Suite 1300, Dallas, Texas 75201
- ------------------------------------------------------------------------------
(Former address, if changed since last report)
Registrant's telephone number, including area code (214) 740-2209
----------------
Securities registered pursuant to Section 12(b) of the Act: Not applicable
Securities registered pursuant to Section 12 (g) of the Act:
Limited Partnership Units
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
-- --
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
All of the registrant's 34,353 Limited Partnership Units are held by non-
affiliates of the registrant. The aggregate market value of units held by non-
affiliates is not determinable since there is no public trading market for
Limited Partnership Units.
Documents Incorporated by Reference: None
Exhibit Index: See Page 17
TOTAL OF 53 PAGES
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO ANNUAL REPORT ON FORM 10-K
<TABLE>
<CAPTION>
Item No. Page
- -------- ----
<S> <C> <C>
PART I
1 Business..................................... 3
2 Properties................................... 6
3 Legal Proceedings............................ 8
4 Submission of Matters to a Vote of Security
Holders...................................... 8
PART II
5 Market for Registrant's Units of Limited
Partnership and Related Security Holder
Matters...................................... 9
6 Selected Financial Data...................... 10
7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
8 Consolidated Financial Statements and 14
Supplementary Data...........................
9 Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure................................... 15
PART III
10 Directors and Executive Officers of the
Registrant................................... 15
11 Executive Compensation....................... 16
12 Security Ownership of Certain Beneficial
Owners and Management........................ 16
13 Certain Relationships and Related
Transactions................................. 16
PART IV
14 Exhibits, Consolidated Financial Statement
Schedules and Reports on Form 8-K............ 17
</TABLE>
2
<PAGE>
PART I
ITEM 1. BUSINESS
- ------- --------
ORGANIZATION
- ------------
University Real Estate Partnership V (the "Partnership" or "Registrant") was
organized on August 12, 1977, as a limited partnership under the provisions of
the California Uniform Limited Partnership Act. 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. The
principal place of business for the General Partner is 2711 LBJ Freeway, Suite
950, Dallas, Texas 75234.
On January 6, 1978, a Registration Statement on Form S-11 was declared effective
by the Securities and Exchange Commission pursuant to which the Partnership
offered for sale an aggregate of $25,000,000 Income and Growth/Shelter Limited
Partnership Units. The Limited Partnership Units represent equity interests in
the Partnership and entitle the holders thereof to participate in certain
allocations and distributions of the Partnership. The sale of Limited
Partnership Units closed on July 13, 1978, with 34,800 Limited Partnership Units
sold at $500 each for gross proceeds of $17,400,000. Of the Limited Partnership
Units sold, 347 have subsequently been repurchased by the Partnership. Of the
34,353 Limited Partnership Units currently outstanding, 17,733 are Income Units
and 16,620 are Growth/Shelter Units.
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 owned by Southmark and its
affiliates, including the general partnership interest of the Partnership. On
December 16, 1993, Southmark and SHL executed the Second Amendment to Asset
Purchase Agreement whereby SHL acquired an option to purchase the general
partnership interest of the Partnership, rather than purchase the partnership
interest itself. On the same date, SHL assigned its rights under the amended
Asset Purchase Agreement to Hampton Realty Partners, L.P., a Texas limited
partnership ("Hampton") and Hampton and Southmark affiliates also entered into
an Option Agreement whereby Hampton acquired the right to purchase the option
assets, including the general partnership interest of the Partnership, subject
to the approval of the limited partners. On April 20, 1994, Insignia Financial
Group, Inc., a Delaware corporation, and certain of its affiliates (collectively
"Insignia") entered into an Option Purchase Agreement with Hampton to acquire
Hampton's rights to solicit proxies from the Limited Partners seeking their
consent to Hampton becoming the general partner of the Partnership. On August
8, 1994, the Insignia contract was terminated. 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 approval of the Limited Partners. As of the date hereof, JKD has not
exercised that right.
Effective as of December 14, 1992, the Partnership entered into a Portfolio
Services Agreement and a Property Management Agreement with Hampton UREF
Management, Ltd. ("Hampton UREF"), Texas limited partnership, pursuant to which
Hampton UREF began providing management for the Partnership's properties and
certain other portfolio services. The operations of the Partnership's
properties were managed by Hampton Management, Inc. (formerly SHL Management,
Inc.) through a subcontract agreement with Hampton UREF. From April 20, 1994 to
August 8, 1994, the Partnership and its properties were managed by Insignia
pursuant to a Property Management Subcontract Agreement with Hampton UREF. As
of August 8, 1994, the properties only were managed by an affiliate of Insignia
under a Property Management Agreement directly with the Partnership.
As of December 30, 1994, Hampton UREF entered into an Assignment and Assumption
of Portfolio Services Agreement with JKD pursuant to which JKD 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
3
<PAGE>
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.
CURRENT OPERATIONS
- ------------------
General:
The Partnership's primary business is to own, operate and ultimately dispose of
its portfolio of income-producing real properties for the benefit of its
partners. The Partnership has liquidated many of its properties and is
currently operating two income-producing properties, Glasshouse Square, and
through its investment in Washington Towne Apartments, LLC, Washington Towne
Apartments. In the course of liquidating certain of its properties, the
Partnership has taken partial consideration in the form of notes receivable.
Currently, a part of the Partnership's cash collections and revenue relates to
one remaining note receivable.
Glasshouse Square Environmental Issue:
During 1993, it was determined in a Phase II Environmental Audit that the soils
and groundwater in the Garcia's Tract and possibly part of the Glasshouse Square
parking lot, located in the Northeastern most corner of Glasshouse Square
property, contain elevated levels of certain petroleum products. During 1994
and 1995, the Partnership worked with counsel and environmental engineers in
connection with further investigation of the alleged leaking of petroleum
products from underground storage tanks and with San Diego County officials to
determine the necessary level of clean-up. The Partnership also obtained a
health risk assessment to ensure that the gasoline constituents beneath the
Garcia's Tract are not emitting harmful vapors inside the building. The health
assessment was returned "non detect" meaning no such harmful vapors were
detected. In 1996, additional testing was conducted by the environmental
engineers who 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.
Business Plan:
The business of the Partnership is not seasonal. The Partnership's anticipated
plan of operation for 1996 is to preserve or increase gross revenue whenever
possible and to maintain or decrease property operating expenditures whenever
possible, while at the same time making whatever capital expenditures are
reasonable under the circumstances in order to preserve and enhance the value of
its properties. Whenever the General Partner deems it in the Partnership's best
interest, the Partnership will sell its properties and will service any note
receivable secured by the properties. In addition, if long-term financing for
the Partnership properties becomes available under favorable terms, the
Partnership may refinance its properties. See Item 7 - "Management's Discussion
and Analysis of Financial Condition and Results of Operations".
From December 14, 1992 through April 20, 1994, Hampton UREF and its affiliates
managed the day-to-day operations of the Partnership and its properties under
terms of Property Management and Portfolio Services Agreements. From April 20,
1994 through December 31, 1994, the Partnership's properties were managed by
Insignia or an affiliate, first pursuant to a Property Management Subcontract
Agreement with Hampton UREF and then a Property Management Agreement with the
Partnership itself. On December 30, 1994, Hampton UREF entered into an
Assignment and Assumption of Portfolio Services Subcontract Agreement with JKD.
4
<PAGE>
Competitive Conditions:
Since the principal business of the Partnership is to own and operate real
estate, the Partnership is subject to all of the risks incidental to ownership
of real estate and interests therein, many of which relate to the illiquidity of
this type of investment. These risks include changes in general or local
economic conditions, changes in supply or demand for competing properties in an
area, changes in interest rates and availability of permanent mortgage funds
which may render the sale or refinancing of a property difficult or
unattractive, changes in real estate and zoning laws, increases in real property
tax rates and federal or local economic or rent controls. The illiquidity of
real estate investments generally impairs the ability of the Partnership to
respond promptly to changes in these circumstances. The Partnership competes
with numerous established companies, private investors (including foreign
investors), real estate investment trusts, limited partnerships and other
entities (many of which have greater resources than the Partnership and broader
experience than the General Partner) in connection with the acquisition, sale,
financing and leasing of properties.
It appears that the Partnership's original schedule for meeting its objectives
of, among other things, preservation of capital, current cash distributions and
capital gains through potential appreciation of Partnership property is unlikely
to be achieved. The Partnership has not been able to liquidate its property
within the originally expected time frame of from five to ten years after its
acquisition (i.e. between 1983 and 1988). The General Partner now expects to
hold the Partnership's real estate investments until such time as the
performance of the Partnership's investment improves and permits the Partnership
to achieve its capital preservation and capital gains objectives. There can be
no assurance, however, that the property's value will increase over an extended
holding period.
SOUTHMARK BANKRUPTCY
- --------------------
On July 14, 1989, Southmark filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership nor its General
Partner were included in the filing. Southmark's reorganization plan became
effective August 10, 1990. Under the plan, most of Southmark's assets, which
include Southmark's interests in the General Partner, are being sold or
liquidated for the benefit of creditors.
Because neither the Partnership nor the General Partner were included in the
Southmark bankruptcy proceedings, there has been no direct effect on the
Partnership's operations during the bankruptcy period or resulting from
confirmation of the plan. Ultimate decision-making authority with respect to
the operations of the Partnership remains with the General Partner until such
time as the Limited Partners approve a substitute general partner.
SALE OF GENERAL PARTNER INTEREST
- --------------------------------
As a result of Southmark's bankruptcy and its plan to liquidate all of its
assets, the General Partner concluded that it was in the best interest of the
Partnership to seek, as its qualified replacement as general partner, an entity
which intends to remain involved in the management of real estate and real
estate limited partnerships.
On March 9, 1993, Southmark and several of its affiliates (including the General
Partner) entered into an Asset Purchase Agreement with SHL to sell various
general and limited partnership interests owned by Southmark and its affiliates,
including the general partnership interest of the Partnership. On December 16,
1993, Southmark and SHL executed the Second Amendment to Asset Purchase
Agreement whereby SHL acquired an option to purchase the general partnership
interest of the Partnership, rather than purchase the partnership interest
itself. On the same date, SHL assigned its rights under the amended Asset
Purchase Agreement to Hampton and Hampton and Southmark affiliates also entered
into an Option Agreement whereby Hampton acquired the right to purchase the
option assets, including the general partnership interest of the Partnership
subject to the approval of the Limited Partners. On April 20, 1994, Insignia
entered into an Option Purchase Agreement with Hampton to acquire Hampton's
rights to solicit proxies from the Limited Partners seeking their consent to
Hampton becoming the general partner of the Partnership. On August 8, 1994, the
Insignia contract was terminated. On December 30, 1994, Hampton entered into an
Assignment and Assumption of Option Agreement with JKD, 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. As of the date
hereof, JKD has not exercised that right.
5
<PAGE>
Effective as of December 14, 1992, the Partnership entered into a Portfolio
Services Agreement and a Property Management Agreement with Hampton UREF
pursuant to which Hampton UREF began providing management for the Partnership's
properties and certain other portfolio services. The operations of the
Partnership's properties were managed by Hampton Management, Inc. (formerly SHL
Management, Inc.) through a subcontract agreement with Hampton UREF. From April
20, 1994 to August 8, 1994, the Partnership and its properties were managed by
Insignia pursuant to a Property Management Subcontract Agreement with Hampton
UREF. As of August 8, 1994, the properties were managed by an affiliate of
Insignia under a Property Management Agreement directly with the Partnership.
As of December 30, 1994, Hampton UREF entered into an Assignment and Assumption
of Portfolio Services Agreement with JKD pursuant to which JKD 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 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 OSGPC 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. PROPERTIES
- ------- ----------
Description of Real Estate:
The following table sets forth the investment portfolio of the Partnership at
December 31, 1995. It is the opinion of management that both properties are
adequately covered by insurance. The property taxes for Washington Towne
Apartments and Glasshouse Square Shopping Center totaled $39,240 and $93,897,
respectively, in 1995. The mortgage notes payable totaled $10,674,931 at
December 31, 1995 for Washington Towne Apartments and Glasshouse Square Shopping
Center. A full detail of each mortgage is described in Item 8 - "Note 7 -
Mortgage Notes Payable".
<TABLE>
<CAPTION>
Gross
Book Value Occupancy Date
Property Description of Property Rate Acquired
- --------------------------- ------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Glasshouse Square Shopping
Center
San Diego, California 92,839 sq. $16,894,110 82% December
ft. 1978
Washington Towne
Apartments Apartments
Atlanta, Georgia 148 units 2,290,310 94% July 1991
------------
$19,184,420
============
</TABLE>
Glasshouse Square
- -----------------
The Glasshouse Square Shopping Center, along with the Garcia's Tract, are
currently owned by the Partnership subject to a first and second lien deeds of
trust as set forth more fully in Item 8 - "Note 7 - Mortgage Notes Payable".
The section of land commonly referred to as the Garcia's Tract, located in the
Northeastern most corner of the Glasshouse Square property, was leased to the
Partnership through September 1993. The Partnership purchased a 50% undivided
interest in the Garcia's Tract on April 14, 1989, and purchased the remaining
50% undivided interest from the Stallard Family Trust on September 16, 1993.
At December 31, 1995, the mortgages payable for Glasshouse Square had unpaid
principal amounts of $7,435,834 and $1,492,431 both of which are due December
2000 (see Item 8 - "Note 7 - Mortgage Notes 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
6
<PAGE>
whereby the lender agreed to discontinue foreclosure proceedings. Additionally,
on March 27, 1995, the Partnership obtained from this same lender a $400,000
line of credit due in December 2000 (see Item 8 - "Note 7 - Mortgage Notes
Payable").
During 1993, it was determined in a Phase II Environmental Audit that the soils
and groundwater in the Garcia's Tract and possibly part of the Glasshouse Square
parking lot, located in the Northeastern most corner of Glasshouse Square
property, contain elevated levels of certain petroleum products. In 1994 and
1995, the Partnership worked with counsel and environmental engineers in
connection with further investigation of the alleged leaking of petroleum
products from underground storage tanks and with San Diego County officials to
determine the necessary level of clean-up. The Partnership also obtained a
health risk assessment to ensure that the gasoline constituents beneath the
Garcia's Tract are not emitting harmful vapors inside the building. The health
assessment was returned "non detect" meaning no such harmful vapors were
detected. In 1996, additional testing was conducted by the environmental
engineers who 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.
Washington Towne Apartments
- ---------------------------
The mortgage payable for Washington Towne Apartments, LLC had unpaid principal
amount of $1,746,666 at December 31, 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 have been completed
prior to the end of the first quarter 1996 and have significantly enhanced the
value of the property (see Item 8 - "Note 7 - Mortgage Notes Payable").
Operating Data:
Occupancy Rates for the Years 1991-1995
<TABLE>
<CAPTION>
- -----------------------------------------------------
1991 1992 1993 1994 1995
- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Glasshouse Square 90% 73% 74% 75% 82%
- -----------------------------------------------------
Washington Towne 77% 82% 98% 98% 94%
- -----------------------------------------------------
</TABLE>
The following table shows tenants in Glasshouse Square occupying ten percent or
more of the rentable square footage and their lease provisions:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Nature of Rent Per Lease Lease
Tenant Business Annum Expiration Renewal
Options
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Showbiz Pizza Family Pizza $161,304 4/18/03 Two - 5
Restaurant year
options
- --------------------------------------------------------------------------------
Silo California Appliances, $224,268 Tenant Three -
Electronics, defaulted 5 year
Computer Retail See Item 3 options
- --------------------------------------------------------------------------------
UA Theater Movie Theater $254,400 7/31/01 Four - 5
year
options
- --------------------------------------------------------------------------------
Blockbuster Music Electronics, $187,380 9/30/04 Three -
Audio and 5 year
Video Software options
- --------------------------------------------------------------------------------
</TABLE>
During 1995, Silo California, a major tenant at Glasshouse Square, ceased retail
operations. Litigation has been filed by the Partnership. See Item 3 - "Legal
Proceedings".
7
<PAGE>
The following is a table of scheduled lease expirations:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
GLASSHOUSE SQUARE SHOPPING CENTER
SCHEDULE OF LEASE EXPIRATIONS
As of 12/31/95
- -----------------------------------------------------------------------------------------------------
Number of Square % of Gross
Year Lease Expirations Footage Annual Rental Annual Rental
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 0 0 $ 0 0.00%
- -----------------------------------------------------------------------------------------------------
1997 0 0 $ 0 0.00%
- -----------------------------------------------------------------------------------------------------
1998 1 5,579 $ 56,906 6.13%
- -----------------------------------------------------------------------------------------------------
1999 0 0 $ 0 0.00%
- -----------------------------------------------------------------------------------------------------
2000 0 0 $ 0 0.00%
- -----------------------------------------------------------------------------------------------------
2001 1 21,295 $ 254,400 27.42%
- -----------------------------------------------------------------------------------------------------
2002 1 1,200 $ 35,458 3.82%
- -----------------------------------------------------------------------------------------------------
2003 1 11,523 $ 161,304 17.39%
- -----------------------------------------------------------------------------------------------------
2004 1 10,414 $ 187,380 20.20%
- -----------------------------------------------------------------------------------------------------
2005 0 0 $ 0 0.00%
- -----------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth information regarding depreciation on each of the
Partnership's properties:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Land Building Improvements
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Glasshouse Square
- --------------------------------------------------------------------------------------
Tax Basis $4,731,102 $10,508,167 $4,040,879
- --------------------------------------------------------------------------------------
Average Depreciable N/A 30 YRS 3-25 YRS
Life
- --------------------------------------------------------------------------------------
Method N/A SL SL
- --------------------------------------------------------------------------------------
Washington Towne
Apartments
- --------------------------------------------------------------------------------------
Tax Basis $ 592,879 $ 1,289,202 $ 390,049
- --------------------------------------------------------------------------------------
Average Depreciable N/A 25 YRS 3-10 YRS
Life
- --------------------------------------------------------------------------------------
Method N/A SL SL
- --------------------------------------------------------------------------------------
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
-----------------
The Partnership filed a lawsuit styled University Real Estate Partnership V v.
---------------------------------------
Silo California, Inc. No. 692441 (Superior Court of the State of California) to
- ---------------------
recover possession of leased premises and damages related to breach of a lease
at Glasshouse Square Shopping Center. The Partnership obtained an unlawful
detainer judgment against the defendant on October 25, 1995, in the amount of
$41,757.
The Partnership filed a claim against Silo California, Inc. on February 9, 1996,
in a bankruptcy proceeding entitled In re: Silo California, Inc., a California
-------------------------------------------
corporation, No. 95-1581 (U.S. Bankruptcy Court, District of Delaware), to
- -----------
recover on the $41,757 unlawful detainer judgment. A second claim in the amount
of $312,992 for additional damages related to breach of the lease was filed on
February 20, 1996 against Silo California, Inc. and an identical $312,992 claim
was filed against Silo Holdings, Inc. in In re: Silo Holdings, Inc., No. 95-
--------------------------
1578 (U.S. Bankruptcy Court, District of Delaware) on February 20, 1996. All
three claims are still pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
None.
8
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED
- ------- --------------------------------------------------------------------
SECURITY HOLDER MATTERS
-----------------------
(A) There is no established public trading market for Limited Partnership
Units, nor is one expected to develop.
<TABLE>
<CAPTION>
(B) Title of Class Number of Record Unit Holders
------------------------- -----------------------------
<S> <C> <C>
Limited Partnership Units 1,532 as of March 31, 1996
Income Units 861 as of March 31, 1996
Growth/Shelter Units 941 as of March 31, 1996
</TABLE>
(C) Cash distributions from the Partnership were suspended in 1992 and the
Partnership is continuing to experience negative cash flows from operations
as of December 31, 1995. Cash distributions from operations totaled
$265,463 to the Income Unit Holders, $475,684 to the Growth/Shelter Unit
Holders and $64,447 to the General Partner in 1991. Cumulative
distributions through December 31, 1995, were $15,812,536, $1,786,307, and
$590,957 to the Income, Growth/Shelter, and General Partners, respectively.
See Item 7 - "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for discussion of distributions and likelihood
of the reinstatement of distributions.
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- --------- -----------------------
The following table sets forth a summary of certain financial data for the
Partnership. This summary should be read in conjunction with the Partnership's
consolidated financial statements and notes thereto appearing in Item 8.
<TABLE>
<CAPTION>
Consolidated Statements Year Ended December 31,
- ----------------------- ---------------------------
Of Operations 1995 1994 1993 1992 1991
- ------------- ------------ ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Rental income.................. $ 2,329,859 $ 2,484,310 $ 1,946,723 $ 1,911,999 $ 1,875,562
Interest income................ 150,809 212,896 876,840 915,414 1,107,400
Other income................... 44,345 - - - -
Expenses (before
provision)................... (3,477,628) (3,792,909) (3,232,592) (3,442,298) (2,914,672)
Loss on sale of note
receivable................... - (350,000) - - -
Loss on modification of
note receivable.............. - (530,695) - - -
Provision for loss on
note receivable.............. (100,000) - - (270,000) -
Loss on sale of repossessed
real estate.................. (121,518) - - - -
Recognition of
deferred gains............... - - - - -
Income (loss) before
extraordinary items.......... (1,174,133) (1,976,398) (409,029) (884,885) 68,290
Extraordinary item............. 75,000 - - - 481,816
----------- ----------- ----------- ----------- -----------
Net income (loss).............. $(1,099,133) $(1,976,398) $ (409,029) $ (884,885) $ 550,106
=========== =========== =========== =========== ===========
Net income (loss) per Limited
Partnership Unit:
Income (loss) before
extraordinary items........ $ (33.84) $(56.79) $(11.75) $(25.43) $ 1.96
Extraordinary item........... 2.16 - - - 13.84
----------- ----------- ----------- ----------- -----------
Net income (loss)............ $ (31.68) $(56.79) $(11.75) $(25.43) $ 15.80
=========== =========== =========== =========== ===========
Distributions per
Limited Partnership
Unit:
Income Partners.............. $ - $ - $ - $ - $ 14.97
Growth/Shelter
Partners................... $ - $ - $ - $ - $ 28.45
Consolidated Balance As of December 31,
- -------------------- ---------------------------------------------------------------------
Sheets 1995 1994 1993 1992 1991
- ------ ----------- ----------- ----------- ----------- -----------
Real estate, net............... $11,673,695 $11,799,899 $12,144,308 $10,646,914 $10,758,235
Notes receivable, net.......... 250,000 750,000 4,319,022 4,319,022 4,589,022
Total assets................... 13,416,272 14,666,336 17,469,314 17,172,610 18,171,320
Mortgage notes payable......... 10,674,931 9,453,587 11,778,476 11,052,490 11,251,866
Partners' equity............... 1,801,295 2,900,428 4,876,826 5,285,855 6,170,740
</TABLE>
Net income (loss) per Limited Partnership Unit is computed by dividing net
income (loss) allocated to the Limited Partners by the weighted average number
of Limited Partnership Units outstanding during the year. Per unit information
has been computed based on 34,353 Limited Partnership Units outstanding in 1995
and 34,453 Limited Partnership Units outstanding in 1994, 1993, 1992, and 1991.
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------- -----------------------------------------------------------------------
OF OPERATIONS
-------------
FINANCIAL CONDITION
- -------------------
The Partnership was formed in 1977 to acquire, operate and ultimately dispose of
a diversified portfolio of income-producing real property. Five of the
Partnership's properties were sold and a sixth was deeded to the lender in
cancellation of indebtedness in 1985, a seventh property was sold in 1986, and
another in 1987. The Partnership received partial consideration from the sale
of certain properties in the form of notes receivable. The Partnership held one
note receivable (secured by the Bank of San Pedro Office Building) and operated
two income-producing properties as of December 31, 1995.
In March 1994, the borrower on the Bank of San Pedro note receivable defaulted
on the note and the Partnership began to contemplate foreclosure proceedings.
In June 1994, the borrower signed over the deed in lieu of foreclosure on the
property as a result of a Settlement Agreement. On July 20, 1995, the
Partnership sold the Bank of San Pedro Office Building (see Item 8 - "Note 5 -
Repossessed Real Estate Held for Resale").
In September 1994, the Las Oficinas note receivable and the underlying wrap
mortgage payable matured. Commitment letters were executed in 1994 modifying
the note receivable principal balance and terms as well as transferring the
entire underlying debt balance to the borrower on the note receivable. On
February 27, 1995, this contract was executed and the Partnership was released
from all liability. On April 7, 1995, the modified note receivable was sold to
a third party (see Item 8 - "Note 6 - Notes Receivable" and "Note 7 - Mortgage
Notes Payable").
RESULTS OF OPERATIONS
- ---------------------
Revenues:
Rental income was $2,329,859 in 1995 as compared to $2,484,310 and $1,946,723 in
1994 and 1993, respectively. The decrease in 1995 as compared to 1994 is due
to the sale of the Bank of San Pedro Office Building on July 20, 1995. The
increase in 1994 as compared to 1993 is primarily a result of revenues earned
from the Bank of San Pedro Office Building in 1994. This property was
repossessed on June 20, 1994 by the Partnership (see Item 8 - "Note 5 -
Repossessed Real Estate Held for Resale").
Of the total revenues recorded by the Partnership, the amount attributable to
rental income from Glasshouse Square Shopping Center was 36% in 1995, 39% in
1994, and 44% in 1993. Of the 36% of revenues attributable to Glasshouse Square
Shopping Center, 91% was contributed by four tenants.
Interest income decreased to $150,809 in 1995 from $212,896 and $876,840 in 1994
and 1993, respectively. The decrease of $62,087 in 1995 as compared to 1994 is
primarily due to the sale of the Las Oficinas note receivable on April 7, 1995.
The $663,944 decrease in 1994 is the result of the borrower on the Bank of San
Pedro Office Building note receivable ceasing to make regularly scheduled debt
payments. Additionally, the Las Oficinas note receivable was modified (see Item
8 - "Note 6 - Notes Receivable"). Interest earned on the Bank of San Pedro note
receivable was approximately 17% in 1993 and 1992 of the total rental and
interest income for the Partnership. No interest was earned by the Partnership
on this note in 1994 due to the fact that the borrower ceased making regularly
scheduled debt payments constituting an event of default on the note receivable
held by the Partnership (see Item 8 - "Note 5 - Repossessed Real Estate Held for
Resale"). Of the total revenues recorded by the Partnership, the amount
attributable to rental income from the Bank of San Pedro Office Building was 11%
for the six months in 1994 that the Partnership owned the property.
Other income was $44,345 in 1995 and related to property tax refunds from prior
years on the Bank of San Pedro Office Building.
Expenses:
Interest expense was $1,096,581 in 1995 as compared to $1,335,552 and $1,075,525
in 1994 and 1993, respectively. The $238,971 decrease in 1995 as compared to
1994, is the result of the transfer of the Las Oficinas underlying debt balance
to the borrower on the note receivable (see Item 8 - "Note 6 - Notes
Receivable").
11
<PAGE>
Approximately $89,000 of the decrease is due to the sale of the Bank of San
Pedro Office Building on July 20, 1995. The approximate $260,000 increase in
1994 as compared to 1993 is due to a combination of finance costs and extension
fees related to the refinance of the mortgage payable and the extension of the
new promissory note payable on the Bank of San Pedro Office Building (see Item
8 -"Note 7 - Mortgage Notes Payable" and "Note 2 -Transactions with
Affiliates").
Depreciation and amortization expense was $488,347 in 1995 as compared to
$464,185 and $472,729 in 1994 and 1993, respectively. Property taxes were
$138,106 in 1995 as compared to $205,576 and $116,811 in 1994 and 1993,
respectively. The decrease of $67,470 in 1995 as compared to 1994 is primarily
the result of the sale of the Bank of San Pedro Office Building on July 20,
1995. The approximate $89,000 increase in property taxes in 1994 as compared to
1993, is due to the repossession by the Partnership of the Bank of San Pedro
Office Building in June 1994 and the purchase of the remaining 50% undivided
interest in the land lease for Glasshouse Square in September 1993.
Other property operating expenses, the provisions for doubtful accounts, and
property management fees were $1,249,227 in 1995 as compared to $1,260,566 and
$998,029 in 1994 and 1993, respectively. The $262,537 increase in 1994 as
compared to 1993 is due to the repossession of the Bank of San Pedro Office
Building in June 1994.
General and administrative expenses were $262,148 in 1995 as compared to
$260,640 and $270,912 in 1994 and 1993, respectively. The decrease in 1994 as
compared to 1993 was primarily due to costs incurred in 1993 related to the
extension of the Bank of San Pedro mortgage note and the modification of the
Washington Towne mortgage.
General and administrative expenses - affiliates were $243,219 in 1995 as
compared to $266,390 and $298,586 1994 and in 1993, respectively. The decreases
in 1995 and 1994 as compared to 1993 are primarily due to a decrease in the
Partnership's Tangible Asset Value. The Partnership's Tangible Asset Value of
the Partnership's real properties is determined by applying a capitalization
rate of 10% to annualize the net operating income of each real property, plus
the book value of all other tangible assets. See Item 8 - "Note 2 -
Transactions with Affiliates".
The Partnership incurred a loss of $530,695 related to the modification of the
Las Oficinas note receivable and the transfer of the underlying mortgage debt to
the borrower on the note receivable (see Item 8 - "Note 6 - Notes Receivable"
and "Note 7 - Mortgage Notes Payable"). The modification of the note receivable
occurred in December 1994 and the transfer of the underlying mortgage debt to
the borrower occurred in February 1995.
The Partnership incurred an additional loss of $350,000 related to the sale of
the Las Oficinas note receivable on April 7, 1995 for $750,000 (see Item 8 -
"Note 6 - Notes Receivable").
On July 20, 1995, the Partnership incurred a loss of $46,518 on the sale of the
Bank of San Pedro Office Building. This amount consists of a loss of $121,518
on the sale and an extraordinary gain on debt forgiveness of $75,000 on the
promissory note payable to Southmark (see Item 8 - "Note 2 - Transactions with
Affiliates" and "Note 5 - Repossessed Real Estate Held for Resale").
The Partnership recorded at year end a $100,000 provision for loss to reduce the
carrying value of the Bank of San Pedro Office Building note receivable to
$250,000 after the purchaser defaulted on the note during the first quarter of
1996. Even though the default has been cured the provision for loss was
recorded in the event of any future complications with the borrower.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At December 31, 1995, the Partnership held cash and cash equivalents of $660,562
of which $17,990 was tenant security deposits. Cash and cash equivalents at the
end of 1995 increased by $463,279 as compared to the balance held at December
31, 1994. Negative cash flows from operations in 1995 was ($9,905). Negative
cash flows from financing activities in 1995 was ($215,558). Positive cash
flows from investing activities in 1995 was $688,742.
Commitments for 1996 capital expenditures on Glasshouse Square or Washington
Towne will be funded from current cash and projected cash flow.
12
<PAGE>
The mortgage payable relating to the Bank of San Pedro matured in June 1992, and
management was successful in obtaining an extension on the note payable to April
1, 1994. After the note matured in April 1994, the Partnership was not able to
negotiate another extension or renewal of the first lien. In June 1994,
Southmark paid off the first lien mortgage and held the first lien position on
the property until the property was sold by the Partnership on July 20, 1995, at
which time all unpaid principal due Southmark was paid (see Item 8 - "Note 5 -
Repossessed Real Estate Held for Resale".
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 have been completed prior to the end of the first quarter
1996 and have significantly enhanced the value of the property (see Note 7 -
"Mortgage Notes Payable").
The mortgage payable on the Las Oficinas Office Building matured in September
1994. In October 1994, the Partnership executed a commitment letter with the
lender and the new borrower whereby the Partnership would be released from all
liabilities associated with the mortgage upon transfer of the mortgage payable
directly to the new borrower. On February 27, 1995, this contract was executed
and the Partnership was released from all liability.
With its present cash reserves and an outlook for positive cash flow from
operating activities, the General Partner expects that the Partnership will have
sufficient cash to meet its commitments. However, should present cash resources
be insufficient for current needs, the Partnership has no non-restrictive
existing lines of credit, and thus would require other sources of working
capital, such as support from affiliates or sale of Partnership property.
Neither the General Partner and its affiliates nor Hampton and its affiliates or
assigns have any obligation to provide financial support to the Partnership and
there is no assurance that the sale of any property can be timed to coincide
with the Partnership's needs.
13
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- --------------------------------------------------------
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
Consolidated Financial Statements:
Independent Auditors' Report, December 31, 1995 and 1994............ F1
Report of Independent Accountants, December 31, 1993 and 1992....... F2
Consolidated Balance Sheets at December 31, 1995 and 1994........... F3
Consolidated Statements of Operations for the Three Years Ended
December 31, 1995................................................ F4
Consolidated Statement of Partners' Equity (Deficit) for the Three
Years Ended December 31, 1995.................................... F5
Consolidated Statements of Cash Flows for the Three Years Ended
December 31, 1995................................................ F6
Notes to Consolidated Financial Statements.......................... F10
Consolidated Financial Statement Schedules:
For the Three Years Ended December 31, 1995:
Schedule VIII - Valuation and Qualifying Accounts................ F28
Schedule X - Supplementary Statements of Operations
Information..................................................... F29
Schedule XI - Real Estate Investments and Accumulated
Depreciation and Amortization................................... F30
Schedule XII - Mortgage Loans on Real Estate..................... F32
</TABLE>
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Partners of
University Real Estate Partnership V:
We have audited the accompanying consolidated balance sheets of University Real
Estate Partnership V as of December 31, 1995 and 1994, and the related
consolidated statements of operations, partners' equity (deficit) and cash flows
for the years then ended. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of University Real
Estate Partnership V as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Wallace Sanders & Company
WALLACE SANDERS & COMPANY
Dallas, Texas
March 28, 1996
F1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Partners of
University Real Estate Partnership V:
In our opinion, the accompanying statements of operations, of partners' equity
and of cash flows for the year ended December 31, 1993 present fairly, in all
material respects, the results of operations and cash flows of University Real
Estate Partnership V for the year ended December 31, 1993, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Partnership's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audit of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above. We have not
audited the financial statements of University Real Estate Partnership V for any
period subsequent to December 31, 1993.
/s/ Price Waterhouse, LLP
PRICE WATERHOUSE, LLP
Dallas, Texas
August 4, 1994
F2
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------------
ASSETS 1995 1994
- ------ ------------ ------------
<S> <C> <C>
Real estate investments (Notes 4 and 7)
Land $ 5,255,247 $ 5,255,247
Buildings and improvements 13,929,173 13,579,798
----------- -----------
19,184,420 18,835,045
Less: Accumulated depreciation and
amortization (7,510,725) (7,035,146)
----------- -----------
11,673,695 11,799,899
----------- -----------
Note receivable, net (Note 6) 250,000 750,000
----------- -----------
Cash and cash equivalents (including $17,990
and $21,695 for security deposits at December
31, 1995 and 1994, respectively) 660,562 197,283
Accounts receivable, net of allowance for
doubtful accounts of $107,044 and $72,740
at December 31, 1995 and 1994, respectively 54,916 84,929
Deferred borrowing costs, net of accumulated
amortization of $83,280 and $65,895 at
December 31, 1995 and 1994, respectively 262,796 128,547
Prepaid expenses and other assets 514,303 283,287
Repossessed real estate held for resale (Note 5) - 1,422,391
----------- -----------
$13,416,272 $14,666,336
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net of discounts (Note 7) $10,674,931 $ 9,453,587
Note payable to Southmark affiliate (Note 2) - 1,086,554
Accrued mortgage interest 86,568 253,110
Accrued property taxes 98,828 279,892
Accounts payable and accrued expenses 156,500 85,951
Accounts payable, affiliates (Note 2) - 20,894
Subordinated real estate commissions (Note 2) 549,218 549,218
Security deposits 48,932 36,702
----------- -----------
11,614,977 11,765,908
----------- -----------
Partners' equity (deficit) (Notes 1 and 8):
Limited Partners - 50,000 Units authorized;
34,353 and 34,453 Units issued and
outstanding at December 31, 1995 and 1994,
respectively, (17,733 Income Units at
December 31, 1995 and 1994 and 16,620 and
16,720 Growth/Shelter Units at December 31,
1995 and 1994, respectively) 2,334,586 3,422,728
General Partner (533,291) (522,300)
----------- -----------
1,801,295 2,900,428
----------- -----------
$13,416,272 $14,666,336
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F3
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
Revenues:
Rental income $ 2,329,859 $ 2,484,310 $1,946,723
Interest 150,809 212,896 876,840
Other income 44,345 - -
----------- ----------- ----------
Total revenues 2,525,013 2,697,206 2,823,563
----------- ----------- ----------
Expenses:
Interest 1,096,581 1,335,552 1,075,525
Depreciation and amortization 488,347 464,185 472,729
Property taxes 138,106 205,576 116,811
Other property operations 933,138 1,023,960 843,366
Provision for doubtful accounts 207,243 116,882 55,437
Property management fees (Note 2) 108,846 119,724 99,226
General and administrative 262,148 260,640 270,912
General and administrative -
affiliates (Note 2) 243,219 266,390 298,586
Provision for loss on note
receivable (Note 6) 100,000 - -
----------- ----------- ----------
Total expenses 3,577,628 3,792,909 3,232,592
----------- ----------- ----------
Net operating loss (1,052,615) (1,095,703) (409,029)
----------- ----------- ----------
Other income (expenses):
Loss on sale of note receivable - (350,000) -
Loss on modification of note
receivable - (530,695) -
Loss on sale of repossessed real
estate (121,518) - -
----------- ----------- ----------
Loss before extraordinary item (1,174,133) (1,976,398) (409,029)
Extraordinary item - gain on debt
forgiveness 75,000 - -
----------- ----------- ----------
Net loss $(1,099,133) $(1,976,398) $ (409,029)
=========== =========== ==========
Net loss allocable to General Partner $ (10,991) $ (19,764) $ (4,090)
Net loss allocable to Limited Partners $(1,088,142) $(1,956,634) $ (404,939)
----------- ----------- ----------
Net loss $(1,099,133) $(1,976,398) $ (409,029)
=========== =========== ==========
Net income (loss) per Limited
Partnership Unit:
Loss before extraordinary item $ (33.84) $ (56.79) $ (11.75)
Extraordinary item 2.16 - -
----------- ----------- ----------
Net loss $ (31.68) $ (56.79) $ (11.75)
=========== =========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F4
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Total
Partners'
General Limited Equity
Partner Partners (Deficit)
---------- ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1992 $(498,446) $ 5,784,301 $ 5,285,855
Net loss (4,090) (404,939) (409,029)
--------- ----------- -----------
Balance at December 31, 1993 (502,536) 5,379,362 4,876,826
Net loss (19,764) (1,956,634) (1,976,398)
--------- ----------- -----------
Balance at December 31, 1994 (522,300) 3,422,728 2,900,428
Net loss (10,991) (1,088,142) (1,099,133)
--------- ----------- -----------
Balance at December 31, 1995 $(533,291) $ 2,334,586 $ 1,801,295
========= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F5
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF CASH FLOWS
Net Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from tenants $ 2,180,199 $ 2,381,350 $ 1,889,864
Cash paid to suppliers (1,464,349) (1,757,581) (1,573,663)
Interest received 150,809 212,896 905,183
Interest paid (920,164) (763,662) (1,040,219)
Property taxes paid - (103,742) (157,746)
Property tax refund 31,508 - -
Insurance refund 12,092 - -
----------- ----------- -----------
Net cash (used in) provided by
operating activities (9,905) (30,739) 23,419
----------- ----------- -----------
Cash flows from investing activities:
Additions to real estate investments (352,820) (110,527) (1,970,124)
Net cash received as a result of
repossession of real estate
- 58,657 -
Sale of Las Oficinas note receivable 750,000 - -
Sale of repossessed real estate 291,562 - -
----------- ----------- -----------
Net cash provided by (used in)
investing activities 688,742 (51,870) (1,970,124)
----------- ----------- -----------
Cash flows from financing activities:
Acquisition of mortgage note for
land purchase - - 1,500,000
Principal payments on mortgage
notes payable (173,222) (194,591) (796,357)
Principal payment on note payable
to Southmark affiliate (750,000) - -
Advances from line of credit 186,206 - -
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 (used in) provided by
financing activities (215,558) (194,591) 703,643
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 463,279 (277,200) (1,243,062)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 197,283 474,483 1,717,545
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 660,562 $ 197,283 $ 474,483
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F6
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net Loss to Net Cash
(Used in) Provided by Operating Activities
<TABLE>
<CAPTION>
For the Years Ended December 31,
--------------------------------------
1995 1994 1993
------------ ------------ ----------
<S> <C> <C> <C>
Net loss $(1,099,133) $(1,976,398) $(409,029)
----------- ----------- ---------
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Depreciation and amortization 488,347 464,185 472,729
Amortization of discounts on
mortgage notes payable - 20,037 22,343
Loss on sale of note receivable - 350,000 -
Loss on modification of note
receivable - 530,695 -
Provision for loss on note receivable 100,000 - -
Interest and fees added to note
payable to
Southmark affiliate 120,040 337,460 -
Gain on debt forgiveness (75,000) - -
Amortization of deferred borrowing
costs 17,385 12,963 12,963
Loss on sale of repossessed real
estate 121,518 - -
Changes in assets and liabilities:
Accounts receivable 11,931 36,605 36,700
Prepaid expenses and other assets 66 8,361 (92,035)
Accounts payable and accrued
expenses 103,830 (19,711) (105,163)
Accounts payable, affiliates (20,894) (75,518) 96,412
Accrued mortgage interest 38,992 201,431 -
Accrued property taxes 138,472 101,834 -
Security deposits 44,541 (22,683) (11,501)
----------- ----------- ---------
Total adjustments 1,089,228 1,945,659 432,448
----------- ----------- ---------
Net cash (used in) provided by
operating activities $ (9,905) $ (30,739) $ 23,419
=========== =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F7
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
The following noncash transactions occurred in 1995:
On March 31, 1995, the Partnership converted $250,000 of accrued liabilities
into a note payable to Imperial Bank secured by Washington Towne Apartments
second lien. On September 13, 1995, the Partnership paid all outstanding
principal and accrued interest as a result of the refinancing of the Washington
Towne Apartments.
On July 20, 1995 the Partnership sold the Bank of San Pedro Office Building for
$1,350,000. The Partnership received, as partial consideration, a note
receivable for $350,000. At year end a $100,000 provision for loss was recorded
to reduce the carrying value of the Bank of San Pedro Office Building note
receivable to $250,000 after the borrower defaulted on the note during the first
quarter of 1996. Even though the default situation has been cured, the
provision for loss was recorded in the event of any future complications with
the borrower.
The mortgage payable on the Washington Towne Apartments matured in June 1995.
In September 1995, Washington Towne, L.L.C., obtained a mortgage loan payable in
the amount of $1,750,000 from a new lender. In connection with this
refinancing, the lender included in the mortgage loan principal balance the
payment of borrowing costs, required escrows, property taxes, interest, and the
payoff of two mortgage notes payable secured by the Washington Towne Apartments.
The following table represents the components of this refinancing:
<TABLE>
<CAPTION>
<S> <C>
Cash $ 604,663
Mortgage notes payable 791,641
Deferred borrowing costs 68,429
Accrued interest and property taxes 53,647
Escrows 231,620
----------
$1,750,000
==========
</TABLE>
The following noncash transactions occurred in 1994:
On June 20, 1994 the Partnership consummated a Settlement Agreement with the
borrower on the Bank of San Pedro Office Building note receivable, whereby the
Partnership received title to the Bank of San Pedro Office Building in lieu of
foreclosure.
The note receivable from the borrower was retired and the property was placed on
the Partnership books at the net note receivable balance, which approximated net
realizable value, plus the value of certain other assets and liabilities
acquired on the date of repossession. The following table represents the
components of the cost of the repossessed real estate:
<TABLE>
<CAPTION>
<S> <C>
Note receivable, net $ 5,060,000
Deferred gain on sale (3,502,914)
Provision for loss (270,000)
Accounts payable and accrued expenses 243,289
Other assets (49,327)
Cash (58,657)
-----------
Repossessed real estate held for resale $ 1,422,391
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F8
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES (CONTINUED):
In June 1994, Southmark paid off the first lien mortgage on the Bank of San
Pedro Office Building. Consequently, the Partnership had a 90-day promissory
note payable to Southmark bearing interest at 10%, secured by a first lien deed
of trust, assignment of rents, and security agreement on the Bank of San Pedro
Office Building, with all outstanding principal and accrued interest due on
September 30, 1995, as a result of two maturity date extensions. The initial
principal balance of this note was $877,000. At every maturity date extension,
the Partnership incurred a fee in the amount of $78,075 in accordance with the
note agreement. In 1994, the extension fees totaling $156,150 and all accrued
interest were added to the principal balance in accordance with the note
agreement. At December 31, 1994, the principal balance (which included both
extension fees and accrued interest) was $1,086,554.
The Las Oficinas note receivable was reduced in 1994 to reflect the sale of the
Las Oficinas note receivable in April 1995 for $750,000.
Note receivable $ 1,100,000
Loss on write-down to
net realizable value (350,000)
-------------
Net realizable value $ 750,000
=============
Prior to that sale, certain letters of commitment were entered into in 1994 that
essentially modified the Las Oficinas note receivable and related underlying
mortgage payable. These transactions resulted in a loss on modification of note
receivable in the amount of $530,695.
See accompanying notes to consolidated financial statements.
F9
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
Organization
- ------------
University Real Estate Partnership V (the "Partnership") was organized in 1977,
as a limited partnership under the provisions of the California Uniform Limited
Partnership Act as then in effect. 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. The Partnership
was formed to acquire, operate and ultimately dispose of a diversified portfolio
of income-producing property.
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 owned by Southmark and
its affiliates, including the general partnership interest of the Partnership.
On December 16, 1993, Southmark and SHL executed the Second Amendment to Asset
Purchase Agreement whereby SHL acquired an option to purchase the general
partnership interest of the Partnership, rather than purchase the Partnership
interest itself. On the same date, SHL assigned its rights under the amended
Asset Purchase Agreement to Hampton Realty Partners, L.P., a Texas limited
partnership ("Hampton"). Hampton and Southmark affiliates also entered into an
Option Agreement whereby Hampton acquired the right to purchase the option
assets, including the general partnership interest of the Partnership, subject
to the approval of the limited partners. On April 20, 1994, Insignia Financial
Group, Inc., a Delaware corporation, and certain of its affiliates (collectively
"Insignia") entered into an Option Purchase Agreement with Hampton to acquire
Hampton's rights to solicit proxies from the Limited Partners seeking their
consent to Hampton becoming the general partner of the Partnership. On August
8, 1994, the Insignia contract was terminated. 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 approval of the Limited Partners. As of the date hereof, JKD has not
exercised that right.
Effective as of December 14, 1992, the Partnership entered into a Portfolio
Services Agreement and a Property Management Agreement with Hampton UREF
Management, Ltd. ("Hampton UREF"), Texas limited partnership, pursuant to which
Hampton UREF began providing management for the Partnership's properties and
certain other portfolio services. The operations of the Partnership's
properties were managed by Hampton Management, Inc. (formerly SHL Management,
Inc.) through a subcontract agreement with Hampton UREF. From April 20, 1994 to
August 8, 1994, the Partnership and its properties were managed by Insignia
pursuant to a Property Management Subcontract Agreement with Hampton UREF. As
of August 8, 1994, the properties only were managed by an affiliate of Insignia
under a Property Management Agreement directly with the Partnership.
On December 30, 1994, Hampton UREF entered into an Assignment and Assumption of
Portfolio Services Agreement with JKD pursuant to which JKD 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.
F10
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------------------
Principles of Consolidation
- ---------------------------
On September 13, 1995, the Partnership contributed the Washington Towne
Apartments to an affiliated entity, Washington Towne Apartments, LLC, a Georgia
limited liability company. The Partnership is the 99% member and Washington
Towne, Inc. is the 1% managing member of Washington Towne Apartments, LLC. The
Partnership is the owner of all the capital stock of Washington Towne, Inc.
Therefore, the Partnership effectively retained a 100% interest in the
Washington Towne Apartments.
The consolidated financial statements include the accounts of the Partnership,
Washington Towne Apartments, LLC, and Washington Towne, Inc.
Real Estate Investments
- -----------------------
Real estate investments and improvements are generally stated at cost except in
cases where it has been determined that the property has sustained an impairment
in value. At such time, a provision for loss is recorded to reduce the basis of
the property to its net realizable value. Improvements are capitalized and
repairs and maintenance are charged to operations as incurred.
Real estate accounted for as an in-substance foreclosure is recorded at the
lower of the note balance or the fair value of the property at the date the in-
substance foreclosure is deemed to have occurred. Effective December 1992, in-
substance foreclosure assets are valued at the fair value of the property in
accordance with Statement of Position 92-3.
Repossessed Real Estate Held for Resale
- ---------------------------------------
Repossessed real estate held for resale is recorded at the lower of the net note
receivable balance or the net realizable value of the property at the date of
repossession.
Depreciation
- ------------
Buildings and improvements are depreciated using the straight-line method over 5
to 30 years. Tenant improvements are amortized over the terms of the related
tenant lease using the straight-line method.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents include cash on hand, demand deposits, money market
funds and investments in certificates of deposit with original maturities of
three months or less. Cash and cash equivalents also include cash held in
segregated accounts for tenant security deposits.
Deferred Borrowing Costs
- ------------------------
Loan fees for long-term financing of real property are capitalized and are
amortized over the terms of the related mortgage note payable using the
straight-line method. Amortization of deferred borrowing costs is included in
interest expense on the Consolidated Statements of Operations.
F11
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------------------
Rental Revenues
- ---------------
The Partnership leases its residential property under short-term operating
leases. Lease terms generally are less than one year in duration. Rental
income is recognized as earned. The Partnership leases its commercial property
under noncancelable operating leases that expire over the next 10 years. Some
leases provide concessions and periods of escalating or free rent. Rental
income is recognized on a straight-line basis over the life of the lease. The
excess of the rental income recognized over the contractual rental payments due
is recorded as accrued rent receivable.
Notes Receivable
- ----------------
Notes receivable are recorded at their original basis, net of any allowance for
uncollectible amounts. Interest income is recognized as it is earned. Interest
accrual is ceased at such time as management determines collection is doubtful.
Discounts on Mortgage Notes Payable
- -----------------------------------
Discounts on mortgage notes payable are amortized over the remaining terms of
the related notes using the interest method. Amortization of discounts is
included in interest expense.
Income Taxes
- ------------
No provision for Federal income taxes is necessary in the consolidated financial
statements of the Partnership because, as a partnership, it is not subject to
Federal income tax and the tax effect of its activities accrues to the Partners.
Use of Estimates
- ----------------
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Financial Instruments
- ---------------------
The Partnership's carrying values for financial instruments approximate their
fair values.
F12
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------------------
Allocation of Net Income and Net Loss
- -------------------------------------
The Partnership Agreement provides for net income of the Partnership for both
consolidated financial statements and income tax reporting purposes to be
allocated 99% to the Limited Partners and 1% to the General Partners. Net
income allocated to the Limited Partners shall be allocated first to the Limited
Partners holding Growth/Shelter Units in the same ratio and manner that losses
were charged to these Limited Partners and up to amounts equal to such
previously charged losses and then to all of the Limited Partners in the same
ratio that distributions from all sources, other than proceeds from the sale of
Limited Partnership units, have been allocated.
The Partnership Agreement provides for net losses of the Partnership for both
financial statement and income tax reporting purposes to be allocated 1% to the
General Partner and 99% to the Growth/Shelter Unit holders.
Federal income tax law provides that the allocation of loss to a partner will
not be recognized unless the allocation has substantial economic effect.
Internal Revenue Code Section 704(b) and Treasury Regulation Sections establish
criteria for allocations of partnership deductions attributable to nonrecourse
debt. The Partnership's allocations for the three years ended December 31, 1995
have been made in accordance with these provisions.
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 weighted average number of Limited Partnership
Units outstanding during the year. Per unit information has been computed based
on 34,353 Limited Partnership Units outstanding in 1995 and 34,453 Limited
Partnership Units outstanding in 1994 and 1993.
Distributions
- -------------
Distributions to the Partners are made at the discretion of the General Partner
and are subject to payment of expenses of the Partnership, including debt
service, and maintenance of reserves. Distributions to the Partners are paid
from operations of the Partnership's properties, from sales or refinancing of
properties, or from other sources, if any. Distributions to the Partners were
suspended in the first quarter of 1992.
Reclassification
- ----------------
Certain prior year amounts have been reclassified to conform with the current
year presentation.
F13
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------
On March 9, 1993, Southmark and several of its affiliates (including the
General Partner) entered into an Asset Purchase Agreement with SHL to sell
various general and limited partnership interests owned by Southmark and its
affiliates, including the general partnership interest of the Partnership. On
December 16, 1993, Southmark and SHL executed the Second Amendment to Asset
Purchase Agreement whereby SHL acquired an option to purchase the general
partnership interest of the Partnership, rather than purchase the partnership
interest itself. On the same date, SHL assigned its rights under the amended
Asset Purchase Agreement to Hampton. Hampton and Southmark affiliates also
entered into an Option Agreement whereby Hampton acquired the right to purchase
the option assets, including the general partnership interest of the
Partnership, subject to the approval of the limited partners. On April 20,
1994, Insignia entered into an Option Purchase Agreement with Hampton to acquire
Hampton's rights to solicit proxies from the Limited Partners seeking their
consent to Hampton becoming the general partner of the Partnership. On August
8, 1994, the Insignia contract was terminated. On December 30, 1994, Hampton
entered into an Assignment and Assumption of Option Agreement with JKD, whereby,
among other things, JKD obtained the right to acquire Hampton's rights to proxy
into the Partnership subject to approval of the Limited Partners. As of the
date hereof, JKD has not exercised that right.
Effective as of December 14, 1992, the Partnership entered into a Portfolio
Services Agreement and a Property Management Agreement with Hampton UREF,
pursuant to which Hampton UREF began providing management for the Partnership's
properties and certain other portfolio services. The operations of the
Partnership's properties were managed by Hampton Management, Inc. (formerly SHL
Management, Inc.) through a subcontract agreement with Hampton UREF. From April
20, 1994 to August 8, 1994, the Partnership and its properties were managed by
Insignia pursuant to a Property Management Subcontract Agreement with Hampton
UREF. As of August 8, 1994, the properties only were managed by an affiliate of
Insignia under a Property Management Agreement directly with the Partnership.
As of December 30, 1994, Hampton UREF entered into an Assignment and Assumption
of Portfolio Services Agreement with JKD pursuant to which JKD 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 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 OSGPC 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.
The Partnership pays property management fees based on 5% of gross rental
revenues for supervising the maintenance and operations of the Partnership's
properties.
Beginning December 14, 1992, the Partnership began reimbursing SHL, and
subsequently Hampton, for its costs, including overhead, of administering the
Partnership's affairs. Reimbursements are "Overhead Fees" which include
salaries, travel and other expenses properly allocated to the services provided
for the benefit of the Partnership, and an Asset Management Fee is charged at
0.75% of the Partnership's Tangible Asset Value. The Partnership's Tangible
Asset Value of the Partnership's real properties is determined by applying a
capitalization rate of 10% to annualize the net operating income of each real
property, plus the book value of all other tangible assets. At December 31,
1995, there were no accounts payable-affiliates. At December 31, 1994, accounts
payable-affiliates for the Partnership's Asset Management Fees were $20,894.
F14
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - TRANSACTIONS WITH AFFILIATES (CONTINUED)
- -------------------------------------------------
Under the Partnership Agreement, the General Partner or an affiliate is entitled
to a subordinated real estate commission upon the sale of Partnership
properties. Payment of the commission is subordinated to distributions to the
Limited Partners of original invested capital plus a 9% per annum cumulative
return. Subordinated real estate commissions payable to a Southmark affiliate
but assigned to Hampton pursuant to the Second Amendment to Asset Purchase
Agreement totaled $549,218 at December 31, 1995 and 1994.
Compensation and reimbursements paid to or accrued for the benefit of Hampton
and affiliates subsequent to December 15, 1992 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- ---------
<S> <C> <C> <C>
Property management fees $ - $ 59,676 $ 99,226
Asset management fee 95,714 135,702 164,716
Charged to general and administrative expense:
Partnership and Financial administration,
data processing, accounting and tax
reporting, and investor relations 147,505 130,688 133,870
-------- -------- --------
Total compensation and reimbursements $243,219 $326,066 $397,812
======== ======== ========
</TABLE>
In June 1994, Southmark paid off the first lien mortgage on the Bank of San
Pedro Office Building. Consequently, the Partnership had a 90-day promissory
note payable to Southmark bearing interest at 10%, secured by a first lien deed
of trust, assignment of rents, and security agreement on the Bank of San Pedro
Office Building, with all outstanding principal and accrued interest due on
September 30, 1995, as a result of two maturity date extensions. The initial
principal balance of this note was $877,000. At every maturity date extension,
the Partnership incurred a fee in the amount of $78,075 in accordance with the
note agreement. In 1994, the extension fees totaling $156,150 and all accrued
interest were added to the principal balance in accordance with the note
agreement. At December 31, 1994, the principal balance (which included both
extension fees and accrued interest) was $1,086,554. On April 11, 1995, the
Partnership made a principal prepayment in the amount of $750,000 on the
promissory note payable to Southmark. 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.
The $75,000 gain on debt forgiveness is included as an extraordinary item in the
consolidated statements of operations at December 31, 1995. On July 20, 1995,
the Partnership sold the Bank of San Pedro Office Building and paid all
remaining principal and accrued interest, totaling $381,593, due on the
promissory note payable to Southmark (see Note 5 - "Repossessed Real Estate Held
for Resale").
F15
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - TAXABLE INCOME (LOSS)
- ------------------------------
A reconciliation between consolidated financial statement net loss and loss for
income tax purposes follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------- ------------
<S> <C> <C> <C>
Net loss per Consolidated
Statements of Operations $(1,099,133) $(1,976,398) $ (409,029)
Add (deduct):
Amortization of discounts on
mortgage notes payable - 20,036 22,343
Excess of tax over book
depreciation (372,137) (370,150) (344,868)
Excess book allowance for bad
debts over tax - (362,981) -
Nontaxable insurance proceeds (12,029) - -
Sale of Bank of San Pedro (595,127) - -
Sale of Las Oficinas note
receivable 750,000 350,000 -
Repossession of Bank of San Pedro - 304,076 -
Las Oficinas note receivable
modification - 764,760 -
Recovery of CAM charges (107,243) - -
Gain on sale of interest in
Washington Towne Apartments
to Washington Towne, Inc. 13,307 - -
Provision for Loss on Note
Receivable 100,000 - -
Other adjustments 20,000 79,842 4,006
----------- ----------- ----------
Estimated loss for tax purposes $(1,302,362) $(1,190,815) $ (727,548)
=========== =========== ==========
The tax basis of the Partners' equity accounts are as follows:
December 31,
----------------------------------------
1995 1994 1993
----------- ----------- ----------
General Partner $ (278,990) $ (265,966) $ (254,058)
Limited Partners 2,225,866 3,515,204 4,694,111
----------- ----------- ----------
$ 1,946,876 $ 3,249,238 $4,440,053
=========== =========== ==========
</TABLE>
The Partnership reports certain transactions differently for tax and financial
statement purposes. The aggregate cost of the Partnership's total assets for
Federal income tax purposes was approximately $11,296,780 and $15,716,760 at
December 31, 1995 and 1994, respectively.
University Real Estate Partnership V is a partnership and is not subject to
Federal and state income taxes. Accordingly, no recognition has been given to
income taxes in the accompanying consolidated financial statements of the
Partnership since the income or loss of the Partnership is to be included in the
tax returns of the individual partners. The tax returns of the Partnership are
subject to examination by Federal and state taxing authorities. If such
examinations result in adjustments to distributive shares of taxable income or
loss, the tax liability of the partners could be adjusted accordingly.
F16
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - TAXABLE INCOME (LOSS) (CONTINUED)
- ------------------------------------------
The tax attributes of the Partnership's net assets flow directly to each
individual partner. Individual partners will have different investment bases
depending upon the timing and prices of acquisition of Limited Partnership
Units. Further, each partner's tax accounting, which is partially dependent upon
their individual tax position, may differ from the accounting followed in the
consolidated financial statements.
Accordingly, there could be significant differences between each individual
partner's tax basis and their proportionate share of the net assets reported in
the consolidated financial statements. Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, requires disclosure by a
---------------------------
publicly held partnership of the aggregate difference in the basis of its net
assets for financial and tax reporting purposes. However, the Partnership does
not have access to information about each individual partner's tax attributes in
the Partnership, and the aggregate tax bases cannot be readily determined. In
any event, the General Partner does not believe that, in the Partnership's
circumstances, the aggregate difference would be meaningful information.
NOTE 4 - REAL ESTATE INVESTMENTS
- --------------------------------
The cost and accumulated depreciation and amortization of the Partnership's real
estate investments held at December 31, 1995 and 1994, is set forth in the
following tables:
<TABLE>
<CAPTION>
Buildings and Accumulated
1995 Land Improvements Depreciation Total
- ------------------- ----------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Glasshouse Square
Shopping Center $ 4,731,102 $12,163,008 $(7,152,145) $ 9,741,965
Washington Towne
Apartments 524,145 1,766,165 (358,580) 1,931,730
----------- ----------- ----------- -----------
$ 5,255,247 $13,929,173 $(7,510,725) $11,673,695
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Buildings and Accumulated
1994 Land Improvements Depreciation Total
- ------------------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Glasshouse Square
Shopping Center $ 4,731,102 $12,079,413 $(6,796,206) $10,014,309
Washington Towne
Apartments 524,145 1,500,385 (238,940) 1,785,590
----------- ----------- ----------- -----------
$ 5,255,247 $13,579,798 $(7,035,146) $11,799,899
=========== =========== =========== ===========
</TABLE>
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 Partnership paid all
outstanding principal and accrued interest as a result of the refinancing of the
Washington Towne Apartments as described below.
F17
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - REAL ESTATE INVESTMENTS (CONTINUED)
- --------------------------------------------
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 have been completed prior to the end of the first quarter
1996 and have significantly enhanced the value of the property (see
Note 7 - "Mortgage Notes Payable").
The Partnership leased under a noncancelable operating lease through September
1993 fifty percent of the Glasshouse Square Shopping Center land tract, known as
the Garcia's Tract. Rent expense was $110,337 for the year ended December 31,
1993. On September 16, 1993, the Partnership purchased the remaining fifty
percent undivided interest in the land for a cash purchase price of $1,716,005
including closing costs.
During 1993 it was determined in a Phase II Environmental Audit that the soils
and groundwater in the Garcia's Tract and possibly part of the Glasshouse Square
parking lot, located in the Northeastern most corner of Glasshouse Square
property, contain elevated levels of certain petroleum products. In 1994 and
1995, the Partnership worked with counsel and environmental engineers in
connection with further investigation of the alleged leaking of petroleum
products from underground storage tanks and with San Diego County officials to
determine the necessary level of clean-up. The Partnership also obtained a
health risk assessment to ensure that the gasoline constituents beneath the
Garcia's Tract are not emitting harmful vapors inside the building. The health
assessment was returned "non detect" meaning no such harmful vapors were
detected. In 1996, additional testing was conducted by the environmental
engineers who 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.
The Partnership leases Glasshouse Square Shopping Center, its only commercial
property, under noncancelable operating lease agreements that expire over the
next 10 years. Future minimum rents over the next five years are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 666,600
1997 730,547
1998 740,311
1999 706,107
2000 782,088
Thereafter 1,822,225
----------
$5,447,878
==========
</TABLE>
F18
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - REAL ESTATE INVESTMENTS (CONTINUED)
- --------------------------------------------
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 December 31,
1995, were $7,435,834 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 December 31, 1995, the
Partnership owed $186,206 against the line of credit. This draw on the line of
credit increased the first lien mortgage principal balance to $7,435,834 as of
December 31, 1995 (see Note 7 - "Mortgage Notes Payable").
In September 1995, Silo California, a major tenant that provided approximately
25% of the gross rental revenues to Glasshouse Square, defaulted on its lease
and ceased retail operations. The Partnership filed a lawsuit styled University
----------
Real Estate Partnership V v. Silo California, Inc. No. 692441 (Superior Court of
- -------------------------------------------------
the State of California) to recover possession of leased premises and damages
related to breach of a lease at Glasshouse Square Shopping Center. The
Partnership obtained an unlawful detainer judgment against the defendant on
October 25, 1995, in the amount of $41,757.
The Partnership seeks to collect from Silo California all base rent and common
area maintenance charges, $18,689 and $5,919, respectively, per month, for the
periods that they are in default or until a new tenant has been secured to lease
their location. At December 31, 1995, an allowance for doubtful accounts in the
amount of $107,044 was recorded for the Silo California lease default (see Note
11 - "Subsequent Events"). However, the Partnership cannot predict what the
final recovery amount will be.
NOTE 5 - REPOSSESSED REAL ESTATE HELD FOR RESALE
- ------------------------------------------------
In January 1994, the borrower ceased making regularly scheduled debt payments
constituting an event of default on a note receivable held by the Partnership
resulting from the sale of Bank of San Pedro Office Building in 1987. In March
1994, the Bank of San Pedro Office Building was placed in receivership due to
the contemplation of a foreclosure proceeding by the Partnership against the
borrower. The Partnership, instead of initiating foreclosure proceedings
against the borrower, entered into a Settlement Agreement with the borrower.
Under the Settlement Agreement, the Bank of San Pedro Office Building was
conveyed to the Partnership in lieu of the foreclosure of the wrap lien held by
the Partnership on June 20, 1994. In return, the Partnership paid $30,000.
At December 31, 1994, the Bank of San Pedro Office Building was recorded on the
consolidated financial statements as repossessed real estate held for resale
with a value of $1,422,391. This amount was the net note receivable balance
plus the book value of assets and liabilities acquired at the date of
repossession, which approximated net realizable value. The Partnership did not
plan to hold the Bank of San Pedro Office Building as an income-producing
property. Thus, it was not considered a depreciable real estate investment.
The underlying mortgage note on the Bank of San Pedro Office Building matured in
June 1992. Negotiations with the lender for an extension were completed in June
1993, and the maturity date was extended to April 1, 1994. After the note
matured in April 1994, the Partnership was not able to negotiate another
extension or renewal of the
F19
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - REPOSSESSED REAL ESTATE HELD FOR RESALE (CONTINUED)
- -----------------------------------------------------------
first lien. In June 1994, Southmark paid off the first lien mortgage.
Consequently, the Partnership had a promissory note payable to Southmark that
matured September 30, 1995.
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. On the date of sale, all remaining principal and accrued interest,
totaling $381,593, due on the promissory note payable to Southmark was paid (see
Note 2 - "Transactions with Affiliates" and Note 6 - "Notes Receivable").
A loss on sale of repossessed real estate was recognized in 1995 relating to
this transaction as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash proceeds $ 291,562
Note receivable 350,000
Repayment of note payable to Southmark affiliate 381,593
Payment of property taxes 230,098
Escrow holdback 15,000
-----------
Total proceeds 1,268,253
Less: net assets sold (1,389,771)
-----------
Loss on sale of repossessed real estate $ (121,518)
===========
</TABLE>
On 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 in the event of any future
complications.
NOTE 6 - NOTES RECEIVABLE
- -------------------------
The following sets forth the notes receivable of the Partnership.
<TABLE>
<CAPTION>
December 31,
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
Note receivable, bearing interest ranging from
10% to 12%, interest only due monthly, secured
by an all-inclusive deed of trust on Las
Oficinas Office Building, subject to a first
lien of $1,417,598 (Note 7 - "Mortgage Notes
Payable") at December 1994; matured September
1994. The note receivable was modified in
December 1994 and sold to a third party on
April 7, 1995. $ - $ 750,000
Note receivable, bearing interest at 9% per
annum, interest only due monthly, secured by
a second lien deed of trust on the Bank of
San Pedro Office Building, maturing on July
20, 1998. 250,000 -
----------- -----------
$ 250,000 $ 750,000
=========== ===========
</TABLE>
F20
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - NOTES RECEIVABLE (CONTINUED)
- -------------------------------------
On July 20, 1995, the Partnership sold the Bank of San Pedro Office Building for
$1,350,000. The Partnership received, as partial consideration from the sale, 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 (see Note 2 - "Transactions
with Affiliates" and Note 5 - "Repossessed Real Estate Held for Resale"). On
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 the event of any future complications.
In September 1994, the Las Oficinas note receivable and the underlying mortgage
payable matured. On October 1, 1994, a commitment letter was executed regarding
the Las Oficinas mortgage payable in order to transfer all liability from the
Partnership to the borrower on the Las Oficinas note receivable. On December 1,
1994, a commitment letter was executed between the borrower and the Partnership
stating that the Partnership, among other things, would reduce the note
receivable principal balance from $3,031,936 to $1,100,000. Both of these
modifications took place simultaneously.
On February 27, 1995, the closing of the above transactions was executed. At
this time, the Partnership was released from the mortgagor position on the Las
Oficinas mortgage payable. Concurrently, the Las Oficinas note receivable was
modified reducing the principal amount by $1,931,936 to $1,100,000, bearing
interest at a rate of 8% per annum and maturing on September 1, 1999.
The modification of the Las Oficinas note receivable and underlying mortgage
payable, as previously discussed, is reflected as of December 31, 1994 as a loss
on modification of note receivable in the amount of $530,695.
On April 7, 1995, the modified Las Oficinas note receivable for $1,100,000 was
sold to a third party for $750,000. This $350,000 valuation loss was recorded
as of the modification date, December 1, 1994.
The following is a summary of the activity for the notes receivable.
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------------
1995 1994 1993
----------- ------------ -----------
<S> <C> <C> <C>
Balance at beginning of year $ 750,000 $ 4,319,022 $ 4,319,022
Repossession of real estate - (1,287,086) -
Modification of note receivable
with the borrower - (1,931,936) -
Sale of Las Oficinas note receivable (750,000) - -
Partial consideration from sale of
repossessed real estate 350,000 - -
Provision for loss on note receivable (100,000) - -
Loss on sale of note receivable - (350,000) -
--------- ----------- -----------
Balance at end of year $ 250,000 $ 750,000 $ 4,319,022
========= =========== ===========
</TABLE>
F21
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - MORTGAGE NOTES PAYABLE
- -------------------------------
The following is a summary of mortgage notes payable.
<TABLE>
<CAPTION>
December 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Mortgage payable bearing interest at 9.375%,
secured by a first lien deed of trust on
Washington Towne Apartments, payable in
monthly installments of principal and
interest of $9,132; matured June 1995. - 646,443
Mortgage payable bearing interest at 8.625%,
secured by Washington Towne Apartments,
payable in monthly installments of principal
and interest of $14,239; maturing October 2005. 1,746,666 -
Mortgage payable bearing interest ranging
from 9% to 15.71%, secured by a first lien
deed of trust on Glasshouse Square Shopping
Center, payable in varying monthly install-
ments of principal and interest; maturing
December 2004. In March 1995, the mortgage
payable was modified. The modification
bears an interest rate of 9.5%, payable in
monthly principal and interest payments
beginning April 1995 based on a 25-year
amortization, maturing December 2000. An
additional advance note payable was
obtained in March 1995, bearing interest
at 9.5%, also secured by the same first
lien deed of trust on Glasshouse Square
Shopping Center, payable in monthly principal
and interest payments beginning April 1995
based on a 25-year amortization, maturing
December 2000. 7,435,834 7,314,713
Mortgage payable bearing interest ranging
from 8% to 14%, secured by a second lien
deed of trust on Glasshouse Square Shopping
Center, payable in varying monthly
installments of interest from October 1993
to September 1994; then, monthly installments
of principal and interest; maturing September
2008. In March 1995, the mortgage payable was
modified. The modification bears an interest
rate of 11%, payable in monthly interest only
installments of $6,595, maturing December 2000. 1,492,431 1,492,431
--------- ---------
$10,674,931 $9,453,587
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
Scheduled principal maturities of the mortgage notes under existing terms are
as follows at December 31, 1995:
<S> <C>
1996 $ 100,196
1997 108,332
1998 118,870
1999 130,424
2000 8,606,871
Thereafter 1,610,238
-------------
Total $ 10,674,931
=============
</TABLE>
F22
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - MORTGAGE NOTES PAYABLE (CONTINUED)
- ------------------------------------------
On September 16, 1993, the Partnership granted a second lien on Glasshouse
Square in order to finance the purchase of the remaining 50% undivided interest
in the land. Interest only payments are required for the first year, and
beginning in the second year payments of principal and interest are required
until maturity in September 2008.
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. 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 the same first lien deed of
trust as the first lien mortgage. As of December 31, 1995, the Partnership owed
$186,206 against the line of credit. This draw on the line of credit increased
the first lien mortgage principal balance to $7,435,834 as of December 31, 1995.
The mortgage payable on the Bank of San Pedro Office Building matured in June
1992. Negotiations with the lender for an extension were completed in June
1993. The extension on the Bank of San Pedro Office Building mortgage matured
April 1994. Southmark purchased the first lien in June 1994 (see Note 2 -
"Transactions with Affiliates").
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 Partnership paid all
outstanding principal and accrued interest as a result of the refinancing of the
Washington Towne Apartments as described below.
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 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 have
been completed prior to the end of the first quarter of 1996 and have
significantly enhanced the value of the property.
In September 1994, the mortgage payable on Las Oficinas matured. On October 1,
1994, a commitment letter was executed regarding the transfer of the mortgage
from the Partnership to the borrower on the Las Oficinas note receivable.
F23
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - MORTGAGE NOTES PAYABLE (CONTINUED)
- -------------------------------------------
On February 27, 1995, the transaction, as discussed above, was executed. On
this date, the Partnership was released from the mortgagor position on the
mortgage payable on Las Oficinas. Concurrent with this transaction, the Las
Oficinas note receivable modification was executed (see Note 6 - "Notes
Receivable").
NOTE 8 - DISTRIBUTIONS
- ----------------------
Distributions of cash from operations, to the extent deemed available by the
General Partner for distribution, are allocated 92% to the Limited Partners and
8% to the General Partner, and are made in the following order:
(a) First to the holders of Income Units until they receive a return of 9% per
annum cumulative on their adjusted capital investment; then,
(b) to the holders of Growth/Shelter Units until they receive a non-cumulative
return for the year of distribution equal to 5% per annum on their adjusted
capital investment; then,
(c) to all the Limited Partners based on number of Units held.
Distributions of cash from other sources, including sales and refinancing and
cash reserves, are made in the following order:
(a) First, 99% to the Limited Partners and 1% to the General Partner until the
Limited Partners have received a return of their aggregate capital
investment plus a 9% per annum cumulative return on their adjusted capital
investment. In this regard, distributions to the Limited Partners are
allocated first to holders of Income Units until they have received their
entire capital investment and their 9% return. Holders of Growth/Shelter
Units then receive return of their entire capital investment and their 9%
return. Further distributions to the Limited Partners under this section
are allocated generally 20% to holders of Income Units and 80% to holders of
Growth/Shelter Units. Distributions then continue;
(b) to the General Partner until the General Partner has received 12% of all
distributions from other sources; then,
(c) 12% to the General Partner and 88% to all the Limited Partners.
During 1995, 1994 and 1993, no distributions were made by the Partnership.
NOTE 9 - SOUTHMARK BANKRUPTCY
- ------------------------------
On July 14, 1989, Southmark filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership nor its General
Partner were included in the filing. Southmark's reorganization plan became
effective August 10, 1990. Under the plan, most of Southmark's assets, which
include Southmark's interests in the General Partner, are being sold or
liquidated for the benefit of creditors.
Because neither the Partnership nor the General Partner were included in the
Southmark bankruptcy proceedings, there has been no direct effect on the
Partnership's operations during the bankruptcy period or resulting from
confirmation of the plan. Ultimate decision-making authority with respect to
the operations of the Partnership remains with the General Partner until such
time as the Limited Partners approve a substitute general partner (see Note 10 -
"Sale of General Partner Interest").
F24
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 - SALE OF GENERAL PARTNER INTEREST
- ------------------------------------------
As a result of Southmark's bankruptcy and its plan to liquidate all of its
assets, the General Partner concluded that it was in the best interest of the
Partnership to seek, as its qualified replacement as general partner, an entity
which intends to remain involved in the management of real estate and real
estate limited partnerships.
On March 9, 1993, Southmark and several of its affiliates (including the General
Partner) entered into an Asset Purchase Agreement with SHL to sell various
general and limited partnership interests owned by Southmark and its affiliates,
including the general partnership interest of the Partnership. On April 22,
1993, Southmark and SHL executed the First Amendment to Asset Purchase Agreement
whereby SHL acquired an option to purchase the general partnership interest of
the Partnership, rather than purchase the Partnership interest itself. On
December 16, 1993, SHL assigned its rights under the amended Asset Purchase
Agreement to Hampton. Hampton and Southmark affiliates also entered into an
Option Agreement whereby Hampton acquired the right to purchase the option
assets, including the general partnership interest of the Partnership subject to
the approval of the Limited Partners. On April 20, 1994, Insignia entered into
an Option Purchase Agreement with Hampton to acquire Hampton's rights to solicit
proxies from the Limited Partners seeking their consent to Hampton becoming the
general partner of the Partnership. On August 8, 1994, the Insignia contract
was terminated. On December 30, 1994, Hampton entered into an Assignment and
Assumption of Option Agreement with JKD 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. As of the date hereof, JKD has
not exercised that right.
Effective as of December 14, 1992, the Partnership entered into a Portfolio
Services Agreement and a Property Management Agreement with Hampton UREF
pursuant to which Hampton UREF began providing management for the Partnership's
properties and certain other portfolio services. The operations of the
Partnership's properties were managed by Hampton Management, Inc. (formerly SHL
Management, Inc.) through a subcontract agreement with Hampton UREF. From April
20, 1994 to August 8, 1994, the Partnership and its properties were managed by
Insignia pursuant to a Property Management Subcontract Agreement with Hampton
UREF. As of August 8, 1994, the properties were managed by an affiliate of
Insignia under a Property Management Agreement directly with the Partnership.
As of December 30, 1994, Hampton UREF entered into an Assignment and Assumption
of Portfolio Services Agreement with JKD pursuant to which JKD 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 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 OSGPC 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.
NOTE 11 - SUBSEQUENT EVENTS
- ---------------------------
On January 29, 1996, SCM and SII entered into a purchase agreement to sell their
partnership interests in UAC to OS 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 OSGPC for JKD
F25
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 - SUBSEQUENT EVENTS (CONTINUED)
- ---------------------------------------
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.
The Partnership filed a claim against Silo California, Inc. on February 9, 1996,
in a bankruptcy proceeding entitled In re: Silo California, Inc., a California
------------------------------------------
corporation, No. 95-1581 (U.S. Bankruptcy Court, District of Delaware), to
- -----------
recover on the $41,757 unlawful detainer judgment. A second claim in the amount
of $312,992 for additional damages related to breach of the lease was filed on
February 20, 1996 against Silo California, Inc. and an identical $312,992 claim
was filed against Silo Holdings, Inc. in In re: Silo Holdings, Inc., No. 95-
--------------------------
1578 (U.S. Bankruptcy Court, District of Delaware) on February 20, 1996. All
three claims are still pending.
As of March 30, 1996, the borrower on the Bank of San Pedro Office Building 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 in the event
of any future complications.
NOTE 12 - PRO FORMA INFORMATION
- -------------------------------
Unaudited pro forma balance sheet information as of December 31, 1994, has been
prepared to reflect the financial condition of the Partnership as if the sales
of the Bank of San Pedro Office Building and the Las Oficinas Note Receivable
had occurred on December 31, 1994.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
----------- ------------ -----------
<S> <C> <C> <C> <C>
Real estate investments $11,799,899 $ - $11,799,899
Cash 197,283 289,856 (C) 487,139
Accounts receivable 84,929 (43,111) (A) 41,818
Note receivable 750,000 (750,000) (B) -
350,000 (D) 350,000
Other assets 411,834 4,178 (A) 416,012
Repossessed real estate held
for resale 1,422,391 (1,422,391) (A) -
----------- ----------- -----------
$14,666,336 $(1,571,468) $13,094,868
=========== =========== ===========
Mortgage notes payable $ 9,453,587 $ - $ 9,453,587
Note payable to Southmark
affiliate 1,086,554 (1,086,554) (A) -
Accounts payable and other
liabilities 655,655 (282,749) (A) 372,906
Accounts payable - affiliates 570,112 - 570,112
Partners' equity 2,900,428 (202,165) (A)(B) 2,698,263
----------- ----------- -----------
$14,666,336 $(1,571,468) $13,094,868
=========== =========== ===========
</TABLE>
F26
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 - PRO FORMA INFORMATION (CONTINUED)
- -------------------------------------------
Unaudited pro forma information for the year ended December 31, 1994, has been
prepared to reflect the results of operations as if the sales of the Bank of San
Pedro Office Building and the Las Oficinas Note Receivable had occurred on
January 1, 1994. The results are not necessarily indicative of the results
which would have occurred had these transactions been consummated at the
beginning of 1994 or of future results of operations of the Partnership.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 2,484,310 $ (305,677) (E) $ 2,178,633
Interest 212,896 (207,852) (F)
31,500 (D) 36,544
----------- ---------- -----------
2,697,206 (482,029) 2,215,177
----------- ---------- -----------
Expenses:
Interest 1,335,552 (391,513) (E)(F) 944,039
Depreciation and
amortization 464,185 - 464,185
Property taxes 205,576 (47,071) (E) 158,505
Operating expenses 1,260,566 (238,464) (E) 1,022,102
General and administrative 527,030 3,983 (E) 531,013
----------- ---------- -----------
3,792,909 (673,065) 3,119,844
----------- ---------- -----------
Net operating loss (1,095,703) (191,036) (904,667)
Other income (expenses):
Loss on sale of note
receivable 350,000 1,231,809 (F) 1,581,809
Loss on modification of
note receivable 530,695 (530,695) -
Loss on sale of
repossessed real estate
held for resale - 154,138 (E) 154,138
----------- ---------- -----------
Net loss $(1,976,398) $ (664,216) $(2,640,614)
=========== ========== ===========
Net Loss per Limited
Partnership Unit $ (56.79) $ (19.09) $ (75.88)
=========== ========== ===========
</TABLE>
Pro Forma Adjustments
- ---------------------
(A) To record the effect of the sale of Bank of San Pedro Office Building
including (1) a reduction in repossessed real estate held for resale and
retirement of underlying note payable to Southmark affiliate and (2)
reductions in accounts receivable, other assets, accounts payable and other
liabilities resulting from the disposition of the property.
(B) To record the effect of the sale of the Las Oficinas Note Receivable.
(C) To record the cash proceeds from the sales ($1,750,000), security deposit
cash surrendered ($1,706), and cash payments of selling expenses, accounts
payable, and repayment of debt ($1,458,438).
(D) To record the note receivable received as proceeds and interest earned from
the sale of the Bank of San Pedro Office Building.
(E) To remove the revenues and expenses related to the Bank of San Pedro Office
Building rental operations and record loss on the sale of the Bank of San
Pedro Office Building.
(F) To remove interest income, interest expense, and record loss on the sale of
the Las Oficinas note receivable.
F27
<PAGE>
SCHEDULE VIII
UNIVERSITY REAL ESTATE PARTNERSHIP V
VALUATION AND QUALIFYING ACCOUNTS
December 31, 1995
<TABLE>
<CAPTION>
Additions
------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
- ----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995
- ----
Allowance for Doubtful Accounts $ 72,740 $ 107,044 $ - $ (72,740) $ 107,044
Allowance for Notes Receivable $ - 100,000 - - 100,000
1994
- ----
Allowance for Doubtful Accounts $ 362,981 72,740 - (362,981) 72,740
Allowance for Notes Receivable $ 270,000 - - (270,000) -
1993
- ----
Allowance for Doubtful Accounts $ 362,981 - - - 362,981
Allowance for Notes Receivable $ 270,000 - - - 270,000
</TABLE>
F28
<PAGE>
SCHEDULE X
UNIVERSITY REAL ESTATE PARTNERSHIP V
SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Charged to Expense
----------------------------
Item 1995 1994 1993
- ------------------------------- -------- -------- --------
<S> <C> <C> <C>
Maintenance and repairs $201,633 $226,012 $238,061
Taxes, other than payroll and
income taxes 138,106 205,576 116,811
</TABLE>
1) Amortization of deferred borrowing costs was not set forth as such items do
not exceed one percent of total sales as shown in the related statements of
operations.
2) Advertising costs was not set forth as such items do not exceed one percent
of total sales as shown in the related statements of operations.
3) Royalty expense is not applicable to these financial statements.
F29
<PAGE>
SCHEDULE XI
UNIVERSITY REAL ESTATE PARTNERSHIP V
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
<TABLE>
<CAPTION>
Initial Costs Costs
---------------------------- Capitalized
Buildings Subsequent
Related and to Cumulative
Description Encumbrances Land Improvements Acquisition Write-downs
- ----------- ------------ ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Glasshouse Square
Shopping Center
San Diego, CA $ 8,928,265 $1,540,892 $ 11,268,742 $ 4,659,956 $(2,400,000)
Washington Towne
Apartments
Atlanta, GA 1,746,666 524,145 931,812 688,749 -
------------ ---------- ------------ ----------- -----------
$ 10,674,931 $2,065,037 $ 12,200,554 $ 5,348,705 $(2,400,000)
============ ========== ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at
Which Carried at Close of Period
--------------------------------------- Accumulated
Buildings Depreciation
and and Date of Date Depreciable
Description Land Improvements Total(s) Amortization Construction Acquired lives (years)
- ----------- ---------- ------------ ---------- ------------ ------------ -------- -------------
<C> <C> <C> <C> <C> <C> <C>
<S>
$4,731,102 $12,163,008 $16,894,110 $(7,152,145) 1981 12/78 3-30
Glasshouse Square
Shopping Center
San Diego, CA
524,145 1,766,165 2,290,310 (358,580) 1971 07/91 3-25
Washington Towne ---------- ------------ ----------- ------------
Apartments
Atlanta, GA $5,255,247 $13,929,173 $19,184,420 $(7,510,725)
========== ============ =========== ============
</TABLE>
(a) The aggregate cost of real estate for Federal Income tax purposes
was $19,295,359 at December 31, 1995.
F30
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
Real Estate Investments and Accumulated Depreciation and Amortization
Note to Schedule XI
Changes in real estate investments and accumulated depreciation and amortization
are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------
1995 1994 1993
------------ ------------- ------------
Real estate:
- ------------
<S> <C> <C> <C>
Balance at beginning of year $ 18,835,045 $ 18,724,518 $ 16,754,395
Acquisitions 88,548 - 1,716,005
Improvements 260,827 110,527 254,118
Dispositions - - -
------------ ------------ ------------
Balance at end of year $ 19,184,420 $ 18,835,045 $ 18,724,518
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Accumulated depreciation and amortization:
- ------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $ 7,035,146 $ 6,580,210 $ 6,107,481
Depreciation and amortization 475,579 454,936 472,729
----------- ----------- -----------
Balance at end of year $ 7,510,725 $ 7,035,146 $ 6,580,210
=========== =========== ===========
</TABLE>
F31
<PAGE>
SCHEDULE XII
UNIVERSITY REAL ESTATE PARTNERSHIP V
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Principal Amount
of Loans Subject
Final Periodic Face Carrying to Delinquent
Maturity Payment Prior Amount of Amount of Principal or
Description Interest Rate Date Terms Liens Mortgage Mortgage Interest
----------- -------------- --------- --------- ------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mortgage payable on 8.625% October (1) None $ 1,750,000 $ 1,746,666 None
Washington Towne 2005
Apartments, secured by
a first lien deed of
trust
Mortgage payable on 9.5% December (2) None $ 7,314,713 $ 7,435,834 None
Glasshouse Square 2000
Shopping Center, secured
by a first lien deed of
trust with an additional
advance note of $400,000
Mortgage payable on 11% September (3) See above $ 1,492,431 $ 1,492,431 None
Glasshouse Square 2000
Shopping Center, secured
by a second lien deed of
trust
</TABLE>
(1) Monthly installments of principal and interest of $14,239.
(2) Varying monthly installments of principal and interest.
(3) Monthly installments of interest only of $6,595.
F32
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Price Waterhouse LLP served as the independent accountant previously engaged to
audit the financial statements of University Real Estate Partnership V (the
"Partnership") for the three years ended December 31, 1993. On May 10, 1995,
the Partnership's Manager selected Wallace Sanders & Company to serve the
Partnership as its independent accountant to audit the Partnership's finacial
statements for the calendar year ended December 31, 1994. The failure of the
Manager of the Partnership to select Price Waterhouse LLP as the Partnership's
independent accountant to audit the financial statements for the year ended
December 31, 1994, constituted Price Waterhouse LLP being "dismissed" (as such
term is used in Item 304 of Regulation S-K).
During the years Price Waterhouse LLP served as the independent accountants to
audit the financial statements of the Partnership and thereafter through the
date hereof, the Partnership has not had any disagreement with Price Waterhouse
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which disagreement, if not resolved
to the satisfaction of Price Waterhouse LLP, would have caused Price Waterhouse
LLP to make reference to the subject matter of the disagreement in connection
with this report. The decision to change accountants was not recommended by an
audit or similar committee (since the Manager has no such committee) and was
made only by the Manager.
The Partnership has provided Price Waterhouse LLP with a copy of the foregoing
disclosures at the same time as the filing of this report with the Commission
and has requested such former accountant to furnish the Partnership with a
letter addressed to the Securities and Exchange Commission (the "Commission")
stating whether Price Waterhouse LLP agrees with the statements made by the
Partnership herein and, if not, stating the respects in which it does not agree.
Price Waterhouse LLP by letter dated July 18, 1995, addressed to the Office of
the Chief Accountant of the Commission, advised that it agrees with the
statements made by the Partnership. A copy of the Price Waterhouse LLP letter
was attached to Form 8-K as filed with the Securities and Exchange Commission on
July 24, 1995.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------- --------------------------------------------------
The Partnership does not have officers or directors. University Advisory
Company is the General Partner of the Partnership. Southmark Commercial
Management, Inc. and Southmark Investors, Inc., both wholly-owned subsidiaries
of Southmark Corporation, are the two general partners of UAC. The executive
officer and director of the General Partner who controls the affairs of the
Partnership is as follows:
<TABLE>
<CAPTION>
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------
<S> <C> <C>
Glen Adams, 57 Chairman of the Board, Chief Executive
Director, President Officer and President of Southmark
and Chief Executive Corporation. Prior to joining Southmark,
Officer Mr. Adams served as Chairman, President
and General Counsel (1986-1989) of The
Great Western Sugar Company, a sugar
manufacturer, manging and liquidating its
assets during Chapter 11 proceedings. Mr.
Adams also serves as a Director of
Southmark San Juan, Inc., an affiliate of
Southmark. Mr. Adams also serves as
Director of Zale Corporation and U.S.
Home Corporation.
</TABLE>
15
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
No individual principal or principals as a group received over $60,000 in direct
remuneration from the Registrant.
The General Partner is not compensated directly for services rendered to the
Partnership. Certain officers and directors of the General Partner and Hampton
receive compensation from the General Partner or Hampton and/or their affiliates
(but not from the Registrant) for services performed for various affiliated
entities which may include services performed for the Registrant. See "Item 13
- - Certain Relationships and Related Transactions" and Note 2 to the financial
statements appearing in Item 8.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
(A) Security Ownership of certain beneficial owners.
No individual or group as defined by Section 13(d)(3) of the Securities
Exchange Act of 1934, known to the Registrant is the beneficial owner of
more than 5 percent of the Registrant's securities.
(B) Security ownership of management.
Neither the General Partner nor any of its officers or directors owns any
Limited Partnership Units.
The General Partner is entitled to distributions of cash from operations
and from other sources (primarily from the sale or refinancing of
Partnership properties and the reserve account) as set forth in
Item 8 - "Note 8 - Distributions."
(C) Change in Control.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
Beginning December 14, 1992, Property Management and Portfolio Services
Agreements were entered into with Hampton UREF and the Partnership began paying
property management fees, through a subcontract agreement with the Hampton UREF,
to Hampton and began reimbursing Hampton for its costs of administering the
Partnership's affairs. Beginning April 20, 1994, the Partnership began paying
property management fees to Insignia, through a Property Management Subcontract
Agreement with Hampton UREF and later the Partnership directly. On December 30,
1994 an Assignment and Assumption of Portfolio Services Agreement was entered
into between Hampton UREF and JKD whereby the Partnership began reimbursing JKD
for its costs of administering the Partnership's affairs.
Compensation or reimbursements paid to or accrued for the benefit of Hampton and
affiliates and Insignia during 1995 are as follows:
<TABLE>
<CAPTION>
JKD Insignia
--- --------
<S> <C> <C>
Property management fees $ - $ 108,846
Charged to general and administrative expense:
Partnership and finacial administration,
data processing, accounting and tax
reporting, and investor relations 147,505 -
Asset management fees 95,714 -
---------- ----------
Total compensation and reimbursements $ 243,219 $ 108,846
========== ==========
</TABLE>
16
<PAGE>
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINACIAL STATEMENTS, SCHEDULES AND REPORTS ON
- -------- --------------------------------------------------------------------
FORM 8-K
--------
(a)(1) Consolidated Financial Statements
Consolidated finacial statements for University Real Estate
Partnership V, listed in the Index to the Consolidated Financial
Statements and Supplementary Data on page 16, are filed as part of
this Annual Report.
(a)(2) Consolidated Financial Statement Schedules
Consolidated Financial Statement Supplementary Data for University
Real Estate Partnership V, listed in the Index to the Consolidated
Financial Statements and Supplementary Data on page 16, are filed as
part of this Annual Report.
Page
----
(a)(3) Index to Exhibits......................................... 17
(b) Reports on Form 8-K....................................... 20
(a)(3) The following documents are filed as part of this report and is an
index to the exhibits.
Exhibit
Number Description
------ -----------
3.1 Limited Partnership Agreement (Incorporated by reference
to Registration Statement No. 2-74914 on Form S-11 filed
by Registrant).
3.2i Articles of Incorporation of Washington Towne, Inc.
executed on August 9, 1995. (6)
3.2ii Washington Towne, Inc. Bylaws. (6)
3.3i Articles of Organization of Washington Towne Apartments,
L.L.C. executed on August 9, 1995. (6)
3.3ii Operating Agreement of Washington Towne Apartments,
L.L.C. entered into and dffective August 9, 1995 by and
between Washington Towne, Inc., a Georgia corporation and
University Real Estate Partnership V, a California
limited partnership. (6)
4. Limited Partnership Agreement (Incorporated by reference
to Registration Statement No. 2-74914 on Form S-11 filed
by Registrant).
4.1 Trust Indenture Agreement (Incorporated by reference to
Exhibit 4.1 to Registration Statement 2-74914 on Form S-
11 filed by Registrant).
10.1 Asset Purchase Agreement among Southmark Corporation and
its affiliates and SHL Acquisition Corp. III dated March
9, 1993, (2)
17
<PAGE>
Exhibit
Number Description
- ------ -----------
10.2 Asset Purchase Agreement amoung Southmark Corporation and its
affiliates and SHL Acquisition Corp. III dated March 9, 1993 as
amended by the First Amendment to Asset Purchase Agreement dated April
22, 1993. Incorporated by reference to the Annual Report of the
Registration on Form 10-K for the period ended December 31, 1992, as
filed with the Securities and Exchange Commission on May 1, 1993.
10.3 Asset Purchase Agreement amoung Southmark Corporation and its
affiliates and SHL Corp. III dated March 9, 1993, as amended by the
Second Amendment to Asset Purchase Agreement dated December 14, 1993.
(2)
10.4 University V Option Agreement entered into as of December 16, 1993, by
and amoung University Advisory Company and Hampton Realty Partners,
L.P. and/or its Permitted Assigns. (3)
10.5 Portfolio Services Agreement between the Partnership and Hampton UREF
Management, Ltd. dated December 16, 1993 to be effective as of
December 14, 1992. (3)
10.6 Assignment of Rights of the Asset Purchase Agreement between SHL
Acquisition Corp. III and Hampton HCW, Hampton Realty Partners, L.P.,
and Hampton UREF Management, Ltd. dated December 16, 1993. (3)
10.7 Portfolio Service Subcontract between Hampton UREF Management, Ltd.
and IFGP Corporation dated April 20, 1994. (3)
10.8 Property Management Subcontract between Hampton UREF Management, Ltd.
and Insignia Management Group, L.P. dated April 20, 1994. (3)
10.9 Purchase Agreement between Hampton Realty Partners, L.P. and Insignia
Financial Group, Inc. dated April 20, 1994. (3)
10.10 Note dated June 10, 1994 by and between University Real Estate
Partnership V, a California limited partnership, and Southmark
Corporation, a Georgia corporation, in the amount of $877,000.00. (3)
10.11 Settlement Agreement between PDP Venture V, a California limited
partnership, and University Real Estate Partnership V, a California
limited partnership, dated June 20, 1994. (3)
10.12 Portfolio Services Subcontract Agreement between Hampton UREF
Management, Ltd. and IFGP Corporation dated April 20, 1994 as amended
July 31, 1994. (3)
10.13 Termination of Purchase Agreement between Hampton Realty Partners,
L.P. and Insignia Financial Group, Inc. dated August 8, 1994. (3)
10.14 Property Management Subcontract Agreement between Hampton UREF
Management, Ltd. and Insignia Management Group, L.P. dated April 20,
1994, as amended August 8, 1994. (3)
10.15 Termination of Property Management Agreement between Hampton UREF
Management, Ltd. and the Partnership dated August 8, 1994. (3)
18
<PAGE>
Exhibit
Number Description
------ -----------
10.16 Property Management Agreement between the Partnership and
Insignia Commercial Group, Inc., dated August 8, 1994.
(3)
10.17 Termination of Property Management Subcontract Agreement
between Hampton UREF Management, Ltd. and Insignia
Management Group, Ltd. dated September 1, 1994. (3)
10.18 Assignment and Assumption of Portfolio Services Agreement
between Hampton UREF Management, Ltd. and JKD Financial
Management, Inc. dated December 30, 1994. (4)
10.19 Assignment and Assumption of Option Agreement between
Hampton Realty Partners, L.P. and JKD Financial
Management, Inc. dated December 30, 1994. (4)
10.20 Modification and/or Extension Agreement dated March 27,
1995 by and between Imperial Bank, a California banking
corporation, and University Real Estate Partnership V, a
California limited partnership. (5)
10.21 Disbursement Agreement and Deed of Trust dated March 27,
1995, between Imperial Bank, a California banking
corporation, and University Real Estate Partnership V, a
California limited partnership for the additional line of
credit granted to the Partnership in the amount of
$400,000. (5)
10.22 Forbearance Agreement dated March 27, 1995 by and between
University Real Estate Partnership V, a California
limited partnership and Imperial Bank, a California
banking corporation. (5)
10.23 Note dated March 31, 1995 by and between University Real
Estate Partnership V, a California limited partnership,
and Imperial Bank, a California banking corporation in
the amount of $250,000. (5)
10.24 Amended and Restated Forbearance Agreement entered into
on April 28, 1995 by and between University Real Estate
Partnership V, a California limited partnership and
Imperial Bank, a California banking corporation. (5)
10.25 Promissory Note dated September 13, 1995 by and between
Washington Towne Apartments, L.L.C. and First Union
National Bank of North Carolina for the principal amount
of $1,750,000. (6)
10.26 Deed to Secure Debt and Security Agreement dated
September 13, 1995 by and between Washington Towne
Apartments, L.L.C. and First Union National Bank of North
Carolina. (6)
10.27 Assignment of Leases and Rents dated September 13, 1995,
by and between Washington Apartments, L.L.C. and First
Union Bank of North Carolina. (6)
10.28 Indemnity and Guaranty Agreement dated September 13,
1995 by and between University Real Estate Partnership V
and First Union National Bank. (6)
19
<PAGE>
Exhibit
Number Description
------ -----------
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 1995 and 1994 respectively.
16. Letter dated July 18, 1995 from Price Waterhouse LLP 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.
(2) Incorporation by reference to Annual Report of the Registrant on
Form 10-K for the period ended December 31, 1993, as filed with the
Securities and Exchange Commission on March 30, 1995.
(3) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ended September 30, 1994, as filed with the
Securities and Exchange Commission on October 6, 1995.
(4) Incorporated by reference to Annual Report of the Registrant on Form
10-K for the period ended December 31, 1994, as filed with the
Securities and Exchange Commission on October 10, 1995.
(5) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ending March 31, 1995, as filed with the
Securities and Exchange Commission on November 20, 1995.
(6) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ending September 30, 1995, as filed with the
Securities and Exchange Commission on May 23, 1996.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended December 31, 1995.
20
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) 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 17, 1996 By: /s/ Glen Adams
- -------------------------- ---------------------------------
Date Glen Adams, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
July 17, 1996 By: /s/ Glen Adams
- -------------------------- ---------------------------------
Date Glen Adams, President, Principal
Executive Officer, and Director
Southmark Investors, Inc.
July 17, 1996 By: /s/ Charles B. Brewer
- -------------------------- ---------------------------------
Date Charles B. Brewer, Executive Vice
President and Principal Financial
and Accounting Officer Southmark
Investors, Inc.
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 660,562
<SECURITIES> 0
<RECEIVABLES> 411,960
<ALLOWANCES> 107,044
<INVENTORY> 0
<CURRENT-ASSETS> 715,478
<PP&E> 19,184,420
<DEPRECIATION> 7,510,725
<TOTAL-ASSETS> 13,416,272
<CURRENT-LIABILITIES> 341,896
<BONDS> 11,224,149
0
0
<COMMON> 0
<OTHER-SE> 1,801,295
<TOTAL-LIABILITY-AND-EQUITY> 13,416,272
<SALES> 2,329,859
<TOTAL-REVENUES> 2,525,013
<CGS> 0
<TOTAL-COSTS> 1,442,238
<OTHER-EXPENSES> 731,566
<LOSS-PROVISION> 307,243
<INTEREST-EXPENSE> 1,096,581
<INCOME-PRETAX> (1,052,615)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,052,615)
<DISCONTINUED> (121,518)
<EXTRAORDINARY> 75,000
<CHANGES> 0
<NET-INCOME> (1,099,133)
<EPS-PRIMARY> (31.68)
<EPS-DILUTED> 0
</TABLE>
