<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
---------------
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-8914
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UNIVERSITY REAL ESTATE PARTNERSHIP V
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3240567
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Ross Avenue, Suite 4600, Dallas, Texas 75201
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(Address of principal executive offices) (Zip code)
(214) 740-2209
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(Registrant's telephone number, including area code)
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(Former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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1
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UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
Page
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Part I - Financial Information
Item 1 - Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996 3
(b) Condensed Consolidated Statements of Operations
for the three months ended March 31, 1997 and 1996 4
(c) Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1997 and 1996 5
(d) Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K 8
Signatures (pursuant to General Instruction E) 9
All other items called for by the instructions are omitted as they are
either inapplicable, not required, or the information is included in
the Condensed Consolidated Financial Statements or Notes thereto.
2
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PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------- -------------------------------------------
(a) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1997 December 31,
(Unaudited) 1996
------------ -------------
<S> <C> <C>
ASSETS
- ------
Real estate investments
Land $ 5,255,247 $ 5,255,247
Buildings and improvements 14,179,225 14,162,222
----------- -----------
19,434,472 19,417,469
Less: Accumulated depreciation and
amortization (8,153,777) (8,019,204)
----------- -----------
11,280,695 11,398,265
----------- -----------
Note receivable 250,000 250,000
Cash and cash equivalents (including $18,775
and $19,355 for security deposits at
March 31, 1997 and December 31, 1996,
respectively) 135,252 175,878
Accounts receivable, net of allowance for
doubtful accounts of $107,044 at March 31,
1997 and December 31, 1996 21,864 21,088
Deferred borrowing costs, net of accumulated
amortization of $118,472 and $111,433 at
March 31, 1997 and December 31, 1996,
respectively 227,869 234,908
Prepaid expenses and other assets 601,722 590,228
----------- -----------
$12,517,402 $12,670,367
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net of discounts $10,764,481 $10,789,414
Accrued mortgage interest 194,306 173,156
Accrued property taxes 76,776 45,756
Accounts payable and accrued expenses 131,683 202,763
Subordinated real estate commissions 549,218 549,218
Security deposits 23,517 24,099
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11,739,981 11,784,406
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Partners' equity (deficit)
Limited Partners - 50,000 units authorized;
34,291 and 34,301 units issued and
outstanding at March 31, 1997
and December 31, 1996, respectively,
(17,733 Income units at March 31, 1997
and December 31, 1996 and 16,558 and
16,568 Growth/Shelter units at March 31,
1997 and December 31, 1996, respectively) 1,320,950 1,428,405
General Partner (543,529) (542,444)
----------- -----------
777,421 885,961
----------- -----------
$12,517,402 $12,670,367
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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(b) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1997 1996
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<S> <C> <C>
Revenues:
Rental income $ 540,456 $ 468,028
Interest 8,115 5,572
Other income 51,483 -
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Total revenues 600,054 473,600
--------- ---------
Expenses:
Interest 257,907 249,991
Depreciation and amortization 154,424 137,590
Property taxes 29,832 13,969
Other property operations 210,987 242,514
General and administrative 55,444 123,502
--------- ---------
Total expenses 708,594 767,566
--------- ---------
Net loss $(108,540) $(293,966)
========= =========
Net loss allocable to General Partner $ (1,085) $ (2,940)
Net loss allocable to Limited Partners (107,455) (291,026)
--------- ---------
Net loss $(108,540) $(293,966)
========= =========
Net loss per Limited Partnership Unit: $ (3.13) $ (8.47)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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(c) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
Net loss $(108,540) $(293,966)
--------- ---------
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 154,424 137,590
Changes in assets and liabilities:
Accounts receivable (776) (17,874)
Prepaid expenses and other assets (24,306) (31,977)
Accounts payable and accrued expenses (71,081) (22,968)
Accrued mortgage interest 21,150 21,364
Accrued property taxes 31,020 35,445
Security deposits (581) (24,609)
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Total adjustments 109,850 96,971
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Net cash provided by (used in) operating activities 1,310 (196,995)
--------- ---------
Cash flows from investing activities:
Additions to real estate investments (17,003) (73,253)
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Net cash (used in) investing activities (17,003) (73,253)
--------- ---------
Cash flows from financing activities:
Advances from line of credit - 146,141
Principal payments on mortgage notes payable (24,933) (25,158)
--------- ---------
Net cash (used in) provided by financing activities (24,933) 120,983
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (40,626) (149,265)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 175,878 660,562
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 135,252 $ 511,297
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1996. The December 31, 1996
condensed consolidated balance sheet was derived from audited numbers.
Certain reclassifications have been made to the 1996 balances to conform to the
1997 presentation.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------
The general partner of the Partnership is University Advisory Company ("UAC" or
the "General Partner"), a California general partnership. Prior to December 15,
1996, Southmark Commercial Management, Inc. ("SCM"), and Southmark Investors,
Inc. ("SII"), both wholly-owned subsidiaries of Southmark Corporation
("Southmark") were the two general partners of UAC. On December 15, 1996, OS
General Partner Company ("OSGPC"), a Texas corporation, and OS Holdings, Inc.
("OS"), a Texas corporation, acquired both interests in UAC held by SCM and SII.
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 the approval of the Limited Partners. As a result of a 1996
transaction between OS and OSGPC and SCM and SII, JKD's option was assigned to
OSGPC. See discussion of transaction between SCM, SII, OSGPC and OS below.
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"), a 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.
6
<PAGE>
On January 29, 1996, SCM and SII entered into a purchase agreement to sell their
partnership interests in UAC to OS Holdings, Inc. ("OS"), a Texas corporation,
and JKD, respectively. The transfer documents were executed January 31, 1996,
and placed into escrow. The transfer would not be effective until certain
conditions precedent were satisfied and, if the conditions precedent were not
satisfied by April 29, 1996, the transfer documents would be returned to SCM and
SII and the transfer would not occur. On April 29, 1996, the purchase agreement
was amended to facilitate the substitution of OS General Partner Company
("OSGPC"), a Texas corporation, for JKD and to extend the escrow period through
June 30, 1996. On June 25, 1996, a Second Amendment of Escrow Agreement was
entered into to extend the escrow period through August 31, 1996. On December
15, 1996, it was determined that all conditions precedent to the OS and OSGPC
purchase of the partnership interests in UAC had been met and the sale was
consummated and OS and OSGPC became the owners and interest holders in UAC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
---------------------
The Partnership's net loss for the three months ended March 31, 1997 was
$108,540. The net loss for the same period in 1996 was $293,966. Total
revenues for the three months ended March 31, 1997 were $600,054 versus $473,600
for the same period in 1996. The increase in total revenues in 1997 is
primarily attributable to increased occupancy at Glasshouse Square and
additional cash receipts in the first quarter of 1997 with the execution of two
ground lease agreements.
Total expenses for the three months ended March 31, 1997 were $708,594 versus
$767,566 for the same period in 1996. The decrease in expenses in 1997 is
primarily due to a reduction in legal expenses regarding the Glasshouse Square
lease agreements and a reduction in the amount of fees charged to perform the
1996 audit.
During the three months ended March 31, 1997, the Partnership recorded a
decrease in cash of $40,626 versus a decrease of $149,265 for the same period in
1996. The statement of cash flows included an increase in cash provided by
operating activities of $198,305 primarily due to an increase in rental and
ground lease collections at Glasshouse Square . The statement of cash flows
included a decrease in cash used in investing activities of $56,250 due to a
reduction in needed property improvements. The statement of cash flows included
an increase in cash used in financing activities of $145,916, primarily due to a
decrease in the draws on the line of credit related to the Glasshouse Square
mortgage payable.
Should operations deteriorate and present resources not be adequate for current
needs, the Partnership has no outside lines of credit on which to draw for its
working capital needs. Neither the General Partner and its affiliates nor JKD
have any obligation to provide financial support to the Partnership.
Accordingly, continued operation of the Partnership is dependent on the
Partnership being able to generate cash from operations or sale of its remaining
operating properties or negotiated reductions in requirements related to
outstanding debt obligations.
Washington Towne Apartments - Atlanta, Georgia
- ----------------------------------------------
Average occupancy for the three months ended March 31, 1997 was 93% versus 94%
for the same period in 1996.
Glasshouse Square - San Diego, California
- -----------------------------------------
Average occupancy for the three months ended March 31, 1997 was 91% versus 81%
for the same period in 1996. This increase in occupancy is primarily due to the
execution of a lease agreement with a major tenant in August 1996.
In 1996, additional testing was conducted by the environmental engineers
regarding the alleged leaking of petroleum products from underground storage
tanks on the Garcia's Tract and part of Glasshouse Square parking lot. The
engineers determined there was no "free product" at the portions of the site
that were tested and, also, no human health risk exists at this time.
Management does not believe that the County of San Diego will take further
action. Therefore, this situation should not have a material effect on the
Partnership.
7
<PAGE>
Bank of San Pedro Note Receivable
- ---------------------------------
On July 20, 1995, the Partnership sold the Bank of San Pedro Office Building for
$1,350,000. The Partnership received partial consideration from the sale in the
form of a note receivable for $350,000, bearing interest at 9% per annum with
interest only payments due monthly, secured by a second lien deed of trust on
the Bank of San Pedro Office Building, maturing on July 20, 1998 and net cash of
$291,562.
As of March 30, 1996, the borrower on the note receivable ceased making
regularly scheduled debt payments constituting an event of default. The
borrower has currently cured the default situation; however, a provision for
loss in the amount of $100,000 was recorded in 1995 to reflect the market value
of the real estate.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits.
Exhibit
Number Description
------ -----------
3. and 4. Limited Partnership Agreement (Incorporated by reference to
Registration Statement No. 2-74914 on Form S-11 filed by
Registrant).
11. Statement regarding computation of Net Loss per Limited
Partnership Unit: Net Loss per Limited Partnership Unit is
computed by dividing net loss allocated to the Limited
Partners by the number of Limited Partnership Units
outstanding. Per unit information has been computed based
on 34,291 and 34,353 Limited Partnership Units outstanding
in 1997 and 1996, respectively.
16. Letter dated July 18, 1995 from Price Waterhouse with
respect to a change in certifying accountant. Incorporated
by reference to Form 8-K - Current Report for the period
ending September 30, 1995, as filed with the Securities and
Exchange Commission on July 24, 1995.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended March 31, 1997.
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNIVERSITY REAL ESTATE PARTNERSHIP V
By: UNIVERSITY ADVISORY COMPANY
General Partner
By: OS GENERAL PARTNER COMPANY
May 12, 1997 By: /s/ Curtis R. Boisfontaine, Jr.
- --------------------------- ------------------------------------------
Date Curtis R. Boisfontaine, Jr. President,
Principal Executive Officer and Director
OS General Partner Company
May 12, 1997 By: /s/ David K. Ronck
- --------------------------- -------------------------------------------
Date David K. Ronck
Financial and Accounting Officer
OS General Partner Company
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 135,252
<SECURITIES> 0
<RECEIVABLES> 378,908
<ALLOWANCES> 107,044
<INVENTORY> 0
<CURRENT-ASSETS> 758,838
<PP&E> 19,434,472
<DEPRECIATION> 8,153,777
<TOTAL-ASSETS> 12,517,402
<CURRENT-LIABILITIES> 426,282
<BONDS> 11,313,699
0
0
<COMMON> 0
<OTHER-SE> 777,421
<TOTAL-LIABILITY-AND-EQUITY> 12,517,402
<SALES> 0
<TOTAL-REVENUES> 600,054
<CGS> 0
<TOTAL-COSTS> 240,819
<OTHER-EXPENSES> 209,868
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 257,907
<INCOME-PRETAX> (108,540)
<INCOME-TAX> 0
<INCOME-CONTINUING> (108,540)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (108,540)
<EPS-PRIMARY> 0
<EPS-DILUTED> (3.13)
</TABLE>
