<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, 1998
--------------------------------------
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to __________________
Commission File Number 0-8914
--------------
UNIVERSITY REAL ESTATE PARTNERSHIP V
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3240567
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Ross Avenue, Suite 4600, Dallas, Texas 75201
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(214) 740-2200
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
1
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
Page
----
Part I - Financial Information
Item 1 - Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of March 31,
1998 and December 31, 1997 3
(b) Condensed Consolidated Statements of Operations for
the three months ended March 31, 1998 and 1997 4
(c) Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 1998 and 1997 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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1998 December 31,
(Unaudited) 1997
----------- ------------
<S> <C> <C>
ASSETS
Real estate investments
Land $ 5,255,247 $ 5,255,247
Buildings and improvements 14,291,613 14,261,080
----------- -----------
19,546,860 19,516,327
Less: Accumulated depreciation and
amortization (8,701,872) (8,565,066)
----------- -----------
10,844,988 10,951,261
----------- -----------
Note receivable 250,000 250,000
Cash and cash equivalents (including $19,585 and $18,985
for security deposits at March 31, 1998 and
December 31, 1997, respectively) 177,452 136,596
Accounts receivable, net of allowance for doubtful accounts of
$107,044 at March 31, 1998 and December 31, 1997 20,724 40,826
Deferred borrowing costs, net of accumulated amortization
of $146,624 and $139,586 at March 31, 1998 and
December 31, 1997, respectively 199,717 206,755
Prepaid expenses and other assets 700,249 663,512
----------- -----------
$12,193,130 $12,248,950
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Mortgage notes payable, net of discounts $10,650,873 $10,680,255
Accrued mortgage interest 275,633 254,478
Accrued property taxes 160,648 127,951
Accounts payable and accrued expenses 94,504 105,782
Subordinated real estate commissions 549,218 549,218
Security deposits 24,326 23,726
----------- -----------
11,755,202 11,741,410
----------- -----------
Partners' equity (deficit)
Limited Partners - 50,000 units authorized; 34,275 and 34,301
units issued and outstanding at March 31, 1998 and December 31,
1997, respectively, (17,723 and 17,733 Income units at March 31,
1998 and December 31, 1997, respectively, and 16,552 and 16,568
Growth/Shelter units at March 31, 1998 and December 31, 1997,
respectively) 984,852 1,053,768
General Partner (546,924) (546,228)
----------- -----------
437,928 507,540
----------- -----------
$12,193,130 $12,248,950
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
(b) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
-------------------
1998 1997
-------- ---------
Revenues:
Rental income $618,038 $ 540,456
Interest 5,685 8,115
Other income 17,736 51,483
-------- ---------
Total revenues 641,459 600,054
-------- ---------
Expenses:
Interest 255,300 257,907
Depreciation and amortization 153,784 154,424
Property taxes 32,697 29,832
Other property operations 218,415 210,987
General and administrative 50,875 55,444
-------- ---------
Total expenses 711,071 708,594
-------- ---------
Net loss $(69,612) $(108,540)
======== =========
Net loss allocable to General Partner $ (696) $ (1,085)
Net loss allocable to Limited Partners (68,916) (107,455)
-------- ---------
Net loss $(69,612) $(108,540)
======== =========
Net loss per Limited Partnership Unit: $ (2.01) $ (3.13)
======== =========
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
(c) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
----------------------
1998 1997
---------- ----------
Net loss $ (69,612) $ (108,540)
---------- ----------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 153,784 154,424
Changes in assets and liabilities:
Accounts receivable 20,101 (776)
Prepaid expenses and other assets (46,678) (24,306)
Accounts payable and accrued expenses (11,277) (71,081)
Accrued mortgage interest 21,154 21,150
Accrued property taxes 32,697 31,020
Security deposits 600 (581)
---------- ----------
Total adjustments 170,381 109,850
---------- ----------
Net cash provided by operating activities 100,769 1,310
---------- ----------
Cash flows from investing activities:
Additions to real estate investments (30,532) (17,003)
---------- ----------
Net cash (used in) investing activities (30,532) (17,003)
---------- ----------
Cash flows from financing activities:
Principal payments on mortgage notes payable (29,381) (24,933)
---------- ----------
Net cash (used in) financing activities (29,381) (24,933)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 40,856 (40,626)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 136,596 175,878
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 177,452 $ 135,252
========== ==========
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, 1998 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. 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, 1997. The December 31, 1997
condensed consolidated balance sheet was derived from audited numbers.
Certain reclassifications have been made to the 1997 balances to conform to the
1998 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 among OS, OSGPC, SCM and SII, JKD's option was assigned to OSGPC.
See discussion of transaction among 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.
NOTE 3 - SUBSEQUENT EVENTS
On May 8, 1998, the Partnership sold Glasshouse Square Shopping Center to an
unaffiliated third party for $10,600,000. The property was acquired by the
purchaser with a cash downpayment of approximately $2,600,000 and assumption of
the first mortgage lien on the property of $7,465,000. In conjunction with the
sale, the Partnership provided short term seller financing in the approximate
amount of $538,000. The net cash proceeds received by the Partnership were used
to pay real estate commissions, property taxes, closing costs and to payoff the
second mortgage lien on the property. The Partnership is currently evaluating
remaining proceeds from the sale for a possible distribution to the partners.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Partnership's net loss for the three months ended March 31, 1998 was
$69,612. The net loss for the same period in 1997 was $108,540. Total revenues
for the three months ended March 31, 1998 were $641,459, versus $600,054 for the
same period in 1997. The increase in total revenues in 1998 is primarily
attributable to increased occupancy at Glasshouse Square and a decrease in lost
rents at Washington Towne Apartments.
Total expenses for the three months ended March 31, 1998 were $711,071 versus
$708,594 for the same period in 1997.
During the three months ended March 31, 1998, the Partnership recorded an
increase in cash of $40,856 versus a decrease of $40,626 for the same period in
1997. The statement of cash flows included an increase in cash provided by
operating activities of $99,459 primarily due to an increase in rental and
ground lease collections at Glasshouse Square. The statement of cash flows
included an increase in cash used in investing activities of $13,529 due to an
increase in needed property improvements. The statement of cash flows included
an increase in cash used in financing activities of $4,448.
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, 1998 was 94% versus 93%
for the same period in 1997.
Glasshouse Square - San Diego, California
Average occupancy for the three months ended March 31, 1998 was 94% versus 91%
for the same period in 1997. This increase in occupancy is primarily due to the
execution of lease agreements with two tenants in February and June 1997.
7
<PAGE>
In 1996, additional testing was conducted by the environmental engineers
regarding the alleged leaking of petroleum products from underground storage
tanks on the Garcia's Tract and part of Glasshouse Square parking lot. The
engineers determined there was no "free product" at the portions of the site
that were tested and, also, no human health risk exists at this time.
Management does not believe that the County of San Diego will take further
action. Therefore, this situation should not have a material effect on the
Partnership.
Bank of San Pedro Note Receivable
On July 20, 1995, the Partnership sold the Bank of San Pedro Office Building for
$1,350,000. The Partnership received partial consideration from the sale in the
form of a note receivable for $350,000, bearing interest at 9% per annum with
interest only payments due monthly, secured by a second lien deed of trust on
the Bank of San Pedro Office Building, maturing on July 20, 1998 and net cash of
$291,562.
As of March 30, 1996, the borrower on the note receivable ceased making
regularly scheduled debt payments constituting an event of default. The
borrower has currently cured the default situation; however, a provision for
loss in the amount of $100,000 was recorded in 1995 to reflect the market value
of the real estate.
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 34,275 and 34,301 Limited Partnership
Units outstanding in 1998 and 1997, 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, 1998.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNIVERSITY REAL ESTATE PARTNERSHIP V
By: UNIVERSITY ADVISORY COMPANY
General Partner
By: OS GENERAL PARTNER COMPANY
May 14, 1998 By: /s/ Curtis R. Boisfontaine
- ---------------------------- ---------------------------------------
Date Curtis R. Boisfontaine, Jr. President,
Principal Executive Officer and
Director OS General Partner Company
May 14, 1998 By: /s/ David K. Ronck
- ---------------------------- ---------------------------------------
Date David K. Ronck
Vice President and Chief Accounting
Officer OS General Partner Company
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 177,452
<SECURITIES> 0
<RECEIVABLES> 127,768
<ALLOWANCES> 107,044
<INVENTORY> 0
<CURRENT-ASSETS> 898,425
<PP&E> 19,546,860
<DEPRECIATION> 8,701,872
<TOTAL-ASSETS> 12,193,130
<CURRENT-LIABILITIES> 118,830
<BONDS> 11,636,372
0
0
<COMMON> 0
<OTHER-SE> 437,928
<TOTAL-LIABILITY-AND-EQUITY> 12,193,130
<SALES> 0
<TOTAL-REVENUES> 641,459
<CGS> 0
<TOTAL-COSTS> 301,987
<OTHER-EXPENSES> 153,784
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 255,300
<INCOME-PRETAX> (69,612)
<INCOME-TAX> 0
<INCOME-CONTINUING> (69,612)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (69,612)
<EPS-PRIMARY> 0
<EPS-DILUTED> (2.01)
</TABLE>
