<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, 1997
------------------------------------------------------
[ ] 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
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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
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
- --------------------------------------------------------------------------------
(Former address, if changed since last report)
Registrant's telephone number, including area code (214) 740-2200
-----------------------------
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 X No
--- ---
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 34,301 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 16
TOTAL OF 45 PAGES
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO ANNUAL REPORT ON FORM 10-K
Item No. Page
- -------- ----
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................................................ 9
7 Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 10
8 Consolidated Financial Statements and Supplementary Data............... 13
9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................... 14
PART III
10 Directors and Executive Officers of the Registrant..................... 14
11 Executive Compensation................................................. 14
12 Security Ownership of Certain Beneficial Owners and Management......... 14
13 Certain Relationships and Related Transactions......................... 15
PART IV
14 Exhibits, Consolidated Financial Statement Schedules and Reports on
Form 8-K............................................................... 16
2
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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. 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. See discussion of SCM, SII, OS and
OSGPC transaction below. The principal place of business for the General
Partner is 2001 Ross Avenue, Suite 4600, Dallas, Texas 75201.
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, 499 have subsequently been repurchased by the Partnership. Of the
34,301 Limited Partnership Units currently outstanding, 17,733 are Income Units
and 16,568 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 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 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.
On December 15, 1996, OS and OSGPC purchased the partnership interests from SCM
and SII.
3
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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 and is the owner of a second lien mortgage note receivable secured by
the Bank of San Pedro Office Building. 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 the Bank of San Pedro 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 the Glasshouse Square
property, contained 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 risks exist 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. As a result of the County's no further action position, the
Partnership, in 1996, entered into ground lease agreements with two fast food
providers. The restaurants have constructed the improvements and the related
ground lease income to the partnership is expected to be in excess of $155,000
annually for the twenty-year term of the leases. Payments under these lease
agreements began in 1997.
After resolving the aforementioned environmental issues, the Partnership
executed two long-term ground leases with two fast food restaurant chains who
completed the construction of the improvements in June of 1997.
During 1997, one of the tenants at Glasshouse Square, United Artists Theatres,
initiated discussions with the Partnership regarding an early termination of
their lease agreement. According to the tenant, as a result of the
proliferation of "mega cinemas" in the area, sales have continued to deteriorate
during the past several years. Certain inquiries and offers from prospective
purchasers had been entertained at the time these discussions began and were
subsequently terminated as a result of the uncertainty regarding the United
Artist's continued tenancy. The Partnership is currently discussing a new lease
in the space currently occupied by United Artist with a national theatre
operator. If a lease is consummated, the estimated lease rate would be at
approximately 70% of the current rate being paid by United Artists, which is the
current estimated market rent for that area. The Partnership cannot predict the
eventual outcome of any negotiations to re-lease the United Artists space.
Also, during the fourth quarter of 1997, the Partnership was notified by
Blockbuster Video, another tenant at Glasshouse Square, of Blockbuster's intent
to sublease their space as a result of poor sales at that location. As a
result, the Partnership has decided to cease any active sales marketing of the
Glasshouse property in light of the uncertainties surrounding the United Artists
and Blockbuster leases.
The Partnership holds a second lien mortgage note receivable in the face amount
of $350,000 resulting from the 1995 sale of the Bank of San Pedro Office
Building located in Long Beach, California. Scheduled payments on the note are
interest only with a scheduled maturity of June 1, 1998. The Partnership cannot
predict whether the note will be retired at the scheduled maturity, however the
borrower has not given the Partnership any indication of their possible
difficulty in retiring this mortgage.
4
<PAGE>
Business Plan:
The business of the Partnership is not seasonal. The Partnership's anticipated
plan of operation for 1998 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. The General Partner is continually analyzing current market
conditions and trends and if it is determined that liquidating the Partnership's
properties is in the best interest, the Partnership decisions will be made
regarding potential dispositions of the properties. In addition, the General
Partner continues to explore other types of transactions that could benefit the
partnership such as favorable long-term financing for the Partnership
properties becoming available and the possibility of entering into some type of
tax free exchange that could enhance Partnership cash flow. There can be no
assurances however as to the ultimate completion of the differing types of
transactions, which might be available to the Partnership and its assets. See
Item 7 - "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
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 was 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 was 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
5
<PAGE>
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 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 a result of a 1996 transaction among OS, OSGPC, SCM and
SII, JKD's option was assigned to OSGPC.
On December 15, 1996, OS and OSGPC purchased the partnership interests from SCM
and SII.
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. During 1997 JKD was merged into Meridian Realty
Advisors, Inc. ("MRA") and MRA assumed responsibility for overseeing the
management of the Partnership.
ITEM 2. PROPERTIES
- ------- ----------
Description of Real Estate:
The following table sets forth the investment portfolio of the Partnership at
December 31, 1997. It is the opinion of management that both properties are
adequately covered by insurance. The mortgage notes payable totaled $10,680,255
at December 31, 1997 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".
Gross
Book Value Occupancy Date
Property Description of Property Rate Acquired
- -------- ----------- ----------- ---- --------
Glasshouse Square Shopping Center
San Diego, California 92,839 sq. ft. $17,012,888 94% December 1978
Washington Towne
Apartments Apartments
Atlanta, Georgia 148 units 2,503,439 94% July 1991
-----------
$19,516,327
===========
Glasshouse Square
- -----------------
The Glasshouse Square Shopping Center, along with the Garcia's Tract, is
currently owned by the Partnership subject to a first and second lien deeds of
trust as set forth more fully in Item 8 - "Note 6 - Mortgage Notes Payable".
At December 31, 1997, the mortgages payable for Glasshouse Square had unpaid
principal amounts of $7,485,124 and $1,492,431 both of which are due December
2000 (see Item 8 - "Note 6 - 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 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 6 - Mortgage Notes Payable"). As of December 31, 1997 and
1996, the Glasshouse Square mortgages were current on all mortgage obligations,
with no current default issues related to the 1995 action discussed above.
6
<PAGE>
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 the Glasshouse Square
property, contained 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.
After resolving the aforementioned environmental issues, the Partnership
executed two long-term ground leases with two fast food restaurant chains who
completed the construction of the improvements in June of 1997.
During 1997, one of the tenants at Glasshouse Square, United Artists Theatres,
initiated discussions with the Partnership regarding an early termination of
their lease agreement. According to the tenant, as a result of the
proliferation of "mega cinemas" in the area, sales have continued to deteriorate
during the past several years. Certain inquiries and offers from prospective
purchasers had been entertained at the time these discussions began and were
subsequently terminated as a result of the uncertainty regarding the United
Artist's continued tenancy. The Partnership is currently discussing a new lease
in the space currently occupied by United Artist with a national theatre
operator. If a lease is consummated, the estimated lease rate would be at
approximately 70% of the current rate being paid by United Artists, which is the
current estimated market rent for that area. The Partnership cannot predict the
eventual outcome of any negotiations to re-lease the United Artists space.
Also, during the fourth quarter of 1997, the Partnership was notified by
Blockbuster Video, another tenant at Glasshouse Square, of Blockbuster's intent
to sublease their space as a result of poor sales at that location. As a
result, the Partnership has decided to cease any active sales marketing of the
Glasshouse Square property in light of the uncertainties surrounding the United
Artists and Blockbuster leases.
The Partnership holds a second lien mortgage note receivable in the face amount
of $350,000 resulting from the 1995 sale of the Bank of San Pedro Office
Building located in Long Beach, California. Scheduled payments on the note are
interest only with a scheduled maturity of June 1, 1998. The Partnership cannot
predict whether the note will be retired at the scheduled maturity, however the
borrower has not given the Partnership any indication of their possible
difficulty in retiring this mortgage.
Washington Towne Apartments
- ---------------------------
The mortgage payable for Washington Towne Apartments, LLC had an unpaid
principal amount of $1,702,700 at December 31, 1997. 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 were completed prior
to the end of the first quarter 1996 and have significantly enhanced the value
of the property (see Item 8 - "Note 6 - Mortgage Notes Payable").
7
<PAGE>
Operating Data:
OCCUPANCY RATES FOR THE YEARS 1993-1997
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1993 1994 1995 1996 1997
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Glasshouse Square 74% 75% 82% 86% 94%
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Washington Towne 98% 98% 94% 94% 94%
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The following table shows tenants in Glasshouse Square occupying ten percent or
more of the rentable square footage and their lease provisions:
- --------------------------------------------------------------------------------
Nature of Rent Per Lease Lease Renewal
Tenant Business Annum Expiration Options
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Showbiz Pizza Family Pizza Restaurant $161,304 4/18/03 Two - 5 year
options
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Staples, Inc. Office Products Super $364,351 8/31/06 Four - 5 year
Store options
- --------------------------------------------------------------------------------
UA Theater Movie Theater $254,400 01/31/01 Four - 5 year
options
- --------------------------------------------------------------------------------
Blockbuster Music Electronics, $211,752 10/31/04 Three - 5 year
Audio and Video options
Software
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During 1995, Silo California, a major tenant at Glasshouse Square, ceased retail
operations.
The following is a table of scheduled lease expirations:
- --------------------------------------------------------------------------------
GLASSHOUSE SQUARE SHOPPING CENTER
SCHEDULE OF LEASE EXPIRATIONS
As of 12/31/97
- --------------------------------------------------------------------------------
Year Number of Square % of Gross
Lease Expirations Footage Annual Rental Annual Rental
- --------------------------------------------------------------------------------
1998 1 5,579 $ 46,459 5.30%
- --------------------------------------------------------------------------------
1999 0 0 $ 0 0.00%
- --------------------------------------------------------------------------------
2000 0 0 $ 0 0.00%
- --------------------------------------------------------------------------------
2001 1 21,200 $254,400 23.68%
- --------------------------------------------------------------------------------
2002 0 0 $ 0 0.00%
- --------------------------------------------------------------------------------
2003 1 11,523 $169,372 15.01%
- --------------------------------------------------------------------------------
2004 1 14,425 $244,317 17.44%
- --------------------------------------------------------------------------------
2005 0 0 $ 0 0.00%
- --------------------------------------------------------------------------------
2006 1 28,027 $375,642 33.70%
- --------------------------------------------------------------------------------
2007 0 0 $ 0 0.00%
- --------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS
-----------------
None.
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.
(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------
Limited Partnership Units 1,532 as of March 31, 1998
Income Units 861 as of March 31, 1998
Growth/Shelter Units 941 as of March 31, 1998
(C) Cash distributions from the Partnership were suspended in 1992 and the
Partnership is continuing to experience negative cash flows after debt
service and capital items as of December 31, 1997. 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, 1997, 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.
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 1997 1996 1995 1994 1993
- ------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Rental income.............. $ 2,390,773 $ 2,087,301 $ 2,329,859 $ 2,484,310 $ 1,946,723
Interest income............ 32,335 32,797 150,809 212,896 876,840
Other income............... 84,723 28,057 44,345 - -
Expenses (before
provision)............... (2,886,252) (3,063,489) (3,477,628) (3,792,919) (3,232,592)
Loss on sale of note
receivable............... - - - (350,000) -
Loss on modification of
note receivable.......... - - - (530,695) -
Provision for loss on
note receivable.......... - - (100,000) - -
Loss on sale of repossessed
real estate.............. - - (121,518) - -
Loss before
extraordinary items...... (378,421) (915,334) (1,174,133) (1,976,398) (409,029)
Extraordinary item......... - - 75,000 - -
----------- ----------- ----------- ----------- -----------
Net loss................... $ (378,421) $ (915,334) $(1,099,133) $(1,976,398) $ (409,029)
=========== =========== =========== =========== ===========
Net loss per Limited
Partnership Unit:
Loss before
extraordinary items.... $ (10.92) $ (26.42) $ (33.84) $ (56.79) $ (11.75)
Extraordinary item....... - - 2.16 - -
----------- ----------- ----------- ----------- -----------
Net loss................. $ (10.92) $ (26.42) $ (31.68) $ (56.79) $ (11.75)
=========== =========== =========== =========== ===========
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Year Ended December 31,
- -------------------- ---------------------------------------------------------------
Sheets 1997 1996 1995 1994 1993
- ------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Real estate, net.......... $10,951,261 $11,398,265 $11,673,695 $11,799,899 $12,144,308
Notes receivable, net..... 250,000 250,000 250,000 750,000 4,319,022
Total assets.............. 12,248,950 12,670,367 13,416,272 14,666,336 17,469,314
Mortgage notes payable.... 10,680,255 10,789,414 10,674,931 9,453,587 11,778,476
Partners' equity.......... 507,540 885,961 1,801,295 2,900,428 4,876,826
</TABLE>
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 34,301 Limited Partnership Units outstanding in 1997 and 1996, 34,353 Limited
Partnership Units outstanding in 1995, and 34,453 Limited Partnership Units
outstanding in 1994 and 1993.
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, 1997.
During 1997, one of the tenants at Glasshouse Square, United Artists Theatres,
initiated discussions with the Partnership regarding an early termination of
their lease agreement. According to the tenant, as a result of the
proliferation of "mega cinemas" in the area, sales have continued to deteriorate
during the past several years. Certain inquiries and offers from prospective
purchasers had been entertained at the time these discussions began and were
subsequently terminated as a result of the uncertainty regarding the United
Artist's continued tenancy. The Partnership is currently discussing a new lease
in the space currently occupied by United Artist with a national theatre
operator. If a lease is consummated, the estimated lease rate would be at
approximately 70% of the current rate being paid by United Artists, which is the
current estimated market rent for that area. The Partnership cannot predict the
eventual outcome of any negotiations to re-lease the United Artists space.
Also, during the fourth quarter of 1997, the Partnership was notified by
Blockbuster Video, another tenant at Glasshouse Square, of Blockbuster's intent
to sublease their space as a result of poor sales at that location. As a
result, the Partnership has decided to cease any active sales marketing of the
Glasshouse Square property in light of the uncertainties surrounding the United
Artists and Blockbuster leases.
The Partnership holds a second lien mortgage note receivable in the face amount
of $350,000 resulting from the 1995 sale of the Bank of San Pedro Office
Building located in Long Beach, California. Scheduled payments on the note are
interest only with a scheduled maturity of June 1, 1998. The Partnership cannot
predict whether the note will be retired at the scheduled maturity, however the
borrower has not given the Partnership any indication of their possible
difficulty in retiring this mortgage.
RESULTS OF OPERATIONS
- ---------------------
Revenues:
Rental income was $2,390,773 in 1997 as compared to $2,087,301 and $2,329,859 in
1996 and 1995, respectively. The increase of $303,472 in 1997 as compared to
1996 is due primarily to increased occupancies and the commencement of ground
lease payments from two ground leases at Glasshouse Square. The decrease in 1996
as compared to 1995 is primarily due to the sale of the Bank of San Pedro Office
Building on July 20, 1995. This property was repossessed on June 20, 1994 by the
Partnership (see Item 8 - "Note 4 - Repossessed Real Estate Held for Resale").
10
<PAGE>
Of the total revenues recorded by the Partnership, the amount attributable to
rental income from Glasshouse Square Shopping Center was 57% in 1997, 39% in
1996 and 36% in 1995. Of the 57% of revenues attributable to Glasshouse Square
Shopping Center, 78 % was contributed by four tenants.
Interest income remained constant between 1997 at $32,335 compared to 1996 at
$32,797 decreasing from $150,809 in 1995. The decrease in 1996 as compared to
1995 is primarily due to the sale of the Las Oficinas note receivable on April
7, 1995. During 1994, the borrower on the Bank of San Pedro Office Building note
receivable ceased making regularly scheduled debt payments, however since that
time payments related to the Bank of San Pedro Note Receivable have remained
current, and the note receivable is scheduled to mature in 1998. Interest earned
on the Bank of San Pedro note receivable was approximately 1.3% in 1997, 1.5% in
1996 and 0.5% in 1995 of the total rental and interest income of the
Partnership.
Expenses:
Interest expense was $1,052,586 in 1997 as compared to $1,058,343 and $1,096,581
in 1996 and 1995, respectively. The $33,910 decrease from 1996 to 1997 is
attributable to scheduled principal amortization of the Partnership's mortgage
debt. The $38,238 decrease in 1996 as compared to 1995 is the result of
extension fees incurred on the Bank of San Pedro Office Building promissory note
payable to Southmark in 1995. (see Item 8 - "Note 6 - Mortgage Notes Payable"
and "Note 2 - Transactions with Affiliates").
Depreciation and amortization expense was $588,124 in 1997 as compared to
$544,080 and $488,347 in 1996 and 1995, respectively. Property taxes were
$124,201 in 1997 as compared to $98,675 and $138,106 in 1996 and 1995,
respectively. The increase in 1997 property taxes of $25,526 is due primarily
to changes in assessed values of the properties as well as the receipt of a tax
refund in 1996. The decrease of $39,431 in 1996 compared to 1995 is primarily
the result of the sale of the Bank of San Pedro Office Building on July 20,
1995, as well as tax refunds that were received during 1996.
Other property operating expenses, the provisions for doubtful accounts, and
property management fees were $837,900 in 1997 as compared to $975,552 and
$1,249,227 in 1996 and 1995, respectively. The $137,652 decrease in 1997 is due
to increased operating efficiencies at the properties. The $273,675 decrease in
1996 as compared to 1995 is primarily the result of the sale of the Bank of San
Pedro Office building on July 20, 1995.
General and administrative expenses were $85,848 in 1997 as compared to $150,593
and $262,148 in 1996 and 1995, respectively. The decrease in 1997 as compared
to 1996 is primarily due to a reduction in partnership legal and consulting
expenses related to resolution of the Glasshouse environmental issue. The
decrease in 1996 as compared to 1995 is primarily a result of the final
resolution on the Bank of San Pedro Office Building occurring in 1995 which
significantly increased general and administrative expenses.
General and administrative expenses - affiliates were $197,593 in 1997 as
compared to $236,246 and $243,219 in 1996 and 1995, respectively. The $38,653
decrease from 1996 to 1997 is primarily a result of the elimination of asset
management fees previously charged to the Partnership.
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 4 - Repossessed Real Estate Held for Resale").
The Partnership recorded at year end 1995 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
purchaser.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At December 31, 1997, the Partnership held cash and cash equivalents of $136,596
of which $18,985 was tenant security deposits. Cash and cash equivalents at
the end of 1997 decreased by approximately $39,000 as compared to the balance
held at December 31, 1996. Cash flow from operations in 1997 was $168,736.
Negative cash flow from investing activities in 1997 was $98,858. Negative cash
flow from financing activities in 1997 was $109,160. Commitments for 1998
capital expenditures on Glasshouse Square or Washington Towne will be funded
from current cash and projected cash flow.
11
<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 4 -
Repossessed Real Estate Held for Resale"). The Bank of San Pedro Note
Receivable is scheduled to mature in June of 1998 which will result in the
receipt of $350,000 by the Partnership. The borrower on the Bank of San Pedro
Note Receivable has given the Partnership no indication that the Note Receivable
will not be paid off at maturity, however the Partnership cannot predict the
eventual outcome of the note payoff.
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 were completed prior to the end of the first quarter 1996
and have significantly enhanced the value of the property (see Item 8 "Note 6 -
Mortgage Notes Payable").
With its present cash reserves, an outlook for positive cash flow from 1998
operating activities, the anticipated receipt of proceeds from the payoff of the
Bank of San Pedro Note Receivable and continued efficient operation and
management of the Partnership, the General Partner expects that the Partnership
will have sufficient cash to meet its commitments. It is the General Partner's
intention, if excess cash flow is available, to consider making distributions of
excess cash to the partners of the Partnership during 1998. 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 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.
This Form 10-K may contain forward-looking statements concerning the business
and operations of the Partnership. Although the General Partner of the
Partnership believes that the expectations reflected in these forward-looking
statements are reasonable, these expectations and the related statements are
subject to risks, uncertainties, and factors including, but not limited to,
industry cyclicality, supply and demand, new construction of comparable
properties and general economic conditions, as well as other risks detailed in
the Partnership's filings with the Securities and Exchange Commission. The
Partnership and its General Partner expressly disclaim any obligation to release
publicly any updates or revisions to these forward-looking statements to reflect
any change in its expectations.
12
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- --------------------------------------------------------
Page
Number
------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
Consolidated Financial Statements:
Independent Auditors' Report, December 31, 1997, 1996 and 1995 F1
Consolidated Balance Sheets at December 31, 1997 and 1996........... F2
Consolidated Statements of Operations for the Three Years Ended
December 31, 1997................................................ F3
Consolidated Statement of Partners' Equity (Deficit) for the Three
Years Ended December 31, 1997.................................... F4
Consolidated Statements of Cash Flows for the Three Years Ended
December 31, 1997................................................ F5
Notes to Consolidated Financial Statements.......................... F8
Consolidated Financial Statement Schedules:
For the Three Years Ended December 31, 1997:
Schedule VIII - Valuation and Qualifying Accounts................ F20
Schedule X - Supplementary Statements of Operations
Information..................................................... F21
Schedule XI - Real Estate Investments and Accumulated
Depreciation and Amortization................................... F22
Schedule XII - Mortgage Loans on Real Estate..................... F24
13
<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, 1997 and 1996, and the related
consolidated statements of operations, partners' equity (deficit) and cash flows
for the years ended December 31, 1997, 1996, and 1995. 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, 1997 and 1996, and the results of its
operations and its cash flows for the years ended December 31, 1997, 1996 and
1995 in conformity with generally accepted accounting principles.
In connection with our audits of the consolidated financial statements referred
to above, we audited the financial schedules listed under item 14(a)(2). In our
opinion, these financial schedules, when considered in relation to the
consolidated financial statements taken as a whole, present fairly, in al
material respects, the information stated therein.
/s/ Wallace Sanders & Company
WALLACE SANDERS & COMPANY
Dallas, Texas
March 10, 1998
See accompanying notes to consolidated financial statements.
F1
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------------
ASSETS 1997 1996
- ------ ----------- -----------
Real estate investments
Land $ 5,255,247 $ 5,255,247
Buildings and improvements 14,261,080 14,162,222
----------- -----------
19,516,327 19,417,469
Less: Accumulated depreciation and
amortization (8,565,066) (8,019,204)
----------- -----------
10,951,261 11,398,265
----------- -----------
Note receivable, net 250,000 250,000
----------- -----------
Cash and cash equivalents (including $18,985
and $19,355 for security deposits at
December 31, 1997 and 1996, respectively) 136,596 175,878
Accounts receivable, net of allowance for
doubtful accounts of $107,044 at December 31,
1997 and 1996 40,826 21,088
Deferred borrowing costs, net of accumulated
amortization of $139,586 and $111,433 at
December 31, 1997 and 1996, respectively 206,755 234,908
Prepaid expenses and other assets 663,512 590,228
----------- -----------
$12,248,950 $12,670,367
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable $10,680,255 $10,789,414
Accrued mortgage interest 254,478 173,156
Accrued property taxes 127,951 45,756
Accounts payable and accrued expenses 105,782 202,763
Subordinated real estate commissions 549,218 549,218
Security deposits 23,726 24,099
----------- -----------
11,741,410 11,784,406
----------- -----------
Partners' equity (deficit)
Limited Partners - 50,000 Units authorized;
34,301 Units issued and outstanding at
December 31, 1997 and 1996, respectively,
(17,733 Income Units at December 31, 1997
and 1996 and 16,568 Growth/Shelter Units at
December 31, 1997 and 1996) 1,053,768 1,428,405
General Partner (546,228) (542,444)
----------- -----------
507,540 885,961
----------- -----------
$12,248,950 $12,670,367
=========== ===========
See accompanying notes to consolidated financial statements.
F2
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31,
-----------------------------------
1997 1996 1995
---------- ---------- -----------
Revenues:
Rental income $2,390,773 $2,087,301 $ 2,329,859
Interest 32,335 32,797 150,809
Other income 84,723 28,057 44,345
---------- ---------- -----------
Total revenues 2,507,831 2,148,155 2,525,013
---------- ---------- -----------
Expenses:
Interest 1,052,586 1,058,343 1,096,581
Depreciation and amortization 588,124 544,080 488,347
Property taxes 124,201 98,675 138,106
Other property operations 688,520 809,620 933,138
Provision for doubtful accounts 38,741 72,820 207,243
Property management fees 110,639 93,112 108,846
General and administrative 85,848 150,593 262,148
General and administrative - affiliates 197,593 236,246 243,219
Provision for loss on note receivable - - 100,000
---------- ---------- -----------
Total expenses 2,886,252 3,063,489 3,577,628
---------- ---------- -----------
Net operating loss (378,421) (915,334) (1,052,615)
---------- ---------- -----------
Other Income (expenses):
Loss on sale of repossessed real estate - - (121,518)
---------- ---------- -----------
Loss before extraordinary item (378,421) (915,334) (1,174,133)
Extraordinary item - gain on debt
forgiveness - - 75,000
---------- ---------- -----------
Net loss $ (378,421) $ (915,334) $(1,099,133)
========== ========== ===========
Net loss allocable to General Partner $ (3,784) $ (9,153) $ (10,991)
Net loss allocable to Limited Partners $ (374,637) $ (906,181) $(1,088,142)
---------- ---------- -----------
Net loss $ (378,421) $ (915,334) $(1,099,133)
========== ========== ===========
Net loss per Limited Partnership Unit:
Loss before extraordinary item $(10.92) $(26.42) $(33.84)
Extraordinary item - - 2.16
---------- ---------- -----------
Net loss $(10.92) $(26.42) $(31.68)
========== ========== ===========
See accompanying notes to consolidated financial statements.
F3
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY (DEFICIT)
Total
Partners'
General Limited Equity
Partner Partners (Deficit)
--------- ----------- -----------
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
Net loss (9,153) (906,181) (915,334)
--------- ----------- -----------
Balance at December 31, 1996 (542,444) 1,428,405 885,961
Net loss (3,784) (374,637) (378,421)
--------- ----------- -----------
Balance at December 31, 1997 $(546,228) $ 1,053,768 $ 507,540
========= =========== ===========
See accompanying notes to consolidated financial statements.
F4
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
Cash flows from operating
activities:
Cash received from
tenants $ 2,374,358 $ 2,027,060 $ 2,180,199
Cash paid to suppliers (1,295,125) (1,339,645) (1,464,349)
Interest received 29,710 32,797 150,809
Interest paid (943,111) (943,603) (920,164)
Property taxes paid (42,006) (151,747) -
Property tax refund 44,910 23,557 31,508
Insurance refund - - 12,092
----------- ----------- -----------
Net cash provided by (used
in) operating activities 168,736 (351,581) (9,905)
----------- ----------- -----------
Cash flows from investing
activities:
Additions to real estate
investments (98,858) (251,727) (352,820)
Sale of Las Oficinas
note receivable - - 750,000
Sale of equipment 4,141 -
Sale of repossessed real
estate - 291,562
----------- ----------- -----------
Net cash (used in) provided
by investing activities (98,858) (247,586) 688,742
----------- ----------- -----------
Cash flows from financing
activities:
Principal payments on
mortgage
notes payable (109,160) (105,978) (173,222)
Principal payment on
note payable to
Southmark
affiliate - - (750,000)
Advances from line of
credit - 220,461 186,206
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 (109,160) 114,483 (215,558)
----------- ----------- -----------
NET (DECREASE) INCREASE IN
CASH AND
CASH EQUIVALENTS (39,282) (484,684) 463,279
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 175,878 660,562 197,283
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 136,596 $ 175,878 $ 660,562
=========== =========== ===========
See accompanying notes to consolidated financial statements.
F5
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net Loss to Net Cash
Provided by (Used in) Operating Activities
For the Years Ended December 31,
---------------------------------
1997 1996 1995
--------- --------- -----------
Net loss $(378,421) $(915,334) $(1,099,133)
--------- --------- -----------
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 588,124 544,080 488,347
Provision for loss on note receivable - - 100,000
Interest and fees added to note payable to
Southmark affiliate - - 120,040
Gain on debt forgiveness - - (75,000)
Amortization of deferred borrowing costs 28,152 28,152 17,385
Loss on sale of repossessed real estate - - 121,518
Gain on sale of equipment - (915) -
Changes in assets and liabilities:
Accounts receivable (19,738) 33,828 11,931
Prepaid expenses and other assets (115,543) (96,072) 66
Accounts payable and accrued expenses (96,982) 45,997 103,830
Accrued mortgage interest 81,322 86,588 38,992
Accrued property taxes 82,195 (53,072) 138,472
Security deposits (373) (24,833) 44,541
--------- --------- -----------
Total adjustments 547,157 563,753 1,089,228
--------- --------- -----------
Net cash provided by (used in) operating
activities $ 168,736 $(351,581) $ (9,905)
========= ========= ===========
See accompanying notes to consolidated financial statements.
F6
<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:
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
==========
See accompanying notes to consolidated financial statements.
F7
<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"), were the
two general partners of UAC through December 15, 1996. On December 15,
1996, OS General Partner Company ("OSGPC"), a Texas corporation and OS
Holdings, Inc. ("OS"), a Texas corporation acquired the interests in UAC
held by SCM and SII. 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 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 a result of a
1996 transaction among, OSGPC, SCM and SII, JKD's option was assigned to
OSGPC.
On December 15, 1996, OS and OSGPC purchased the partnership interests in
UAC from SCM and SII.
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.
F8
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------------------
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 in the Consolidated Statements of Operations.
Rental Revenues
- ---------------
Residential property owned by the Partnership is subject to numerous tenant
leasing arrangements having initial terms of one year or less. The
Partnership leases its commercial property under noncancelable operating
leases that expire over the next 20 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.
Income Taxes
- ------------
The Partnership is not a tax paying entity, and accordingly no provision
has been recorded for Federal or state income tax purposes. The partners
are individually responsible for reporting their share of the Partnership's
taxable income or loss on their income tax returns. In the event of an
examination of the Partnership's tax return by the Internal Revenue
Service, the tax liability of the partners could be changed if an
adjustment in the Partnership's income or loss is ultimately sustained by
the taxing authorities.
Certain transactions of the Partnership may be subject to accounting
methods for income tax purposes that differ from the accounting methods
used in preparing these consolidated financial statements in accordance
with generally accepted accounting principles. Accordingly, the net income
or loss of the Partnership and the resulting balances in the partners'
capital accounts reported for income tax purposes may differ from the
balances reported for those same items in these consolidated financial
statements.
F9
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------------------
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.
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 Partner.
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.
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 34,301Limited Partnership Units outstanding in 1997
and 1996, and 34,353 Limited Partnership Units outstanding in 1995.
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.
F10
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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 a result of a
1996 transaction among OS, OSGPC, SCM and SII, JKD's option was assigned to
OSGPC.
On December 15, 1996, OS and OSGPC purchased the partnership interests in
UAC from SCM and SII.
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
pursuant to an Administrative Services Agreement dated January 1, 1997
between the Partnership and Meridian Realty Advisors, Inc. ("MRA"), MRA 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. No asset
management fees were charged during 1997. At December 31, 1997 and 1996,
there were no amounts due to affiliates.
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, 1997 and
1996.
Compensation and reimbursements paid to or accrued for the benefit of OSGPC
and its affiliates for the years ending December 31:
1997 1996 1995
-------- -------- --------
Property management fees $ - $ - $ -
Asset management fee - 86,259 95,714
Charged to general and administrative expense:
Partnership and Financial administration,
data processing, accounting and tax
reporting, and investor relations 197,593 149,987 147,505
-------- -------- --------
Total compensation and reimbursements $197,593 $236,246 $243,219
======== ======== ========
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<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - TRANSACTIONS WITH AFFILIATES (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. 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 4 - "Repossessed Real Estate Held
for Resale").
NOTE 3 - REAL ESTATE INVESTMENTS
- --------------------------------
The cost and accumulated depreciation and amortization of the Partnership's real
estate investments held at December 31, 1997 and 1996, is set forth in the
following tables:
Buildings and Accumulated
1997 Land Improvements Depreciation Total
---- ---------- ------------- ------------ -----------
Glasshouse Square
Shopping Center $4,731,102 $ 12,281,786 $(7,869,983) $ 9,142,905
Washington Towne
Apartments 524,145 1,979,294 (695,083) 1,808,356
---------- ------------ ----------- -----------
$5,255,247 $ 14,261,080 $(8,565,066) $10,951,261
========== ============ =========== ===========
Buildings and Accumulated
1996 Land Improvements Depreciation Total
---- ---------- ------------- ------------ -----------
Glasshouse Square
Shopping Center $4,731,102 $ 12,243,834 $(7,499,669) $ 9,475,267
Washington Towne
Apartments 524,145 1,918,388 (519,535) 1,922,998
---------- ------------ ----------- -----------
$5,255,247 $ 14,162,222 $(8,019,204) $11,398,265
========== ============ =========== ===========
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 in
F12
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - REAL ESTATE INVESTMENTS (CONTINUED)
- --------------------------------------------
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 were completed prior to the end of the first
quarter 1996 and have significantly enhanced the value of the property (see Note
6 - "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 the 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 risks exist 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.
As a result of the County's no further action position, the Partnership, in
1996, entered into ground lease agreements with two fast food providers. The
restaurants have constructed the improvements and the related ground lease
income to the partnership is expected to be in excess of $155,000 annually for
the twenty year term of the leases. Payments under these lease agreements began
in 1997.
The Partnership leases Glasshouse Square Shopping Center, its only commercial
property, under noncancelable operating lease agreements that expire over the
next 20 years. Future minimum rents over the next five years are as follows:
1998 $ 1,211,317
1999 1,194,101
2000 1,258,739
2001 1,158,811
2002 1,036,882
Thereafter 4,766,103
-----------
$10,625,953
===========
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
F13
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - REAL ESTATE INVESTMENTS (CONTINUED)
- --------------------------------------------
December 31, 1997, were $7,485,124 and $1,492,431, respectively, compared to
$7,573,193 and $1,492,431, respectively in 1996. 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, 1997 and 1996,
the Partnership owed $400,000 against the line of credit. As a result, the first
lien mortgage principal balance is $7,485,124 and $7,573,193 as of December 31,
1997 and 1996, respectively (see Note 6 - "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, 1997 and 1996, an allowance for doubtful
accounts in the amount of $107,044 was recorded for the Silo California lease
default 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. While all three claims are still pending, it is unlikely the Partnership
will ever be successful in recovering any amounts from Silo's Chapter 11
proceeding.
NOTE 4 - 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 first
F14
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - REPOSSESSED REAL ESTATE HELD FOR RESALE (CONTINUED)
- ------------------------------------------------------------
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 5 - "Notes Receivable").
A loss on sale of repossessed real estate was recognized in 1995 relating to
this transaction as follows:
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)
===========
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 5 - NOTES RECEIVABLE
- -------------------------
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 4 - "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; and as of December 31, 1997 is current on
all obligations. However, a provision for loss in the amount of $100,000 was
recorded in 1995 in the event of any future complications. The Bank of San Pedro
Note Receivable is scheduled to mature in June of 1998.
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.
F15
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - NOTES RECEIVABLE (CONTINUED)
- -------------------------------------
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.
For the years ended December 31,
--------------------------------
1997 1996 1995
--------- --------- ---------
Balance at beginning of year $ 250,000 $ 250,000 $ 750,000
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)
Balance at end of year $ 250,000 $ 250,000 $ 250,000
========= ========= =========
NOTE 6 - MORTGAGE NOTES PAYABLE
- -------------------------------
The following is a summary of mortgage notes payable.
December 31,
---------------------
1997 1996
--------- ---------
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. 1,702,700 1,723,790
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 installments 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. 7,485,124 7,573,193
F16
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - MORTGAGE NOTES PAYABLE (CONTINUED)
- -------------------------------------------
December 31,
-----------------------
1997 1996
--------- -----------
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
----------- -----------
$10,680,255 $10,789,414
=========== ===========
Scheduled principal maturities of the mortgage notes under existing terms are as
follows at December 31, 1997:
1998 $ 122,044
1999 134,029
2000 8,803,364
2001 32,333
2002 35,234
Thereafter 1,553,251
-----------
Total $10,680,255
===========
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, 1997 and 1996 the
Partnership owed $400,000, respectively against the line of credit. This draw on
the line of credit increased the first lien mortgage principal balance to
$7,485,124 and $7,573,193 as of December 31, 1997 and 1996, respectively. As of
December 31, 1997 and 1996, the Glasshouse mortgages were current on all
mortgage obligations, with no current default issues of default issues related
to the 1995 action discussed above.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
F17
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - MORTGAGE NOTES PAYABLE (CONTINUED)
- -------------------------------------------
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 were
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.
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 5 -"Notes Receivable").
NOTE 7 - 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
(c) 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;
F18
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - DISTRIBUTIONS (CONTINUED)
- ----------------------------------
(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 1997, 1996 and 1995, no distributions were made by the Partnership.
NOTE 8 - 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 was 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 9 - "Sale
of General Partner Interest").
NOTE 9 - 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 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 a result of a
1996 transaction among OS, OSGPC, SCM and SII, JKD's option was assigned to
OSGPC.
On December 15, 1996, OS and OSGPC purchased the partnership interests in UAC
from SCM and SII.
NOTE 10 - SUBSEQUENT EVENTS
- ---------------------------
On December 22, 1997, UREPV Acquisition, L.P., ("UREPVALP") an affiliate of the
General Partner of the Partnership initiated an offer to purchase Income and
Growth Shelter Units of the Partnership held by limited partners for $60.00 and
$2.00 per unit respectively for those units outstanding as of December 15, 1997.
UREPVALP's offer was made in response to unsolicited tender offers made to
limited partners of the Partnership by Accelerated High Yield Institutional Fund
I, L.P., MacKenzie Patterson Special Fund, Peachtree Partners, Accelerated High
Yield Pension Investors, L.P., Everest Properties II, LLC and Bond Purchase LLC.
UREPVALP's offer closed February 12, 1998 with 1,891 Income Units and 1,639
Growth Shelter Units tendered.
F19
<PAGE>
SCHEDULE VIII
UNIVERSITY REAL ESTATE PARTNERSHIP V
VALUATION AND QUALIFYING ACCOUNTS
December 31, 1997
Additions
----------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
- ----------- ---------- ---------- ---------- ---------- ----------
1997
- ----
Allowance for
Doubtful Accounts $ 107,044 $ - $ - $ - $ 107,044
Allowance for
Notes Receivable $ 100,000 - - - 100,000
1996
- ----
Allowance for
Doubtful Accounts $ 107,044 - - - 107,044
Allowance for
Notes Receivable $ 100,000 - - - 100,000
1995
- ----
Allowance for
Doubtful Accounts $ 72,740 107,044 - (72,740) 107,044
Allowance for
Notes Receivable $ - 100,000 - - 100,000
F20
<PAGE>
SCHEDULE X
UNIVERSITY REAL ESTATE PARTNERSHIP V
SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION
For the Years Ended December 31, 1997, 1996 and 1995
Charged to Expense
----------------------------------
Item 1997 1996 1995
- ------------------------------ -------- -------- --------
Maintenance and repairs $121,295 $182,562 $201,633
Taxes, other than payroll and
income taxes 124,201 98,675 138,106
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.
F21
<PAGE>
SCHEDULE XI
UNIVERSITY REAL ESTATE PARTNERSHIP V
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1997
<TABLE>
<CAPTION>
Gross Amount at
Initial Costs Costs Which Carried at Close of Period
------------------------- Capitalized --------------------------------------
Related Buildings and Subsequent to Cumulative Buildings and
Description Encumbrances Land Improvements Acquisition Write-downs Land Improvements Total(s)
- ----------- ------------ ---------- ------------- ------------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Glasshouse Square
Shopping Center
San Diego, CA $ 8,977,555 $1,540,892 $11,268,742 $4,797,625 $(2,400,000) $4,731,102 $12,281,786 $17,012,888
Washington Towne
Apartments
Atlanta, GA 1,702,700 524,145 931,812 901,884 - 524,145 1,979,294 2,503,439
------------ ---------- ----------- ---------- ----------- ---------- ------------ -----------
$ 10,680,255 $2,065,037 $12,200,554 $5,699,509 $(2,400,000) $5,255,247 $14,261,080 $19,516,327
============ ========== =========== ========== =========== ========== ============ ===========
<CAPTION>
Accumulated
Depreciation
and Date of Date Depreciable
Description Amortization Construction Acquired lives (years)
- ----------- ------------ ------------ -------- -------------
<S> <C> <C> <C> <C>
Glasshouse Square
Shopping Center
San Diego, CA $ (7,869,983) 1981 12/78 3-30
Washington Towne
Apartments
Atlanta, GA (695,083) 1971 07/91 3-25
------------
$ (8,565,066)
============
</TABLE>
F22
<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:
For the years ended December 31,
--------------------------------------
1997 1996 1995
----------- ----------- -----------
Real estate:
- ------------
Balance at beginning of year $19,417,469 $19,184,420 $18,835,045
Acquisitions - - 88,548
Improvements 98,858 251,727 260,827
Dispositions - (18,678) -
----------- ----------- -----------
Balance at end of year $19,516,327 $19,417,469 $19,184,420
=========== =========== ===========
Accumulated depreciation
- ------------------------
and amortization:
- -----------------
Balance at beginning of year $ 8,019,204 $ 7,510,725 $ 7,035,146
Depreciation and amortization 545,862 523,933 475,579
Dispositions - (15,454) -
----------- ----------- -----------
Balance at end of year $ 8,565,066 $ 8,019,204) $ 7,510,725
=========== =========== ===========
F23
<PAGE>
SCHEDULE XII
UNIVERSITY REAL ESTATE PARTNERSHIP V
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Principal Amount
Final Periodic Face Carrying of Loans Subject
Maturity Payment Prior Amount of Amount of to Delinquent
Description Interest Rate Date Terms Liens Mortgage Mortgage Principal or Interest
----------- ------------- -------- -------- ----- ---------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mortgage payable on 8.625% October (1) None $1,750,000 $1,702,700 None
Washington Towne 2005
Apartments, secured
by a first lien deed
of trust
Mortgage payable on 9.5% December (2) None $7,314,713 $7,485,124 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% December (3) See $1,492,431 $1,492,431 None
Glasshouse Square 2000 above
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.
F24
<PAGE>
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------ ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
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. OS General Partner Company
and OS Holdings, Inc., 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:
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------
Curtis R. 39 From 1991 to the present, Mr. Boisfontaine has served
Boisfontaine, Jr., as President of Meridian Capital Corporation. OSGPC
President and was formed in 1995 and Mr. Boisfontaine is the
Chairman of the majority shareholder, President and sole director of
Board of Directors OSGPC.
of OS General
Partner Company
David K. Ronck, Vice 38 From 1995 to the present, Mr. Ronck has served as
President and Chief Vice President-Chief Financial Officer and President
Accounting Officer of Meridian Realty Advisors, Inc. From 1991 to
Partner Company 1995, of OS General Mr. Ronck served as President
Equities, of ConCap Inc., the General Partner of fifteen
public limited partnerships. He is Vice President
and Chief Accounting Officer for OSGPC.
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.
14
<PAGE>
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 7 -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 Hampton UREF, 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 (now
Meridian Realty Advisors, Inc. ("MRA")) for its costs of administering the
Partnership's affairs. As of December 31, 1997, Insignia continues to property
manage the Partnership's assets.
Compensation or reimbursements paid to or accrued for the benefit of MRA and
Insignia during 1997 are as follows:
MRA Insignia
-------- --------
Property management fees $ - $110,639
Charged to general and administrative expense:
Partnership and financial administration,
data processing, accounting and tax
reporting, and investor relations 197,593 -
Asset management fees - -
-------- --------
Total compensation and reimbursements $197,593 $110,639
======== ========
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
- ------- ----------------------------------------------------------------------
FORM 8-K
--------
(a)(1) Consolidated Financial Statements
Consolidated financial statements for University Real Estate
Partnership V, listed in the Index to the Consolidated Financial
Statements and Supplementary Data on page 13, 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 13, are filed as
part of this Annual Report.
Page
----
(a)(3) Index to Exhibits................................................. 16
15
<PAGE>
(b) Reports on Form 8-K............................................... 18
(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 effective 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)
10.2 Asset Purchase Agreement among 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 Registrant 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 among 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 among 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)
16
<PAGE>
Exhibit
Number Description
------ -----------
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)
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)
17
<PAGE>
Exhibit
Number Description
------ -----------
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)
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
34,301, 34,353 and 34,453 Limited Partnership Units
outstanding in 1996, 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) Incorporated 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 From
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.
(7) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ended March 31. 1996, as filed with the
Securities and Exchange Commission on May 23, 1996.
(8) Incorporated by reference to Annual Report of the Registrant on From
10-K for the period ended December 31, 1995, as filed with the
Securities and Exchange Commission on July 18, 1996.
(9) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ending June 30, 1996, as filed with the
Securities and Exchange Commission on July 31, 1996.
18
<PAGE>
(10) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ending September 30, 1996, as filed with the
Securities and Exchange Commission on November 14, 1996.
(11) Incorporated by reference to Annual Report of the Registrant on From
10-K for the period ended December 31, 1996, as filed with the
Securities and Exchange Commission on April 16, 1997.
(12) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ended March 31. 1997, as filed with the
Securities and Exchange Commission on May 14, 1997.
(13) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ending June 30, 1997, as filed with the
Securities and Exchange Commission on August 14, 1997.
(14) Incorporated by reference to Quarterly Report of the Registrant on
Form 10-Q for the period ending September 30, 1997, as filed with the
Securities and Exchange Commission on November 14, 1997.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended December 31, 1997.
19
<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: OS GENERAL PARTNER COMPANY
April 1, 1998 By: /s/ Curtis R. Boisfontaine, Jr.
- ----------------------- ------------------------------------------
Date Curtis R. Boisfontaine, Jr.
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.
April 1, 1998 By: /s/ Curtis R. Boisfontaine, Jr.
- ----------------------- ------------------------------------------
Date Curtis R.Boisfontaine, Jr. President,
Principal Executive Officer and Director
OS General Partner Company
April 1, 1998 By: /s/ David K. Ronck
- ----------------------- ------------------------------------------
Date David K. Ronck
Vice President and Chief Accounting
Officer OS General Partner Company
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: OS GENERAL PARTNER COMPANY
April 1, 1998 By: /s/ Curtis R. Boisfontaine, Jr.
- ----------------- ------------------------------------------------
Date Curtis R. Boisfontaine, Jr.
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.
April 1, 1998 By: /s/ Curtis R. Boisfontaine, Jr.
- ----------------- ------------------------------------------------
Date Curtis R.Boisfontaine, Jr. President, Principal
Executive Officer and Director OS General
Partner Company
April 1, 1998 By: /s/ David K. Ronck
- ----------------- ------------------------------------------------
Date David K. Ronck
Vice President and Chief Accounting Officer
OS General Partner Company
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 136,596
<SECURITIES> 0
<RECEIVABLES> 147,870
<ALLOWANCES> 107,044
<INVENTORY> 0
<CURRENT-ASSETS> 840,934
<PP&E> 19,516,327
<DEPRECIATION> 8,565,066
<TOTAL-ASSETS> 12,248,950
<CURRENT-LIABILITIES> 511,937
<BONDS> 11,229,473
0
0
<COMMON> 0
<OTHER-SE> 507,540
<TOTAL-LIABILITY-AND-EQUITY> 12,248,950
<SALES> 2,390,773
<TOTAL-REVENUES> 2,507,831
<CGS> 0
<TOTAL-COSTS> 1,009,208
<OTHER-EXPENSES> 785,717
<LOSS-PROVISION> 38,741
<INTEREST-EXPENSE> 1,052,586
<INCOME-PRETAX> (378,421)
<INCOME-TAX> 0
<INCOME-CONTINUING> (378,421)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (378,421)
<EPS-PRIMARY> (10.92)
<EPS-DILUTED> 0
</TABLE>
