<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
---------------------------------------------
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-8914
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UNIVERSITY REAL ESTATE PARTNERSHIP V
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3240567
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3811 Turtle Creek Blvd.,Suite 1850, Dallas, Texas 75219
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(Address of principal executive offices) (Zip code)
(214) 651-4000
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(Registrant's telephone number, including area code)
2001 Ross Avenue, Suite 4600, Dallas, TX 75201
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(Former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
--- ---
UNIVERSITY REAL ESTATE PARTNERSHIP V
1
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INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER, 1999
Page
----
Part I - Financial Information
Item 1 - Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of
September 30, 1999 and December 31, 1998 3
(b) Condensed Consolidated Statements of Operations
for the three and nine months ended
September 30, 1999 and 1998 4
(c) Condensed Consolidated Statements of Cash Flows
for nine months ended September 30, 1999 and 1998 5
(d) Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures (pursuant to General Instruction E) 11
All other items called for by the instructions are omitted
as they are either inapplicable, not required, or the
information is included in the Condensed Consolidated
Financial Statements or Notes thereto.
2
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PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------- -------------------------------------------
(a) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1999 December 31,
(Unaudited) 1998
------------- ------------
<S> <C> <C>
ASSETS
- ------
Real estate investments
Land $ 2,045,356 $ 524,145
Buildings and improvements 18,408,206 2,063,933
----------- ----------
20,453,562 2,588,078
Less: Accumulated depreciation and amortization - (875,241)
----------- ----------
20,453,562 1,712,837
----------- ----------
Cash and cash equivalents (including $49,239 for security deposits at
September 30, 1999) 2,377,037 192,968
Accounts receivable, net of allowance for doubtful accounts of
$0 at September 30, 1999 43,552 16,660
Deferred borrowing costs, net of accumulated amortization of $49,992
at December 31, 1998 219,958 101,695
Prepaid expenses and other assets 86,842 111,819
----------- ----------
$23,180,951 2,135,979
----------- ----------
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- -------------------------------------------
Mortgage notes payable 18,521,318 $1,677,715
Accrued mortgage interest 97,919 12,403
Accrued property tax 82,369 3,174
Accounts payable and accrued expenses 249,968 130,014
Subordinated real estate commissions 548,757 549,218
Security deposits 49,239 22,964
----------- ----------
19,549,570 2,395,488
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Partners' equity (deficit):
Limited Partners - 50,000 units authorized; 34,263 units issued and outstanding at
September 30, 1999 and December 31, 1998 (17,723 Income units at September 30, 1999
and December 31, 1998, and 16,540 Growth/Shelter units at September 30, 1999
and December 31, 1998) 4,135,625 283,643
General Partner (504,244) (543,152)
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3,631,381 (259,509)
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$23,180,951 $ 2,135,979
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</TABLE>
3
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(b) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -------------------------
1999 1998 1999 1998
--------------------- ------------- ----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $668,323 $260,299 $ 909,917 $1,352,945
Interest 3,660 (1,702) 4,751 33,260
Other income 67,028 - 98,965 -
-------- -------- ---------- ----------
Total revenues 739,011 258,597 1,013,633 1,386,205
-------- -------- ---------- ----------
Expenses:
Interest 393,296 16,406 720,402 484,146
Depreciation and amortization - 2,717 52,635 213,478
Property taxes 6,436 5,239 31,821 91,491
Other property operations 274,638 180,716 398,651 583,249
General and administrative 89,384 36,395 164,354 183,179
-------- -------- ---------- ----------
Total expenses 763,754 241,473 1,367,863 1,555,543
-------- -------- ---------- ----------
Net operating (loss) gain $(24,743) $ 17,123 $ (354,230) $ (169,338)
======== ======== ========== ==========
Other income (expenses):
Gain on sale of real estate - - 4,100,941 198,610
Cost of Sale 3/31/99 1,820,847
Income before extraordinary item (24,743) 17,123 1,925,864 29,272
Extraordinary item - gain on debt
forgiveness - - - 420,418
-------- -------- ---------- ----------
Net income $(24,743) $ 17,123 $1,925,864 $ 449,690
======== ======== ========== ==========
Net income allocable to
General Partner $ (247) $ 171 $ 19,258 $ 4,497
Net income allocable to
Limited Partners (24,496) 16,952 1,906,606 445,193
-------- -------- ---------- ----------
Net income $(24,743) $ 17,123 $1,925,864 $ 449,690
======== ======== ========== ==========
Net income per Limited
Partnership Unit
Income before
Extraordinary item $ (0.72) $ - $ 56.21 $ 0.84
Extraordinary item - .49 - 12.14
-------- -------- ---------- ----------
Net income $ (0.72) $ .49 $ 56.19 $ 12.98
======== ======== ========== ==========
</TABLE>
4
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(c) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------
1999 1998
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<S> <C> <C>
Net income $ 1,925,864 $ 449,690
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Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 52,635 213,478
Gain on sale of real estate (2,280,094) (198,610)
Extraordinary gain on debt forgiveness - (420,418)
Changes in assets and liabilities:
Accounts receivable 11,748 19,812
Prepaid expenses and other assets 159,857 160,405
Deferred Borrowing Costs (219,958) -
Accounts payable and accrued expenses 119,115 (5,769)
Accrued mortgage interest 359,992 (119,088)
Accrued property taxes 86,557 91,490
Security deposits 26,750 3,107
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Total adjustments (1,683,398) (255,593)
----------- -----------
Net cash provided by operating activities 242,466 194,097
----------- -----------
Cash flows from investing activities:
Increase in real estate investments (1,900,147) (30,532)
Investment in notes receivable - 346,000
Proceeds from sale of real estate 1,914,994 1,564,330
----------- -----------
Net cash provided by investing activities 14,847 1,879,798
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Cash flows from financing activities:
Distributions to partners - (250,000)
Contributions from Partners 2,041,996 -
Principal payments on mortgage notes payable (115,240) (1,389,948)
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Net cash used in financing activities 1,926,756 (1,639,948)
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NET INCREASE IN CASH AND CASH EQUIVALENTS 2,184,069 433,947
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 192,968 136,596
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,377,037 $ 570,543
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 622,483 $ 336,248
=========== ===========
Cash paid during the period for taxes $ - $ 298
=========== ===========
</TABLE>
5
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine months ended September 30, 1999
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1998. The December 31, 1998
condensed consolidated balance sheet was derived from audited numbers.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------
The general partner of the Partnership is University Advisory Company ("UAC" or
the "General Partner"), a California general partnership. Prior to December 15,
1996, Southmark Commercial Management, Inc. ("SCM"), and Southmark Investors,
Inc. ("SII"), both wholly-owned subsidiaries of Southmark Corporation
("Southmark") were the two general partners of UAC. On December 15, 1996, OS
General Partner Company ("OSGPC"), a Texas corporation, and OS Holdings, Inc.
("OS"), a Texas corporation, acquired the interests held in UAC held by SCM and
SII. On March 9, 1993, Southmark and several of its affiliates (including the
General Partner) entered into an Asset Purchase Agreement with SHL Acquisition
Corp. III, a Texas corporation, and its permitted assigns (collectively "SHL")
to sell various general and limited partnership interests owned by Southmark and
its affiliates, including the general partnership interest of the Partnership.
On December 16, 1993, Southmark and SHL executed the Second Amendment to Asset
Purchase Agreement whereby SHL acquired an option to purchase the general
partnership interest of the Partnership, rather than purchase the partnership
interest itself. On the same date, SHL assigned its rights under the amended
Asset Purchase Agreement to Hampton Realty Partners, L.P., a Texas limited
partnership ("Hampton") and Hampton and Southmark affiliates also entered into
an Option Agreement whereby Hampton acquired the right to purchase the option
assets, including the general partnership interest of the Partnership, subject
to the approval of the limited partners. On December 30, 1994, Hampton entered
into an Assignment and Assumption of Option Agreement with JKD Financial
Management, Inc. ("JKD"), a Texas corporation, whereby, among other things, JKD
obtained the right to acquire Hampton's rights to proxy into the Partnership
subject to the approval of the Limited Partners. As a result of a 1996
transaction among OS, OSGPC, SCM and SII, JKD's option was assigned to OSGPC.
See discussion of transaction among SCM, SII, OSGPC and OS below.
Effective as of December 14, 1992, the Partnership entered into a Portfolio
Services Agreement and a Property Management Agreement with Hampton UREF
Management, Ltd. ("Hampton UREF"), a Texas limited partnership, pursuant to
which Hampton UREF began providing management for the Partnership's properties
and certain other portfolio services. The operations of the Partnership's
properties were managed by Hampton Management, Inc. (formerly SHL Management,
Inc.) through a subcontract agreement with Hampton UREF. From April 20, 1994 to
August 8, 1994, the Partnership and its properties were managed by Insignia
pursuant to a Property Management Subcontract Agreement with Hampton UREF. As
of August 8, 1994, the properties only were managed by an affiliate of Insignia
under a Property Management Agreement directly with the Partnership.
As of December 30, 1994, Hampton UREF entered into an Assignment and Assumption
of Portfolio Services Agreement with JKD pursuant to which JKD oversees the
management of the Partnership.
6
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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 totaled $548,757 at
September 30, 1999 and $549,218 at December 31, 1998.
The Partnership had previously entered into a Debt Workout Consulting Agreement
with Meridian Realty Advisors, Inc., an affiliate of the General Partner to
assist the Partnership in its ongoing efforts to negotiate debt relief from its
lenders and assist in the marketing and sale of the Partnership's properties.
The Partnership paid $216,800 to the affiliate pursuant to such agreement
related to the sale of the Glasshouse Square Shopping Center on May 8, 1998.
This amount reduced the gain on sale of real estate in the accompanying
condensed consolidated statements of operations.
NOTE 3 - SALE OF GLASSHOUSE SQUARE SHOPPING CENTER
- --------------------------------------------------
On May 8, 1998, the Partnership sold the Glasshouse Square Shopping Center to a
third party for $10,600,000. The transaction was recorded as follows:
Net cash received $ 240,513
Real estate investment (9,018,637)
Note receivable 538,258
Other assets, liabilities and expenses (358,009)
Mortgage notes 8,796,485
-----------
Gain $ 198,610
===========
On May 8, 1998, the Glasshouse Square Shopping Center was sold. The Partnership
provided short-term financing, in the form of a note receivable, to the
purchaser (a third-party) in the amount of $538,258. This note receivable bore
interest at 8% per annum with interest only payments due monthly, secured by a
deed of trust on the Glasshouse Square property and maturing on March 1, 1999.
On November 27, 1998, the note receivable was paid by the purchaser.
In addition, the Partnership obtained forgiveness of debt in the amount of
$420,418.
A portion of this transaction was accounted for as a non-cash transaction in the
accompanying condensed consolidated statements of cash flows.
NOTE 4 - SALE OF WASHINGTON TOWNE APARTMENTS
- --------------------------------------------
On March 31, 1999, the Partnership sold Washington Towne Apartments for
$4,100,000. The transaction was recorded as follows:
Net cash received $ 1,914,994
Real estate investment (1,667,797)
Accrued interest 275,369
Other assets, liabilities and expenses 86,371
Mortgage note 1,671,157
-----------
Gain on sale of Washington Towne Apartments $ 2,280,094
===========
A portion of this transaction was accounted for as a non-cash transaction in the
accompanying condensed consolidated statements of cash flows.
7
<PAGE>
NOTE 5 - PURCHASE OF SUPERSTITION PARK APARTMENTS
- -------------------------------------------------
On July 1, 1999 the Partnership purchased the Superstition Park Apartment
complex for $20,400,000 and was recorded as follows:
Net cash paid $ (1,900,147)
Real estate investment 20,453,562
Accrued interest (893)
Other assets, liabilities and expenses 77,478
Mortgage notes (18,630,000)
---------------
Gain/(Loss) $ -
---------------
A portion of this transaction was accounted for as a non-cash transaction in the
accompanying condensed consolidated statements of cash flows.
NOTE 6 - DISTRIBUTIONS
- ----------------------
During 1998, distributions were made by the Partnership and totaled $1,074,693.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The comparison of operations and balance sheet position for the period ended
September 30, 1999 to any prior period(s) is difficult due to the fact that as
of July 31, 1999 the only entity owned by the Partnership is a new apartment
complex (Superstition Park) as opposed to multiple properties which have all
been sold prior to this reporting quarter.The Partnership's net loss from
operations for the nine months ended September 30, 1999 was $354,230. The net
loss for the same period in 1998 was $169,338. Total revenues for the nine
months ended September 30, 1999 were $1,013,633 versus $1,386,205 for the same
period in 1998. The decrease in total revenues in 1999 is primarily attributable
to there being only one revenue-producing asset as opposed to multiple ones in
the same period for 1998. After giving effect for the gain of the sale of the
Washington Towne Apartments property, the Partnership recorded net income of
$1,925,864 for the nine months ended September 30, 1999.
Total expenses for the nine months ended September 30, 1999 were $1,367,863
versus $1,555,543 for the same period in 1998. The decrease in total expenses
is due to a less expensive operation in having only one apartment complex as
opposed to multiple apartment complexes in 1998.
At September 30, 1999, the Partnership held cash and cash equivalents of
$2,377,037. Cash and cash equivalents at September 30, 1999 increased by
approximately $2,184,069 as compared to the balance held at December 31, 1998.
Cash flow from operations for the nine months ended September 30, 1999 was
$242,466. Positive cash flow from investing activities for the nine months
ended September 30, 1999 was $14,847. Positive cash flow from financing
activities for the nine months ended September 30, 1999 was $1,719,278.
Should operations deteriorate and present resources become inadequate for
current needs, the Partnership has no outside lines of credit on which to draw
for its working capital needs. Neither the General Partner nor its affiliates
have any obligation to provide financial support to the Partnership.
Accordingly, continued operation of the Partnership is dependent on the
Partnership being able to generate cash from operations.
Bank of San Pedro Note Receivable
- ---------------------------------
On July 20, 1995, the Partnership sold one if its real estate investments, 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
8
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the bank of San Pedro Office Building, maturing on July 20, 1998. On March 30,
1996, the borrower on the note receivable ceased making regular scheduled debt
payments constituting an event of default. The borrower 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. The note receivable balance of
$350,000 was paid on July 20, 1998.
9
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits.
Exhibit
Number Description
------ -----------
3. and 4. Limited Partnership Agreement (Incorporated by reference to
Registration Statement No. 2-74914 on Form S-11 filed by
Registrant).
11. Statement regarding computation of Gain/Loss per Limited
Partnership Unit is incorporated within the Statement of
Operations for 1998 and 1997.
16. Letter dated July 18, 1995 from Price Waterhouse with
respect to a change in certifying accountant. Incorporated
by reference to Form 8-K - Current Report for the period
ending September 30, 1995, as filed with the Securities and
Exchange Commission on July 24, 1995.
(b) Reports on Form 8-K. During the six months ended June 30, 1999, there
was a Form 8-K filed for the sale of the Washington Towne Apartments on
March 31, 1999. The sale was intended to be a like kind exchange, the
cash was held in escrow until the new property (Superstition Park
Apartments) was purchased.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNIVERSITY REAL ESTATE PARTNERSHIP V
By: UNIVERSITY ADVISORY COMPANY
General Partner
By: OS GENERAL PARTNER COMPANY
November 15, 1999 By: /s/ Curtis R. Boisfontaine, Jr.
- -------------------------- -----------------------------------------
Date Curtis R. Boisfontaine, Jr. President,
Principal Executive Officer and Director
OS General Partner Company
November 15, 1999 By: /s/ David K. Ronck
- -------------------------- -----------------------------------------
Date David K. Ronck
Vice President and Chief Accounting Officer
OS General Partner Company
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,377,037
<SECURITIES> 0
<RECEIVABLES> 43,552
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 306,800
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,180,951
<CURRENT-LIABILITIES> 249,968
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,180,951
<SALES> 668,323
<TOTAL-REVENUES> 739,011
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 370,458
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 393,296
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,743)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
