<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
-----------------------------------------------
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to ________________________
Commission File Number 0-8914
----------------
UNIVERSITY REAL ESTATE PARTNERSHIP V
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3240567
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Ross Avenue, Suite 4600, Dallas, Texas 75201
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(214) 740-2200
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
------ ------
1
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UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
Page
----
Part I - Financial Information
Item 1 - Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998 3
(b) Condensed Consolidated Statements of Operations for the
three Months ended March 31, 1999 and 1998 4
(c) Condensed Consolidated Statements of Cash Flows for three
months ended March 31, 1999 and 1998 5
(d) Notes to Condensed Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------- -------------------------------------------
(a) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1999 December 31,
(Unaudited) 1998
------------- -------------
<S> <C> <C>
ASSETS
- ------
Real estate investments
Land $ - $ 524,145
Buildings and improvements - 2,063,933
------------ -----------
- 2,588,078
Less: Accumulated depreciation and
amortization - (875,241)
-----------
- 1,712,837
------------ -----------
Note receivable - -
Cash and cash equivalents (including $0.00 and $21,939
for security deposits at March 31,1999 and
December 31, 1998, respectively) 2,068,230 192,968
Accounts receivable, net of allowance for doubtful accounts of
$0 at March 31,1999 and $16,660 at December 31, 1998 - 16,660
Deferred borrowing costs, net of accumulated amortization
of $0 and $101,695 at March 31,1999 and
December 31, 1998, respectively - 101,695
Prepaid expenses and other assets 57,090 111,819
------------ -----------
$ 2,125,320 $ 2,135,979
------------ -----------
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net of discounts $ - $ 1,677,715
Accrued mortgage interest - 12,403
Accrued property taxes - 3,174
Accounts payable and accrued expenses 60,715 130,014
Subordinated real estate commissions 548,757 549,218
Security deposits - 22,964
------------ -----------
609,472 2,395,488
------------ -----------
Partners' equity (deficit)
Limited Partners - 50,000 units authorized; 34,275 and 34,275
units issued and outstanding at March 31,1999 and December 31,
1998, respectively, 17,723 and 17,723 Income units at March 31,1999
and December 31, 1998, respectively, and 16,552 and 16,552.
Growth/Shelter units at March 31,1999 and December 31, 1998,
respectively) 2,041,206 283,643
General Partner (525,358) (543,152)
------------ -----------
1,515,848 (259,509)
------------ -----------
$ 2,125,320 $ 2,135,979
------------ -----------
</TABLE>
3
<PAGE>
(b) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended XXX Months Ended
March 31, XXXXX
------------------------- --------------------------
1999 1998 XXXXX XXXXX
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 241,594 $ 618,038 $ XXX $ XXX
Interest 388 5,685 XXX XXX
Other income 12,514 17,736 - XXX
Total revenues 254,496 641,459 XXX XXX
------------ ----------- ------------ ------------
Expenses:
Interest 327,106 255,300 XXX XXX
Depreciation and amortization 52,635 153,784 XXX XXX
Property taxes 25,385 32,697 XXX XXX
Other property operations 155,164 218,415 XXX XXX
General and administrative 55,997 50,875 XXX XXX
Total expenses 616,287 711,071 XXX XXX
------------ ----------- ------------ ------------
Net operating profit $ (361,791) $ (69,612) $ XXX $ XXX
============ =========== ============ ============
Other income (expenses);
Sale of real estate 4,100,000 - XXX -
Cost of Sale (1,958,789) - - -
Income (loss) before
extraordinary item 1,779,420 (69,612) XXX XXX
Extraordinary item--gain
on debt forgiveness - - XXX -
------------ ----------- ------------ ------------
Net income (loss) $ 1,779,420 $ (69,612) $ XXX $ XXX
============ =========== ============ ============
Net income (loss) allocable to
General Partner $ 17,794 $ (696) $ XXX $ XXX
Net income (loss) allocable to
Limited Partners 1,761,626 (68,916) XXX XXX
------------ ----------- ------------ ------------
Net income (loss) $ 1,779,420 $ (69,612) $ XXX $ XXX
============ =========== ============ ============
Net income (loss) per Limited
Partnership Unit
Income (loss) before
Extraordinary item $ 51.92 $ (2.01) $ XXX $ XXX
Extraordinary item - - XXX -
------------ ----------- ------------ ------------
Net income (loss) $ 51.92 $ (2.01) $ XXX $ XXX
============ =========== ============ ============
</TABLE>
4
<PAGE>
(c) UNIVERSITY REAL ESTATE PARTNERSHIP V
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1999 1998
------------ -----------
<S> <C> <C>
Net Income(loss) $ 1,779,420 $ (69,612)
------------ -----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 52,635 153,784
Gain on sale of real estate (502,777) -
Extraordinary gain on debt forgiveness - -
Changes in assets and liabilities:
Accounts receivable 16,660 20,101
Prepaid expenses and other assets 181,276 (46,678)
Accounts payable and accrued expenses (69,299) (11,277)
Accrued mortgage interest (12,403) 21,154
Accrued property taxes (3,174) 32,697
Subordinated real estate commissions 461 -
Intercompany account 178,867 -
Security deposits (22,964) 600
------------ -----------
Total adjustments (180,718) 170,381
------------ -----------
Net cash provided by operating activities 1,598,702 100,769
------------ -----------
Cash flows from investing activities:
Decrease/(Increase) of real estate investments - (30,532)
Investment in notes receivable - -
Cash proceeds from sale of Washington Towne 1,914,994 -
------------ -----------
Net cash provided by (used in) investing activities 1,914,994 (30,532)
------------ -----------
Cash flows from financing activities:
Distributions to partners - -
Principal payments on mortgage notes payable (1,638,434) (29,381)
------------ -----------
Net cash (used in) financing activities 276,560 (29,381)
------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,875,262 40,856
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 192,968 136,596
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,068,230 $ 177,452
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $
============
Cash paid during the year for taxes $
============
</TABLE>
5
<PAGE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
On May 8, 1998, the Partnership sold the Glasshouse Square Shopping Center for
$10,600,000. The transaction was recorded as follows:
<TABLE>
<S> <C>
Net cash received $ 1,564,330
Real estate investment (9,018,637)
Other assets/liabilities/expenses incurred
On sale 198,862
Mortgage note 7,454,055
-----------
Gain on sale of Glasshouse Square Shopping Center $ 198,610
===========
</TABLE>
A portion of this transaction was accounted for as a non-cash transaction in the
statement of cash flows.
During 1998, the Partnership was forgiven debt in the amount of $420,418, which
was accounted for as a non-cash transaction in the statement of cash flows.
6
<PAGE>
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended September 30, 1998
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1997. The December 31, 1997
condensed consolidated balance sheet was derived from audited numbers.
Certain reclassifications have been made to the 1997 balances to conform to the
1998 presentation.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------
The general partner of the Partnership is University Advisory Company ("UAC" or
the "General Partner"), a California general partnership. Prior to December 15,
1996, Southmark Commercial Management, Inc. ("SCM"), and Southmark Investors,
Inc. ("SII"), both wholly-owned subsidiaries of Southmark Corporation
("Southmark") were the two general partners of UAC. On December 15, 1996, OS
General Partner Company ("OSGPC"), a Texas corporation, and OS Holdings, Inc.
("OS"), a Texas corporation, acquired both interests in UAC held by SCM and SII.
On March 9, 1993, Southmark and several of its affiliates (including the General
Partner) entered into an Asset Purchase Agreement with SHL Acquisition Corp.
III, a Texas corporation, and its permitted assigns (collectively "SHL") to sell
various general and limited partnership interests owned by Southmark and its
affiliates, including the general partnership interest of the Partnership. On
December 16, 1993, Southmark and SHL executed the Second Amendment to Asset
Purchase Agreement whereby SHL acquired an option to purchase the general
partnership interest of the Partnership, rather than purchase the partnership
interest itself. On the same date, SHL assigned its rights under the amended
Asset Purchase Agreement to Hampton Realty Partners, L.P., a Texas limited
partnership ("Hampton") and Hampton and Southmark affiliates also entered into
an Option Agreement whereby Hampton acquired the right to purchase the option
assets, including the general partnership interest of the Partnership, subject
to the approval of the limited partners. On April 20, 1994, Insignia Financial
Group, Inc., a Delaware corporation, and certain of its affiliates (collectively
"Insignia") entered into an Option Purchase Agreement with Hampton to acquire
Hampton's rights to solicit proxies from the Limited Partners seeking their
consent to Hampton becoming the general partner of the Partnership. On August
8, 1994, the Insignia contract was terminated. On December 30, 1994, Hampton
entered into an Assignment and Assumption of Option Agreement with JKD Financial
Management, Inc. ("JKD"), a Texas corporation, whereby, among other things, JKD
obtained the right to acquire Hampton's rights to proxy into the Partnership
subject to the approval of the Limited Partners. As a result of a 1996
transaction among OS, OSGPC, SCM and SII, JKD's option was assigned to OSGPC.
See discussion of transaction among SCM, SII, OSGPC and OS below.
Effective as of December 14, 1992, the Partnership entered into a Portfolio
Services Agreement and a Property Management Agreement with Hampton UREF
Management, Ltd. ("Hampton UREF"), a Texas limited partnership, pursuant to
which Hampton UREF began providing management for the Partnership's properties
and certain other portfolio services. The operations of the Partnership's
properties were managed by Hampton Management, Inc. (formerly SHL Management,
Inc.) through a subcontract agreement with Hampton UREF. From April 20, 1994 to
August 8, 1994, the Partnership and its properties were managed by Insignia
pursuant to a Property Management Subcontract Agreement with Hampton UREF. As
of August 8, 1994, the properties only were managed by an affiliate of Insignia
under a Property Management Agreement directly with the Partnership.
As of December 30, 1994, Hampton UREF entered into an Assignment and Assumption
of Portfolio Services Agreement with JKD pursuant to which JKD oversees the
management of the Partnership.
7
<PAGE>
On January 29, 1996, SCM and SII entered into a purchase agreement to sell their
partnership interests in UAC to OS Holdings, Inc. ("OS"), a Texas corporation,
and JKD, respectively. The transfer documents were executed January 31, 1996,
and placed into escrow. The transfer would not be effective until certain
conditions precedent were satisfied and, if the conditions precedent were not
satisfied by April 29, 1996, the transfer documents would be returned to SCM and
SII and the transfer would not occur. On April 29, 1996, the purchase agreement
was amended to facilitate the substitution of OS General Partner Company
("OSGPC"), a Texas corporation, for JKD and to extend the escrow period through
June 30, 1996. On June 25, 1996, a Second Amendment of Escrow Agreement was
entered into to extend the escrow period through August 31, 1996. On December
15, 1996, it was determined that all conditions precedent to the OS and OSGPC
purchase of the partnership interests in UAC had been met and the sale was
consummated and OS and OSGPC became the owners and interest holders in UAC.
As further discussed in Note 3 - Sale of Glasshouse Square Shopping Center, the
Partnership sold the Glasshouse Square Shopping Center on May 8, 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. In
conjunction with the sale of the Glasshouse Square property, the Partnership
obtained a $150,000 principal discount from the mortgage lender, as well as
forgiveness of $270,418 of accrued and unpaid interest. The Partnership paid
$216,800 to the affiliate pursuant to such agreement.
NOTE 3 - SALE OF GLASSHOUSE SQUARE SHOPPING CENTER
- --------------------------------------------------
On May 8, 1998, the Partnership sold Glasshouse Square Shopping Center to an
unaffiliated third party for a gross sales price of $10,600,000. The property
was acquired by the purchaser with a cash down payment of approximately
$2,600,000 and assumption of the first mortgage lien on the property of
$7,465,000. In conjunction with the sale, the Partnership provided short term
seller financing in the approximate amount of $538,000. The seller note
receivable bears interest at 8% and matures March 1, 1999. The net cash
proceeds received by the Partnership were used to pay real estate commissions,
property taxes, closing costs and to payoff the second mortgage lien on the
property. The Partnership was able to obtain a $150,000.00 principal discount
on the second mortgage from the second mortgage lender, as well as forgiveness
of $270,418 of accrued and unpaid interest. This gain on debt forgiveness is
reflected as an extraordinary item in the Partnership's consolidated statement
of operations for the three and six months ended June 30, 1998.
NOTE 4 - SALE OF WASHINGTON TOWNE APARTMENTS
- --------------------------------------------
On March 31,1999 the Partnership sold Washington Towne Apartments to an
unaffiliated third party for a gross sales price of $4,100,000.00. The property
was aquaired by the purchaser for cash. The cash proceeds received by the
Partnership were used to pay the mortgage, commissions, recording fees, security
deposits, taxes, fire damage repairs and legal fees. The net cash proceeds are
$1,914,994.14 which results in a calculated gain on sale of $502,777. The net
cash proceeds are held in escrow by an appropriate independent third party in
order to complete a tax-free exchange. The Partnership intends to use the net
cash proceeds to purchase a like kind property in order to preserve cash flow
and avoid unessecery recognition for tax purposes of gain on the sale pursuant
to Section 1031 of the Internal Revenue Service code of 1986 as amended.
There can be no assurance that the General Partner will be able to find a
suitable replacement property to facilitate completion of the tax-free exchange.
NOTE 5 - DISTRIBUTIONS
- ----------------------
As a result of the Glasshouse sale, as discussed further in Note 3, on June 10,
1998, the Partnership paid a $250,000 distribution, pursuant to the Partnership
Agreement, to the Income Unit holders of record as of June 10, 1998. This
distribution represents a $14.11 per Income Unit distribution.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The Partnership's net loss from operations for the three months ended March 31,
1999 was $361,791. The net loss for the same period in 1998 was $69,612. Total
revenues for the three months ended March 31, 1999 were $254,496 versus $641,459
for the same period in 1998. The decrease in total revenues in 1999 is
primarily attributable to the sale of the Glasshouse Shopping Center on May 8,
1998. The Washington Towne Apartments property was sold March 31, 1999.After
giving effect for the gain of the sale of the Washington Towne Apartments
property , the Partnership recorded net income of $1,779,420 for the three
months ended March 31,1999.
Total expenses for the three months ended March 31,1999 were $616,287 versus
$711,071 for the same period in 1998. The decrease in total expenses is due to
the sale of the Glasshouse Square property.
During the three months ended March 31,1999, the Partnership recorded an
increase in cash of $1,875,262 versus an increase of $40,856 for the same period
in 1998. The statement of cash flows included an increase in cash provided by
operating activities of $1,598,702 primarily due to the sale of the Washington
Towne property on March 31,1999. The statement of cash flows included an
increase in cash provided by investing activities of $1,914,994 due to the cash
proceeds received from the sale of Washington Towne Apartments (See Note 4 for
further discussion). The statement of cash flows included an increase in cash
used in financing activities of $1,638,434 resulting from the payoff of the
mortgage debt related to Washington Towne Apartments.
Should operations deteriorate and present resources not are adequate for current
needs, the Partnership has no outside lines of credit on which to draw for its
working capital needs. Neither the General Partner 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 or sale of its remaining operating
properties or negotiated reductions in requirements related to outstanding debt
obligations.
Washington Towne Apartments - Atlanta, Georgia
- ----------------------------------------------
Washington Towne Apartments was sold March 31,1999 for a gross sale proceeds of
$4,100,000. See Note 4 Sale of Washington Towne Apartments for further
discussion.
Average occupancy for the three months ended March 31,1999 was 99% versus 94%
for the same period in 1998. Occupancy at Washington Towne continued to be
steady.
Glasshouse Square - San Diego, California
- -----------------------------------------
Glasshouse Square was sold on May 8, 1998 for a gross sales price of
$10,600,000. See Note 3--Sale of Glasshouse Square for further discussion.
Bank of San Pedro Note Receivable
- ---------------------------------
On July 20, 1995, the Partnership sold the Bank of San Pedro Office Building for
$1,350,000. The Partnership received partial consideration from the sale in the
form of a note receivable for $350,000, bearing interest at 9% per annum with
interest only payments due monthly, secured by a second lien deed of trust on
the Bank of San Pedro Office Building, maturing on July 20, 1998 and net cash of
$291,562.
As of March 30, 1996, the borrower on the note receivable ceased making
regularly scheduled debt payments constituting an event of default. The
borrower has currently cured the default situation; however, a provision for
loss in the amount of $100,000 was recorded in 1995 to reflect the market value
of the real estate.
The note receivable was paid off in full in August of 1998.
9
<PAGE>
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.
27 Financial Data Schedule.
(b) Reports on Form 8-K. There was a form 8-K filed for the 1998 10-K
regarding the sale of the Washington Towne Apartments on March 31,1999.
The sale is intended to be a like kind exchange, the cash is held in
escrow until the proposed like kind property is determined.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNIVERSITY REAL ESTATE PARTNERSHIP V
By: UNIVERSITY ADVISORY COMPANY
General Partner
By: OS GENERAL PARTNER COMPANY
By: /s/ CURTIS R. BOISFONTAINE, JR.
- ---------------------- ---------------------------------------
Date Curtis R. Boisfontaine, Jr. President,
Principal Executive Officer and Director
OS General Partner Company
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> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,068,230
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,090
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,125,320
<CURRENT-LIABILITIES> 60,715
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,125,320
<SALES> 254,496
<TOTAL-REVENUES> 4,354,496
<CGS> 0
<TOTAL-COSTS> 2,575,076
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,779,420
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
