<PAGE> 1
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, 1999
------------------------------------------------------
[ ] 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
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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.)
3811 Turtle Creek Blvd, Suite 1850, Dallas, Texas 75219
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(Address of principal executive offices) (Zip code)
2001 Ross Avenue, Suite 4600, Dallas, Texas 75201
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(Former address, if changed since last report)
Registrant's telephone number, including area code (214) 651-4000
---------------------------
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 No X
---- -----
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 34,253 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 15
TOTAL OF 40 PAGES
<PAGE> 2
UNIVERSITY REAL ESTATE PARTNERSHIP V
INDEX TO ANNUAL REPORT ON FORM 10-K
<TABLE>
<CAPTION>
Item No. Page
-------- ----
<S> <C> <C>
PART I
1 Business................................................................................................ 3
2 Property................................................................................................ 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................ 8
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
PART III
9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.................... 14
10 Directors and Executive Officers of the Registrant...................................................... 14
11 Executive Compensation.................................................................................. 14
12 Security Ownership of Certain Beneficial Owners and Management.......................................... 15
13 Certain Relationships and Related Transactions.......................................................... 15
PART IV
14 Exhibits, Consolidated Financial Statements Schedules and Reports on Form 8-K........................... 15
</TABLE>
2
<PAGE> 3
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 3811 Turtle Creek Blvd., Suite 1850, Dallas, Texas 75219.
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, 547 have subsequently been repurchased by the Partnership. Of the
34,253 Limited Partnership Units currently outstanding, 17,723 are Income Units
and 16,530 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. ("Hampton"), a Texas
limited partnership, 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
between OS, OSGPC, SCM and SII, JKD's option was assigned to OSGPC. See
discussion of transaction between SCM, SII, OSGPC and OS below.
Effective as of December 14, 1992, the Partnership entered into a Portfolio
Services Agreement and a Property Management Agreement with Hampton UREF
Management, Ltd. ("Hampton UREF"), a Texas limited partnership, pursuant to
which Hampton UREF began providing management for the Partnership's properties
and certain other portfolio services. The operations of the Partnership's
properties were managed by Hampton Management, Inc. (formerly SHL Management,
Inc.) through a subcontract agreement with Hampton UREF. From April 20, 1994 to
August 8, 1994, the Partnership and its properties were managed by Insignia
pursuant to a Property Management Subcontract Agreement with Hampton UREF. As of
August 8, 1994, the properties only were managed by an affiliate of Insignia and
its assigns 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.
3
<PAGE> 4
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 liquidated many of its properties, including
Glasshouse Square on May 8, 1998 and Washington Towne Apartments on April 1,
1999. The proceeds from the sale of Washington Towne Apartments were used to
acquire a like-kind apartment complex on a tax-free basis. The new project,
Superstition Park Apartments, was acquired on July 1, 1999. As of December 31,
1999 Superstition Park Apartments was the Partnership's only income-producing
property.
Sale of Washington Towne Apartments:
The Partnership sold Washington Towne Apartments on April 1, 1999 for
$4,100,000. Net cash received totaled $1,914,994 and was placed into escrow
until a like-kind apartment complex could be acquired on a tax-free basis. The
Partnership recognized a gain on the sale of Washington Towne Apartments of
$2,212,935. A portion of the transaction was accounted for as a non-cash
transaction in the accompanying consolidated statements of cash flows.
Purchase of Superstition Park Apartments:
On June 25, 1999, Meridian Superstition Park Investors, LLC ("MSPI"), an Arizona
limited liability company, was formed as a wholly owned limited liability
company by Washington Towne Apartments, LLC ("WTA"), a Georgia limited liability
corporation, which is effectively wholly owned by the Partnership. WTA used the
escrowed proceeds from the sale of Washington Towne Apartments for a like kind
exchange.
On July 1, 1999, WTA purchased Superstition Park Apartments for $20,400,000 with
the escrowed proceeds and mortgage notes in the amount of $18,630,000. These
mortgage notes were to mature on June 30, 2004 and bore interest at LIBOR plus
3.25%.
On July 13, 1999, in order to consummate a refinancing with a new lender, the
Partnership entered into an agreement with Meridian Equity Investors, LP
("MEI"), a Texas limited partnership, to continue Meridian Multi-Family
Investors 99-IV ("MMFI 99-IV") pursuant to the Limited Partnership Act. The
Partnership contributed to MMFI 99-IV its 99% member interest in WTA. The
ownership of MMFI 99-IV is allocated (1) 99% limited partner to the Partnership,
and (2) 1% general partner to MEI. MEI is owned by affiliates of the General
Partner of the Partnership.
On July 20, 1999, the Partnership assigned 99% of the 100 shares of capital
stock it owned in Washington Towne, Inc. ("WT") to MSP Genpar, Inc. ("MSP"), a
Texas corporation, in order to satisfy the new lender's structural requirements
with respect to the refinancing of Superstition Park Apartments. The Partnership
retained 1 share of capital stock in WT. In return for the assignment of 99
shares of stock to MSP, the Partnership receives all of the economic benefit
that is normally allocated to MSP. MSP is owned by affiliates of the General
Partner of the Partnership. After the stock transfer, WT assigned 0.99% of its
1% member interest in WTA to MMFI 99-IV. Therefore, WT is the 0.01% managing
member of WTA and MMFI 99-IV is 99.99% member of WTA.
On December 15, 1999, the mortgage notes were refinanced with the new lender, in
the principal amount of $16,000,000, bearing interest at 7.765%, secured by
Superstition Park Apartments, payable in monthly installments of principal and
interest of $114,792 and maturing January 2010. In addition to this new note,
the MMFI 99-IV entered into an agreement to sell 10% non-recourse general
obligation promissory notes, maturing December 31, 2004 with interest payable
quarterly, in the amount of $4,050,000. As of December 31, 1999, $3,875,000 had
been received. The remaining $175,000 was received in January 2000. These 10%
non-recourse general obligation promissory notes are secured by a security
interest in the Partnership's 0.1% Class B voting limited partnership interest
in MMFI 99-IV. The collateral does not include the Partnership's 98.9% Class A
non-voting limited partnership interest in MMFI 99-IV.
MEI and MSP are effectively minority interest partners in the Partnership since
these entities are not wholly owned by the Partnership. As a result of various
provisions of the Partnership's limited partnership agreement not permitting
minority interest partners, no income (loss) or cash distributions will be
allocated to MSP or MEI.
4
<PAGE> 5
Sale of Glasshouse Square:
The Partnership sold the Glasshouse Square Shopping Center on May 8, 1998 for
$10,600,000. The Partnership had previously entered into a Debt Workout
Consulting Agreement with MRA, 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. MRA was
successful in negotiating certain reductions in the Partnership's debt as of the
sale date of Glasshouse Square.
Business Plan:
The business of the Partnership is not seasonal. The Partnership's anticipated
plan of operation for 2000 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 and cash flows and continue to defer potentially negative tax
impact to the Partnership in the event of liquidating the Partnership. 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.
Computer Systems/Year 2000 Compliance:
In the fourth quarter of 1998 the General Partner purchased and installed new
computer hardware and operating platforms. In addition, the accounting software
package was upgraded to become year 2000 compliant.
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.
5
<PAGE> 6
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 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 from SCM
and SII.
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 MRA and MRA
assumed responsibility for overseeing the management of the Partnership.
ITEM 2. PROPERTY
Description of Real Estate:
The following table sets forth the investment portfolio of the Partnership at
December 31, 1999. It is the opinion of management that the property has
adequate insurance coverage. The mortgage note payable at December 31, 1999 for
Superstition Park Apartments is $16,000,000. Full detail of the mortgage is
described in Item 8 - "Note 5 - Mortgage Notes Payable."
<TABLE>
<CAPTION>
Gross
Book Value Occupancy Date
Property Description of Property Rate Acquired
-------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Superstition Park
Apartments Apartments
Tempe, Arizona 376 units $20,253,562 93% July 1999
===========
</TABLE>
Sale of Washington Towne Apartments
The mortgage payable for WTA had an unpaid principal amount of $1,677,715 at
December 31, 1998.
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, WTA. 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 WTA. Therefore, the
Partnership effectively retained a 100% interest in the property. In connection
with the contribution of the property to WTA, 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 significantly enhanced the value of the property (see Item 8 -
"Note 5 - Mortgage Notes Payable"). The Partnership sold Washington Towne
Apartments on April 1, 1999 for $4,100,000. Net cash received totaled $1,914,994
and was placed into escrow until a like-kind apartment complex could be acquired
on a tax-free basis. The Partnership recognized a gain on the sale of Washington
Towne Apartments of $2,212,935. A portion of the transaction was accounted for
as a non-cash transaction in the accompanying consolidated statements of cash
flow.
6
<PAGE> 7
Superstition Park Apartments
On June 25, 1999, MSPI was formed, as a wholly owned limited liability company,
by WTA, which is effectively wholly owned by the Partnership. WTA used the
escrowed proceeds from the sale of Washington Towne Apartments for a like kind
exchange.
On July 1, 1999, WTA purchased Superstition Park Apartments for $20,400,000 with
the escrowed proceeds and mortgage notes in the amount of $18,630,000. These
mortgage notes were to mature on June 30, 2004 and bore interest at LIBOR plus
3.25%.
On July 13, 1999, in order to consummate a refinancing with a new lender, the
Partnership entered into an agreement with MEI to continue MMFI 99-IV pursuant
to the Limited Partnership Act. The Partnership contributed to MMFI 99-IV its
99% member interest in WTA. The ownership of MMFI 99-IV is allocated (1) 99%
limited partner to the Partnership, and (2) 1% general partner to MEI. MEI is
owned by affiliates of the General Partner of the Partnership.
On July 20, 1999, the Partnership assigned 99% of the 100 shares of capital
stock it owned in WT to MSP in order to satisfy the new lender's structural
requirements with respect to the refinancing of Superstition Park Apartments.
The Partnership retained 1 share of capital stock in WT. In return for the
assignment of 99 shares of stock to MSP, the Partnership receives all of the
economic benefit that is normally allocated to MSP. MSP is owned by affiliates
of the General Partner of the Partnership. After the stock transfer, WT assigned
0.99% of its 1% member interest in WTA to MMFI 99-IV. Therefore, WT is the 0.01%
managing member of WTA and MMFI 99-IV is 99.99% member of WTA.
On December 15, 1999, the mortgage notes were refinanced with the new lender, in
the principal amount of $16,000,000, bearing interest at 7.765%, secured by
Superstition Park Apartments, payable in monthly installments of principal and
interest of $114,792 and maturing January 2010. In addition to this new note,
the MMFI 99-IV entered into an agreement to sell 10% non-recourse general
obligation promissory notes, maturing December 31, 2004 with interest payable
quarterly, in the amount of $4,050,000. As of December 31, 1999, $3,875,000 had
been received. The remaining $175,000 was received in January 2000. These 10%
non-recourse general obligation promissory notes are secured by a security
interest in the Partnership's 0.1% Class B voting limited partnership interest
in MMFI 99-IV. The collateral does not include the Partnership's 98.9% Class A
non-voting limited partnership interest in MMFI 99-IV.
MEI and MSP are effectively minority interest partners in the Partnership since
these entities are not wholly owned by the Partnership. As a result of various
provisions of the Partnership's limited partnership agreement not permitting
minority interest partners, no income (loss) or cash distributions will be
allocated to MSP or MEI.
Sale of Glasshouse Square
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 and assumption of the
first mortgage lien on the property. In conjunction with the sale, the
Partnership provided short-term financing, which was paid off by the purchaser
in 1998. The Partnership was able to obtain a $150,000 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 statements
of operations for the year ended December 31, 1998.
Operating Data:
OCCUPANCY RATES FOR THE YEARS 1995-1999
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999
------------------------- ---------------- ----------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Superstition Park N/A N/A N/A N/A 93%
------------------------- ---------------- ----------------- ---------------- ----------------- -----------------
</TABLE>
7
<PAGE> 8
ITEM 3. LEGAL PROCEEDINGS
The Partnership filed a lawsuit styled University Real Estate Partnership V vs.
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 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. All three
claims are still pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR 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.
<TABLE>
<CAPTION>
(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------
<S> <C>
Limited Partnership Units 1,411 as of March 31, 2000
Income Units 588 as of March 31, 2000
Growth/Shelter Units 823 as of March 31, 2000
</TABLE>
(C) The Partnership resumed making distributions in 1998 as a result of
payments on the San Pedro Note Receivable and the sale of Glasshouse
Square Shopping Center. Cash distributions from capital transactions
totaled $1,074,693 and all were paid entirely to the Income Unit
Holders. No distributions were made in the year ended December 31,
1999. Cumulative distributions through December 31, 1999, were
$16,887,229, $1,786,307, and $590,957 to the Income, Growth/Shelter,
and General Partners, respectively. No distributions were made during
1999.
8
<PAGE> 9
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>
Year Ended December 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Consolidated Statements
Of Operations
-------------
Rental income..................... $ 1,651,793 $ 1,551,668 $ 2,390,773 $ 2,087,301 $ 2,329,859
Interest income .................. 34,592 45,915 32,335 32,797 150,809
Other income ..................... 135,306 160,427 84,723 28,057 44,345
Expenses ......................... (3,266,482) (2,069,394) (2,886,252) (3,063,489) (3,477,628)
Provision for loss on
note receivable ................ -- -- -- -- (100,000)
Loss on sale of repossessed
real estate .................... -- -- -- -- (121,518)
Gain on sale of real estate ...... 2,212,935 198,610 -- -- --
Income (loss) before
extraordinary items ............ 768,144 (112,774) (378,421) (915,334) (1,174,133)
Extraordinary items ............ -- 420,418 -- -- 75,000
------------ ----------- ----------- ----------- -----------
Net income (loss)................. $ 768,144 $ 307,644 $ (378,421) $ (915,334) $(1,099,133)
============ =========== =========== =========== ===========
Net income (loss) per Limited
Partnership Unit:
Income (Loss) before
extraordinary items............. $ 22.20 $ (3.26) $ (10.92) $ (26.42) $ (33.84)
Extraordinary items ............ -- 12.15 -- -- 2.16
------------ ----------- ----------- ----------- -----------
Net income (loss)............... $ 22.20 $ 8.89 $ (10.92) $ (26.42) $ (31.68)
============ =========== =========== =========== ===========
Distributions per Limited
Partnership Unit:
Income Partners................. $ -- $ 60.64 $ -- $ -- $ --
Growth/Shelter
Partners...................... $ -- $ -- $ -- $ -- $ --
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Consolidated Balance
Sheets
------
Real estate, net............ $ 19,889,398 $ 1,712,837 $ 10,951,261 $ 11,398,265 $ 11,673,695
Notes receivable, net....... -- -- 250,000 250,000 250,000
Total assets................ 21,397,653 2,135,979 12,248,950 12,670,367 13,416,272
Mortgage and promis-
sory notes payable....... 19,875,000 1,677,715 10,680,255 10,789,414 10,674,931
Partners' equity (deficit).. 508,635 (259,509) 507,540 885,961 1,801,295
</TABLE>
Net income (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 34,253 Limited Partnership Units outstanding in 1999, 34,275
Limited Partnership Units outstanding in 1998, 34,301 Units outstanding in 1997
and 1996, and 34,353 in 1995.
9
<PAGE> 10
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,
another in 1987, Glasshouse Square in 1998, and Washington Towne Apartments in
1999. The Partnership received partial consideration from the sale of certain
properties in the form of notes receivable, all of which have been collected in
full as of December 31, 1998.
RESULTS OF OPERATIONS
Revenues:
Rental income was $1,651,793 in 1999 as compared to $1,551,668 and $2,390,773 in
1998 and 1997, respectively. The increase of $100,125 in 1999 as compared to
1998 is due primarily to the sale of Washington Towne Apartments and the
acquisition of Superstition Park Apartments with the use of the proceeds from
the sale. In 1998 the decrease of $839,105 as compared to 1997 was primarily due
to the sale of Glasshouse Square Shopping Center.
Of the total revenues recorded by the Partnership, the amount attributable to
rental income from Glasshouse Square Shopping Center was 32% in 1998, 57% in
1997.
Interest income decreased in 1999 by $11,323 primarily due to no interest being
received from note receivables as in the years past. Interest income increased
in 1998 by $13,580 as compared to the 1997 amount of $32,335 mostly due to
additional interest received for a note receivable from the Glasshouse Square
Shopping Center sale. On November 28, 1998 the Glasshouse Square purchaser paid
the related note receivable in full. Interest earned on the Bank of San Pedro
note receivable was approximately 7.0% in 1998 and 1.3% in 1997 of the total
rental and interest income of the Partnership. The San Pedro note receivable was
paid in full on July 20, 1998.
Other income decreased by $25,121 from 1998 to 1999 and consists of late
charges, returned check charges, cable television and storage charges. The
increase from 1997 to 1998 of $75,704 was attributable to an adjustment in
allowance for doubtful debts.
Expenses:
Interest expense was $1,524,937 in 1999 as compared to $542,586 and $1,052,586
in 1998 and 1997, respectively. The increase was due to the acquisition and
refinancing of Superstition Park Apartments which included an additional
interest payment in the amount of $325,000. The decrease in 1998 as compared to
1997 was due to the sale of Glasshouse Square Shopping Center and the retirement
of its mortgage notes payable.
Depreciation and amortization expense was $574,277 in 1999 as compared to
$317,679 and $588,124 in 1998 and 1997, respectively. The increase in 1999 of
$256,598 was due to the acquisition of Superstition Park at a cost of
$20,253,562 compared to the 1998 asset, Washington Towne, which cost $2,588,078.
The decrease of $270,445 from 1997 to 1998 was due to the sale of Glasshouse
Square. Property taxes were $127,755 in 1999 as compared to $118,876 and
$124,201 in 1998 and 1997, respectively. The increase in 1999 of $8,879 was due
to the acquisition of Superstition Park Apartments. The reduction in 1998 as
compared to 1997 is due to the sale and elimination of expenses for the
Glasshouse Square Shopping Center.
Other property operating expenses, the provisions for doubtful accounts, and
property management fees were $686,132 in 1999 as compared to $772,526 and
$837,900 in 1998 and 1997, respectively. The decrease in 1999 of $86,394 is
primarily due to the Partnership not owning a property for a period of three
months (second quarter) during the year. The $65,374 decrease in 1998 as
compared to 1997 was due to the sale of the Glasshouse Square Shopping Center in
the middle of the fiscal year.
General and administrative expenses were $215,881 in 1999 as compared to
$197,727 and $85,848 in 1998 and 1997, respectively. The increase in 1999 as
compared to 1998 is primarily due to an increase in partnership legal
10
<PAGE> 11
expenses related to the sale and purchase transactions. General and
administrative expenses - affiliates was $137,500 in 1999 as compared to
$120,000 and $197,593 in 1998 and 1997, respectively.
In 1995, the Partnership incurred an additional loss of $350,000 related to the
sale of the Las Oficinas note receivable on April 7, 1995 of $750,000.
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.
At year end 1995, the Partnership recorded 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.
On July 20, 1998, the San Pedro note receivable in the amount of $350,000 was
paid in full.
In 1998, the Partnership recorded extraordinary income as a result of debt
reductions by the Glasshouse lender that consisted of debt forgiveness of
$420,418. On May 8, 1998, the Partnership recorded a gain on the sale of
Glasshouse Square Shopping Center of $198,610.
On April 1, 1999, the Partnership recorded a gain on the sale of Washington
Towne Apartments of $2,212,935. A portion of the transaction was accounted for
as a non-cash transaction in the accompanying condensed consolidated statements
of cash flow.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999 the Partnership held cash and cash equivalents of $317,630
of which $50,024 were tenant security deposits. Cash and cash equivalents at the
end of 1999 increased by approximately $124,662 as compared to the balance held
at December 31, 1998. Cash flow used in operations in 1999 was $521,340.
Positive cash flow from investing activities in 1999 was $14,847. Positive cash
flow from financing activities in 1999 was $631,155.
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, WTA. 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 WTA. Therefore, the
Partnership effectively retained a 100% interest in the property. In connection
with the contribution of the property to WTA, 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. The
property was sold on April 1, 1999 for $4,100,000.
On June 25, 1999, MSPI was formed, as a wholly owned limited liability company,
by WTA, which is effectively wholly owned by the Partnership. WTA used the
escrowed proceeds from the sale of Washington Towne Apartments for a like kind
exchange.
On July 1, 1999, WTA purchased Superstition Park Apartments for $20,400,000 with
the escrowed proceeds and mortgage notes in the amount of $18,630,000. These
mortgage notes were to mature on June 30, 2004 and bore interest at LIBOR plus
3.25%.
On July 13, 1999, in order to consummate a refinancing with a new lender, the
Partnership entered into an agreement with MEI to continue MMFI 99-IV, pursuant
to the Limited Partnership Act. The Partnership contributed to MMFI 99-IV its
99% member interest in WTA. The ownership of MMFI 99-IV is allocated (1) 99%
limited partner to the Partnership, and (2) 1% general partner to MEI. MEI is
owned by affiliates of the General Partner of the Partnership.
11
<PAGE> 12
On July 20, 1999, the Partnership assigned 99% of the 100 shares of capital
stock it owned in WT to MSP in order to satisfy the new lender's structural
requirements with respect to the refinancing of Superstition Park Apartments.
The Partnership retained 1 share of capital stock in WT. In return for the
assignment of 99 shares of stock to MSP, the Partnership receives all of the
economic benefit that is normally allocated to MSP. MSP is owned by affiliates
of the General Partner of the Partnership. After the stock transfer, WT assigned
0.99% of its 1% member interest in WTA to MMFI 99-IV. Therefore, WT is the 0.01%
managing member of WTA and MMFI 99-IV is 99.99% member of WTA.
On December 15, 1999, the mortgage notes were refinanced with the new lender, in
the principal amount of $16,000,000, bearing interest at 7.765%, secured by
Superstition Park Apartments, payable in monthly installments of principal and
interest of $114,792 and maturing January 2010. In addition to this new note,
the MMFI 99-IV entered into an agreement to sell 10% non-recourse general
obligation promissory notes, maturing December 31, 2004 with interest payable
quarterly, in the amount of $4,050,000. As of December 31, 1999, $3,875,000 had
been received. The remaining $175,000 was received in January 2000. These 10%
non-recourse general obligation promissory notes are secured by a security
interest in the Partnership's 0.1% Class B voting limited partnership interest
in MMFI 99-IV. The collateral does not include the Partnership's 98.9% Class A
non-voting limited partnership interest in MMFI 99-IV.
MEI and MSP are effectively minority interest partners in the Partnership since
these entities are not wholly owned by the Partnership. As a result of various
provisions of the Partnership's limited partnership agreement not permitting
minority interest partners, no income (loss) or cash distributions will be
allocated to MSP or MEI.
With its present cash reserves, the General Partner expects that the Partnership
will have sufficient cash to meet its commitments. 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 nor MRA 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.
Forward-Looking Information
Certain statements in this section and elsewhere in this report are
forward-looking in nature and relate to trends and events that may affect the
Partnership's future financial position and operating results. The words
"expect," "anticipate," "intend," "project" and similar words or expressions are
intended to identify forward-looking statements. These statements speak only as
of the date of this annual report. The statements are based on current
expectations, are inherently uncertain, are subject to risks, and should be
viewed with caution. Actual results and experience may differ materially from
the forward-looking statements as a result of many factors, including: changes
in economic conditions in the various markets served by the Partnership's
operations, increased competitive activity, and other unanticipated events and
conditions. It is not possible to foresee or identify all such factors. The
Partnership makes no commitment to update any forward-looking statement or to
disclose any facts, events, or circumstances after the date hereof that may
affect the accuracy of any forward-looking statements.
12
<PAGE> 13
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements:
Independent Auditors' Report, December 31, 1999, 1998, and 1997............................. F1
Consolidated Balance Sheets at December 31, 1999 and 1998................................... F2
Consolidated Statements of Operations for the Three Years Ended
December 31, 1999....................................................................... F3
Consolidated Statement of Partners' Equity (Deficit) for the Three
Years Ended December 31, 1999........................................................... F4
Consolidated Statements of Cash Flows for the Three Years Ended
December 31, 1999....................................................................... F5
Notes to Consolidated Financial Statements.................................................. F7
Consolidated Financial Statement Schedules:
For the Three Years Ended December 31, 1999:
Schedule II - Valuation and Qualifying Accounts......................................... F16
Schedule III - Real Estate Investments and Accumulated
Depreciation and Amortization......................................................... F17
Schedule IV - Mortgage Loans on Real Estate............................................. F19
</TABLE>
13
<PAGE> 14
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 (the "Partnership") as of December 31, 1999 and 1998, and
the related consolidated statements of operations, partners' equity (deficit)
and cash flows for the years ended December 31, 1999, 1998, and 1997. 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, 1999 and 1998, and the results of its
operations and its cash flows for the years ended December 31, 1999, 1998 and
1997 in conformity with generally accepted accounting principles.
In connection with our audits of the consolidated financial statements referred
to above, we have audited the accompanying 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
all material respects, the information stated therein.
WALLACE SANDERS & COMPANY
Dallas, Texas
April 10, 2000
F1
<PAGE> 15
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------
ASSETS 1999 1998
------ ------------ ------------
<S> <C> <C>
Real estate investments
Land $ 2,045,356 $ 524,145
Buildings and improvements 18,208,206 2,063,933
------------ ------------
20,253,562 2,588,078
Less: Accumulated depreciation and
amortization (364,164) (875,241)
------------ ------------
19,889,398 1,712,837
------------ ------------
Cash and cash equivalents (including $50,024 and $21,939
for security deposits at December 31, 1999 and 1998,
respectively) 317,630 192,968
Accounts receivable 34,196 16,660
Deferred borrowing costs, net of accumulated amortization
of $49,992 at December 31, 1998 607,287 101,695
Escrows 336,906 110,519
Prepaid expenses and other assets 212,236 1,300
------------ ------------
$ 21,397,653 $ 2,135,979
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Mortgage notes payable $ 19,875,000 $ 1,677,715
Accrued mortgage interest 55,787 12,403
Accrued property taxes 89,152 3,174
Accounts payable and accrued expenses 260,170 130,014
Subordinated real estate commissions 549,218 549,218
Prepaid rent 9,667 --
Security deposits 50,024 22,964
------------ ------------
20,889,018 2,395,488
------------ ------------
Partners' equity (deficit):
Limited Partners - 50,000 Units authorized; 34,253 and 34,275 Units issued
and outstanding at December 31, 1999 and 1998, respectively, (17,723
Income Units at December 31, 1999 and 1998 and 16,530 and 16,552
Growth/Shelter Units at December 31, 1999 and 1998) 1,044,106 283,643
General Partner (535,471) (543,152)
------------ ------------
508,635 (259,509)
------------ ------------
$ 21,397,653 $ 2,135,979
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F2
<PAGE> 16
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income $ 1,651,793 $ 1,551,668 $ 2,390,773
Interest 34,592 45,915 32,335
Other income 135,306 160,427 84,723
----------- ----------- -----------
Total revenues 1,821,691 1,758,010 2,507,831
----------- ----------- -----------
Expenses:
Interest 1,524,937 542,586 1,052,586
Depreciation and amortization 574,277 317,679 588,124
Property taxes 127,755 118,876 124,201
Other property operations 593,663 651,289 688,520
Provision for doubtful accounts 17,400 43,163 38,741
Property management fees - affiliates 75,069 78,074 110,639
General and administrative 215,881 197,727 85,848
General and administrative - affiliates 137,500 120,000 197,593
----------- ----------- -----------
Total expenses 3,266,482 2,069,394 2,886,252
----------- ----------- -----------
Net operating loss (1,444,791) (311,384) (378,421)
----------- ----------- -----------
Gain on sale of real estate 2,212,935 198,610 --
----------- ----------- -----------
Income (loss) before extraordinary item 768,144 (112,774) (378,421)
Extraordinary item - gain on debt forgiveness -- 420,418 --
----------- ----------- -----------
Net income (loss) $ 768,144 $ 307,644 $ (378,421)
=========== =========== ===========
Net income (loss) allocable to General Partner $ 7,681 $ 3,076 $ (3,784)
Net income (loss) allocable to Limited Partners $ 760,463 $ 304,568 $ (374,637)
----------- ----------- -----------
Net income (loss) $ 768,144 $ 307,644 $ (378,421)
=========== =========== ===========
Net income (loss) per Limited Partnership Unit:
Income (loss) before extraordinary item $ 22.20 $ (3.26) $ (10.92)
Extraordinary item -- 12.15 --
----------- ----------- -----------
Net income (loss) $ 22.20 $ 8.89 $ (10.92)
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F3
<PAGE> 17
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Total
Partners'
General Limited Equity
Partner Partners (Deficit)
----------- ----------- -----------
<S> <C> <C> <C>
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
Net income 3,076 304,568 307,644
Distributions -- (1,074,693) (1,074,693)
----------- ----------- -----------
Balance at December 31, 1998 (543,152) 283,643 (259,509)
Net income 7,681 760,463 768,144
----------- ----------- -----------
Balance at December 31, 1999 $ (535,471) $ 1,044,106 $ 508,635
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F4
<PAGE> 18
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31,
--------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from tenants $ 1,735,727 $ 1,589,643 $ 2,374,358
Cash paid to suppliers (966,772) (945,805) (1,295,125)
Interest received 34,592 45,914 29,710
Interest paid (1,207,077) (492,360) (943,111)
Property taxes paid (117,810) (54,403) (42,006)
Property tax refund -- -- 44,910
Proceeds from note receivable -- 350,000 --
------------ ------------ ------------
Net cash (used in) provided by operating activities (521,340) 492,989 168,736
------------ ------------ ------------
Cash flows from investing activities:
Investment in real estate (1,900,147) (84,641) (98,858)
Proceeds on sale of real estate 1,914,994 240,513 --
Proceeds from purchasers note receivable -- 538,258 --
------------ ------------ ------------
Net cash provided by (used in) investing activities 14,847 694,130 (98,858)
------------ ------------ ------------
Cash flows from financing activities:
Principal payments on mortgage
notes payable (18,636,558) (56,054) (109,160)
Advances on mortgage notes payable 19,875,000 -- --
Deferred borrowing costs (607,287) -- --
Distributions -- (1,074,693) --
------------ ------------ ------------
Net cash provided by (used in) financing activities 631,155 (1,130,747) (109,160)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 124,662 56,372 (39,282)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 192,968 136,596 175,878
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 317,630 $ 192,968 $ 136,596
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F5
<PAGE> 19
UNIVERSITY REAL ESTATE PARTNERSHIP V
CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net Income (Loss) to Net Cash
Provided by (Used in) Operating Activities
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net income (loss) $ 768,144 $ 307,644 $ (378,421)
----------- ----------- -----------
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization 574,277 317,679 588,124
Gain on sale of real estate (2,212,935) (198,610) --
Extraordinary gain on debt forgiveness -- (420,418) --
Amortization of deferred borrowing costs -- 21,883 28,152
Non-cash expenses on sale of Glasshouse Square -- 157,678 --
Non-cash expenses on sale of Washington Towne (4,475) -- --
Non-cash expenses on acquisition of Superstition Park 113,312 -- --
Changes in assets and liabilities:
Accounts receivable (17,536) (15,392) (19,738)
Prepaid expenses and other assets 42,735 6,323 (91,219)
Escrows (226,387) (54,826) (24,324)
Notes receivable -- 250,000 --
Accounts payable and accrued expenses 130,156 24,232 (96,982)
Prepaid rent 9,289 -- --
Accrued mortgage interest 317,860 28,343 81,322
Accrued property taxes 9,945 64,473 82,195
Security deposits (25,725) 3,980 (373)
----------- ----------- -----------
Total adjustments (1,289,484) 185,345 547,157
----------- ----------- -----------
Net cash (used in) provided by operating activities $ (521,340) $ 492,989 $ 168,736
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F6
<PAGE> 20
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 held in UAC by SCM and SII.
The Partnership was formed to acquire, operate and ultimately dispose
of a diversified portfolio of income-producing property.
Principles of Consolidation
On September 13, 1995, the Partnership contributed the Washington Towne
Apartments to an affiliated entity, Washington Towne Apartments, LLC
("WTA"), a Georgia limited liability company. The Partnership is the
99% member and Washington Towne, Inc. is the 1% managing member of WTA.
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. On April 1, 1999, the
Partnership sold Washington Towne Apartments to a third party for
$4,100,000.
On June 25, 1999, Meridian Superstition Park Investors, LLC ("MSPI"),
an Arizona limited liability company, was formed, as a wholly owned
limited liability company, by Washington Towne Apartments, LLC ("WTA"),
a Georgia limited liability corporation, which is effectively wholly
owned by the Partnership. WTA used the escrowed proceeds from the sale
of Washington Towne Apartments for a like kind exchange.
On July 1, 1999, WTA purchased Superstition Park Apartments for
$20,400,000 with the escrowed proceeds and mortgage notes in the amount
of $18,630,000. These mortgage notes were to mature on June 30, 2004
and bore interest at LIBOR plus 3.25%.
On July 13, 1999, in order to consummate a refinancing with a new
lender, the Partnership entered into an agreement with Meridian Equity
Investors, LP ("MEI"), a Texas limited partnership, to continue
Meridian Multi-Family Investors 99-IV ("MMFI 99-IV"), a Texas limited
partnership, pursuant to the Limited Partnership Act. The Partnership
contributed to MMFI 99-IV its 99% member interest in WTA. The ownership
of MMFI 99-IV is allocated (1) 99% limited partner to the Partnership,
and (2) 1% general partner to MEI. MEI is owned by affiliates of the
General Partner of the Partnership.
On July 20, 1999, the Partnership assigned 99% of the 100 shares of
capital stock it owned in Washington Towne, Inc. ("WT") to MSP Genpar,
Inc. ("MSP"), a Texas corporation, in order to satisfy the new lender's
structural requirements with respect to the refinancing of Superstition
Park Apartments. The Partnership retained 1 share of capital stock in
WT. In return for the assignment of 99 shares of stock to MSP, the
Partnership receives all of the economic benefit that is normally
allocated to MSP. MSP is owned by affiliates of the General Partner of
the Partnership. After the stock transfer, WT assigned 0.99% of its 1%
member interest in WTA to MMFI 99-IV. Therefore, WT is the 0.01%
managing member of WTA and MMFI 99-IV is 99.99% member of WTA.
On December 15, 1999, the mortgage notes were refinanced with the new
lender, in the principal amount of $16,000,000, bearing interest at
7.765%, secured by Superstition Park Apartments, payable in monthly
installments of principal and interest of $114,792 and maturing January
2010. In addition to this new note, the MMFI 99-IV
F7
<PAGE> 21
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Principles of Consolidation (continued)
entered into an agreement to sell 10% non-recourse general obligation
promissory notes, maturing December 31, 2004 with interest payable
quarterly, in the amount of $4,050,000. As of December 31, 1999,
$3,875,000 had been received. The remaining $175,000 was received in
January 2000. These 10% non-recourse general obligation promissory
notes are secured by a security interest in the Partnership's 0.1%
Class B voting limited partnership interest in MMFI 99-IV. The
collateral does not include the Partnership's 98.9% Class A non-voting
limited partnership interest in MMFI 99-IV.
MEI and MSP are effectively minority interest partners in the
Partnership since these entities are not wholly owned by the
Partnership. As a result of various provisions of the Partnership's
limited partnership agreement not permitting minority interest
partners, no income (loss) or cash distributions will be allocated to
MSP or MEI.
The consolidated financial statements include the accounts of the
Partnership, MSPI, MMFI 99-IV, WTA, and Washington Towne, Inc. All
significant inter-entity transactions have been eliminated.
Real Estate Investments
Real estate investments and improvements are generally stated at cost.
Improvements are capitalized and repairs and maintenance are charged to
operations as incurred.
Depreciation
Buildings and improvements are depreciated using the straight-line
method over 5 to 30 years. Tenant improvements were amortized over the
terms of the related tenant lease using the straight-line method.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with initial
maturities of three months or less to be cash equivalents.
Deferred Borrowing Costs
Loan fees for long-term financing of real property are capitalized and
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 Income
The Partnership leases its residential property under short-term
operating leases. Lease terms generally are less than one year in
duration. Rental income is recognized as earned. The Partnership leased
its commercial property under non-cancelable operating leases that
expired over the succeeding 10-year period. Some leases provided
concessions and periods of escalating or free rent. Rental income was
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 was recorded as accrued rent receivable and is included in
prepaid expenses and other assets in the accompanying consolidated
balance sheets.
F8
<PAGE> 22
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
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 (deficit) accounts reported for income tax purposes
may differ from the balances reported for those same items in these
consolidated financial statements.
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 Income (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 34,253 Limited Partnership Units
outstanding in 1999 and 34,275 Limited Partnership Units outstanding in
1998 and 34,301 Limited Partnership Units outstanding in 1997.
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.
F9
<PAGE> 23
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Concentrations of Credit Risk Arising form Cash Deposits in Excess of
Insured Limits
The Partnership maintains cash balances at several financial
institutions. At December 31, 1999, the Partnership's uninsured cash
balances at these financial institutions totaled $374,054.
NOTE 2 - TRANSACTIONS WITH 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 totaled $549,218 at December 31, 1999 and 1998, respectively.
Compensation and reimbursements paid to or accrued for the benefit of
OSGPC and affiliates for the years ending December 31:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Asset management fee $ 75,069 $ 78,074 $110,639
Charged to general and administrative expense:
Partnership and Financial administration,
data processing, accounting and tax
reporting, and investor relations 137,500 120,000 197,593
-------- -------- --------
Total compensation and reimbursements $212,569 $198,074 $308,232
======== ======== ========
</TABLE>
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 consolidated
statements of operations.
As of December 31, 1999, the Partnership has a payable to MEI of
$59,600 included in accounts payable and accrued expenses in the
accompanying consolidated balance sheets. MEI owned 1% of MMFI 99-IV.
NOTE 3 - REAL ESTATE INVESTMENTS
The cost and accumulated depreciation of the Partnership's real estate
investments held at December 31, 1999 and 1998, is set forth in the
following tables:
<TABLE>
<CAPTION>
Buildings and Accumulated
1999 Land Improvements Depreciation Total
---- ------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Superstition Park
Apartments $ 2,045,356 $ 18,208,206 $ (364,164) $ 19,889,398
============= ============== ============ ============
</TABLE>
<TABLE>
<CAPTION>
Buildings and Accumulated
1998 Land Improvements Depreciation Total
---- ------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Washington Towne
Apartments $ 524,145 $ 2,063,933 $ (875,241) $ 1,712,837
============= ============ ============== =============
</TABLE>
F10
<PAGE> 24
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - NOTES RECEIVABLE
On July 20, 1995, the Partnership sold one of 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
the Bank of San Pedro Office Building, maturing on July 20, 1998. On
March 30, 1996, the borrower on the note receivable ceased making
regularly 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.
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.
NOTE 5 - MORTGAGE NOTES PAYABLE
The following is a summary of mortgage notes payable.
<TABLE>
<CAPTION>
December 31,
---------------------------
1999 1998
------------ ------------
<S> <C> <C>
Mortgage payable bearing interest at 7.765%, secured by
Superstition Park Apartments, payable in monthly installments
of principal and interest of $114,792; maturing January 2010. $ 16,000,000 $ --
10% non-recourse general obligation promissory notes,
maturing December 31, 2004 and interest payable quarterly. 3,875,000 --
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. Paid in full upon sale on April 1, 1999. -- 1,677,715
------------ ------------
$ 19,875,000 $ 1,677,715
============ ============
</TABLE>
On June 30, 1999, MSPI, signed mortgage notes in the amounts of
$13,630,000 and $5,000,000 maturing on June 30, 2004 and bearing
interest at LIBOR plus 3.25%. On December 15, 1999, these mortgage
notes were refinanced, with a new lender, in the principal amount of
$16,000,000 bearing interest at 7.765%, secured by Superstition Park
Apartments, payable in monthly installments of principal and interest
of $114,792 and maturing January 2010. In addition, the Partnership
entered into an agreement to sell 10% non-recourse general obligation
promissory notes, maturing December 31, 2004 with interest payable
quarterly, in the amount of $4,050,000. At December 31, 1999 $3,875,000
had been received. The remaining $175,000 was received in January 2000.
F11
<PAGE> 25
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - MORTGAGE NOTES PAYABLE (CONTINUED)
Scheduled principal maturities of the mortgage note under existing
terms are as follows at December 31, 1999:
<TABLE>
<S> <C>
2000 $ 127,929
2001 150,310
2002 162,407
2003 175,476
2004 4,064,598
Thereafter 15,194,280
------------
Total $ 19,875,000
============
</TABLE>
NOTE 6 - DEFERRED BORROWING COSTS
The following is a summary of deferred borrowing costs:
<TABLE>
<CAPTION>
December 31,
---------------------------
1999 1998
------------ ------------
<S> <C> <C>
Deferred borrowing costs incurred on the mortgage payable of
$16,000,000, secured by Superstition Park Apartments. $ 201,547 $ --
Deferred borrowing costs incurred on the 10% non-recourse
general obligation promissory notes. 405,740 --
Deferred borrowing costs incurred on the mortgage payable of
$1,677,715 secured by Washington Towne Apartments. -- 151,687
Accumulated Amortization -- (49,992)
------------ ------------
$ 607,287 $ 101,695
============ ============
</TABLE>
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,
(d) to all the Limited Partners based on number of Units held.
F12
<PAGE> 26
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - DISTRIBUTIONS (CONTINUED)
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;
(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 1999, no distributions were made by the Partnership. During
1998, distributions totaled $1,074,693. In 1997, no distributions were
made by the Partnership.
NOTE 8 - 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:
<TABLE>
<S> <C>
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
============
</TABLE>
In addition, the Partnership was forgiven of indebtedness totaling
$420,418.
A portion of this transaction was accounted for as a non-cash
transaction in the accompanying consolidated statements of cash flows.
NOTE 9 - SALE OF WASHINGTON TOWNE APARTMENTS
On April 1, 1999, the Partnership sold Washington Towne Apartments to a
third party for $4,100,000. The transaction was recorded as follows:
<TABLE>
<S> <C>
Net cash received $ 1,914,994
Real estate investment (1,667,797)
Accrued interest 275,369
Deferred borrowing costs (94,100)
Other assets, liabilities and expenses 113,312
Mortgage notes 1,671,157
------------
Gain $ 2,212,935
============
</TABLE>
A portion of this transaction was accounted for as a non-cash
transaction in the accompanying consolidated statements of cash flows.
F13
<PAGE> 27
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 - PURCHASE OF SUPERSTITION PARK APARTMENTS
On July 1, 1999, the Partnership purchased Superstition Park Apartments
for $20,400,000. The transaction was recorded as follows:
<TABLE>
<S> <C>
Real estate investment $ 20,253,562
Accrued interest (893)
Other assets, liabilities and expenses 277,478
Mortgage notes (18,630,000)
-------------
Net cash paid $ 1,900,147
=============
</TABLE>
A portion of this transaction was accounted for as a non-cash
transaction in the accompanying consolidated statements of cash flows.
NOTE 11 - PRO FORMA INFORMATION
Unaudited pro forma balance sheet information as of December 31, 1998
has been prepared to reflect the financial condition of the Partnership
as if the sale of the Washington Towne Apartments had occurred on
December 31, 1998.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------ ------------- ------------
<S> <C> <C> <C> <C>
Real estate investments, net $ 1,712,837 $ (1,712,837) (A) $ --
Cash and cash equivalents 192,968 1,914,994 (B) 2,107,962
Accounts receivable 16,660 (16,660) (A) --
Deferred borrowing costs 101,695 (101,695) (A) --
Prepaid expenses and other assets 111,819 (111,819) (A) --
------------ -------------- ------------
$ 2,135,979 $ (28,017) $ 2,107,962
============ ============== ============
Mortgage notes payable $ 1,677,715 $ (1,677,715) (A) $ --
Accrued mortgage interest 12,403 (12,403) (A) --
Accrued property taxes 3,174 (3,174) (A) --
Accounts payable and accrued expenses 130,014 (130,014) (A) --
Subordinated real estate commissions 549,218 -- 549,218
Security deposits 22,964 (22,964) (A) --
Partners' equity (deficit) (259,509) 1,818,253 (A) 1,558,744
------------ ------------- ------------
$ 2,135,979 $ (28,017) $ 2,107,962
============ ============== ============
</TABLE>
F14
<PAGE> 28
UNIVERSITY REAL ESTATE PARTNERSHIP V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 - PRO FORMA INFORMATION (CONTINUED)
Unaudited pro forma information for the year ended December 31, 1998
has been prepared to reflect the results of the operations as if the
sale of the Washington Towne Apartments had occurred on January 1,
1998. The results are not necessarily indicative of the results which
would have occurred had these transactions been consummated at the
beginning of 1998 or of future results of operations of the
Partnership.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues: $ 1,551,668 $ (1,009,265) (C) $ 542,403
Rental income 45,915 -- 45,915
Interest 160,427 -- 160,427
------------ ------------- ------------
Other income
1,758,010 (1,009,265) 748,745
------------ ------------- ------------
Expenses:
Interest 542,586 (145,885) (C) 396,701
Depreciation and amortization 317,679 (177,935) (C) 139,744
Property taxes 118,876 (49,308) (C) 69,568
Operating expenses 788,871 (708,794) (C) 80,077
General and administrative 301,382 -- 301,382
------------ ------------- ------------
2,069,394 (1,081,922) 987,472
------------ ------------- ------------
Net operating loss (311,384) 72,657 (238,727)
Gain on sale of real estate 198,610 1,818,714 (C) 2,017,324
------------ ------------- ------------
Income (Loss) before extraordinary item (112,774) 1,891,371 1,778,597
Extraordinary item - gain on debt forgiveness 420,418 -- 420,418
------------ ------------- ------------
Net income $ 307,644 $ 1,891,371 $ 2,199,015
============ ============= ============
Net income per Limited Partnership Unit $ 8.89 $ 54.63 $ 63.52
============ ============= ============
</TABLE>
Pro forma Adjustments
(A) To record the effect of the sale of Washington Towne
Apartments including (1) a reduction in real estate
investments and payoff of underlying mortgage note payable and
interest and (2) reductions in accounts receivable deferred
borrowing costs, prepaid expenses and other assets, accounts
payable and other liabilities resulting from the disposition
of the real estate investment.
(B) To record the cash proceeds from the sale of Washington Towne
Apartments.
(C) To remove the revenues and expenses related to Washington
Towne Apartments rental operations and record the gain on the
sale.
NOTE 12 - RECLASSIFICATIONS
Certain reclassifications have been made to the prior year's
consolidated financial statements in order to conform them to the
classifications used for the current year.
F15
<PAGE> 29
SCHEDULE II
UNIVERSITY REAL ESTATE PARTNERSHIP V
VALUATION AND QUALIFYING ACCOUNTS
December 31, 1999
<TABLE>
<CAPTION>
Additions
-----------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1999
Allowance for Doubtful Accounts $ -- $ -- $ -- $ -- $ --
Allowance for Note Receivable -- -- -- -- --
1998
Allowance for Doubtful Accounts 107,044 -- -- (107,044) --
Allowance for Note Receivable 100,000 -- -- (100,000) --
1997
Allowance for Doubtful Accounts 107,044 -- -- -- 107,044
Allowance for Note Receivable 100,000 -- -- -- 100,000
</TABLE>
F16
<PAGE> 30
SCHEDULE III
SCHEDULE III
UNIVERSITY REAL ESTATE PARTNERSHIP V
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1999
<TABLE>
<CAPTION>
Gross Amount at
Initial Costs Costs Which Carried at Close of Period
-------------------------- Capitalized ---------------------------------------
Related Buildings and Subsequent to Buildings and
Description Encumbrances Land Improvements Acquisition Land Improvements Total(s)
----------- ------------ ----------- ------------- ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Superstition Park
Apartments
Tempe, AZ $ 16,000,000 $ 2,045,356 $ 18,208,206 $ -- $ 2,045,356 $ 18,208,206 $ 20,253,562
============ =========== ============= ============= =========== ============ ============
<CAPTION>
Accumulated
Depreciation
and Date of Date Depreciable
Description Amortization Construction Acquired lives (years)
----------- ------------ ------------ -------- -------------
<S> <C> <C> <C> <C>
Superstition Park
Apartments
Tempe, AZ $ (364,164) 1985 7/99 3-25
============
</TABLE>
F17
<PAGE> 31
UNIVERSITY REAL ESTATE PARTNERSHIP V
Real Estate Investments and Accumulated Depreciation and Amortization
Notes to Schedule III
Changes in real estate investments and accumulated depreciation and amortization
are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Real estate:
Balance at beginning of year $ 2,588,078 $ 19,516,327 $ 19,417,469
Acquisitions 20,253,562
Improvements -- 84,639 98,858
Dispositions (2,588,078) (17,012,888) --
------------ ------------ ------------
Balance at end of year $ 20,253,562 $ 2,588,078 $ 19,516,327
============ ============ ============
Accumulated depreciation and amortization:
Balance at beginning of year $ 875,241 $ 8,565,066 $ 8,019,204
Depreciation and amortization 409,204 304,426 545,862
Dispositions (920,281) (7,994,251) --
------------ ------------ ------------
Balance at end of year $ 364,164 $ 875,241 $ 8,565,066
============ ============ ============
</TABLE>
F18
<PAGE> 32
SCHEDULE IV
SCHEDULE IV
UNIVERSITY REAL ESTATE PARTNERSHIP V
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1999
<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 7.765% January (1) None $ 16,000,000 $ 16,000,000 None
Superstition Park 2010
Apartments, secured by
a first lien deed of trust
</TABLE>
(1) Monthly installments of principal and interest of $114,792
F19
<PAGE> 33
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:
<TABLE>
<CAPTION>
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
----------------- --- -------------------------------------
<S> <C> <C>
Curtis R. Boisfontaine, 40 From 1991 to the present, Mr. Boisfontaine has served as Chief
Jr., President and Executive Officer of Hampton Real Estate Group and as President of
Chairman of the Board Meridian Capital Corporation. OSGPC was formed in 1995 and Mr.
of Directors of OS Boisfontaine is the majority shareholder, President and sole director
General Partner Company of OSGPC.
David K. Ronck, Vice 40 From 1995 to the present, Mr. Ronck has served as Vice
President and Chief President-Chief Financial Officer and President of Meridian Realty
Financial Officer of Advisors, Inc. Prior to that time, Mr. Ronck served as President of
OS General Partner ConCap Equities, Inc., the General Partner of fifteen public limited
Company partnerships. He is Vice President and Chief Financial Officer for
OSGPC.
</TABLE>
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 consolidated
financial statements appearing in Item 8.
14
<PAGE> 34
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.
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 6 - 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, to
Hampton 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.
Compensation or reimbursements paid to or accrued for the benefit of MRA and
affiliates and AIMCO during 1999 are as follows:
<TABLE>
<CAPTION>
MRA AIMCO
--- -----
<S> <C> <C>
Property management fees $ -- $ 75,069
Charged to general and administrative expense:
Partnership and financial administration,
data processing, accounting and tax
reporting, and investor relations 137,500 --
----------- -----------
Total compensation and reimbursements $ 137,500 $ 75,069
=========== ===========
</TABLE>
In addition, the Partnership paid MRA a debt work-out consulting fee of $216,800
in May 1998 in connection with negotiating the debt relief relating to the
Glasshouse sale.
As of December 31, 1999, the Partnership has a payable to MEI of $59,600
included in accounts payable and accrued expenses in the accompanying
consolidated balance sheets. MEI owned 1% of MMFI 99-IV.
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 11, are filed as part of this
Annual Report.
15
<PAGE> 35
<TABLE>
<S> <C>
(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 11, are filed as part of this
Annual Report.
(a)(3) Index to Exhibits........................................................................... 16
(b) Reports on Form 8-K
None
(a)(3) The following documents are filed as part of this report and is an index to the exhibits:...
</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
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)
</TABLE>
16
<PAGE> 36
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
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)
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)
</TABLE>
17
<PAGE> 37
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
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)
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.
</TABLE>
(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.
18
<PAGE> 38
(8) Incorporated by reference to Annual Report of the Registrant on Form
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.
(10) Incorporated by reference to Quarterly Report of the Registrant on Form
10-Q for the period ended 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 Form
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 ended 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 ended September 30, 1997, as filed with the
Securities and Exchange Commission on November 14, 1997.
(15) Incorporated by reference to Annual Report of the Registrant on Form
10-K for the period ended December 31, 1997, as filed with the
Securities and Exchange Commission on April 1, 1998.
(16) Incorporated by reference to Quarterly Report of the Registrant on Form
10-Q for the period ended March 31, 1998, as filed with the Securities
and Exchange Commission on May 15, 1998.
(17) Incorporated by reference to Quarterly Report of the Registrant on Form
10-Q for the period ended June 30, 1998, as filed with the Securities
and Exchange Commission on September 23, 1998.
(18) Incorporated by reference to Quarterly Report of the Registrant on Form
10-Q for the period ended September 30, 1998, as filed with the
Securities and Exchange Commission on November 11, 1998.
(19) Incorporated by reference to Quarterly Report of the Registrant on Form
10-Q for the period ended March 31, 1999, as filed with the Securities
and Exchange Commission on May 21, 1999.
(20) Incorporated by reference to Quarterly Report of the Registrant on Form
10-Q for the period ended June 30, 1999, as filed with the Securities
and Exchange Commission on August 24, 1999.
(21) Incorporated by reference to Quarterly Report of the Registrant on Form
10-Q for the period ended September 30, 1999, as filed with the
Securities and Exchange Commission on November 15, 1999.
19
<PAGE> 39
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
July 5 , 2000 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.
July 5, 2000 By: /s/ Curtis R. Boisfontaine, Jr.
------------------------------- --------------------------------------
Date Curtis R. Boisfontaine, Jr. President,
Principal Executive Officer and
Director of OS General Partner Company
July 5, 2000 By: /s/ David K. Ronck
------------------------------- --------------------------------------
Date David K. Ronck
Vice President and Chief Accounting
Officer of OS General Partner Company
20
<PAGE> 40
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
