SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report February 12, 1999
(Date of earliest event reported) (January 29, 1999)
RANCON REALTY FUND V,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 0-16467 33-0098488
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification Number)
incorporation)
400 South El Camino Real, Suite 1100, San Mateo, California 94402
(Address of principal executive offices)
Registrant's Telephone number, including area code: (650) 343-9300
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This Form 8-K contains a total of 8 pages.
No exhibit required.
Page 1 of 8
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 20, 1999, Rancon Realty Fund V, a California Limited Partnership (the
Registrant), sold 24 acres of land (referred to as the Perris Ethanac land)
located in Perris, Riverside County, California, to an unaffiliated entity for
$502,200. The sale generated net proceeds of $446,000, which were added to the
Registrant's cash reserves.
On January 29, 1999, the Registrant sold five distribution-center buildings
(referred to as Rancon Centre Ontario) located in Ontario, California, to an
unaffiliated entity for $7,650,000. As part of the terms of the sale, the
Registrant loaned $5,715,000 to the buyer (the "RCO Note"). The RCO Note is
secured by a deed of trust encumbering the Rancon Centre Ontario property, bears
interest at 8% and matures on January 1, 2000. The sale generated net proceeds
of $1,648,000, which were added to the Registrant's cash reserves.
Also on January 29, 1999, the Registrant sold 60.14 acres of land (referred to
as the Perris Nuevo land) located in Perris, Riverside County, California, to an
unaffiliated entity for $675,000. As part of the terms of the sale, the
Registrant loaned $475,000 to the buyer (the "Nuevo Note"). The Nuevo Note is
secured by a deed of trust encumbering the Perris Nuevo land, bears interest at
6% and matures on November 15, 1999. The sale generated net proceeds of
$135,000, which were added to the Registrant's cash reserves.
This Form 8-K of the Registrant incorporates the sale of 38.5 acres of land
(referred to as the Ontario land) located in Ontario, California, to an
unaffiliated entity for $5,500,000 on December 31, 1998. The sale generated net
proceeds of $5,266,000, which were added to the Registrant's cash reserves. On
January 14, 1999, the Registrant filed a report on Form 8-K with respect to the
sale of the Ontario land.
Item 7. FINANCIAL STATEMENTS
(b) PRO-FORMA FINANCIAL STATEMENTS
The following unaudited pro forma consolidated balance sheet as of September 30,
1998 has been prepared to reflect the sale of real estate investments (as
discussed above) as if each transaction had been completed on September 30,
1998. The following unaudited pro forma consolidated statements of operations
for the nine months ended September 30, 1998 and for the year ended December 31,
1997, have been prepared to reflect the sales of real estate investments (as
discussed above) as if each transaction had been completed on January 1, 1997.
The pro forma consolidated financial information is unaudited and is not
necessarily indicative of the results which would have occurred if the sales of
real estate investments had been consummated in the periods presented, or on any
particular date in the future, nor does it purport to represent the financial
position, results of operations, or cash flows for future periods.
Page 2 of 8
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<TABLE>
<CAPTION>
RANCON REALTY FUND V,
A CALIFORNIA LIMITED PARTNERSHIP
Pro Forma Consolidated Balance Sheet
As of September 30, 1998
(in thousands, except units outstanding)
(Unaudited)
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Assets Investment in real estate:
Rental property, net $ 28,704 $ -- $ 28,704
Land held for development, net 2,691 -- 2,691
Rental property held for sale, net 3,959 (3,959) --
Land held for sale, net 6,209 (6,209) --
----------- ------------ -------------
Total real estate investments 41,563 (10,168) 31,395
Cash and cash equivalents 4,065 7,495 11,560
Restricted cash 353 -- 353
Accounts and interest receivable 122 (1) 121
Notes receivable 1,175 6,190 7,365
Deferred financing costs and other fees, net 989 (17) 972
Prepaid expenses and other assets 730 (44) 686
----------- ----------- -------------
Total assets $ 48,997 $ 3,455 $ 52,452
=========== =========== =============
Liabilities
Notes payable $ 13,553 $ __ $ 13,553
Accounts payable and accrued expenses 710 (140) 570
Interest payable 73 -- 73
----------- ----------- -------------
Total liabilities 14,336 (140) 14,196
Commitments and contingent liabilities __ __ __
Partners' equity (deficit): (964) 36 (928)
General partners
Limited partners, 76,842 limited partnership
units outstanding 35,625 3,559 39,184
----------- ----------- -------------
Total partners' equity 34,661 3,595 38,256
----------- ----------- -------------
Total liabilities and partners' equity $ 48,997 $ 3,455 $ 52,452
=========== =========== =============
</TABLE>
Page 3 of 8
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<TABLE>
<CAPTION>
Pro Forma Consolidated Statement of Operations
For the nine months ended September 30, 1998
(in thousands, except units outstanding and per unit amounts)
(Unaudited)
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Revenues:
Rental income $ 4,837 $ (615) $ 4,222
Interest and other income 260 368 628
----------- ----------- -------------
Total revenues 5,097 (247) 4,850
----------- ------------ -------------
Expenses:
Operating 2,340 (218) 2,122
Interest expense 963 -- 963
Depreciation and amortization 1,331 (94) 1,237
Expenses associated with undeveloped land 428 (207) 221
General and administrative expenses 1,010 (73) 937
----------- ------------ -------------
Total expenses 6,072 (592) 5,480
----------- ----------- -------------
Net loss $ (975) $ 345 $ (630)
=========== =========== =============
Net loss per limited partnership unit $ (9.99) $ 3.54 $ (6.45)
=========== =========== =============
Weighted average number of limited partnership
units outstanding during each period used
to compute net loss per limited partnership unit 96,582 96,582 96,582
=========== =========== =============
</TABLE>
Page 4 of 8
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<TABLE>
<CAPTION>
Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1997
(in thousands, except units outstanding and per unit amounts)
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Revenues:
Rental income $ 6,894 $ (754) $ 6,140
Interest and other income 379 492 871
----------- ----------- -------------
Total revenues 7,273 (262) 7,011
----------- ------------ -------------
Expenses:
Operating 3,190 (268) 2,922
Depreciation and amortization 2,065 (205) 1,860
Interest expense 1,298 -- 1,298
Provision for impairment of real
estate investments 1,688 -- 1,688
Expenses associated with undeveloped land 615 (272) 343
General and administrative 1,231 (97) 1,134
Proposed dissolution costs 479 -- 479
----------- ----------- -------------
Total expenses 10,566 (842) 9,724
----------- ----------- -------------
Net loss $ (3,293) $ 580 $ (2,713)
=========== =========== =============
Net loss per limited
partnership units $ (32.68) $ 5.75 $ (26.93)
=========== =========== =============
Weighted average number of limited partnership
units outstanding during period to compute
net loss per limited partnership units 99,767 99,767 99,767
=========== =========== =============
</TABLE>
Page 5 of 8
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Notes to Pro Forma Financial Statements
The accompanying Pro Forma Consolidated Balance Sheet as of September 30, 1998
and the Pro Forma Consolidated Statements of Operations for the nine months
ended September 30, 1998 and the year ended December 31, 1997, reflect the sale
of Rancon Centre Ontario and the three land sales (the "Rancon Land") (as
discussed in Item 2 on page 2) and include the following pro forma adjustments.
The $3,959,000 decrease in rental property held for sale and the $6,209,000
decrease in land held for sale reflect the net book value of Rancon Center
Ontario and the Rancon Land, respectively, as of September 30, 1998.
The increase in cash reflects the net cash proceeds upon the sales of real
estate investments.
The $6,190,000 increase in notes receivable reflects the $5,715,000 and $475,000
promissory notes related to the sales of Rancon Center Ontario and the Perris
Nuevo land, respectively.
The decreases in rental income, operating expense and depreciation and
amortization reflect the operations of Rancon Centre Ontario for the respective
periods.
The increase in interest income for the nine months ended September 30, 1998 and
the year ended December 31, 1997, reflects interest on the $6,190,000 notes
receivable.
The decrease in expenses associated with undeveloped land for the nine months
ended September 30, 1998 and the year ended December 31, 1997, reflect the
property tax and other expenses related to the Rancon Land.
The decrease in general and administrative expense for the periods presented
primarily reflect a reduction in the asset management fee upon the sales of the
real estate assets.
The Registrant recognized the following gain or loss on the sales of the real
estate assets.
Asset Gain/(Loss)
Ontario Land $ (34,000)
Perris Ethanac Land $ (329,000)
Rancon Centre Ontario $3,352,000
Perris Nuevo Land $ 450,000
Although the sale of Rancon Centre Ontario included a $5,715,000 loan from the
Registrant to the buyer, the buyer paid cash of approximately $1,862,000 towards
the purchase of the property, the historical operations of the property are
sufficient to service the loan and the Registrant has no other continuing
obligations or involvement with the property and therefore, the Registrant will
recognize the sale under the full accrual method of accounting.
Page 6 of 8
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Although the sale of the Perris Nuevo land included a $475,000 loan from the
Registrant to the buyer, the buyer paid sufficient cash towards the purchase of
the property and the Registrant has no other continuing obligations or
involvement with the property and therefore, the Registrant will recognize the
sale under the full accrual method of accounting.
The loss from the sale of Perris Ethanac includes a provision for the impairment
of the real estate totaling $323,000, which was recorded in the fourth quarter
of 1998.
The gains/losses on sale and provision for impairment of real estate discussed
above have been excluded from the pro forma consolidated operations for the
periods presented as these amounts are non-recurring.
Page 7 of 8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
RANCON REALTY FUND V,
a California Limited Partnership (Registrant)
Date: February 12, 1999 By: /s/ Daniel L. Stephenson
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Daniel L. Stephenson
Chief Executive Officer and
Chief Financial Officer of
Rancon Financial Corporation,
General Partner of Rancon Realty
Fund V, a California Limited Partnership
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