FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended June 30, 1996
Commission file number 0-15702
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
State of California 33-0122424
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5850 San Felipe, Suite 500
Houston, Texas 77057
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (713) 706-6271
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]. No [ ].
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are submitted in the next pages:
Page number
Consolidated Balance Sheets - June 30, 1996 and December 31, 1995 4
Consolidated Statements of Operations - For the Six Months Ended
June 30, 1996 and 1995 and the Three Months Ended June 30, 1996
and 1995 5
Consolidated Statement of Changes in Partners' Equity - from
October 8, 1985 (Inception of the Partnership) to December 31,
1995 and for the Six Months Ended June 30, 1996 6
Consolidated Statements of Cash Flows - For the Six Months Ended
June 30, 1996 and 1995 7
Notes to Consolidated Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(a) OVERVIEW
The following discussion should be read in conjunction with the Partnership's
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Form 10-Q.
The Partnership currently owns a 73.08% interest in the Sorrento II Partnership,
which operates the Sorrento II property in San Diego, California.
2
(b) RESULTS OF OPERATIONS
Revenues for the first six months of the year increased by $46,000, or 10%, due
to the occupancy of additional space by the property's largest tenant in July
1995. Operating expenses for the same period decreased $25,000, or 11%, in
comparison to the same period in 1995 due to lower administrative costs and
other expense cutting measures implemented by management. Additionally, property
tax expense decreased in comparison to the same periods in 1995 due to appeal
costs incurred in the prior year. No such costs were incurred in 1996. For the
quarter ended June 30, operating expense increased $6,000, or 6%, when compared
to the corresponding period in the prior year. This increase is primarily due to
the costs of making repairs that were deferred in the prior year. These costs
are partially offset by reduced insurance costs resulting from enrollment of the
property in a national insurance program sponsored by an affiliate of the
general partner. Depreciation and amortization increased $20,000, or 10%, due to
increased depreciation expenses on tenant improvements associated with the
expansion of tenant space.
(c) LIQUIDITY AND CAPITAL RESOURCES
The Partnership is in an illiquid position at June 30, 1996 with cash of
$129,000 and current liabilities of $201,000. On October 1, 1993, the
Partnership created a general partnership (Sorrento II Partners) with Sierra
Mira Mesa Partners ("SMMP"), an affiliate, to facilitate cash contributions by
SMMP for the continued development and operation of the Sorrento II property.
SMMP has adequate resources to make any necessary advances during the
foreseeable future.
3
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
June 30, December 31,
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents ........................ $ 129,456 $ 66,933
Receivables:
Unbilled rent .................................. 451,820 401,333
Billed rent .................................... 705 0
Income-producing property - net of
accumulated depreciation of $1,802,077
and $1,606,003, respectively .................. 6,147,167 6,332,709
Other assets ..................................... 279,556 329,194
---------- ----------
Total Assets ..................................... $7,008,704 $7,130,169
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities .................... $ 200,673 $ 215,837
---------- ----------
Total Liabilities ................................ 200,673 215,837
---------- ----------
Ground lessor's equity in income-
producing property ............................. 3,000,000 3,000,000
---------- ----------
Minority interest in consolidated
joint venture ................................. 1,258,280 1,286,896
---------- ----------
Partners' equity:
General Partner ................................ 0 0
Limited Partners:
140,000 units authorized,
30,777 issued and
outstanding ............................... 2,549,751 2,627,436
---------- ----------
Total Partners' equity ........................... 2,549,751 2,627,436
---------- ----------
Total Liabilities and Partners' equity .......... $7,008,704 $7,130,169
========== ==========
Unaudited
See Accompanying Notes
4
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
AND FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Rental income ..................... $ 506,638 $ 460,267 $ 267,116 $ 235,764
Interest income ................... 0 116 0 116
--------- --------- --------- ---------
Total Revenues .................. 506,638 460,383 267,116 235,880
--------- --------- --------- ---------
EXPENSES:
Operating expenses .............. 197,964 223,275 116,225 109,967
Ground lease .................... 191,250 195,625 103,125 100,000
Depreciation and amortization ... 223,725 203,560 111,866 101,779
--------- --------- --------- ---------
Total costs and expenses ............ 612,939 622,460 331,216 311,746
--------- --------- --------- ---------
LOSS BEFORE MINORITY INTEREST'S SHARE
OF CONSOLIDATED JOINT VENTURE LOSS (106,301) (162,077) (64,100) (75,866)
--------- --------- --------- ---------
MINORITY INTEREST'S SHARE OF
CONSOLIDATED JOINT VENTURE LOSS ... 28,616 32,594 17,125 15,257
--------- --------- --------- ---------
NET LOSS ............................ $ (77,685) $(129,483) $ (46,975) $ (60,609)
========= ========= ========= =========
Net loss per limited partnership unit $ (2.52) $ (4.21) $ (1.53) $ (1.97)
========= ========= ========= =========
</TABLE>
Unaudited
See Accompanying Notes
5
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FROM OCTOBER 8, 1985 (INCEPTION OF PARTNERSHIP) TO DECEMBER 31, 1995
AND FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Limited Partners Total
------------------------- General Partners'
Per Unit Total Partner Equity
---------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Proceeds from sale of
partnership units .................... $ 250.00 $ 7,694,250 -- $ 7,694,250
Underwriting commissions
and other organization expenses ...... (37.21) (1,145,333) -- (1,145,333)
Cumulative net income (loss)
(to December 31, 1995) .............. (124.73) (3,838,720) $ 9,193 (3,829,527)
Cumulative distributions from operations
(to December 31, 1995) .............. (2.69) (82,761) (9,193) (91,954)
---------- ----------- ------- -----------
Partners' equity - January 1, 1996 ..... 85.37 2,627,436 0 2,627,436
Net loss - year to date ................ (2.52) (77,685) -- (77,685)
---------- ----------- ------- -----------
Partners' equity - June 30, 1996 ...... $ 82.85 $ 2,549,751 $ 0 $ 2,549,751
========== =========== ======= ===========
</TABLE>
Unaudited
See Accompanying Notes
6
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................. $ (77,685) $(129,483)
Adjustments to reconcile net loss
to cash provided by operating activities:
Depreciation and amortization ........... 223,725 203,560
Minority interest's share of consolidated
joint venture loss .................... (28,616) (32,594)
Increase in rent receivable ............. (51,192) (122,950)
Decrease in other receivables ........... 0 31,958
Decrease (increase) in other assets ..... 21,987 (164,005)
(Decrease) increase in accrued and other
liabilities ........................... (15,164) 391,601
--------- ---------
Net cash provided by operating activities 73,055 178,087
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property additions ........... (10,532) (361,507)
--------- ---------
Net cash used in investing activities ..... (10,532) (361,057)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from minority investor ...... 0 188,000
--------- ---------
Net cash provided by financing activities ... 0 188,000
--------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS ................... 62,523 4,580
CASH AND CASH EQUIVALENTS -
Beginning of period ...................... 66,933 2,815
--------- ---------
CASH AND CASH EQUIVALENTS -
End of period ............................ $ 129,456 $ 7,395
========= =========
Unaudited
See Accompanying Notes
7
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
In October 1993, the Partnership created a general partnership (Sorrento II
Partners) with Sierra Mira Mesa Partners ("SMMP") to facilitate cash
contributions by SMMP for the continued development and operation of the
Sorrento II property. The Partnership Agreement of Sorrento II Partners (the
"Agreement") was amended effective January 1, 1995 to consider both
contributions and distributions when calculating each partners' percentage
interest at January 1 of each year as called for by the Agreement. As a result
of this Amendment, the Partnership's percentage interest in Sorrento II Partners
increased from 72.77% to 73.08%. The effect of this change on the minority
interest share of consolidated joint venture loss for the three months ended
March 31, 1996 was recognized in the second quarter.
2. BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited consolidated condensed financial statements include
the accounts of the Partnership and Sorrento II Partners, a majority owned joint
venture at June 30, 1996. All significant intercompany balances and transactions
have been eliminated in consolidation.
In the opinion of the Partnership's management, these unaudited financial
statements reflect all adjustments which are necessary for a fair presentation
of its financial position at June 30, 1996 and results of operations and cash
flows for the periods presented. All adjustments included in these statements
are of a normal and recurring nature. These financial statements should be read
in conjunction with the financial statements and notes thereto contained in the
Annual Report of the Partnership for the year ended December 31, 1995.
3. RELATED PARTY TRANSACTIONS
In 1994, all of the common stock of S-P Properties, Inc., the General Partner of
the Partnership, was purchased by Finance Factors, Inc. from Carlsberg
Management Company ("CMC"). CMC continued to manage the affairs of the
Partnership through March 31, 1995.
UNAUDITED
8
Sierra Pacific Institutional Properties V
Notes to Consolidated Financial Statements
Page two
Included in the financial statements for the six months ended June 30, 1996 and
1995 are affiliate transactions as follows:
June 30
---------------------
1996 1995
--------- ---------
Management fees ............................ $27,231 $ 9,322
Administrative fees ........................ $36,059 $14,491
Leasing fees ............................... $ 0 $ 0
4. PARTNERS' EQUITY
Equity and net loss per limited partnership unit is determined by dividing the
Limited Partners' share of the Partnership's equity and net loss by the number
of limited partnership units outstanding, 30,777.
UNAUDITED
9
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are filed herewith pursuant to Rule 601 of
Regulation S-K.
Exhibit
Number Description of Exhibit
- ------------ -----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report be signed on its behalf by the
undersigned thereunto duly authorized.
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
a Limited Partnership
S-P PROPERTIES, INC.
General Partner
Date: AUGUST 9, 1996 /S/ THOMAS N. THURBER
Thomas N. Thurber
President and Director
Date: AUGUST 9, 1996 /S/ MICHELE E. JOHNSON
Michele E. Johnson
Chief Accounting Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SIERRA PACIFIC INSTITUTIONAL PROPERTIES V JUNE 30, 1996 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 129,456
<SECURITIES> 0
<RECEIVABLES> 452,525
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 130,161
<PP&E> 7,949,244
<DEPRECIATION> 1,802,077
<TOTAL-ASSETS> 7,008,704
<CURRENT-LIABILITIES> 200,673
<BONDS> 3,000,000
0
0
<COMMON> 0
<OTHER-SE> 2,549,751
<TOTAL-LIABILITY-AND-EQUITY> 7,008,704
<SALES> 506,638
<TOTAL-REVENUES> 506,638
<CGS> 0
<TOTAL-COSTS> 389,214
<OTHER-EXPENSES> 223,725
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (77,685)
<INCOME-TAX> 0
<INCOME-CONTINUING> (77,685)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77,685)
<EPS-PRIMARY> (2.52)
<EPS-DILUTED> (2.52)
</TABLE>
