SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission file number : 0-15702
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A CALIFORNIA LIMITED PARTNERSHIP)
State of California 33-0122424
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
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
5850 San Felipe, Suite 120
Houston, Texas 77057
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12 (b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
None None
Securities registered pursuant to Section 12 (g) of the Act:
140,000 LIMITED PARTNERSHIP UNITS
Title of class
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__.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Limited Partners for the Year Ended December 31, 1996 is
incorporated by reference into Parts II and III
1
<PAGE>
PART I
ITEM 1. BUSINESS
(a.) GENERAL DEVELOPMENT OF BUSINESS. Sierra Pacific Institutional Properties V
(the "Partnership") is a California limited partnership that was formed in
October 1985 for the purpose of acquiring, developing, and operating commercial
and industrial real estate.
The Partnership acquired land in August 1987 for the development of an 88,423
square foot industrial property in San Diego, California known as Sierra
Sorrento II. This development consists of two separate buildings; a two-story
building consisting of 29,500 usable square feet that was completed in November
1988 and a two-story building consisting of 58,923 usable square feet that was
completed in May 1989.
On February 1, 1989, the Partnership sold the Sierra Sorrento II land to a life
insurance company ("Ground Lessor") for $3,000,000. Simultaneously, the
Partnership entered into a ground lease with the Ground Lessor to lease the
Sierra Sorrento II land for a term of approximately 40 years requiring minimum
payments of $25,000 per month commencing February 1989. Additionally, the terms
of the ground lease require scheduled ground rent increases over the lease term
and additional ground rent. Commencing January 1, 1994, subject to the
provisions of the ground lease, the Partnership has the right to sell the
property (land and buildings) to a third party and terminate the ground lease.
Upon sale, the Ground Lessor is entitled to a return of its $3,000,000
investment before any proceeds are distributed to the Partnership. The Ground
Lessor will also participate in the appreciation of the property (upon sale)
based on a formula contained in the ground lease agreement.
On October 1, 1993, the Partnership created a California general partnership
(Sorrento II Partners or "SIIP") 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. The Partnership
contributed the Sierra Sorrento II property and $115,000 in cash and SMMP
contributed cash ($1,470,400, net, through December 31, 1995) in exchange for a
26.92% interest in Sorrento II Partners. Such interest was computed based upon
the estimated fair value of SIIP's net assets at the date of formation of the
joint venture. SMMP made additional cash contributions amounting to $44,500 and
received distributions amounting to $190,500 during 1996. The percentage
interests of the Partnership and Sierra Mira Mesa Partners are to be adjusted
every January 1st during the term of Sorrento II Partners, beginning January 1,
1995. Accordingly, as of January 1, 1997, the Partnership's interest in SIIP
will be increased to 75.09%, and SMMP's interest will be reduced to 24.91%.
(b.) NARRATIVE DESCRIPTION OF BUSINESS. The Partnership owns and operates Sierra
Sorrento II, an industrial project in San Diego, California. Success of the
office building is dependent upon the timely payment of rent by two tenants
which occupied 92% of the building at December 31, 1996.
The Sierra Sorrento II property consists of two adjacent office/research and
development buildings. There is significant competition in the research and
development building rental market in the Partnership's trade area. A 1994
appraisal identified just over seven million square feet of competing research
and development space in the Property's market area.
2
<PAGE>
(c.) COMPARISON OF CURRENT ACTIVITIES TO THOSE PROPOSED AT THE INITIATION OF THE
PARTNERSHIP. In the Partnership's prospectus dated January 6, 1986, the
investment objectives were described as follows:
"The Partnership has been formed to acquire and operate on an all-cash basis
commercial and industrial real properties, including both properties which are
to be developed by the Partnership or are under development or construction
("development properties") and properties which are newly-constructed or have
operating histories ("existing properties"). A minimum of 75% of the cash
invested in properties by the Partnership will be invested in properties which
are in the development or lease-up stage. The properties in which the
Partnership will invest will be located in areas in the western and southwestern
United States which are expected to experience high population and/or economic
growth levels during the Partnership's period of operations. The principal
investment objectives of the Partnership are to: (i) preserve, protect and
return the Partnership's invested capital; (ii) generate sufficient cash from
operations to provide for distributions of Available Cash to the Limited
Partners, a portion of which will be tax-sheltered to the holders of Taxable
Entity Units; (iii) obtain maximum long-term appreciation in the value of the
Partnership's real estate investments; and (iv) sell the Partnership's real
estate investments for cash after an approximate three to five year holding
period. There can be no assurance that such objectives will be attained."
Operations of the Partnership through 1996 have been consistent with the intent
of the original prospectus in that the Partnership has invested in real estate
projects that had the potential for capital gains, preservation of capital, and
providing distributable cash flow partially sheltered from Federal Income Tax.
However, the Partnership and its real estate have been adversely affected by the
Tax Reform Act of 1986, aggressive lending by banks that resulted in commercial
real estate overbuilding, and subsequent severe recessions. The original
intention to sell its real estate investments after a five year holding period
was delayed indefinitely. As of December 31, 1996, the Partnership had paid cash
distributions of $2.69 for each $250 unit investment and remaining partners'
equity was computed at $79.91 per unit. Thus, if the Partnership were to be
liquidated at the end of 1996 at book value, each $250 investment would have
returned a total of $82.60.
The General Partner's goal is to continue operating the Sierra Sorrento II
property until such time as rental rates return to the level necessary to
support new industrial building development. At that time, the property may be
sold at a price substantially greater than current book value.
3
<PAGE>
ITEM 2. PROPERTY
During 1996, the Partnership owns a 73.08% interest in Sierra Sorrento II, an
industrial property located in San Diego, California. (See Item 1. Business for
discussion of percentage ownership changes.) The property includes two separate
buildings comprising 88,423 rentable square feet and is 92% occupied at December
31, 1996. There are no material liens or encumbrances against the property at
December 31, 1996. The average effective annual rent per square foot at December
31, 1996 is $10.12. The property has only two tenants whose principal businesses
are electronics manufacturing and healthcare administration. Details of these
significant tenants and their leases follow.
SUMMARY OF TENANTS/LEASES
<TABLE>
<CAPTION>
Square Feet Percent of Effective Rent Effective Rent Percent of Gross Expiration
Tenants Occupied Rentable Space per Square Foot Per Annum Annual Rent of Lease
- ------------------- ----------- -------------- --------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Cigna ........................ 22,150 25% $ 13.08 $289,739 35% December 1997
Insight Electronics .......... 58,923 67% 9.00 530,502 65% February 2003
------ --- --------- -------- ---
Total Rented Space ........... 81,073 92% $ 10.12 $820,241 100%
Vacancies .................... 7,350 8%
------ ---
Total Rentable Space ......... 88,423 100%
====== ===
</TABLE>
DEPRECIABLE PROPERTY Reference is made to Schedule III of the Form 10-K.
REAL ESTATE TAXES The real estate tax obligation for 1996 is approximately
1.13% of the assessed value or $63,993.
INSURANCE It is the opinion of management that the property is
adequately covered by insurance.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not involved in any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
4
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERS' EQUITY AND RELATED MATTERS
As of December 31, 1996, the number of security holders is as follows:
Number Number of
of Units Record Holders
-------- --------------
Limited Partners................ 30,777 1,618
======== ==============
These securities are all of the same class, namely, limited partnership
interests (units) and were sold pursuant to a registration statement filed under
the Securities Act of 1933, as amended. The total offering was 140,000 units at
$250.00 per unit.
No broker or dealer currently makes a market in the units of the Partnership.
Accordingly, there are no published price or trading volume figures available
for the units. The units have been transferred on an extremely limited extent
from time-to-time since the inception of the Partnership; however, the market
for the units is highly restricted and sporadic, especially in view of the
investor suitability requirements imposed on new purchasers by the various state
blue sky laws and the restrictions on transfer contained in the Partnership
Agreement.
The Partnership has neither paid nor declared any cash or other distributions to
the General or Limited Partners during the two most recent years. There are no
contractual or other restrictions on the Partnership's ability to make such
distributions.
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data for the Partnership is filed by reference to the
Annual Report to the Limited Partners attached as an Exhibit.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Finanacial Condition and Results of
Operations includes certain forward looking statements reflecting the
Partnership's expectations in the near future; however, many factors which may
affect the actual results, especially changing regulations, are difficult to
predict. Accordingly, there is no assurance that the Partnership's expectations
will be realized.
Overview:
The following discussion should be read in conjunction with the Selected
Financial Data and the Partnership's Consolidated Financial Statements and Notes
thereto incorporated by reference to the Annual Report to the Limited Partners
attached as an Exhibit. As of December 31, 1996, the Partnership owns a 73.08%
interest in Sierra Sorrento II, an industrial property located in San Diego,
California.
5
<PAGE>
Results of Operations:
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995.
Revenues increased by $68,000, or 7%, due primarily to increased expense
recoveries of common area maintenance fees. The weighted average annual rent per
square foot, on an accrual basis, increased from $9.89 at December 31, 1995 to
$10.12 at December 31, 1996. The occupancy rate remained constant at 92%
throughout 1996. Operating expenses increased $40,000, or 3%, primarily as a
result of a full year's depreciation taken on significant tenant improvements
capitalized late in 1995 and increased maintenance and repair costs due to the
costs of making repairs that were deferred in the prior year.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994.
Revenues increased by $252,000, or 38%, due to the rental of additional space by
the property's largest tenant in January 1995. Occupancy increased from 64% at
December 31, 1994 to 92% at December 31, 1995. The weighted average annual rent
per square foot, on an accrual basis, decreased from $10.26 at December 31, 1994
to $9.89 at December 31, 1995, due to the favorable rental rate given to this
tenant as an incentive to expand their square footage. Operating expenses
increased by $43,000, or 4%, primarily due to the increased depreciation and
amortization expenses on $278,000 of additional tenant improvements associated
with the expansion of tenant space.
Liquidity and Capital Resources:
On October 1, 1993, the Partnership created a California 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 the
necessary advances during the foreseeable future.
During 1996, the Partnership generated cash of $159,000 from operating
activities. The Partnership paid $52,000 for property additions and distributed
$191,000 to SMMP.
The Partnership is in an illiquid position at December 31, 1996 with cash of
$9,000 and current liabilities of $97,000.
The Partnership's primary capital requirements will be for construction of new
tenant space and compliance with the Americans with Disabilities Act or other
yet unknown changes in building codes. It is anticipated that these requirements
will be funded from operations of the Property.
Inflation:
The Partnership's long-term leases contain provisions designed to mitigate the
adverse impact of inflation on its results from operations. Such provisions may
include escalation clauses related to Consumer Price Index increases.
6
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and independent auditors' report are
incorporated by reference to the Annual Report to the Limited Partners attached
as an Exhibit.
1. Independent Auditors' Report
2. Consolidated Balance Sheets - December 31, 1996 and 1995
3. Consolidated Statements of Operations - for the years ended
December 31, 1996, 1995 and 1994
4. Consolidated Statements of Changes in Partners' Equity - from
October 8, 1985 (Inception of Partnership) to December 31, 1993 and
for the years ended December 31, 1996, 1995 and 1994
5. Consolidated Statements of Cash Flows - for the years ended
December 31, 1996, 1995 and 1994
6. Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None
7
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The Registrant is a California Limited Partnership and has no officers or
directors.
S-P Properties, Inc., a California corporation, is the General Partner of the
Registrant. In December 1994, Finance Factors, Inc., a subsidiary of CGS Real
Estate Company, Inc., purchased the common stock TCP, Inc. TCP, Inc. owns all of
the common stock of S-P Properties, Inc. In July 1995, Finance Factors, Inc.
merged with Bancor Real Estate Company, Inc., a subsidiary of CGS Real Estate
Company, Inc. CGS Real Estate Company, Inc. and its affiliates are engaged in
real estate management, leasing, ownership, and sales. The companies own or
manage more than ten million square feet of commercial real estate in Texas,
Arizona, Colorado, California and the Carolinas.
The executive officers and directors of S-P Properties, Inc. are:
<TABLE>
<CAPTION>
APPROXIMATE
NAME POSITION AGE TIME IN OFFICE
- ----- ---------------------- --- --------------
<S> <C> <C> <C>
Thomas N. Thurber President and Director 46 2 years
Dawson L. Davenport Vice President 41 2 years
Steven M. Speier Secretary/Treasurer and Director 46 2 years
William J. Carden Assistant Secretary/Treasurer and Director 52 2 years
</TABLE>
Thomas N. Thurber - President and Director, S-P Properties, Inc. Mr. Thurber is
a Certified Public Accountant who began his career with Arthur Andersen & Co. in
1972. In 1979, he joined a major publicly traded real estate development firm
(Daon) where he became Controller for U.S. Operations. Subsequently, Mr. Thurber
served as Director of Real Estate for a developer of retail properties, and
Chief Financial Officer of a trust with significant investments in commercial
real estate. Mr. Thurber also serves as a director of Property Secured
Investments, Inc. Mr. Thurber holds a bachelors degree in accounting from
Florida State University.
Dawson L. Davenport - Vice President, S-P Properties, Inc. Mr. Davenport is the
founder of WD Real Estate Services, a full service property management firm that
became part of the Banc Commercial family of companies in 1992. Mr. Davenport
has been responsible for the management, development and rehabilitation of
substantial commercial, industrial, retail, and residential projects during the
past seventeen years. Mr. Davenport specializes in leasing and turning around
distressed properties.
Steven M. Speier - Secretary/Treasurer and Director, S-P Properties, Inc. Mr.
Speier is a Certified Public Accountant who, after spending two years in public
accounting, went into the banking industry in 1975. During his sixteen year
banking career, Mr. Speier managed a real estate loan portfolio of approximately
$1.5 billion secured by properties throughout the United States. Mr. Speier
brings to S-P Properties, Inc. a broad real estate background that includes
management, leasing, and disposition of all categories of commercial real
estate. Mr. Speier also serves as a director of IDM Corporation. Mr. Speier is a
licensed real estate broker and has a masters degree in business administration
from Grand Valley State University in Michigan.
William J. Carden - Assistant Secretary/Treasurer and Director, S-P Properties,
Inc. Mr. Carden is the founder and President of CGS Real Estate Company, Inc.,
which owns over one million square feet of commercial real estate. Mr. Carden
founded DVM Properties, Inc. in 1974 which concentrated on rehabilitation of
retail, office, industrial, and commercial real estate. Mr. Carden is a former
Director of Bay Financial, a New York Stock Exchange company, and currently
serves as a director of Property Secured Investments, Inc. and IDM Corporation.
There have been no events under any bankruptcy act, no criminal proceedings, and
no judgments or injunctions material to the evaluation of the ability and
integrity of any director or officer during the past five years.
8
<PAGE>
ITEM 11. MANAGEMENT REMUNERATION
The Registrant is a California Limited Partnership and has no officers or
directors. No options to purchase securities of the Registrant have been granted
to any person.
In accordance with the terms of the Partnership Agreement, certain affiliates of
the General Partner receive real estate brokerage commissions in connection with
the leasing of properties by the Partnership and receive from the Partnership
certain management and administrative services fees. These amounts are set forth
in the Annual Report to the Limited Partners attached as an Exhibit.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
None
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership pays a management fee of 6% of the gross rental income collected
from the property to Banc Commercial California (BCCA). These fees for the year
ended December 31, 1996 were $54,102. Bancor Real Estate Company, Inc. (Bancor)
provides services to the Partnership such as accounting, legal, data processing
and similar services and is entitled to reimbursement for expenses incurred to
provide such services. Amounts so reimbursed totaled $67,428 during the year
ended December 31, 1996. The Partnership also reimbursed BCCA for construction
supervision costs. No such costs were incurred during the year ended December
31, 1996. In consideration for services rendered with respect to initial leasing
of Partnership properties, BCCA is paid initial leasing costs. No such costs
were incurred during the year ended December 31, 1996. Bancor and BCCA are both
wholly owned subsidiaries of CGS Real Estate Company, Inc. William J. Carden, an
officer and director of S-P Properties, Inc., the general partner of the
Partnership, owns 50% of CGS Real Estate Company, Inc.
9
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. EXHIBITS
1. Annual Report to the Limited Partners
2. Exhibit Number 27 - Financial Data Schedule
B. FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule and the report of the
independent auditors thereon are included herein:
1. Schedule III - Real Estate and Accumulated Depreciation - December 31, 1996
All other schedules are omitted as they either are not required or are not
applicable, or the required information is set forth in the financial statements
and notes thereto.
C. REPORTS ON FORM 8-K
None
10
<PAGE>
SIGNATURES
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.
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
a California Limited Partnership
S-P PROPERTIES, INC.
General Partner
Date: March 19, 1997 /S/ THOMAS N. THURBER
Thomas N. Thurber
President and Director
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.
Date: March 19, 1997 /S/ THOMAS N. THURBER
Thomas N. Thurber
President and Director
S-P Properties, Inc.
Date: March 19, 1997 /S/ WILLIAM J. CARDEN
William J. Carden
Assistant Secretary/Treasurer and
Director S-P Properties, Inc.
Date: March 19, 1997 /S/ MICHELE E. JOHNSON
Michele E. Johnson
Chief Accounting Officer
S-P Properties, Inc.
11
<PAGE>
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
To the Partners of
Sierra Pacific Institutional Properties V
We have audited the consolidated financial statements of Sierra Pacific
Institutional Properties V, a California limited partnership, (the
"Partnership") as of December 31, 1996 and 1995, and for each of the three years
in the period ended December 31, 1996 and have issued our report thereon dated
February 24, 1997. Such consolidated financial statements and report are
included in your 1996 Annual Report to the Limited Partners and are incorporated
herein by reference. Our audits also included the financial statement schedule
of Sierra Pacific Institutional Properties V, listed in Item 14. This financial
statement schedule is the responsibility of the Partnership's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Houston, Texas
February 24, 1997
12
<PAGE>
SCHEDULE III - FORM 10-K
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Initial Cost Gross Amount at
to Partnership (1) Improvements Which carried at close of period
----------------------- Capitalized ----------------------------------------
Encumb- Improve- After Acquis- Improve- Total
Description rances Land ments ition (2) Land ments (3)(4)(6)
- ----------- ---------- ---------- ---------- --------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE BUILDING -
INCOME PRODUCING PROPERTY:
Sierra Sorrento II (3)
San Diego,
California........ $3,000,000 $2,420,186 $5,420,774 $2,569,815 $5,420,774 $ 7,990,589
</TABLE>
<TABLE>
<CAPTION>
Accumulated Date Date Depreciation
Description Depreciation (6) Constructed Acquired Life
- ----------- ----------------- ----------- -------- -------------
<S> <C> <C> <C> <C>
OFFICE BUILDING -
INCOME PRODUCING PROPERTY:
Sierra Sorrento II (3)
San Diego, California...... $ 1,998,154 (5) 8/87 3-30 yrs.
</TABLE>
(1) The initial cost represents the original purchase price of the property.
(2) The Partnership has capitalized property development costs.
(3) On February 1, 1989, the Sierra Sorrento II land was sold for $3,000,000
and leased back from the buyer. Sale and leaseback costs of $149,629 were
capitalized. Because the sale and leaseback transaction contains many
characteristics of a joint venture, the Partnership accounts for this
arrangement under the method of accounting described in Note 4 to the
consolidated financial statements incorporated by reference to the Annual
Report to the Limited Partners attached as an Exhibit. On October 1, 1993,
the property was transferred to a general partnership, Sorrento II
Partners. The Partnership has an equity interest of 73.08% and Sierra Mira
Mesa Partners, an affiliate, has 26.92% equity interest at December 31,
1996.
(4) For Federal Income Tax purposes, the total cost of the Property (net of
the ground lessor's equity) is $4,990,589.
(5) Construction on a two-story building ("Building B"), 29,500 usable square
footage, was completed in November 1988. Construction on a two-story
building ("Building A") 58,923 usable square footage, was completed in May
1989.
(6) Reconciliation of total real estate carrying value and accumulated
depreciation for the three years ended December 31, 1996 is as follows:
Total Real Estate Accumulated
Carrying Value Depreciation
---------- ----------
Balance - January 1, 1994 ....... $7,308,991 $ 891,477
Additions during the year .... 324,502 346,521
---------- ----------
Balance - December 31, 1994 ..... 7,633,493 1,237,998
Additions during the year .... 305,219 368,005
---------- ----------
Balance - December 31, 1995 ..... 7,938,712 1,606,003
Additions during the year ... 51,877 392,151
---------- ----------
Balance - December 31, 1996 ..... $7,990,589 $1,998,154
========== ==========
13
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A California Limited Partnership)
SELECTED FINANCIAL DATA
For the Years Ended December 31, 1996, 1995, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES ...................................... $ 990,901 $ 923,375 $ 671,486 $ 386,124 $ 634,242
OPERATING EXPENSES:
Total ....................................... 1,220,966 1,181,440 1,138,026 2,844,698 929,456
Per dollar of revenues ...................... 1.23 1.28 1.69 7.37 1.47
NET LOSS:
Total ....................................... (168,132) (206,168) (389,176) (2,404,332) (295,214)
General Partner ............................. 0 0 0 0 0
Limited Partners ............................ (168,132) (206,168) (389,176) (2,404,332) (295,214)
Per Unit(1) ................................. (5.46) (6.70) (12.64) (78.13) (9.59)
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES ........................ 158,517 (96,063) (534,943) (277,391) (35,348)
CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES ........................ (51,877) (305,219) (324,502) (871,867) 250,000
CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES ........................ (164,995) 465,400 845,000 101,649 7,002
TOTAL ASSETS .................................. 6,785,833 7,130,169 6,856,102 7,988,849 8,685,670
PARTNERS' EQUITY:
Total ....................................... 2,459,304 2,627,436 2,833,604 3,222,780 5,627,112
General Partner ............................. 0 0 0 0 0
Limited Partners ............................ 2,459,304 2,627,436 2,833,604 3,222,780 5,627,112
LIMITED PARTNERS' EQUITY - PER UNIT (1) ....... 79.91 85.37 92.07 104.71 182.84
INCOME-PRODUCING PROPERTIES:
Number ...................................... 1 1 1 1 1
Cost ........................................ 7,990,589 7,938,712 7,633,493 7,308,991 6,437,124
Less: Accumulated depreciation .............. (1,998,154) (1,606,003) (1,237,998) (891,447) (699,449)
Net book value .............................. 5,992,435 6,332,709 6,395,495 6,417,514 5,737,675
MINORITY INTEREST IN
CONSOLIDATED JOINT VENTURE ................. 1,078,963 1,286,896 873,393 1,445,758 N/A
DISTRIBUTIONS PER UNIT (1) .................... 0 0 0 0 0
</TABLE>
N/A = Not applicable nor available
(1) The net income (loss), limited partners' equity and distributions per unit
are based upon the limited partnership units outstanding at the end of the
year, 30,777 in all years. The cumulative distributions per limited
partnership unit from inception to December 31, 1996 equal $2.69.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Sierra Pacific Institutional Properties V
We have audited the accompanying consolidated balance sheets of Sierra Pacific
Institutional Properties V, a California limited partnership, (the
"Partnership") as of December 31, 1996 and 1995, and the related consolidated
statements of operations, changes in partners' equity and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall 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 Sierra Pacific
Institutional Properties V as of December 31, 1996 and 1995, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Houston, Texas
February 24, 1997
15
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
December 31, December 31,
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents ........................ $ 8,578 $ 66,933
Receivables:
Unbilled rent (Notes 1 and 4) .................. 489,965 401,333
Due from affiliates (Note 3) ..................... 18,995 0
Income-producing property - net of
accumulated depreciation of
$1,998,154 in 1996 and $1,606,003
in 1995 (Note 4) ............................... 5,992,435 6,332,709
Other assets (Notes 1, 2 and 3) .................. 275,860 329,194
---------- ----------
Total Assets ..................................... $6,785,833 $7,130,169
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities (Notes 1 and 2) .... $ 247,566 $ 215,837
---------- ----------
Total Liabilities ................................ 247,566 215,837
---------- ----------
Ground lessor's equity in income-
producing property (Note 4) .................... 3,000,000 3,000,000
---------- ----------
Minority interest in consolidated
joint venture (Note 4) ........................ 1,078,963 1,286,896
---------- ----------
Partners' equity (Notes 1 and 5):
General Partner ................................ 0 0
Limited Partners:
140,000 units authorized,
30,777 issued and
outstanding ................................. 2,459,304 2,627,436
---------- ----------
Total Partners' equity ........................... 2,459,304 2,627,436
---------- ----------
Total Liabilities and Partners' equity ........... $6,785,833 $7,130,169
========== ==========
See Accompanying Notes
16
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Rental income (Note 1) ..................... $ 990,901 $ 923,375 $ 667,487
Interest income ............................ 0 0 3,999
----------- ----------- -----------
Total revenues ........................... 990,901 923,375 671,486
----------- ----------- -----------
EXPENSES:
Operating expenses:
Depreciation and amortization ............ 447,452 423,305 383,674
Ground lease ............................. 382,733 382,500 381,000
Property taxes and insurance ............. 90,530 108,055 61,832
Maintenance and repairs .................. 84,287 62,390 77,701
Administrative fees (Note 3) ............. 67,428 62,167 55,205
Management fees (Note 3) ................. 54,102 46,718 30,899
Legal and accounting ..................... 33,070 44,957 70,332
General and administrative ............... 25,316 20,689 24,033
Utilities ................................ 20,193 17,897 19,081
Salaries and payroll taxes ............... 0 3,362 16,789
Renting expenses ......................... 1,940 101 5,019
Other operating expenses ................. 13,915 9,299 12,461
----------- ----------- -----------
Total operating expenses ................ 1,220,966 1,181,440 1,138,026
----------- ----------- -----------
LOSS BEFORE MINORITY INTEREST'S SHARE
OF CONSOLIDATED JOINT VENTURE LOSS ......... (230,065) (258,065) (466,540)
----------- ----------- -----------
MINORITY INTEREST'S SHARE OF
CONSOLIDATED JOINT VENTURE LOSS ............ 61,933 51,897 77,364
----------- ----------- -----------
NET LOSS ..................................... $ (168,132) $ (206,168) $ (389,176)
=========== =========== ===========
Net loss per limited partnership unit (Note 1) $ (5.46) $ (6.70) $ (12.64)
=========== =========== ===========
</TABLE>
See Accompanying Notes
17
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
From October 8, 1985 (Inception of Partnership) to December 31, 1993
and for the Years Ended December 31, 1996, 1995 and 1994
<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, 1993) ............................... (105.39) (3,243,376) $ 9,193 (3,234,183)
Cumulative distributions
(to December 31, 1993) ............................... (2.69) (82,761) (9,193) (91,954)
------- ----------- --------- -----------
Partners' equity - January 1, 1994 ................... 104.71 3,222,780 0 3,222,780
Net loss ............................................. (12.64) (389,176) (389,176)
------- ----------- --------- -----------
Partners' equity - December 31, 1994 ................. 92.07 2,833,604 0 2,833,604
Net loss ............................................. (6.70) (206,168) (206,168)
------- ----------- --------- -----------
Partners' equity - December 31, 1995 ................. 85.37 2,627,436 0 2,627,436
Net loss ............................................. (5.46) (168,132) (168,132)
------- ----------- --------- -----------
Partners' equity - December 31, 1996 ................. $ 79.91 $ 2,459,304 $ 0 $ 2,459,304
======= =========== ========= ===========
</TABLE>
See Accompanying Notes
18
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss ................................................................ $(168,132) $(206,168) $(389,176)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Depreciation and amortization ......................................... 447,452 423,305 383,674
Minority interest's share of unconsolidated
joint venture loss .................................................. (61,933) (51,897) (77,364)
Increase in rent receivable ........................................... (88,632) (185,285) (152,313)
Decrease (increase) in other receivables .............................. 0 31,958 (24,071)
Increase in other assets .............................................. (1,967) (174,708) (104,487)
Increase (decrease) in accrued and other liabilities .................. 31,729 66,732 (171,206)
--------- --------- ---------
Net cash provided by (used in) operating activities ................... 158,517 (96,063) (534,943)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property additions ......................................... (51,877) (305,219) (324,502)
--------- --------- ---------
Net cash used in investing activities ................................... (51,877) (305,219) (324,502)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on borrowings of affiliates .................................. 0 0 550,000
Payments to affiliates .................................................. (18,995) 0 0
Distributions to minority investor ...................................... (190,500) (23,600) 0
Contributions from minority investor .................................... 44,500 489,000 295,000
--------- --------- ---------
Net cash (used in) provided by financing activities ..................... (164,995) 465,400 845,000
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS ................................................. (58,355) 64,118 (14,445)
CASH AND CASH EQUIVALENTS - Beginning of year ............................. 66,933 2,815 17,260
--------- --------- ---------
CASH AND CASH EQUIVALENTS - End of year .................................. $ 8,578 $ 66,933 $ 2,815
========= ========= =========
</TABLE>
See Accompanying Notes
19
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Sierra Pacific Institutional Properties V (the "Partnership") was organized on
October 8, 1985 in accordance with the provisions of the California Uniform
Limited Partnership Act to acquire and operate commercial and industrial real
properties. S-P Properties, Inc. is the General Partner and manager of the
Partnership. On December 30, 1994, all of the outstanding stock of TCP, Inc. was
sold to Finance Factors, Inc. TCP, Inc. owns all of the common stock of S-P
Properties, Inc. Finance Factors was a subsidiary of CGS Real Estate Company,
Inc., a national real estate company. In July 1995, Finance Factors, Inc. merged
with Bancor Real Estate Company, Inc., another subsidiary of CGS Real Estate
Company, Inc.
The Partnership acquired land in August 1987 for the development of an 88,423
square foot industrial property in San Diego, California known as Sierra
Sorrento II. This development consists of two separate buildings; a two-story
building consisting of 29,500 usable square feet that was completed in November
1988 and a two-story building consisting of 58,923 usable square feet that was
completed in May 1989.
On February 1, 1989, the Partnership sold the Sierra Sorrento II land to a life
insurance company ("Ground Lessor") for $3,000,000. Simultaneously, the
Partnership entered into a ground lease with the Ground Lessor to lease the
Sierra Sorrento II land for a term of approximately 40 years requiring minimum
payments of $25,000 per month commencing February 1989.
On October 1, 1993, the Partnership created a California 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. The Partnership contributed the Sierra
Sorrento II property and cash and SMMP contributed cash to the newly formed
partnership. At December 31, 1996, the Partnership's remaining asset is a 73.08%
interest in Sorrento II Partners.
BASIS OF FINANCIAL STATEMENTS
The Partnership maintains its books and prepares its financial statements in
accordance with generally accepted accounting principles. However, the
Partnership prepares its tax returns on the accrual basis of accounting as
defined by the Internal Revenue Code with adjustments to reconcile book and
taxable income (loss) for differences in the treatment of certain income and
expense items. The accompanying financial statements do not reflect any
provision for federal or state income taxes since such taxes are the obligation
of the individual partners.
The preparation of 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 financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
The consolidated financial statements include the accounts of the Partnership
and Sorrento II Partners, a majority owned California general partnership (see
Note 4). All significant intercompany balances and transactions have been
eliminated in consolidation.
20
<PAGE>
Sierra Pacific Institutional Properties V
Notes to Consolidated Financial Statements
Page two
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid, short-term investments with
original maturities of three months or less.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The financial instruments of the Partnership at December 31, 1996 and 1995
consist of cash and cash equivalents, receivables, due from affiliates, and
accounts payable. The fair value of cash and cash equivalents, receivables, and
accounts payable approximates the carrying value due to the short term nature of
these items. The fair value of due from affiliates can not be determined due to
the related party nature of this receivable.
INCOME-PRODUCING PROPERTY
Property and tenant improvements are carried at cost and depreciated on the
straight-line method over the estimated lives of the related assets, ranging
from three to thirty years. Tenant improvements incurred at the initial leasing
of the property are depreciated over ten years and tenant improvements incurred
at the re-leasing of the property are depreciated over the life of the related
lease.
Expenditures for repairs and maintenance are charged against income as incurred.
Improvements and major renewals are capitalized. Costs and the related
accumulated depreciation of assets sold or retired are removed from the accounts
in the year of disposal or when fully depreciated and any resulting gain or loss
is reflected in income or deferred income as appropriate.
The Partnership employs a systematic approach in determining whether the value
of income-producing property has been impaired. Prior to 1995, a provision for
loss on a property was established if the appraised value of the property
declined below its book value due to what the General Partner believed to be an
other than temporary condition. A complete appraisal was performed on the
property as of December 31 each year. A provision for loss on the property was
established as the appraised value of the property declined below book value
because of depressed real estate market conditions, which the General Partner
believed to be other than temporary. A complete appraisal was performed on the
property as of December 31, 1994 that indicated an appraised value in excess of
the historical cost basis of the property.
Effective January 1, 1995, the Partnership implemented Statement of Financial
Accounting Standards No. 121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" (the "Statement"). The Partnership
regularly evaluates long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of the asset may not be
recoverable. Future cash flows are estimated and compared to the carrying amount
of the asset to determine if an impairment has occurred. If the sum of the
expected future cash flows is less than the carrying amount of the asset, the
Partnership shall recognize an impairment loss in accordance with the Statement.
No loss provision was required with the implementation of this Statement.
Because the determination of fair value is based upon projections of future
economic events such as property occupancy rates, rental rates, operating cost
inflation and market capitalization rates which are inherently subjective, the
amounts ultimately realized at disposition may differ materially from the net
carrying value as of December 31, 1996. The cash flows used to determine fair
value and net realizable value are based on good faith estimates and assumptions
developed by management. Unanticipated events and circumstances may occur and
some assumptions may not materialize; therefore actual results may vary from the
estimates and the variances may be material. The Partnership may provide
additional write-downs which could be material in subsequent years if real
estate markets or local economic conditions change.
21
<PAGE>
Sierra Pacific Institutional Properties V
Notes to Consolidated Financial Statements
Page three
OTHER ASSETS
Deferred leasing costs represent costs incurred to lease properties and are
amortized over the life of the related lease.
RENTAL INCOME AND RENT RECEIVABLE
Rental income is recognized on the straight-line method over the term of the
related operating lease in accordance with the provisions of Statement of
Financial Accounting Standards No. 13, "Accounting for Leases".
Unbilled rent receivable represents the difference between rent recognized on
the straight-line method and actual cash due.
ACCRUED AND OTHER LIABILITIES
Ground lease payable, included in accrued and other liabilities, represents the
difference between rent recognized on the straight-line method in accordance
with the provisions of Statement of Financial Accounting Standards No. 13,
"Accounting for Leases" and actual cash due and paid by that date.
CALCULATION OF EQUITY AND NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
Equity and net income (loss) per limited partnership unit are determined by
dividing the Limited Partners' equity and net income (loss) by 30,777, the
number of limited partnership units outstanding.
2. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS
Additional information regarding certain balance sheet accounts, at December 31,
1996 and 1995, is as follows:
1996 1995
-------- --------
Other assets:
Prepaid expenses .................................. $ 38,020 $ 36,052
Deferred leasing costs, net of accumulated
amortization of $149,273 in 1996
and $93,973 in 1995 ........................... 237,840 293,142
-------- --------
$275,860 $329,194
======== ========
Accrued and other liabilities:
Ground lease payable .............................. $150,233 $157,500
Accounts payable .................................. 84,380 41,245
Security deposits ................................. 7,249 7,249
Other ............................................. 5,704 9,843
-------- --------
$247,566 $215,837
======== ========
22
<PAGE>
Sierra Pacific Institutional Properties V
Notes to Consolidated Financial Statements
Page four
3. GENERAL PARTNER AND RELATED PARTY TRANSACTIONS
In 1994, all of the common stock of TCP, Inc., was purchased by Finance Factors,
Inc. from Carlsberg Management Company ("CMC"). TCP, Inc. owns all of the common
stock of S-P Properties, Inc., the General Partner of the Partnership. CMC
continued to manage the affairs of the Partnership through March 31, 1995.
An affiliate of the General Partner may receive a management fee of 6% of the
gross rental income collected from the properties. Management fees paid to
affiliates for the years ended December 31, 1996, 1995 and 1994 were $54,102,
$33,554 and $30,899, respectively.
An affiliate of the General Partner is entitled to reimbursement for expenses
incurred by the affiliate for services provided to the Partnership such as
accounting, legal, data processing and similar services. The affiliate was
reimbursed $67,428, $46,318 and $55,205 for such services for the years ended
December 31, 1996, 1995 and 1994, respectively. Additionally, the Partnership
reimbursed the affiliate for construction supervision costs incurred by the
affiliate. For the years ended December 31, 1995 and 1994, the affiliate
received $27,235 and $5,596, respectively, for tenant improvements supervisory
costs. No such costs were incurred in 1996.
For the year ended December 31, 1994 the affiliate received $4,969 for leasing
supervision costs that were recorded as part of renting expenses of the
property. No such costs were incurred in 1995 and 1996.
During 1996, the Partnership made a short-term, non-interest bearing loan to an
affiliate. Repayment in expected in 1997.
4. INCOME-PRODUCING PROPERTY
At December 31, 1996 and 1995 the total cost and accumulated depreciation of the
property are as follows:
1996 1995
----------- -----------
Land ................................... $ 2,569,815 $ 2,569,815
Building and improvements .............. 5,420,774 5,368,897
----------- -----------
Total ....................... 7,990,589 7,938,712
Accumulated depreciation ............... (1,998,154) (1,606,003)
----------- -----------
Net ......................... $ 5,992,435 $ 6,332,709
=========== ===========
23
<PAGE>
Sierra Pacific Institutional Properties V
Notes to Consolidated Financial Statements
Page five
On February 1, 1989, the Partnership sold the Sierra Sorrento II land to a life
insurance company ("Ground Lessor") for $3,000,000. Simultaneously, the
Partnership entered into a ground lease with the Ground Lessor to lease the
Sierra Sorrento II land for a term of approximately 40 years requiring minimum
payments of $25,000 per month commencing February 1989. Additionally, the terms
of the ground lease require scheduled ground rent increases over the lease term
and additional ground rent. Commencing January 1, 1994, subject to the
provisions of the ground lease, the Partnership has the right to sell the
property (land and buildings) to a third party and terminate the ground lease.
Upon sale the Ground Lessor is entitled to a return of its $3,000,000 investment
before any proceeds are distributed to the Partnership. The Ground Lessor will
also participate in the appreciation of the property (upon sale) based on a
formula contained in the ground lease agreement. Because the transaction does
not qualify as a sale and leaseback under generally accepted accounting
principles, the Partnership has reflected the $3,000,000 payment as the Ground
Lessor's equity in the income-producing property in the accompanying balance
sheet.
On October 1, 1993, the Partnership formed a joint venture with SMMP, an
affiliate. The joint venture, known as Sorrento II Partners ("SIIP"), was formed
as a California general partnership to develop and operate the Sierra Sorrento
II property. The Partnership had an 83.2% equity interest with its contribution
of Sierra Sorrento II and $115,000 in cash. Such interest was computed based
upon the estimated fair value of SIIP's net assets at the date of formation of
the joint venture. SMMP was allocated a 16.8% initial equity interest in SIIP in
exchange for its $710,000 cash contribution. SMMP made additional cash
contributions amounting to $295,000, $489,000 and $44,500, and received
distributions amounting to $0, $23,600 and $190,500 during 1994, 1995 and 1996,
respectively. The percentage interests of the Partnership and SMMP are to be
adjusted every January 1st during the term of SIIP, beginning January 1, 1995.
Accordingly, as of January 1, 1995 and 1996, the Partnership's interest in SIIP
was reduced to 79.89% and 73.08%, respectively, and SMMP's interest was
increased to 20.11% and 26.92%, respectively. On January 1, 1997, the
Partnership's interest will be increased to 75.09% and SMMP's interest will be
reduced to 24.91% to reflect the 1996 contributions and distributions. Under the
terms of the SIIP joint venture agreement, SMMP will receive preferential cash
distributions of available "Distributable Funds" from the operation of SIIP or
sale of its property to the extent of its capital contributions. Additional
Distributable Funds are allocable to the Partnership to the extent of the deemed
fair value of its property contribution, and the remainder to the Partnership
and SMMP in proportion to their respective equity interests.
Future minimum base rental income, under the existing operating leases for the
Sierra Sorrento II property, to be recognized on a straight-line basis and
amounts to be received on a cash basis are as follows:
Straight-line Cash
YEAR ENDING DECEMBER 31, Basis Basis
---------- ----------
1997 ............................. $ 820,242 $ 833,929
1998 ............................. 530,502 559,769
1999 ............................. 530,502 595,127
2000 ............................. 530,502 630,487
2001 ............................. 530,502 651,103
Thereafter ......................... 618,920 780,720
---------- ----------
Total ........................... $3,561,170 $4,051,135
========== ==========
The Partnership relies on two tenants to generate all of rental income; 35% is
from a healthcare administrator and the remaining 65% is from an electronics
manufacturer.
24
<PAGE>
Sierra Pacific Institutional Properties V
Notes to Consolidated Financial Statements
Page six
5. PARTNERS' EQUITY
Accrual basis profits and losses resulting from operations of the Partnership
are allocated 99% to the Limited Partners and 1% to the General Partner.
Currently, the Partnership does not meet the criteria for distributing cash to
the General Partner, and it cannot reasonably predict when the criteria will be
met. Accordingly, no accrual basis profits and losses from operations were
allocated to the General Partner.
Upon any sale or other disposition of the Partnership's real properties,
distributions will be made to the Limited Partners until they have received
distributions from sales proceeds in an amount equal to 100% of their unreturned
capital. Thereafter, distributions generally will be divided 1% to the General
Partner and 99% to the Limited Partners until the Limited Partners have received
distributions from all sources equal to the sum of their respective priority
distributions (an amount equal to not less than 12% per annum cumulative, but
not compounded, on each Limited Partners' unreturned capital). Thereafter, the
General Partner will be entitled to receive incentive distributions which, when
aggregated with the 1% distributions to the General Partner described above, are
equal to 10% of the total net sale proceeds available for distribution to the
Partners. Any remaining sale proceeds will be distributed to the Limited
Partners.
25
<PAGE>
EXECUTIVE OFFICERS OF THE GENERAL PARTNER
The Executive Officers of S-P Properties, Inc., the General Partner are as
follows:
NAME POSITION
- ----------------- ------------------------------------------
Thomas N. Thurber President and Director
Dawson L. Davenport Vice President
Steven M. Speier Secretary/Treasurer and Director
William J. Carden Assistant Secretary/Treasurer and Director
The 10-K Report sent to the Securities and Exchange Commission contains
additional information on the Partnership's operations and is available to
Limited Partners upon request.
26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SIERRA PACIFIC INSTITUTIONAL PROPERTIES V DECEMBER 31, 1996 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 8,578
<SECURITIES> 0
<RECEIVABLES> 489,965
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,573
<PP&E> 7,990,589
<DEPRECIATION> 1,998,154
<TOTAL-ASSETS> 6,785,833
<CURRENT-LIABILITIES> 97,333
<BONDS> 3,000,000
0
0
<COMMON> 0
<OTHER-SE> 2,459,304
<TOTAL-LIABILITY-AND-EQUITY> 6,785,833
<SALES> 990,901
<TOTAL-REVENUES> 990,901
<CGS> 0
<TOTAL-COSTS> 773,514
<OTHER-EXPENSES> 447,452
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (168,132)
<INCOME-TAX> 0
<INCOME-CONTINUING> (168,132)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (168,132)
<EPS-PRIMARY> (5.46)
<EPS-DILUTED> (5.46)
</TABLE>
