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 March 31, 1998
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Commission file number 0-15702
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SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A 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
-------------------------------------------
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 - March 31, 1998 and December 31, 1997 4
Consolidated Statements of Operations - For the Three Months Ended March
31, 1998 and 1997 5
Consolidated Statement of Changes in Partners' Equity - from October 8,
1985 (Inception of the Partnership) to December 31, 1997 and for the Three
Months Ended March 31, 1998 6
Consolidated Statements of Cash Flows - For the Three Months Ended March
31, 1998 and 1997 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 66.45% interest in the Sorrento II Partnership,
which operates the Sorrento II property in San Diego, California.
2
<PAGE>
(b) RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 1998 decreased by $106,000, or
38%, when compared to the corresponding period in the prior year. This decrease
was primarily due to a decrease in occupancy from 92% at March 31, 1997 to 67%
at March 31, 1998. One tenant, whose lease accounted for 22,150 square feet of
the Property, expired December 31, 1997. A new lease is currently pending for
this vacant space.
Operating expenses for the three months ended March 31, 1998 increased by
$25,000, or 31%, principally as a result of accounting and auditing costs
incurred during the quarter. Similar costs were accrued in the second quarter in
the prior year.
(c) LIQUIDITY AND CAPITAL RESOURCES
The Partnership is in an illiquid position at March 31, 1998 with cash of
$38,000 and current liabilities of $44,000. 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
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
March 31, 1998 and December 31, 1997
March 31, December 31,
1998 1997
---------- ------------
ASSETS
Cash and cash equivalents ........................ $ 37,650 $ 23,479
Receivables:
Unbilled rent .................................. 473,380 476,278
Due from affiliates .............................. 48,495 18,995
Prepaid ground lease ............................. 791,000 845,000
Income-producing property - net of
accumulated depreciation of $2,457,962
and $2,390,306, respectively ................... 5,533,277 5,629,596
Other assets ..................................... 191,964 219,646
---------- ----------
Total Assets ..................................... $7,075,766 $7,212,994
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities .................... $ 44,073 $ 48,386
Ground lease payable ............................. 175,510 172,058
---------- ----------
Total Liabilities ................................ 219,583 220,444
---------- ----------
Ground lessor's equity in income-
producing property ............................. 3,000,000 3,000,000
---------- ----------
Minority interest in consolidated
joint venture ................................. 1,665,546 1,711,297
---------- ----------
Partners' equity:
General Partner ................................ 0 0
Limited Partners:
140,000 units authorized,
30,777 issued and
outstanding .................................. 2,190,637 2,281,253
---------- ----------
Total Partners' equity ........................... 2,190,637 2,281,253
---------- ----------
Total Liabilities and Partners' equity ........... $7,075,766 $7,212,994
========== ==========
Unaudited
See Accompanying Notes
4
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1997
1998 1997
--------- ---------
REVENUES:
Rental income .................................... $ 169,808 $ 275,936
--------- ---------
Total revenues ................. 169,808 275,936
--------- ---------
EXPENSES:
Operating expenses ............................. 104,860 80,271
Ground lease ................................... 93,451 95,858
Depreciation and amortization .................. 107,864 111,863
--------- ---------
Total costs and expenses ....... 306,175 287,992
--------- ---------
LOSS BEFORE MINORITY INTEREST'S SHARE
OF CONSOLIDATED JOINT VENTURE LOSS ............... (136,367) (12,056)
--------- ---------
MINORITY INTEREST'S SHARE OF
CONSOLIDATED JOINT VENTURE LOSS .................. 45,751 3,003
--------- ---------
NET LOSS ........................................... $ (90,616) $ (9,053)
========= =========
Net loss per limited partnership unit .............. $ (2.94) $ (0.29)
========= =========
Unaudited
See Accompanying Notes
5
<PAGE>
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, 1997
and for the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>
Limited Partners Total
---------------------- General Partners'
Per Unit Total Partner Equity
-------- ------------ ------------ ------------
<S> <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, 1997) ............ (135.98) (4,184,903) $ 9,193 (4,175,710)
Cumulative distributions
(to December 31, 1997) ............ (2.69) (82,761) (9,193) (91,954)
------- ----------- ----------- -----------
Partners' equity - January 1, 1998... 74.12 2,281,253 0 2,281,253
Net loss ............................ (2.94) (90,616) (90,616)
------- ----------- ----------- -----------
Partners' equity - March 31, 1998.... $ 71.18 $ 2,190,637 $ 0 $ 2,190,637
======= =========== =========== ===========
</TABLE>
Unaudited
See Accompanying Notes
6
<PAGE>
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1998 and 1997
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................. $ (90,616) $ (9,053)
Adjustments to reconcile net loss
to cash provided by operating activities:
Depreciation and amortization ...................... 107,864 111,863
Minority interest's share of consolidated
joint venture loss ............................... (45,751) (3,003)
Decrease (increase) in rent receivable ............. 2,898 (63,948)
Decrease in other assets ........................... 70,137 20,020
(Decrease) increase in accrued and other liabilities (861) 26,674
--------- ---------
Net cash provided by operating activities .......... 43,671 82,553
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property additions .................... 0 (24,972)
--------- ---------
Net cash used in investing activities .............. 0 (24,972)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan to affiliate .................................. (29,500) (29,600)
--------- ---------
Net cash used in financing activities .............. (29,500) (29,600)
--------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS ............................... 14,171 27,981
CASH AND CASH EQUIVALENTS -
Beginning of period ................................ 23,479 8,578
--------- ---------
CASH AND CASH EQUIVALENTS -
End of period ...................................... $ 37,650 $ 36,559
========= =========
Unaudited
See Accompanying Notes
7
<PAGE>
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. Accordingly,
on January 1, 1998, the Partnership's interest in Sorrento II Partners was
decreased from 75.09% to 66.45% to reflect 1997 contributions and distributions.
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 March 31, 1998. 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 March 31, 1998 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, 1997.
3. 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.
In 1997, the Sorrento II land was purchased from Lincoln National Life Insurance
Company by CGS Real Estate Company, Inc. ("CGS"), an affiliate of the General
Partner. All rights, title and interest in the ground lease were transferred and
assigned to CGS.
UNAUDITED
8
<PAGE>
Included in the financial statements for the three months ended March 31, 1998
and 1997 are affiliate transactions as follows:
March 31
--------------------------
1998 1997
------------- ------------
Management fees $ 10,362 $ 12,719
Administrative fees 17,663 13,795
Ground lease payments 36,000 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, 30,077.
UNAUDITED
9
<PAGE>
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: MAY 4, 1998 /s/ THOMAS N. THURBER
----------- ----------------------------
Thomas N. Thurber
President and Director
Date: MAY 4, 1998 /s/ G. ANTHONY EPPOLITO
----------- ----------------------------
G. Anthony Eppolito
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 MARCH 31,1998 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 37,650
<SECURITIES> 0
<RECEIVABLES> 48,495
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 86,145
<PP&E> 7,991,239
<DEPRECIATION> 2,457,962
<TOTAL-ASSETS> 7,075,766
<CURRENT-LIABILITIES> 44,073
<BONDS> 3,000,000
0
0
<COMMON> 0
<OTHER-SE> 2,190,637
<TOTAL-LIABILITY-AND-EQUITY> 7,075,766
<SALES> 169,808
<TOTAL-REVENUES> 169,808
<CGS> 0
<TOTAL-COSTS> 198,311
<OTHER-EXPENSES> 107,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (90,616)
<INCOME-TAX> 0
<INCOME-CONTINUING> (90,616)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,616)
<EPS-PRIMARY> (2.94)
<EPS-DILUTED> (2.94)
</TABLE>
