10-Q 1 d97450e10vq.txt FORM 10-Q FOR QUARTER ENDED MARCH 31, 2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 -------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------------- ------------------------ Commission File Number 0-8914 --------------------- UNIVERSITY REAL ESTATE PARTNERSHIP V ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3240567 ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3811 Turtle Creek Blvd, Suite 1850, Dallas, Texas 75219 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (214) 651-4000 ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) -------------------------------------------------------------------------------- (Former address, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X ---- ---- Of the registrant's 34,253 Limited Partnership Units, 6,188 units are held by an affiliate of the registrant. The aggregate market value of units held by non-affiliates is not determinable since there is no public trading market for Limited Partnership Units. UNIVERSITY REAL ESTATE PARTNERSHIP V INDEX TO FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2002

Page ---- Part I - Financial Information Item 1 - ~~Condensed~~ Consolidated Financial Statements: (a) ~~Condensed~~ Consolidated Balance Sheets as of ~~June~~March 3031, ~~2000~~2002 and December 31, ~~1999~~2001 3 (b) ~~Condensed~~ Consolidated Statements of ~~Income~~Operations for the three ~~and six~~ months ended ~~June~~March 3031, ~~2000~~2002 and ~~1999~~2001 4 (c) ~~Condensed~~ Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June~~March 3031, ~~2000~~2002 and ~~1999~~2001 5 (d) Notes to ~~Condensed~~ Consolidated Financial Statements 6 - 87 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 98 - 109 Part II - Other Information Item 1 - Legal Proceedings 9 Item 6 - Exhibits and Reports on Form 8-K 109 Signatures 1110

PART I - FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS UNIVERSITY REAL ESTATE PARTNERSHIP V CONSOLIDATED BALANCE SHEETS

~~June~~March 3031, ~~2000~~2002 December 31, (Unaudited) ~~1999~~2001 ------------ ------------ ASSETS Real estate investments Land $ 2,045,356 $ 2,045,356 Buildings and improvements 1814,~~335~~994,~~137~~403 1814,~~208~~975,~~206~~904 ------------ ------------ 2017,~~380~~039,~~493~~759 2017,~~253~~021,~~562~~260 Less: Accumulated depreciation and amortization (~~729~~176,~~803~~505) ~~(364,164)~~-- ------------ ------------ 1916,~~650~~863,~~690~~254 1917,~~889~~021,~~398~~260 ------------ ------------ Cash ~~(including~~-- ~~$51~~62,~~472~~106 ~~and $50,024 for security deposits at June 30, 2000 and December 31, 1999, respectively) 386,452 317,630~~ Accounts receivable 1210,~~933~~866 68,~~632~~454 Other receivables - related parties ~~30,145~~ 27,~~564~~893 ~~Deferred borrowing costs~~28,311 ~~net of accumulated amortization of $51,790 and $0 at June 30, 2000 and December 31, 1999, respectively 566,891 607,287~~ Escrows ~~256~~182,~~025~~071 ~~336~~133,~~906~~630 Prepaid expenses and other assets 199,~~104~~191 ~~212~~18,~~236~~940 ------------ ------------ $ 2017,~~922~~093,~~240~~275 $ 2117,~~397~~272,~~653~~701 ============ ============ LIABILITIES AND PARTNERS' ~~EQUITY (~~DEFICIT) Mortgage ~~notes~~note payable $ 15,~~949~~719,~~932~~890 $ 1615,~~000~~758,~~000~~530 Participating notes payable 4,050,000 34,~~875~~050,000 Advances - related party (Note 2) 314,625 229,125 Accrued mortgage interest ~~102~~206,~~584~~361 55206,~~787~~620 Accrued property taxes 89127,~~152~~012 8984,~~152~~836 Accounts payable and accrued expenses ~~150~~307,~~950~~993 ~~201~~310,~~031~~944 Other payables - related party 28130,~~749~~840 5999,~~600~~481 Prepaid rent 646,~~721~~976 967,~~667~~841 Security deposits 5143,~~472~~276 5046,~~024~~484 Excess of outstanding checks over bank balance 10,402 -- Subordinated real estate commissions 548,757 548,757 ------------ ------------ 2021,~~978~~506,~~317~~132 2021,~~889~~402,~~018~~618 ------------ ------------ ~~Partners~~Minority partner's ~~equity~~interest (~~deficit~~50,245) (47,416) Partners' deficit Limited Partners - 50,000 units authorized; 34,253 units issued and outstanding (17,723 Income units and 16,530 Growth/Shelter units) ~~484~~(3,~~853~~778,616) 1(3,~~044~~501,~~106~~306) General Partner (~~540~~583,~~930~~996) (~~535~~581,~~471~~195) ------------ ------------ (564,~~077~~362,612) ~~508~~(4,~~635~~082,501) ------------ ------------ $ 2017,~~922~~093,~~240~~275 $ 2117,~~397~~272,~~653~~701 ============ ============

See notes to consolidated financial statements 3 UNIVERSITY REAL ESTATE PARTNERSHIP V CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended ~~Six~~March ~~Months Ended June 30~~31, ~~June 30,~~ ---------------------------- ~~----------------------------~~2002 ~~2000~~2001 ~~1999 2000 1999~~ ---------~~---~~ ---------~~---~~ ~~------------ ------------~~ Revenues: Rental income $ ~~738~~611,~~788~~461 $ ~~-- $ 1~~657,~~499,318~~066 $Interest ~~241,594~~49 ~~Interest~~883 ~~1,807~~Property ~~704~~tax ~~3,130~~refund 133,~~092~~225 -- Other income 1767,~~231~~634 ~~158~~73,~~306~~718 ~~44,951 31,937~~ ---------~~---~~ ---------~~---~~ ~~------------ ------------~~ Total revenues ~~757~~712,~~826~~369 ~~159~~731,~~010~~667 ~~1,547,399 274,623~~ ---------~~---~~ ---------~~---~~ ~~------------ ------------~~ Expenses: ~~Interest 402,634 -- 829,484 327,106 Depreciation and amortization 209,352 -- 417,430 52,635~~ Property taxes 4442,~~575~~337 ~~-- 89~~42,~~151~~337 ~~25,289~~ Other property operations ~~183~~238,~~548~~824 36313,~~256~~737 ~~487,755 91,904~~ Bad debts 319,~~455~~415 ~~-- 17~~10,~~205~~248 ~~1,922~~ Property management fees~~-affiliates~~ 3633,~~891~~636 ~~-- 73~~36,~~422~~059 ~~12,632~~ General and administrative 5148,~~810~~400 111,~~048~~717 ~~90,221 34,944~~ General and administrative - affiliates 5329,~~615~~465 ~~-- 88~~29,~~615~~107 ~~40,000~~ ---------~~---~~ ---------~~---~~ Total expenses 412,077 443,205 ---------~~---~~ ---------~~---~~ ~~Total~~Net ~~expenses~~operating ~~985~~income 300,~~880~~292 37288,~~304~~462 2Interest (406,~~093~~727) (409,~~283~~934) ~~586~~Depreciation and amortization (176,~~432~~505) ~~------------~~(216,377) ---------~~---~~ ---------~~---~~ ~~------------~~ Net ~~operating~~loss ~~profit~~before ~~(loss)~~minority $partner's ~~(228,054)~~interest $in ~~121,706~~subsidiary $loss (~~545~~282,~~884~~940) $ (~~311~~337,~~809~~849) ~~Other~~Minority ~~income:~~partner's ~~Net~~interest ~~gain~~in onsubsidiary ~~sale~~loss of2,829 ~~real estate (Note 3) -- -- --~~ 2,~~212,935~~810 ---------~~---~~ ---------~~---~~ ~~------------ ------------~~ Net ~~income (~~loss) $ (~~228~~280,~~054~~111) $ ~~121,706 $~~ (~~545~~335,~~884~~039) ~~$ 1,901,126~~ =========~~===~~ =========~~===~~ ~~============ ============~~ Net ~~income (~~loss) allocable to General Partner $ (2,~~281~~801) ~~$ 1,217 $~~ (53,~~459~~350) ~~$ 19,011~~ Net ~~income (~~loss) allocable to Limited Partners (~~225~~277,~~773~~310) ~~120,489~~ (~~540~~331,~~425~~689) ~~1,882,115~~ ---------~~---~~ ---------~~---~~ ~~------------ ------------~~ Net ~~income (~~loss) $ (~~228~~280,~~054~~111) $ ~~121,706 $~~ (~~545~~335,~~884~~039) ~~$ 1,901,126~~ =========~~===~~ =========~~===~~ ~~============ ============~~ Net ~~income (~~loss) per Limited Partnership Unit $ (68.5910) $ ~~3.52 $~~ (159.7868) ~~$ 54.95~~ =========~~===~~ =========~~=== ============ ============~~

See notes to consolidated financial statements 4 UNIVERSITY REAL ESTATE PARTNERSHIP V CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

~~Six~~Three Months Ended ~~June~~March 3031, ----------------------------- ~~2000~~2002 ~~1999~~2001 ------------ ------------ Net (loss) ~~income~~ $ (~~545~~280,~~884~~111) $ 1(335,~~901,126~~039) Adjustments to reconcile net (loss) ~~income~~ to net cash ~~provided by~~ (used in) provided by operating activities: Depreciation and amortization ~~417~~176,~~430~~505 52216,~~635~~378 ~~Gain~~Minority onpartner's ~~sale~~interest ofin ~~real~~subsidiary ~~estate~~loss -- (2,~~212,935~~829) (~~Increase~~2,810) ~~decrease~~Changes in ~~operating~~ assets and liabilities: Accounts receivable (82,~~882~~412) 55(2,~~300~~099) ~~Prepaid~~Other ~~expenses~~receivables ~~and~~-- ~~other~~(3,254) ~~assets~~Other ~~33,132~~receivables ~~49,064~~- ~~Escrows~~related 80parties (8,~~881~~773) --9,043 ~~Increase~~Escrows (~~decrease~~48,441) in77,928 ~~operating~~Prepaid ~~liabilities:~~expenses ~~Accrued~~and ~~mortgage~~other ~~interest~~assets 4618,~~797~~940 ~~262~~(5,~~966~~000) Accounts payable and accrued expenses (502,~~095~~951) ~~(58~~68,~~822~~164 Accrued mortgage interest (259) 384 Accrued property taxes --42,176 4(33,~~188~~855) Other payables ~~(30~~- related parties 31,~~851)~~359 --19,673 Prepaid rent (220,~~946~~865) --12,557 Security deposits 1(3,~~448~~208) 30(4,~~296~~217) ------------ ------------ Net cash (used in) provided by operating activities (58100,~~970~~869) 8317,~~818~~853 ------------ ------------ Cash flows from investing activities: ~~Investments~~Additions into real estate (~~126~~18,~~931~~499) ~~-- Proceeds on sale of real estate -- 1~~(35,~~914,994~~082) ------------ ------------ Net cash (used in) ~~provided by~~ investing activities (~~126~~18,~~931~~499) 1(35,~~914,994~~082) ------------ ------------ Cash flows from financing activities: Principal payments on mortgage ~~notes~~note payable (5038,~~068~~640) (636,~~558~~075) ~~Advances~~Excess onof ~~notes~~outstanding ~~payable~~checks ~~175,000~~over --bank ~~Deferred~~balance ~~borrowing costs (11~~10,~~395)~~402 -- ~~Refund~~Advances on- ~~mortgage~~related ~~refinancing~~party ~~160~~85,~~000~~500 -- ~~Distributions (18,716)~~ -- --------~~----~~ ------------ Net cash provided by (used in) financing activities ~~254~~57,~~821~~262 (636,~~558~~075) ------------ ------------ NET ~~INCREASE~~DECREASE IN CASH 68(62,~~920~~106) 1(53,~~992,254~~304) CASH AT BEGINNING OF PERIOD ~~317~~62,~~630~~106 ~~192~~280,~~968~~804 ------------ ------------ CASH AT END OF PERIOD $ ~~386,550~~-- $ 2227,~~185,222~~500 ============ ============ CASH PAID DURING THE PERIOD FOR INTEREST $ ~~783~~406,~~183~~985 $ ~~327~~409,~~106~~550 ============ ==========~~== NON-CASH TRANSACTIONS 2000 - None 1999 - See Note 3~~

See notes to financial statements 5 UNIVERSITY REAL ESTATE PARTNERSHIP V NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 2001. The December 31, 2001 consolidated balance sheet was derived from audited numbers. Income Taxes The Partnership is not a tax paying entity and, accordingly, no provision has been recorded for Federal or state income tax purposes. The partners are individually responsible for reporting their share of the Partnership's taxable income or loss on their income tax returns. In the event of an examination of the Partnership's tax return by the Internal Revenue Service, the tax liability of the partners could be changed if the taxing authorities ultimately issue an adjustment for the Partnership's income or loss. Certain transactions of the Partnership may be subject to accounting methods for income tax purposes that differ from the accounting methods used in preparing these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Accordingly, the net income or loss of the Partnership and the resulting balances in the partners' capital (deficit) accounts reported for income tax purposes may differ from the balances reported for those same items in these consolidated financial statements. NOTE 2 - LIQUIDITY The Partnership's principal capital resources at March 31, 2002 consisted of one apartment complex located in Tempe, Arizona with a depreciated cost of $16,863,254 as of that date. The number of units available was 376. The Partnership has no outside lines of credit on which to draw for its working capital needs. Neither the General Partner and its affiliates nor Meridian Realty Advisors, Inc. have any obligation to provide financial support to the Partnership, except as required by the senior participation note agreements. Accordingly, continued operations of the Partnership is dependent on the Partnership being able to generate cash flow from operations or sale of its remaining operating property or negotiated reductions in requirements related to outstanding debt obligations. If the Partnership is unable to either generate sufficient operating cash flow or ultimately renegotiate its debt structure, the Partnership could be forced to curtail or cease operations. 6 UNIVERSITY REAL ESTATE PARTNERSHIP V NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Unaudited) NOTE 2 - LIQUIDITY (Continued) Operations have not generated sufficient cash in 2002 to pay the expenses of the partnership. As of March 31, 2002 the general partner had not advanced sufficient funds to the Partnership to enable it to meet all its cash requirements nor is there assurance that the general partner will fund further cash deficits. However, subsequent to March 31, 2002 the General Partner has advanced $109,100 in order to sustain operations of the property. The property occupancy level at March 31, 2002 was approximately 83%. It is the General Partners' intent to sell the property. Management began actively marketing the property for sale in October 2001 and subsequently recorded an impairment charge of $2,100,000 against the property based on various letters of intent to purchase the property and the estimated future cash flows to be generated by the property. The net proceeds, if any, from the sale will be distributed to income unit holders after all obligations have been paid. It is the general partner's intent to dissolve the Partnership once these distributions have been made. There is no assurance that sufficient, if any, proceeds will be available to satisfy all outstanding obligations of the property. NOTE 3 - NET LOSS PER LIMITED PARTNERSHIP UNIT Net loss per Limited Partnership Unit is computed by dividing net loss allocated to the Limited Partners by the weighted average number of Limited Partnership Units outstanding during the year. Per unit information has been computed based on 34,253 Limited Partnership Units outstanding in 2002 and 2001. NOTE 4 - TRANSACTIONS WITH AFFILIATES Compensation and reimbursements paid to or accrued for the benefit of one of the general partners, OS General Partner Company and affiliates for the three months ended March 31, 2002 and 2001 were as follows:

Three Months Ended ~~Six~~March ~~Months Ended June 30~~31, ~~June 30,~~ ------------------- -------~~------------~~ ~~2000~~2002 ~~1999~~2001 ~~2000 1999~~ -------- ---~~-----~~ -------- ---~~-----~~ ~~Property~~Asset management fees $ 3622,~~891~~500 $ ~~-- $ 73~~22,~~422~~500 ~~$ 12,632~~ Charged to general and administrative expense: Partnership and financial administration, ~~data processing,~~ accounting and tax reporting, and investor relations 536,~~615~~965 ~~-- 88~~6,~~615~~607 ~~40,000~~ -------- ---~~-----~~ -------- ---~~-----~~ Total $ 9029,~~506~~465 $ ~~-- $162~~29,~~037~~107 ~~$ 52,632~~ ======== ===~~=====~~ ======== ===~~=====~~

7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Report of Form 10-Q may contain forward-looking statements, which include risks and uncertainties. The Partnership's actual operations may differ significantly from those discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, leverage capital requirements, occupancy rates, dependence on key operating personnel and uncertainties related to the Partnership's operating strategies. The following discussion of the financial condition and results of operations of the Partnership relates to the three months ended March 31, 2002 and 2001 and should be read in conjunction with the financial statements and notes thereto included elsewhere in this report. RESULTS OF OPERATIONS The Partnership's net operating income for the three months ended March 31, 2002 and 2001 was $300,292 and $288,462, respectively. Total revenues for the three months ended March 31, 2002 were $712,369, versus $731,667 for the same period in 2001 and total expenses for three months ended March 31, 2002 were $995,309, versus $1,069,516 for the same period in 2001. The decrease in total revenues in 2002 is primarily attributable to lower occupancy due to local market conditions. Occupancy was approximately 83% and 84% for March 2002 and 2001, respectively. The decrease in other property expenses in 2002 was primarily attributable to lower occupancy rates, while the increase in general and administrative expenses was primarily attributable to increased professional fees. LIQUIDITY AND CAPITAL RESOURCES During the three months ended March 31, 2002, the Partnership recorded a decrease in cash of $62,106 versus a decrease of $53,304 for the same period in 2001. Cash decreased due to the lower occupancy rate described above. The Partnership has no outside lines of credit on which to draw for its working capital needs. Neither the General Partner and its affiliates nor Meridian Realty Advisors, Inc. have any obligation to provide financial support to the Partnership except as required by the senior participation note agreements. Accordingly, continued operation of the Partnership is dependent on the Partnership being able to generate cash from operations or sale of its remaining operating property or negotiated reductions in requirements related to outstanding debt obligations. If the Partnership is unable to either generate sufficient operating cash flow or ultimately renegotiate its debt structure, the Partnership could be forced to curtail or cease its operations. The apartment complex was acquired by the Partnership through a like-kind exchange in 1999. The acquisition was financed through proceeds of approximately $18,600,000 received from the issuance of two mortgage notes. These notes were subsequently refinanced through the issuance of a $16,000,000 mortgage note and the issuance of general promissory notes of $4,050,000. These general promissory notes include a feature, which will allow the holders to potentially share in appreciation of the property, upon certain circumstances being met. There can be no assurances that the property will appreciate in value. The Partnership does not anticipate acquiring additional properties. Operations have not generated sufficient cash in 2002 to pay the expenses of the partnership. The general partner has advanced $85,500 through March 31, 2002 to the Partnership to enable it to meet its cash requirements. There is no assurance that the general partner will fund the debt service of the senior participation notes in the future. However, subsequent to March 31, 2002 the General Partner has advanced $109,100 in order to sustain operations of the property. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The property is currently being marketed after a management decision in October 2001 to sell the property. The net proceeds, if any, from the sale will be distributed to income unit holders after all obligations have been paid. It is the general partner's intent to dissolve the Partnership once these distributions have been made. There is no assurance that sufficient, if any, proceeds will be available to satisfy all outstanding obligations of the property. Management recorded an impairment charge, during the fourth quarter of 2001, in the amount of $2,100,000, thereby reducing the carrying value of the property to $17,021,260 as at December 31, 2001. The impairment was considered necessary based on current and estimated future levels of occupancy of the property, potential rehabilitation costs and local real estate market conditions. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There have been no new legal developments during the quarter. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. Exhibit Number Description 3. and 4. Limited Partnership Agreement (Incorporated by reference to Registration Statement No. 2-74914 on Form S-11 filed by Registrant). 11. Statement regarding computation of Net Loss per Limited Partnership Unit: Net Loss per Limited Partnership Unit is computed by dividing net loss allocated to the Limited Partners by the number of Limited Partnership Units outstanding. Per unit information has been computed based on 34,253 Limited Partnership Units outstanding in 2002 and 2001. (b) Reports on Form 8-K: None. 9 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, thereunto duly authorized. UNIVERSITY REAL ESTATE PARTNERSHIP V By: UNIVERSITY ADVISORY COMPANY General Partner By: OS GENERAL PARTNER COMPANY June 7, 2002 By: /s/ Curtis R. Boisfontaine -------------------------------- ------------------------------- Date Curtis R. Boisfontaine, Jr. President, Principal Executive Officer and Director OS General Partner Company June 7, 2002 By: /s/ David K. Ronck -------------------------------- ------------------------------- Date David K. Ronck Vice President and Chief Accounting Officer 10

EXHIBIT NUMBER DESCRIPTION --------- ----------- 3. and 4. Limited Partnership Agreement (Incorporated by reference to Registration Statement No. 2-74914 on Form S-11 filed by Registrant). 11. Statement regarding computation of Net Loss per Limited Partnership Unit: Net Loss per Limited Partnership Unit is computed by dividing net loss allocated to the Limited Partners by the number of Limited Partnership Units outstanding. Per unit information has been computed based on 34,253 Limited Partnership Units outstanding in 2000 and 1999.

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