FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended June 30, 2000
----------------------------------------------------
Commission file number 0-15702
----------------------------------------------------
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
State of California 33-0122424
- - -------------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
5850 San Felipe, Suite 450
Houston, Texas 77057
- - -------------------------------------- -----------------------------------
(Address of principal executive (Zip Code)
offices)
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 [ ].
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are submitted in the next pages:
PAGE
NUMBER
------
Consolidated Balance Sheets - June 30, 2000 and December 31, 1999 4
Consolidated Statements of Operations - For the Six Months Ended
June 30, 2000 and for the Three Months Ended June 30, 1999 5
Consolidated Statement of Changes in Partners' Equity - For the Year
Ended December 31, 1999 and for the Six Months Ended June 30, 2000 6
Consolidated Statements of Cash Flows - For the Six Months
Ended June 30, 2000 and 1999 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 Sierra Pacific
Institutional Properties V's (the Partnership) Consolidated Financial Statements
and Notes thereto appearing elsewhere in this Form 10-Q.
The Partnership currently owns a 56.08% interest in the Sorrento II Partnership,
which operates the Sorrento II property (the Property) in San Diego, California.
(b) RESULTS OF OPERATIONS
Rental income for the six months and three months ended June 30, 2000 increased
by approximately $144,000, or 26%, and by approximately $19,000, or 6%,
respectively, in comparison to the corresponding periods in 1999. These
increases were principally the result of higher common area maintenance fees
billed between the periods. Supplemental billings were made in 2000 to recover
higher than anticipated prior year common area maintenance fees. The Property
was 100% occupied at June 30, 2000 and June 30, 1999.
2
Total operating expenses for the six months and three months ended June 30, 2000
decreased by approximately $7,000, or 3%, and by approximately $9,000 or 7%,
respectively, when compared to the same periods in the prior year. These
decreases were primarily due to lower administrative costs and other operating
expenses incurred between the periods.
(c) LIQUIDITY AND CAPITAL RESOURCES
The Partnership is in a liquid position at June 30, 2000 with cash and billed
receivables of approximately $113,000 and accrued and other liabilities of
approximately $23,000. A source of cash is available through advances from the
minority owner of the property, Sierra Mira Mesa Partner (SMMP). SMMP has
adequate resources to make any necessary advances during the foreseeable future.
Inflation:
The Partnership does not expect inflation to be a material factor in its
operations in 2000.
3
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
- - --------------------------------------------------------------------------------
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
------------ ------------
ASSETS
Cash and cash equivalents ....................... $ 33,703 $ 134,781
Receivables:
Unbilled rent ................................. 417,070 451,414
Billed rent ................................... 79,264 76,707
Prepaid ground lease ............................ 0 1,344,540
Income-producing property - net of
accumulated depreciation of $2,383,649
and $2,195,937, respectively .................. 5,672,235 5,552,440
Other assets - net of accumulated amortization
of $349,335 and $306,675, respectively ........ 280,430 314,313
------------ ------------
Total Assets .................................... $ 6,482,702 $ 7,874,195
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities ................... $ 22,573 $ 90,908
Ground lease payable ............................ 0 194,539
------------ ------------
Total Liabilities ............................... 22,573 285,447
------------ ------------
Ground lessor's equity in income-
producing property ............................ 0 3,000,000
------------ ------------
Minority interest in consolidated
joint venture ................................ 4,399,084 2,647,872
------------ ------------
Partners' equity (deficit):
General Partner ............................... (53,152) 0
Limited Partners:
140,000 units authorized,
30,777 issued and
outstanding ................................. 2,114,197 1,940,876
------------ ------------
Total Partners' equity .......................... 2,061,045 1,940,876
------------ ------------
Total Liabilities and Partners' equity .......... $ 6,482,702 $ 7,874,195
============ ============
SEE ACCOMPANYING NOTES
4
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 AND
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
- - --------------------------------------------------------------------------------
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
2000 1999 2000 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------
REVENUES:
Rental income .................................................... $ 699,130 $ 554,777 $ 313,286 $ 294,711
Interest income .................................................. 11,205 0 0 0
------------ ------------ ------------ ------------
Total revenues ................................. 710,335 554,777 313,286 294,711
------------ ------------ ------------ ------------
EXPENSES:
Operating expenses ............................................... 236,241 243,567 111,479 119,989
Ground lease ..................................................... 29,441 186,902 0 93,451
Depreciation and amortization .................................... 230,372 216,608 115,186 110,180
------------ ------------ ------------ ------------
Total costs and expenses ....................... 496,054 647,077 226,665 323,620
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY INTEREST'S
SHARE OF CONSOLIDATED JOINT VENTURE
(INCOME) LOSS .................................................... 214,281 (92,300) 86,621 (28,909)
------------ ------------ ------------ ------------
MINORITY INTEREST'S SHARE OF
CONSOLIDATED JOINT VENTURE
(INCOME) LOSS .................................................... (94,112) 32,397 (38,044) 10,147
------------ ------------ ------------ ------------
NET INCOME (LOSS) .................................................. $ 120,169 $ (59,903) $ 48,577 $ (18,762)
============ ============ ============ ============
Net income (loss) per limited partnership unit ..................... $ 3.87 $ (1.95) $ 1.57 $ (0.61)
============ ============ ============ ============
SEE ACCOMPANYING NOTES
5
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE SIX MONTHS ENDED JUNE 30, 2000
- - --------------------------------------------------------------------------------
LIMITED PARTNERS TOTAL
---------------------------- GENERAL PARTNERS'
PER UNIT TOTAL PARTNER EQUITY
------------ ------------ ------------ ------------
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, 1998) ........................................... (145.20) (4,468,631) $ 9,193 (4,459,438)
Cumulative distributions
(to December 31, 1998) ........................................... (2.69) (82,761) (9,193) (91,954)
------------ ------------ ------------ ------------
Partners' equity - January 1, 1999 ................................. 64.90 1,997,525 0 1,997,525
Net loss ........................................................... (1.84) (56,649) (56,649)
------------ ------------ ------------ ------------
Partners' equity - January 1, 2000 (audited) ....................... 63.06 1,940,876 0 1,940,876
Transfer among general partner and limited partners ................ 1.77 54,354 (54,354) 0
Net income ......................................................... 3.87 118,967 1,202 120,169
------------ ------------ ------------ ------------
Partners' equity (deficit) - June 30, 2000 (unaudited) ............. $ 68.70 $ 2,114,197 $ (53,152) $ 2,061,045
============ ============ ============ ============
SEE ACCOMPANYING NOTES
6
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
- - --------------------------------------------------------------------------------
2000 1999
(UNAUDITED) (UNAUDITED)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................ $ 120,169 $ (59,903)
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation and amortization .................. 230,372 216,608
Minority interest's share of consolidated
joint venture income (loss) .................. 94,112 (32,397)
Decrease in rent receivable .................... 31,787 13,592
Decrease in prepaids and other assets .......... 10,018 69,562
Decrease in accrued and other liabilities ...... (68,894) (154,783)
----------- -----------
Net cash provided by operating activities ...... 417,564 52,679
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property additions ................ (2,175,742) (284,053)
----------- -----------
Net cash used in investing activities .......... (2,175,742) (284,053)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from minority investor ........... 1,907,000 0
Distributions to minority investor ............. (249,900) 0
Loan from affiliate ............................ 0 267,420
----------- -----------
Net cash provided by financing activities ...... 1,657,100 267,420
----------- -----------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS ........................... (101,078) 36,046
CASH AND CASH EQUIVALENTS -
Beginning of period ............................ 134,781 3,203
----------- -----------
CASH AND CASH EQUIVALENTS -
End of period .................................. $ 33,703 $ 39,249
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for real estate taxes $ 44,488 $ 40,384
=========== ===========
SEE ACCOMPANYING NOTES
7
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - --------------------------------------------------------------------------------
1. ORGANIZATION
In October 1993, Sierra Pacific Institutional Properties V (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. Accordingly, on January 1, 2000,
the Partnership's interest in Sorrento II Partners was decreased from 64.90% to
56.08% to reflect 1999 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 June 30, 2000. All significant intercompany balances and transactions
have been eliminated in consolidation.
In the opinion of the Partnership's management, these unaudited financial
statements reflect all adjustments which are necessary for a fair presentation
of its financial position at June 30, 2000 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, 1999.
3. RELATED PARTY TRANSACTIONS
Included in the financial statements for the six months ended June 30, 2000 and
1999 are affiliate transactions as follows:
June 30
-----------------------
2000 1999
-----------------------
Management fees $ 40,565 $34,102
Administrative fees 40,795 49,897
8
Sierra Pacific Institutional Properties V
Notes to Financial Statements (Unaudited)
Page Two
4. PARTNERS' EQUITY
Equity and net income (loss) per limited partnership unit is determined by
dividing the limited partners' share of the Partnership's equity and net income
(loss) by the number of limited partnership units outstanding, 30,777.
During the quarter ended March 31, 2000, an amount was transferred between the
partners' equity accounts such that 99% of cumulative operating income, gains,
losses, deductions and credits of the Partnership is allocated among the limited
partners and 1% is allocated to the general partner. Management does not believe
that the effect of this transfer is significant.
5. PENDING TRANSACTION
CGS Real Estate Company, Inc. (CGS), an affiliate of the general partner, is in
the process of developing a plan pursuant to which the property owned by the
Partnership would be combined with the properties of other real estate
partnerships managed by CGS and its affiliates. These limited partnerships own
office properties, industrial properties, shopping centers, and residential
apartment properties. It is expected that the acquirer would in the future
qualify as a real estate investment trust. Limited partners would receive shares
of common stock in the acquirer, which would be listed on a national securities
exchange or the NASDAQ national market system.
9
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are filed herewith pursuant to Rule 601 of
Regulation S-K.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed in April 2000 reporting a change in the Partnership's
Certifying Accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report be signed on its behalf by the
undersigned thereunto duly authorized.
SIERRA PACIFIC INSTITUTIONAL PROPERTIES V
a Limited Partnership
S-P PROPERTIES, INC.
General Partner
Date: AUGUST 14, 2000 /s/ THOMAS N. THURBER
-----------------------------------------------
Thomas N. Thurber
President and Director
Date: AUGUST 14, 2000 /s/ G. ANTHONY EPPOLITO
-----------------------------------------------
G. Anthony Eppolito
Chief Accountant
10