Item 1. BUSINESS
RAL INCOME + EQUITY GROWTH V LIMITED PARTNERSHIP (the "Registrant" or "Partnership") is a Wisconsin Limited Partnership formed on April 1, 1988, under the Wisconsin Revised Uniform Limited Partnership Act. The Registrant was originally organized to acquire, for cash (no debt), real estate projects, including real estate for restaurants, mobile home communities, apartment complexes and other commercial properties. The Partnership raised $9,866,000 in Limited Partnership Interests (9,866 Interests at $1,000 per unit) pursuant to a registration statement on Form S-11 under the Securities Act of 1933. The Partnership has utilized the net offering proceeds to acquire the real property investments described under "Properties" (Item 2).
The officers and employees of RAL Asset Management Group, a Wisconsin general partnership, and its affiliates performed services for the Registrant until June 1, 1993. RAL Asset Management Group is controlled by the General Partners of the Partnership. Effective June 1, 1993 the Partnership made separate property and partnership management agreements.
The partnership management agreement is with an unrelated management company. The property management agreement is with a related entity with the same general partners as the Partnership. The related property management firm simultaneously subcontracted with the same unrelated management company handling the partnership management. The terms and conditions of these agreements are similar to the above related party agreements, which they replace.
The Registrant itself employs individual onsite managers and maintenance personnel in the mobile home parks and apartment complexes. The Registrant employed five at March 30, 1996.
Item 2.
Item 2. PROPERTIES
As of March 30, 1996, the Registrant owned the following properties:
Date of Property Name Purchase Approximate Size - ------------------- --------- -----------------------------
Evergreen Estates 07/29/88 161 mobile home sites on Mobile Home Park approximately 32 acres of land Faribault, MN*
Cedar Crossing 12/23/88 Minority ownership (12.291%) in Apartments a 109 unit garden apartment Frederick, MD complex (RAL Yield + Equities IV Limited Partnership, an affiliated limited partnership owns the remaining interest)
Champion Auto Center 02/28/89 A 7,176 square foot building Ashwaubenon, WI 28,800 sq. ft. of land
Camelot Homes 10/17/89 73 mobile home sites on 39 acres Mobile Home Park of land Pulaski, WI*
Muir Heights 01/12/90 66 unit apartment complex Apartments Madison, WI*
Forest Downs 01/03/91 35 unit apartment complex Apartments Hales Corners, WI*
*Denotes a material property, having gross revenues greater than 10% of total revenues.
The real estate business is highly competitive and the Partnership competes with other real estate investment entities many of which have greater financial resources. No one firm or group of firms, in the opinion of the General Partners, is dominate in the industry. The Partnership, therefore, faces substantial competition from a variety of sources for attractive real estate investment opportunities and attracting and retaining tenants for its existing properties.
Any commercial, residential or mobile home community properties acquired by the Partnership have competition for tenants from similar properties in the vicinity. To the extent that the Partnership owns or acquires commercial properties, such as restaurants or shopping centers, which have leases entitling the Partnership to participate in gross receipts of tenants above fixed minimum amounts, the success of the Partnership will depend in part on the success of its tenants in competing with similar businesses in the vicinity.
Leases on Investment Properties:
The mobile home parks and apartments lease rental spaces (apartments) and receive income on a monthly basis from tenant leases which normally have lease terms of one year or less.
In the opinion of management of the Partnership, all properties are adequately covered by insurance.
MATERIAL PROPERTIES - -------------------
Following is information with respect to each property whose revenues are greater than 10% of total revenues as denoted above.
The Federal tax basis for each of the material properties is identical to the book basis as listed in Schedule III on page of this report. Depreciation information for tax purposes on the properties is as follows:
Type of Asset Rate Method Depreciable Life ------------- ---- ------ ---------------- Land Improvements SL MACRS 15-40 Year Building SL MACRS 31.5-40 Year Equipment DDB MACRS 7-12 Year
Item 3.
Item 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal proceedings.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during 1995.
PART II
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a)&(b) As of March 30, 1996, there were approximately 1,150 record holders of Interests of the Partnership. There is no public market for Interests and it is not anticipated that a public market for Interests will develop. The General Partners will not redeem or repurchase Interests.
(c) All cash available for distribution other than sale or refinancing proceeds is distributed 95% to the Limited Partners and 5% to the General Partners, at least semi -annually. See attached financial statements and footnotes for a detailed discussion of amounts and timing of distributions to Limited Partners.
Item 6.
Item 6. SELECTED FINANCIAL DATA
(A) The Net Income per Interest is computed on the basis of the net income allocated to the Limited Partners divided by the outstanding Interests at the end of the period.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RAL INCOME + EQUITY GROWTH V LIMITED PARTNERSHIP is a Wisconsin Limited Partnership formed on April 1, 1988, under the Wisconsin Revised Uniform Limited Partnership Act. The Registrant was organized to acquire new and existing income producing properties for cash. Also, the Partnership may acquire undeveloped property on which improvements are to be constructed. The Partnership will not purchase or lease any property from, or sell or lease property to, the General Partners or their Affiliates, other than a purchase of property which such persons have temporarily purchased and held title to on behalf of the Partnership, and then only at their cost.
The Partnership has purchased six income-producing properties to- date (see Item (2)).
Liquidity and Capital Resources:
Properties acquired by the Partnership are intended to be held for approximately seven to ten years. During the properties' holding periods, the investment strategy is to maintain (on the "triple net lease" properties) and improve (on the residential properties) occupancy rates through the application of professional property management (including selective capital improvements). Cash flow generated from property operations is distributed to the partners on a quarterly or semi-annual basis. The Partnership also accumulates working capital reserves for normal repairs, replacements, working capital, and contingencies.
Net cash flow provided from operating activities was $501,000 in 1995, $521,000 in 1994, and $567,000 in 1993. As of December 31, 1995, the Partnership had cash of approximately $255,000 representing undistributed cash flow, working capital reserves, and tenant security deposits. Total short term liabilities were approximately $278,000.
The Partnership has not experienced, and is not currently experiencing any liquidity problems. It is not expected that the Partnership will experience liquidity problems due to the nature of the current liabilities. Approximately $94,000 of the current liabilities represent tenant security deposits. The majority of the remaining current liabilities are accrued and escrowed real estate taxes payable in installments in 1996. The Partnership expects to meet all of its obligations as they come due.
Total distributions to Limited Partners in 1995 were approximately $416,000.
During 1995, the Partnership financed a 17 pad expansion of the Camelot mobile home park in Pulaski, Wisconsin, with a $125,000 bank loan. The note has a 5 year term with a 9.95% interest rate and is secured by a real estate mortgage on the improved lots and a general business security agreement. The pads were completed and ready for occupancy June 1, 1995.
Results of Operations:
Inflation:
The effect of inflation on the Partnership has not been material to date. Should the rate of inflation increase substantially over the life of the Partnership, it is likely to influence ongoing operations, in particular, the operating expenses of the Partnership. All of the Partnership's commercial leases contain clauses permitting pass-through of certain increased operating costs. Residential leases are typically of one year or less in duration; this allows the Partnership to react quickly (through increases in rent) to changes in the level of inflation. These factors should serve to reduce, to a certain degree, any impact of rising costs on the Partnership.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedule on page, incorporated herein by reference.
The supplemental financial information specified by Item 302 of Regulation S-K is not applicable.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
a. Effective November 11, 1994, RAL Income & Equity Growth V Limited Partnership (RAL V) dismissed its prior certifying accountants, Ernst & Young LLP (E & Y), and retained Kolb Lauwasser & Company, S.C. as its new certifying accountants. E & Y's report on RAL V's financial statements for the fiscal year ended December 31, 1993 contained no adverse opinion or a disclaimer of opinion, and was not qualified as to uncertainty, audit scope or accounting principles. The decision to change accountants was approved by RAL V's general partners.
During the fiscal year ended December 31, 1993 there were no disagreements between RAL V and E & Y on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of E & Y, would have caused it to make a reference to the subject matter of the disagreements in connection with its reports.
None of the "reportable events" described in Item 304(a)(1)(ii) occurred with respect to RAL V within the fiscal year ended December 31, 1993.
b. Effective November 11, 1994, RAL V engaged Kolb Lauwasser & Company, S.C. as its principal accountants. During the two fiscal years ended December 31, 1993 and the subsequent interim period to the date hereof, RAL V did not consult Kolb Lauwasser & Company, S.C. regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The General Partners of RAL Income + Equity Growth V Limited Partnership are Robert A. Long, John A. Hanson, Thomas R. Brophy, and Bart Starr. The General Partners manage and control the Partnership's affairs and have the general responsibility and the ultimate authority in all matters affecting the partnership's business. The Partnership has available to it the services, personnel, and experience of certain other organizations affiliated with the General Partners, including RAL Asset Management Group. The relationship of the General Partners to their affiliates is described under the caption "Conflicts of Interest" on pages 10 through 12 of the Prospectus, a copy of which is filed with Form S- 11 for this Partnership and is incorporated herein by reference.
The general partners and significant employees of First Financial Realty Management are as follows: Position with RAL Asset Name Management Group - ---- -----------------------
Robert A. Long General Partner John A. Hanson General Partner Thomas R. Brophy General Partner Bart Starr General Partner Douglas C. Heston President (FFRM) Christine D. Kennedy Controller (FFRM)
There is no family relationship among any of the foregoing officers. The business experience of the General Partners and significant employees includes the following:
Robert A. Long, age 54, has, since January 1982, been a partner in RAL Asset Management Group. He is co-founder of RAL Asset Management Group. Since 1966 Mr. Long has been involved in real estate consulting, development and syndication. Mr. Long is a licensed securities agent. Since 1981 Mr. Long has been involved as an individual, general partner, or affiliate in ownership and management of twenty-six (26) mobile home parks totaling over 2,600 pads in the states of Wisconsin and Minnesota. Prior to 1981, Mr. Long developed or purchased over 200 commercial properties in six states and currently owns individually or through partnerships over 50 restaurants (land and building) leased to restaurant operators, including Pizza Hut, Hardee's, Taco Bell, and Rocky Rococo (or their franchisees). Mr. Long also played professional football for the Green Bay Packers, Atlanta Falcons, and Washington Redskins. Mr. Long received a Bachelor of Science Degree in Business from Wichita State University in 1965 and is currently Executive Director of the Vince Lombardi Scholarship Fund for Wichita State University. Mr. Long is also on the Board of Directors of Roundy's Inc., a major Midwest food distributor and originator of the Pick 'N Save stores. John A. Hanson, age 54, has, since March 1982, been a partner in RAL Asset Management Group. Mr. Hanson is involved individually, as a general partner, or as an affiliate, in the ownership and management of twenty-six (26) mobile home parks in the states of Wisconsin and Minnesota. Mr. Hanson has been involved in pension and profit-sharing and tax consulting for 25 years. In 1975 he founded, and since that time has been president of Pension Designers, Inc., of Appleton, Wisconsin, a firm that specializes in structuring and consulting with respect to qualified retirement plans, estate planning, investment sales and sales of life, health and disability insurance products to individuals, groups or corporations. From 1966 to 1971 Mr. Hanson was engaged in tax consulting, having management and tax accounting responsibilities for a farm management firm with approximately 200 clients. Mr. Hanson is past president of the Fox River Valley Association of Life Underwriters, and the General Agents and Managers Association, an associate member of the American Society of Pension Actuaries, a member of the International Association of Financial Planners, a qualifying and life member of the Million Dollar Round Table, and a registered principal with the National Association of Securities Dealers. Mr. Hanson received his Bachelor of Science Degree in Agri-Business from the University of Wisconsin - River Falls in 1966. Mr. Hanson is a licensed securities agent.
Thomas R. Brophy, CLU, ChFC., age 50, has, since March 1982, been a partner of RAL Asset Management Group. Mr. Brophy is involved individually, as a general partner, or as an affiliate in the ownership and management of twenty-six (26) mobile home parks in the states of Wisconsin and Minnesota which total approximately 2,600 pads. Mr. Brophy has been a NASD registered securities representative since 1969, active in the marketing and sales of mutual funds, unit investment trusts, stocks, bonds, limited partnerships and private ventures. Since 1967 Mr. Brophy has also been active in the marketing, selling, training, supervising and managing of personnel, with respect to qualified retirement plans and personal or business life, health and disability insurance plans. He is active in the financial planning field, having been conferred the degree of Chartered Financial Consultant, by the American College, Bryn Mawr, PA, in 1984. He is associated with the Principal Financial Group. Mr. Brophy is an active member of the National and Wisconsin Association of Life Underwriters, Million Dollar Round Table, Fox Valley Estate Planning Council and International Association of Financial Planners. He is recipient of the Fox River Valley Association of Life Underwriters' 1983 "Agent of the Year" award. A 1967 Bachelor of Science graduate from Marquette University, Mr. Brophy went on for advanced studies in insurance, receiving his Chartered Life Underwriter (CLU) degree from the American College, Bryn Mawr, PA, in 1975. Mr. Brophy is a licensed securities agent.
Bart Starr, age 63, has, since January 1984, been a partner in RAL Asset Management Group. He is a University of Alabama graduate with a B.S. Degree in Education. Since 1970, he has been a partner in the Bart Starr Motor Company, Birmingham, Alabama, and since January 1984. Since 1979 he has been a member of the Board of Directors of the Sentry Insurance Company, Stevens Point, Wisconsin. He was a Green Bay Packer football player from 1956- 1972, the Green Bay Packer Head Coach from 1975-1983, the NFL Most Valuable Player in 1966, and the Most Valuable Player in Super Bowls I and II. Mr. Starr was a CBS Game Analyst in 1973 and 1974 and the first winner of the Byron White Award in 1967. Mr. Starr has been the recipient of numerous civic and sports awards and is actively engaged in many charitable and public service organizations.
The following individuals are the employees of the General Partners who make significant contributions to the business of the Partnership:
Douglas C. Heston, age 42, is President of First Financial Realty Management (FFRM). FFRM and affiliates own and/or manage over 50 investment properties. Mr. Heston received a B.A. degree from Duke University (North Carolina) with a double major in Economics and Public Policy Analysis (Statistics) in 1975. He received an M.S. degree in Real Estate Investment Analysis from the University of Wisconsin in 1979. Previously he worked for real estate appraisal firms in Atlanta and Milwaukee. He co-founded RAL Asset Management Group in 1981 and left at the end of 1984 to found his current firm.
Christine D. Kennedy, age 30, joined RAL Asset Management Group in December, 1990, as Assistant Controller. In November, 1991 she was promoted to Controller. She is now Controller for First Financial Realty Management. Prior to that she worked in the audit department of Arthur Young & Company in Milwaukee, Wisconsin for approximately three years. She received her B.B.A. in Accounting from the University of Wisconsin-Whitewater in 1987. She is a Certified Public Accountant.
Item 11.
Item 11. EXECUTIVE COMPENSATION
(a,b,c, and d) The Registrant has not paid and does not propose to pay any executive compensation to the General Partners or any of their affiliates (other than described in Item 13 below).
(e) There are no compensatory plans or arrangements regarding termination of employment or change of control.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person owns of record or is known by the Registrant to own beneficially more than 5% of the outstanding Interests of the Registrant as of March 30, 1996.
As of March 31, 1996, the General Partners own 3 Limited Partnership Interests in the Registrant.
(c) None
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a and b) Certain General Partners own or control businesses which have agreed to perform a variety of services for the Partnership.
The Partnership also has various agreements with businesses owned by, controlled by, or affiliated with certain General Partners which entitle such businesses to receive fees for services rendered on terms established by the General Partners as summarized below:
- Reimbursement of certain expenses at the lower of cost or the prevailing rates for comparable services;
- Property management fees at 5% of gross revenues for residential properties, 6% for commercial properties if an Affiliate provides leasing related services, or 3% if such services are not provided, and 1.6% for net leased properties with a lease term of ten years or more for the first five years of the lease term and 1% thereafter;
- Real estate commissions of up to 3% of the contract price subject to certain limitations.
- Costs and fees paid or payable to affiliates of the General Partners for the years ended December 31, 1995, 1994 and 1993 are as follows:
The General Partners receive 5% of all Cash Available for Distribution. Distributions paid to the General Partners were $22,000 in 1995, $28,000 in 1994 and $32,000 in 1993.
(c) No management person is indebted to the Registrant. (d) Not applicable.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1 and 2) See Index to Financial Statements and Financial Statement Schedule on Page
(b) Reports on Form 8-K
None
(c) Exhibits See Exhibit 27.
(d) Financial Statement Schedule See Index to Financial Statements and Financial Statement Schedule on Page.
RAL INCOME + EQUITY GROWTH V LIMITED PARTNERSHIP (A Wisconsin Limited Partnership)
TABLE OF CONTENTS TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
COVERED BY REPORTS OF INDEPENDENT AUDITORS
Reports of Independent Auditors
Balance Sheets at December 31, 1995 and 1994
Statements of Income for the years ended December 31, 1995, 1994 and 1993 Statements of Partners' Equity for the years ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993
Notes to Financial Statements
Financial statement schedule: III - Real estate and accumulated depreciation Schedules, other than those listed, are omitted for the reason that they are inapplicable or equivalent information has been included elsewhere herein.
INDEPENDENT AUDITOR'S REPORT
January 23, 1996
To the Partners of RAL Income + Equity Growth V Limited Partnership
We have audited the accompanying Balance Sheets of RAL Income + Equity Growth V Limited Partnership as of December 31, 1995 and 1994, and the related Statements of Income, Partners' Equity and Cash Flows for the years then ended. Our audits also included the financial statement schedule listed in the Table of Contents at Item 14. These financial statements and financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule 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 1995 and 1994 financial statements referred to above present fairly, in all material respects, the financial position of RAL Income + Equity Growth V Limited Partnership as of December 31, 1995 and 1994, and the results of their operations and cash flows for the years then ended in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
Respectfully submitted,
Kolb Lauwasser & Co., S.C.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Partners of RAL Income + Equity Growth V Limited Partnership
We have audited the accompanying balance sheet of RAL Income + Equity Growth V Limited Partnership, a Wisconsin Limited Partnership (the Partnership), as of December 31, 1993, and the related statements of income, Partners' equity and cash flows for each of the two years in the period ended December 31, 1993. Our audits also included the financial statement schedule listed in the Table of Contents at Item 14. These financial statements and financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule 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 financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 1993, and the results of its operations and its cash flows for the two years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
Milwaukee, Wisconsin January 24, 1994 ERNST & YOUNG LLP
RAL INCOME + EQUITY GROWTH V LIMITED PARTNERSHIP Notes to Financial Statement ----------------------------- For the years ended December 31, 1995, 1994 and 1993
Note #1 Summary of Significant Accounting Policies - ------- ------------------------------------------ A. Organization and Nature of the Business ---------------------------------------
RAL Income + Equity Growth V Limited Partnership (the Partnership) is a Wisconsin limited partnership formed on April 1, 1988, under the provisions of the Wisconsin Revised Uniform Limited Partnership Act, to acquire for cash, operate, lease, develop and eventually sell real estate properties. The Partnership owns and operates two mobile home parks and an apartment complex located in the upper midwest. It holds a minority interest in another apartment complex located in Maryland. The Partnership also leases a commercial property to a retail/service business in the upper midwest. The Partnership will terminate December 31, 2018, except in the event of prior sale of the Partnership's properties, action by a majority interest of the limited partners, or certain other events.
Effective June 9, 1990, the Partnership completed its offering of limited partnership interests. A total of 9,866 interests were sold for an aggregate contribution of $9,866,000. In connection with the sale of limited partnership interests, the Partnership incurred approximately $1,085,000 of costs to raise capital, which were charged against partners' equity.
B. Method of Accounting -------------------- Assets, liabilities, revenue and expenses are recognized on the accrual basis method of accounting.
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 reporting period. Actual results could differ from these estimates.
C. Income-Producing Properties --------------------------- Income-producing properties are carried at the lower of cost less accumulated depreciation or fair value. Cost includes acquisition fees paid to RAL Asset Management Group. Management periodically evaluates a property's fair value based upon occupancy rate and comparison to similar properties in the same geographic area.
For financial statement purposes, depreciation is determined using the straight-line method. For income tax reporting purposes, building and land improvements are depreciated using the straight-line method while equipment is depreciated using accelerated methods. Depreciable lives for financial statement and income tax purposes are set forth below:
D. Allowance for Doubtful Accounts ------------------------------- Receivables are reviewed periodically by management to determine the adequacy of the allowance for doubtful accounts. Based upon managements' evaluation, no allowance for doubtful accounts was necessary as of December 31, 1995 and 1994.
E. Deferred Charges - ---------------- Costs incurred with respect to organizing the Partnership were deferred and have been fully amortized. Prepaid management fees incurred in the initial public offering were amortized to expense on the straight-line method over the term (ten years) of the management agreement and have been fully amortized. Commission fees incurred to lease the properties are deferred and amortized over the respective lease term. The noncompete agreement is being amortized on a straight-line basis over a five-year period.
Costs incurred in obtaining financing have been capitalized and are amortized over the term of the agreement (five years).
====== ====== F. Leases ------ The Partnership has determined that all leases relating to the income-producing properties are properly classified as operating leases; therefore, rental income is reported when earned and the cost of each of the properties, excluding cost of land, is depreciated over its estimated useful life.
G. Income Taxes ------------ No income taxes will be payable or provided by the Partnership since net income or loss is includable in the respective tax returns of the partners. In the initial year of ownership of partnership interests, each partner's share of taxable income or loss, tax credits and distributions is allocated to them on a pro rata basis that considers the number of days in the year during which their respective interests were held.
H. Cash and Cash Equivalents ------------------------- For purposes of the Statements of Cash Flows, the Partnership considers all short-term investments in interest-bearing bank accounts and certificates of deposits with a maturity of three months or less, to be equivalent to cash. Several demand deposit accounts are at one financial institution. Such funds on deposit exceeded the federally insured limit by $173,381 and $66,000 for the years ended December 31, 1995 and 1994, respectively.
I. Reclassifications ----------------- Certain information contained in the 1993 financial statements has been reclassified to conform with the 1995 and 1994 presentation.
Note #2 Investment in Joint Venture - ------- --------------------------- On December 23, 1988, the Partnership entered into a joint venture agreement with an affiliated partnership to acquire and operate the Cedar Crossing Apartments. All assets, liabilities, revenue and expenses of the joint venture are included in the financial statements of the affiliate with the appropriate adjustment of income for the Partnership's participation in the joint venture. Profits, losses and distributions are allocated 12.291% to the Partnership and 87.709% to the affiliate.
Note #3 Income-Producing Properties - ------- ---------------------------
Note #4 Leases of Income-Producing Properties - ------- -------------------------------------
Note #5 Note Payable - ------- ------------ The Company is indebted to Mitchell Bank on a five year note dated February 16, 1995. The note requires monthly payments of $1,658 including interest at 9.95% plus a balloon payment due February 16, 2000. The note is secured by a real estate mortgage on the improved lots at a mobile home park located in Pulaski, Wisconsin and a general business security agreement. 118,718 =======
Note #6 General Provisions of the Limited Partnership Agreement - ------- ------------------------------------------------------- Pursuant to the terms of the partnership agreement, net profits or losses of the Partnership from operations are generally allocated 95% to the limited partners and 5% to the general partners. Notwithstanding the foregoing, all depreciation from tax-exempt use properties is allocated to tax-exempt limited partners.
In general, subject to certain limitations, all income from the sale of property will be allocated first to the limited partners with deficit capital accounts, then to the limited partners to the extent of any depreciation deductions not included in their deficit capital accounts, then to the general partners in an amount equal to the general partners' share of the amount distributable to the general partners as sale or refinancing proceeds and the remainder to the limited partners in proportion to the number of interests held by each of them on the date of such sale or other disposition provided that the general partners shall be allocated at least 1% of such income. Losses on the sale of property will be allocated 95% to the limited partners and 5% to the general partners.
At least semiannually, Cash Available for Distribution (as defined in the partnership agreement) from operations is distributed 95% to the limited partners and 5% to the general partners.
Sale or refinancing proceeds shall be distributed first to the limited partners until they have received an amount equal to their capital contribution and then to the limited partners until such amount, when added to Distributions of Cash Available for Distribution, equals their investment preference of 10% simple interest per annum and then 85% to the limited partners and 15% to the general partners.
The partnership agreement provides that, among other things, the general partners are responsible for managing all aspects of the operations of the Partnership and may ultimately be held responsible for any unpaid general obligations of the Partnership, except for those, if any, which are on a nonrecourse basis.
Note #7 Related Party Transactions - ------- -------------------------- Certain general partners own or control businesses which have agreed to perform a variety of services for the Partnership. In addition, certain general partners were securities agents for the managing dealer which originally offered the limited partnership interests.
In consideration for these services, the general partners and their affiliates have received or will in the future receive certain compensation at amounts which are provided by the partnership agreement. The following table sets forth the types, amounts and recipients of compensation paid annually by the Partnership to the general partners and their affiliates:
Affiliate and Service Amount of Compensation --------------------- ---------------------- General partners' and affiliates At lower of cost or prevailing reimburable expenses. rates at which comparable services could have been obtained in the same geographic area for similar services. The
amount of expenses reimbursed was $1,767 in 1993.
Property management fee payable Residential property: to RAL Asset Management Group for property management and rental At rates prevailing for services. comparable services where the properties are located, but not to exceed 5% of gross revenues.
Other than residential properties:
At rates prevailing for comparable services where properties are located, but not to exceed 6% of gross revenues where leasing and related services are provided, or 3% if such services are not provided. Property under a net lease with a term of ten years or more is subject to an annual
fee of 1.6% of gross revenues per year for the first five years plus an annual fee of 1% of gross revenues per year thereafter.
Total property management fees incurred were $16,800 in 1993.
Effective June 1, 1993, the Partnership entered into new property and partnership management agreements. The partnership management agreement is with an unrelated management company. The property management agreement is with a related entity owned by the same general partners. The related property management firm simultaneously subcontracted with the same unrelated management company handling the partnership management. The terms and conditions of these agreements are similar to the above related party agreements, which they replace.
RAL-YIELD EQUITIES V LIMITED PARTNERSHIP (A Wisconsin Limited Partnership)
NOTES TO SCHEDULE III
(a) All properties are unencumbered at December 31, 1995, except for Camelot Mobile Home Park's most recent expansion as discussed previously.
(b) Includes personal property.
(c) The aggregate cost of land, buildings and improvements for federal income tax purposes includes the Partnership's share of the Cedar Crossing Apartments fixed assets. For book purpose the amount invested is treated as an investment on the balance sheet and is not included in fixed assets.
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 bythe undersigned, thereunto duly authorized.
RAL INCOME + EQUITY GROWTH V LIMITED PARTNERSHIP
BY: Robert A. Long -------------------------------------- Robert A. Long, General Partner
DATE: March 30, 1996 -----------------------------------
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.
Signature Title Date - -----------------------------------------------------------------
Robert A. Long Managing Partner 3/30/96 - -------------------- RAL Asset Management ---------- Robert A. Long Group and General Partner of RAL Income + Equity Growth V Limited Partnership
John A. Hanson Partner - RAL Asset 3/30/96 - -------------------- Management Group and ---------- John A. Hanson General Partner of RAL Income + Equity Growth V Limited Partnership
Christine D. Kennedy Controller, First Financial 3/30/96 - -------------------- Realty Management ---------- Christine D. Kennedy