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8-K - FORM 8-K - RANCON REALTY FUND V | d472129d8k.htm |
EX-99.2 - LETTER TO CUSTODIANS AND PENSION PLAN TRUSTEES FROM THE GENERAL PARTNERS - RANCON REALTY FUND V | d472129dex992.htm |
Exhibit 99.1
January 28, 2013
Dear Limited Partner in Rancon Realty Fund V:
During the time that Rancon V has existed, the investment culture has gone full-circle several times. Real estate investments, stocks and mutual funds, municipal bonds, even gold and precious metals have been in and out of favor. Revisions to state and federal income tax regulations have had an impact on the perceived and actual value of investments. Today, the media is filled with concerns about unemployment, gas prices and even the fiscal cliff. Throughout it all, the long-term goal of your partnership has remained the same to create, improve and maintain the value of the properties owned by Rancon V.
HELP RANCON REALTY FUND V GO GREEN!
In an effort to reduce paper and the costs associated with printing and mailing of reports such as this one, wed like to offer you the option of receiving your quarterly and annual reports and other similar communications via email. If you are interested, please send an email to rancon@myinvestment.com and include your email address, plus your name and current mailing address and the P* number from the address section on the outside cover of this report. Reports and other communications sent to you via email will be sent to you without cost. You may change your election at any time and, even if you elect to receive materials by email, you may request a paper copy of the referenced materials at no charge by calling Investor Services toll free at 888.909.7774.
PROPERTY UPDATE
The thirteen properties owned by Rancon Realty Fund V as a part of the Tri City Corporate Centre include the following nine office buildings and four retail properties.
Office Property | Description/Square Footage | |
Brier Corporate Center | Three-story office building /104,501 square feet of space | |
Carnegie Business Center II | Two two-story office buildings/50,867 total square feet of space | |
Lakeside Tower | Six-story office building/112,716 square feet of space | |
One Carnegie Plaza | Two two-story office buildings/107,275 total square feet of space | |
Two Carnegie Plaza | Two-story office building/68,957 square feet of space | |
Three Carnegie | Two-story office building/83,698 square feet of space | |
One Parkside | Four-story office building/70,068 square feet of space | |
Two Parkside | Three-story office building/82,039 square feet of space | |
Three Parkside | Two-story office building/29,076 square feet of space | |
Retail Property | Description/Square Footage | |
Ballys Health Club | Health club facility/25,000 square feet of space | |
Outback Steakhouse | Restaurant/6,500 square feet of space | |
Palm Court Retail III | Retail building/6,004 square feet of space | |
Pat & Oscars | Restaurant/5,100 square feet of space |
Combined occupancy of the thirteen properties as of September 30, 2012, was 69%, a decrease from 74% as of September 30, 2011, primarily due to the downsizing of a major tenant at Brier Corporate Center. According to the recent CBRE MarketView report on the Inland Empire Office Market, Since the fourth quarter of 2008, the overall vacancy rate in the Inland Empire has been above 20% and is expected to remain at this level through the third quarter of next year. Our goal is to continue strengthening the property values by maintaining and increasing occupancy, and by managing the upkeep and appearance of the properties and grounds.
261 Boeing Court
Livermore, California 94551
925.241.7143 Fax 925.371.0167
Toll-free 888.909.7774
Rancon V is required, by the terms of its partnership agreement, to dissolve by no later than December 31, 2015. In 2013, we intend to explore the options available in connection with the anticipated dissolution of the Partnership.
VALUATION ESTIMATE FOR 2013
The per Unit valuation estimate for Rancon Realty Fund V as of December 31, 2012, is $440 per Unit. The General Partners have established the per Unit valuation estimate based solely on the estimated net asset value of the Partnerships properties and other assets. For further detail on how the valuation was determined, please refer to our Current Report on Form 8-K, dated January 25, 2013, which has been filed with the SEC, and can be obtained by request to Investor Services or from the SECs website at www.sec.gov.
Unlike stocks and mutual funds, which experience daily price changes, the Partnerships valuation of its outstanding Units is made once a year, as of December 31, and is not revised throughout the year. It thus does not reflect changes in the net asset value of the Partnerships properties and other assets that may occur throughout the year. No third-party appraisals were obtained in connection with the General Partners valuation of the Units, and the General Partners valuation and the methodology they employed to value the Units has not been verified or reviewed by any third-party advisor, including Rancon Vs auditors. The actual amount for which the Partnerships properties are eventually sold may be materially lower than the current estimates of their fair market values made by the General Partners. The General Partners valuation of the Units also does not represent the price Units can be sold for on the informal secondary market. That price is generally 10 to 40% of the current per Unit valuation, less any fees or commissions that may be charged.
Some investors have contacted us, asking how to liquidate (sell) their Partnership Units. Remember that Rancon Realty Fund V is not publicly traded, so options for selling are extremely limited. Upon request, we can provide a list of potential buyers that you can contact and possibly negotiate with to facilitate the sale of your Units. While we can provide a list of potential buyers, we cannot confirm the potential buyers ability to follow through on any proposal they may make to you to purchase your Units. Anyone who purchases Rancon V units does so at prices between 10% and 40% of the current valuation estimate (noted above).
This letter also includes unaudited financial information for the quarter ended September 30, 2012. Reference is made to the Partnerships Quarterly Report on Form 10-Q, as filed with the SEC, for further information on the Partnerships result of operations for the quarter ended September 30, 2012.
If you have questions or need additional information, please dont hesitate to contact Investor Services, toll free at 888.909.7774. We are here to help you if you have questions about changing your address or transferring your IRA to a new custodian, contact us either by phone or by visiting our website at www.myinvestment.com. On the website, you can find information on how to contact us by email, and even submit a change of address electronically.
Sincerely,
Dan Stephenson | Judy Henrich | |||
General Partner | Preferred Partnership Services, Inc. |
Note: Certain statements contained in this Report may be deemed to be forward-looking statements under the federal securities laws. Such statements generally can be identified by our use of words such as may, will, can, intend, anticipate, estimate, think, continue, or other similar words. For a list of the factors that could cause actual results to vary materially from those expressed in these forward-looking statements, see our Annual Report on Form 10-K for the year ended December 31, 2011, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.
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RANCON REALTY FUND V, A CALIFORNIA LIMITED PARTNERSHIP |
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Consolidated Balance Sheets (in thousands, except units outstanding) (Unaudited) |
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September 30, 2012 |
December 31, 2011 |
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Assets |
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Investments in real estate: |
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Rental properties |
$ | 77,827 | $ | 78,666 | ||||
Accumulated depreciation |
(31,136 | ) | (29,775 | ) | ||||
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Rental properties, net |
46,691 | 48,891 | ||||||
Land held for development |
1,494 | 1,494 | ||||||
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Total investments in real estate |
48,185 | 50,385 | ||||||
Cash and cash equivalents |
4,990 | 5,773 | ||||||
Accounts receivable, net |
126 | 125 | ||||||
Deferred costs, net of accumulated amortization of $2,115 and $1,938 as of September 30, 2012 and December 31, 2011, respectively |
2,329 | 1,917 | ||||||
Prepaid expenses and other assets |
3,010 | 2,540 | ||||||
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Total assets |
$ | 58,640 | $ | 60,740 | ||||
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Liabilities and Partners Equity (Deficit) |
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Liabilities: |
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Notes payable |
$ | 50,940 | $ | 51,721 | ||||
Accounts payable and other liabilities |
1,134 | 723 | ||||||
Prepaid rent |
212 | 76 | ||||||
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Total liabilities |
52,286 | 52,520 | ||||||
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Commitments and contingent liabilities (Note 7) |
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Partners Equity (Deficit): |
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General Partner |
(2,381 | ) | (2,170 | ) | ||||
Limited partners, 83,898 limited partnership units outstanding as of September 30, 2012 and December 31, 2011 |
8,735 | 10,390 | ||||||
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Total partners equity |
6,354 | 8,220 | ||||||
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Total liabilities and partners equity |
$ | 58,640 | $ | 60,740 | ||||
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RANCON REALTY FUND V, A CALIFORNIA LIMITED PARTNERSHIP |
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Consolidated Statements of Operations (in thousands, except per unit amounts and units outstanding) (Unaudited) |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating revenue |
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Rental revenue and other |
$ | 2,733 | $ | 2,876 | $ | 8,102 | $ | 8,731 | ||||||||
Tenant reimbursements |
235 | 205 | 557 | 485 | ||||||||||||
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Total operating revenue |
2,968 | 3,081 | 8,659 | 9,216 | ||||||||||||
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Operating expenses |
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Property operating expenses |
1,943 | 1,898 | 4,869 | 4,918 | ||||||||||||
Depreciation and amortization |
1,064 | 1,247 | 3,278 | 3,641 | ||||||||||||
General and administrative |
198 | 225 | 692 | 708 | ||||||||||||
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Total operating expenses |
3,205 | 3,370 | 8,839 | 9,267 | ||||||||||||
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Operating loss |
(237 | ) | (289 | ) | (180 | ) | (51 | ) | ||||||||
Interest and other income |
23 | | 23 | 9 | ||||||||||||
Interest expense (including amortization of loan fees) |
(728 | ) | (742 | ) | (2,195 | ) | (2,237 | ) | ||||||||
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Loss before gain on sale of property |
(942 | ) | (1,031 | ) | (2,352 | ) | (2,279 | ) | ||||||||
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Net gain on sale of property |
486 | | 486 | | ||||||||||||
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Net loss |
$ | (456 | ) | $ | (1,031 | ) | $ | (1,866 | ) | $ | (2,279 | ) | ||||
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Basic and diluted net loss per limited partnership unit |
$ | (4.60 | ) | $ | (11.06 | ) | $ | (19.73 | ) | $ | (24.45 | ) | ||||
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Rancon Realty Fund V
261 Boeing Court
Livermore, CA 94551
Address Service Requested