UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 0-15690
RESOURCES PENSION SHARES 5, L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3353722
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Greenwich, CT 06830
(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code 203-862-7000
Securities registered pursuant to Section 12(b) of the Act:
None
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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 registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
Exhibit Index is set forth on page IV-1.
<PAGE>
PART I
Item 1. Business
General
Resources Pension Shares 5, L.P. (the "Registrant") is a Delaware limited
partnership which was formed on February 11, 1986 as an investment medium
primarily for tax-exempt investors. Registrant was formed for the purpose of
investing primarily in participating mortgage loans and, to a lesser extent, in
land sale-leasebacks on improved, income-producing commercial real estate.
Through April 1, 1998, Disposition Proceeds (as hereinafter defined) must be
reinvested by Registrant or held as reserves. Thereafter, the Administrative
General Partner may either reinvest or distribute any such Disposition Proceeds.
Due to the substantial changes which have occurred in the real estate financing
markets during the last few years, none of the mortgage loans made after 1992
contain provisions permitting Registrant to participate in the economic benefits
of any increase in a property's revenue or the value of the property
("Participations"). Such mortgage loans also do not provide for a certain
portion of the base interest to accrue and be paid upon maturity of the
respective mortgage loan, upon sale or refinancing of the property or after a
stated period of time. Certain loans made prior to 1993 do contain such
features. The security for any mortgage loan investment is intended to consist
of commercial and industrial properties (such as office buildings, shopping
centers and industrial buildings) and, possibly, leasehold interests in
properties.
The Investment General Partner of the Registrant, Resources Pension Advisory
Corp., and the Administrative General Partner, Resources Capital Corp., are
wholly-owned subsidiaries of Presidio Capital Corp. ("Presidio"). Resources
Pension Advisory Corp. and Resources Capital Corp. were, until November 3, 1994,
wholly-owned subsidiaries of Integrated Resources Inc. ("Integrated"). On
November 3, 1994, Integrated consummated its plan of reorganization under
Chapter 11 of the United States Bankruptcy Code, at which time, pursuant to such
plan of reorganization, the newly formed Presidio purchased substantially all of
Integrated's assets. The Associate General Partner is Presidio AGP Corp.
("Presidio AGP"), a Delaware corporation, which replaced as Associate General
Partner Richard H. Ader, a former executive officer of Integrated.
Effective with the consummation of Integrated's plan of reorganization, Presidio
entered into a management and administrative agreement with Concurrency
Management Corp. ("Concurrency"). Effective January 1, 1996, Wexford Management
Corp. (formerly Concurrency) assigned its agreement to provide administrative
services to Presidio and its subsidiaries to Wexford Management LLC ("Wexford").
In December 1994, Richard Ader notified Registrant of his withdrawal as
Associate General Partner. The withdrawal became effective, after 60 days prior
written notice to Limited Partners, on February 28, 1995. Upon the effective
date of such withdrawal, Presidio AGP, which is a wholly-owned subsidiary of
Presidio Capital Corp., became the Associate General Partner. The Administrative
General Partner is also a general partner in several other limited partnerships.
Registrant registered 16,000,000 units of limited partnership interest at $10
per interest (the "Units") with the Securities and Exchange Commission,
6,000,000 of which were for Registrant's Reinvestment Plan. On February 12,
1988, Registrant terminated its offering of Units, having raised $56,907,425
<PAGE>
from approximately 5,800 investors (including $699,565 from Units issued
pursuant to the Reinvestment Plan). After the payment of a nonaccountable
expense reimbursement to the Administrative General Partner, Registrant had
approximately $54,238,000, including evaluation fees and acquisition fees paid
or payable to the Administrative General Partner, available for investment and
reserves.
Mortgage Investments of Registrant
As of December 31, 1996, seven mortgage loans, consisting of six first mortgage
loans and one wraparound mortgage loan, funded by Registrant in the aggregate
amount of $30,762,500 were still outstanding. The following table sets forth, as
of December 31, 1996, the outstanding mortgage loan investments made by
Registrant:
<TABLE>
<CAPTION>
Mortgage Loans as of December 31, 1996
------------------------------------------------------------------------------------
Rentable Mortgage Date Maturity Current Deferred
Property Sq.Ft Amount (1) Funded Date Interest Interest
-------- ------- -------------- ------ ----- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Shopping Centers
Santa Ana Square
Santa Ana, California 32,159 $ 2,600,000 3/88 3/97 9.62%-10.91% 1.29% - 0%
Lucky Supermarket
Buena Park, California 47,000 2,200,000 5/88 5/05 10.0 (2) -
Avon Marketplace
Avon, Colorado 70,211 3,750,000 3/93 4/03 8.35% -
Office Buildings
Bank of California
Seattle, Washington 618,041 8,500,000 (3) 5/88 5/98 7-10.0% 3.0% - 0%
Xerox Office Bldg. 8.5% - 12.67%
Arlington, Texas 82,566 1,100,000 3/88 3/97 4.55% (2)
Lionmark Corporate Center Columbus,
Ohio 79,415 4,000,000 6/93 6/03 8.5% -
Medford Village Outlet Center
Medford , Minnesota 121,660 8,612,500 7/95 4/98 8.55% -
--------------
$ 30,762,500
==============
1. All of these loans are first mortgage loans except the Bank of
California, which is a wraparound mortgage loan.
2. In addition to fixed interest, Registrant is entitled to contingent
interest in an amount equal to a percentage of the rent received by the
borrower from the property securing the mortgage above a base amount,
payable annually, and/or a percentage of the excess of the value of the
property above a base amount, payable at maturity.
<PAGE>
3. The wraparound mortgage loan is in the amount of $16,500,000, $8,500,000
of which has been funded by Registrant. The balance represents the
underlying first mortgage financing to which Registrant's investment is
subordinate.
</TABLE>
On December 21, 1992, the Investment General Partner, on behalf of Registrant,
foreclosed on the property securing the Garfinkel Loan. On December 9, 1993,
Registrant foreclosed on the mortgage securing the Groton Shopping Center (the
"Groton Loan"). See Item 2, "Properties."
On February 2, 1994 and on October 11, 1994, the respective mortgagors on the
415 East 149th Street and 134-140 East Fordham Road mortgage loans repaid these
loans.
On July 25, 1995, Registrant funded an additional first mortgage loan in the
principal amount of $8,612,500. The loan is secured by the Medford Village
Outlet Center located in Medford, Minnesota. On February 28, 1997, Registrant
funded an additional promissory note in the principal amount of $2,000,000. See
"Mortgage Transactions and Defaults," below.
For the year ended December 31, 1996, the Bank of California and the Medford
loans generated in excess of 15% of Registrant's mortgage interest revenue. For
the year ended December 31, 1995, the Bank of California and Santa Ana mortgage
loans each generated in excess of 15% of Registrant's mortgage interest revenue.
For the year ended December 31, 1994 the Bank of California and the 134-140 East
Fordham loans each generated in excess of 15% of Registrants mortgage interest
revenue.
Mortgage Transactions and Defaults
Allowance for Loan Losses
An allowance for loan losses is established based upon a quarterly review of
each of the mortgages in Registrant's portfolio. In performing the review,
management considers the estimated net realizable value of the property or
collateral as well as other factors, such as the current occupancy, the amount
and status of senior debt, if any, the prospects for the property and the
economic situation in the region where the property is located. Because this
determination of net realizable value is based upon projections of future
economic events which are inherently subjective, the amounts ultimately realized
at disposition may differ materially from the carrying value as of December 31,
1996.
The allowance is inherently subjective and is based on management's best
estimate of current conditions and assumptions about expected future conditions.
Registrant may provide for additional losses in subsequent years and such
provisions could be material.
Certain of the properties, as described below, on which Registrant made loans
have experienced varying degrees of operating or other problems which resulted
in the establishment of an allowance for loan losses.
<PAGE>
Groton Loan
Groton Loan, in the original principal amount of $8,000,000, was collateralized
by a shopping center in Groton, Connecticut. Groton Associates, the mortgagor,
defaulted on the interest payment due September 1, 1991. On September 20, 1991,
Groton Associates filed a voluntary petition for reorganization pursuant to the
provisions of Chapter 11 of the Bankruptcy Code. Registrant, using an internally
generated appraisal prepared with current property data, established a reserve
of $750,000 on the Groton Loan during 1991. In addition, during 1991, Registrant
had established reserves for $528,093 of deferred interest due from Groton
Associates and $129,919 of unamortized acquisition fees incurred when this loan
was funded. In March 1993, Registrant received a third party appraisal of the
property which valued the property at $6,500,000. As a result, Registrant
reserved an additional $750,000 on the principal of this loan during 1993.
In June 1992, the bankruptcy court approved a Stipulation and Order authorizing
Groton Associates to use rents collected to operate its business and remit the
excess cash to Registrant on a monthly basis retroactive to June 1, 1992. The
Investment General Partner, on behalf of Registrant, obtained an order from the
bankruptcy court on July 27, 1993 permitting it to proceed with a foreclosure
against the property and directing Groton Associates to turn over all cash
collateral and provide an accounting for rents. Beginning with the rents due on
August 1, 1993, Registrant began to collect the rents directly. Registrant
commenced a foreclosure action in Connecticut and on September 13, 1993 the
Connecticut court appointed a receiver to collect rents and exercise final
approval of disbursements for the property. All revenues received from the
Groton Property, including the rents, have been included in operating income for
the year ended December 31, 1996.
On December 9, 1993, the Investment General Partner, on behalf of Registrant,
foreclosed on the shopping center securing the Groton Loan located in Groton,
Connecticut. See Item 2, "Properties." At the foreclosure, the value of the
shopping center was determined to be $6,500,000 based on the third party
appraisal of the shopping center previously received by the partnership. All
reserves previously recorded on the loan were written off after the foreclosure
and the remaining balance of $6,500,000 was transferred to the Real Estate
account on Registrant's balance sheet. In February 1994, Registrant paid
approximately $212,000 in past due real estate taxes which were accrued for in
1993. In March 1995 a $1,860,000 provision was necessary on the Groton property.
See Note 5 to the Financial Statements.
Bank of California, Seattle Loan
Bank of California, Seattle Loan, in the principal amount of $8,500,000 ("Wrap
Loan"), is secured by, among other things, the interest of Gum Loong Limited
Partnership ("Gum Loong") in land (the "Land") located in downtown Seattle,
Washington. The building situated on the Land is commonly known as the Bank of
California Building (the "Building"). The Land is subject to a long term ground
lease (the "Ground Lease"). Concurrently with the closing of the Wrap Loan, Gum
Loong acquired the lessor's interest under the Ground Lease and Continental
Seattle Partners L.P. ("CSP"), an affiliate of Gum Loong, acquired the lessee's
interest under the Ground Lease and the fee interest in the Building. CSP also
acquired the lessor's interest under a master (net) sublease with the Bank of
California for the entire Building. A first mortgage on the land ("Land Loan")
in the amount of $8,000,000 is held by Anchor National Life Insurance Company
("Anchor"). Under the provisions of the Wrap Loan, Gum Loong is required to make
the payments required under both the Land Loan and the Wrap Loan to Registrant
<PAGE>
on a monthly basis. Registrant, in turn, then pays Anchor the amounts due under
the Land Loan on a monthly basis. The Wrap Loan is secured by a Wraparound Deed
of Trust dated May 2, 1988 in the amount of $16,500,000 between Registrant and
Gum Loong. The Building is encumbered by a loan ("Building Loan") between the
Bank of Tokyo Trust Company (Seattle Branch) ("BOT") and CSP, in the amount of
$48,000,000, secured by a first mortgage on the Building and a third mortgage on
the Land. This loan is also guaranteed by Gum Loong. Registrant's collateral for
the Wrap Loan is the Land, the Ground Lease, and, subject to the BOT's lien, the
Building.
Registrant received a letter dated April 22, 1993 stating that BOT had commenced
a foreclosure action against CSP for failure to repay the Building Loan which
matured on March 26, 1992. An Option Agreement entered into at the time the Wrap
Loan was made gives BOT the right, after commencing a foreclosure action, to
exercise an option to purchase either (i) the Land Loan and the Wrap Loan from
Anchor and Registrant or (ii) the Land from Gum Loong subject to the Land Loan
and the Wrap Loan. On July 9, 1993, Registrant received notice from BOT that it
intended to exercise the option to purchase the Land.
Gum Loong did not make timely payment of its scheduled July, August, and
September 1993 installments on the Wrap Loan. Registrant utilized its working
capital reserves to make the required payments on the Land Loan. On July 20,
1993 and again on August 9, 1993, Registrant notified Gum Loong that an event of
default had occurred because of the CSP default on the BOT loan and because of
Gum Loong's failure to make scheduled payments. Both Gum Loong and CSP filed for
bankruptcy protection in August 1993, staying the exercise by BOT of its option
to purchase the Land. On September 27, 1993 Registrant, Anchor and Gum Loong
entered into an Interim Stipulation and Order Concerning Cash Collateral, which
was approved by the bankruptcy court on September 29, 1993. On October 5, 1993
Registrant, Anchor and Gum Loong entered into a Second Interim Stipulation and
Order Concerning Cash Collateral, which was approved by the bankruptcy court on
October 5, 1993. Since October 1993, various Cash Collateral Orders have been
entered into which require Gum Loong to make monthly payments to Registrant. The
September 1993 payment and all monthly contract interest payments due thereafter
under the Cash Collateral Orders have been made, including payments due
subsequent to September 30, 1994. The current Cash Collateral Order requires Gum
Loong to make monthly payments to Registrant through the maturity date of the
loan.
On January 31, 1994, a Proof of Claim was filed in connection with the Gum Loong
Bankruptcy by Registrant as it related to amounts due under the Wraparound
Mortgage, including principal, interest and other amounts due. On January 6,
1995, a Proof of Claim was filed in connection with the CSP bankruptcy by the
Registrant for a contingent and unliquidated claim under the Wraparound
Mortgage. Despite the bankruptcy filings by both Gum Loong and CSP, Registrant
had not reserved for this loan. Registrant believes that the collateral for the
Wrap Loan, the Land as encumbered by the Ground Lease, is of sufficient value to
realize the amount due under the Wrap Loan. If BOT exercises the option to
purchase the Land, it will be required as a condition of such exercise to cure
any defaults by Gum Loong.
On or about January 3, 1995, the United States Trustee moved to convert the Gum
Loong Bankruptcy to a Chapter 7 case, or to dismiss the Gum Loong case, or to
set a deadline for filing a plan of reorganization. This motion was scheduled
for a hearing on February 3, 1995. This motion has been adjourned pending the
hearing on BOT's proposed disclosure statement and proposed plan. The hearing on
the adequacy of BOT's proposed disclosure statement was scheduled for April 6,
1995. The Third Amended Disclosure Statement was approved on May 31, 1995.
<PAGE>
Thereafter, BOT sought confirmation of various amended plans to which the
Registrant successfully objected. Such plans included provisions that were
adverse to Registrant's interests. Registrant's objections, and the Bankruptcy
Court's rulings thereon, prompted BOT to make various amendments and revisions
to the proposed plan of reorganization and withdraw various provisions that were
objectionable to Registrant. After extended confirmation hearings on BOT's
proposed plans, the Bankruptcy Court approved the revised Fifth Amended Plan in
September 1995. As part of the approved plan, in September 1995 approximately
$335,000 was paid to Registrant. This amount consisted of approximately $266,000
of interest payments due the Registrant which resulted from two missed interest
payments in 1993, and late charges and interest related to these payments of
approximately $69,000.
The plan calls for, among other things, a Court appointed liquidating agent to
manage the building securing Registrant's loan, and to pay the installments due
under Registrant's loan. The liquidating agent is also required to sell the
building and the property by June 1998 in a sale that must be approved by the
Bankruptcy Court, and to which Registrant may object, or at a court approved
auction in which the Registrant could bid. If the property is sold in a
non-auction sale, the purchaser can buy the building free and clear by
satisfying Registrant's mortgage indebtedness, or purchase the property subject
to Registrant's loan. If the building is purchased subject to Registrant's loan,
the purchaser will have the right to extend the loan for three years from the
present maturity date at a rate of 300 basis points over the yield on three year
United States Treasury notes at that time, paying interest only from May 1998
until the new maturity date. Such a purchaser would also have to pay an
extension fee of 60 basis points if it elects the three year extension option.
134-140 East Fordham Road and 415 East 149th Street
In May 1993, these mortgage loans, in the principal amount of $5,300,000 and
$4,750,000 matured. During the fourth quarter of 1993, Registrant extended the
maturity date to May 1994 at a rate of 10% per annum with monthly payments of
principal and interest based upon a 15 year amortization schedule. Prior to the
extension, Registrant was receiving interest only payments at the original loan
rate of 10.75%. The borrower and its general partners had agreed to give
Registrant a personal guaranty of the loans if at any time the respective
partnerships file a petition under Chapter 11 of the United States Bankruptcy
Code. Registrant received a .5% commitment fee of $50,250. On February 2, 1994,
the mortgagor prepaid the entire amount of the East 149th Street loan.
Registrant received $4,781,922 of gross proceeds consisting of $4,738,540 of
principal and $43,382 of interest. The East Fordham Road loan matured in May
1994. The General Partners extended this loan to July 1, 1995. Monthly principal
and interest payments, effective July 1994, increased to $62,325 from $56,954.
The interest rate, however, remained at 10% per annum. The new payment amount
would reduce the principal balance of the loan to $5 million at the new maturity
date. In addition, the borrower had the option to extend the maturity date to
July 1, 1996 if, as additional collateral, the borrower pledged $500,000 in cash
or an irrevocable letter of credit. On October 11, 1994, the mortgagor on the
134-140 East Fordham Road loan prepaid the entire amount of such loan.
Registrant received $5,238,596 of gross proceeds consisting of $5,178,417 of
principal and $60,179 of interest. Medford Village Loan
On July 25, 1995 Registrant purchased a first mortgage loan in the principal
amount of $8,612,500 for approximately $8,700,000 in cash. The loan has a
floating interest rate, capped at 10%, based on the Eurodollar rate for each
<PAGE>
quarterly interest period plus 280 basis points. It is payable in quarterly
installments of principal and interest, maturing on April 22, 1998 with a
balloon payment of $7,737,500 plus any deferred interest due. The borrower has
the right to two, one year extensions for a fee of $23,500 each year, provided
the loan to value ratio at the time does not exceed 60%. The loan is
collateralized by a guarantee from the borrowers' principals, should the
borrower default, and is secured by a 121,660 square foot shopping center known
as Medford Village Outlet Center located in Medford, Minnesota.
Santa Ana Loan
For the quarter ended September 30, 1996, Registrant recorded an allowance for
loan losses in the amount of $1,547,830 and ceased accruing interest on the
Santa Ana loan. As a result of an economic decline in the surrounding area, the
tenancy at the Santa Ana Shopping Center has been slowly shifting from regional,
credit tenants to local, non-credit tenants. Consequently, although the cash
flow from the operation of the center has not declined, its value has been
eroded due to the shift in tenancy. Management performed cash flow projections
and analyzed data regarding sales of comparable centers in order to estimate the
fair value of the center for the purpose of valuing the loan. Based upon
analysis of the projected cash flow from the center using a 13% capitalization
rate and market comparables indicating a value of approximately $78 per square
foot, the fair value of the center was estimated to be approximately $2,500,000.
The net carrying value of the loan at September 30, 1996, was $4,047,830,
necessitating an allowance of $1,547,830.
DVL Negotiable Promissory Note
On February 28, 1997, Registrant funded a Negotiable Promissory Note (the
"Note") to DVL, Inc. ("DVL"), in the principal amount of $2,000,000 at an annual
interest rate of 12% with interest payable monthly. In addition, Registrant is
entitled to receive payments equal to DVL's excess cash flow (as defined) from
the mortgages underlying DVL's collateral assignment, which is to be applied as
a reduction of principal. The Note matures on February 27, 2000 and may be
pre-paid during the first two years without penalty. The Note is secured by
(among other things) a collateral assignment of DVL's interest in certain
promissory notes payable to DVL which in the aggregate amounted to $4,325,000 as
of February 28, 1997.
Competition
To the extent Registrant reinvests any funds, Registrant will be in competition
with other companies which are engaged in the business of making loans.
Registrant's competition would include a large number of lenders, many of whom
have resources substantially larger than those of Registrant. The principal
competitive factor in Registrant's business is the effective rate charged for
loans and the loan-to-value ratio.
In addition, the properties which secure Registrant's mortgage loans may face
competition from similar properties in the vicinity. To the extent such
competition reduces the gross revenue from the operation of such properties
and/or decreases any appreciation in the value of such properties, such
competition will reduce any contingent interest otherwise payable to Registrant.
Because Presidio (including its affiliates) is the parent of other corporations
in addition to the Investment General Partner and the Administrative General
Partner, such General Partners are or may become affiliated with other entities
which are engaged in businesses that are, or may in the future be, in direct
competition with Registrant.
<PAGE>
Employees
Registrant does not have any employees. The Investment General Partner is
responsible for Registrant's investments in mortgage loans and land
sale-leasebacks, if any, and the Administrative General Partner is responsible
for all administrative functions of Registrant, including asset management of
foreclosed properties. Wexford currently performs accounting, secretarial,
transfer and other administrative services for Registrant. See Item 10,
"Directors and Executive Officers of the Registrant", Item 11, "Executive
Compensation", and Item 13, "Certain Relationships and Related Transactions."
Item 2. Properties
On December 21, 1992, Registrant, through a foreclosure auction, acquired fee
simple title to the Garfinkel property by bidding $3,200,000 of the mortgage
indebtedness owed to it. The Garfinkel property is located in Landover, Maryland
and is part of a regional shopping center known as Landover Mall. The parcel of
land comprises approximately 4.93 acres. The building is a two-story retail
facility consisting of approximately 93,384 rentable square feet of space. The
building contains asbestos-containing material and, on January 27, 1992,
Registrant received $450,000 from the former property owner in exchange for a
release of a personal guarantee which obligated the owner to reimburse
Registrant for asbestos removal to a maximum of $500,000. During June 1992,
$6,950 was paid for remedial cleaning in connection with the asbestos removal
and at December 31, 1996, the unexpended asbestos reserve aggregated $500,829.
Registrant does not presently plan to commence removal of the asbestos until a
purchaser or tenant for the property is identified. As of March 1, 1997,
Registrant has been unable to sell or lease the property, and the building
remains vacant.
On December 9, 1993, Registrant, through a foreclosure, acquired fee simple
title to the Groton Shopping Center. The shopping center is located in Groton,
Connecticut. The parcel of land comprises approximately 17 acres. The property
is a neighborhood strip shopping center containing a gross leasable area of
approximately 118,938 square feet. In addition, the strip center has a parking
area for approximately 450 automobiles. As of March 1, 1997, the Groton Shopping
Center was 77% occupied. On December 9, 1993, Registrant entered into a
supervisory management agreement with Resources Supervisory Management Corp.
("RSMC"), also an affiliate of Presidio, to perform certain functions related to
supervising the management of the Groton property. As such, RSMC is entitled to
receive as compensation the greater of 6% of annual gross revenues when leasing
services are performed or 3% of gross revenues when no leasing services are
performed. During 1994 RSMC entered into an agreement with an unaffiliated local
management company to perform such services on behalf of the Registrant. The
terms of the agreement are substantially the same as the agreement entered into
between Registrant and RSMC. There was no fee earned by RSMC for the year ended
December 31, 1996.
Item 3. Legal Proceedings
For a discussion of Legal Proceedings, please see Note 7 ("Commitments and
Contingencies") to the Financial Statements.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report through the solicitation of
proxies or otherwise.
PART II
Item 5. Market for Registrant's Securities and Related Security
Holder Matters
There is no established public trading market for the Units of Registrant.
There are certain restrictions set forth in the Partnership Agreement which may
limit the ability of a limited partner to transfer Units. Such restrictions
could impair the ability of a limited partner to liquidate its investment in the
event of an emergency or any other reason.
As of March 1, 1997, there were approximately 5,693 limited partners of
Registrant, owning an aggregate of 5,690,843 Units.
Distributions per Unit during 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
Distribution with Amount of Distribution Per Unit
Respect to Quarter Ended 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C>
March 31 $ .11 $ .05
-----------------------------------------------------------------------------
June 30 $ .11 $ .05
-----------------------------------------------------------------------------
September 30 $ .11 $ .07
-----------------------------------------------------------------------------
December 31 $ .11 $ .07
-----------------------------------------------------------------------------
</TABLE>
There are no material legal restrictions upon Registrant's present or future
ability to make distributions from operations in accordance with the provisions
of Registrant's Amended and Restated Certificate of Limited Partnership and
Partnership Agreement ("Partnership Agreement"). The Partnership Agreement
requires that Disposition Proceeds received through April 1, 1998 must be
reinvested or held as reserves, but not distributed. For a further discussion of
factors which may affect distributions see Item 7 in Part II of this Form 10-K.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------
(dollars in thousands except per unit amounts)
1996 1995 1994 1993 1992
--------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Revenues ....... $ 4,748 $ 4,130 $ 3,824 $ 4,115 $ 3,512
Net Income ..... $ 1,244(5) $ 254(4) $ 1,864 $ 1,634(3) $ 1,296(2)
Net Income
Per Unit (1) . $ .22(5) $ .04(4) $ .32 $ .28(3) $ .23(2)
Distributions
Per Unit (1) . $ .44 $ .24 $ .28 $ .34 $ .24
Total Assets ... $48,916 $49,731 $50,607 $50,491 $50,295
Partners' Equity $46,947 $48,232 $49,358 $49,103 $49,424
- -----------------
(1) Per Unit amounts were computed based on the weighted average number of
Units of 5,690,843 for 1996, 1995, 1994, 1993 and 1992.
(2) Net of provision for loan losses of $800,000 or $.14 per Unit.
(3) Net of provision for loan losses of $750,000 or $.13 per Unit.
(4) Net of write-down for impairment of $1,860,000 or $.32 per Unit.
(5) Net of provision for loan losses of $1,547,830 or $.27 per Unit.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
Registrant's public offering commenced on May 15, 1986 and terminated on
February 12, 1988 generating gross proceeds of $56,907,425, including $699,565
through Registrant's Reinvestment Plan. Registrant initially made ten permanent
investments, consisting of nine first mortgage loans and one wraparound mortgage
loan, in which Registrant had funded a total of $49,300,000 or 100% of its net
proceeds available for investment. On May 21, 1992 and November 16, 1992 loans
in the original principal amounts of $8,200,000 and $3,800,000, respectively
were prepaid. In addition, on December 21, 1992 the Investment General Partner,
on behalf of Registrant foreclosed on the property securing the Garfinkel Loan.
The original principal amount of this loan was $4,850,000. On March 12, 1993,
Registrant funded an additional mortgage loan in the principal amount of
$3,750,000 at an annual rate of 8.35% payable in monthly installments of
principal and interest. On June 15, 1993 Registrant funded another new mortgage
loan in the principal amount of $4,000,000 at an annual interest rate of 8.5%
<PAGE>
payable in monthly installments of principal and interest. On December 9, 1993
the Investment General Partner on behalf of Registrant foreclosed on the
shopping center securing the Groton loan which was in the original principal
amount of $8,000,000. On February 2, 1994 the mortgagor on the 415 East 149th
Street loan prepaid the entire amount of such loan. The Registrant received
$4,781,922 of gross proceeds, consisting of $4,739,540 of principal and $43,382
of interest. On October 11, 1994 the mortgagor on the 134-140 East Fordham Road
loan prepaid the entire amount of such loan. The Registrant received $5,238,595
in gross proceeds. In July 1995 Registrant funded an additional mortgage loan in
the principal amount of $8,612,500, payable in quarterly installments of
principal and interest at a floating interest rate based on the Eurodollar plus
280 basis points for the applicable period, capped at 10%. As of December 31,
1996, Registrant has funded an aggregate of $30,762,500 to the mortgagors in
seven mortgage loans which are outstanding, consisting of six first mortgage
loans and one wraparound mortgage loan.
In March 1997, the Santa Ana and Xerox loans both matured. Registrant is
currently negotiating payoff amounts on both loans that more accurately reflect
current market values. The amounts have not yet been determined. On February 28,
1997, Registrant funded a Note to DVL in the principal amount of $2,000,000 at
an annual interest rate of 12% with interest payable monthly. In addition,
Registrant is entitled to receive payments equal to DVL's excess cash flow (as
defined) from the mortgages underlying DVL's collateral assignment, which is to
be applied as a reduction of principal. The Note matures on February 27, 2000
and may be pre-paid during the first two years without penalty. The Note is
secured by (among other things) a collateral assignment of DVL's interest in
certain promissory notes payable to DVL which in the aggregate amounted to
$4,325,000 as of February 28, 1997.
Previously, the Bank of California, Seattle wraparound mortgage loan was in
default. See Item 1 "Business - Mortgage Transactions and Defaults - Bank of
California, Seattle Loan." Payments to Anchor on the Land Loan for two months
were made from working capital reserves. As part of a plan of reorganization,
approved in 1995, these two months were repaid to Registrant in September 1995,
amounting to approximately $336,000. This consisted of approximately $226,000 in
missed payments and $69,000 of late charges and interest relating to the
payments. The borrower is currently making payments to Registrant on the Wrap
Loan sufficient to make payments on the Land Loan.
If necessary, Registrant has the right to establish reserves either from
disposition proceeds or from cash flow.
For the year ended December 31, 1996 as compared to 1995, Registrant paid a
higher cash distribution to its partners primarily due to the funding of the
Medford loan in July 1995. At December 31, 1996, working capital reserves were
approximately $9,337,000. This represents an increase of approximately $944,000
from December 31, 1995 primarily as a result of placing undistributed cash flow
from operations into working capital reserves as a result of the funding of the
Medford loan in July 1995.
Currently, the foreclosed property which formerly secured the Garfinkel Loan is
vacant. Funds which are necessary to lease up the property and to remedy
deferred maintenance conditions at the Garfinkel's property will be supplied
from Registrant's working capital reserves. In addition, Registrant might need
to expend funds for capital improvements to and leasing of the property which
<PAGE>
formerly secured the foreclosed Groton loan. These funds may be expended from
working capital reserves. Registrant currently holds working capital reserves in
short term investments, at rates which are lower than the returns previously
earned on the loans that have been prepaid. If excess working capital is
ultimately invested in new loans, these investments are likely to be at lower
rates than previous investments due to current market conditions.
During March of 1997, the Santa Ana and Arlington loans are expected to be
repaid. Management will review the Registrant's cash reserve requirements on a
quarterly basis to determine if a distribution will be made in the future or
whether a new investment will be made.
Real Estate Market
The real estate market continues to suffer from the effects of the recent
recession which included a substantial decline in the market value of existing
properties. Market values have begun to recover, and while the pace of new
construction has slowed, high vacancy rates continue to exist in many areas. As
a result, Registrant's potential for realizing the full value of its investment
in mortgages is at increased risk.
Allowance for Loan Losses and Write-Down for Impairment
A provision for loan losses is established based upon a quarterly review of each
mortgage loan and property in Registrant's portfolio. Real estate property is
carried at the lower of cost or net realizable value. In performing the review,
management considers the estimated net realizable value of the property or
collateral as well as other factors, such as the current occupancy, the amount
and status of senior debt, if any, the prospect for the property and the
economic situation in the region where the property is located. Because this
determination of net realizable value is based upon projections of future
economic events which are inherently subjective, the amounts ultimately realized
at disposition may differ materially from the carrying value as of December 31,
1996. There was no provision for the year ended December 31, 1994. The
Registrant recorded provisions and write-downs of $1,547,830 and $1,860,000 for
the years ended December 31, 1996 and 1995, respectively, as follows:
For the quarter ended September 30, 1996, Registrant recorded a provision for
loan losses in the amount of $1,547,830 and ceased accruing interest on the
Santa Ana loan. As a result of an economic decline in the surrounding area, the
tenancy at the Santa Ana Shopping Center has been slowly shifting from regional,
credit tenants to local, non-credit tenants. Consequently, although the cash
flow from the operation of the center has not declined, its value has been
eroded due to the shift in tenancy. Management performed cash flow projections
and analyzed data regarding sales of comparable centers in order to estimate the
fair value of the center for the purpose of valuing the loan. Based upon an
analysis of the projected cash flow from the center using a 13% capitalization
rate and market comparables indicating a value of approximately $78 per square
foot, the fair value of the center was estimated to be approximately $2,500,000.
The net carrying value of the loan at September 30, 1996, was $4,047,830,
necessitating a provision of $1,547,830.
<PAGE>
Occupancy at the Groton Shopping Center ("Groton") declined from 82% at the time
of foreclosure to 69% at March 1, 1995. The anticipated lease-up of the vacant
space had not occurred as of March 31, 1995 resulting in lower than anticipated
net operating income. In addition, Management was investigating the potential
cost to correct certain environmental violations at the shopping center. As a
result Groton would not likely realize its carrying value at March 31, 1995
prior to the establishment of a provision for impairment. Consequently,
management recorded a write-down for impairment on the shopping center of
$1,860,000 at March 31, 1995.
Provisions and write-downs are inherently subjective and are based on
management's best estimate of current conditions and assumptions about expected
future conditions. Registrant may provide for additional provisions and
write-downs in subsequent years which could be material.
Results of Operations
1996 vs. 1995
Net income increased for the year ended December 31, 1996 when compared to the
same period in 1995. The increase was due to an increase in revenues and a
decrease in expenses.
The increase in revenues for the year ended December 31, 1996 was primarily due
to an increase in mortgage interest income and other income, partially offset by
a decrease in short term investment income. Mortgage interest income increased
as a result of additional interest income earned on the Medford loan which was
funded in July 1995. Other income increased due to the reimbursement of legal
expenses related to the Bank of California loan in 1996. Short term investment
income decreased as a result of decreased interest rates and decreased working
capital reserves as a result of funding the Medford loan.
The decrease in costs and expenses for the year ended December 31, 1996 was
primarily a result of a decrease in the provision for loan losses when compared
to the write-down for impairment in the same period of 1995, and a decrease in
general and administrative expenses. General and administrative expenses
decreased primarily as a result of a decrease in legal fees related to the Bank
of California loan.
1995 vs. 1994
There was a decrease in net income for the year ended December 31, 1995 when
compared to the prior years net income due to a substantial increase in costs
and expenses partially offset by an increase in revenues.
The increase in costs and expenses is primarily due to an increase in general
and administrative expenses and provision for impairment for the year ended
December 31, 1995, when compared to the prior year. As previously discussed, a
provision for impairment was required on the Groton property for the year ended
December 31, 1995, while in 1994 there was no provision required. The increase
in general and administrative expenses when comparing 1995 with 1994 is
primarily a result of an increase in legal costs related to the Seattle loan.
Revenues increased in 1995 when compared to 1994 mainly due to an increase in
short-term investment income, mortgage interest income, and other income
partially offset by a decrease in operating income. The increase in short-term
<PAGE>
investment income for the year ended December 31, 1995 is a result of the
increase in working capital reserves (before the Medford loan funding) resulting
from the proceeds received from the 149th Street and Fordham loan payoffs, as
well as higher interest rates earned on short-term investments. Mortgage
interest income increased in 1995 compared with the prior year due to increased
interest as a result of the funding of the Medford loan in July of 1995 and the
Seattle interest increase in August of 1995, partially offset by the decrease in
interest payments (before the Medford funding) as a result of the loan payoff of
149th Street in February 1994 and the Fordham Road loan in October 1994. Other
income increased primarily due to the receipt of late charge income from the
Bank of California, Seattle loan related to the two missed interest payments in
1993. The decrease in operating income for 1995 versus 1994 is a result of the
reduced occupancy at the Groton Shopping Center. Aside from the previously
discussed, the loans that existed during both 1994 and 1995 had comparable
interest income.
Inflation
Inflation has not had a material effect on Registrant's operations and financial
position during the last three years and is not expected to have a material
effect in the future. However, prolonged periods of low or no inflation could
result in low levels of interest rates which could result in certain of
Registrant's loans being prepaid prior to maturity and Registrant receiving
decreased revenues on any reinvestment of such funds.
Legal Proceedings
On or about May 11, 1993, three public real estate partnerships (the "HEP
Partnerships") including High Equity Partners, L.P. Series 86, in which the
Administrative General Partner is also a General Partner, were advised of the
existence of an action (the "HEP Action") filed in the Superior Court for the
State of California for the County of Los Angeles, by Mark Erwin, Trustee, Mark
Erwin Sales, Inc. Defined Benefit Plan; Nancy Cooper, Trustee of Nancy Cooper
Individual Retirement Account; and Leonard Drescher, Trustee of Drescher Family
Trust Account individually and purportedly on behalf of a class consisting of
all of the purchasers of limited partnership interests in the HEP Partnerships
(the "Plaintiffs"). The HEP Action names as defendants the Administrative
General Partner and several individuals who are general partners of the former
Associate General Partner, among others.
On November 30, 1995, the original plaintiffs and the intervening plaintiffs
filed a Consolidated Class and Derivative Action Complaint against the General
Partners of the HEP Partnerships alleging, among other things, breach of
fiduciary duties, breach of contract, and negligence.
On or about January 31, 1996, the parties to the HEP Action agreed upon a
revised settlement, which would be significantly more favorable to the
Plaintiffs than the previously proposed settlement. The revised settlement
proposal, like the previous proposal, involves the reorganization of the HEP
Partnerships. Upon the effectuation of the revised settlement, the HEP Action
would be dismissed with prejudice.
On July 18, 1996, the Court preliminarily approved the revised settlement. In
August 1996, the Court approved the form and method of notice regarding the
revised settlement which was sent to the HEP limited partners.
<PAGE>
Only approximately 2.5% of the limited partners of the HEP Partnerships elected
to "opt out" of the revised settlement. Despite this, following the submission
of additional briefs, the Court entered an order on January 14, 1997 rejecting
the revised settlement and concluding that there had not been an adequate
showing that the settlement was fair and reasonable. Thereafter, the Plaintiffs
filed a motion seeking to have the Court reconsider its order. However, the
defendants withdrew the revised settlement and at a hearing on February 24,
1997, the Court denied the Plaintiffs' motion. Also at the February 24, 1997
hearing, the Court recused itself from considering a motion to intervene and to
file a new complaint in intervention by one of the objectors to the revised
settlement, granted the request of one of the Plaintiffs' law firm to withdraw
as class counsel and scheduled future hearings on various matters.
In the event that there is no settlement of the remaining claims, the
Administrative General Partner intends to vigorously contest such claims and
have, along with the other defendants, previously filed a motion to dismiss the
HEP Action, which is currently pending before the Superior Court. It is
impossible at this time to predict what the defense of this lawsuit will cost
the Administrative General Partner and whether such costs could adversely effect
the Administrative General Partners' ability to perform its obligations to
Registrant.
<PAGE>
Item 8. Financial Statements and Supplementary Data
RESOURCES PENSION SHARES 5, L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
INDEX
Independent Auditor's Report
Independent Auditors' Report
Financial statements - Years ended
December 31, 1996, 1995 and 1994
Balance sheets
Statements of income
Statement of partners' equity
Statements of cash flows
Notes to financial statements
Schedule:
II - Valuation and Qualifying Accounts
III - Real Estate and Accumulated Depreciation
All other schedules have been omitted because they are inapplicable or the
information is included in the financial statements or notes thereto.
<PAGE>
To the Partners
Resources Pension Shares 5, L.P.
Greenwich, Connecticut
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Resources Pension Shares 5,
L.P. (a limited partnership) as of December 31, 1996 and 1995, and the related
statements of income, partners' equity and cash flows for the years then ended.
Our audits also included the financial statement schedules listed in the Index
at Item 14(a)2. These financial statements and financial statement schedules are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on the financial statements and financial statement schedules
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 Resources Pension Shares 5,
L.P. as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles. Also, in our opinion, such financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
Hays & Company
February 24, 1997, except for Note 9 which
is dated February 28, 1997
New York, New York
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Resources Pension Shares 5, L.P.
We have audited the accompanying statements of operations, partners' equity and
cash flows of Resources Pension Shares 5, L.P. (a Delaware limited partnership)
for the year ended December 31, 1994. Our audit also included the financial
statement schedule listed in the Index at Item 14(a)2 as it relates to the year
ended December 31, 1994. These financial statements and the financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of Resources Pension Shares 5
for the year ended December 31, 1994 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.
March 16, 1995
/s/Deloitte & Touche
- --------------------
Deloitte & Touche
<PAGE>
<TABLE>
<CAPTION>
RESOURCES PENSION SHARES 5, L.P.
BALANCE SHEETS
December 31,
-----------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Investments in mortgage loans (net of allowance for loan
losses of $1,547,830 at December 31, 1996) .......... $ 30,255,687 $ 32,252,926
Cash and cash equivalents .............................. 10,375,892 9,192,906
Real estate - net ...................................... 7,777,158 7,881,094
Interest receivable - mortgage loans ................... 306,101 306,101
Interest receivable - other ............................ 46,886 --
Other assets ........................................... 154,030 98,043
------------ ------------
$ 48,915,754 $ 49,731,070
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses .................. $ 668,794 $ 451,810
Other liabilities ...................................... 443,050 443,050
Distributions payable .................................. 632,316 402,383
Due to affiliates ...................................... 224,716 201,948
------------ ------------
Total liabilities ................................... 1,968,876 1,499,191
============ ============
Commitments and contingencies (Notes 3, 4, 5 and 7)
Partners' equity
Limited partners' equity (5,690,843 units issued
and outstanding) .................................... 47,018,809 48,290,961
General partners' deficit .............................. (71,931) (59,082)
------------ ------------
Total partners' equity .............................. 46,946,878 48,231,879
------------ ------------
$ 48,915,754 $ 49,731,070
============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESOURCES PENSION SHARES 5, L.P.
STATEMENTS OF INCOME
Year ended December 31,
--------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Revenues
Mortgage loans interest income ............. $3,050,689 $2,485,841 $2,390,060
Operating income - real estate ............. 979,454 756,471 902,021
Short term investment interest ............. 459,974 779,837 504,620
Other income ............................... 251,964 104,427 26,904
Additional contingent interest ............. 6,000 3,366 782
---------- ---------- ----------
4,748,081 4,129,942 3,824,387
---------- ---------- ----------
Costs and expenses
Provision for loan losses and write-down for
impairment ............................. 1,547,830 1,860,000 --
Management fees ............................ 775,060 736,256 743,736
Operating expenses - real estate ........... 553,598 575,442 583,667
General and administrative expenses ........ 286,180 402,836 338,831
Depreciation and administration expense .... 209,047 189,292 184,758
Mortgage servicing fees .................... 76,184 64,149 67,725
Property management fees ................... 55,920 48,241 41,502
---------- ---------- ----------
3,503,819 3,876,216 1,960,219
---------- ---------- ----------
Net income ...................................... $1,244,262 $ 253,726 $1,864,168
========== ========== ==========
Net income attributable to
Limited partners ........................... $1,231,819 $ 251,189 $1,845,526
General partners ........................... 12,443 2,537 18,642
---------- ---------- ----------
$1,244,262 $ 253,726 $1,864,168
========== ========== ==========
Net income per unit of limited partnership
interest (5,690,843 units outstanding) ..... $ 0.22 $ 0.04 $ 0.32
========== ========== ==========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESOURCES PENSION SHARES 5, L.P.
STATEMENT OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
General Limited Total
Partners' Partners' Partners'
Deficit Equity Equity
<S> <C> <C> <C>
Balance, January 1, 1994 ............... $ (50,370) $ 49,153,485 $ 49,103,115
Net income - 1994 ...................... 18,642 1,845,526 1,864,168
Distributions to partners
($.28 per limited partnership unit) (16,095) (1,593,436) (1,609,531)
------------ ------------ ------------
Balance, December 31, 1994 ............. (47,823) 49,405,575 49,357,752
Net income - 1995 ...................... 2,537 251,189 253,726
Distributions to partners
($.24 per limited partnership unit) (13,796) (1,365,803) (1,379,599)
------------ ------------ ------------
Balance, December 31, 1995 ............. (59,082) 48,290,961 48,231,879
Net income - 1996 ...................... 12,443 1,231,819 1,244,262
Distributions to partners
($.44 per limited partnership unit) (25,292) (2,503,971) (2,529,263)
------------ ------------ ------------
Balance, December 31, 1996 ............. $ (71,931) $ 47,018,809 $ 46,946,878
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESOURCES PENSION SHARES 5, L.P.
STATEMENTS OF CASH FLOWS
Year ended December 31,
----------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income ........................................... $ 1,244,262 $ 253,726 $ 1,864,168
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for loan losses ................... 1,547,830 -- --
Write-down for impairment ................... -- 1,860,000 --
Depreciation and amortization expense ....... 209,077 189,292 184,758
Amortization of acquisition fees ............ 127,705 92,084 62,293
Deferred interest receivable ................ (75,463) (141,637) (142,031)
Stepped lease rentals ....................... (18,510) -- --
Changes in assets and liabilities
Interest receivable .............................. (46,886) 109,611 65,507
Other assets ..................................... (52,130) (14,029) 34,020
Accounts payable and accrued expenses ............ 216,984 48,314 (23,869)
Due to affiliates ................................ 22,768 201,948 --
------------ ------------ ------------
Net cash provided by operating activities 3,175,637 2,599,309 2,044,846
------------ ------------ ------------
Cash flows from investing activities
Investments in mortgage loans ........................ -- (8,746,181) --
Mortgage loan repayments received .................... 397,167 130,706 174,295
Additions to real estate ............................. (90,488) (275,467) (131,831)
Proceeds received from loan repayments ............... -- -- 9,916,957
------------ ------------ ------------
Net cash provided by (used in)
investing activities .................. 306,679 (8,890,942) 9,959,421
------------ ------------ ------------
Cash flows from financing activities
Distributions to partners ............................ (2,299,330) (1,379,599) (1,724,497)
------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents ..................................... 1,182,986 (7,671,232) 10,279,770
Cash and cash equivalents, beginning of year .............. 9,192,906 16,864,138 6,584,368
------------ ------------ ------------
Cash and cash equivalents, end of year .................... $ 10,375,892 $ 9,192,906 $ 16,864,138
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1 ORGANIZATION
Resources Pension Shares 5, L.P., a Delaware limited partnership (the
"Partnership"), was formed under the Delaware Revised Uniform Limited
Partnership Act on February 11, 1986 for the purpose of investing
primarily in participating mortgage loans and, to a lesser extent,
land sale-leaseback transactions on improved, income-producing real
estate. The Partnership will terminate on December 31, 2010, or
sooner, in accordance with the terms of the Amended and Restated
Agreement of Limited Partnership (the "Limited Partnership
Agreement").
The Partnership registered 16,000,000 units of limited partnership
interests at $10 per unit with the Securities and Exchange
Commission, 6,000,000 of which were for the Partnership's
Reinvestment Plan. On February 12, 1988, the Partnership terminated
its offering of limited partnership units, having raised $56,907,425
from approximately 5,800 investors (including $699,565 from limited
partnership units issued pursuant to the Reinvestment Plan). After
the payment of a nonaccountable expense reimbursement to the
Administrative General Partner, the Partnership had approximately
$54,238,000, including evaluation and acquisition fees paid or
payable to the Administrative General Partner, available for
investment and reserves.
Limited partners' units were issued at a stated value of $10 per
unit. A total of 5,690,843 units of limited partnership were issued,
including 100 units to the initial limited partner, for an aggregate
capital contribution of $56,908,426. The general partners contributed
$1,000 to the Partnership.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in mortgage loans
The Partnership accounts for its investments in mortgage loans under
the following methods:
Investment method
Mortgage loans representing transactions in which the Partnership is
considered to have substantially the same risks and potential rewards
as the borrower are accounted for as investments in real estate
rather than as loans. Although the transactions are structured as
loans, due to the terms of the deferred interest portion of the
mortgage loan, it is not readily determinable at inception that the
borrower will continue to maintain a minimum investment in the
property. Under this method of accounting, the Partnership recognizes
as revenue the lesser of the amount of interest as contractually
provided for in the mortgage loan, or the pro rata share of the
actual cash flow from operations of the underlying property inclusive
of depreciation and interest expense on any senior indebtedness.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Interest method
Under this method of accounting, the Partnership recognizes revenue
as interest income over the term of the mortgage loan so as to
produce a constant periodic rate of return. Interest income is not
recognized as revenue during periods where there are concerns about
the ultimate realization of the interest or the loan principal.
Allowance for loan losses
A provision for loan losses is established based upon a quarterly
review of each of the mortgage loans in the Partnership's portfolio.
In performing this review, management considers the estimated net
realizable value of the mortgage loan or collateral as well as other
factors, such as the current occupancy, the amount and status of any
senior debt, the prospects for the property and the economic
situation in the region where the property is located. Because this
determination of net realizable value is based upon projections of
future economic events which are inherently subjective, the amounts
ultimately realized at disposition may differ materially from the
carrying value at each year end. Accordingly, the Partnership may
provide additional losses in subsequent years and such provisions
could be material.
Write-down for impairment
The Partnership records write-downs for impairment based upon a
quarterly review of the real estate in its portfolio. Real estate
property is carried at the lower of depreciated cost or estimated
fair value. In performing this review, management considers the
estimated fair value of the property based upon the undiscounted
future cash flows, as well as other factors, such as the current
occupancy, the prospects for the property and the economic situation
in the region where the property is located. Because this
determination of estimated fair value is based upon projections of
future economic events which are inherently subjective, the amounts
ultimately realized at disposition may differ materially from the
carrying value at each year end. Accordingly, the Partnership may
record additional write-downs in subsequent years and such
write-downs could be material.
Depreciation
Depreciation on properties acquired by the Partnership as a result of
a loan default is computed using the straight-line method over the
useful life of the property, which is estimated to be 40 years. The
initial cost of property represents the lower of the loan principal
or the fair market value of the property at the time of acquisition.
Repairs and maintenance are charged to operations as incurred.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial statements
The financial statements include only those assets, liabilities and
results of operations which relate to the business of the
Partnership.
Cash and cash equivalents
For the purpose of the statements of cash flows, the Partnership
considers all short-term investments which have original maturities
of three months or less to be cash equivalents.
Principally all of the Partnership's cash and cash equivalents are
held at one financial institution.
Fair value of financial instruments
The fair value of financial instruments is determined by reference to
market data and other valuation techniques as appropriate. The
Partnership's financial instruments include cash and cash equivalents
and investments in mortgage loans. Unless otherwise disclosed, the
fair value of financial instruments approximates their recorded
values.
Net income and distributions per unit of limited partnership interest
Net income and distributions per unit of limited partnership interest
are computed based upon the number of units outstanding (5,690,843)
for the years ended December 31, 1996, 1995 and 1994.
Income taxes
No provisions have been made for federal, state and local income
taxes, since they are the personal responsibility of the partners.
The income tax returns of the Partnership are subject to examination
by federal, state and local taxing authorities. Such examinations
could result in adjustments to Partnership income or losses, which
changes could affect the income tax liability of the individual
partners.
Reclassifications
Certain reclassifications have been made to the financial statements
shown for the prior years in order to conform to the current year's
classifications.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Estimates
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 disclosures 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 those estimates.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The Investment General Partner of the Partnership, Resources Pension
Advisory Corp., and the Administrative General Partner, Resources
Capital Corp., are wholly-owned subsidiaries of Presidio Capital
Corp. ("Presidio"). Resources Pension Advisory and Resources Capital
Corp. were, until November 3, 1994, wholly-owned subsidiaries of
Integrated Resources Inc., ("Integrated"). On November 3, 1994,
Integrated consummated its plan of reorganization under Chapter 11 of
the United States Bankruptcy Code at which time, pursuant to such
plan of reorganization, the newly formed Presidio purchased
substantially all of the assets of Integrated.
As of February 28, 1995, the Associate General Partner of the
Partnership is Presidio AGP Corp., a Delaware corporation, which
replaced Richard H. Ader, formerly an executive officer of
Integrated. Presidio AGP is a wholly-owned subsidiary of Presidio.
The Administrative General Partner is also a general partner in
several other limited partnerships which are also affiliated with
Presidio, and which are engaged in businesses that are, or may be in
the future, in direct competition with the Partnership.
Wexford Management Corp. has been engaged to perform administrative
services for Presidio and its direct and indirect subsidiaries as
well as the Partnership. Wexford Management Corp. was also engaged to
perform similar services for other similar entities that may be in
competition with the Partnership. Effective January 1, 1996, Wexford
Management Corp., formerly Concurrency Management Corp., assigned its
agreement to provide administrative services to Presidio and its
subsidiaries to Wexford Management LLC ("Wexford"). During 1996,
amounts paid to Wexford for administrative services rendered amounted
to $42,545.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
(continued)
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, Presidio will control the Partnership through
its indirect ownership of all of the shares of the Administrative,
Investment and, as of February 28, 1995, the Associate General
Partners. Presidio was managed by Presidio Management Company, LLC
("Presidio Management"), a company controlled by a director of
Presidio. Presidio Management is responsible for the day-to-day
management of Presidio and, among other things, has authority to
designate directors of the Administrative, Investment and Associate
General Partners. In March 1996, Presidio Management assigned its
agreement for the day-to-day management of Presidio to Wexford.
Presidio is a liquidating company. Although it has no immediate plans
to do so, it will ultimately seek to dispose of the interests it
acquired from Integrated through liquidation; however, there can be
no assurance of the timing of such transaction or the effect it may
have on the Partnership.
Presidio has elected new directors for the Administrative, Investment
and Associate General Partners. However, certain of Integrated's
former employees who performed services with respect to the
Partnership are employed by Wexford.
For management of the affairs of the Partnership, the Administrative
General Partner is entitled to receive a management fee equal to
1.25% per annum of the average month-end net asset value of the
Partnership for the first four years after the initial closing date;
1.5% for the next six years; and 1.75% thereafter. For the years
ended December 31, 1996, 1995 and 1994, the Administrative General
Partner earned $775,060, $736,256 and $743,736, respectively, for its
management services. Amounts due to the Administrative General
Partner at December 31, 1996 and 1995, for management services of
$205,670 and $182,774, respectively, is included in due to
affiliates.
For the servicing of mortgage loans made by the Partnership, the
Investment General Partner is entitled to receive a mortgage
servicing fee of 1/4 of 1% per annum of the principal balances
loaned. During the years ended December 31, 1996, 1995 and 1994, the
Investment General Partner earned $76,184, $64,149 and $67,725,
respectively, for mortgage servicing fees. Amounts due to the
Investment General Partner at December 31, 1996 and 1995, for
mortgage servicing fees of $19,046 and $19,174, respectively, is
included in due to affiliates.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
(continued)
On December 9, 1993, the Partnership entered into a supervisory
management agreement with Resources Supervisory Management Corp.
("RSMC"), an affiliate of the General Partners, to perform certain
functions relating to supervising the management of the Groton
property. As such, RSMC is entitled to receive as compensation for
its supervisory management services the greater of 6% of annual gross
revenues from the Groton property when leasing services are performed
or 3% of gross revenue when no leasing services are performed. During
1994, RSMC entered into an agreement with an unaffiliated local
management company to perform such services on behalf of the
Partnership. The terms of this agreement are substantially the same
as the agreement entered into between the Partnership and RSMC. There
was no supervisory management fee earned by RSMC for the years ended
December 31, 1996, 1995 and 1994. Management fees earned by the
unaffiliated local management company amounted to $55,920, $48,241
and $41,502 for the years ended December 31, 1996, 1995 and 1994,
respectively.
The General Partners collectively are allocated 1% of net income,
loss and cash flow distributions of the Partnership. Such amounts
allocated or distributed to the General Partners are apportioned .98%
to the Administrative General Partner, .01% to the Investment General
Partner and .01% to the Associate General Partner.
During 1996 affiliates of Presidio purchased 536,959 units of the
Partnership. These purchases represent approximately 9.4% of the
outstanding limited partnership units of the Partnership,and entitle
the purchaser to approximately $59,000 in distributions for the year
ended December 31, 1996.
4 INVESTMENTS IN MORTGAGE LOANS
As of December 31, 1996, the Partnership has funded an aggregate of
$30,762,500 in seven outstanding mortgage loans, consisting of six
first mortgage loans and one wraparound mortgage loan. On July 25,
1995 the Partnership purchased the Medford loan in the principal
amount of $8,612,500. On February 2, 1994, the 415 East 149th Street
loan was repaid in its entirety and the Partnership received
$4,781,922 consisting of principal and accrued interest through that
date. On October 11, 1994, the 134-140 East Fordham Road loan was
repaid in its entirety and the Partnership received $5,238,595
consisting of principal and accrued interest through that date.
Bank of California, Seattle Loan
The Bank of California, Seattle Loan, in the principal amount of
$8,500,000 ("Wrap Loan"), is secured by, among other things, the
interest of Gum Loong Limited Partnership ("Gum Loong") in the land
located in downtown Seattle, Washington underlying a building
commonly known as The Bank of California Building (the "Building").
The land is subject to a long term ground lease (the "Ground Lease").
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Bank of California, Seattle Loan (continued)
Concurrently with the closing of the Wrap Loan, Gum Loong acquired
the lessor's interest under the Ground Lease and Continental Seattle
Partners, L.P. ("CSP"), a partnership related to Gum Loong, acquired
the lessee's interest under the Ground Lease. CSP also acquired the
lessor's interest under a master (net) sublease with The Bank of
California for a substantial portion of the Building. A first
mortgage on the land ("Land Loan") in the principal amount of
$8,000,000, is held by Anchor National Life Insurance Company
("Anchor"). Under the provisions of the Wrap Loan, Gum Loong is
required to make the payments required under both the Land Loan and
the Wrap Loan to the Partnership on a monthly basis. The Partnership,
in turn, then pays Anchor the amounts due under the Land Loan on a
monthly basis.
The Wrap Loan is secured by a Wraparound Deed of Trust, Security
Agreement, Financing Statement and Assignment of Lessor's Interest in
Ground Lease(s) dated May 5, 1988 in the amount of $16,500,000,
between the Partnership and Gum Loong. The Building is encumbered by
a loan ("Building Loan"), which matured on March 26, 1992, between
The Bank of Tokyo Trust Company (Seattle Branch) ("BOT") and CSP, in
the principal amount of $48,000,000, secured by a first mortgage on
the Building and a third mortgage on the land. This loan is also
guaranteed by Gum Loong. The Partnership's collateral for the Wrap
Loan is the land, the lessor's interest in the Ground Lease and
subject to the Ground Lease, BOT's lien, the Building, the rents and
profit and proceeds therefrom.
The Partnership received a letter dated April 22, 1993, stating that
BOT had commenced a foreclosure action against CSP for failure to
repay the Building Loan which matured on March 26, 1992. An Option
Agreement entered into at the time the Wrap Loan was made gives BOT
the right, after commencing a foreclosure action, to exercise an
option to purchase either (i) the Land Loan and the Wrap Loan from
Anchor and the Partnership or (ii) the land from Gum Loong subject to
the Land Loan and the Wrap Loan. On July 9, 1993 the Partnership
received notice from BOT that it intended to exercise its option to
purchase the land.
Gum Loong did not make timely payments of its scheduled July, August,
and September 1993 debt service on the Wrap Loan. The Partnership
utilized its working capital reserves to make the required payments
on the Land Loan. On July 20, 1993, and again on August 9, 1993, the
Partnership notified Gum Loong that an event of default had occurred
because of the CSP default on the BOT loan and because of Gum Loong's
failure to make its scheduled payments. Both Gum Loong and CSP filed
for bankruptcy protection under Chapter 11 of the United States
Bankruptcy Code in August 1993, staying BOT's foreclosure action. On
September 27, 1993 the Partnership, Anchor and Gum Loong entered into
an Interim Stipulation and Order Concerning Cash Collateral, which
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Bank of California, Seattle Loan (continued)
was approved by the Bankruptcy Court on September 29, 1993. Since
October 1993, various Cash Collateral Orders had been entered into
which required Gum Loong to make its monthly payments to the
Partnership. The September 1993 payment and all monthly contract
interest payments due thereafter under the Cash Collateral Orders
have been made. The current Cash Collateral Order requires Gum Loong
to make monthly payments to the Partnership through the maturity date
of the loan.
On January 31, 1994, a Proof of Claim was filed in connection with
the Gum Loong Bankruptcy by the Partnership as it relates to amounts
due under the Wrap Loan, including principal, interest and other
amounts due. On January 6, 1995, a Proof of Claim was filed in
connection with the CSP bankruptcy by the Partnership for a
contingent and unliquidated claim under the Wrap Loan. Despite the
bankruptcy filings by both Gum Loong and CSP, the Partnership has not
provided for an allowance for loan loss on this loan. The Partnership
believes that the collateral for the Wrap Loan, the land as
encumbered by the Ground Lease, is of sufficient value to realize the
amount due under the Wrap Loan. If BOT exercises its option to
purchase the land, it will be required, as a condition of such
exercise, to cure any defaults by Gum Loong.
On or about January 3, 1995, the United States Trustee moved to
convert the Gum Loong Chapter 11 Bankruptcy to a Chapter 7 Bankruptcy
or to dismiss the Gum Loong Case, or to set a deadline for filing a
plan of reorganization. This motion was scheduled for a hearing on
February 9, 1995. This motion has been adjourned pending the hearing
on its proposed disclosure statement and proposed plan. The hearing
on the adequacy of BOT's proposed disclosure statement was set for
April 6, 1995. The Third Amended Disclosure Statement was approved on
May 31, 1995.
Thereafter, BOT sought confirmation of various amended plans to which
the Partnership successfully objected. Such plans included provisions
that were adverse to the Partnership's interests. The Partnership's
objections, and the Bankruptcy Court's rulings thereon, prompted BOT
to make various amendments and revisions to its proposed plan of
reorganization and withdraw various provisions that were
objectionable to the Partnership. After extended confirmation
hearings on BOT's proposed plans, the Bankruptcy Court approved the
revised Fifth Amended Plan in September 1995. As part of the approved
plan, in September 1995, approximately $335,000 was paid to the
Partnership. This amount consisted of approximately $266,000 of
interest payments due the Partnership which resulted from two missed
interest payments in 1993, and late charges and interest related to
these payments of approximately $69,000, which is included in other
income in the statement of income for the year ended December 31,
1995.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Bank of California, Seattle Loan (continued)
The approved plan calls for, among other things, a Bankruptcy Court
appointed liquidating agent to manage the Building securing the Wrap
Loan and to pay the installments due the Partnership. The liquidating
agent is also required to sell the Building by June 1998 in a sale
that must be approved by the Bankruptcy Court and to which the
Partnership may object, or at a court approved auction in which the
Partnership could bid. If the property is sold in a non-auction sale,
the purchaser can buy the Building by satisfying the Wrap Loan, or
purchase the Building subject to the Wrap Loan. If the Building is
purchased subject to the Wrap Loan, the purchaser will have the right
to extend the Wrap Loan for three years from the present maturity
date at a rate of 300 basis points over the yield on three year
United States Treasury Notes at that time, paying interest only from
May 1998 until the new maturity date. Such a purchaser would also
have to pay an extension fee of 60 basis points if it elects the
three year extension option. In connection with the plan of
reorganization, in September 1996, the Partnership was reimbursed
$216,000 for legal expenses related to the bankruptcy which amount is
included in the accompanying statement of income as other income.
Avon Market Center Loan
On March 19, 1993, the Partnership funded a first mortgage loan in
the principal amount of $3,750,000 at an annual interest rate of
8.35%, payable in monthly installments of principal and interest
(based on a 35-year amortization schedule). The loan is for a period
of ten years, may not be prepaid during its first two years and may
be prepaid thereafter without penalty. The loan does not provide for
any accrued or contingent interest. The Partnership received a
non-refundable origination fee in the amount of $35,500 along with a
non-refundable application fee of $2,000. The loan is secured by a
shopping center located in Eagle County, Colorado which consists of
approximately 70,211 square feet of net rentable area and parking for
approximately 352 automobiles. The shopping center's major tenant is
a Wal-Mart Discount Store which occupies 53,318 square feet of retail
space. There is also a separate retail center which consists of
16,893 square feet of retail space. The shopping center is located in
the commercial area of the town of Avon which is located close to
Beaver Creek, a well-known ski resort. This development serves as a
convenience-center for the neighboring communities as well as the
near-by resorts, including Vail.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Lionmark Corporate Center Loan
On June 15, 1993, the Partnership funded a first mortgage loan in the
principal amount of $4,000,000 at an annual interest rate of 8.5%,
payable in monthly installments of principal and interest (based on a
35-year amortization schedule). The loan is for a 10 year period and
may not be prepaid during the first two years and may be prepaid
thereafter without penalty. The loan is with recourse to principals
of the borrower if at any time the borrower files a petition under
the Bankruptcy Code. The loan is secured by a one story campus type
office/flexible use building which is part of a larger office park.
The building is located in Columbus, Ohio and consists of
approximately 79,000 square feet of net rentable area and parking for
approximately 357 automobiles. The office building's major tenants
include Star Bank Services, GDE Systems, Inc. and TransAmerica. In
connection with issuing the commitment, the Partnership received
application and commitment fees aggregating $40,000.
Medford Village Loan
On July 25, 1995, the Partnership purchased a first mortgage loan in
the principal amount of $8,612,500 for approximately $8,700,000 in
cash. In addition, the Partnership incurred $45,469 of consulting
fees with respect to this loan. The loan has a floating interest
rate, capped at 10%, based on the Eurodollar rate for each quarterly
interest period plus 280 basis points. It is payable in quarterly
installments of principal and interest, maturing on April 22, 1998,
with a balloon payment of $7,737,500, plus any accrued interest due.
The borrower has the right to two, one year extensions for a fee of
$23,500 each year, provided the loan to value ratio at the time does
not exceed 60%. The loan is collateralized by a guarantee from the
borrower's principals, should the borrower default, and is secured by
a 121,660 square foot shopping center known as the Medford Village
Outlet Center located in Medford, Minnesota.
Santa Ana Square Loan
On March 15, 1988, the Partnership funded a first mortgage loan in
the principal amount of $2,600,000 at an annual interest rate of
10.91%. Payments are due based upon a payment schedule which requires
monthly payments ranging from $6,250 and increasing to $23,750.
Interest, which is in excess of amounts received, is deferred and
added to the principal balance for purposes of computing interest.
For the quarter ended September 30, 1996, Partnership recorded a
provision for loan losses in the amount of $1,547,830 and ceased
accruing interest on the Santa Ana loan. As a result of an economic
decline in the surrounding area, the tenancy at the Santa Ana
Shopping Center has been slowly shifting from regional, credit
tenants to local, non-credit tenants. Consequently, although the cash
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Santa Ana Square Loan (continued)
flow from the operation of the center has not declined, its value has
been eroded due to the shift in tenancy. Management performed cash
flow projections and analyzed data regarding sales of comparable
centers in order to estimate the fair value of the center for the
purpose of valuing the loan. Based upon analysis of the projected
cash flow from the center using a 13% capitalization rate and market
comparables indicating a value of approximately $78 per square foot,
the fair value of the center was estimated to be approximately
$2,500,000. The net carrying value of the loan at September 30, 1996,
was $4,047,830, necessitating a provision of $1,547,830. This loan
matures in March 1997. The Partnership is currently negotiating a
payoff amount that more accurately reflects current market values.
The amount has not yet been determined.
Xerox Loan
In March, 1997, the Xerox loan matures. The Partnership is currently
negotiating a payoff amount that more accurately reflects current
market values. The amount has not yet been determined.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Information with respect to the Partnership's mortgage loans is
summarized below:
<TABLE>
<CAPTION>
Interest
Recognized Contractual
Mortgage Year Ended Balance Carrying value at
Maturity Amount December 31, December 31, December 31,
Description Current % Deferred % Date Advanced 1996 1996 (4) 1996 (3) 1995 (3)
- ----------- --------- ---------- ---- -------- ---- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Centers
Santa Ana Square
Santa Ana, CA (5)(9)(10) 10.91 1.29-0 March 1997 $ 2,600,000 $ 344,388 $ 4,119,466 $ 2,495,981 $ 3,984,645
Lucky Supermarket
Buena Park, CA (6) ..... 8.41-10.00(1) 1.82-0(1) May 2005 2,200,000 221,539 2,460,780 2,244,550 2,250,159
Avon Market Ctr ..........
Avon, CO (5)(8) ........ 8.35 -- April 2003 3,750,000 307,674 3,673,112 3,673,112 3,696,458
Medford Village Outlet
Center
Medford, MN (5)(8) 8.55 -- April 1998 8,612,500 654,607 8,175,000 8,239,815 8,638,426
Office Buildings
Bank of California
Seattle, WA (2)(6)(7) .. 9.36-10.24 3.0-0 May 1998 8,500,000 1,145,297 16,657,000 8,573,639 8,623,102
Xerox
Arlington, TX (6)(10) .. 4.55(1) 10.38-11.47(1) March 1997 1,100,000 42,513 1,946,060 1,101,872 1,109,596
Lionmark Corp. Ctr .......
Columbus, OH( 5) ....... 8.50 -- June 2003 4,000,000 334,671 3,926,718 3,926,718 3,950,540
----------- ---------- ----------- ----------- -----------
$30,762,500 $3,050,689 $40,958,136 $39,255,687 $32,252,926
=========== ========== =========== =========== ===========
- --------------
1. In addition to the fixed interest, the Partnership is entitled to
contingent interest in an amount equal to a percentage of the rent received
by the borrower from the property securing the mortgage above a base
amount, payable annually, and/or a percentage of the excess of the value of
the property above a base amount, payable at maturity. Approximately
$6,000, $3,400 and $800 of contingent interest was earned during 1996, 1995
and 1994, respectively.
<PAGE>
2. All of the above mortgage loans are first mortgage loans except for the
Bank of California which is a wraparound mortgage loan, subordinate to
prior liens held by others with no recourse.
3. The carrying values of the above mortgage loans are inclusive of
acquisition fees, accrued interest recognized and allowance for loan
losses.
4. The contractual balance represents the original mortgage amount advanced
plus accrued interest calculated in accordance with the loan agreements,
less principal amortization received.
5. These loans are accounted for under the interest method.
6. These loans are accounted for under the investment method.
7. This loan is currently in default, as previously discussed.
8. This loan was made in July 1995 and has a floating interest rate, capped at
10%, based on the Eurodollar rate for each quarterly interest period plus
280 basis points. Such loan was made with the proceeds of two loans which
were repaid during 1994.
9. During 1996, the Partnership recorded a provision for loan losses of
$1,547,830 on this loan and ceased accruing interest as of September 30,
1996.
10. These loans mature in March 1997. The Partnership is currently negotiating
payoff amounts that more accurately reflect current market values. The
amounts have not yet been determined.
</TABLE>
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 INVESTMENTS IN MORTGAGE LOANS (continued)
A summary of mortgage activity is as follows:
<TABLE>
<CAPTION>
Investment Interest
Method Method Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1994 ..... $ 12,089,145 $ 21,510,267 $ 33,599,412
Interest recognized .......... 892,741 1,497,319 2,390,060
Loan payoffs/foreclosures .... -- (9,916,957) (9,916,957)
Amortization of loan principal -- (174,295) (174,295)
Cash received inclusive of
current interest accruals .. (942,202) (1,368,120) (2,310,322)
------------ ------------ ------------
Balance, December 31, 1994 ... 12,039,684 11,548,214 23,587,898
Interest recognized .......... 1,139,501 1,346,340 2,485,841
Amortization of loan principal -- (130,706) (130,706)
Investment in mortgage loan .. -- 8,746,181 8,746,181
Cash received inclusive of
current interest accruals .. (1,196,328) (1,239,960) (2,436,288)
------------ ------------ ------------
Balance, December 31, 1995 ... 11,982,857 20,270,069 32,252,926
Interest recognized .......... 1,409,349 1,641,340 3,050,689
Amortization of loan principal -- (397,167) (397,167)
Provision for loan losses .... -- (1,547,830) (1,547,830)
Cash received inclusive of
current interest accruals .. (1,472,368) (1,630,563) (3,102,931)
------------ ------------ ------------
Balance, December 31, 1996 ... $ 11,919,838 $ 18,355,849 $ 30,255,687
============ ============ ============
</TABLE>
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Unaudited financial information for mortgage loans which exceed 10%
of the Partnership's original contributions, is summarized as
follows:
MG Medford Limited Partnership
<TABLE>
<CAPTION>
December 31,
1996
------------
<S> <C>
Total assets $ *
Total liabilities $ *
Revenues $ 908,000
Net Income $ 546,000
</TABLE>
* Certain unaudited information with respect to the Medford Village
loan is not yet available to the Partnership.
Gum Loong, L.P.
Due to the bankruptcy filing of Gum Loong, L.P., unaudited financial
information for 1996 and 1995 is not presently available for The Bank
of California property, an office building located in Seattle,
Washington.
5 REAL ESTATE
A summary of the Partnership's real estate is as follows:
<TABLE>
<CAPTION>
December 31,
1996 1995
----------- -----------
<S> <C> <C>
Land ................................... $ 1,902,000 $ 1,902,000
Buildings and improvements ............. 6,520,190 6,429,702
----------- -----------
8,422,190 8,331,702
Less accumulated depreciation .......... (645,032) (450,608)
----------- -----------
$ 7,777,158 $ 7,881,094
=========== ===========
</TABLE>
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
5 REAL ESTATE (continued)
Landover, Md.
On December 21, 1992 the Investment General Partner, on behalf of the
Partnership, foreclosed on the property securing the Garfinkel's
loan. At the foreclosure sale, the Partnership acquired the property
for a bid of $3,200,000. In addition, in June 1993, the Partnership
paid $84,404 for costs associated with the foreclosure. Such costs
have been capitalized as real estate assets and are being depreciated
over the estimated useful life of the property.
The Partnership paid real estate taxes for the years ended December
31, 1996, 1995 and 1994 in the amount of $48,926, $49,189 and
$49,397, respectively. Such amounts are included in operating
expenses in the statements of income.
On January 27, 1992, the Partnership received $450,000 from the
former property owner in exchange for a release of a personal
guarantee in which the former property owner was obligated to
reimburse the Partnership for asbestos removal up to a maximum of
$500,000. The receipt of these funds was recorded as a liability on
the Partnership's balance sheet. During June 1992, $6,950 was paid
for remedial cleaning in connection with the asbestos removal and the
unexpended asbestos reserve aggregated $443,050 at December 31, 1996
and 1995. The Partnership does not presently plan to commence removal
of the asbestos until a purchaser or tenant for the property is
identified.
The owner of the Landover Mall ("Mall Owner"), where the property is
located, has requested reimbursement from the Partnership for common
area maintenance and utility usage charges, allegedly due under
certain agreements made between the former owner of the property and
Mall Owner, for periods subsequent to the date that the Partnership
took title to the property. The Partnership believes it may be
obligated only for the actual value of certain items. Discussions
between the Partnership and Mall Owner are on-going as to the exact
amount to be paid. However, the Partnership has provided a liability
(included in accounts payable and accrued expenses in the
accompanying balance sheet) in the amount of $500,829 and $356,829 at
December 31, 1996 and 1995, respectively, for such charges.
As of December 31, 1996, the Garfinkel's property is vacant.
Groton, Ct.
The Groton loan, in the original principal amount of $8,000,000, was
collateralized by a shopping center in Groton, Connecticut. On
September 20, 1991, Groton Associates, the borrower, filed a
voluntary petition for reorganization pursuant to the provisions of
Chapter 11 of the United States Bankruptcy Code.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
5 REAL ESTATE (continued)
Groton, Ct. (continued)
Groton Associates defaulted on its interest payment due September 1,
1991. In June 1992, the Bankruptcy Court approved a Stipulation and
Order authorizing Groton Associates to use rents collected to operate
its business and remit the excess cash to the Partnership on a
monthly basis, retroactive to June 1, 1992. The Partnership, using an
internally generated appraisal prepared with current property data,
established an allowance for loan loss of $750,000 on the Groton loan
during 1991. In addition, during 1991, the Partnership had
established reserves of approximately $528,000 for deferred interest
due from Groton Associates and approximately $130,000 for acquisition
fees incurred when this loan was funded. In March 1993, the
Partnership received a third party appraisal which valued the
property at $6,500,000. As a result, the Partnership provided an
additional allowance for loan loss of $750,000 on the Groton loan
during 1993.
The Investment General Partner, on behalf of the Partnership,
obtained an order from the Bankruptcy Court on July 27, 1993
permitting it to proceed with a foreclosure against the property and
directing Groton Associates to turn over all cash collateral and
provide an accounting for rents. In addition, beginning with the
rents due on August 1, 1993, the Partnership began to collect rents
directly. The Partnership commenced a foreclosure action in
Connecticut and on December 9, 1993 foreclosed on the shopping
center.
At the foreclosure, the value of the shopping center was determined
to be $6,500,000 based on the third party appraisal of the shopping
center previously received by the Partnership. All reserves
previously recorded on the loan were written off after the
foreclosure and the remaining balance of $6,500,000 was transferred
to real estate on the Partnership's balance sheet. There was a lien
against the property for past due real estate taxes amounting to
approximately $200,000 which were not paid by the borrower but which
were provided for by the Partnership for the year ended December 31,
1993. In February 1994, the Partnership paid $212,837 representing
payment in full of all property taxes and interest due for the period
prior to the foreclosure.
Occupancy at the shopping center has declined from approximately 82%
at the time of foreclosure to approximately 77% at December 31, 1996.
The anticipated lease-up of the vacant space has not occurred as of
December 31, 1996 resulting in lower than anticipated net operating
income. In addition, management is currently investigating the
potential cost to correct certain environmental violations at the
shopping center. Management determined, as a result of an internally
prepared analysis during March 1995, that the carrying value could
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
5 REAL ESTATE (continued)
Groton, Ct. (continued)
not be realized and consequently, recorded a write-down for
impairment on the shopping center of $1,860,000. This analysis
determined the net realizable value of the Groton property to be
approximately $5,500,000. The carrying value was approximately
$7,360,000 at that time, thus requiring a $1,860,000 write-down for
impairment.
6 DISTRIBUTIONS PAYABLE
Distributions payable represent distributions of adjusted cash flows
from operations as defined in the Limited Partnership Agreement.
Distributions payable to limited partners of $625,993 and $398,359
for each of the quarters ended December 31, 1996 and 1995,
respectively, were paid in the first quarters of 1997 and 1996,
respectively. Distributions of $6,323 and $4,024 payable to the
general partners for each of the quarters ended December 31, 1996 and
1995, respectively, were paid in the first quarters of December 31,
1997 and 1996, respectively.
7 COMMITMENTS AND CONTINGENCIES
Status of Integrated
On February 13, 1990, Integrated, the sole shareholder of the
Administrative and Investment General Partners, filed a voluntary
petition for reorganization under Chapter 11 of the United States
Bankruptcy Code. Integrated's bankruptcy has not directly affected
the Partnership's operations.
On August 8, 1994, the Bankruptcy Court confirmed a Plan of
Reorganization (the "Steinhardt Plan") proposed by Steinhardt
Management Company, Inc. and the Official Committee of Subordinated
Bondholders and on November 3, 1994, the Steinhardt Plan was
consummated. Presidio purchased substantially all of the assets of
Integrated, including its interest in the Administrative and
Investment General Partners and in RSMC. Presidio is a British Virgin
Islands corporation owned 12% by IR Partners, a general partnership,
and 88% by former creditors of Integrated.
HEP Action
On or about May 11, 1993, three public real estate partnerships (the
"HEP Partnerships") including High Equity Partners, L.P. - Series 86,
in which the Administrative General Partner is also a General
Partner, were advised of the existence of an action (the "HEP
Action") filed in the Superior Court for the State of California for
the County of Los Angeles, by Mark Erwin, Trustee, Mark Erwin Sales,
Inc. Defined Benefit Plan; Nancy Cooper, Trustee of Nancy Cooper
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
7 COMMITMENTS AND CONTINGENCIES (continued)
HEP Action (continued)
Individual Retirement Account; and Leonard Drescher, Trustee of
Drescher Family Trust Account individually and purportedly on behalf
of a class consisting of all of the purchasers of limited partnership
interests in the HEP Partnerships (the "Plaintiffs"). The HEP Action
names as defendants the Administrative General Partner and several
individuals who are general partners of the former Associate General
Partner, among others.
On November 30, 1995, the original plaintiffs and the intervening
plaintiffs filed a Consolidated Class and Derivative Action Complaint
against the General Partners of the HEP Partnerships alleging, among
other things, breach of fiduciary duties, breach of contract, and
negligence.
On or about January 31, 1996, the parties to the HEP Action agreed
upon a revised settlement, which would be significantly more
favorable to the Plaintiffs than the previously proposed settlement.
The revised settlement proposal, like the previous proposal, involves
the reorganization of the HEP Partnerships. Upon the effectuation of
the revised settlement, the HEP Action would be dismissed with
prejudice.
On July 18, 1996, the Court preliminarily approved the revised
settlement. In August 1996, the Court approved the form and method of
notice regarding the revised settlement which was sent to the HEP
limited partners.
Only approximately 2.5% of the limited partners of the HEP
Partnerships elected to "opt out" of the revised settlement. Despite
this, following the submission of additional briefs, the Court
entered an order on January 14, 1997 rejecting the revised settlement
and concluding that there had not been an adequate showing that the
settlement was fair and reasonable. Thereafter, the Plaintiffs filed
a motion seeking to have the Court reconsider its order. However, the
defendants withdrew the revised settlement and at a hearing on
February 24, 1997, the Court denied the Plaintiffs' motion. Also at
the February 24, 1997 hearing, the Court recused itself from
considering a motion to intervene and to file a new complaint in
intervention by one of the objectors to the revised settlement,
granted the request of one of the Plaintiffs' law firm to withdraw as
class counsel and scheduled future hearings on various matters.
With respect to the above litigation, the Limited Partnership
Agreement provides for the indemnification of the General Partners
and their affiliates in certain circumstances. It is impossible to
predict what financial exposure the Partnership will have as a result
of this indemnification.
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
8 RECONCILIATION OF NET INCOME AND NET ASSETS PER FINANCIAL
STATEMENTS TO TAX BASIS
The Partnership files its tax returns on an accrual basis.
Additionally, the Partnership recognizes interest income on all of
its investments in mortgage loans for tax purposes using the interest
method. For financial statement purposes mortgage loans accounted for
under the investment method recognize income as described in Note 2.
A reconciliation of net income per financial statements to the tax
basis of accounting is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net income per financial statements ... $ 1,244,262 $ 253,726 $ 1,864,168
Difference in provision for loan losses
and write-down for impairment .... 1,547,830 1,860,000 --
Difference in income recognized on
mortgage investments ............. 745,403 863,987 1,010,939
Difference in reserves ................ 144,000 -- --
Tax depreciation in excess of
financial statement depreciation . (20,717) (21,647) (18,898)
----------- ----------- -----------
Net income per tax basis .............. $ 3,660,778 $ 2,956,066 $ 2,856,209
=========== =========== ===========
</TABLE>
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
The differences between the Partnership's net assets per financial
statements to the tax basis of accounting are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net assets per financial statements .......... $ 46,946,878 $ 48,231,879
Deferred interest receivable ................. 9,367,011 8,653,207
Acquisition fees ............................. (42,678) (74,275)
Allowance for loan losses and impairments .... 3,407,830 1,860,000
Syndication costs ............................ 2,669,697 2,669,697
Financial statement reserves in excess of
tax amounts ............................. 144,000 --
Cumulative tax depreciation in excess of
financial statement depreciation ........ (75,545) (54,828)
------------ ------------
Net assets per tax basis ..................... $ 62,417,193 $ 61,285,680
============ ============
</TABLE>
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
9 SUBSEQUENT EVENT
On February 28, 1997, the Partnership funded a Negotiable Promissory
Note (the "Note") to DVL, Inc., ("DVL") in the principal amount of
$2,000,000 at an annual interest rate of 12% with interest payable
monthly. In addition, the Partnership is entitled to receive payments
equal to DVL's excess cash flow (as defined) from the mortgages
underlying DVL's collateral assignment, which is to be applied as a
reduction of principal. The Note matures on February 27, 2000 and may
be pre-paid during the first two years without penalty. The Note is
secured by (among other things) a collateral assignment of DVL's
interest in certain promissory notes payable to DVL which in the
aggregate amounted to $4,325,000 as of February 28, 1997.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
<TABLE>
<CAPTION>
Schedule II
RESOURCES PENSION SHARES 5, L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Additions
----------------------
Balance at Charged to Charged Balance at
Beginning of Costs and to Other End of
Description Period Expenses Accounts Deductions Period
----------- ------ -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Write-down for impairment:
Groton Shopping Center
Groton, Connecticut ... $ 1,860,000(A) $ -- $ -- $ -- $ 1,860,000
=========== ========== ===== ====== ===========
Allowance for loan losses:
Santa Ana Loan
Santa Ana, California . $ -- (B) $1,547,830 $ -- $ -- $ 1,547,830
=========== ========== ===== ====== ===========
(A) Represents a write-down for impairment on the Groton Shopping Center
provided during 1995.
(B) Represents a provision for loan losses on the Santa Ana Loan provided during
1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Costs Capitalized Gross Amount at
Initial Cost to Subsequent to Close of
Partnership Acquisition Period
------------------------- ------------------------- -------------------------------------
Building Building Write-Down
Encum- and Carrying and for
Description brances Land Improvements Improvements Costs Land Improvements Impairment
----------- ------- ---- ------------ ------------ ----- ---- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LANDOVER MALL $ -- $ 640,000 $2,560,000 $ -- $ 84,404 $ 640,000 $2,644,404 $ --
LANDOVER, MARYLAND
GROTON SHOPPING CENTER -- 1,820,000 4,680,000 497,786 -- 1,820,000 5,177,786 (1,860,000)
GROTON, CONNECTICUT
-------- ---------- ---------- -------- --------- ---------- ---------- -----------
TOTAL $ -- $2,460,000 $7,240,000 $497,786 $ 84,404 $2,460,000 $7,822,190 $(1,860,000)
======== ========== ========== ======== ========= ========== ========== ===========
<CAPTION>
Gross Amount Life on Which
Close of Depreciation In
Period Latest Income
------------ Accumulated Date of Date Statement is
Description Total Depreciation Construction Acquired Computed
----------- ----- ------------ ------------ -------- --------
<S> <C> <C> <C> <C> <C>
LANDOVER MALL
LANDOVER, MARYLAND $3,284,404 $ 265,140 N/A 12/21/92 40 YEARS
Straight-line method
GROTON SHOPPING CENTER
GROTON, CONNECTICUT 5,137,786 379,892 N/A 12/9/93 40 YEARS
Straight-line method
---------- ---------
TOTAL $8,422,190 $ 645,032
========== =========
</TABLE>
<PAGE>
(A) RECONCILIATION OF REAL ESTATE OWNED
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year $8,331,702 $ 9,916,235 $9,784,404
Additions during year
Improvements 90,488 275,467 131,831
Write-down for impairment -- (1,860,000) --
---------- ----------- ----------
Balance at end of year $8,422,190 $ 8,331,702 $9,916,235
========== =========== ==========
(B) RECONCILIATION OF ACCUMULATED DEPRECIATION
Year ended December 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year $450,608 $261,316 $ 76,558
Additions during year
Depreciation(1) 194,424 189,292 184,758
-------- -------- --------
Balance at end of year $645,032 $450,608 $261,316
======== ======== ========
Note: The aggregate cost for income tax purposes is $10,282,190 at December 31,
1996.
</TABLE>
<PAGE>
PART III
Item 10. Directors and Executive Officers of Registrant
There are no officers or directors of Registrant. The Administrative General
Partner is responsible for all administrative functions of Registrant and the
Investment General Partner is responsible for Registrant's investments in
mortgage loans and land sale-leasebacks. The Associate General Partner will not
devote any material amount of its business time and attention to the affairs of
Registrant.
Based on a review of Forms 3 and 4 and amendments thereto furnished to
Registrant pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), during its most recent fiscal year and Forms 5
and amendments thereto furnished to Registrant with respect to its most recent
fiscal year and written representations received pursuant to Item 405(b)(2)(i)
of Regulation S-K, none of the directors or officers of the General Partners, or
beneficial owners of more than 10% of the Units failed to file on a timely basis
reports required by Section 16(a) of the Exchange Act during the most recent
fiscal or prior fiscal years. However, no written representations were received
from the partners of the former Associate General Partner.
As of March 15, 1997, the executive officers and directors of the Administrative
General Partner were as follows:
<TABLE>
<CAPTION>
Has Served As a
Director and/or
Name Age Position Officer Since
---- --- -------- -------------
<S> <C> <C> <C>
Joseph M. Jacobs 43 Director and President November 1994
- --------------------------------------------------------------------------------------------------
Jay L. Maymudes 36 Director, Vice President, November 1994
Secretary and Treasurer
- --------------------------------------------------------------------------------------------------
Frederick Simon 42 Vice President February 1996
- --------------------------------------------------------------------------------------------------
Arthur H. Amron 40 Vice President and Assistant Secretary November 1994
- --------------------------------------------------------------------------------------------------
Robert Holtz 29 Vice President November 1994
- --------------------------------------------------------------------------------------------------
Mark Plaumann 41 Vice President March 1995
- --------------------------------------------------------------------------- ----------------------
</TABLE>
Joseph M. Jacobs has been a director and President of Presidio since its
formation in August 1994 and a Director, Chief Executive Officer, President and
Treasurer of Resurgence Properties Inc., a company engaged in diversified real
estate activities ("Resurgence"), since its formation in March 1994. As of
January 1, 1996, Mr. Jacobs was a member and the President of Wexford. From May
1994 to December 1995, Mr. Jacobs was the President of Wexford Management Corp.
From 1982 through May 1994, Mr. Jacobs was employed by, and since 1988 was the
President of, Bear Stearns Real Estate Group, Inc., a firm engaged in all
aspects of real estate, where he was responsible for the management of all
activities, including maintaining worldwide relationships with institutional and
individual real estate investors, lenders, owners and developers.
<PAGE>
Jay L. Maymudes has been the Chief Financial Officer, a Vice President and
Treasurer of Presidio since its formation in August 1994 and the Chief Financial
Officer and a Vice President of Resurgence since July 1994, Secretary of
Resurgence since January 1995 and Assistant Secretary from July 1994 to January
1995. Since January 1, 1996, Mr. Maymudes has been the Chief Financial Officer
and a Senior Vice President of Wexford and was the Chief Financial Officer and a
Vice President of Wexford Management Corp. from July 1994 to December 1995. From
December 1988 through June 1994, Mr. Maymudes was the Secretary and Treasurer,
and since February 1990 was the Senior Vice President of Dusco, Inc., a real
estate investment advisor, where he was responsible for all financial, tax,
treasury and financing functions.
Frederick Simon was a Senior Vice President of Wexford Management Corp. from
November 1995 to December 1995. Since January 1996, Mr. Simon has been a Senior
Vice President of Wexford. He is also a Vice President of Resurgence. From
January 1994 through November 1995, Mr. Simon was an independent real estate
investor. From 1984 through 1993, Mr. Simon was Executive Vice President and a
Partner of Greycoat Real Estate Corporation, the United States arm of Greycoat
PLC, a London stock exchange real estate investment and development company.
Arthur H. Amron has been a Senior Vice President of certain subsidiaries of
Presidio since November 1994. Since January 1996, Mr. Amron has been a Senior
Vice President and the General Counsel of Wexford. Also, from November 1994 to
December 1995, Mr. Amron was the General Counsel and, since March 1995, a Vice
President of Wexford Management Corp. From 1992 through November 1994, Mr. Amron
was an attorney with the law firm of Schulte, Roth and Zabel. Previously, Mr.
Amron was an attorney with the law firm of Debevoise & Plimpton.
Robert Holtz has been a Senior Vice President and Secretary of Presidio since
its formation in August 1994 and a Vice President and Assistant Secretary of
Resurgence since its formation in March 1994. Since January 1, 1996, Mr. Holtz
has been a Senior Vice President and member of Wexford and was a Vice President
of Wexford Management Corp. from May 1994 to December 1995. From 1989 through
May 1994, Mr. Holtz was employed by, and since 1993 was a Vice President of,
Bear Stearns Real Estate Group, Inc., where he was responsible for analysis,
acquisitions and management of the assets owned by Bear Stearns Real Estate and
its clients.
Mr. Plaumann had been a Senior Vice President of Wexford since January 1996.
From February 1995 through December 1995, Mr. Plaumann had been a Senior Vice
President of Wexford Management Corp. Mr. Plaumann was employed by Alvarez and
Marsel, Inc. as a Managing Director from February 1990 through January 1995, by
American Healthcare Management Inc. from February 1985 to January 1990 and by
Ernst & Young from January 1973 to February 1985.
<PAGE>
As of March 15, 1997, the executive officers and directors of the Investment
General Partner were as follows:
<TABLE>
<CAPTION>
Has Served as a
Director and/or
Name Age Position Officer Since
---- --- -------- -------------
<S> <C> <C> <C>
Frank Goveia 50 Director November 1995
- --------------------------------------------------------------------------------------------------------
Frederick Simon 42 President February 1996
- -------------------------------------------------------------------------------------------------------
Robert Holtz 29 Director and Vice President November 1994
- ---------------------------------------------------------------------------------------------------------
Jay L. Maymudes 36 Vice President, Secretary and Treasurer November 1994
- -----------------------------------------------------------------------------------------------------------
Arthur H. Amron 40 Vice President and Assistant Secretary November 1994
- --------------------------------------------------------------------------------------------------------
Mark Plauman 41 Vice President March 1995
- -------------------------------------------------------------------------------------------------------
</TABLE>
Frank Goveia has served as an officer of the Investment General Partner since
November 1985 and had previously been an officer of the Administrative General
Partner. Frederick Simon has served as an officer of the Investment General
partner since February 1996. All of the others are serving their second term in
such positions and were newly elected following the consummation of the
Steinhardt Plan under which the Administrative and Investment General Partners
became indirectly wholly owned by Presidio.
Frank Goveia has been the Chief Operating Officer and a Senior Vice President of
Wexford since January 1996. From July 1994 to December 1995, Mr. Goveia was a
Vice President of Wexford Management Corp. Mr. Goveia was associated with
Integrated from February 1983 to November 1994, and was a Senior Vice President
since 1990, primarily involved in financial reporting and controls.
There are no family relationships between any executive officer and any other
executive officer or director of either the Administrative or Investment General
Partner.
<PAGE>
Associate General Partner
In December 1994, Richard Ader notified Registrant of his withdrawal as the
Associate General Partner of Registrant. The withdrawal became effective, after
60 days prior written notice to Limited Partners, on February 28, 1995. Upon the
effective date of such withdrawal, Presidio AGP became the Associate General
Partner. The officers and directors of the Associate General Partner are as
follows:
<TABLE>
<CAPTION>
Has Served as a
Director and/or
Name Age Position Officer Since
---- --- -------- -------------
<S> <C> <C> <C>
Robert Holtz 29 Director and President March 1995
- ------------------------------------------------------------------------------------------------
Mark Plauman 41 Director and Vice President March 1995
- ------------------------------------------------------------------------------------------------
Jay L. Maymudes 36 Vice President, Secretary and Treasurer March 1995
- ------------------------------------------------------------------------------------------------
Arthur H. Amron 40 Vice President and Assistant Secretary March 1995
- ------------------------------------------------------------------------------------------------
</TABLE>
See the biographies of the above named officers and directors in the preceding
section.
Many of the officers and directors of the Administrative, Investment and
Associate General Partners are also officers and/or directors of the general
partners of other public partnerships affiliated with Presidio or of various
subsidiaries of Presidio.
Item 11. Executive Compensation
Registrant is not required to and did not pay remuneration to the executive
officers and directors of the Administrative General Partner, the Investment
General Partner or the former Associate General Partner. Certain officers and
directors of the Investment General Partner and the Administrative General
Partner receive compensation from Presidio or its affiliates (but not from
Registrant) for services performed for various affiliated entities, which may
include services performed for Registrant; however, the Administrative and
Investment General Partners believe that any compensation attributable to
services performed for Registrant is not material. See Item 13, "Certain
Relationships and Related Transactions."
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 1, 1997, only the following entity was known by Registrant to be the
beneficial owner of more than 5% of Registrant's Units:
<TABLE>
<CAPTION>
Name and Address of Amount of Beneficial Percentage of
Title of Class Beneficial Owner Ownership Beneficial Ownership
-------------- ---------------- --------- --------------------
<S> <C> <C> <C>
Limited Partnership Units Presidio Partnership II 506,649 8.9%
Corp.
411 West Putnam Ave.
Greenwich, CT 06830
</TABLE>
As of March 1, 1997, none of the General Partners or their officers and
directors were known by Registrant to beneficially own Units or shares of
Presidio, the parent of the General Partners.
As of March 1, 1997, there were 8,766,569 shares of outstanding Class A common
stock of Presidio (the "Shares"). The following table sets forth certain
information known to Registrant with respect to beneficial ownership of the
Class A shares of Presidio as of March 1, 1997 by each person who beneficially
owns 5% or more of the Class A shares, U.S. $.01 par value. The holders Class A
shares are entitled to elect three out of the five members of the Presidio's
Board of Directors with the remaining two Directors being elected by holders of
the Class B shares, U.S. $.01 par value of Presidio.
<TABLE>
<CAPTION>
Beneficial Ownership Percentage
Name of Beneficial Owner Number of Shares Outstanding
- ------------------------ --------- ------ -----------
<S> <C> <C>
Thomas F. Steyer/Fleur A. Fairman 4,553,560(1) 51.8%
John M. Angelo/Michael L. Gordon 1,231,762(2) 14.0%
Intermarket Corp. 1,000,918(3) 11.4%
M. H. Davidson & Co. 474,205(4) 5.4%
- -----------------
(1) As the managing partners of each of Farallon Capital Partners, L.P.
("FCP"), Farallon Capital Institutional Partners, L.P. ("FCIP"), Farallon
Capital Institutional Partners II, L.P. ("FCIP II") and Tinicum Partners,
L.P. ("Tinicum"), (collectively, the "Farallon Partnerships"), may each
be deemed to own beneficially for purposes of Rule 13d-3 of the Exchange
Act the 1,397,318, 1,610,730, 607,980 and 241,671 shares held,
respectively, by each of such Farallon Partnerships.
Farallon Capital Management, LLC ("FCMLLC"), the investment advisor to
certain discretionary accounts which collectively hold 695,861 shares and
Enrique H. Boilini, David I. Cohen, Joseph F. Downes, Jason M. Fish,
Andrew B. Fremder, William F. Mellin, Steven L. Millham, Meridee A. Moore
and Thomas F. Steyer, as a managing member of FCMLLC (collectively, the
"Managing Members") may be deemed to be the beneficial owner of all of
the shares owned by such discretionary accounts. FCMLLC and each Managing
Member disclaims any beneficial ownership of such shares.
<PAGE>
Farallon Partners, LLC ("FPLLC") (the general partner of FCP, FCIP, FCIP
II and Tinicum), and each of Fleur A. Fairman, Mr. Boilini, Mr. Cohen,
Mr. Downes, Mr. Fish, Mr. Fremder, Mr. Mellin, Mr. Millham, Ms. Moore and
Mr. Steyer, each as managing member of FPLLC (collectively, the "Managing
Members"), may be deemed to be the beneficial owner of all of the shares
owned by FCP, FCIP, FCIP II and Tinicum. FPLLC and each managing Member
disclaims any beneficial ownership of such shares.
(2) John M. Angelo and Michael L. Gordon, the general partners and
controlling persons of AG Partners, L.P., which is the general partner of
Angelo, Gordon & Co., L.P., may be deemed to have beneficial ownership
under Section 13(d) of the Exchange Act of the securities beneficially
owned by Angelo, Gordon & Co., L.P. and its affiliates. Angelo, Gordon &
Co., L.P., a registered investment advisor, serves as general partner of
various limited partnerships and as investment advisor of third party
accounts with power to vote and direct the disposition of Class A Shares
owned by such limited partnerships and third party accounts.
(3) Intermarket Corp. serves as General Partner for certain limited
partnerships and as investment advisor to certain corporations and
foundations. As a result of such relationships, Intermarket Corp. may be
deemed to have the power to vote and the power to dispose of Class A
shares held by such partnerships, corporations and foundations.
(4) Marvin H. Davidson, Thomas L. Kempner Jr., Stephen M. Dowicz, Scott E.
Davidson and Michael J. Leffell, the general partners, members and
stockholders of certain entitities that are general partners or
investment advisors of Davidson Kempner Institutional Partners, L.P., M.
H. Davidson and Co., Davidson Kempner Internatinal Ltd. (collectively,
the "Investment Funds"), may be deemed to be the beneficial owners under
Section 13(d) of the Exchange Act of the securities beneficially owned by
the Investment Funds and their affiliates.
In addition, Mr. Kempner owns 800 shares and may be deemed to
beneficially own certain securities held by certain foundations and
trusts. Mr. Kempner disclaims beneficial ownership of such shares.
</TABLE>
All of Presidio's Class B Shares are owned by IR Partners. Such Class B Shares
are convertible in certain circumstances into 1,200,000 Class A Shares; however,
such shares are not convertible at present. IR Partners is a general partnership
whose general partners are Steinhardt Management, certain of its affiliates and
accounts managed by it and Roundhill Associates. Roundhill Associates, is a
limited partnership whose general partner is Charles E. Davidson, the principal
of Presidio Management, the Chairman of the Board of Presidio and a Member of
Wexford. Joseph M. Jacobs, the Chief Executive Officer and President of Presidio
and a Member and the President of Wexford, has a limited partner's interest in
Roundhill Associates. Pursuant to Rule 13d-3 under the Exchange Act, each of
Michael H. Steinhardt, the controlling person of Steinhardt Management and its
affiliates and Charles E. Davidson may be deemed to be beneficial owners of such
1,200,000 shares.
Shares held by each Class A Director of Presidio were issued pursuant to a
Memorandum of Understanding Regarding Compensation of Class A Directors of
Presidio. (See "Executive Compensation - Compensation of Directors.")
<PAGE>
The address of Thomas F. Steyer and the other individuals mentioned in footnote
1 to the table above (other than Fleur A. Fairman) is c/o Farallon Capital
Partners, L.P., One Maritime Plaza, San Francisco, California 94111 and the
address of Fleur A. Fairman is c/o Farallon Capital Management, Inc., 800 Third
Avenue, 40th Floor, New York, New York 10022. The address of Angelo, Gordon &
Co., L.P. and its affiliates is 245 Park Avenue, 26th Floor, New York, New York
10167. The address for Intermarket Corp. Is 667 Madison Avenue, New York, New
York 10021. The address for M. H. Davidson & Co., is 885 Third Avenue, New York,
New York 10022.
<PAGE>
Item 13. Certain Relationships and Related Transactions
During Registrant's fiscal year ended December 31, 1996, the General Partners
and certain affiliated entities have earned or received compensation or payments
for services from Registrant as follows:
<TABLE>
<CAPTION>
Name of Recipient Capacity in Which Served Compensation
----------------- ------------------------ ------------
<S> <C> <C>
Resources Capital Corp. Administrative General Partner $787,253(1)
Resources Pension Advisory Corp. Investment General Partner $76,309(2)
Presidio AGP Corp. Associate General Partner $125(3)
(1) This amount includes the following:
(a)a Partnership Management Fee of $775,060 for managing the affairs of
Registrant.
(b)$12,193 as the Administrative General Partner's share of the General
Partners' 1% distribution of Adjusted Cash From Operations.
(2) This amount includes the following:
(a)a Mortgage Servicing Fee of $76,184 for servicing the mortgage loan
portfolio of Registrant.
(b)$125 as the Investment General Partner's share of the General
Partners' 1% distribution of Adjusted Cash From Operations.
(3) This amount represents the Associate General Partner's share of the
General Partner's 1% interest in Adjusted Cash from Operations.
(4) Pursuant to Registrant's Partnership Agreement, for the year ended
December 31, 1996, the General Partners were allocated taxable income as
follows: taxable income of $74,035 to the Administrative General Partner
and taxable income of $756 to each of the Investment and Associate
General Partners.
</TABLE>
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements: See Item 8.
(2) Financial Statement Schedules: See Item 8.
(3) Exhibits:
3 Amended and Restated Certificate of Limited Partnership and
Partnership Agreement, incorporated by reference to Exhibit A to
Registrant's Prospectus dated May 15, 1986, filed pursuant to Rule
424(b) under the Securities Act of 1933 (File No. 33-3572).
10(a) Services Agreement, incorporated by reference to Exhibit 10B to
Registrant's Registration Statement (No. 33-3572).
10(b) Agreement with Associate General Partner incorporated by reference to
Exhibit 10C to Registrant's Registration Statement (No. 33-3572).
10(c) Supervisory Management Agreement dated as of December 9, 1993 between
Registrant and Resources Supervisory Management Corporation
incorporated by reference to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993.
10(d) Mortgage Note between M G Medford Limited Partnership and Tokyo
Leasing (U.S.A.) Inc. dated as of April 22, 1993, purchased by
Registrant on July 12, 1995.
10(e) Negotiable Promissory Note between DVL, Inc. and Registrant, dated
February 28, 1997.*
(b) Reports on Form 8-K filed during the last quarter of the fiscal year:
None.
* Filed herewith
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
RESOURCES PENSION SHARES 5, L.P.
By: RESOURCES CAPITAL CORP.
Administrative General Partner
DATE
By: /s/Joseph M. Jacobs March 29, 1997
-------------------
Joseph M. Jacobs
President
By: RESOURCES PENSION ADVISORY CORP.
Investment General Partner
By: /s/ Frederick Simon March 29, 1997
-------------------
Frederick Simon
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant in their
capacities (with respect to The Administrative and Investment General Partners)
and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Joseph M. Jacobs Director and President March 29, 1997
Joseph M. Jacobs (Principal Executive Officer)
/s/ Frank Goveia Director and Vice President March 29, 1997
- ----------------
Frank Goveia
/s/ Jay L. Maymudes Director and President March 29, 1997
- -------------------
Jay L. Maymudes (Principal Financial Officer
and Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibits
- --------
3 Amended and Restated Certificate of Limited Partnership and
Partnership Agreement, incorporated by reference to Exhibit A to
Registrant's Prospectus dated May 15, 1986, filed pursuant to Rule
424(b) under the Securities Act of 1933 (File No. 33-3572).
10(a) Services Agreement, incorporated by reference to Exhibit 10B to
Registrant's Registration Statement (No. 33-3572).
10(b) Agreement with Associate General Partner incorporated by reference to
Exhibit 10C to Registrant's Registration Statement (No. 33-3572).
10(c) Supervisory Management Agreement dated as of December 9, 1993 between
Registrant and Resources Supervisory Management Corporation
incorporated by reference to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993.
10(d) Mortgage Note between M G Medford Limited Partnership and Tokyo
Leasing (U.S.A.) Inc. dated as of April 22, 1993, purchased by
Registrant on July 12, 1995.
10(e) Negotiable Promissory Note between DVL, Inc. and Registrant, dated
February 28, 1997.*
* Filed herewith
EXHIBIT 10(e)
<PAGE>
NEGOTIABLE PROMISSORY NOTE
New York, New York
$2,000,000 February 28, 1997
FOR VALUE RECEIVED, the undersigned, DVL, INC., a Delaware
corporation, with an address at 24 River Road, Bogota, New Jersey 07603
(hereinafter the "Borrower"), hereby unconditionally PROMISES TO PAY to the
order of RESOURCES PENSION SHARES 5, L.P., a Delaware limited partnership, with
an address c/o Wexford Management LLC, 411 West Putnam Avenue, Greenwich,
Connecticut 06830 (the "Lender"), and its successors or assigns (together with
the Lender, the "Holder"), the principal sum of TWO MILLION DOLLARS ($2,000,000)
(the "Loan"), together with interest from and after the date hereof on the
principal balance from time to time outstanding from and after the date hereof
as provided herein.
This Negotiable Promissory Note (this "Promissory Note") is
made in accordance with the Secured Loan Agreement dated as of February 27, 1997
between the Borrower and the Lender (the "Loan Agreement"). The Holder is
entitled to the benefits and security of, and the rights and remedies under, the
Loan Agreement and the other Loan Documents. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms on Schedule 1
hereto or, if not defined thereon, then as such terms are defined in the Loan
Agreement.
The principal amount of the Loan, and accrued interest
thereon, shall be payable in monthly installments in the amounts specified
herein through (unless sooner paid by prepayment, acceleration or otherwise as
provided in the Loan Agreement) February 27, 2000 (the "Maturity Date"). On the
Maturity Date, the entire outstanding principal balance of, and accrued and
unpaid interest on, this Promissory Note and any other obligations of the
Borrower under this Promissory Note, the Loan Agreement or the other Loan
Documents shall be due and payable in full.
Interest on the outstanding principal balance of this
Promissory Note shall accrue at twelve percent (12%) per annum (the "Interest
Rate"), based on a 360-day year, for the actual number of days elapsed. From and
after the occurrence of an Event of Default, the outstanding principal balance
of this Promissory Note shall bear interest at the Interest Rate plus additional
interest at the rate five percent (5%) per annum (the "Default Rate"). In no
event shall the interest or other amounts payable pursuant to this Promissory
Note exceed the Maximum Lawful Rate, as provided in the Loan Agreement.
On March 10, 1997, the Borrower shall pay to the Holder an
amount equal to all unpaid interest accrued on this Promissory Note. Thereafter,
the Borrower shall pay to the Holder, on or before the tenth (10th) day of each
calendar month, commencing on April 10, 1997 (each, a "Monthly Payment Date") an
amount equal to the greater of (i) 100% of Cash Flow during the preceding
<PAGE>
calendar month and (ii) an amount equal to all interest accrued and unpaid on
this Promissory Note. The Borrower shall make each payment under this Promissory
Note not later than 11:00 A.M. (New York City time) on the day when due in
lawful money of the United States of America in immediately available funds to
the Holder's depositary bank, as designated by the Holder by Notice from time to
time, for deposit in the Holder's depositary account or, if such day is not a
Business Day, then the subject due date shall be extended to the next succeeding
full Business Day and interest thereon shall be payable during such extension.
Prior to the occurrence of an Event of Default under the Loan
Agreement, all payments by the Borrower to the Holder under this Promissory Note
shall be applied in the following priority and order:
(i) to accrued and unpaid interest on the outstanding
principal balance of this Promissory Note;
(ii) to then due and payable fees and expenses payable to
the Holder under any of the Loan Documents;
(iii) to the then outstanding principal balance of this
Promissory Note.
From and after the occurrence of an Event of Default under the
Loan Agreement, the Holder is authorized to, and at its option may, make
advances on behalf of the Borrower for payment of all fees, expenses, charges,
costs, principal and interest incurred by the Borrower under the other Loan
Documents when and as the Borrower fails to pay any such amounts. At the
Holder's option and to the extent permitted by law, any advances so made by the
Holder shall automatically be added to the principal balance of this Promissory
Note and shall constitute a portion of the Indebtedness evidenced by this
Promissory Note for all purposes. From and after the occurrence of an Event of
Default, the Holder shall apply all payments by the Borrower to the Holder under
this Promissory Note as the Holder may determine.
The Borrower may, at its option, prepay the outstanding
principal balance of, and accrued and unpaid interest on, this Promissory Note,
in whole or in part, at any time, provided that (i) the amount of any such
prepayment equals or exceeds $325,000; (ii) any such prepayment is made on a
Business Day; (iii) no default, event of default or breach has occurred under
any of the Loan Documents; (iv) the Borrower shall have given the Holder at
least thirty (30) days' prior Notice of the Borrower's intention to make such
prepayment; and (v) such prepayment is accompanied by payments of all other sums
due and owing under the Loan Documents on such date, including a Yield
Maintenance Fee.
Upon any prepayment of the outstanding principal balance of,
and accrued and unpaid interest on, this Promissory Note, in whole or in part,
the Borrower shall, pay to the Holder a Yield Maintenance Fee if such prepayment
is made during the first two years of the term of this Promissory Note. In no
event shall the Yield Maintenance Fee be less than zero. There shall be no Yield
Maintenance Fee if this Promissory Note is prepaid during the third (3rd) year
of the term of this Promissory Note.
<PAGE>
The Holder shall notify the Borrower of the amount and the
basis of determination of the Yield Maintenance Fee which shall be conclusively
determined by the Holder absent manifest error. The Holder shall not be
obligated actually to reinvest any amount prepaid hereunder in any such U.S.
Government Treasury obligations as a condition precedent to the Holder's
receiving the Yield Maintenance Fee.
In the event that any of the Properties or any interest in any
of the Leases has been transferred, sold or otherwise disposed of by the
applicable Partnership in a transaction pursuant to which (i) such a transfer,
sale or other disposition does not constitute or give rise to (with the passage
of time or the giving of notice or both) a default or event of default under any
of the Loan Documents, (ii) the Borrower gives the Holder at least 60 days prior
Notice of any such transfer, sale or other disposition, (iii) the Borrower shall
have paid to the Holder an amount equal to the greater of: (A) the DI Payment
(as defined below) for such Property and (B) the Minimum Release Price in
respect of such Property plus the appropriate Yield Maintenance Fee in effect at
the time of such prepayment, and (iv) such Property is actually sold to a third
party pursuant to an arm's length sale transaction, then the Borrower shall make
a prepayment of the outstanding unpaid principal balance of, and accrued and
unpaid interest on, this Promissory Note, in whole or in part, in an amount
equal to the greater of:
(i) the gross sale price received in respect of such
transfer, sale or other disposition, less (A)
reasonable and customary transaction fees (including
attorneys' fees not to exceed a maximum of $12,000),
(B) a fee payable to the Borrower not to exceed two
percent (2%) of such gross sale price and (C) any and
all amounts of such gross sale price actually
distributed to the limited partners of the Partnership
which transferred, sold or otherwise disposed of such
Property, or interest in any such Lease thereon, as an
inducement to consent to such transfer, sale or other
disposition; and
(ii) the Minimum Release Price for such Property set forth
in Schedule 2 hereto plus the appropriate Yield
Maintenance Fee in effect at the time of such
prepayment.
In the event that DVL shall make a prepayment to the Lender in an amount
determined in accordance with clause (i) above (a "DI Payment"), the DI Payment
shall be allocated to principal, interest and Yield Maintenance Fee in such
proportion as will result in the aggregate amount of such principal, together
with accrued and unpaid interest thereon, and the Yield Maintenance Fee payable
with respect thereto at the time of such prepayment to equal such DI Payment. In
the event that Milford Property has been transferred, sold or otherwise disposed
of by or on behalf of Milford Associates in accordance with the foregoing within
the six month period immediately following the date hereof, the Yield
Maintenance Fee applicable to resulting prepayment on the Loan by the Borrower
shall be $25,000.
Notwithstanding any provisions herein or in the Loan Agreement
to the contrary, in the event this Promissory Note is declared due and payable
by the Holder by reason of a default or event of default under any of the Loan
Documents, any repayment shall be deemed to be a voluntary prepayment of this
Promissory Note and the Borrower shall be required to pay the appropriate Yield
Maintenance Fee which is in effect at the time such declaration is made.
<PAGE>
THE BORROWER HEREBY EXPRESSLY WAIVES PRESENTMENT FOR PAYMENT,
DEMAND, PROTEST, NOTICE OF PROTEST, NOTICE OF DISHONOR, NOTICE OF OCCURRENCE OF
AN EVENT OF DEFAULT, NOTICE OF ACCELERATION AND NOTICE OF NON-PAYMENT HEREOF.
THE BORROWER HEREBY VOLUNTARILY AND KNOWINGLY WAIVES THE RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS PROMISSORY NOTE, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.
This Promissory Note has been executed, delivered and accepted
at New York, New York and shall be interpreted, governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and performed in such state, without regard to the principles
thereof regarding conflict of laws, and any applicable laws of the United States
of America.
This Promissory Note may not be changed orally, but only by a
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
IN WITNESS WHEREOF, the Borrower has executed this Promissory
Note on February 27, 1997 intending that it be effective on February 28, 1997.
ATTEST: DVL, INC.
/s/Joyce K. Helman By:/s/Robert W. LoSchiavo
- ------------------ ----------------------
Joyce K. Helman Name: Robert W. LoSchiavo
Title: Vice President
<PAGE>
SCHEDULE 1
DEFINITIONS
"Affiliate" means, with respect to any Person, (i) each other
Person that directly or indirectly owns or holds five percent (5%) or
more of any class of voting stock or partnership or other voting
interests of such Person or a Subsidiary of such Person or (ii) each
Person of which five percent (5%) or more of the voting stock or
partnership or other voting interests is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such
Person, (iii) each Person that, directly or indirectly through one or
more intermediaries, controls, is controlled by or is under common
control with such Person or any Affiliate of such Person or (iv) each
of such Person's officers, directors, employees, joint venturers and
partners. For the purpose of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether
through the ownership of voting securities, partnership or other voting
interests by contract or otherwise.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or
required by law to close.
"Cash Flow" means, for any period, the collective reference to
the sum of (1) the gross proceeds generated by the Collateral
(including, without limitation, all payments of interest and principal,
all proceeds from the refinancing of any notes and mortgages and all
proceeds of any payoff of, or sale of, or with respect to, any of the
Collateral) plus (2) from and after the occurrence of an Event of
Default, any and all cash and other proceeds received by the Borrower
and/or the Holder on account of the Collateral or from the sale,
collection or other realization of or upon the Collateral.
"Collateral" means:
a. the following described property, whether now
existing or hereafter arising, in which the Borrower now has
or may hereafter acquire any interest:
(1) any and all rights and interests of the Borrower in
any Leases or the right to receive payments therefrom
pursuant to any Collateral Assignments of Leases and
Rent or otherwise;
(2) all Collateral Notes, together with any and all
other forms of obligations of the Partnerships to the
Borrower in respect of the Indebtedness evidenced by
the Collateral Notes, any and all rights and interests
of the Borrower to receive payments from the
Partnerships in connection with such Indebtedness, any
and all other rights and interests of the Borrower
under any agreements or Instruments relating to such
indebtedness;
<PAGE>
(3) all other property, instruments or documents,
evidencing, securing or guaranteeing payment of the
indebtedness evidenced and secured by the Collateral
Notes, including, but not limited to, the Collateral
Mortgages and Collateral Assignments of Leases and
Rents, and each title policy, title binder or
commitment to issue title insurance insuring the
Collateral Mortgages and the lien thereof, each
commitment, if any, now or hereafter, issued by a long
term or interim lender in which the Borrower has an
interest and pursuant to the provisions of which such
long term or interim lender has committed itself to
make an interim or long term loan out of the proceeds
of which the indebtedness evidenced and secured by the
Collateral Mortgages will be paid in whole or in part,
each policy of hazard insurance, rental interruption
insurance, boiler insurance, liability insurance or
other forms of insurance now or hereafter issued with
respect to the premises and improvements encumbered by
the Collateral Mortgage and the proceeds thereof, and
all deposit accounts, credits, moneys, property or
other security of any nature whatsoever now or
hereafter available to the Borrower for application in
reduction, in whole or in part, of the indebtedness
evidenced and secured by the Collateral Mortgages; and
(4) any and all other Collateral Loan Documents;
b. any other property which now or hereafter serves as
security for the Obligations;
c. any other property of the Borrower of any kind or
nature coming into the Holder's possession, custody or
control; and
d. any Proceeds (as such term is defined under the UCC)
of the foregoing.
"Collateral Assignment of Leases and Rents" means each of the
assignments of leases and/or rents and any modifications, amendments,
and supplements thereto contained in any agreements, instruments or
other documents described in Schedule 3 annexed hereto.
"Collateral Loan Documents" means the Collateral Notes, the
Collateral Mortgages and any and all Collateral Assignments of Leases
and Rents and any and all documents, instruments, assignments, and
agreements executed by any obligor under any of the Collateral Loan
Documents in connection therewith.
"Collateral Mortgage" means each of the mortgages and any
modifications, amendments and supplements thereto contained in any
agreements, instruments or other documents described on Schedule 3
annexed hereto.
<PAGE>
"Collateral Note" means each of the promissory notes of the
Partnerships and any modifications, amendments and supplements thereto
contained in any agreements, instruments or other documents described
on Schedule 3 annexed hereto, evidencing an Indebtedness of any kind
from such Partnership to the Borrower or its Affiliates secured by a
Collateral Mortgage.
"DI Payment" shall have the meaning ascribed to it in the
Promissory Note.
"Estoppel Certificate and Agreement of Lessee" means an
Estoppel Certificate and Agreement of Lessee, executed on or about the
date hereof by each of the Tenants under the Leases, the respective
Partnerships and the Borrower.
"Guaranteed Indebtedness" means, as to any Person, the
obligation of such Person guaranteeing any Indebtedness, lease,
dividend, or other obligation ("primary obligations") of any other
Person (the "primary obligor") in any manner (or otherwise providing
any other assurance to or on behalf of the primary obligor that such
primary obligations will be paid, discharged or performed) including,
without limitation, any obligation or arrangement of such Person, (i)
to purchase or repurchase any such primary obligation, (ii) to advance
or supply funds (A) for the purchase or payment of any such primary
obligation or (B) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or
any balance sheet condition of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (iv) to
indemnify the owner of such primary obligation against loss in respect
thereof.
"Indebtedness" of any Person means (i) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (including, without limitation, reimbursement and
all other obligations with respect to surety bonds, letters of credit
and bankers' acceptances, whether or not matured, but not including
obligations to trade creditors incurred in the ordinary course of
business), (ii) all obligations evidenced by notes, bonds, debentures
or similar instruments, (iii) all indebtedness created or arising under
any conditional sale or other title retention agreements with respect
to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (iv) all
obligations of any Person under any lease of property (whether real,
personal or mixed) by such Person as lessee that, in accordance with
generally accepted accounting principles in the United States of
America in effect from time to time, as consistently applied and
maintained throughout the period indicated, either would be required to
be classified and accounted for as a capital lease on a balance sheet
of such Person or otherwise disclosed as such in a note to such balance
sheet, (v) all Guaranteed Indebtedness, and (vi) all Indebtedness
referred to in clause (i), (ii), (iii), (iv) or (v) above secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness.
<PAGE>
"Instrument" shall have the meaning given such term in Section
9-105 of the UCC.
"Lease" means each of the lease and sublease agreements
between the respective Partnerships and any Tenant including but not
limited to those Leases set forth on Schedule 3 annexed hereto.
"Lender Collateral Assignment" means the Collateral
Assignments by and between the Borrower and the Lender pursuant to
which the Borrower assigns the Collateral to the Lender as security for
the Loan.
"Lender Loan Document" means the Loan Agreement, this
Promissory Note, the Security Agreement, the Lender Collateral
Assignment(s), the Lockbox Agreement, the Estoppel Certificates and
Agreements of Lessee, the Subordination Agreements and the
Lender/Partnership Agreements.
"Lender/Partnership Agreements" means those agreements dated
on or about the date hereof between the Lender and the Partnerships
executed in connection with the Loan.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing) and the filing with the
consent of the debtor of any financing statement under the UCC or
comparable law of any jurisdiction.
"Loan Documents" means the Loan Agreement, this Promissory
Note, the Security Agreement, the Lender Collateral Assignment(s), the
Lockbox Agreement, the Estoppel Certificates and Agreements of Lessee,
the Subordination Agreements, the Lender/Partnership Agreements, the
Collateral and all other instruments and documents contemplated hereby
and thereby.
"Lockbox Agreement" means the Lockbox Agreement dated on or
about the date hereof among, inter alia, the Borrower and the Lender.
"Minimum Release Prices" means, with respect to each of the
Properties, the amount set forth opposite the name of such Property on
Schedule 2.
"money" shall have the meaning given such term in Section
1-201 of the UCC.
"Notice" means, whenever it is provided herein that any notice
shall or may be given to or served upon any of the parties by another,
each such notice shall be in writing and shall be deemed given only if
(i) delivered in person, or (ii) sent by Federal Express or other
nationally recognized overnight courier service, and addressed to the
parties at the addresses set forth hereinabove or at such other address
as may be substituted by notice given as herein provided, and such
notice shall be deemed effective upon receipt.
<PAGE>
"Obligations" means and includes all loans, debts,
liabilities, obligations, charges, fees, interest, guarantees,
covenants and duties owing by the Borrower to the Holder, arising out
of or in connection with the Loan, of every kind and description
(whether or not evidenced by any note or other Instrument and whether
or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising,
including, without limitation, any and all interest, fees, charges, or
other costs that the Borrower is required to pay to the Holder by law.
"Partnerships" means the four (4) limited partnerships listed
below:
Hoosick Falls Associates, a Pennsylvania Limited Partnership
Salisbury Associates, a Pennsylvania Limited Partnership
Milford Associates, a New Jersey Limited Partnership Fort
Edward Associates, a New Jersey Limited Partnership
"person" or "Person" means any individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Government Authority or other entity of
whatever nature.
"Properties" mean the following four (4) properties:
o the property owned by Fort Edward Associates located in
Fort Edward, Washington County, New York, as more
particularly described in and encumbered by Collateral Loan
Documents (the "Fort Edward Property");
o the property owned by Hoosick Falls Associates located in
Hoosick Falls, Rennsalaer County, New York, as more
particularly described in and encumbered by Collateral Loan
Documents (the "Hoosick Falls Property");
o the property owned by Milford Associates located in
Milford, Pike County, Pennsylvania, as more particularly
described in and encumbered by Collateral Loan Documents (the
"Milford Property"); and
o the property owned by Salisbury Associates located in
Salisbury, Wicomico County, Maryland, as more particularly
described in and encumbered by Collateral Loan Documents (the
"Salisbury Property").
"Security Agreement" means that certain security agreement
dated on or about the date hereof between the Borrower and the Lender.
"Subordination Agreements" means the collective reference to
the Subordination Agreements dated on or about the date hereof by and
between the Lender and each of NPM Capital LLC and NPO Management LLC,
and acknowledged, agreed and consented to by the Borrower, concerning
the Collateral.
<PAGE>
"Subsidiary" means, with respect to any Person, (a) any
corporation in which such Person and/or one or more Subsidiaries of
such Person, directly or indirectly, owns legally or beneficially an
aggregate of more than fifty percent (50%) of any class of the
outstanding securities having ordinary voting power to elect a majority
of the board of directors of such corporation (irrespective of whether,
at the time, securities of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) or (b) any partnership or other Person in
which such Person and/or one or more Subsidiaries of such Person shall
have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%) or
(c) any Person of which such Person has the right to control the
operating or financial decisions of such Person.
"Tenant" means any tenant under any of the Leases, including,
without limitation, the Grand Union Company, Camellia Food Stores, Inc.
and any sublessees thereof, and any of their respective assignees.
"Treasury Rate" means the rate per annum conclusively
determined by the Holder (absent manifest error) as of (i) the
acceleration date, if the Loan shall be accelerated in accordance with
any provision of the Lender Loan Documents, or (ii) the date of
prepayment, if the Loan is prepaid in accordance with the provisions of
the Lender Loan Documents, as the case may be. The Treasury Rate shall
be the Treasury Constant Maturity yields reported in the Federal
Reserve Statistical Release H.15 Selected Interest Rates (or such
suitable replacement publication as the Holder may reasonably select),
on the third (3) Business Day preceding such acceleration date or date
of prepayment, as the case may be. The Treasury Rate shall be the yield
implied by the Treasury Constant Maturity series for a U.S. Government
Treasury obligation having a term ending on the Maturity Date, such
yield being determined by linear interpolation between the yields
reported in Release H.15 (or such replacement publication).
"UCC" means the Uniform Commercial Code of the jurisdiction
with respect to which such term is used, as an effect from time to
time.
"Yield Maintenance Fee" means and is the difference between
(i) the amount of interest which would be earned on the Loan at the
Interest Rate during the Yield Maintenance Term and (ii) the amount of
interest which would be earned on the Loan at a rate equal to one
percent above the Treasury Rate during the Yield Maintenance Term, as
calculated as follows:
(a) The difference between the Interest Rate and the rate
equal to one percent above the Treasury Rate shall be
multiplied by the amount of principal indebtedness due upon
acceleration or by the amount of the prepayment, as the case
may be;
(b) The product thus obtained will be divided by twelve (12)
to determine the monthly excess of earned interest; and
<PAGE>
(c) The monthly excess of earned interest (determined in
subsection (b) above) will be multiplied by a factor which
is equal to the present value of a series of one dollar
($1.00) payments, such present value based upon the
following components:
(i) An interest rate equal to one-twelfth (1/12) of the
Treasury Rate; and
(ii) The number of payments or periods equal to the
number of months remaining in the Yield Maintenance
Term, but determined as if there had been no prepayment
or acceleration, as the case may be, rounded up to the
nearest whole number.
"Yield Maintenance Term" means the period beginning on the
acceleration date or the date of prepayment, as the case may be, and
ending on the Maturity Date.
The words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Promissory Note as a whole, including the Schedules hereto, as the
same may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Promissory Note.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter.
<PAGE>
SCHEDULE 2
Minimum Release Prices
With respect to each of the Properties, the amount set forth
opposite the name of such Property shall be the "Minimum Release Price" for such
Property:
Fort Edward Property: $850,000
Hoosick Falls Property: $500,000
Milford Property: $850,000
Salisbury Property: $325,000
The terms, Milford Property, Fort Edward Property, Hoosick Falls Property and
Salisbury Property, are defined under the term "Properties".
<PAGE>
SCHEDULE 3, page 1 of 5
FORT EDWARD ASSOCIATES PROPERTY
Collateral Loan Documents:
Note dated March 31, 1983 in the amount of $1,152,000 made by Fort Edward
Associates, as maker, payable to Kenbee Management-New York, Inc., as holder.
Second Mortgage dated March 31, 1983 between Fort Edward Associates, as
mortgagor, and Kenbee Management-New York, Inc., as mortgagee covering the
Property as more particularly described therein, recorded on April 6, 1983 in
the records of Washington County, New York at Book 381, page 895.
First Assignment of Leases and Rents dated March 31, 1983 between Fort Edward
Associates, as assignor, and Kenbee Management-New York, Inc. and Del-Val
Financial Corporation (n/k/a DVL, Inc.), as assignees, recorded in the records
of Washington County, New York at Book 494, page 108.
Assignment of Note, Mortgage and Assignment of Rents dated as of October 6, 1988
between Kenbee Management-New York, Inc., as assignor, and Del-Val Financial
Corporation (n/k/a DVL, Inc.), as assignee, recorded on October 28, 1988 in the
records of Washington County, New York at Book 534, page 136.
Mortgage Modification Agreement and Collateral Assignment of Leases dated as of
October 6, 1988 between Kenbee Management-New York, Inc., as assignor, and
Del-Val Financial Corporation (n/k/a DVL, Inc.), as assignee, recorded on
October 28, 1988 in the records of Washington County, New York at Book 534, page
140.
Modification Agreement dated as of January 1, 1992 among Del-Val Financial
Corporation (n/k/a DVL, Inc.), Fort Edward Associates and Textron Financial
Corporation, recorded on July 11, 1994 in the records of Washington County, New
York at Book 844, page 217.
Lease:
Lease dated March 30, 1983 between Fort Edward Associates and The Grand Union
Company.
<PAGE>
SCHEDULE 3, page 2 of 5
HOOSICK FALLS ASSOCIATES PROPERTY
Collateral Loan Documents:
Note dated November 12, 1981 in the amount of $1,045,000 made by Hoosick Falls
Associates, as maker, payable to Kenbee Management New York, Inc., as holder.
Mortgage dated as of November 12, 1981 between Hoosick Falls Associates, as
mortgagor, and Kenbee Management-New York, Inc., as mortgagee, covering the
Property as more particularly described therein, recorded on November 20, 1981
in the records of Rennsalaer County, New York at Liber 1184, page 534.
Assignment of Lessor's Interest in Lease dated as of November 12, 1981 between
Hoosick Falls Associates, as assignor, and Kenbee Management-New York, Inc., as
assignee, recorded on March 15, 1982 in the records of Rennsalaer County, New
York at Liber 1343, page 305.
Assignment of Note and Mortgage dated as of March 1, 1987 between Kenbee
Management-New York, Inc., as assignor, and Del-Val Financial Corporation (n/k/a
DVL, Inc.), as assignee, recorded on October 31, 1988 in the records of
Rennsalaer County, New York at Liber 1617, page 200.
Note and Mortgage Modification Agreement and Collateral Assignment of Leases
dated as of March 1, 1987 between Hoosick Falls Associates and Del-Val Financial
Corporation (n/k/a DVL, Inc.), recorded on October 31, 1988 in the records of
Rennsalaer County, New York at Liber 1617, page 185.
Modification Agreement dated as of January 1, 1992 among Del-Val Financial
Corporation (n/k/a DVL, Inc.), Hoosick Falls Associates and Textron Financial
Corporation, recorded on July 13, 1994 in the records of Rennsalaer County, New
York at Liber 2504, page 0295.
Lease:
Lease dated November 10, 1981 between Hoosick Falls Associates and The Grand
Union Company.
<PAGE>
SCHEDULE 3, page 3 of 5
MILFORD ASSOCIATES PROPERTY
Collateral Loan Documents:
Note dated January 31, 1983 in the amount of $1,368,000 made by Milford
Associates, as maker, payable to Kenbee Management-New York, Inc., as holder.
Mortgage dated as of January 31, 1983 between Milford Associates, as mortgagor,
and Kenbee Management-New York, Inc., as mortgagee, covering the Property as
more particularly described therein, recorded on February 3, 1983 in the records
of Pike County, Pennsylvania at Book 368, page 204.
First Assignment of Leases and Rents dated as of January 31, 1983 between
Milford Associates, as assignor, and Kenbee Management-New York, Inc., as
assignee, recorded on February 3, 1983 in the records of Pike County,
Pennsylvania at Book 852, page 15.
First Collateral Assignment of Sewage Lease dated as of January 31, 1983 between
Milford Associates, as assignor, and Kenbee Management-New York, Inc., as
assignee, recorded on February 3, 1983 in the records of Pike County,
Pennsylvania at Book 856, page 79.
Assignment of Note, Mortgage, Assignment of Rents and Sewage Lease dated as of
October 6, 1988 between Kenbee Management-New York, Inc., as assignor, and
Del-Val Financial Corporation (n/k/a DVL, Inc.), as assignee, recorded on
November 1, 1988 in the records of Pike County, Pennsylvania at Book 784, page
271.
Mortgage Modification Agreement and Collateral Assignment of Leases dated as of
October 6, 1988 between Kenbee Management-New York, Inc., as assignor, and
Mortgage Financing Partners (predecessor-in-interest to DVL, Inc.), as assignee,
recorded on November 1, 1988 in the records of Pike County, Pennsylvania at Book
784, page 279.
<PAGE>
SCHEDULE 3, page 4 of 5
Note Modification Agreement dated as of January 1, 1990 between Milford
Associates, as maker, and Mortgage Financing Corporation (assignee of Kenbee
Management-New York, Inc. and predecessor-in-interest to DVL, Inc.), as holder.
Modification Agreement dated as of January 1, 1992 among DVL, Inc., Milford
Associates and Textron Financial Corporation, recorded on July 11, 1994 in the
records of Pike County, Pennsylvania at Book 921, page 089.
Lease:
Lease dated January 31, 1983 between Milford Associates and The Grand Union
Company.
SALISBURY ASSOCIATES PROPERTY
Collateral Loan Documents:
Note dated March 30, 1982 in the amount of $700,000 made by Salisbury
Associates, as maker, payable to Kenbee Management-New York, Inc., as holder.
Deed of Trust dated March 30, 1982 between Salisbury Associates, as grantor, and
John P. Douds and James N. Wright, Jr., Trustees for the benefit of Kenbee
Management-New York, Inc. recorded in the records of Wicomico County, Maryland
on April 6, 1982 in Liber 972, page 110.
Memorandum of Assignment of Note and Deed of Trust dated as of June 30, 1982
between Kenbee Management-New York, Inc., as assignor, and the Newspaper
Statistics, Inc. dated January 1, 1973, as restated as of January 1, 1976, and
as further amended, and the Newspaper Statistics, Inc. Defined Benefit Pension
Plan with Newspaper Statistics, Inc. dated January 1, 1977, as amended, and the
Newspaper Statistics, Inc. Pension Plan Account of Martin Scheinberg with
Newspaper Statistics, Inc. dated January 1, 1973, as amended January 1, 1984, as
assignees, recorded in the aforesaid records on September 30, 1988 in Liber
1158, page 693.
<PAGE>
SCHEDULE 3, page 5 of 5
Assignment of Note and Deed of Trust dated as of January 1, 1987 between Paul D.
Spindel and Martin R. Scheinberg, as Trustees for the Newspaper Statistics, Inc.
dated January 1, 1973, as restated as of January 1, 1976, and as further
amended, the Newspaper Statistics, Inc. Defined Benefit Pension Plan with
Newspaper Statistics, Inc. dated January 1, 1977, as amended, and the Newspaper
Statistics, Inc. Pension Plan Account of Martin Scheinberg with Newspaper
Statistics, Inc. dated January 1, 1973, as amended January 1, 1984, as
assignors, and Mortgage Financing Partners (predecessor-in-interest to DVL,
Inc.), as assignee, recorded in the aforesaid records on or about September 30,
1988 in Liber 1158, page 701.
Note and Deed of Trust Modification Agreement and Collateral Assignment of
Leases, between Salisbury Associates and Mortgage Financing Partners
(predecessor-in-interest to DVL, Inc.) and John P. Douds and James N. Wright,
Jr. dated as of January 1, 1987 and recorded in Liber 1158, page 705.
Modification Agreement dated as of January 1, 1992 between DVL, Inc., Salisbury
Associates and Textron Financial Corporation, recorded in the aforesaid records
in Liber 1400, page 441.
Lease: Lease dated March 30, 1982 between Salisbury Associates and The Grand
Union Company. Sublease dated September 14, 1983 between The Grand Union Company
and Eastern Shore Markets, Inc., t/a Meatland Supermarkets.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information from the Financial Statements of the
December 31, 1997 Form 10-K of Resources Pension Shares 5, L.P. and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 10,375,892
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,882,909
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,915,754
<CURRENT-LIABILITIES> 1,525,826
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 46,946,878
<TOTAL-LIABILITY-AND-EQUITY> 48,915,754
<SALES> 0
<TOTAL-REVENUES> 4,748,081
<CGS> 0
<TOTAL-COSTS> 1,746,942
<OTHER-EXPENSES> 1,756,877
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,244,262
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,244,262
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,244,262
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
