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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-15690
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RESOURCES PENSION SHARES 5, L.P.
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(Exact name of Registrant as specified in its charter)
DELAWARE 13-3353722
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
FIVE CAMBRIDGE CENTER, CAMBRIDGE, MA 02142-1493
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
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<S> <C> <C>
ASSETS
Investments in mortgage loans $ 12,400,235 $ 12,466,613
Cash and cash equivalents 6,104,501 4,801,986
Real estate - net 4,526,733 4,615,314
Other assets 157,168 169,268
Interest receivable - mortgage loans 123,358 105,040
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Total Assets $ 23,311,995 $ 22,158,221
============= =============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 68,064 $ 132,315
Other liabilities 30,045 25,422
Due to affiliates 218,202 113,800
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Total Liabilities 316,311 271,537
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Commitment and Contingencies
Partners' Equity:
Limited partners' equity (5,690,843 units
issued and outstanding) 22,765,738 21,667,828
General partners' equity 229,946 218,856
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Total Partners' Equity 22,995,684 21,886,684
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Total Liabilities and Partners' Equity $ 23,311,995 $ 22,158,221
============ ============
</TABLE>
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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Revenues:
Mortgage loans interest income $ 966,938 $ 973,589
Operating income - real estate 828,479 764,761
Short-term investment interest 228,025 138,034
Other income -- 68,117
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Total revenues 2,023,442 1,944,501
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Costs and Expenses:
Management fees 322,100 307,126
Operating expenses - real estate 313,203 320,574
Depreciation and amortization expense 125,645 172,491
General and administrative expenses 105,285 168,370
Property management fees 24,954 45,833
Mortgage servicing fees 23,255 23,449
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Total costs and expenses 914,442 1,037,843
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Net income $1,109,000 $ 906,658
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Net income attributable to:
Limited partners $1,097,910 $ 897,591
General partners 11,090 9,067
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$1,109,000 $ 906,658
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Net income per unit of limited partnership
interest (5,690,843 units outstanding) $ .19 $ .16
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See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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Revenues:
Mortgage loans interest income $321,724 $324,011
Operating income - real estate 302,020 256,675
Short-term investment interest 86,468 52,172
Other income -- 7
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Total revenues 710,212 632,865
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Costs and Expenses:
Management fees 107,000 103,900
Operating expenses - real estate 110,433 93,212
Depreciation and amortization expense 40,708 57,710
General and administrative expenses 48,639 38,471
Property management fees 8,127 18,095
Mortgage servicing fees 7,750 7,800
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Total costs and expenses 322,657 319,188
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Net income $387,555 $313,677
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Net income attributable to:
Limited partners $383,679 $310,540
General partners 3,876 3,137
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$387,555 $313,677
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Net income per unit of limited partnership
interest (5,690,843 units outstanding) $ .07 $ .06
======== ========
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
LIMITED GENERAL TOTAL
PARTNERS' PARTNERS' PARTNERS'
EQUITY EQUITY EQUITY
----------- --------- ----------
Balance - January 1, 2000 $21,667,828 $218,856 $21,886,684
Net income 1,097,910 11,090 1,109,000
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Balance - September 30, 2000 $22,765,738 $229,946 $22,995,684
=========== ======== ===========
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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<S> <C> <C>
Cash Flows from Operating Activities:
Net income $1,109,000 $ 906,658
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization expense 125,645 172,491
Amortization of origination and acquisition fees (32,407) (24,468)
Changes in assets and liabilities:
Other assets 31,145 (44,819)
Interest receivable - mortgage loans (18,318) 59,591
Interest receivable - other -- 3,784
Accounts payable and accrued expenses (64,251) (52,182)
Other liabilities 4,623 --
Due to affiliates 104,402 3,675
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Net cash provided by operating activities 1,259,839 1,024,730
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Cash Flows from Investing Activities:
Mortgage loan repayments received 66,378 80,585
Additions to real estate (23,702) (52,729)
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Net cash provided by investing activities 42,676 27,856
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Net increase in cash and cash equivalents 1,302,515 1,052,586
Cash and cash equivalents, beginning of period 4,801,986 3,427,496
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Cash and cash equivalents, end of period $6,104,501 $4,480,082
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</TABLE>
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Resources Pension Shares 5, LP (the
"Partnership") Annual Report on Form 10-K for the year ended December 31,
1999. The financial information contained herein is unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of
such financial information have been included. All adjustments are of a
normal recurring nature. The balance sheet at December 31, 1999 was derived
from audited financial statements at such date.
The results of operations for the three and nine months ended September 30,
2000 and 1999 are not necessarily indicative of the results to be expected
for the full year.
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.
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.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. CONFLICTS OF INTEREST AND TRANSACTION WITH RELATED PARTIES
Resources Pension Advisory Corp., the investment general partner of the
Partnership, Resources Capital Corp., the administrative general partner of
the Partnership, and Presidio AGP Corp., the associate general partner of
the Partnership (collectively referred to as the "General Partners") are
wholly-owned subsidiaries of Presidio Capital Corp. ("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.
On August 28, 1997, an affiliate of NorthStar Capital Partners acquired all
of the Class B shares of Presidio. This acquisition, when aggregated with
previous acquisitions, caused NorthStar Capital Partners to acquire
indirect control of the General Partners. Effective July 31, 1998, Presidio
is indirectly controlled by NorthStar Capital Investment Corp.
("NorthStar"), a Maryland corporation.
Presidio entered into a management agreement with NorthStar Presidio
Management Company LLC ("NorthStar Presidio"), an affiliate of NorthStar.
Under the terms of the management agreement, NorthStar Presidio provides
the management of Presidio's operation and its direct and indirect
subsidiaries and affiliates. For the nine months ended September 30, 1999,
reimbursable expenses due to NorthStar Presidio amounted to $56,926.
On October 21, 1999, Presidio entered into a Service Agreement with AP-PCC
III, L.P. (the "Agent") pursuant to which the Agent was retained and is
compensated by Presidio to provide asset management and investor relation
services to the Partnership and other entities affiliated with the
Partnership, which were previously provided by NorthStar Presidio.
As a result of this agreement, the Agent has the duty to direct the day to
day affairs of the Partnership, including, without limitation, reviewing
and analyzing potential sale, financing or restructuring proposals
regarding the Partnership's assets, preparation of all Partnership reports,
maintaining Partnership records and maintaining bank accounts of the
Partnership. The Agent is not permitted, however, without the consent of
Presidio, or as otherwise required under the terms of the Partnership's
agreement of Limited Partners (the "Partnership Agreement") to, among other
things, cause the Partnership to sell or acquire an asset or file for
bankruptcy.
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 nine months ended September 30, 2000
and 1999, the Administrative General Partner earned $322,100 and $307,126,
respectively.
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 nine months ended
September 30, 2000 and 1999, the Investment General Partner earned $23,255
and $23,449, respectively, in mortgage servicing fees.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. CONFLICTS OF INTEREST AND TRANSACTION 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, Connecticut 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,
Connecticut property when leasing services are performed or 3% of gross
revenue when no leasing services are performed. 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. Effective February 1, 2000, property management
services are performed by Kestrel Management Company ("Kestrel"), an
affiliate of the General Partners.
There was no supervisory management fee earned by RSMC for the nine months
ended September 30, 2000 and 1999. Management fees earned by the
unaffiliated local management company amounted to $4,000 and $45,833 for
the nine months ended September 30, 2000 and 1999, respectively. Management
fees earned by Kestrel amounted to $20,954 for the nine months ended
September 30, 2000.
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.
As of September 30, 2000 affiliates of Presidio have purchased 1,482,988
limited partnership units of the Partnership. These units represent 26% of
the issued and outstanding limited partnership units.
4. INVESTMENTS IN MORTGAGE LOANS
Information with respect to the Partnership's investments in mortgage loans
is summarized below:
<TABLE>
<CAPTION>
Interest Interest Mortgage Interest (1)
Rate Rate Maturity Amount Recognized Carrying Value
Current % Accrued % Date Advanced Sept 30, 2000 Sept 30, 2000
----------- ----------- ----------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Description
Shopping Center
Lucky Supermarket
Buena Park, CA (3) 8.41-10.00 1.82-0 May 2005 $ 2,200,000 $166,154 $ 2,200,000
Hotel
Crowne Plaza Hotel
Cincinnati, OH (2)(4) 11.00 -- Oct. 2000 6,500,000 556,836 6,384,720
Office Building
Lionmark Corp. Ctr.
Columbus, OH (2) 8.5 -- June 2003 4,000,000 243,948 3,815,515
----------- -------- -----------
$12,700,000 $966,938 $12,400,235
=========== ======== ===========
</TABLE>
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
4. INVESTMENT IN MORTGAGE LOAN (CONTINUED)
1. The carrying values of the above mortgage loans are inclusive of
acquisition fees, accrued interest recognized and loan origination
fees.
2. These loans are accounted for under the interest method.
3. This loan is accounted for under the investment method.
4. The Partnership recently extended the mortgage for an additional year
at 12% interest with monthly payments of $68,450. The Partnership
received a fee of $31,872 related to the extension in the fourth
quarter of 2000. In addition, the borrower will place in escrow a deed
which will be released to the Partnership should the borrower default.
5. REAL ESTATE
Groton, Connecticut
The following table is a summary of the Partnership's real estate as of:
September 30, December 31,
2000 1999
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Land $ 2,460,000 $ 2,460,000
Building and improvements 8,114,654 8,090,952
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10,574,654 10,550,952
Less: accumulated depreciation (1,366,988) (1,254,705)
Less: impairment reserve (4,680,933) (4,680,933)
----------- -----------
$ 4,526,733 $ 4,615,314
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The matters discussed in this Form 10-Q contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosure contained in this Form 10-Q
and the other filings with the Securities and Exchange Commission made
by the Partnership from time to time. The discussion of the
Partnership's liquidity, capital resources and results of operations,
including forward-looking statements pertaining to such matters, does
not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a
number of factors, including those identified herein.
This item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, the Partnership had funded an aggregate of
$12,700,000 to the mortgagors in three outstanding mortgage loans.
(See Item 1 - Note 4 to the financial statements.)
The Partnership has two properties located in Groton, Connecticut and
Landover, Maryland. Currently, the foreclosed property that formerly
secured the Garfinkel Loan, located in Landover, Maryland, is vacant.
Funds which are necessary to lease up the property and to remedy
deferred maintenance conditions at the Garfinkel's property and for
capital improvements will be supplied from the Partnership's working
capital reserves. The Partnership 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 repaid. 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.
At September 30, 2000, the Partnership's level of liquidity based on
cash and cash equivalents increased to $6,104,501 as compared to
$4,801,986 as of December 31, 1999. The increase was due to increases
of $1,259,839 in cash from operating activities and $42,676 of cash
from investing activities. Investing activities consist of mortgage
loan repayments of $66,378 partially offset by $23,702 of additions to
real estate. All other increases (decreases) in certain assets and
liabilities are the result of normal and scheduled operating
activities.
At September 30, 2000, the Partnership had $6,104,501 of cash and cash
equivalents which are invested in short-term instruments and are
expected to be sufficient to pay administrative expenses during the
term of the Partnership. If necessary, the Partnership has the right
to establish additional reserves from disposition proceeds or from
operating cash flow.
Except as discussed above, management is not aware of any other known
trends, events, commitments or uncertainties that will have a
significant impact on liquidity.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
Net income increased for the three and nine month periods ended
September 30, 2000 compared with the same periods in the prior year.
The increase for the nine months ended September 30, 2000 was
primarily due to a decrease in costs and expenses and an increase in
operating income. The increase for the three months ended September
30, 2000, as compared to 1999, was primarily due to an increase in
revenue.
Revenues increased for the three and nine month periods ended
September 30, 2000 compared with the same periods in the prior year
primarily due to increases in operating income and in short term
investment interest income as a result of an increase in cash
available for investment on which the interest is earned, which was
partially offset by decreases in other income and mortgage loan
interest income.
Costs and expenses decreased for the nine months ended September 30,
2000 compared with the same period in the prior year. The decrease is
primarily due to a decrease in depreciation and amortization expense,
insurance premium expense (operating expense) and property management
fees incurred for the Groton Shopping Center. In addition, general and
administrative expenses decreased primarily as a result of a decrease
in legal expenses due to the mortgage loan payoffs.
Costs and expenses remained relatively constant for the three months
ended September 30, 2000 compared with the same period in the prior
year, as the increases in operating expenses and general and
administrative expenses were offset by the decrease in depreciation
and amortization expense and property management fees.
INFLATION
Inflation has not had a material effect on the Partnership's revenues
during the period 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 the
Partnership's loans being prepaid prior to maturity and the
Partnership receiving decreased revenue on any reinvestment of such
funds.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Partnership is not subject to market risk as its cash and cash
equivalents are invested in short term money market mutual fund. The
Partnership has no loans outstanding.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
PART II - OTHER INFORMATION
ITEM 1 - Legal Procedures
(a) NONE
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits: 27. Financial Data Schedule.
(b) Reports on Form 8-K: On August 2, 200, the Registrant filed an 8-K
to disclose the dismissal of its prior independent auditors.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q SEPTEMBER 30, 2000
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the 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.
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Administrative General Partner
BY: /s/ MICHAEL L. ASHNER
-----------------------------------------
Michael L. Ashner
President and Director
(Principal Executive Officer)
BY: /s/ CAROLYN B. TIFFANY
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Carolyn B. Tiffany
Vice President and Treasurer
(Principal Financial and Accounting
Officer)
Dated: November 14, 2000
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