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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------
Commission file number 0-15690
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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.)
Cambridge Center, 9th Floor, Cambridge, Massachusetts 02142
(Address of principal executive offices)
(617) 234-3000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
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RESOURCES PENSION SHARES 5, L.P.
FORM 10Q - MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<S> <C> <C>
BALANCE SHEETS - March 31, 2000 and December 31, 1999 ............................................ 1
STATEMENTS OF OPERATIONS - For the three months ended March 31, 2000
and 1999 ....................................................................................... 2
STATEMENT OF PARTNERS' EQUITY - For the three months ended
March 31, 2000 ................................................................................. 3
STATEMENTS OF CASH FLOWS - For the three months ended
March 31, 2000 and 1999 ........................................................................ 4
NOTES TO FINANCIAL STATEMENTS..................................................................... 5-8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ...................................................... 9-10
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK .............................................................................. 10
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K............................................................. 10
SIGNATURES ............................................................................................ 11
</TABLE>
<PAGE>
RESOURCES PENSION 5, L.P.
FORM 10-Q - MARCH 31, 2000
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS
March 31, December 31,
2000 1999
----------- -----------
(Unaudited)
ASSETS
Investments in mortgage loans $12,447,018 $12,466,613
Cash and cash equivalents 5,238,671 4,801,986
Real estate - net 4,578,030 4,615,314
Other assets 194,605 169,268
Interest receivable - mortgage loans 104,850 105,040
----------- -----------
$22,563,174 $22,158,221
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 286,206 $ 132,315
Other liabilities 40,060 25,422
Due to affiliates 6,186 113,800
----------- -----------
Total liabilities 332,452 271,537
----------- -----------
Commitments and contingencies
Partners' equity
Limited partners' equity (5,690,843
units issued and outstanding) 22,008,426 21,667,828
General partners' equity 222,296 218,856
----------- -----------
Total partners' equity 22,230,722 21,886,684
----------- -----------
$22,563,174 $22,158,221
=========== ===========
1
See notes to financial statements
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q - MARCH 31, 2000
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months ended
March 31,
---------------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues
Mortgage loans interest income $318,260 $325,069
Operating income - real estate 268,024 303,307
Short term investment interest 64,447 40,648
Other income - 48,923
-------- --------
650,731 717,947
-------- --------
Costs and expenses
Management fees 107,100 100,420
Operating expenses - real estate 115,362 113,725
Depreciation and amortization expense 42,405 55,874
General and administrative expenses 29,880 28,353
Property management fees 9,696 15,738
Mortgage servicing fees 2,250 7,831
-------- --------
306,693 321,941
-------- --------
Net income $344,038 $396,006
======== ========
Net income attributable to
Limited partners $340,598 $392,046
General partners 3,440 3,960
-------- --------
$344,038 $396,006
======== ========
Net income per unit of limited partnership
interest (5,690,843 units outstanding) $ .06 $ .07
======== ========
</TABLE>
See notes to financial statements
2
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q - MARCH 31, 2000
STATEMENT OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
General Limited Total
Partners' Partners' Partners'
Equity Equity Equity
------ ------ ------
<S> <C> <C> <C>
Balance, January 1, 2000 $ 218,856 $21,667,828 $21,886,684
Net income for the three months ended
March 31, 2000 (unaudited) 3,440 340,598 344,038
---------- ------------ -----------
Balance, March 31, 2000 (unaudited) $ 222,296 $22,008,426 $22,230,722
========== ============ ===========
</TABLE>
3
See notes to financial statements
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q - MARCH 31, 2000
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months ended
March 31,
----------------------------------
2000 1999
----------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income $ 344,038 $ 396,006
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization expense 42,405 55,874
Amortization of origination and acquisition fees (5,121) (8,156)
Changes in operating assets and liabilities
Other assets (25,337) (131,661)
Interest receivable - mortgage loans 190 59,482
Interest receivable - other - (7,963)
Accounts payable and accrued expenses 153,891 (56,905)
Increase in other liabilities 14,638 -
Due to affiliates (107,614) 114,251
----------------- ----------------
Net cash provided by operating activities 417,090 420,928
----------------- ----------------
Cash flows from investing activities
Mortgage loan repayments received 19,595 38,031
Additions to real estate assets - (16,149)
----------------- ----------------
Net cash provided by investing activities 19,595 21,882
----------------- ----------------
Net increase in cash and cash equivalents 436,685 442,810
Cash and cash equivalents, beginning of period 4,801,986 3,427,496
----------------- ----------------
Cash and cash equivalents, end of period $ 5,238,671 $ 3,870,306
================= ================
</TABLE>
See notes to financial statements
4
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
FORM 10Q - MARCH 31, 2000
1 INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of such
financial information have been included. 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, L.P. (the "Partnership")
annual report on Form 10-K for the year ended December 31, 1999. The
accounting policies used in preparing these financial statements are
consistent with those described in the December 31, 1999 financial
statements. The results of operations for the three months ended March
31, 2000 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 will recognize 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.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The Investment General Partner of the Partnership, Resources Pension
Advisory Corp., the Administrative General Partner, Resources Capital
Corp., and the Associate General Partner, Presidio AGP Corp. 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. The Investment General
Partner, the Administrative General Partner and Associate General
Partner are collectively referred to as the "General Partners."
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.
5
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RESOURCES PENSION SHARES 5, L.P.
FORM 10Q - MARCH 31, 2000
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
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 day-to-day management of Presidio and its direct
and indirect subsidiaries and affiliates.
For the three months ended March 31, 2000 and 1999, reimbursable
expenses due to NorthStar Presidio amounted to $0 and $6,000,
respectively.
On October 21, 1999, Presidio entered into a Services Agreement with
AP-PCC III, L.P. (the "Agent") pursuant to which the Agent was retained
to provide asset management and investor relation services to the
Partnership and other entities affiliated with the Partnership.
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 Partnership (the
"Partnership Agreement") to, among other things, cause the Partnership
to sell or acquire an asset or file for bankruptcy.
In order to facilitate the provision by the Agent of the asset
management services and the investor relation services, effective
October 25,1999, the officers and directors of the General Partner
resigned and nominees of the Agent were elected as the officers and
directors of the General Partner. The Agent is an affiliate of Winthrop
Financial Associates, a Boston based company that provides asset
management services, investor relation services and property management
services to over 150 limited partnerships which own commercial property
and other assets. The General Partner does not believe that this
transaction will have a material effect on the operations of the
Partnership.
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 three months ended March
31, 2000 and 1999, the Administrative General Partner earned $107,100
and $100,420, 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
three months ended March 31, 2000 and 1999, the Investment General
Partner earned $2,250 and $7,831, respectively, for mortgage servicing
fees.
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. 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 three
6
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RESOURCES PENSION SHARES 5, L.P.
FORM 10Q - MARCH 31, 2000
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
months ended March 31, 2000 and 1999. Management fees earned by the
unaffiliated local management company amounted to $9,696 and $15,738
for the three months ended March 31, 2000 and 1999, 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.
As of March 31, 2000 affiliates of Presidio have purchased 1,482,988
limited partnership units. 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 Carrying
Interest Rate Mortgage Recognized Value
----------------------------- Maturity Amount March 31, March 31,
Description Current % Accrued % Date Advanced 2000 2000 (1)
------------------ ------------- -------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shopping Centers
------------------
Lucky Supermarket
Buena Park, CA (3) 8.41-10.00 1.82 - 0 May 2005 $ 2,200,000 $ 55,385 $ 2,227,347
Hotel
------------------
Crowne Plaza Hotel (2)
Cincinnati, Ohio 11.00 - October 2000 6,500,000 180,791 6,387,484
Office Building
------------------
Lionmark Corp. Ctr.
Columbus, OH (2) 8.5 - June 2003 4,000,000 81,491 3,832,186
---------- --------- -----------
$12,700,000 $ 317,667 $12,447,017
=========== ========= ===========
</TABLE>
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.
7
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
FORM 10Q - MARCH 31, 2000
5 REAL ESTATE
Landover, Maryland
The following table is a summary of the Partnership's real estate as
of:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------------- ---------------
<S> <C> <C>
Land $ 2,460,000 $ 2,460,000
Building and improvements 8,090,952 8,090,952
--------------- ---------------
10,550,952 10,550,952
Less accumulated depreciation (1,291,989) (1,254,705)
Less impairment reserve (4,680,933) (4,680,933)
--------------- ---------------
$ 4,578,030 $ 4,615,314
=============== ===============
</TABLE>
8
<PAGE>
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 uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures 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 consolidated financial
statements and other items contained elsewhere in the report.
Liquidity and capital resources
As of March 31, 2000, the Partnership has funded an aggregate of
$12,700,000 to the mortgagors in three outstanding mortgage loans. (See
Note 4 to the financial statements.)
Currently, the foreclosed property that 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
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 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.
At March 31, 2000, the Partnership's level of liquidity based on cash
and cash equivalents experienced a $436,685 increase as compared to
December 31, 1999. The increase was due to $417,090 of net investing
activities. Investing activities consisted of mortgage loan repayments
of $19,595. All other increases (decreases) in certain assets and
liabilities are the result of the timing of receipt and payment of
various operating activities.
At March 31, 2000 the Partnership had $5,238,671 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 reserves from disposition proceeds or from 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.
Results of operations
Net income decreased for the three-month period ended March 31, 2000
compared with the three month period ended March 31, 1999. The decrease
in the three months ended March 31, 2000 was due to a decrease in
revenues partially offset by a decrease in costs and expenses. The
decrease in the revenues for the three months ended March 31, 2000 was
principally attributable to decrease in rent received at the Groton
property as well as $47,345 of transfer fees received in 1999 that were
not received in 2000. Partially offsetting these decreases was an
increase in investment interest income as a result of an increase in
cash available for investment on which the interest is earned.
9
<PAGE>
Results of operations (continued)
Costs and expenses decreased for the three-month period ended March 31,
2000 compared with the three month period ended March 31, 1999. The
decrease for the three months ended March 31, 2000 is primarily due to
a decrease in insurance premium expense as well as a decrease in the
management fees incurred for the Groton Shopping Center.
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 revenues 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.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 27. Financial Data Schedule.
(b) Reports on Form 8-K: None
11
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PART II - OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities 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.
Administrative General Partner
Date: June 29, 2000 By: /s/ Michael L. Ashner
-----------------------------------
Michael L. Ashner
President and Director
(Principal Executive Officer)
Date: June 29, 2000 By: /s/ Carolyn B. Tiffany
-----------------------------------
Carolyn B. Tiffany
Vice President and Treasurer
(Principal Financial and Accountant
Officer)
12
