<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File
December 31, 1999 Number 0-15690
RESOURCES PENSION SHARES 5, L.P.
------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3353722
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
5 Cambridge Center 9th Floor, Cambridge, MA 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 617-234-3000
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Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
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 and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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There is no public market for the Limited Partnership Units. Accordingly,
information with respect to the aggregate market value of Limited Partnership
Units held by non-affiliates of Registrant has not been supplied.
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 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].
Documents Incorporated by Reference
None
Exhibit Index is set forth on page IV-1.
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PART I
Item 1. Business
General
Resources Pension Shares 5, L.P. (the "Registrant") was organized as a Delaware
limited partnership on February 11, 1986. The general partners of the Registrant
are Resources Capital Corp. (the "Administrative Partner"), Resources Pension
Advisory Corp. (the "Investment General Partner") and Presidio AGP Corp. (the
"Associate General Partner"). The Associate General Partner, the Administrative
General Partner and the Investment General Partner are collectively referred to
herein as the "General Partners". The General Partners are all ultimately wholly
owned subsidiaries of Presidio Capital Corporation, a British Virgin Islands
corporation ("Presidio"). See "Management/Employees" below.
In 1988, the Registrant sold, pursuant to a registration statement filed with
the Securities Exchange Commission, 5,690,843 units of limited partnership
interest (the "Units") for gross proceeds aggregating $56,908,426. 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.
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) were required to be reinvested by Registrant
or held as reserves. Thereafter, the Administrative General Partner is permitted
to either reinvest or distribute any such Disposition Proceeds. See "Mortgage
Investments of Registrant" and "Item 2. Properties" for a description of
Registrant's remaining assets.
Management/Employees
Registrant does not have any employees. The General Partners, their affiliates
and agents, manage the business of the Registrant. Through November 2, 1994, the
Administrative General Partner and the Investment General Partner were wholly
owned subsidiaries of Integrated Resources, Inc. ("Integrated"). On November 3,
1994, as a result of the consummation of the reorganization plan relating to
Integrated's bankruptcy, indirect ownership of the Managing General Partner and
the Corporate General Partner was purchased by Presidio. Further, on February
28, 1995, the Associate General Partner replaced Richard Ader as the associate
general partner of Registrant. As a result, all of the General Partners became
ultimately wholly owned by Presidio. NorthStar Capital Investment Corp., a
Maryland corporation ("NorthStar"), controls Presidio.
Presidio previously retained Wexford Management LLC ("Wexford") to provide
consulting and administrative services to Presidio and its affiliates, including
the General Partners and Registrant. The agreement with Wexford expired on May
3, 1998 at which time Presidio entered into a management agreement with
NorthStar Presidio Management Company, LLC ("NorthStar Presidio"). Under the
terms of the management agreement, NorthStar Presidio provided the day-to-day
management of Presidio and its direct and indirect subsidiaries and affiliates.
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 Registrant and other entities
affiliated with Registrant.
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As a result of this agreement, the Agent has the duty to direct the day to day
affairs of Registrant, including, without limitation, reviewing and analyzing
potential sale, financing or restructuring proposals regarding the Registrant's
assets, preparation of all reports, maintaining records and maintaining bank
accounts of Registrant. The Agent is not permitted, however, without the consent
of Presidio, or as otherwise required under the terms of the Limited Partnership
Agreement to, among other things, cause Registrant to sell or acquire an asset
or file for bankruptcy protection.
In order to facilitate the Agent's provision of the asset management services
and the investor relation services, effective October 25, 1999, the officers and
directors of the General Partners resigned and nominees of the Agent were
elected as the officers and directors of the General Partners. 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 Partners do not believe this transaction will have a
material effect on the operations of Registrant.
Mortgage Investments of Registrant
As of March 1, 2000, Registrant had investments in three first mortgage loans in
the original aggregate amount of $12,700,000. The following table sets forth, as
of December 31, 1999, the outstanding mortgage loan investments made by
Registrant:
<TABLE>
<CAPTION>
Mortgage loans as of December 31, 1999
-------------------------------------------------------------------------------
Original Current
Mortgage Carrying Date Maturity Interest
Sq. Ft. Amount Value Funded Date Rate
---------- --------------- ----- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Shopping Center
---------------
Lucky Supermarket
Buena Park, California 47,000 $ 2,200,000 $ 2,228,670 5/88 5/05 10.0% (1)
Hotel
-----
Crowne Plaza Hotel
Cincinnati, Ohio 200,000 6,500,000 6,397,682 10/97 10/00 11.0%
Office Building
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Lionmark Corporate Ctr.
Columbus, Ohio 79,415 4,000,000 3,840,261 6/93 6/03 8.5%
--------------- ---------------
$ 12,700,000 $ 12,466,613
=============== ===============
</TABLE>
(1) 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.
For additional information regarding Registrant's mortgage investments see Item
8 "Financial Statements and Supplementary Data" Note 4.
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Recent Mortgage Transactions
Bank of California, Seattle Loan - Gum Loong Limited Partnership ("Gum
Loong"), the obligor under the Registrant's Bank of California Loan in the
original principal amount of $8,500,000 ("Wrap Loan") filed for bankruptcy in
1994. The loan was secured by, among other things, the interest of Gum Loong in
land (the "Land") located in downtown Seattle, Washington. The building situated
on the Land was commonly known as the Bank of California Building (the
"Building").
In June 1998, the Bankruptcy Court approved settlement of the Wrap Loan in
its entirety. At that time, the net carrying value of the Wrap Loan on
Registrant's books was $8,500,000. Registrant received the full contractual
amount of $16,955,560, of which $8,500,000 was applied towards principal and
$8,455,560 applied to interest income.
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 was entitled to receive payments equal to DVL's
excess cash flow (as defined) from the mortgages underlying DVL's collateral
assignment, which was to be applied as a reduction of principal. The Note was to
mature on February 27, 2000 and was repayable during the first two years without
penalty. The Note was 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.
On July 30, 1997, DVL sold one of the properties underlying the Note and
made a $1,075,000 prepayment to Registrant. Approximately $1,032,000 of the
prepayment was applied towards the principal balance of the Note and the
remainder was applied to interest and yield maintenance fee.
On April 1, 1998, DVL sold another of the properties underlying the Note
and made a $500,000 prepayment to Registrant. $467,787 was applied towards the
principal balance of the Note and the remainder was applied to interest and
yield maintenance fee.
In December 1998, the balance of the DVL Note was repaid in its entirety.
Xerox Loan - The Xerox loan was originally a $1,100,000 first mortgage
loan, which was secured by an office building located in Arlington, Texas. This
loan was accounted for under the investment method.
In March 1997, the Xerox loan matured in accordance with its terms. On
September 30, 1997, Registrant received a deed-in-lieu of foreclosure on the
property underlying this loan. At that date, the Xerox loan had a carrying value
of $1,100,000 and the underlying property had an estimated net realizable value
of $1,500,000. Accordingly, Registrant reduced its investments in mortgage loans
by the carrying value of the Xerox loan and recorded an addition to real estate
for the fair market value of the underlying property, which resulted in
recognition of interest income for amounts previously deferred in the amount of
$400,000.
On March 10, 1998, Registrant sold this property for $1,550,000, exclusive
of closing costs of approximately $93,000. At the time the property had a net
carrying value of $1,485,000, resulting in a loss on the disposition of the
property of approximately $28,000.
Avon Market Center Loan - On March 19, 1993, Registrant 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, which was scheduled to mature in March
2003, was prepaid on June 3, 1998. Registrant received $3,694,492 of which
$3,638,804 was applied towards principal and $55,688 to interest.
Competition
To the extent Registrant reinvests any funds received from loan repayments or
property sales or forecloses on any of the assets securing its loans, Registrant
will be in competition with other companies, which are engaged in the business
of making loans and selling properties. Registrant's competition would include a
large number of lenders,
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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, 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 entities in
addition to the General Partners, 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.
Employees
Registrant does not have any employees. The General Partners and/or their
affiliates currently perform certain services for Registrant in connection with
the servicing of the Mortgage Loans pursuant to a mortgage servicing agreement.
AP-PCC III, L.P. currently performs asset management, property management,
accounting, secretarial, transfer and administrative services for Registrant and
Registrant pays its pro rata portion of such services. AP-PCC III, L.P. also
performs similar services for other affiliates of the General Partners. See Item
10, "Directors and Executive Officers of Registrant," Item 11, "Executive
Compensation" and Item 13, "Certain Relationships and Related Transactions."
Item 2. Properties
As a result of the foreclosure on two of its mortgage loans, Registrant acquired
fee simple title to two properties as described below.
Garfinkel Property - On December 21, 1992, through a foreclosure auction,
Registrant acquired fee simple title to the Garfinkel property by bidding
$3,200,000, the amount of the mortgage indebtedness then 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 93,384 rentable square feet of space. As of March 1, 2000, Registrant has
been unable to sell or lease the property and the building remains vacant.
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. Since June 1992,
$8,396 was paid for remedial cleaning in connection with the asbestos removal
and at December 31, 1999, the unexpended asbestos reserve aggregated $441,604.
Registrant does not presently plan to commence removal of the asbestos until a
purchaser or tenant for the property is identified.
Based upon the properties continued vacancy and the lack of interest received by
the Registrant in its efforts to lease or sell the property as well as the
potential costs to upgrade the property, during the fourth quarter of 1999, the
Partnership recorded a provision for impairment of $2,379,330, which represented
the full carrying value of the property net the unexpended asbestos reserve of
$441,604.
Groton Property - On December 9, 1993, through a foreclosure auction,
Registrant acquired fee simple title to the Groton Shopping Center property. 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 119,000 square feet. In
addition, the strip center has a parking area for approximately 450 automobiles.
As of March 1, 2000, the Groton Shopping Center was approximately 82% occupied
and average rental rates were $7.80 per square foot.
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Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
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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. From
time to time however, tender offers have been or are presently being made.
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, 2000, there were approximately 4,477 limited partners of
Registrant, owning an aggregate of 5,690,843 Units.
Distributions per Unit during 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
Distribution with
Respect to Quarter Ended Amount of Distribution Per Unit
-------------------------------------- -------------------------------------------
1999 1998
-------------------------------------- --------------------- ---------------------
<S> <C> <C>
March 31 $ - $ .11
June 30 $ - $ 6.11
September 30 $ - $ -
December 31 $ - $ -
</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
provides that through April 1, 1998, disposition Proceeds received were required
to be reinvested or held as reserves, but not distributed. For a further
discussion of factors which may affect distributions see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Over the past few years, many companies have begun making "mini-tenders" (offers
to purchase an aggregate of less than 5% of the total outstanding units) for
limited partnership interests in the Registrant. Pursuant to the rules of the
Securities and Exchange Commission, when a tender offer is commenced for Units,
the Registrant is required to provide limited partners with a statement setting
forth whether it believes limited partners should tender or whether it is
remaining neutral with respect to the offer. Unfortunately, the rules of the
Securities and Exchange Commission do not require that the bidders in certain
tender offers provide the Registrant with a copy of their offer. As a result,
the General Partners often do not become aware of such offers until shortly
before they are scheduled to expire or even after they have expired.
Accordingly, the General Partners do not have sufficient time to advise you of
its position on the tender. In this regard, please be advised that pursuant to
the discretionary right granted to the General Partners of your partnership in
the Partnership Agreement to reject any transfers of units, the General Partners
will not permit the transfer of any Unit in connection with a tender offer
unless: (i) the Registrant is provided with a copy of the bidder's offering
materials, including amendments thereto, simultaneously with their distribution
to the limited partners; (ii) the offer provides for withdrawal rights at any
time prior to the expiration date of the offer and, if payment is not made by
the bidder within 60 days of the date of the offer, after such 60 day period;
and (iii) the offer must be open for at least 20 business days and, if a
material change is made to the offer, for at least 10 business days following
such change.
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Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------------------
(dollars in thousands except per unit amounts)
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues $ 2,553 $ 12,103 (4) $ 5,335 $ 4,748 $ 4,130
Net (Loss) Income $ (1,149) (5) $ 10,339 (4) $ 4,033 (2) $ 1,244 (1) $ 254 (3)
Net (Loss) Income Per Unit $ (.20) (5) $ 1.80 (4) $ .70 (2) $ .22 (1) $ .04 (3)
Distributions Per Unit $ - $ 6.22 $ .44 $ .44 $ .24
Total Assets $ 22,158 $ 23,786 $ 50,793 $ 48,916 $ 49,731
Partner's equity $ 21,887 $ 23,036 $ 48,451 $ 46,947 $ 48,232
</TABLE>
(1) Net of provision for loan losses of $1,547,830 or $.27 per Unit.
(2) Net of recovery for loan losses of $721,946 or $.13 per Unit.
(3) Net of write-down for impairment of $1,860,000 or $.32 per Unit.
(4) Includes interest income of $8,455,560, or $1.47 per Unit, upon the
repayment of the Bank of California, Seattle Loan.
(5) Net of write-down for impairment of $2,379,330 or $.42 per unit.
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Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The General Partners hold a 1% equity interest in Registrant. However, at the
inception of Registrant, the General Partners' equity account was credited with
only the actual capital contributed in cash, $1,000. Registrant's management
determined that this accounting did not appropriately reflect the Limited
Partners' and the General Partners' relative participations in Registrant's net
assets, since it did not reflect the General Partners' 1% equity interest in
Registrant. Thus, Registrant had restated its financial statements to
reallocated $541,390 (1% of the gross proceeds raised at Registrant's formation)
of the partners' equity to the General Partners' equity account. This
reallocation was made as of the inception of Registrant. The reallocation had no
impact on Registrant's financial position, results of operations, cash flows,
distributions to partners, or the partners' tax basis capital accounts.
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. At December 31, 1999, Registrant retained an
interest in three mortgage loans and held title to two parcels of real property
and the improvements located thereon. See "Item 8. Financial Statements and
Supplementary Data-Notes 4 and 5."
The Registrant had $4,801,986 of cash and cash equivalents at December 31, 1999
as compared to $3,427,496 at December 31, 1998. The $1,374,490 increase in cash
and cash equivalents at December 31, 1999, as compared to December 31, 1998, was
due to $1,341,311 of cash provided by operating activities and $33,179 of cash
provided by investing activities. Cash and cash equivalents are invested in
short term money market instruments and are expected to be sufficient to pay all
anticipated needs.
Registrant's only sources of liquidity are through payments of its mortgage
loan, if any, and from cash flow generated from operations, if any, from its two
wholly owned properties. Registrant is required to pay the operating expenses
associated with its two properties.
On June 16, 1998, the Partnership declared and paid a special cash distribution
of $34,489,955 ($6.00 per limited partnership unit), substantially all of which
represents proceeds from mortgage principal payments and property sales received
in 1998 and prior years. At December 31, 1999, working capital reserves were
approximately $4,635,000.
Currently, the foreclosed property, which formerly secured the Garfinkel Loan,
is vacant. Funds which may be necessary to lease up the property to remedy
deferred maintenance conditions or for capital improvements would need to be
supplied from Registrant's working capital reserves. Registrant currently holds
working capital reserves in short-term investments, at rates that 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.
On June 30, 1997 the Medford loan was prepaid in its entirety. Registrant
received $8,129,181, of which $8,000,000 was applied toward the outstanding
principal balance of the loan and the remainder was applied to interest.
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 was entitled to receive payments equal to DVL's excess cash
flow (as defined) from the mortgages underlying DVL's collateral assignment,
which was to be applied as a reduction of principal. The Note was to mature on
February 27, 2000 and was able to be prepaid during the first two years without
penalty. The Note was secured by (among other things) a collateral assignment of
DVL's interest in certain promissory notes payable to DVL.
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On July 30, 1997, DVL sold one of the properties underlying the promissory notes
and made a $1,075,000 prepayment of the Note. Approximately $1,032,000 of the
prepayment was applied toward the principal balance of the Note and the
remainder was applied to interest and a yield maintenance fee.
On April 1, 1998, DVL sold another one of the properties underlying the Note and
made a $500,000 prepayment to Registrant. $467,787 was applied towards the
principal balance of the Note and the remainder was applied to interest and
yield maintenance fee.
In December 1998, the balance of the DVL Note was repaid in its entirety.
On April 10, 1997, Registrant entered into a settlement agreement with the Santa
Ana borrower in which, among other things, the borrower gave Registrant a
deed-in-lieu of foreclosure on the property. On April 30, 1997, Registrant sold
this property for net proceeds of $3,213,908. The net carrying value of the
Santa Ana loan at that time was $2,491,962, necessitating a recovery of loan
loss of $721,946 which was recorded in the first quarter of 1997.
In March 1997, the Xerox loan matured. On September 30, 1997 Registrant received
a deed-in-lieu of foreclosure on the property underlying this loan. At that
date, the Xerox loan had a carrying value of $1,100,000 and the underlying
property had an estimated net realizable value of $1,500,000. Accordingly,
Registrant has reduced its investments in mortgage loans by the carrying value
of the Xerox loan and recorded an addition to real estate for the estimated net
realizable value of the underlying property.
On March 10, 1998, the Xerox property was sold for approximately $1,457,000, net
of closing costs.
On October 31, 1997, Registrant funded a first mortgage loan to Oliveye Hotel
Limited Partnership, in the principal amount of $6,500,000. This loan has an
annual interest rate of 11% and is payable monthly. The loan is secured by the
Crowne Plaza Hotel located in Cincinnati, Ohio, and matures in October 2000.
In June 1998, the Bankruptcy Court approved settlement of the Bank of California
Loan in its entirety. At that time, the net carrying value of the loan on
Registrant's books was $8,500,000. Registrant received the full contractual
amount of $16,955,560, of which $8,500,000 was applied towards principal and
$8,455,560 applied to interest.
On June 3, 1998, Registrant received approximately $3,700,000 in prepayment of
the Avon Market Center Loan.
As of December 31, 1999, Registrant has funded an aggregate of $12,700,000 to
the mortgagors in three first mortgage loans, which are currently outstanding.
If necessary, Registrant has the right to establish reserves either from
disposition proceeds or from cash flow.
Real Estate Market
The real estate market has begun to recover from the effects of the recent
recession, which included a substantial decline in the market value of existing
properties. However, 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 periodic 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 its 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,
1999.
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<PAGE>
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
1999 as Compared to 1998
The Registrant generated a net loss of $1,149,261 for the year ended December
31, 1999, as compared to net income of $10,339,470 for the year ended December
31, 1998. Net income decreased as a result of a decrease in revenues of
$9,549,456 and an increase in cost and expenses of $1,939,275. Revenues
decreased due primarily to a decrease in mortgage loan interest income which
decreased by $9,286,498 for the year ended December 31, 1999 compared to the
same period in the prior year primarily as a result of loans paid off in June
1998. Further, short term interest income decreased as a result of a decrease in
cash available for investment, operating income, real estate and other income
remained stable.
Costs and expenses increased for the year ended December 31, 1999 compared to
the year ended December 31, 1998 due primarily to a $2,379,330 net provision for
the impairment of the Garfinkel's property recognized in 1999. Mortgage
servicing and property management fees decreased as a result of lower net asset
value as well as lower principal loan balances outstanding on which fees are
calculated. General and administrative expenses decreased as a result of legal
expenses.
1998 as Compared to 1997
Net income increased for the year ended December 31, 1998 as compared to the
year ended December 31, 1997. The increase is primarily due to the increase in
revenues as a result of the payoff of the Bank of California and Avon Market
Center loans offset by an increase in costs and expenses.
Revenues increased for the year ended December 31, 1998 compared to the same
period in the prior year primarily due to an increase in mortgage loans interest
income as a result of the Bank of California and Avon Market Center loan payoffs
in June 1998. Operating income - real estate decreased as a result of a decrease
in rental income from Groton shopping center. Short-term investment interest
decreased as a result of a decrease in cash available for short-term investment.
Other income decreased as a result of a decrease in transfer fee income.
Costs and expenses increased for the year ended December 31, 1998 compared to
the same period in the prior year principally due to the recovery of loan losses
recognized in 1997. There was no recovery of or provision for loan losses in
1998. Mortgage servicing and management fees decreased primarily due to a
decrease in the net asset value as well as a decrease in the principal balance
of loans outstanding on which such fees are calculated. Operating expenses
decreased as a result of the disposition of the office building by Registrant in
March 1998. General and administrative expenses increased primarily due to legal
and investor relation expenses.
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.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
Not applicable
II-5
<PAGE>
Item 8. Financial Statements and Supplementary Data
RESOURCES PENSION SHARES 5, L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
INDEX
Page
Number
------
Independent Auditor's Report F-1
Financial statements - Years ended
December 31, 1999, 1998 and 1997
Balance sheets F-2
Statements of operations F-3
Statement of partners' equity F-4
Statements of cash flows F-5 & F-6
Notes to financial statements F-7 through F-22
Schedule:
II - Valuation and Qualifying Accounts F-23
III - Real Estate and Accumulated Depreciation F-24
All other schedules have been omitted because they are inapplicable or the
information is included in the financial statements or notes thereto.
II-6
<PAGE>
To the Partners
Resources Pension Shares 5, L.P.
Cambridge, Massachusetts
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, 1999 and 1998, and the related
statements of operations, partners' equity and cash flows for each of the three
years in the period ended December 31, 1999. 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, 1999 and 1998, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1999 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.
March 15, 2000
New York, New York
F - 1
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1999 1998
------------------ ------------------
<S> <C> <C>
ASSETS
Investments in mortgage loans $ 12,466,613 $ 12,531,894
Cash and cash equivalents 4,801,986 3,427,496
Real estate - net 4,615,314 7,581,505
Other assets 169,268 139,754
Interest receivable - mortgage loans 105,040 105,751
------------------ ------------------
$ 22,158,221 $ 23,786,400
================== ==================
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 157,737 $ 200,278
Other liabilities - 441,604
Due to affiliates 113,800 108,573
------------------ ------------------
Total liabilities 271,537 750,455
------------------ ------------------
Commitments and contingencies (Notes 3, 4, 5 and 7)
Partners' equity
Limited partners' equity (5,690,843 units issued
and outstanding) 21,667,828 22,805,596
General partners' equity 218,856 230,349
------------------ ------------------
Total partners' equity 21,886,684 23,035,945
------------------ ------------------
$ 22,158,221 $ 23,786,400
================== ==================
</TABLE>
F - 2
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues
Mortgage loans interest income $ 1,297,087 $ 10,583,585 $ 3,267,488
Short-term investment interest 202,729 474,013 757,945
Operating revenue - real estate 978,171 982,971 1,191,478
Other income 75,260 62,134 118,139
--------------- --------------- ---------------
2,553,247 12,102,703 5,335,050
--------------- --------------- ---------------
Costs and expenses
Management fees 412,757 604,275 847,690
Operating expenses - real estate 416,694 473,562 654,978
General and administrative 183,562 321,383 160,296
Depreciation and amortization 229,412 227,793 234,259
Mortgage servicing fees 31,170 47,144 65,122
Property management fees 49,583 60,920 61,203
Provision for impairment, net 2,379,330 - -
Loss on disposition of real estate - 28,156 -
Recovery of loan losses - - (721,946)
--------------- --------------- ---------------
3,702,508 1,763,233 1,301,602
--------------- --------------- ---------------
Net (loss) income $ (1,149,261) $ 10,339,470 $ 4,033,448
================ =============== ===============
Net (loss) income attributable to
Limited partners $ (1,137,768) $ 10,236,075 $ 3,993,114
General partners (11,493) 103,395 40,334
---------------- --------------- ---------------
$ (1,149,261) $ 10,339,470 $ 4,033,448
================ =============== ===============
Net (loss) income per unit of limited partnership
interest (5,690,843 units outstanding) $ (0.20) $ 1.80 $ 0.70
================ =============== ===============
</TABLE>
F - 3
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
STATEMENT OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
General Limited Total
Partners' Partners' Partners'
Equity Equity Equity
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance, January 1, 1997 $ 469,459 $ 46,477,419 $ 46,946,878
Net income - 1997 40,334 3,993,114 4,033,448
Distributions to partners
($.44 per limited partnership unit) (25,293) (2,503,971) (2,529,264)
--------------- --------------- ---------------
Balance, December 31, 1997 484,500 47,966,562 48,451,062
Net income - 1998 103,395 10,236,075 10,339,470
Distributions to partners
($6.22 per limited partnership unit) (357,546) (35,397,041) (35,754,587)
--------------- --------------- ---------------
Balance, December 31, 1998 230,349 22,805,596 23,035,945
Net loss - 1999 (11,493) (1,137,768) (1,149,261)
--------------- --------------- ---------------
Balance, December 31, 1999 $ 218,856 $ 21,667,828 $ 21,886,684
=============== =============== ===============
</TABLE>
F - 4
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities
Net (loss) income $ (1,149,261) $ 10,339,470 $ 4,033,448
Adjustments to reconcile net (loss) income to net
Cash provided by operating activities
Recovery of loan losses - - (721,946)
Depreciation and amortization 229,412 227,793 234,259
Provision for impairment, net 2,379,330 - -
Interest earned on Xerox loan - - (400,000)
Amortization of loan origination and
acquisition fees (32,624) (9,224) 119,919
Loss on disposition of real estate - 28,156 -
Stepped lease rentals 12,202 31,460 (63,245)
Changes in operating assets and liabilities
Other assets (61,145) 70,854 6,437
Interest receivable - mortgage loans 711 20,761 147,882
Accounts payable and accrued expenses (42,541) (579,634) 111,118
Other liabilities - (166,834) 165,388
Due to affiliates 5,227 (212,952) 96,809
--------------- --------------- ---------------
Net cash provided by operating activities 1,341,311 9,749,850 3,730,069
--------------- --------------- ---------------
Cash flows from investing activities
Investments in mortgage loans - - (8,500,000)
Proceeds from disposition of real estate - 1,456,844
Mortgage loan repayments received 97,905 12,926,153 12,695,141
Loan origination fees received - 113,750
Additions to real estate (64,726) (44,064) (159,972)
--------------- --------------- ---------------
Net cash provided by investing activities 33,179 14,338,933 4,148,919
--------------- --------------- ---------------
Cash flows from financing activities
Distributions to partners - (36,386,903) (2,529,264)
--------------- --------------- ---------------
Net increase (decrease) in cash and
cash equivalents 1,374,490 (12,298,120) 5,349,724
Cash and cash equivalents, beginning of year 3,427,496 15,725,616 0,375,892
--------------- --------------- ---------------
Cash and cash equivalents, end of year $ 4,801,986 $ 3,427,496 $ 15,725,616
=============== =============== ===============
</TABLE>
F - 5
<PAGE>
STATEMENTS OF CASH FLOWS (continued)
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
On September 30, 1997 the Partnership received a deed-in-lieu of foreclosure on
the property underlying the Xerox loan. At that date, the Xerox loan (which was
accounted for under the investment method) had a carrying value of $1,100,000
and the property had an estimated net realizable value of $1,500,000.
Accordingly, the Partnership reduced its investments in mortgage loans by the
carrying value of the Xerox loan, recorded an addition to real estate for the
estimated net realizable value of the underlying property which resulted in
mortgage loan interest income of $400,000.
F - 6
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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 collectively 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.
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.
F - 7
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Loan origination and acquisition fees
Fees received and costs associated with the funding of mortgage loans are
included in investments in mortgage loans and amortized over the term of
the mortgage. Amortization is included in interest income.
Allowance for loan losses
A provision for loan losses is established based upon a periodic 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 provides write-downs for impairment based upon a periodic
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.
Financial statements
The financial statements include only those assets, liabilities and
results of operations that relate to the business of the Partnership.
F - 8
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 (loss) and distributions per unit of limited partnership
interest
Net income (loss) and distributions per unit of limited partnership
interest are computed based upon the average number of outstanding units
(5,690,843) for the year.
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.
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.
F - 9
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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., were, until November 3, 1994, wholly owned subsidiaries of
Integrated Resources, Inc. ("Integrated"). On November 3, 1994, as a
result of the consummation of the reorganization plan relating to
Integrated's bankruptcy, indirect ownership of the Investment General
Partner and the Administrative General Partner was purchased by Presidio
Capital Corp. ("Presidio"). As of February 28, 1995, the Associate General
Partner of the Partnership is Presidio AGP Corp. ("Presidio AGP"), a
wholly owned subsidiary of Presidio, which replaced Richard Ader, a former
executive officer of Integrated. The General Partners and certain
affiliates of the General Partners, are general partners 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,
Administrative General Partner and Associate General Partner are
collectively referred to as the "General Partners."
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, Presidio controls the Partnership through its
indirect ownership of 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.
Presidio was party to an Administrative Services Agreement with Wexford
Management LLC ("Wexford") pursuant to which Wexford was responsible for
the day-to-day management of Presidio and among other things, had
authority to designate directors of the General Partners.
On November 2, 1997, the Administrative Services Agreement with Wexford
expired. Effective November 3, 1997, Wexford and Presidio entered into a
new Administrative Services Agreement (the "ASA"), which expired on May 3,
1998. Under the terms of the ASA, Wexford provided consulting and
administrative services to Presidio and its affiliates, including the
General Partners and the Partnership. Presidio also entered into a
management agreement with NorthStar Presidio Management Company, LLC
("NorthStar Presidio"). Under the terms of the management agreement,
NorthStar Presidio provided the day-to-day management of Presidio and its
direct and indirect subsidiaries and affiliates. During the years ended
December 31, 1999 and 1998 amounts paid to NorthStar Presidio for
administrative services rendered aggregated $39,068 and $21,869,
respectively.
Effective November 3, 1997, the officers and employees of Wexford that had
served as officers and/or directors of the General Partners tendered their
resignations. On the same date, the Board of Directors of Presidio
appointed new individuals to serve as officers and/or directors of the
General Partners.
F - 10
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
On October 21, 1999, Presidio entered into a new 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 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 Limited
Partnership Agreement to, among other things, cause the Partnership to
sell or acquire an asset or file for bankruptcy.
In order to facilitate the Agent's provision of asset management services
and the investor relation services, effective October 25, 1999, the
officers and directors of the General Partners resigned and nominees of
the Agent were elected as the officers and directors of the General
Partners. 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
Partners do not believe 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 years ended December 31, 1999, 1998
and 1997, the Administrative General Partner earned $412,157, $604,275 and
$847,690, respectively, for its management services. Amounts due to the
Administrative General Partner at December 31, 1999 and 1998, for
management services amounted to $106,000 and $99,243, respectively, and 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, 1999, 1998 and 1997, the Investment General Partner
earned $31,170, $47,144 and $65,122, respectively, for mortgage servicing
fees. Amounts due to the Investment General Partner at December 31, 1999
and 1998, for mortgage servicing fees amounted to $7,800 and $9,330,
respectively, and are included in due to affiliates.
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 has 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, 1999, 1998 and 1997.
Management fees earned by the unaffiliated local management company
amounted to $49,583, $60,920 and $61,203 for the years ended December 31,
1999, 1998 and 1997, respectively.
F - 11
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
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 December 31, 1999 and 1998, affiliates of Presidio have acquired
1,413,256.475 units of limited partnership interest of the Partnership.
These units represent approximately 24.8% of the issued and outstanding
limited partnership units, and entitled the purchaser to approximately $0
and $8,690,973 in distributions for the year ended December 31, 1999 and
1998.
4 INVESTMENTS IN MORTGAGE LOANS
As of December 31, 1999, the Partnership had three outstanding first
mortgage loans representing an aggregate mortgage amount advanced of
$12,700,000. During 1999 the Partnership was repaid the remaining balance
on one of its loans (the DVL note). During 1998, the Partnership was
repaid its entire outstanding balance on two of its mortgage loans (Bank
of California Loan and Avon Market Center Loan). During 1997, the
Partnership was repaid its entire outstanding balance on one of its
mortgage investments (Medford Village Loan); received a property in lieu
of foreclosure which was subsequently sold for net proceeds of $3,213,908
(Santa Ana Square Loan); acquired a property in lieu of foreclosure which
the Partnership sold during 1998 (Xerox Loan); and funded two additional
mortgage loans (DVL Loan and Oliveye Loan).
A discussion of these events, as well as a description of the
Partnership's other mortgage investments is described below.
Bank of California Loan
The Bank of California Loan, in the original principal amount of
$8,500,000 ("Wrap Loan"), was 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 was 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"), 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. Anchor National Life Insurance Company ("Anchor") held a first
mortgage on the land ("Land Loan") in the principal amount of $8,000,000.
Under the provisions of the Wrap Loan, Gum Loong was 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 paid Anchor
the amounts due under the Land Loan on a monthly basis.
F - 12
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Bank of California Loan (continued)
The Wrap Loan was secured by a Wraparound Deed of Trust, Security
Agreement, Financing Statement and Assignment of Lessor's Interest in
Ground Lease dated May 5, 1988 in the amount of $16,500,000, between the
Partnership and Gum Loong. The Building was 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. Gum Loong also guaranteed this loan. The
Partnership's collateral for the Wrap Loan was 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.
On January 31, 1994, a Proof of Claim was filed in connection with the Gum
Loong Bankruptcy by the Partnership as it related 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 had not provided for an allowance for loan loss on this loan.
The Partnership believed that the collateral for the Wrap Loan, the land
as encumbered by the Ground Lease, was of sufficient value to realize the
amount due under the Wrap Loan. If BOT exercised its option to purchase
the land, it would have been required, as a condition of such exercise, to
cure any defaults by Gum Loong.
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.
The approved plan called 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 was
also required to sell the Building by June 1998 in a sale that must have
been approved by the Bankruptcy Court and to which the Partnership may
object, or at a court approved auction in which the Partnership could bid.
In connection with the plan of reorganization, in September 1996, the
Partnership was reimbursed $216,000 for legal expenses relating to the
bankruptcy.
In June 1998, the Bankruptcy Court approved settlement of the Wrap Loan in
its entirety. At that time, the net carrying value of the Wrap Loan on the
Partnership's books was $8,500,000. The Partnership received the full
contractual amount of $16,955,560, of which $8,500,000 was applied towards
principal and $8,455,560 applied to interest income.
F - 13
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
4 INVESTMENTS IN MORTGAGE LOANS (continued)
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 was for a period of ten years,
may not have been prepaid during its first two years and may have been
prepaid thereafter without penalty. The loan did 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 was secured by a shopping center
located in Eagle County, Colorado that 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.
On June 3, 1998, the loan was prepaid in its entirety. The Partnership
received $3,694,492 of which $3,638,804 was applied towards principal and
$55,688 to interest.
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 ten-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 United States Bankruptcy
Code. The loan is secured by a one-story, campus type office or 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.
DVL Loan
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 was entitled to receive payments equal to DVL's
excess cash flow (as defined) from the mortgages underlying DVL's
collateral assignment, which was to be applied as a reduction of
principal. The Note was to mature on February 27, 2000 and was able to be
prepaid during the first two years. The Note was secured by (among other
things) a collateral assignment of DVL's interest in certain promissory
notes payable to DVL.
F - 14
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
4 INVESTMENTS IN MORTGAGE LOANS (continued)
DVL Loan (continued)
On July 30, 1997, DVL sold one of the properties underlying the Note and
made a $1,075,000 prepayment to the Partnership. Approximately $1,032,000
of the prepayment was applied towards the principal balance of the Note
and the remainder was applied to interest.
On April 1, 1998, DVL sold another one of the properties underlying the
Note and made a $500,000 prepayment to the Partnership. $467,787 was
applied towards the principal balance of the Note and the remainder was
applied to interest and yield maintenance fee.
In January 1999, the balance of the DVL Note was repaid in its entirety.
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 had a floating interest rate, capped at 10%, based
on the Eurodollar rate for each quarterly interest period plus 280 basis
points. The loan was 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 had the right to
two, one year extensions for a fee of $23,500 each year, provided the loan
to value ratio at the time did not exceed 60%. The loan was collateralized
by a guarantee from the borrower's principals, should the borrower have
defaulted, and was secured by a 121,660 square foot shopping center known
as the Medford Village Outlet Center located in Medford, Minnesota.
On June 30, 1997, the Medford loan was repaid in its entirety. The
Partnership received $8,129,181 of which $8,000,000 was applied towards
the principal balance of the loan and the remainder was applied to
interest.
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 were due based upon a payment schedule, which required monthly
payments ranging from $6,250 and increasing to $23,750. Interest, which
was in excess of amounts received, was deferred and added to the principal
balance for purposes of computing interest. This loan matured during March
1997.
As a result of an economic decline in the surrounding area, the tenancy at
the Santa Ana Shopping Center had been slowly shifting from regional,
credit tenants to local, non-credit tenants. Consequently, although the
cash flow from the operation of the center had not declined, its value had
been eroded due to the shift in tenancy. During 1996, 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
F - 15
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Santa Ana Square Loan (continued)
$2,500,000. The net carrying value of the loan at that time was
$4,047,830, necessitating a provision of $1,547,830 which was recorded by
the Partnership during 1996. Additionally, the Partnership ceased accruing
interest on this loan.
On April 10, 1997 the Partnership entered into a settlement agreement with
the Santa Ana borrower in which, among other things, the borrower gave the
Partnership a deed-in-lieu of foreclosure on the property. On April 30,
1997 the Partnership sold this property for net proceeds of $3,213,908.
The net carrying value of the Santa Ana loan at that time was $2,491,962,
necessitating a recovery of loan losses of $721,946.
Xerox Loan
The Xerox loan was originally a $1,100,000 first mortgage loan, which was
secured by an office building located in Arlington, Texas. In March 1997,
the Xerox loan matured in accordance with its terms. On September 30,
1997, the Partnership received a deed-in-lieu of foreclosure on the
property underlying this loan. At that date, the Xerox loan had a carrying
value of $1,100,000 (this loan was accounted for under the investment
method) and the underlying property had an estimated net realizable value
of $1,500,000. Accordingly, the Partnership reduced its investments in
mortgage loans by the carrying value of the Xerox loan and recorded an
addition to real estate for the fair market value of the underlying
property, which resulted in recognition of interest income for amounts
previously deferred in the amount of $400,000.
On March 10, 1998, the Partnership sold this property for $1,550,000,
exclusive of closing costs of approximately $93,000. At that time the
property had a net carrying value of $1,485,000, resulting in a loss on
the disposition of the property of approximately $28,000.
Oliveye Loan
On October 31, 1997, the Partnership funded a first mortgage loan to
Oliveye Hotel Limited Partnership in the principal amount of $6,500,000.
The loan has an annual interest rate of 11% and is payable monthly. The
loan is secured by the Crowne Plaza Hotel located in Cincinnati, Ohio, and
matures in October 2000. In connection with the funding of this loan, the
Partnership received $113,750 in loan origination fees.
F - 16
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
4 INVESTMENTS IN MORTGAGE LOANS (continued)
Information with respect to the Partnership's investments in mortgage
loans is summarized below:
<TABLE>
<CAPTION>
Interest
Interest Rate Mortgage Recognized
--------------------------------------- Maturity Amount Dec. 31,
Description Current % Accrued % Date Advanced 1999
--------------- ------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Shopping Centers
----------------
Lucky Supermarket
Buena Park, CA (4) 8.41-10.00 1.82 - 0 May 2005 2,200,000 221,539
DVL, Inc. (3) 12.00 - February 2000 2,000,000 -
Hotel
-----
Crowne Plaza Hotel (3)
Cincinnati, Ohio 11.00 - October 2000 6,500,000 747,914
Office Buildings
----------------
Lionmark Corp. Ctr.
Columbus, OH (3) 8.5 - June 2003 4,000,000 327,634
------------------ ------------------
$ 14,700,000 $ 1,297,087
================== ==================
<CAPTION>
Contractual Carrying Carrying
Balance Value Value
Dec. 31, Dec. 31, Dec. 31,
Description 1999 (2) 1999 (1) 1998 (1)
--------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Shopping Centers
----------------
Lucky Supermarket
Buena Park, CA (4) 2,549,161 2,228,670 2,233,963
DVL, Inc. (3) - - 13,267
Hotel
-----
Crowne Plaza Hotel (3)
Cincinnati, Ohio 6,397,682 6,397,682 6,413,761
Office Buildings
----------------
Lionmark Corp. Ctr.
Columbus, OH (3) 3,840,261 3,840,261 3,870,903
------------------ ------------------ ------------------
$ 12,787,104 $ 12,466,613 $ 12,531,894
================== ================== ==================
</TABLE>
1. The carrying values of the above mortgage loans are inclusive of
acquisition fees, accrued interest recognized, loan origination fees and
allowance for loan losses.
2. The contractual balance represents the original mortgage amount advanced
plus accrued interest calculated in accordance with the loan agreements,
less principal amortization received.
3. These loans are accounted for under the interest method.
4. This loan is accounted for under the investment method.
F - 17
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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, 1997 $ 11,919,838 $ 18,335,849 $ 30,255,687
Investments in mortgage loans - 8,500,000 8,500,000
Interest recognized 2,010,754 1,256,734 3,267,488
Amortization of loan principal - (449,565) (449,565)
Recovery of provision for loan losses - 721,946 721,946
Loan payoffs/foreclosure (1,500,000) (3,213,908) (4,713,908)
Loan origination fees received - (113,750) (113,750)
Cash received inclusive of
current interest accruals (1,667,936) (10,351,139) (12,019,075)
----------------- ----------------- -----------------
Balance, December 31, 1997 10,762,656 14,686,167 25,448,823
Interest recognized 9,318,505 1,265,080 10,583,585
Amortization of loan principal - (319,562) (319,562)
Cash received inclusive of
current interest accruals (17,847,198) (5,333,754) (23,180,952)
----------------- ----------------- -----------------
Balance, December 31, 1998 2,233,963 10,297,931 12,531,894
Interest recognized 221,539 1,075,548 1,297,087
Amortization of loan principal - (84,638) (84,638)
Cash received inclusive of
current interest accruals (226,832) (1,050,898) (1,277,730)
----------------- ----------------- -----------------
Balance, December 31, 1999 $ 2,228,670 $ 10,237,943 $ 12,466,613
================= ================= =================
</TABLE>
F - 18
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
5 REAL ESTATE - NET
A summary of the Partnership's real estate is as follows:
December 31,
---------------------------
1999 1998
------------ ------------
Land $ 2,460,000 $ 2,460,000
Buildings and improvements 8,090,952 8,026,226
------------ ------------
10,550,952 10,486,226
Less accumulated depreciation (1,254,705) (1,044,721)
Less impairment reserve (4,680,933) (1,860,000)
------------ ------------
$ 4,615,314 $ 7,581,505
============ ============
Landover, Maryland
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 this property during the years
ended December 31, 1999, 1998 and 1997 in the amounts of $6,594, $39,135
and $44,024, respectively. Such amounts are included in operating expenses
- real estate 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. Since that
time, $8,396 was paid for remedial cleaning in connection with the
asbestos removal and the unexpended asbestos reserve aggregated $441,604.
The Partnership does not presently plan to commence removal of the
asbestos until a purchaser or tenant for the property is identified.
The Garfinkel's property has been vacant since the foreclosure by the
Partnership. Based upon the continued vacancy and the Partnership's
inability to lease or sell the property as well as potential costs to
upgrade the property into condition to sell, during 1999 the Partnership
recorded a provision for impairment in the amount of $2,379,330, which
represented the entire carrying value of the property, net of the
unexpended asbestos reserve in the amount of $441,604.
Groton, Connecticut
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.
F - 19
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
5 REAL ESTATE - NET (continued)
Groton, Connecticut (continued)
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 estimated net realizable 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.
At the time of foreclosure, occupancy at the shopping center was
approximately 82%. The anticipated lease-up of the vacant space has not
occurred as of December 31, 1999 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.
6 PARTNERS' EQUITY
The General Partners hold a 1% equity interest in the Partnership.
However, at the inception of the Partnership, the General Partners' equity
account was credited with only the actual capital contributed in cash,
$1,000. The Partnership's management determined that this accounting did
not appropriately reflect the Limited Partners' and the General Partners'
relative participations in the Partnership's net assets, since it did not
reflect the General Partners' 1% equity interest in the Partnership. The
Partnership reallocated $541,390 (1% of the gross proceeds raised at the
Partnership's formation) of the partners' equity to the General Partners'
equity account. This reallocation was made retroactively as of the
inception of the Partnership. The reallocation had no impact on the
Partnership's financial position, results of operations, cash flows,
distributions to partners, or the partners' tax basis capital accounts.
F - 20
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
7 RECONCILIATION OF NET INCOME AND NET ASSETS PER FINANCIAL STATEMENTS TO
TAX BASIS
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,
------------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Net income (loss) per financial statements $ (1,149,261) $ 10,339,470 $ 4,033,448
Difference in recovery of loan losses - - (721,946)
Difference in income recognized on
mortgage investments 14,004 (8,491,987) (22,741)
Difference in reserves - - (144,000)
Provision for impairment, net 2,379,330 - -
Tax loss on disposition of real estate
in excess of financial statement - (464,753) -
Tax write-off of loan in excess of
financial statement - - (933,092)
Tax depreciation in excess of
financial statement depreciation (12,213) (19,701) (25,175)
------------- ------------- -------------
Net income per tax basis $ 1,231,860 $ 1,363,029 $ 2,186,494
============= ============= =============
</TABLE>
F - 21
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
8 RECONCILIATION OF NET INCOME AND NET ASSETS PER FINANCIAL STATEMENTS TO
TAX BASIS (continued)
The differences between the Partnership's net assets per financial
statements to the tax basis of accounting are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1999 1998
--------------- ---------------
<S> <C> <C>
Net assets per financial statements $ 21,886,684 $ 23,035,945
Deferred interest receivable 250,949 237,817
Acquisition and origination fees (4,522) (5,395)
Allowance for impairments 4,239,330 1,860,000
Syndication costs 2,669,697 2,669,697
Cumulative tax depreciation in excess of
financial statement depreciation (127,412) (115,199)
--------------- ---------------
Net assets per tax basis $ 28,914,726 $ 27,682,865
=============== ===============
</TABLE>
F - 22
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
Schedule II
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
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, 1999
Write-down for impairment:
Landover Mall
Landover, Maryland $ - $ 2,820,933 (C) $ - $ - $ 2,820,933
Groton Shopping Center
Groton, Connecticut 1,860,000 (A) - - - 1,860,000
------------ ------------ ------------ ------------ ------------
$ 1,860,000 $ 2,820,933 $ - $ - $ 4,680,933
============ ============ ============ ============ ============
YEAR ENDED DECEMBER 31, 1998
Write-down for impairment:
Groton Shopping Center
Groton, Connecticut $ 1,860,000 (A) $ - $ - $ - $ 1,860,000
============ ============ ============ ============ ============
YEAR ENDED DECEMBER 31, 1997
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 $ 1,547,830 (B) $ - $ - $ (1,547,830) (B) $ -
============ ============ ============ ============ ============
</TABLE>
(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 which was reversed during 1997 upon receipt by the
Partnership and subsequent sale of the property underlying the loan.
(C) Represents a write-down for impairment on the Landover Mall provided
during 1999.
F - 23
<PAGE>
RESOURCES PENSION SHARES 5, L.P.
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS CAPITALIZED
INITIAL COST TO SUBSEQUENT TO
PARTNERSHIP (1) ACQUISITION
------------------------------- -------------------------------
BUILDINGS
AND CARRYING
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
LANDOVER MALL
LANDOVER, MARYLAND $ - $ 640,000 $ 2,560,000 $ - $ 84,404
GROTON SHOPPING CENTER
GROTON, CONNECTICUT - 1,820,000 4,680,000 766,548 -
------------- ------------- ------------- ------------- -------------
TOTAL $ - $ 2,460,000 $ 7,240,000 $ 766,548 $ 84,404
============= ============= ============= ============= =============
<CAPTION>
GROSS AMOUNT AT
CLOSE OF
PERIOD
-------------------------------------------------------------------
BUILDINGS WRITE-DOWN
AND FOR
DESCRIPTION LAND IMPROVEMENTS IMPAIRMENT TOTAL
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
LANDOVER MALL
LANDOVER, MARYLAND $ 640,000.00 $2,644,404.00 $2,820,933.00 $ 463,471.00
GROTON SHOPPING CENTER
GROTON, CONNECTICUT 1,820,000 5,446,548 (1,860,000) 5,406,548
------------- ------------- ------------- -------------
TOTAL $ 2,460,000 $ 8,090,952 $ 4,680,933 $ 5,870,019
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------
(A) RECONCILIATION OF REAL ESTATE OWNED 1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of year $ 8,626,226 $ 10,082,162 $ 8,422,190
Dispositions - (1,500,000) -
Write down for impairment (2,820,933) - -
------------ ------------ ------------
Additions during year:
Building - - 1,200,000
Land - - 300,000
Improvements 64,726 44,064 159,972
------------ ------------ ------------
Balance at end of year $ 5,870,019 $ 8,626,226 $ 10,082,162
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------
(B) RECONCILIATION OF ACCUMULATED DEPRECIATION 1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of year $ 1,044,721 $ 850,088 $ 645,032
Additions during year
Depreciation expense 209,984 209,633 205,056
Dispositions - (15,000) -
------------ ------------ ------------
Balance at end of year $ 1,254,705 $ 1,044,721 $ 850,088
============ ============ ============
</TABLE>
(1) Aggregate cost for income tax purposes is $10,550,952.
F - 24
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
II-7
<PAGE>
PART III
Item 10. Directors and Executive Officers of Registrant
Registrant has no officers or directors. The Administrative General Partner
manages and controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters affecting its business. The
officers and directors of the Associate General Partner and the Investment
General Partner, in their respective capacities as such, do not devote any
material amount of their business time and attention to Registrant's affairs.
The names and positions held by the officers and directors of the Administrative
General Partner at May 1, 2000 are described below. The officers and directors
of the Associate General Partner and the Investment General Partner are the same
as the officers and directors of the Administrative General Partner.
Position Held with the Has Served as a Director
Name Managing General Partner or Officer Since
---- ------------------------ ----------------
Michael L. Ashner President and Director 10-99
David G. King, Jr. Vice President 11-97
Peter Braverman Vice President 10-99
Lara K. Sweeney Vice President and Secretary 10-99
Carolyn Tiffany Vice President and Treasurer 10-99
Michael L. Ashner, age 47, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") since January 15,
1996. From June 1994 until January 1996, Mr. Ashner was a Director, President
and Co-chairman of National Property Investors, Inc., a real estate investment
company "NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm that has organized and administered real estate limited
partnerships.
David G. King, Jr., 37, has been a Vice President and Assistant Treasurer
of NorthStar Capital Investment Corp. since November 1997. He is also a Vice
President of the General Partner. For more than the previous five years he was a
Senior Vice President of Finance at Olympia & York Companies (USA).
Peter Braverman, age 48, has been a Vice President of WFA since January
1996. From June 1995 until January 1996, Mr. Braverman was a Vice President of
NPI and NPI Management. From June 1991 until March 1994, Mr. Braverman was
President of the Braverman Group, a firm specializing in management consulting
for the real estate and construction industries. From 1988 to 1991, Mr.
Braverman was a Vice President and Assistant Secretary of Fischbach Corporation,
a publicly traded, international real estate and construction firm.
Lara K. Sweeney, age 27, has been a Senior Vice President of WFA since
January 1996. Prior to joining WFA, Ms. Sweeney was an officer of NPI and NPI
Management in the asset management and investor relations departments.
Carolyn Tiffany, age 33, has been employed with WFA since January 1993.
From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and Associate in
WFA's accounting and asset management departments. From October 1995 to present
Ms. Tiffany was a Vice President in the asset management and investor relations
departments of WFA until December 1997, at which time she became the Chief
Operating Officer of WFA.
Each director and officer of the General Partner will hold office until the next
annual meeting of stockholders of the General Partner and until his successor is
elected and qualified.
III-1
<PAGE>
One or more of the above persons are also directors or officers of a general
partner (or general partner of a general partner) of a number of limited
partnerships which either have a class of securities registered pursuant to
Section 12(g) of the Securities and Exchange Act of 1934, or are subject to the
reporting requirements of Section 15(d) of such Act.
There are no family relationships among the officers and directors of the
General Partners.
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."
Item 12. Security Ownership of Certain Beneficial Owners and Management
-
(a) Security Ownership of Certain Beneficial Owners.
Except as set forth below, no person or group is known by the Registrant
to be the beneficial owner of more than 5% of the outstanding Units at March 1,
2000:
Number of
Name of Beneficial Owner Units owned % of Class
------------------------ ----------- ----------
Presidio Partnership II Corp.(1) 552,505 7.64%
Presidio Capital Investment Company LLC 69,732 1.23%
Presidio RPS Acquisition Corp.(1) 860,751 15.13%
(1) The principal business address of Presidio Partnership II Corp., Presidio
Capital Investment Company LLC and Presidio RPD Acquisition Corp., all of
which are affiliates of the General Partners, is 527 Madison Avenue, New
York, New York 10022.
(b) Security Ownership of Management.
Affiliates of Presidio own a total of 1,4982,988 Units representing
approximately 24% of the total outstanding Units. Neither Presidio, the General
Partners or their respective officers and directors own any Units.
(c) Changes in Control.
There exists no arrangement known to the Registrant the operation of which
may at a subsequent date result in a change in control of the Registrant.
III-2
<PAGE>
Item 13. Certain Relationships and Related Transactions
During Registrant's fiscal year ended December 31, 1999, the General Partners
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. (3) Administrative General Partner $ 412,757 (1)
Resources Pension Advisory Corp. (3) Investment General Partner $ 31,170 (2)
Presidio AGP Corp. (3) Associate General Partner $ -
</TABLE>
(1) This amount represents a fee for managing affairs of Registrant.
(2) This amount represents a fee for servicing the mortgage loan portfolio of
Registrant.
(3) Pursuant to Registrant's Partnership Agreement, for the year ended
December 31, 1999, the General Partners were allocated taxable loss as
follows: $36,756 to the Administrative General Partner and $123 to each of
the Investment and Associate General Partners.
III-3
<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.
10(f) Loan agreement between Oliveye Hotel Limited Partnership and Registrant,
dated October 31, 1997.
(b) Reports on Form 8-K filed during the last quarter of the fiscal year:
Current Report on 8-K filed on November 2, 1999 with respect to an other
event (Item 5)
IV-1
<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 on the 19th day of May 2000.
RESOURCES PENSION SHARES 5, L.P.
By: RESOURCES CAPITAL CORP.
Administrative General Partner
By: /s/ Michael L. Ashner June 2, 2000
-------------------------
Michael L. Ashner
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 as directors and/or officers (with respect to the Administrative and
Investment General Partners) on the date indicated below.
Signature Title Date
--------- ----- ----
/s/ Michael L. Ashner Director and President June 2, 2000
-------------------------
Michael L. Ashner
/s/ Carolyn Tiffany Vice President and Treasurer June 2, 2000
-------------------------
Carolyn Tiffany
<PAGE>
EXHIBIT INDEX
Page
Exhibits Number
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.
10(f) Loan Agreement between Oliveye Hotel Limited Partnership and
Registrant, dated October 31, 1997.
