U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-15690
Resources Pension Shares 5, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 13-3353722
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Five Cambridge Center, Cambridge, MA 02142-1493
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
---------------
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
--- ---
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Investments in mortgage loans $ 12,423,920 $ 12,466,613
Cash and cash equivalents 5,547,905 4,801,986
Real estate - net 4,564,319 4,615,314
Other assets 157,848 169,268
Interest receivable - mortgage loans 104,655 105,040
------------ ------------
Total Assets $ 22,798,647 $ 22,158,221
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 59,644 $ 132,315
Other liabilities 25,422 25,422
Due to affiliates 105,452 113,800
------------ ------------
Total Liabilities 190,518 271,537
------------ ------------
Commitment and Contingencies
Partners' Equity:
Limited partners' equity (5,690,843 units
issued and outstanding) 22,382,059 21,667,828
General partners' equity 226,070 218,856
------------ -------------
Total Partners' Equity 22,608,129 21,886,684
------------ -------------
Total Liabilities and Partners' Equity $ 22,798,647 $ 22,158,221
============ =============
</TABLE>
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
------------ -----------
<S> <C> <C>
Revenues:
Mortgage loans interest income $ 645,214 $ 649,578
Operating income - real estate 526,459 508,086
Short-term investment interest 141,557 85,862
Other income -- 68,110
------------ -----------
Total revenues 1,313,230 1,311,636
------------ -----------
Costs and Expenses:
Management fees 215,100 203,226
Operating expenses - real estate 202,770 227,362
Depreciation and amortization expense 84,937 114,781
General and administrative expenses 56,646 129,899
Property management fees 16,827 27,738
Mortgage servicing fees 15,505 15,649
------------ -----------
Total costs and expenses 591,785 718,655
------------ -----------
Net income $ 721,445 $ 592,981
============ ===========
Net income attributable to:
Limited partners $ 714,231 $ 587,051
General partners 7,214 5,930
------------ -----------
$ 721,445 $ 592,981
============ ===========
Net income per unit of limited partnership
interest (5,690,843 units outstanding) $ .13 $ .10
============ ===========
</TABLE>
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
---------- ----------
Revenues:
Mortgage loans interest income $ 326,954 $ 324,509
Operating income - real estate 258,435 204,779
Short-term investment interest 77,110 45,214
Other income -- 19,187
---------- ----------
Total revenues 662,499 593,689
---------- ----------
Costs and Expenses:
Management fees 105,750 102,806
Operating expenses - real estate 87,408 113,637
Depreciation and amortization expense 42,532 58,907
General and administrative expenses 34,542 101,546
Property management fees 7,131 12,000
Mortgage servicing fees 7,729 7,818
---------- ----------
Total costs and expenses 285,092 396,714
---------- ----------
Net income $ 377,407 $ 196,975
========== ==========
Net income attributable to:
Limited partners $ 373,633 $ 195,005
General partners 3,774 1,970
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$ 377,407 $ 196,975
========== ==========
Net income per unit of limited partnership
interest (5,690,843 units outstanding) $ .07 $ .03
========== ==========
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
LIMITED GENERAL TOTAL
PARTNERS' PARTNERS' PARTNERS'
EQUITY EQUITY EQUITY
------------ --------- ------------
<S> <C> <C> <C> <C>
Balance - January 1, 2000 $ 21,667,828 $ 218,856 $ 21,886,684
Net income 714,231 7,214 721,445
------------ --------- ------------
Balance - June 30, 2000 $ 22,382,059 $ 226,070 $ 22,608,129
============ ========= ============
</TABLE>
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 1999
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
----------------------------
JUNE JUNE 30,
2000 1999
----------- ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 721,445 $ 592,981
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization expense 84,937 114,781
Amortization of origination and acquisition fees (21,605) (16,311)
Changes in assets and liabilities:
Other assets 22,785 27,175
Interest receivable - mortgage loans 385 59,536
Interest receivable - other -- 5,552
Accounts payable and accrued expenses (72,671) (23,803)
Other liabilities -- (800)
Due to affiliates (8,348) 2,875
----------- -----------
Net cash provided by operating activities 726,928 761,986
----------- -----------
Cash Flows from Investing Activities:
Mortgage loan repayments received 42,693 59,040
Additions to real estate (23,702) (52,729)
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Net cash provided by investing activities 18,991 6,311
----------- -----------
Net increase in cash and cash equivalents 745,919 768,297
Cash and cash equivalents, beginning of period 4,801,986 3,427,496
----------- -----------
Cash and cash equivalents, end of period $ 5,547,905 $ 4,195,793
=========== ===========
</TABLE>
See notes to financial statements.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of such financial
information have been included. Certain amounts have been reclassified to
conform to the current year's presentation. The accompanying financial
statements, footnotes and discussions should be read in conjunction with
the financial statements, related footnotes and discussions contained in
the Resources Pension Shares 5, L.P. (the "Partnership") annual report on
Form 10-K for the year ended December 31, 1999. The results of operations
for the six months ended June 30, 2000 are not necessarily indicative of
the results to be expected for the full year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in mortgage loans
The Partnership accounts for its investments in mortgage loans under the
following methods:
INVESTMENT METHOD
Mortgage loans representing transactions in which the Partnership is
considered to have substantially the same risks and potential rewards as
the borrower are accounted for as investments in real estate rather than as
loans. Although the transactions are structured as loans, due to the terms
of the deferred interest portion of the mortgage loan, it is not readily
determinable at inception that the borrower will continue to maintain a
minimum investment in the property. Under this method of accounting, the
Partnership 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.
3. CONFLICTS OF INTEREST AND TRANSACTION WITH RELATED PARTIES
Resources Pension Advisory Corp., the investment general partner of the
Partnership, Resources Capital Corp., the administrative general partner of
the Partnership, and Presidio AGP Corp., the associate general partner of
the Partnership (collectively referred to as the "General Partners") are
wholly-owned subsidiaries of Presidio Capital Corp. ("Presidio"). The
Administrative General Partner is also a general partner in several other
limited partnerships which are also affiliated with Presidio, and which are
engaged in businesses that are, or may be in the future, in direct
competition with the Partnership.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. CONFLICTS OF INTEREST AND TRANSACTION WITH RELATED PARTIES (CONTINUED)
On August 28, 1997, an affiliate of NorthStar Capital Partners acquired all
of the Class B shares of Presidio. This acquisition, when aggregated with
previous acquisitions, caused NorthStar Capital Partners to acquire
indirect control of the General Partners. Effective July 31, 1998, Presidio
is indirectly controlled by NorthStar Capital Investment Corp.
("NorthStar"), a Maryland corporation.
Presidio entered into a management agreement with NorthStar Presidio
Management Company LLC ("NorthStar Presidio"), an affiliate of NorthStar.
Under the terms of the management agreement, NorthStar Presidio provides
the day-to-day management of Presidio and its direct and indirect
subsidiaries and affiliates. For the six months ended June 30, 2000 and
1999, reimbursable expenses due to NorthStar Presidio amounted to $0 and
$47,926, respectively.
On October 21, 1999, Presidio entered into a Service Agreement with AP-PCC
III, L.P. (the "Agent") pursuant to which the Agent was retained to provide
asset management and investor relation services to the Partnership and
other entities affiliated with the Partnership.
As a result of this agreement, the Agent has the duty to direct the day to
day affairs of the Partnership, including, without limitation, reviewing
and analyzing potential sale, financing or restructuring proposals
regarding the Partnership's assets, preparation of all Partnership reports,
maintaining Partnership records and maintaining bank accounts of the
Partnership. The Agent is not permitted, however, without the consent of
Presidio, or as otherwise required under the terms of the Partnership's
agreement of Limited Partners (the "Partnership Agreement") to, among other
things, cause the Partnership to sell or acquire an asset or file for
bankruptcy.
For management of the affairs of the Partnership, the Administrative
General Partner is entitled to receive a management fee equal to 1.25% per
annum of the average month-end net asset value of the Partnership for the
first four years after the initial closing date; 1.5% for the next six
years; and 1.75% thereafter. For the six months ended June 30, 2000 and
1999, the Administrative General Partner earned $215,100 and $203,226,
respectively.
For the servicing of mortgage loans made by the Partnership, the Investment
General Partner is entitled to receive a mortgage servicing fee of 1/4 of
1% per annum of the principal balances loaned. During the six months ended
June 30, 2000 and 1999, the Investment General Partner earned $15,505 and
$15,649, respectively, in mortgage servicing fees.
On December 9, 1993, the Partnership entered into a supervisory management
agreement with Resources Supervisory Management Corp. ("RSMC'), an
affiliate of the General Partners, to perform certain functions relating to
supervising the management of the Landover, Maryland 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 Landover,
Maryland property when leasing services are performed or 3% of gross
revenue when no leasing services are performed. RSMC entered into an
agreement with an unaffiliated local management company to perform such
services on behalf of the Partnership. The terms of this agreement are
substantially the same as the agreement entered into between the
Partnership and RSMC.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. CONFLICTS OF INTEREST AND TRANSACTION WITH RELATED PARTIES (CONTINUED)
There was no supervisory management fee earned by RSMC for the six months
ended June 30, 2000 and 1999. Management fees earned by the unaffiliated
local management company amounted to $16,827 and $27,728 for the six months
ended June 30, 2000 and 1999, respectively.
The General Partners collectively are allocated 1% of net income, loss and
cash flow distributions of the Partnership. Such amounts allocated or
distributed to the General Partners are apportioned .98% to the
Administrative General Partner, .01 % to the Investment General Partner and
.01 % to the Associate General Partner.
As of June 30, 2000 affiliates of Presidio have purchased 1,482,988 limited
partnership units of the Partnership. These units represent 26% of the
issued and outstanding limited partnership units.
4. INVESTMENTS IN MORTGAGE LOANS
Information with respect to the Partnership's investments in mortgage loans
is summarized below:
<TABLE>
<CAPTION>
INTEREST INTEREST MORTGAGE INTEREST
RATE RATE MATURITY AMOUNT RECOGNIZED CARRYING VALUE
CURRENT % ACCRUED % DATE ADVANCED JUNE 30, 2000 JUNE 30, 2000
----------- ----------- ----------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
DESCRIPTION
Shopping Center
Lucky Supermarket
Buena Park, CA (3) 8.41-10.00 1.82-0 May 2005 $ 2,200,000 $ 110,770 $ 2,200,000
Hotel
Crowne Plaza Hotel
Cincinnati, OH (2) 11.00 -- Oct. 2000 6,500,000 371,635 6,399,981
Office Building
Lionmark Corp. Ctr.
Columbus, OH (2) 8.5 -- June 2003 4,000,000 162,809 3,823,939
------------ --------- ------------
$ 12,700,000 $ 645,214 $ 12,423,920
============ ========= ============
</TABLE>
1. The carrying values of the above mortgage loans are inclusive of
acquisition fees, accrued interest recognized and loan origination fees.
2. These loans are accounted for under the interest method.
3. This loan is accounted for under the investment method.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
5. REAL ESTATE
Landover, Maryland
The following table is a summary of the Partnership's real estate as of:
June 30, December 31,
2000 1999
------------ ------------
Land $ 2,460,000 $ 2,460,000
Building and improvements 8,114,654 8,090,952
------------ ------------
10,574,654 10,550,952
Less: accumulated depreciation (1,329,402) (1,254,705)
Less: impairment reserve (4,680,933) (4,680,933)
------------ ------------
$ 4,564,319 $ 4,615,314
============ ============
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The matters discussed in this Form 10-Q contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosure contained in this Form 10-Q and the other filings with the
Securities and Exchange Commission made by the Partnership from time to
time. The discussion of the Partnership's liquidity, capital resources and
results of operations, including forward-looking statements pertaining to
such matters, does not take into account the effects of any changes to the
Partnership's operations. Accordingly, actual results could differ
materially from those projected in the forward-looking statements as a
result of a number of factors, including those identified herein.
This item should be read in conjunction with the financial statements and
other items contained elsewhere in the report.
Liquidity and Capital Resources
As of June 30, 2000, the Partnership has funded an aggregate of $12,700,000
to the mortgagors in three outstanding mortgage loans. (See Item 1 - Note 4
to the financial statements.)
Currently, the foreclosed property that formerly secured the Garfinkel Loan
is vacant. The Garfinkel property is located in Landover, Maryland. Funds
which are necessary to lease up the property and to remedy deferred
maintenance conditions at the Garfinkel's property and for capital
improvements will be supplied from the Partnership's working capital
reserves. The Partnership currently holds working capital reserves in short
term investments at rates which are lower than the returns previously
earned on the loans that have been repaid. If excess working capital is
ultimately invested in new loans, these investments are likely to be at
lower rates than previous investments due to current market conditions.
At June 30, 2000, the Partnership's level of liquidity based on cash and
cash equivalents experienced an $745,919 increase as compared to December
31, 1999. The increase was due to an increases of $726,928 in cash from
operating activities and $18,991 of cash from investing activities.
Investing activities consists of mortgage loan repayments of $45,693
partially offset by $23,702 of additions to real estate. All other
increases (decreases) in certain assets and liabilities are the result of
the timing of receipt and payment of various operating activities.
At June 30, 2000, the Partnership had $5,547,905 of cash and cash
equivalents which are invested in short-term instruments and are expected
to be sufficient to pay administrative expenses during the term of the
Partnership. If necessary, the Partnership has the right to establish
reserves from disposition proceeds or from cash flow.
Except as discussed above, management is not aware of any other known
trends, events, commitments or uncertainties that will have a significant
impact on liquidity.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Results of Operations
Net income increased for the three and six month periods ended June 30,
2000 compared with the same periods in the prior year. The increase was
primarily due to a decrease in costs and expenses.
Revenues increased for the three and six month periods ended June 30, 2000
compared with the same periods in the prior year primarily due to an
increase in interest income as a result of an increase in cash available
for investment on which the interest is earned which was offset by a
decrease in other income.
Costs and expenses decreased for the three and six month periods ended June
30, 2000 compared with the same periods in the prior year. The decrease is
primarily due to a decrease in insurance premium expense as well as a
decrease is the management fees incurred for the Groton Shopping Center.
General and administrative expenses decreased primarily as a result of a
decrease in legal expenses due to the mortgage loan payoffs.
Inflation
Inflation has not had a material effect on the Partnership's revenues
during the period and is not expected to have a material effect in the
future. However, prolonged periods of low or no inflation could result in
low levels of interest rates which could result in certain of the
Partnership's loans being prepaid prior to maturity and the Partnership
receiving decreased revenue on any reinvestment of such funds.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Partnership is not subject to market risk as its cash and cash
equivalents are invested in short term money market mutual fund. The
Partnership has no loans outstanding.
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits: 27. Financial Data Schedule.
(b) Reports on Form 8-K: None
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RESOURCES PENSION SHARES 5, L.P.
FORM 10-Q JUNE 30, 2000
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RESOURCES PENSION SHARES 5, L.P.
BY: RESOURCES CAPITAL CORP.
------------------------------------------
Administrative General Partner
BY: /s/ MICHAEL L. ASHNER
---------------------------------
Michael L. Ashner
President and Director
(Principal Executive Officer)
BY: /s/ CAROLYN B. TIFFANY
---------------------------------
Carolyn B. Tiffany
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
Dated: August 14, 2000
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