<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------------------------------------------------------------
For Quarter Ended June 30, 1997 Commission File Number 0-17808
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2940131
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
225 Franklin Street, 25th Fl.
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (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 X No
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1997
PART I
FINANCIAL INFORMATION
---------------------
<PAGE>
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
ASSETS
Real estate investments:
Property, net $36,874,640 $42,828,754
Joint ventures 4,781,997 4,722,223
----------- -----------
41,656,637 47,550,977
Cash and cash equivalents 7,365,968 4,706,279
Short-term investments 4,987,233 7,332,878
----------- -----------
$54,009,838 $59,590,134
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 124,138 $ 108,026
Accrued management fee 59,425 57,064
Deferred management and
disposition fees 965,960 596,583
----------- -----------
Total liabilities 1,149,523 761,673
----------- -----------
Commitments to fund real estate
investments
Partners' capital (deficit):
Limited partners ($832 and $924 per
unit, respectively; 160,000 units
authorized, 82,388 and 82,426
units issued and outstanding,
respectively) 52,931,646 58,916,206
General partners (71,331) (87,745)
----------- -----------
Total partners' capital 52,860,315 58,828,461
----------- -----------
$54,009,838 $59,590,134
=========== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Six
Quarter Months Quarter Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1997 1997 1996 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY
Property rentals $1,766,349 $3,398,150 $1,583,118 $3,199,983
Interest income on loan to
ground lessor 36,509 75,077 37,321 74,970
Property operating
expenses (360,346) (797,142) (347,160) (758,029)
Ground rent expense (97,500) (195,000) (97,500) (195,000)
Depreciation and
amortization (378,757) (762,227) (381,958) (759,202)
---------- ---------- ---------- ----------
966,255 1,718,858 793,821 1,562,722
Joint venture earnings 89,566 174,787 94,794 183,651
---------- ---------- ---------- ----------
Total real estate
operations 1,055,821 1,893,645 888,615 1,746,373
Gain on sale of
wholly-owned property 2,160,404 2,160,404 - -
---------- ---------- ---------- ----------
Total real estate
activity 3,216,225 4,054,049 888,615 1,746,373
Interest on cash
equivalents
and short-term
investments 186,073 337,283 148,517 296,533
---------- ---------- ---------- ----------
Total investment
activity 3,402,298 4,391,332 1,037,132 2,042,906
---------- ---------- ---------- ----------
Portfolio Expenses
Management fee 118,849 237,753 114,218 228,499
General and administrative 83,578 155,867 80,494 165,463
---------- ---------- ---------- ----------
202,427 393,620 194,712 393,962
---------- ---------- ---------- ----------
Net Income $3,199,871 $3,997,712 $ 842,420 $1,648,944
========== ========== ========== ==========
Net income per weighted
average limited
partnership unit $38.45 $48.03 $10.11 $19.78
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Cash distributions per
limited partnership unit
outstanding for the entire
period $106.44 $120.30 $ 13.86 $ 25.99
======= ======= ======= =======
Weighted average number of limited
partnership units outstanding
during the period 82,388 82,407 82,491 82,514
======= ======= ======= =======
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1997 June 30, 1997 June 30, 1996 June 30, 1996
---------------------- ---------------------- ---------------------- -----------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
-------- ----------- -------- ----------- -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
period $(91,307) $58,533,701 $(87,745) $58,916,206 $(78,951) $59,835,289 $(76,903) $60,073,460
Repurchase of
limited
partnership
units - - - (29,944) - - - (35,468)
Cash
distributions (12,023) (8,769,927) (23,563) (9,912,351) (11,554) (1,143,948) (21,667) (2,145,110)
Net income 31,999 3,167,872 39,977 3,957,735 8,424 833,996 16,489 1,632,455
-------- ----------- -------- ----------- -------- ----------- --------- -----------
Balance at
end of period $(71,331) $52,931,646 $(71,331) $52,931,646 $(82,081) $59,525,337 $ (82,081) $59,525,337
======== =========== ======== =========== ======== =========== ========= ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
--------- ----------
<S> <C> <C>
Net cash provided by operating activities $ 2,431,382 $ 2,529,387
----------- -----------
Cash flows from investing activities:
Deferred disposition fees 250,500 -
Investment in property (124,871) (20,547)
Decrease in short-term investments, net 2,292,204 3,149,790
Repayment of loan to ground lessor 32,702 29,972
Net proceeds from sale of property 7,743,630 -
----------- -----------
Net cash provided by
investing activities 10,194,165 3,159,215
----------- -----------
Cash flows from financing activities:
Distributions to partners (9,935,914) (2,166,777)
Repurchase of limited partnership
units (29,944) (35,468)
----------- -----------
Net cash used in financing
activities (9,965,858) (2,202,245)
----------- -----------
Net increase in cash and
cash equivalents 2,659,689 3,486,357
Cash and cash equivalents:
Beginning of period 4,706,279 3,790,598
----------- -----------
End of period $ 7,365,968 $ 7,276,955
=========== ===========
</TABLE>
Non-cash transactions:
Effective January 1, 1996, the Partnership's joint venture investment in
University Business Park was converted to a wholly-owned property. The carrying
value of this investment at conversion was $5,630,581. Effective April 1, 1996,
for financial reporting purposes, the Partnership's joint venture investment in
Waters Landing II was converted to a wholly-owned property. The carrying value
of this investment at conversion was $1,491,742.
(See accompanying notes to financial statements)
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the Partnership's financial
position as of June 30, 1997 and December 31, 1996 and the results of its
operations, its cash flows and partners' capital (deficit) for the interim
periods ended June 30, 1997 and 1996. These adjustments are of a normal
recurring nature.
See notes to financial statements included in the Partnership's 1996 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
NOTE 1 - ORGANIZATION AND BUSINESS
- ----------------------------------
New England Pension Properties V; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other entities intended to be exempt from federal
income tax. The Partnership commenced operations in May, 1987 and acquired the
six real estate investments it currently owns prior to the end of 1989. The
Partnership intends to dispose of its investments within eight to twelve years
of their acquisition, and then liquidate.
The Partnership maintains a repurchase fund for the purpose of repurchasing
limited partnership units. Two percent of cash flow, as defined, is designated
for this fund which had a balance of $78,504 and $56,736 at June 30, 1997 and
December 31, 1996, respectively.
NOTE 2 - REAL ESTATE JOINT VENTURES
- -----------------------------------
Effective January 1, 1996, the University Business Park investment was
dissolved and the venture partner's ownership interest was assigned to the
Partnership. Accordingly, this investment is now a wholly-owned property.
The Waters Landing II joint venture was restructured and the investment has
been accounted for as a wholly-owned property since April 1, 1996.
Ownership of the Columbia Gateway Corporate Park joint venture is being
restructured whereby the Partnership and its affiliate will obtain full control
over the business of the joint venture. Although there can be no assurance that
this restructuring will occur, the restructuring is expected to be completed
during the third quarter.
<PAGE>
The following summarized financial information is presented in the aggregate
for the Partnership's joint venture:
Assets and Liabilities
----------------------
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation
of $1,968,382 and $1,852,988,
respectively $ 15,939,498 $ 15,670,283
Other 399,179 321,328
------------- -------------
16,338,677 15,991,611
Liabilities 191,432 43,521
------------- -------------
Net Assets $ 16,147,245 $ 15,948,090
=========== ===========
</TABLE>
Results of Operations
---------------------
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
---- ----
<S> <C> <C>
Revenue
Rental income $ 940,529 $ 979,813
----------- ----------
940,529 979,813
----------- ----------
Expenses
Operating expenses 238,506 248,728
Depreciation and amortization 128,950 128,950
----------- ----------
367,456 377,678
----------- ----------
Net income $ 573,073 $ 602,135
=========== ==========
</TABLE>
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliate on behalf of their financing arrangements with the
joint ventures.
NOTE 3 - PROPERTY
- -----------------
In the second quarter of 1996, the Waters Landing II joint venture was
restructured and the venture partner's ownership interest was assigned to the
Partnership. Since April 1, 1996, the investment has been accounted for as a
wholly-owned property. The carrying value of the joint venture investment at
conversion ($1,491,742) was allocated to land and the investment valuation
allowance.
A settlement with a former tenant at Dahlia for past due rent was secured
by an attachment on 36 acres of land in Scottsdale, Arizona. During
<PAGE>
the first quarter of 1996, the land was sold. The Partnership received $332,489
in net proceeds, which exceeded the carrying value of the receivable by
approximately $32,000.
The University Business Park wholly-owned property was sold on May 28,
1997.
The following is a summary of the Partnership's investment in property (five
in 1997 and six in 1996):
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
--------------- -----------------
<S> <C> <C>
Land $ 9,640,690 $ 11,475,045
Building and improvements 30,661,898 34,383,256
Accumulated depreciation (3,223,677) (2,797,876)
Investment valuation allowance (3,500,000) (3,500,000)
Loan to ground lessor 1,632,024 1,664,726
Lease commissions and other
assets, net 1,459,135 1,667,594
Accounts receivable 575,512 576,334
Accounts payable (370,942) (640,325)
----------- -----------
$ 36,874,640 $ 42,828,754
============ ===========
</TABLE>
NOTE 4 - SUBSEQUENT EVENT
- -------------------------
Distributions of cash from operations relating to the quarter ended June
30, 1997 were made on July 24, 1997 in the aggregate amount of $1,201,700
($14.44 per limited partnership unit.)
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership completed its offering of limited partnership units in
December 1988. A total of 83,291 units were sold. The Partnership received
proceeds of $74,895,253, net of selling commissions and other offering costs,
which have been used for investment in real estate, for the payment of related
acquisition costs and for working capital reserves. The Partnership made nine
real estate investments, two of which were sold in 1994 and one of which was
sold in 1997.
As a result of the sales, capital of $13,861,500 has been returned to the
limited partners through June 30, 1997, including a capital distribution of
$7,579,696 ($92 per limited partnership unit) made on June 30, 1997 from the
proceeds of the sale of University Business Park. This capital distribution
reduces the adjusted capital contribution to $832 per unit. In addition, a
portion of the sales proceeds was used to pay previously accrued, but deferred
management fees to the advisor ($388,320 in July 1997). The Partnership accrued
$250,500 of disposition fees in connection with this sale.
At June 30, 1997, the Partnership had $12,353,201 in cash, cash equivalents
and short-term investments, of which $1,201,700 was used for cash distributions
to partners on July 24, 1997; the remainder will be used to complete the funding
of real estate investments or be retained as working capital reserves. The
source of future liquidity and cash distributions to partners will be cash
generated by the Partnership's short-term and real estate investments.
Distributions of cash from operations relating to the first and second quarters
of 1997 were made at the annualized rate of 6.25% on the adjusted capital
contribution. Distributions of cash from operations relating to the first and
second quarters of 1996 were made at the annualized rate of 6% on the adjusted
capital contribution. The distribution rate was increased due to the
stabilization of property operations and the attainment of appropriate cash
reserve levels.
The Partnership maintains a fund for the purpose of repurchasing limited
partnership units pursuant to the terms and conditions set forth in the
Partnership Agreement. Two percent of cash flow, as defined, is designated for
this fund which had a balance of $78,504 and $56,736 at June 30, 1997 and
December 31, 1996, respectively. Through June 30, 1997, the Partnership had
repurchased and retired 903 limited partnership units for an aggregate cost of
$843,180.
The carrying value of real estate investments in the financial statements
is at depreciated cost, or if the investment's carrying value is determined not
to be recoverable through expected undiscounted future cash flows, the carrying
value is reduced to estimated fair market value. The fair market value of such
investments is further reduced by the estimated cost of sale for properties held
for sale. Carrying value may be greater or less than current appraised value. At
June 30, 1997, the appraised values of certain investments exceeded their
related carrying values by an aggregate of $5,227,000, and the appraised values
of the remaining investments were less than their related carrying values by an
aggregate of $742,000. The current appraised value of real estate investments
has been estimated by the managing general partner and is generally based on a
combination of traditional appraisal approaches performed by the Partnership's
advisor and independent appraisers. Because of the subjectivity inherent in the
valuation process, the estimated current appraised value may differ
significantly from that which could be realized if the real estate were actually
offered for sale in the marketplace.
<PAGE>
Results of Operations
- ---------------------
Puente Street, Palms Business Center, Santa Rita Plaza and Dahlia are
wholly-owned properties. Effective April 1, 1996, the Waters Landing II joint
venture was restructured and the venture partner's ownership interest was
assigned to the Partnership. Accordingly, these investments have been accounted
for as wholly-owned properties since their respective conversion dates. The
University Business Park property, which was a wholly-owned property, was sold
on May 28, 1997. The remaining investment in the portfolio, Columbia Gateway
Corporate Park, is structured as a joint venture with a real estate
development/management firm and an affiliate of the Partnership.
Operating Factors
Overall occupancy at Columbia Gateway Corporate Park remained at 95% during
the second quarter of 1997, consistent with March 31, 1997 and up from 92% at
June 30, 1996. No leases are due to expire until December 1997. Ownership of the
Columbia Gateway Corporate Park joint venture is being restructured whereby the
Partnership and its affiliate will obtain full control over the business of the
joint venture. Although there can be no assurance that this restructuring will
occur, the restructuring is expected to be completed during the third quarter.
Occupancy at Puente Street has remained at 100% since the first quarter of
1994. Operations are stable and no leases are due to expire until April 1999.
Litigation involving an existing tenant was settled during the quarter. The
settlement provides for this tenant to assign its lease to the other existing
tenant no later than February 1, 1998. It is expected that there will be no
significant effect on the Partnership's financial position.
During 1995, the Partnership undertook a number of feasibility studies of
alternative development plans for the Waters Landing II site. Based on the
results, it was determined that it was not in the best interest of the limited
partners to develop this site.
Occupancy at the Palms Business Center III and IV was at 100% consistent
with June 30, 1996. Rental rates in Las Vegas have increased over the past 12
months.
Occupancy at the Dahlia property remained at 100% during the first two
quarters of 1997, where it has been since the first quarter of 1994. The
Partnership had previously received an interest in land located in Arizona as a
rent settlement from a former tenant. During the first quarter of 1996, upon
liquidation of this interest in land, the Partnership received cash of
approximately $332,000.
Occupancy at Santa Rita Plaza was at 96% at June 30, 1997 up from 90% at
June 30, 1996. Although occupancy is strong at this time, past performance at
the Plaza has been affected by tenant delinquencies and turnover due to business
failures.
Investment Activity
Interest on cash equivalents and short-term investments for the first six
months of 1997 increased compared to the same period of 1996 due to the
temporary investment of proceeds from the sale of University Business Park.
Real estate operating activity for the first six months of 1997 was
$1,893,645 compared to $1,746,373 for the same period in 1996. This increase of
approximately $147,000 is a result of improvements at Santa Rita Plaza ($81,000)
due to an increase in occupancy and improved operating results at Puente Street
($63,000) due to an increase in tenant reimbursement income and
<PAGE>
lower operating expenses. Operating income at the remainder of the Partnership's
investments was relatively stable.
On May 28, 1997, the University Business Park wholly-owned property was
sold and the Partnership received net proceeds of $7,994,130 and recognized a
gain of $2,160,404.
Cash flow from operations for the first six months of 1996 included
$332,000 from the settlement of past due rents from a former tenant at the
Dahlia property. Exclusive of this amount, cash flow from operations increased
$234,000 which is consistent with the increase in investment activities between
the two periods.
Portfolio Expenses
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the managing general partner. General and administrative expenses
consist primarily of real estate appraisal, printing, legal, accounting and
investor servicing fees.
The Partnership management fee increased slightly between the first six
months of 1997 and 1996 due to an increase in distributable cash flow. General
and administrative expenses decreased 4% between the respective six-month
periods due primarily to lower legal expenses.
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1997
PART II
OTHER INFORMATION
-------------------
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: None.
b. Reports on Form 8-K: The Partnership filed one Current
Report on Form 8-K dated June 10, 1997 reporting on Item
No. 2 (Acquisition or Disposition of Assets).
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
August 13, 1997
/s/ James J. Finnegan
-------------------------------
James J. Finnegan
Managing Director and General Counsel
of Managing General Partner,
Fifth Copley Corp.
August 13, 1997
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Fifth Copley Corp.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,365,968
<SECURITIES> 4,987,233
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,353,201
<PP&E> 41,656,637
<DEPRECIATION> 0
<TOTAL-ASSETS> 54,009,838
<CURRENT-LIABILITIES> 183,563
<BONDS> 965,960
0
0
<COMMON> 0
<OTHER-SE> 52,860,315
<TOTAL-LIABILITY-AND-EQUITY> 54,009,838
<SALES> 5,808,418
<TOTAL-REVENUES> 6,145,701
<CGS> 992,142
<TOTAL-COSTS> 992,142
<OTHER-EXPENSES> 1,155,847
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,997,712
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,997,712
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,997,712
<EPS-PRIMARY> 48.03
<EPS-DILUTED> 48.03
</TABLE>
