<PAGE>
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 December 31, 1997
Commission File No. 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
incorporation or organization) Identification No)
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
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
(Title of Class)
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 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 ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) 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]
No voting stock is held by nonaffiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
Item 1. Business.
--------
New England Pension Properties V; A Real Estate Limited Partnership
(the "Partnership") was organized under the Uniform Limited Partnership Act of
the Commonwealth of Massachusetts on October 23, 1986, to invest primarily in
to-be-developed, newly-constructed and existing income-producing real
properties.
The Partnership was initially capitalized with contributions of $2,000
in the aggregate from Fifth Copley Corp. (the "Managing General Partner") and
ECOP Associates Limited Partnership (the "Associate General Partner")
(collectively, the "General Partners") and $10,000 from Copley Real Estate
Advisors, Inc. (the "Initial Limited Partner"). The Partnership filed a
Registration Statement on Form S-11 (the "Registration Statement") with the
Securities and Exchange Commission on November 12, 1986, with respect to a
public offering of 60,000 units of limited partnership interest at a purchase
price of $1,000 per unit (the "Units") with an option to sell up to an
additional 60,000 Units (an aggregate of $120,000,000). The Registration
Statement was declared effective on January 9, 1987.
The first sale of Units occurred on July 23, 1987, at which time the
Initial Limited Partner withdrew its contribution from the Partnership.
Investors were admitted to the Partnership thereafter at monthly closings; the
offering terminated and the last group of subscription agreements was accepted
by the Partnership on December 31, 1987. As of January 31, 1988, a total of
83,291 Units had been sold, a total of 12,900 investors had been admitted as
limited partners (the "Limited Partners") and a total of $82,761,530 had been
contributed to the capital of the Partnership. The remaining 36,709 Units were
de-registered on March 17, 1988.
The Partnership makes available 2% of Cash Flow, as defined in the
Partnership's Amended and Restated Agreement of Limited Partnership dated July
23, 1987, for the purpose of repurchasing Units. See Note 1 of the Financial
Statements in Item 8 hereof.
At December 31, 1997, the Partnership owned the five real property
investments described in A., B., D., E., and F. below. Two investments were sold
in 1994 and two investments were sold in 1997 (see C. & G. below). Sales
proceeds were distributed in the amount of $48 per Unit in 1994, $28 per Unit in
1995, and $308 per Unit in 1997, after the Partnership made certain strategic
decisions on projects yet to be developed. The Partnership has no current plan
to renovate, improve or further develop any of its real property other than as
described in E. below. In the opinion of the Managing General Partner, the
properties are adequately covered by insurance.
The Partnership has no employees. Services are performed for the
Partnership by the Managing General Partner and affiliates of the Managing
General Partner.
A. Land in Germantown, Maryland ("Waters Landing II").
-------------------------------------------------
On May 26, 1987, the Partnership acquired a 60% interest in a joint
venture with Waters Landing Two - Oxford Limited Partnership ("Oxford"). As of
April 1, 1996, the Partnership had contributed $1,403,112 to the capital of the
joint venture out of a maximum commitment of $4,682,400. The joint venture
agreement entitles the Partnership to receive a monthly preferred return on its
invested capital at the rate of 10.5% per annum. Prior to December 1, 1994, such
monthly preferred return was permitted to accrue to the extent that the joint
venture did not have sufficient cash to pay it. The joint venture agreement also
entitled the Partnership to receive 60% of all remaining cash flow from
operations and 60% of net sale and refinancing proceeds following the return of
the Partnership's equity. The Partnership also committed to make a loan of up to
$3,121,600 to Oxford for investment in the venture of which $935,408 had been
funded as of April 1, 1996. Interest only on the loan was payable monthly at the
rate of 10.5% per annum. The loan was due upon the sale of the joint venture's
assets or the sale of Oxford's interest in the joint venture. Oxford was
required to apply any cash flow received from operations of the joint venture to
interest payments on the loan and must apply proceeds of financings or sales
received from the joint venture to payments of the interest on and principal of
the
<PAGE>
loan. The loan was secured by Oxford's interest in the joint venture. Effective
April 1, 1996, Oxford's ownership interest was transferred and assigned to the
Partnership and an affiliate.
The joint venture owns approximately 8.5 acres of land in Germantown,
Maryland and originally intended to construct a 144-unit apartment complex.
Development had been postponed due to the excess supply of apartment units in
the Germantown area. During 1995, after a number of feasibility studies of
alternative development proposals for the site, it was determined development
would not yield a sufficient return to justify the investment risk.
B. Warehouse Building in Fontana, California ("Dahlia").
---------------------------------------------------
On September 21, 1987, the Partnership acquired a 60% interest in a
joint venture formed with an affiliate of Investment Building Group. As of
December 31, 1997, the Partnership had contributed $7,081,593 to the capital of
the joint venture out of a maximum commitment of $7,250,000. The joint venture
agreement entitles the Partnership to receive a monthly preferred return on its
invested capital at the rate of 10% per annum. The joint venture agreement also
entitles the Partnership to receive 60% of the remaining cash flow and 60% of
sale and refinancing proceeds following the return of the Partnership's equity.
On September 1, 1995, the joint venture was converted into a limited partnership
with the Partnership as the general partner and the affiliate of Investment
Building Group as the limited partner.
The limited partnership owns approximately 12.9 acres of land in
Fontana, California and has completed construction thereon of a one-story
warehouse building containing approximately 278,220 square feet of space. As of
December 31, 1997, the building was 100% leased.
C. Office/Warehouse Buildings in Phoenix, Arizona (" University
------------------------------------------------------------
Business Park").
--------------
On September 30, 1987, the Partnership acquired a 60% interest in a
joint venture formed with an affiliate of The Hewson Company. The Partnership
contributed $7,976,784 to the capital of the joint venture out of a maximum
commitment of $9,450,000. The joint venture agreement entitled the Partnership
to receive a monthly preferred return on its invested capital at the rate of 10%
per annum. The joint venture agreement also entitled the Partnership to receive
60% of the remaining cash flow and 60% of sale and refinancing proceeds
following return of the Partnership's equity. Effective January 1, 1996, the
joint venture was dissolved and ownership of the joint venture assets consisting
of approximately 8.5 acres of land in Phoenix, Arizona improved with five
warehouse buildings containing approximately 109,930 square feet of space, was
assigned to the Partnership.
On May 28, 1997, the property was sold at which time the Partnership
received net proceeds of $7,994,130. On June 30, 1997, the Partnership made a
capital distribution of $7,579,696 ($92 per limited partnership unit) from sale
proceeds.
D. Office/Research and Development Buildings in Columbia, Maryland
---------------------------------------------------------------
("Columbia Gateway Corporate Park").
---------------------------------
On December 21, 1987, the Partnership acquired a 33% interest in a
joint venture formed with New England Life Pension Properties IV; A Real Estate
Limited Partnership, an affiliate of the Partnership (the "Affiliate"), which
had a 17% interest, and M.O.R. Gateway 51 Associates Limited Partnership.
As of April 20, 1989, the joint venture agreement was amended and
restated to reflect a decrease in the Partnership's interest in the joint
venture to 15.25% and an increase in the Affiliate's interest in the joint
venture to 34.75%. In addition, the amended and restated joint venture agreement
increased the Affiliate's maximum obligation to contribute capital to the joint
venture and reallocated the
<PAGE>
capital contributed to the joint venture by the Partnership and the Affiliate.
As of December 31, 1997, the Partnership had contributed $6,181,690 to the
capital of the joint venture out of a maximum commitment of $6,402,000.
The joint venture agreement entitles the Partnership and the Affiliate
to receive a preferred return on their respective invested capital at the rate
of 10.5% per annum. Such preferred return will be payable currently until the
Partnership and the Affiliate have received an aggregate of $8,865,000;
thereafter, if sufficient cash flow is not available therefor, the preferred
return will accrue and bear interest at the rate of 10.5% per annum, compounded
monthly. The joint venture agreement also entitles the Partnership to receive
15.25% of cash flow following payment of the preferred return and 15.25% of the
net proceeds of sales and refinancings following return of the Partnership's and
the Affiliate's equity. Ownership of the joint venture has been restructured
whereby the Partnership and the Affiliate will obtain full control over the
business of the joint venture. The restructuring will be effective January 1,
1998.
The joint venture owns approximately 20.85 acres of land in the
Columbia Gateway Corporate Park in Columbia, Maryland. The intended development
plan for this land was for a two-stage development of seven office and research
and development buildings. The first phase of this development was completed in
1992 and included the construction of four, one-story office and research and
development buildings containing 142,545 square feet. The second phase of this
development commenced in the spring of 1994 in which a 46,000 square-foot
building was constructed and leased to a single tenant for a lease term of ten
years. As of December 31, 1997 the property was 98% leased.
E. Industrial Building in Brea, California ("Puente Street").
--------------------------------------------------------
On April 28, 1988, the Partnership acquired a 60% interest in a joint
venture formed with an affiliate of The Muller Company. In April, 1990, the
Partnership increased its commitment to the joint venture by $625,000 to
$13,725,000 of which $13,475,000 had been contributed as of June 1, 1991. The
joint venture agreement entitled the Partnership to receive a monthly preferred
return on its invested capital at the rate of 10.5% per annum. The joint venture
agreement also entitled the Partnership to receive 60% of the remaining cash
flow and 60% of sale and refinancing proceeds following the return of the
Partnership's equity. As of June 1, 1991, because of the developer partner's
inability to fund its share of capital contributions, the Partnership assumed
100% ownership of the joint venture's assets.
The Partnership owns approximately 16.75 acres of land in Brea,
California and has completed renovation of an existing building thereon
containing 181,200 square feet. Construction of an approximately 37,320 square
foot addition was completed during the first quarter of 1989. As of December 31,
1997, the existing building was 100% leased to two tenants. During 1997,
negotiations were finalized for a 53,000 square-foot build-to-suit facility to
be built on the remaining land for Nature's Best. A 10-year lease will commence
upon completion of the building.
On December 8, 1995 the Partnership was named as a defendant in a
complaint filed in the Superior Court of the State of California for the County
of Orange by an existing tenant, Bridgeport Management Services, Inc. alleging
breach of lease. On January 17, 1996 the Partnership filed an answer denying the
allegations presented by the plaintiff. A settlement was reached with Bridgeport
Management, resulting in its agreement to transfer its leasehold interest to
20th Century Plastics, the other tenant, no later than February 1, 1998. This
transfer has occurred and Bridgeport Management Services is now sub-leasing the
space from 20th Century Plastics.
F. Shopping Center in Salinas, California ("Santa Rita Plaza").
----------------------------------------------------------
On February 1, 1989, the Partnership acquired a 60% interest in a
joint venture formed with Rodde McNellis/Salinas. On July 20, 1990, the
Partnership committed to increase its maximum contribution from $9,500,000 to
$11,350,000, of which $6,500,000 is characterized as Senior Capital and
$4,850,000 is characterized as Junior Capital. As of December 31, 1997, the
Partnership had
<PAGE>
contributed $11,119,840 to the capital of the joint venture. The joint venture
agreement entitles the Partnership to receive a monthly preferred return on its
Senior Capital at the rate of 10.5% per annum during months 1-24 of the joint
venture's operations and a monthly preferred return to reduce its outstanding
Senior Capital, together with a return at the rate of 10.5% per annum, based on
a 27-year amortization schedule, during months 25-120 of the joint venture's
operations. The entire outstanding Senior Capital is due and payable ten years
after the date of the Partnership's first investment of Senior Capital. The
joint venture agreement also entitles the Partnership to receive a priority
return payment on its Junior Capital at the rate of 10.5% per annum. Such junior
priority return payment will accrue and bear interest at the rate of 10.5% per
annum, if sufficient cash is not available therefor. At such time as the
aggregate of accrued junior priority return payments total $1,000,000, all
junior priority return payments and the return on the accrued junior priority
return payments will thereafter be paid currently; provided, however, that the
$1,000,000 threshold will be increased by each dollar of Junior Capital which
the Partnership elects not to contribute to fund its return. The Junior Capital
will be due and payable after the fifteenth year of the joint venture's
operations. On August 1, 1995 the joint venture was converted into a California
limited partnership with the Partnership as the general partner with a 63%
ownership interest and an affiliate of Rodde/McNellis Salinas as the limited
partner with a 37% interest. The joint venture agreement also entitles the
Partnership to receive 63% of cash flow remaining after payment of the preferred
return and 63% of sale and refinancing proceeds following the return of the
Partnership's equity.
The limited partnership has a leasehold interest in approximately
10.56 acres of land in Salinas, California (the "Land") and has completed
construction thereon of five one-story retail buildings containing a total of
approximately 125,247 square feet. The ground lease has a term of 75 years with
two options to extend, for ten years each. Under the ground lease, fixed rent of
$390,000 per annum is payable. A percentage rent equal to 11.55% of rents in
excess of $1,400,000 received by the ground lessee from subtenants, excluding
expense reimbursements, is also payable. As of December 31, 1997, the buildings
were 95% leased .
On August 1, 1995 the Partnership made a $1,750,000 loan to Nielsen
Properties, Ltd., which is the ground lessor, for a term of 15 years. The loan
earns interest at the rate of 8.75% per annum and the Partnership can require
full payment of the note on or after August 1, 2000. The note is secured by a
deed of trust on the Land. In conjunction with this loan, Nielsen Properties,
Ltd. repaid the limited partnership $1,299,052, representing full payment of two
outstanding notes receivable.
G. Office/Retail/Industrial Buildings in Las Vegas, Nevada ("Palms
---------------------------------------------------------------
Business Center III and IV").
---------------------------
On March 7, 1988, the Partnership acquired a 60% interest in a joint
venture formed with an affiliate of B.H. Miller Companies. As of January 1,
1995, the Partnership had contributed $11,589,888 to the capital of the joint
venture out of a maximum commitment of $11,700,000. The joint venture agreement
entitled the Partnership to receive a monthly preferred return at the rate of
11% per annum on the daily balance of its invested capital during each month, of
which 9.5% per annum was to be paid currently and up to 1.5% per annum was to be
deferred if sufficient cash was not available therefor. All invested capital,
monthly payments of preferred return and deferred monthly payments of preferred
return were due and payable at the end of the tenth year of the joint venture's
operations. The joint venture agreement also entitled the Partnership to receive
60% of net cash flow and 60% of sale and refinancing proceeds following the
return of the Partnership's equity capital. Effective January 1, 1995, the joint
venture partner's ownership interest was transferred and assigned to the
Partnership.
The Partnership owned approximately 11.75 acres of land in Las Vegas,
Nevada improved with twelve single-story office/industrial buildings and one
single-story retail building containing a total of approximately 173,574 square
feet.
<PAGE>
On October 24, 1997, the Partnership sold the Palms Business Center
property for $18,000,000. The Partnership received net proceeds of $17,823,259.
On November 25, 1997, the Partnership made a capital distribution of $17,784,576
($216 per limited partnership unit) from the sale proceeds.
<PAGE>
Item 2. Properties
----------
The following table sets forth the annual realty taxes for the
Partnership's properties and information regarding tenants who occupy 10% or
more of gross leasable area (GLA) in Partnership's properties.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ESTIMATED
1998 NUMBER OF ANNUAL
ANNUAL TENANTS WITH SQUARE FEET CONTRACT
REALTY 10% OR MORE NAME(S) OF OF EACH RENT PER
PROPERTY TAXES OF GLA TENANT(S) TENANT SQUARE FOOT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Office/R&D Bldgs in Columbia, MD $163,974 4 Wiltel 27,480 $10.50
Columbia National 45,951 $8.95
EVI, Inc. 38,225 $9.57
Avnet 21,991 $8.20
Land in Germantown, MD $ 18,309 N/A N/A N/A N/A
Warehouse Bldg. in Fontana, CA $ 82,248 3 M.W. Kasch 172,972 $3.21
Aromatics Industries 84,660 $2.64
Building Materials Distributor 20,888 $3.56
Industrial Bldg. in Brea, CA $108,000 2 20th Century Plastics 152,576 $3.74
Bridgeport Management 65,944 $3.72
Shopping Ctr in Salinas, CA $134,874 2 Food Maxx 51,008 $7.30
Ross Dress for Less 17,068 $11.03
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<CAPTION>
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LEASE RENEWAL LINE OF BUSINESS
PROPERTY EXPIRATION OPTIONS OF PRINCIPAL TENANTS
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<S> <C> <C> <C>
Office/R&D Bldgs in Columbia, MD 11/2007 Two for 5 Years Telecommunications
8/2004 Two for 5 Years Home Mortgages
2/2006 One for 5 Years Environmental/Testing
10/1999 One for 5 Years Telecommunications
Land in Germantown, MD N/A N/A N/A
Warehouse Bldg. in Fontana, CA 5/2003 One for 5 Years Distribution
5/1998 None Distribution
12/1999 None Distribution
Industrial Bldg. in Brea, CA 3/2004 Two for 5 Years Plastics Manuf./Assembler
4/1999 None Rec. Vehicle Storage/Svc
Shopping Ctr in Salinas, CA 8/2010 Three for 5 Years Supermarket
1/2001 Three for 5 Years Apparel Retailer
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</TABLE>
<PAGE>
The following table sets forth for each of the last five years the gross
leasable area, occupancy rates, rental revenue, and net effective rent for the
Partnership's properties:
<TABLE>
<CAPTION>
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PROPERTY GROSS LEASABLE YEAR-END RENTAL NET EFFECTIVE
AREA OCCUPANCY REVENUE RENT
RECOGNIZED ($/SF/YR)*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Office/ R&D Buildings in Columbia, MD
- -------------------------------------
1993 142,545 73% $1,334,767 $13.01
1994 188,649 92% $1,496,175 $ 9.61
1995 188,649 92% $1,870,329 $10.78
1996 188,649 94% $1,959,621 $11.23
1997 188,649 98% $1,953,724 $10.70
Land in Germantown, MD
- ----------------------
1993 N/A N/A N/A N/A
1994 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
1996 N/A N/A N/A N/A
1997 N/A N/A N/A N/A
Warehouse Building in Fontana, CA
- ---------------------------------
1993 278,220 89% $1,026,506 $ 4.59
1994 278,220 100% $ 990,796 $ 3.77
1995 278,220 100% $1,001,121 $ 3.60
1996 278,220 100% $1,019,558 $ 3.66
1997 278,220 100% $1,012,957 $ 3.66
Industrial Building in Brea, CA
- -------------------------------
1993 218,520 70% $ 161,378 $ 4.25
1994 218,520 100% $ 882,870 $ 4.75
1995 218,520 100% $ 949,389 $ 4.34
1996 218,520 100% $ 930,938 $ 4.26
1997 218,520 100% $ 946,719 $ 4.33
Shopping Center in Salinas, CA
- ------------------------------
1993 125,247 92% $1,759,243 $10.72
1994 125,247 90% $1,874,676 $16.45
1995 125,247 91% $1,657,425 $14.31
1996 125,247 98% $1,718,737 $14.56
1997 125,247 95% $1,759,594 $14.60
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</TABLE>
Note: N/A for commercial properties indicates property was not constructed as of
this date.
* Net Effective Rent calculation is based on average occupancy during the
respective years.
<PAGE>
Following is a schedule of lease expirations for each of the next years for
the Partnership's properties based on the annual contract rent in effect at
December 31, 1997:
<TABLE>
<CAPTION>
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TENANT AGING REPORT
- --------------------------------------------------------------------------------
PROPERTY # OF LEASE TOTAL TOTAL PERCENTAGE OF
EXPIRATIONS SQUARE FEET ANNUAL CONTRACT GROSS ANNUAL
RENT RENTAL*
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Office/R&D Building in Columbia, MD
- -----------------------------------
1998 1 8,781 $ 93,077 5%
1999 2 32,570 $270,257 15%
2000 1 14,825 $146,026 8%
2001 0 0 $ 0 0%
2002 2 20,987 $245,855 14%
2003 0 0 $ 0 0%
2004 1 45,951 $411,261 23%
2005 0 0 $ 0 0%
2006 4 38,225 $350,904 19%
2007 1 27,480 $288,540 16%
Land in Germantown, MD
- ----------------------
1998 N/A N/A N/A N/A
1999 N/A N/A N/A N/A
2000 N/A N/A N/A N/A
2001 N/A N/A N/A N/A
2002 N/A N/A N/A N/A
2003 N/A N/A N/A N/A
2004 N/A N/A N/A N/A
2005 N/A N/A N/A N/A
2006 N/A N/A N/A N/A
2007 N/A N/A N/A N/A
Warehouse Building in Fontana, CA
- ---------------------------------
1998 1 84,660 $223,502 26%
1999 1 20,888 $ 74,361 9%
2000 0 0 $ 0 0%
2001 0 0 $ 0 0%
2002 0 0 $ 0 0%
2003 1 172,972 $555,240 65%
2004 0 0 $ 0 0%
2005 0 0 0 0%
2006 0 0 $ 0 0%
2007 0 0 $ 0 0%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial Building in Brea, CA
- -------------------------------
1998 0 0 $ 0 0%
1999 1 65,944 $ 245,311 30%
2000 0 0 $ 0 0%
2001 0 0 $ 0 0%
2002 0 0 $ 0 0%
2003 0 0 $ 0 0%
2004 1 152,576 $ 570,984 70%
2005 0 0 $ 0 0%
2006 0 0 $ 0 0%
2007 0 0 $ 0 0%
Shopping Center in Salinas, CA
- ------------------------------
1998 7 13,888 $ 282,420 21%
1999 4 5,150 $ 80,301 6%
2000 7 18,513 $ 440,140 33%
2001 6 32,698 $ 518,777 40%
2002 0 0 $ 0 0%
2003 0 0 $ 0 0%
2004 0 0 $ 0 0%
2005 0 0 $ 0 0%
2006 0 0 $ 0 0%
2007 0 0 $ 0 0%
- --------------------------------------------------------------------------------
</TABLE>
* Does not include expenses paid by tenants.
Note: N/A denotes that the disclosure is not applicable based on the nature of
the property.
<PAGE>
The following table sets forth for each of the Partnership's properties
the: (i) federal tax basis, (ii) rate of depreciation, (iii) method of
depreciation, (iv) life claimed, and (v) accumulated depreciation, with respect
to each property or component thereof for purposes of depreciation:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Rate Life Accumulated
Entity/Property Tax Basis Depreciation Method in Years Depreciation
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Office/Research and Development
Buildings,
Columbia, MD
- ---------------------------------
Land Improvements $ 94,022 N/A 150% DB 15 $ 28,050
Land Improvements 3,685,502 2.56% SL 39 45,712
Building & Improvements 7,829,962 3.18% SL 31.5 1,950,016
----------- ----------
Total Depreciable Assets 11,609,486 2,023,778
Warehouse Building, Fontana, CA
- ---------------------------------
Building & Improvements 5,141,883 2.50% SL 40 974,497
----------- ----------
Total Depreciable Assets 5,141,883 974,497
Industrial Building, Brea, CA
- ---------------------------------
Building & Improvements 7,976,123 3.18% SL 31.5 2,314,747
Building Improvements 771,373 2.56% SL 39 77,943
----------- ----------
Total Depreciable Assets 8,747,496 2,392,690
Land, Germantown, MD
- ---------------------------------
No Depreciable Property 0 0.00% 0
- -
Total Depreciable Assets 0 0
Shopping Center, Salinas, CA
- ---------------------------------
Building & Improvements 305,868 2.5% SL 40 12,701
Building & Improvements 8,989,174 3.18% SL 31.5 1,988,534
----------- ----------
Total Depreciable Assets 9,295,042 2,001,235
Total Depreciable Assets $ 34,793,907 $7,392,200
=========== ==========
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</TABLE>
SL= Straight Line
DB= Declining Balance
<PAGE>
Following is information regarding the competitive market conditions for
each of the Partnership's properties. This information has been gathered from
sources deemed reliable. However, the Partnership has not independently verified
the information and, as such, cannot guarantee its accuracy or completeness.
Industrial Buildings in Brea, California
- ----------------------------------------
The property is located within the Orange County industrial market. Brea is a
desirable industrial location due to its close proximity to Los Angeles County
and the central portion of Orange County. The North Orange County market has
approximately 7.6 million square feet of space available, an increase which is
primarily due to the completion of more than 35 new industrial buildings, adding
over 2.6 million square feet of new space to the market. In addition, another 54
buildings should be completed by year-end 1998, adding approximately twice the
square footage added during 1997. Average asking rental rates over the last year
have increased 19%, with average vacancy in the County of 7.11%.
Shopping Center in Salinas, California
- --------------------------------------
The city of Salinas has a population of approximately 120,000 people. Due to the
fact that most of the city's growth is occurring in north Salinas, the north end
of the city continues to be the focus of most major retailers. Santa Rita Plaza
is in the heart of this retail core; however, it must compete for tenants
with power centers such as the Northridge Mall (1.2 million square feet) and
Harden Ranch Plaza (680,000 square feet).
Office/Research and Development Buildings in Columbia, Maryland
- ---------------------------------------------------------------
The property is located within the Howard County R&D submarket, which has a base
of 8.9 million square feet and a 6.3% vacancy rate as of year-end 1997. Due to
limited space in the marketplace, tenants continue to seek space that will
accommodate their growth needs and are moving from Washington, D.C. to the
Baltimore suburbs. The Columbia flex submarket contains 6.8 million square feet
of space and has a 6.5% vacancy rate. Planned construction of 300,000 square
feet of speculative office space in this market is showing offering rates on new
product that are setting new highs. As a result, 1997 rents for Howard County
averaged in the $10.00 - $10.50 range.
Warehouse Building in Fontana, California
- -----------------------------------------
The property is located within the Riverside metropolitan industrial market,
which consists of approximately 115 million square feet of space. Occupancy for
this product type is approximately 93%. With employment growing at approximately
4% per year and a jobless rate below 7%, Riverside's economy continues to
expand. Part of the area's strength has been derived from population migration
out of Los Angeles and Orange Counties. However, if relocating businesses in
Southern California opt for peripheral regions such as Nevada, Arizona, Utah or
Oregon instead of the Riverside market, growth in the area may be adversely
affected.
Item 3. Legal Proceedings.
-----------------
The Partnership is not a party to, nor are any of its properties
subject to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Annual Report on Form 10-K.
<PAGE>
PART II
-------
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
---------------------------------------------------------------------
There is no active market for the Units. Trading in the Units is
sporadic and occurs solely through private transactions.
As of December 31, 1997, there were 12,524 holders of Units.
The Partnership's Amended and Restated Agreement of Limited
Partnership dated July 23, 1987, as amended to date (the "Partnership
Agreement"), requires that any Distributable Cash (as defined therein) be
distributed quarterly to the Partners in specified proportions and priorities.
There are no restrictions on the Partnership's present or future ability to make
distributions of Distributable Cash. Cash distributions paid in 1997 or
distributed after year end with respect to 1997 to the Limited Partners as a
group totaled $30,179,538, including $25,364,272 of returned capital from the
proceeds of property sales. Cash distributions paid in 1996 or distributed after
year end with respect to 1996 to the Limited Partners as a group totaled
$4,573,024.
Cash distributions exceeded net income in 1997 and, therefore,
resulted in a reduction of partners' capital. Operating cash distributions
exceeded net cash provided by operating activities. Reference is made to the
Partnership's Statement of Partners' Capital (Deficit) and Statement of Cash
Flows in Item 8 hereof.
<PAGE>
Item 6. Selected Financial Data
-----------------------
<TABLE>
<CAPTION>
For Year For Year For Year For Year For Year
Ended or Ended or Ended or Ended or Ended or
as of as of as of as of as of
12/31/97(1) 12/31/96 12/31/95(2) 12/31/94(3) 12/31/93(4)
<S> <C> <C> <C> <C> <C>
Revenues $ 17,197,366 $ 7,716,609 $ 5,522,086 $ 6,096,743 $ 3,190,972
Net Income $ 13,153,920 $ 3,392,534 $ 2,248,715 $ 3,375,406 $ 50,380
Net Income
per Weighted
Average
Limited
Partnership
Unit $ 158.07 $ 40.72 $ 26.96 $ 40.42 $ .60
Total Assets $ 42,788,822 $ 59,590,134 $ 60,535,231 $ 64,530,075 $ 69,345,524
Total Cash
Distributions
per Limited
Partnership
Unit outstanding
for the entire
period, including
amounts distributed
after year end with
respect to
such year $ 366.45 $ 55.44 $ 77.36 $ 87.44 $ 32.50
</TABLE>
(1) During 1997, net income includes a gain of $10,176,990 recognized on
the sale of two investments. Cash distributions include a return of capital
of $308 per Unit.
(2) During 1995, the Partnership recorded a valuation provision on one
property totaling $600,000 ($7.19 per Weighted Average Limited Partnership
Unit). Cash distributions include a return of capital of $28 per Unit.
(3) During 1994, the Partnership recorded a valuation provision on one
property totaling $1,400,000 ($16.76 per Weighted Average Limited
Partnership Unit). Net income also includes a gain of $1,790,470 recognized
on the sale of two investments. Cash distributions include a return of
capital of $48 per Unit.
(4) During 1993, the Partnership recorded a valuation provision on two
properties totaling $2,000,000 ($23.93 per Weighted Average Limited
Partnership Unit).
<PAGE>
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
The Partnership completed its offering of units of limited partnership
interest 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
the real estate investments described in Item 1 herein. Four investments have
been sold, one in each of June 1994, August 1994, May 1997 and October 1997.
As a result of the sales, capital of $31,646,076 has been returned to the
limited partners through December 31, 1997. The adjusted capital contribution
was reduced to $952 from $1,000 per unit in 1994, then to $924 in July 1995,
then to $616 in 1997. A portion of the sales proceeds was used to pay
previously accrued, but deferred, management fees to the advisor ($447,745 in
1997, $183,426 in 1995 and $1,259,988 in 1994).
At December 31, 1997, the Partnership had $10,665,416 in cash, cash
equivalents and short-term investments, of which $972,230 was used for cash
distributions to partners on January 29, 1998; 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 or cash distributions to
partners will be cash generated by the Partnership's real estate and short-term
investments. Quarterly distributions of cash from operations relating to 1997
and 1996 were made at the annualized rate of 6.25% and 6%, respectively, on the
weighted average adjusted capital contribution during the period. 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 $96,937 and $56,736 at December 31, 1997 and
1996, respectively. Through December 31, 1997 the Partnership had repurchased
and retired 955 limited partnership units for an aggregate cost of $880,412.
The carrying value of real estate investments in the financial statements
at December 31, 1997 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 December 31, 1997, the appraised value of certain
investments exceeded the related carrying values by an aggregate of
approximately $3,600,000, and the remaining investments had carrying values
which exceeded their appraised values by a total of approximately $40,000. 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.
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
partnership's computer programs that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in normal business operations.
The Managing General Partner and its affiliates are assessing the
modifications or replacements of its software that may be necessary for its
computer systems to function properly with respect to the dates in the year 2000
and thereafter. The Managing General Partner and its affiliates do not believe
that the cost of either modifying existing software or converting to new
software will be significant or that the year 2000 issue will pose significant
operational problems for its computer systems.
<PAGE>
Results of Operations
Form of Real Estate Investments
Effective January 1, 1996, the University Business Park joint venture was
dissolved and ownership of the joint venture assets was assigned to the
Partnership. This property was sold during 1997. Effective April 1, 1996, the
Waters Landing II joint venture was restructured and the venture partner's
ownership interest was assigned to the Partnership. Effective January 1, 1995,
Palms Business Center joint venture was restructured and the venture partner's
ownership interest was assigned to the Partnership. This property was also sold
during 1997. Effective August 1, 1995 and September 1, 1995, respectively, the
Santa Rita Plaza and Dahlia joint venture investments were restructured to grant
the Partnership control over management decisions. Accordingly, these
investments have been accounted for as wholly-owned properties since those
dates. The Puente Street investment is also a wholly-owned property. 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
As previously discussed, the University Business Park was sold on May 28,
1997 and the Partnership recognized a gain of $2,160,404. The property was 100%
leased at the time of sale, consistent with December 31, 1996.
Overall occupancy at the Columbia Gateway Corporate Park was 98% at
December 31, 1997, an increase from both 94% at December 31, 1996 and 92% at
December 31, 1995. Ownership of the Columbia Gateway Corporate Park joint
venture has been restructured whereby the partnership and its affiliate will
obtain full control over the business of the joint venture. This restructuring
will be effective January 1, 1998.
Occupancy at Puente Street has been 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 second quarter of
1997. The settlement provided for this tenant to assign its lease to the other
existing tenant no later than February 1, 1998. This lease assignment has
occurred and the former tenant now sub-leases the space from the latter one.
There was no material effect on the Partnership's financial position or results
of operations.
The Waters Landing II property is presently zoned and permitted for the
development of 144 apartment units. However, based on studies previously
undertaken by the Partnership, the Partnership has no plans at this time to
develop this site.
As previously discussed, the Palms Business Center was sold on October 24,
1997 and the Partnership recognized a gain of $8,016,586. At the time of the
sale, the property was 100% leased compared to 98% and 95% at December 31, 1996
and 1995, respectively.
Occupancy at the Dahlia property has been 100% since the first quarter of
1994. The lease of a tenant that occupies approximately 30% of the space expires
in May 1998. This tenant is not expected to renew and therefore an agreement has
been executed allowing for the lease to be terminated by the Partnership any
time after February 1, 1998. The marketing process for this space has been
initiated. 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 95% at December 31, 1997, a slight
decrease from 98% at December 31, 1996 and an increase from 91% at December 31,
1995. Although occupancy is strong, past performance at the Plaza has been
affected by tenant delinquencies and turnover due to business failures.
Investment Results
Interest on short-term investments and cash equivalents increased in 1997
as compared to 1996 as a result of higher average investment balances due to the
temporary investment of proceeds from the sale of both University Business Park
in May 1997 and the Palms Business Center in October 1997. Interest on short-
term investments and cash equivalents
<PAGE>
decreased in 1996 as compared to 1995 as a result of lower average investment
balances and lower average yields because 1995 average investment balances
included the temporary investment of sale proceeds from the C.S. Graham and
Lakewood sales in 1994.
1997 Compared to 1996
Real estate operations decreased by $506,603 between 1997 and 1996. This
decrease is primarily due to lower operating results from both University
Business Park and Palms Business Center due to the sale of these assets during
1997. Operating results at Dahlia also decreased due to higher operating
expenses in 1997 and the 1996 non-recurring gain on sale of land mentioned in
Operating Factors above.
Exclusive of the proceeds from the settlement of past due tenant
receivables at Dahlia in 1996 ($332,000), and the payment of deferred management
fees in 1997 ($447,745), cash flow from operations decreased by $915,000 between
1997 and 1996. This decrease is due to the decrease in operating results
discussed above, along with an increase in working capital.
1996 Compared to 1995
The Managing General Partner determined during the second quarter of 1995
not to develop the Waters Landing II site. Accordingly, the carrying value of
this investment was reduced to its estimated fair market value less cost of sale
with a $600,000 charge to operations.
Exclusive of the investment valuation allowance of $600,000 on Waters
Landing II discussed above, total real estate operations were $3,542,491 in 1996
and $2,828,940 in 1995. This increase of approximately $714,000 resulted from
improved operating results at University Business Park ($461,000) and Palms
Business Center III and IV ($281,000). These improvements were primarily
attributable to increased rental income due to higher rental rates and
occupancies at both properties, as well as a decrease in amortization expense at
University Business Park. Operating results at Salinas also improved by $66,000.
These increases were partially offset by a decline in net operating income at
Puente Street ($74,000) primarily caused by non-recurring revenue recognized in
1995.
Exclusive of the proceeds from the settlement of past due tenant
receivables at Dahlia in 1996 ($332,000), and the payment of deferred management
fees in 1995 ($183,426), cash flow from operations decreased by $71,000 between
1996 and 1995. This change is inconsistent with the increase in operating
results between the respective years primarily due to the timing of cash
distributions from joint ventures. In addition, cash flow from operations
decreased as a result of increases in working capital items.
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.
1997 Compared to 1996
The Partnership management fee increased due to an increase in
distributable cash flow from operations. General and administrative expenses
were remained stable between the two periods.
1996 Compared to 1995
The Partnership management fee increased due to an increase in
distributable cash flow from operations. General and administrative expenses
decreased $29,000 or 9%, primarily due to a decrease in legal costs.
<PAGE>
Inflation
By their nature, real estate investments tend not to be adversely affected
by inflation. Inflation may result in appreciation in the value of the
Partnership's real estate investments over time if rental rates and replacement
costs increase. Declines in real property values during the period of
Partnership operations, due to market and economic conditions, have overshadowed
the positive effect inflation may have on the value of the Partnership's
investments.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
See the Financial Statements of the Partnership included as a part of
this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
- --------------------
The Partnership has had no disagreements with its accountants on any
matters of accounting principles or practices or financial statement disclosure.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant.
--------------------------------------------------
(a) and (b) Identification of Directors and Executive Officers.
--------------------------------------------------
The following table sets forth the names of the directors and
executive officers of the Managing General Partner and the age and position held
by each of them as of December 31, 1997.
<TABLE>
<CAPTION>
Name Position(s) with the Managing General Partner Age
- ---- --------------------------------------------- ---
<S> <C> <C>
Wesley M. Gardiner, Jr. President, Chief Executive Officer and Director 39
Pamela J. Herbst Vice President and Director 42
J. Grant Monahon Vice President and Director 52
James J. Finnegan Vice President 37
Karin J. Lagerlund Treasurer and Principal Financial and Accounting Officer 33
</TABLE>
(c) Identification of Certain Significant Employees.
-----------------------------------------------
None.
(d) Family Relationships.
--------------------
None.
(e) Business Experience.
-------------------
The Managing General Partner was incorporated in Massachusetts on
October 23, 1986. The background and experience of the executive officers and
directors of the Managing General Partner are as follows:
Wesley M. Gardiner, Jr. joined AEW Real Estate Advisors, Inc. ("AEW") ,
formerly known as Copley Real Estate Advisors, Inc., in 1990 and has been a Vice
President at AEW since January, 1994. AEW is a subsidiary of AEW Capital
Management, L.P. ("AEW Capital Management"). From 1982 to 1990, he was employed
by Metric Realty, a nationally-known real estate investment advisor and
syndication firm, as a portfolio manager responsible for several public and
private limited partnerships. His career at AEW has included asset management
responsibility for the company's Georgia and Texas holdings. Presently, Mr.
Gardiner has overall responsibility for all the partnerships advised by AEW
<PAGE>
whose securities are registered under the Securities and Exchange Act of 1934.
He received a B.A. in Economics from the University of California at San Diego.
Pamela J. Herbst directs AEW Capital Management's Portfolio Advisory
Services, with oversight responsibility for the asset and portfolio management
areas. Ms. Herbst is a member of AEW Capital Management's Investment Policy
Group and Management Committee. She came to AEW Capital Management in December
1996 as a result of the firm's merger with Copley Real Estate Advisors, Inc.
where she held various senior level positions in asset and portfolio management,
acquisitions and corporate operations since 1982. Ms. Herbst is a graduate of
the University of Massachusetts (B.A.) and Boston University (M.B.A.).
J. Grant Monahon is AEW Capital Management's General Counsel and a member
of the firm's Management Committee and Investment Policy Group. He has over 25
years of experience in real estate law and investments. Prior to joining AEW
Capital Management in 1987, Mr. Monahon was a partner with a major Boston law
firm. As the head of that firm's real estate finance department, he represented
a wide variety of institutional clients, both domestic and international, in
complex equity and debt transactions. He is the former Chairman of the General
Counsel section of the National Association of Real Estate Investment Managers.
Mr. Monahon is a graduate of Dartmouth College (B.A.) and Georgetown University
Law Center (J.D.).
James J. Finnegan is the Assistant General Counsel of AEW Capital
Management. Mr. Finnegan served as Vice President and Assistant General Counsel
of Aldrich, Eastman & Waltch, L.P., a predecessor to AEW Capital Management. Mr.
Finnegan has over ten years of experience in real estate law, including seven
years of experience in private practice with major New York City and Boston law
firms. Mr. Finnegan also serves as AEW's securities and regulatory compliance
officer. Mr. Finnegan is a graduate of the University of Vermont (B.A.) and
Fordham University School of law (J.D.).
Karin J. Lagerlund directs the Advisory Services Portfolio Accounting Group
at AEW Capital Management, overseeing portfolio accounting, performance
measurement and client financial reporting for AEW's private equity investment
portfolios. Ms. Lagerlund is a Certified Public Accountant and has over ten
years experience in real estate consulting and accounting. Prior to joining AEW
Capital Management in 1994, she was an Audit Manager at EY/Kenneth Leventhal
LLP. Ms. Lagerlund is a graduate of Washington State University (B.A.).
(f) Involvement in Certain Legal Proceedings.
----------------------------------------
None.
Item 11. Executive Compensation.
----------------------
Under the Partnership Agreement, the General Partners and their
affiliates are entitled to receive various fees, commissions, cash
distributions, allocations of taxable income or loss and expense reimbursements
from the Partnership. See Note 1, Note 2 and Note 6 of Notes to Financial
Statements.
The following table sets forth the amounts of the fees and cash distributions
and reimbursements for out-of-pocket expenses which the Partnership paid to or
accrued for the account of the General Partners and their affiliates for the
year ended December 31, 1997. Cash distributions to General Partners include
amounts distributed after year end with respect to 1997.
<PAGE>
<TABLE>
<CAPTION>
Amount of
Compensation and
Receiving Entity Type of Compensation Reimbursement
- ---------------- -------------------- -------------
<S> <C> <C>
General Partners Share of Distributable Cash $ 48,639
AEW Real Estate Advisors, Inc. Management Fees and 498,050
(formerly known as Copley Real Reimbursement of Expenses
Estate Advisors, Inc.)
New England Securities Corporation Servicing Fees plus out-of-
pocket reimbursements 19,601
----------
TOTAL $ 566,290
==========
</TABLE>
For the year ended December 31, 1997 the Partnership allocated
$122,666 of taxable income to the General Partners.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
-----------------------------------------------
No person or group is known by the Partnership to be the beneficial
owner of more than 5% of the outstanding Units at December 31, 1997. Under the
Partnership Agreement, the voting rights of the Limited Partners are limited
and, in some circumstances, are subject to the prior receipt of certain opinions
of counsel or judicial decisions.
Except as expressly provided in the Partnership Agreement, the right
to manage the business of the Partnership is vested exclusively in the Managing
General Partner.
(b) Security Ownership of Management.
--------------------------------
The General Partners of the Partnership owned no Units at December 31,
1997.
(c) Changes in Control.
------------------
There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The Partnership has no relationships or transactions to report other
than as reported in Item 11, above.
<PAGE>
PART IV
-------
Item 14. Exhibits, Financial Statements, and Reports on Form 8-K.
-------------------------------------------------------
(a) The following documents are filed as part of this report:
(1) Financial Statements--The Financial Statements listed on the
accompanying Index to Financial Statements and Schedule are filed as part of
this Annual Report.
(2) Financial Statement Schedule - The Financial Statement
Schedule listed on the accompanying Index to Financial Statements and Schedule
are filed as part of this Annual Report.
(3) Exhibits--The Exhibits listed in the accompanying Exhibit
Index are filed as a part of this Annual Report and incorporated in this Annual
Report as set forth in said Index.
(b) Reports on Form 8-K. During the last quarter of the year ending
December 31, 1997, the Partnership filed one Current Report on Form 8-K dated
October 24, 1997 reporting on Item No. 2 (Acquisition or Disposition of Assets)
and Item No. 7 (Financial Statements and Exhibits), relating in both cases to
the sale of the Palms Business Center III and IV property.
<PAGE>
New England Pension Properties V;
A Real Estate Limited Partnership
Financial Statements
* * * * * * * *
December 31, 1997
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
--------------------------------
A REAL ESTATE LIMITED PARTNERSHIP
---------------------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
------------------------------------------
Report of Independent Accountants
Financial Statements:
Balance Sheet - December 31, 1997 and 1996
Statement of Operations - Years ended December 31, 1997, 1996 and 1995
Statement of Partners' Capital (Deficit) - Years ended December 31, 1997,
1996 and 1995
Statement of Cash Flows - Years ended December 31, 1997, 1996 and 1995
Notes to Financial Statements
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at December 31,
1997, 1996 and 1995
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Partners
New England Pension Properties V;
A Real Estate Limited Partnership
In our opinion, based upon our audits and the reports of other auditors for the
years ended December 31, 1997, 1996 and 1995, the financial statements listed in
the accompanying index present fairly, in all material respects, the financial
position of New England Pension Properties V; A Real Estate Limited Partnership
(the "Partnership") at December 31, 1997 and 1996, and the results of its
operation and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of Fifth Copley Corp., the
Managing General Partner of the Partnership; our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of the Partnership's investments in Santa Rita Plaza, Palms
Business Center III and IV, Puente Street and Dahlia for the years ended
December 31, 1996 and 1995. Operating income for these investments aggregated
$3,667,940 and $2,397,128 for the years ended December 31, 1996 and 1995. We
also did not audit the financial statements of the Partnership's investment in
University Business Park for the year ended December 31, 1996. Operating income
for this investment totaled $732,439 for the year ended December 31, 1996. We
also did not audit the financial statements of the Partnership's Columbia
Gateway Corporate Park joint venture investee for the years ended December 31,
1996 and 1995, which results of operations are recorded using the equity method
of accounting in the Partnership's financial statements. Equity in joint venture
income for this venture was $360,214 and $371,986 for the years ended December
31, 1996 and 1995. Those statements were audited by other auditors whose reports
thereon have been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for operating income and equity in joint
venture income for Santa Rita Plaza, Palms Business Center III and IV, Puente
Street and Dahlia for the years ended December 31, 1996 and 1995, for University
Business Park for the year ended December 31, 1996, and for Columbia Gateway
Corporate Park for the years ended December 31, 1996 and 1995, is based solely
on the reports of the other auditors. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by the Managing General Partner, and
evaluating the overall financial statement presentation. We believe that our
audits and the reports of other auditors for the years ended December 31, 1997,
1996 and 1995 provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- ------------------------
Boston, Massachusetts
March 19, 1998
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------------ -----------
<S> <C> <C>
ASSETS
Real estate investments:
Property, net $ 27,287,367 $ 42,828,754
Joint ventures 4,836,039 4,722,223
------------ ------------
32,123,406 47,550,977
Cash and cash equivalents 6,303,386 4,706,279
Short-term investments 4,362,030 7,332,878
------------ ------------
$ 42,788,822 $ 59,590,134
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 129,158 $ 108,026
Accrued management fees 48,078 57,064
Deferred management and disposition fees 1,106,292 596,583
------------ ------------
Total liabilities 1,283,528 761,673
------------ ------------
Commitments to fund real estate investments
Partners' capital (deficit):
Limited partners ($616 and $924 per unit;
160,000 units authorized, 82,336 and
82,426 issued and outstanding, respectively) 41,511,957 58,916,206
General partners (6,663) (87,745)
------------ ------------
Total partners' capital 41,505,294 58,828,461
------------ ------------
$ 42,788,822 $ 59,590,134
============ ============
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------------
1997 1996 1995
----------------- ------------------- ------------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY
Property rentals $ 5,775,821 $ 6,566,057 $ 3,400,015
Interest income on loan to ground lessor 180,821 185,379 63,455
Property operating expenses (1,559,211) (1,775,678) (839,565)
Ground rent expense (390,000) (390,000) (162,500)
Depreciation and amortization (1,315,384) (1,403,481) (937,015)
------------ ------------ ------------
2,692,047 3,182,277 1,524,390
Joint venture earnings 343,841 360,214 1,304,550
Investment valuation allowances - - (600,000)
------------ ------------ ------------
Total real estate operations 3,035,888 3,542,491 2,228,940
Gain on sales of property 10,176,990 - 6,209
------------ ------------ ------------
Total real estate activity 13,212,878 3,542,491 2,235,149
Interest on cash equivalents
and short-term investments 719,893 604,959 747,857
------------ ------------ ------------
Total investment activity 13,932,771 4,147,450 2,983,006
------------ ------------ ------------
PORTFOLIO EXPENSES
Management fee 481,045 456,846 407,217
General and administrative 297,806 298,070 327,074
------------ ------------ ------------
778,851 754,916 734,291
------------ ------------ ------------
NET INCOME $ 13,153,920 $ 3,392,534 $ 2,248,715
============ ============ ============
Net income per weighted average limited
Partnership unit $ 158.07 $ 40.72 $ 26.96
============ ============ ============
Cash distributions per limited partnership
unit outstanding for the entire year $ 368.62 $ 53.73 $ 74.75
============ ============ ============
Weighted average number of limited
partnership units outstanding during the year $ 82,385 $ 82,486 $ 82,582
============ ============ ============
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1997 1996 1995
--------------------------- --------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
GENERAL LIMITED GENERAL LIMITED GENERAL LIMITED
PARTNERS PARTNERS PARTNERS PARTNERS PARTNERS PARTNERS
Balance at beginning of year $ (87,745) $58,916,206 $ (76,904) $ 60,073,461 $(60,383) $64,086,525
Repurchase of limited
partnership units - (67,176) - (84,104) - (64,360)
Cash distributions (50,457) (30,359,454) (44,766) (4,431,760) (39,008) (6,174,932)
Net income 131,539 13,022,381 33,925 3,358,609 22,487 2,226,228
--------- ------------ ---------- ------------ -------- -----------
Balance at end of year $ (6,663) $ 41,511,957 $ (87,745) $ 58,916,206 $(76,904) $60,073,461
========= ============ ========== ============ ======== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------
1997 1996 1995
------------ ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $13,153,920 $3,392,534 $2,248,715
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,315,384 1,403,481 937,015
Gain on sales of property (10,176,990) - (6,209)
Investment valuation allowances - - 600,000
Increase in deferred lease commissions (106,319) (126,625) (85,768)
Equity in joint venture earnings (343,841) (360,214) (1,304,550)
Cash distributions from joint ventures 228,086 335,500 1,850,619
Decrease (increase) in investment
income receivable 19,093 (36,107) 16,323
Decrease (increase) in property working
capital (333,224) 350,402 447,121
Payment of deferred management fee (447,745) - (183,426)
Increase in operating liabilities 179,100 222,999 218,167
------------ ----------- ----------
Net cash provided by operating activities 3,487,464 5,181,970 4,738,007
------------ ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Return of capital from joint venture - - 1,305,765
Net proceeds from sale of investments 25,026,889 - 6,209
Deferred disposition fees 790,500 - -
Investment in joint ventures - - (138,242)
Investments in property (249,274) (334,973) (100,739)
Loan to ground lessor - - (1,750,000)
Repayments received on loan to ground lessor 66,860 61,278 -
Decrease (increase) in short-term
investments, net 2,951,755 568,036 (2,967,346)
------------ ----------- ----------
Net cash provided by (used in)
investing activities 28,586,730 294,341 (3,644,353)
------------ ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (30,409,911) (4,476,526) (6,213,940)
Repurchase of limited partnership units (67,176) (84,104) (64,360)
------------ ----------- ----------
Net cash used in financing activities (30,477,087) (4,560,630) (6,278,300)
------------ ----------- ----------
Net increase (decrease) in cash and cash
equivalents 1,597,107 915,681 (5,184,646)
Cash and cash equivalents:
Beginning of year 4,706,279 3,790,598 8,975,244
------------ ----------- ----------
End of year $ 6,303,386 4,706,279 $3,790,598
============ =========== ==========
</TABLE>
<PAGE>
NON-CASH TRANSACTIONS:
Two of the Partnership's joint venture investments were converted to wholly-
owned properties in 1996. The carrying value of these investments at their
respective conversion dates totalled $7,122,323. Three of the Partnership's
joint venture investments were converted to wholly-owned properties in 1995.
The carrying value of these investments at their respective conversion dates
totalled $27,938,099.
(See accompanying notes to financial statements)
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Business
- ----------------------------------
General
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 to-be-developed, 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 five real estate investments it currently owns prior to
the end of 1989. It intends to dispose of its investments within twelve years of
their acquisition, and then liquidate.
The Managing General Partner of the Partnership is Fifth Copley Corp., a
wholly-owned subsidiary of AEW Real Estate Advisors, Inc. ("AEW"), formerly
known as Copley Real Estate Advisors, Inc. ("Copley"). The associate general
partner is ECOP Associates Limited Partnership, a Massachusetts limited
partnership. Subject to the Managing General Partner's overall authority, the
business of the Partnership is managed by AEW pursuant to an advisory contract.
On December 10, 1996, Copley's parent, New England Investment Companies,
Limited Partnership ("NEIC"), a publicly traded master limited partnership,
acquired certain assets subject to then existing liabilities from Aldrich,
Eastman & Waltch, Inc. and its affiliates and principals (collectively "the AEW
Operations"). Simultaneously, a new entity, AEW Capital Management, L.P. was
formed into which NEIC contributed its interest in Copley and its affiliates. As
a result, the AEW Operations were combined with Copley to form the business
operations of AEW Capital Management, L.P.
At year end 1997, NEIC completed a restructuring plan under which it
contributed all of its operations to a newly formed private partnership, NEIC
Operating Partnership, L.P., in exchange for a general partnership interest in
the newly formed entity. As such, at December 31, 1997, AEW Capital Management,
L.P. is wholly owned by NEIC Operating Partnership, L.P. AEW is a subsidiary of
AEW Capital Management, L.P.
Prior to August 30, 1996, New England Mutual Life Insurance Company ("The
New England") was NEIC's principal unit holder and owner of all the outstanding
stock of NEIC's general partner. On August 30, 1996, The New England merged with
and into Metropolitan Life Insurance Company ("Met Life"). Met Life is the
surviving entity and, therefore, through a wholly-owned subsidiary, became the
owner of the units of partnership interest previously owned by The New England
and of the stock of NEIC's general partner.
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 $96,937 and $56,736 at December 31, 1997
and 1996, respectively. As of December 31, 1997 and 1996, the Partnership had
cumulatively repurchased and retired 955 units and 865 units, respectively.
Management
AEW, as advisor, is entitled to receive stipulated fees from the
Partnership in consideration of services performed in connection with the
management of the Partnership and the acquisition and disposition of Partnership
investments in real property. Partnership management fees are 9% of
distributable cash flow from operations, as defined, before deducting such fees.
Payment of 50% of management fees is deferred until cash distributions to
limited partners exceed a specified rate or until payable from sales proceeds.
AEW is also reimbursed for expenses incurred in connection with administering
the Partnership ($17,004 in 1997, $15,740 in 1996, and $20,081 in 1995).
Acquisition fees were based on 2% of gross proceeds from the offering.
Disposition fees are limited to the lesser of
<PAGE>
3% of the selling price of property or 50% of the standard real estate
commission customarily charged by an independent real estate broker. Payment of
disposition fees are subject to the prior receipt by the limited partners of
their capital contributions plus a stipulated return thereon. Deferred
disposition fees were $1,058,215 and $267,715 at December 31, 1997 and 1996,
respectively.
New England Securities Corporation, an indirect subsidiary of Met Life, is
engaged by the Partnership to act as its unit holder servicing agent. Fees and
out-of pocket expenses for such services totaled $19,601, $18,733 and $16,774,
in 1997, 1996 and 1995, respectively.
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Managing General Partner to make
estimates affecting the reported amounts of assets and liabilities, and of
revenues and expenses. In the Partnership's business, certain estimates require
an assessment of factors not within management's control, such as the ability of
tenants to perform under long-term leases and the ability of the properties to
sustain their occupancies in changing markets. Actual results, therefore, could
differ from those estimates.
Real Estate Joint Ventures
Investments in joint ventures, including loans made to venture partners,
which are in substance real estate investments, are stated at cost plus (minus)
equity in undistributed joint venture income (losses). Allocations of joint
venture income (losses) were made to the Partnership's venture partners as long
as they had substantial economic equity in the project. Currently, the
Partnership has one joint venture jointly owned by an affiliate of the
Partnership which has substantial economic equity in the project. Joint ventures
are consolidated with the accounts of the Partnership if, and when, the venture
partner no longer shares in the control of the business.
Property
Property includes land and buildings and improvements, which are stated at
cost, less accumulated depreciation, and other operating net assets
(liabilities). The initial carrying value of a property previously owned by a
joint venture equals the Partnership's carrying value of the predecessor
investment on the conversion date.
Capitalized Costs, Depreciation, and Amortization
Maintenance and repair costs are expensed as incurred. Significant
improvements and renewals are capitalized. Depreciation is computed using the
straight-line method based on estimated useful lives of the buildings and
improvements. Leasing costs are also capitalized and amortized over the related
lease terms.
Acquisition fees have been capitalized as part of the cost of real estate
investments. Amounts not related to land are amortized using the straight-line
method over the estimated useful lives of the underlying property.
Tenant leases at the properties provide for rental increases over the
respective lease terms. Rental revenue is being recognized on a straight-line
basis over the lease terms.
Realizability of Real Estate Investments
The Partnership considers a real estate investment to be impaired when it
determines the carrying value of the investment is not recoverable through
expected undiscounted cash flows generated from the operations and disposition
of property. The impairment loss is based on the excess of the investment's
carrying value over its estimated fair market value. For investments being held
for sale, the impairment loss also includes estimated costs of sale. Property
held for sale is not depreciated during the holding
<PAGE>
period. The Waters Landing II investment was reduced to its estimated fair
market value, less costs of sale, during 1995. (See Notes 3 and 4.)
The carrying value of an investment may be more or less than its current
appraised value. At December 31, 1997 and 1996, the appraised values of certain
investments exceeded their related carrying values by an aggregate of $3,600,000
and $6,900,000, respectively, and the appraised values of the remaining
investments were less than their related carrying values by an aggregate of
$40,000 and $1,100,000, respectively.
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 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.
Cash Equivalents and Short-Term Investments
Cash equivalents are stated at cost, plus accrued interest. The Partnership
considers all highly liquid debt instruments purchased with a maturity of ninety
days or less to be cash equivalents; otherwise, they are classified as short-
term investments.
The Partnership has the positive intent and ability to hold all short-term
investments to maturity; therefore, short-term investments are carried at cost
plus accrued interest which approximates market value. At December 31, 1997 and
1996, all investments were in commercial paper with less than six months and
three months, respectively, remaining to maturity.
Deferred Disposition Fees
Disposition fees due to AEW related to sales of investments are included in
the determination of gains or losses resulting from such transactions. According
to the terms of the advisory contract, payment of such fees has been deferred
until the limited partners first receive their capital contributions, plus a
stipulated return thereon.
Income Taxes
A partnership is not liable for income taxes and, therefore, no provision
for income taxes is made in the financial statements of the Partnership. A
proportionate share of the Partnership's income is reportable on each partner's
tax return.
Per Unit Computations
Net income per unit is computed based on the weighted average number of
units of limited partnership interest outstanding during the year. The actual
per unit amount will vary by partner depending on the date of admission to, or
withdrawal from, the Partnership.
Effective January 1, 1998, the Partnership adopted FAS 128 "Earnings per
Share," which simplifies the standards of reporting earnings per share (EPS)
previously found in APB Opinion No. 15. It provides guidance on the computation
and disclosure of basic and diluted EPS and requires restatement of prior
periods for comparative purposes. The adoption of FAS 128 did not have a
material impact on the Partnership's financial statements.
Note 3 - Real Estate Joint Ventures
- -----------------------------------
The Partnership had invested in eight real estate joint ventures, each
organized as general partnerships with a real estate development/management firm
and, in two cases, with an affiliate of the Partnership. Two joint venture
projects were sold in 1994, three joint ventures were converted to wholly-owned
investments in 1995 and two joint ventures were converted to wholly-owned
investments in 1996. Joint venture investments are in either of two forms. In
one form, the Partnership makes an equity contribution which is subject to
preferential cash distributions at a specified rate and to priority
distributions with respect to sale or refinancing transactions. In the second
form of joint venture, the
<PAGE>
Partnership makes an equity contribution to the venture, subject to preferential
returns, and also makes a loan to its venture partner which, in turn,
contributes the proceeds to the venture. The loans bear interest at a specified
rate, mature in full in ten years, and are secured by the venture partner's
interest in the venture. These loans have been accounted for as a real estate
investment due to the attendant risks of ownership. The joint venture agreements
provide for the funding of cash flow deficits in proportion to ownership
interests and for the dilution of ownership share in the event a venture partner
does not contribute proportionately.
The respective real estate management/development firm is responsible for
day-to-day development and operating activities, although overall authority and
responsibility for the business is shared by the venturers. The real estate
development/management firms or their affiliates also provide various services
to the respective joint ventures for a fee.
The following is a summary of cash invested in the Partnership's remaining
joint venture, net of returns of capital and excluding acquisition fees:
<TABLE>
<CAPTION>
Original December 31,
Investment/ Rate of Ownership ------------------------
Location Return/Interest Interest 1997 1996
- ----------- --------------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Columbia Gateway
Corporate Park
Columbia, MD 10.5% 15.25% $5,517,497 $5,517,497
</TABLE>
Waters Landing II
On May 26, 1987, the Partnership entered into a joint venture with an
affiliate of Oxford Development Corporation to acquire land and develop an
apartment complex.
The Waters Landing II joint venture was restructured, and the investment is
being accounted for as a wholly-owned property effective April 1, 1996. (See
Note 4.)
University Business Park
On September 30, 1987, the Partnership entered into a joint venture
agreement with an affiliate of The Hewson Company. Effective January 1, 1996,
the joint venture was dissolved and the venture partner's ownership interest was
assigned to the Partnership. (See Note 4.)
Columbia Gateway Corporate Park
On December 21, 1987, the Partnership entered into a joint venture
agreement with an affiliate of the Partnership and an affiliate of Manekin
Corporation to construct and operate seven research and development /office
buildings, of which six have been constructed to date. The Partnership committed
to make a $6,402,000 equity contribution to the joint venture. The Partnership
and its affiliate collectively have a 50% ownership interest in the joint
venture. Ownership of the Columbia Gateway Corporate Park joint venture has been
restructured whereby the Partnership and its affiliate will obtain full control
over the business of the joint venture effective January 1, 1998. The minimum
future rental payments to the venture under non-cancelable operating leases are:
$1,510,900 in 1998; $1,408,027 in 1999; $707,156 in 2000; $602,419 in 2001 and
$475,580 in 2002.
Sale of C.S. Graham and Lakewood
On June 30, 1987, the Partnership entered into a joint venture agreement
with an affiliate of Connell Scott and Associates to own and operate a warehouse
facility. The Partnership contributed a total of $3,185,246 to the venture. On
June 17, 1994, the joint venture sold its property. The total sales price was
$3,925,000. After closing costs, the Partnership received proceeds of $3,720,076
and recognized a gain of $409,982 ($4.91 per weighted average limited
partnership unit). A disposition fee of $117,750 was accrued but not paid to the
advisor.
<PAGE>
On August 12, 1988, the Partnership entered into a joint venture with an
affiliate of the Partnership and with an affiliate of Evans Withycombe Company
to construct and operate an apartment complex. The Partnership's total equity
contribution was $ 3,167,615. On August 17, 1994, the joint venture sold its
property to a real estate investment trust sponsored by Evans Withycombe. After
closing costs, the payment of preferential returns to the Partnership, and the
allocation to the venture partner, the Partnership received proceeds of
$4,297,367, which resulted in a gain of $1,380,488 ($16.53 per weighted average
limited partnership unit). A disposition fee of $149,965 was accrued but not
paid to the advisor. An additional $6,209 was received in 1995 in final
settlement of the Lakewood sale.
On September 15, 1994, the Partnership made a capital distribution of
$3,968,640 ($48 per limited partnership unit) from the proceeds of the C.S.
Graham and Lakewood sales. A second capital distribution of $2,313,164 ($28 per
limited partnership unit) was made in July, 1995. A portion of the proceeds was
used to pay previously accrued, but deferred, management fees due to the advisor
($183,426 in 1995 and $1,259,988 in 1994).
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the joint venture:
Assets and Liabilities
----------------------
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1997 1996
------------ -----------
<S> <C> <C>
Assets
Real property, at cost less accumulated
depreciation of $1,506,022 and $1,852,988,
respectively $ 15,781,399 $ 15,670,283
Other 739,025 321,328
------------ --------------
16,520,424 15,991,611
Liabilities 192,816 43,521
------------ --------------
Net assets $ 16,327,608 $ 15,948,090
============ ==============
</TABLE>
Result of Operations
--------------------
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------
1997 1996 1995
--------- ---------- ----------
<S> <C> <C> <C>
Revenue
Rental income $ 1,953,704 $ 1,941,458 $ 4,437,415
Other income 20 18,163 146,660
----------- ----------- -----------
1,953,724 1,959,621 4,584,075
----------- ----------- -----------
Expenses
Operating expenses 461,780 482,749 1,402,041
Depreciation and amortization 364,595 295,841 1,032,349
----------- ----------- -----------
826,375 778,590 2,434,390
----------- ----------- -----------
Net Income $ 1,127,349 $ 1,181,031 $ 2,149,685
=========== =========== ===========
</TABLE>
<PAGE>
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliates on behalf of its various financing arrangements
with the joint venture.
Note 4 - Property
- -----------------
Palms Business Center III and IV
Effective January 1, 1995, the Palms Business Center joint venture was
restructured and the venture partner's ownership interest was assigned to the
Partnership. The carrying value at conversion ($10,308,265) was allocated to
land, building and improvements and other net operating assets.
The buildings and improvements (thirteen commercial buildings in Las Vegas,
Nevada) were being depreciated over 25 years, beginning January 1, 1995.
On October 24, 1997, the Partnership sold the Palm Business Center III & IV
property for $18,000,000. The Partnership received net proceeds of $17,823,259
and recognized a gain of $8,016,586 ($96.39 per limited partnership unit at
December 31, 1997). A disposition fee of $540,000 was accrued but not paid to
AEW. On November 25, 1997, the Partnership made a capital distribution of
$17,784,576 ($216 per limited partnership unit) from the sale proceeds. In
addition, a portion of the proceeds was used to pay previously accrued but
deferred management fees to AEW of $59,424.
Santa Rita Plaza
Effective August 1, 1995, the Santa Rita Plaza joint venture was
restructured into a limited partnership, whereby the Partnership was granted
control over management decisions. Accordingly, the investment is being
accounted for as a wholly-owned property as of that date. The carrying value of
the joint venture investment at conversion ($10,216,659) was allocated to
building and improvements, mortgage loan receivable from the ground lessor and
other net operating assets. On this same date, the Partnership made a fifteen-
year loan in the amount of $1,750,000 to the ground lessor, which used a portion
of the proceeds to repay a loan from the Santa Rita venture which, in turn, paid
approximately $1,300,000 to the Partnership as a partial return of its capital
investment in the venture. The Partnership can require full payment of the loan
after August 1, 2000. The ground lease requires an annual base payment of
$390,000 per year through 2063, plus 11.55% of rents, as defined.
The buildings and improvements (a shopping center in Salinas, California)
are being depreciated over 25 years beginning August 1, 1995. The loan to the
ground lessor bears interest at 8.75%, with payments to be made monthly based on
a 15 year amortization schedule, and is secured by the ground lessor's interest
in the Santa Rita Plaza land.
Dahlia
Effective September 1, 1995, the Dahlia joint venture was restructured into
a limited partnership, whereby the Partnership was granted control over
management decisions. Accordingly, the investment is being accounted for as a
wholly-owned property as of that date. The carrying value at conversion
($7,413,175) was allocated to land, building and improvements, and other net
operating assets. During 1993, the joint venture agreed to a settlement with a
former tenant for past due rent. This settlement was secured by an attachment on
36 acres of land in Arizona. During the first quarter of 1996, the land was
liquidated. The Partnership received $332,489, which exceeded the carrying value
of the receivable by approximately $32,000.
The buildings and improvements (a warehouse facility in Fontana,
California) are being depreciated over 25 years beginning September 1, 1995.
<PAGE>
Puente Street
Effective June 1, 1991, the Partnership assumed total ownership of this
property due to the venture partner's inability to fund its proportionate share
of operating deficits. The property includes an industrial building, together
with a parking lot and storage area in Brea, California.
The Managing General Partner determined that the carrying value of this
investment exceeded its estimated net realizable value because of the effect of
depressed market conditions on rental rates. Accordingly, the carrying value
was reduced to its estimated net realizable value by $2,900,000 prior to January
1, 1995.
The building and improvements are being depreciated over 30 years beginning
June 1, 1991.
In 1995, the Partnership was named as a defendant in a complaint filed in
the Superior Court of the State of California for the County of Orange by an
existing tenant, Bridgeport Management Services, Inc. alleging breach of lease.
The Partnership filed an answer denying the allegations presented by the
plaintiff. This litigation was settled during the second quarter of 1997. The
settlement provided for this tenant to assign its lease to the other existing
tenant, 20th Century Plastics, This transfer has occurred and Bridgeport
Management Services, Inc. is now sub-leasing the space from 20th Century
Plastics.
University Business Park
Effective January 1, 1996, the University Business Park joint venture was
dissolved and the venture partner's ownership interest was assigned to the
Partnership. The carrying value of the joint venture investment at conversion
($5,630,581) was allocated to land, building and improvements and other net
operating assets.
The building and improvements (five industrial buildings in Phoenix,
Arizona) are being depreciated over 25 years, beginning January 1, 1996.
The University Business Park property was sold on May 28, 1997. The
Partnership received net proceeds of $7,994,130 and recognized a gain of
$2,160,404 ($25.96 per limited partnership unit at June 30, 1997). A disposition
fee of $250,500 was accrued but not paid to AEW. On June 30, 1997, the
Partnership made a capital distribution of $7,579,696 ($92 per limited
partnership unit) from the proceeds. In addition, a portion of the proceeds was
used to pay previously accrued but deferred management fee to AEW of $388,320.
Waters Landing II
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.
During the second quarter of 1995, the Managing General Partner determined
that it was not in the best interest of the limited partners to develop the
Waters Landing II site, which is located in Germantown, Maryland. Accordingly,
the carrying value of the joint venture investment was reduced to its estimated
net fair market value with the recognition of an investment valuation allowance
of $600,000.
<PAGE>
The following is a summary of the Partnership's investments in property
(four in 1997 and six in 1996):
<TABLE>
<CAPTION>
December 31,
-------------------------------
1997 1996
-------------- -----------
<S> <C> <C>
Land $ 7,445,208 $ 11,475,045
Buildings and improvements 22,936,747 34,383,256
Accumulated depreciation (2,805,296) (2,797,876)
Impairment provision (3,500,000) (3,500,000)
Loan to ground lessor 1,597,866 1,664,726
Lease commissions and
other assets, net 1,388,391 1,667,594
Accounts receivable 515,182 576,334
Accounts payable (290,731) (640,325)
------------ ------------
$ 27,287,367 $ 42,828,754
============ ============
</TABLE>
Tenant leases provide for minimum rents, subject to periodic adjustment.
Tenants are also generally obligated to reimburse their pro-rata share of
operating expenses. The minimum rents due under non-cancelable operating leases
at all of the Partnership's properties are as follows: $3,060,079 in 1998;
$2,775,186 in 1999; $2,606,067 in 2000; $2,206,179 in 2001; $2,062,911 in 2002
and $6,123,085 thereafter.
Note 5 - Income Taxes
- ---------------------
The Partnership's income for federal income tax purposes differs from that
reported in the accompanying statement of operations as follows:
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------
1997 1996 1995
------------- ---------- ----------
<S> <C> <C> <C>
Net income per financial statements $ 13,153,920 $ 3,392,534 $ 2,248,715
Timing differences:
Joint venture earnings 48,147 87,002 1,532,140
Property rentals (11,223) (77,972) (1,844,941)
Expenses (258,142) 230,364 31,747
Depreciation and amortization (51,506) (61,668) 602,925
Investment valuation allowances - - 600,000
Gain on sale (614,595) - -
------------ --------- -----------
Taxable income $ 12,266,601 3,570,260 $ 3,170,586
============ ========= ===========
</TABLE>
Note 6 - Partners' Capital
- --------------------------
Allocation of net income from operations and distributions of distributable
cash from operations, as defined, are in the ratio of 99% to the limited
partners and 1% to the general partners. Cash distributions are made quarterly.
Net sale proceeds and financing proceeds are allocated first to limited
partners to the extent of their contributed capital plus a stipulated return
thereon, as defined, second to pay disposition fees, and then 85% to the limited
partners and 15% to the general partners. The adjusted capital contribution per
limited partnership unit was reduced from $1,000 to $952 in 1994, then to $924
in 1995, and further reduced to $616 in 1997, as a result of the return of
capital from the sale of four investments. No capital distributions have been
made to the general partners. Income from a sale is allocated in proportion to
<PAGE>
the distribution of related proceeds, provided that the general partners are
allocated at least 1%. Income or losses from a sale, if there are no residual
proceeds after the repayment of the related debt, will be allocated 99% to the
limited partners and 1% to the general partners.
Note 7 - Subsequent Event
- -------------------------
Distributions of cash from operations relating to the quarter ended
December 31, 1996 were made on January 29, 1998 in the aggregate amount of
$972,230 ($11.69 per weighted average limited partnership unit).
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
Initial Cost to
the Partnership
----------------------------------------------------------------------------
Lease Comm.
Buildings & & Other Other Net
Description Land Improvements Capital Costs Assets (Liabilities)
- -------------------------------------------------- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brea, CA.
- Puente Street (See Note A) $3,985,498 $8,542,701 $1,273,000 ($619)
Las Vegas, NV.
- Palms Business Center III and IV (See Note A) 2,195,482 7,783,981 115,493 213,309
Fontana, CA.
- Dahlia (See Note A) 1,367,969 5,471,878 227,625 345,703
Salinas, CA.
- Santa Rita Plaza (See Note A) 0 8,056,722 196,574 1,963,363
Germantown, MD
- Waters Landing II (See Note A) 2,091,742 0 0 0
Phoeniz, AZ
- University Business Park 1,834,355 3,724,297 86,200 (14,271)
----------------------------------------------------------------------
Total Wholly-Owned Property $11,475,046 $33,579,579 $1,898,892 $2,507,485
======================================================================
<CAPTION>
Costs Subsequent
to Acquisition
----------------------------------------------------------------------------------
Write off of
Buildings Write off of Lease Commissions Change in
and Tenant & Other Write down Other Net
Description Improvements Improvements Cap. Costs of Property Assets (Liabilities)
- ----------------------------------------------- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brea, CA.
- Puente Street (See Note A) $1,038,078 ($409,228) ($1,273,000) ($2,900,000) $1,168,223
Las Vegas, NV.
- Palms Business Center III and IV (See Note A) 65,573 0 0 0 (80,044)
Fontana, CA.
- Dahlia (See Note A) 6,727 0 0 0 (294,600)
Salinas, CA.
- Santa Rita Plaza (See Note A) 229,868 0 0 0 123,366
Germantown, MD
- Waters Landing II (See Note A) 0 0 0 (600,000) 0
Phoeniz, AZ
- University Business Park 121,932 0 0 0 139,566
----------------------------------------------------------------------------
Wholly-Owned Property $1,462,178 ($409,228) ($1,273,000) ($3,500,000) $1,056,511
============================================================================
<CAPTION>
Balance at end of year
--------------------------------------------------------------------------------
Accumulated
Buildings & Other Disposal Depreciation
Description Land Improvements Net Assets of Asset Total and Amortization
- ------------------------------------------------- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Brea, CA.
- Puente Street (See Note A) $3,985,498 $6,271,551 $1,167,604 0 $11,424,653 ($1,764,286)
Las Vegas, NV.
- Palms Business Center III and IV (See Note A) 2,195,482 7,849,554 248,758 (10,298,786) (4,992)(1) $0
Fontana, CA.
- Dahlia (See Note A) 1,367,969 5,478,605 278,728 0 7,125,302 ($560,382)
Salinas, CA.
- Santa Rita Plaza (See Note A) 0 8,286,590 2,283,303 10,569,893 ($1,032,436)
Germantown, MD
- Waters Landing II (See Note A) 1,491,742 0 0 1,491,742 $0
Phoeniz, AZ
- University Business Park 1,834,354 3,846,230 211,495 (5,854,206) 37,873 (1) $0
---------------------------------------------------------------------------------
Total Wholly-Owned Property $10,875,045 $31,732,530 $4,189,888 (16,152,992) $30,644,471 ($3,357,104)
=================================================================================
<CAPTION>
Date of Date Depreciable
Description Construction Acquired Life
- ------------------------------------------------- ------------ -------- -----------
<S> <C> <C> <C>
Brea, CA.
- Puente Street (See Note A) 1989 6/1/91 30 Years
Las Vegas, NV.
- Palms Business Center III and IV (See Note A) Lease-up 3/7/88 25 Years
Fontana, CA.
- Dahlia (See Note A) 1990 9/21/87 25 Years
Salinas, CA.
- Santa Rita Plaza (See Note A) 1990 2/1/89 25 Years
Germantown, MD To be
- Waters Landing II (See Note A) Constructed 5/26/87 Land
Phoeniz, AZ
- University Business Park 1991 9/30/87 30 Years
Total Wholly-Owned Property
</TABLE>
(1) Represents remaining working capital at 12/31/97
<TABLE>
<S> <C> <C> <C> <C>
15.25% interest in Columbia
Gateway Corporate Park __________ See Note B _______ $4,836,039 N/A Phase I - 1990 12/21/87 50 Years
Partnership. Develop and operate
officce/R & D bldgs. in Columbia, MD. Phase II - Under Construction
----------------------------------------
Total Joint Ventures $4,836,039
========================================
</TABLE>
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
---------------------------------
NOTE A TO SCHEDULE III
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Balance Conversion to Additions to
as of Wholly-Owned Lease Additions to Write Down
Description 12/31/94 Property Commissions Property of Property
- ----------------------------------- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brea, CA.
- - Puente Street $10,881,546 $ 0 ($4,933) ($426) $ 0
Las Vegas, NV.
- - Palms Business Center III and IV 0 10,308,265 90,701 48,665 0
Fontana, CA
- - Dahlia 0 7,413,175 0 0 0
Salinas, CA
- -Santa Rita Plaza 0 10,216,659 0 52,500 0
-----------------------------------------------------------------------------------------
Total Wholly-Owned Property $10,881,546 $27,938,099 $85,768 $100,739 $ 0
=========================================================================================
<CAPTION>
-----------------------------------------------------------------------------------------
12/31/94
Change in Balance Accumulated
Property Working Disposal as of Depreciation and
DESCRIPTION Capital of Asset 12/31/95 Amortization
- ----------------------------------- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brea, CA.
- - Puente Street $116,300 $10,992,487 $1,019,762
Las Vegas, NV.
- - Palms Business Center III and IV (234,273) 10,213,358 0
Fontana, CA
- - Dahlia (37,013) 7,376,162 0
Salinas, CA
- -Santa Rita Plaza 152,100 10,421,259 0
----------------------------------------------------------------------------------------
Total Wholly-Owned Property ($2,886) $39,003,266 $1,019,762
========================================================================================
<CAPTION>
----------------------------------------------------------------------------------------
1995 1995 12/31/95
Depreciation Depreciation Accumulated
and Amortization and Amortization Disposal Depreciation and
Description Expense Subtotal of Asset Amortization
- --------------------------------- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brea, CA.
- - Puente Street ($248,175) $1,267,937 $1,267,937
Las Vegas, NV.
- - Palms Business Center III and IV (395,448) $ 395,448 $ 395,448
Fontana, CA
- - Dahlia (42,908) $ 42,908 $ 42,908
Salinas, CA
- -Santa Rita Plaza (238,920) $ 238,920 $ 238,920
----------------------------------------------------------------------------------------
Total Wholly-Owned Property ($925,451) $1,945,213 $ 0 $1,945,213
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Balance Conversion to Additions to
as of Wholly-Owned Lease Additions to Write Down
Description 12/31/95 Property Commissions Property of Property
- ----------------------------------- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brea, CA.
- - Puente Street $10,992,487 $ 0 $58,848 $ 0 $ 0
Las Vegas, NV.
- - Palms Business Center III and IV 10,213,358 0 18,908 16,908 0
Fontana, CA
- - Dahlia 7,376,162 0 1,860 0 0
Salinas, CA
- -Santa Rita Plaza 10,421,259 0 27,868 253,368 0
Germantown, MD
- - Waters Landing II 0 1,491,742 0 0 0
Phoenix, AZ
- -University Business Park 0 5,630,581 19,141 64,697 0
-----------------------------------------------------------------------------------------
Total Wholly-Owned Property $39,003,266 $ 7,122,323 $126,625 $ 334,973 $ 0
=========================================================================================
<CAPTION>
-----------------------------------------------------------------------------------------
12/31/95
Change in Balance Accumulated
Property Working Disposal as of Depreciation and
DESCRIPTION Capital of Asset 12/31/96 Amortization
- ----------------------------------- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brea CA,
- - Puente Street $ 42,589 $11,093,924 $1,267,937
Las Vegas, NV.
- - Palms Business Center III and IV 63,181 10,312,355 395,448
Fontana, CA
- - Dahlia (290,044) 7,087,978 42,908
Salinas, CA
- -Santa Rita Plaza (156,141) 10,546,354 238,920
Germantown, MD
- - Waters Landing II 0 1,491,742 0
Phoenix, AZ
- -University Business Park (71,265) 5,643,154 0
-----------------------------------------------------------------------------------------
Total Wholly-Owned Property (411,680) $46,175,507 $1,945,213
=========================================================================================
<CAPTION>
----------------------------------------------------------------------------------------
1996 1996 12/31/96
Depreciation Depreciation Accumulated
and Amortization and Amortization Disposal Depreciation and
Description Expense Subtotal of Asset Amortization
- --------------------------------- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brea CA,
- - Puente Street (248,209) $1,516,146 $1,516,146
Las Vegas, NV.
- - Palms Business Center III and IV (346,036) $ 741,484 $ 741,484
Fontana, CA
- - Dahlia (258,685) $ 301,593 $ 301,593
Salinas, CA
- -Santa Rita Plaza (365,154) $ 604,074 $ 604,074
Germantown, MD
- - Waters Landing II 0 $ 0 $ 0
Phoenix, AZ
- -University Business Park (183,456) $ 183,456 $ 183,456
-----------------------------------------------------------------------------------------
Total Wholly-Owned Property ($1,401,540) $3,346,753 $ 0 $3,346,753
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Balance Conversion to Additions to Additions/
as of Wholly-Owned Lease Deletions to Write Down
Description 12/31/96 Property Commissions Property of Property
- ----------------------------------- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brea, CA.
- - Puente Street $11,093,924 $ 0 $88,482 $ 261,312 $ 0
Las Vegas, NV.
- - Palms Business Center III and IV 10,312,355 0 5,011 0 0
Fontana, CA
- - Dahlia 7,087,978 0 0 6,727 0
Salinas, CA
- -Santa Rita Plaza 10,546,354 0 5,273 (76,000) 0
Germantown, MD
- - Waters Landing II 1,491,742 0 0 0 0
Phoenix, AZ
- -University Business Park 5,643,154 0 7,553 57,235 0
-----------------------------------------------------------------------------------------
Total Wholly-Owned Property $46,175,507 $ 0 $106,319 $ 249,274 $ 0
=========================================================================================
<CAPTION>
-----------------------------------------------------------------------------------------
12/31/96
Change in Balance Accumulated
Property Working Disposal as of Depreciation and
DESCRIPTION Capital of Asset 12/31/97 Amortization
- ----------------------------------- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brea CA,
- - Puente Street ($19,065) $11,424,653 $1,516,146
Las Vegas, NV.
- - Palms Business Center III and IV (23,572) (10,298,786) (4,992) (1) 741,484
Fontana, CA
- - Dahlia 30,597 7,125,302 301,593
Salinas, CA
- -Santa Rita Plaza 94,266 10,569,893 604,074
Germantown, MD
- - Waters Landing II 0 1,491,742 0
Phoenix, AZ
- -University Business Park 184,137 (5,854,206) 37,873 (1) 183,456
-----------------------------------------------------------------------------------------
Total Wholly-Owned Property $ 266,363 (16,152,992) $30,644,471 $3,346,753
=========================================================================================
<CAPTION>
----------------------------------------------------------------------------------------
1997 1997 12/31/97
Depreciation Depreciation Accumulated
and Amortization and Amortization Disposal Depreciation and
Description Expense Subtotal of Asset Amortization
- --------------------------------- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brea CA,
- - Puente Street ($248,140) $1,764,286 $1,764,286
Las Vegas, NV.
- - Palms Business Center III and IV (290,629) $1,032,113 (1,032,113) 0
Fontana, CA
- - Dahlia (258,789) $ 560,382 560,382
Salinas, CA
- -Santa Rita Plaza (428,362) $1,032,436 1,032,436
Germantown, MD
- - Waters Landing II 0 $ 0 0
Phoenix, AZ
- -University Business Park (87,524) $ 270,980 (270,980) 0
-----------------------------------------------------------------------------------------
Total Wholly-Owned Property ($1,313,444) $4,660,197 ($1,303,093) $3,357,104
=========================================================================================
</TABLE>
(1) Represents remaining working capital at 12/31/97
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
------------------------------------
NOTE B TO SCHEDULE III
<TABLE>
<CAPTION>
BALANCE CASH EQUITY IN
PERCENT OF AS OF INVESTMENTS IN INCOME/
DESCRIPTION OWNERSHIP 12/31/94 JOINT VENTURES (LOSS)
- ---------------------------------- ---------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Waters Landing II 60% $ 2,073,501 $ 18,241 $ 0
Dahlia (3) 60% 7,542,262 0 517,485
University Business Park 60% 5,802,686 120,001 89,582
Columbia Gateway Corporate Park 15.25% 4,695,528 0 371,986
Palms Business Center III and IV (1) 100% 10,308,265 0 0
Santa Rita Plaza (2) 63% 10,357,021 0 325,497
------------- --------- ----------
$ 40,779,263 $ 138,242 $1,304,550
============= ========= ==========
</TABLE>
(1) Effective January 1, 1995 converted to wholly-owned property.
(2) Effective August 1, 1995 the Joint Venture was restructured into a Limited
Partnership.
(3) Effective September 1, 1995 the Joint Venture was restructured into a
Limited Partnership.
<TABLE>
<CAPTION>
BALANCE CASH EQUITY IN
PERCENT OF AS OF INVESTMENTS IN INCOME/
DESCRIPTION OWNERSHIP 12/31/95 JOINT VENTURES (LOSS)
- -------------------------------------- ----------- ----------- -------------- ----------
<S> <C> <C> <C> <C>
Waters Landing II (2) 60% $ 1,491,742 $0 $ 0
University Business Park (1) 60% 5,630,581 0 0
Columbia Gateway Corporate Park 15.25% 4,699,450 0 360,214
----------- -------------- --------
$11,821,773 $0 $360,214
=========== ============== ========
</TABLE>
(1) Effective January 1, 1996 converted to wholly-owned property.
(2) Effective April 1, 1996 converted to wholly-owned property.
<TABLE>
<CAPTION>
BALANCE CASH EQUITY IN
PERCENT OF AS OF INVESTMENTS IN INCOME/
DESCRIPTION OWNERSHIP 12/31/96 JOINT VENTURES (LOSS)
- ------------------------------------- ---------- ------------ --------------- -----------
<S> <C> <C> <C> <C>
Columbia Gateway Corporate Park 15.25% 4,722,223 0 343,841
------------ --------------- -----------
$4,722,223 $0 $343,841
============ =============== ===========
</TABLE>
<TABLE>
<CAPTION>
CASH
1995 AMORTIZATION DISTRIBUTED CONVERSION TO BALANCE
OF DEFERRED FROM WRITE-DOWN WHOLLY-OWNED AS OF
DESCRIPTION ACQUISITION FEES JOINT VENTURE OF PROPERTY PROPERTY 12/31/95
- ------------------------------------ ----------------- ------------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Waters Landing II $0 $0 ($600,000) $0 $1,491,742
Dahlia (3) (1,572) (645,000) 0 (7,413,175) 0
University Business Park (4,888) (376,800) 0 0 5,630,581
Columbia Gateway Corporate Park (2,064) (366,000) 0 0 4,699,450
Palms Business Center III and IV (1) 0 0 0 (10,308,265) 0
Santa Rita Plaza (2) (3,040) (462,819) 0 (10,216,659) 0
----------------- ------------- -------------- --------------- ------------
($11,564) ($1,850,619) ($600,000) ($27,938,099) $11,821,773
================= ============= ============== =============== ============
</TABLE>
<TABLE>
<CAPTION>
1996 AMORTIZATION DISTRIBUTED CONVERSION TO BALANCE
OF DEFERRED FROM WRITE-DOWN WHOLLY-OWNED AS OF
DESCRIPTION ACQUISITION FEES JOINT VENTURE OF PROPERTY PROPERTY 12/31/96
- ----------------------------------- ----------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Waters Landing II (2) $ 0 $ 0 $0 ($1,491,742) $ 0
University Business Park (1) 0 0 0 (5,630,581) 0
Columbia Gateway Corporate Park (1,941) (335,500) 0 0 4,722,223
----------------- ------------- ----------- ------------- -----------
($1,941) ($335,500) $0 ($7,122,323) $4,722,223
================= ============= =========== ============= ===========
</TABLE>
<TABLE>
<CAPTION>
CASH
1997 AMORTIZATION DISTRIBUTED CONVERSION TO BALANCE
OF DEFERRED FROM WRITE-DOWN WHOLLY-OWNED AS OF
DESCRIPTION ACQUISITION FEES JOINT VENTURE OF PROPERTY PROPERTY 12/31/97
- ----------------------------------- ----------------- -------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Columbia Gateway Corporate Park (1,939) (226,086) 0 0 4,838,039
---------------- -------------- -------------- -------------- -----------
($1,939) ($226,086) $0 $0 $ 4,838,039
================ ============== ============== ============== ===========
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Number
- ------ ------- ------
<S> <C> <C>
10A. Joint Venture Agreement of Waters Landing *
Partners Two, dated as of May 26, 1987 between
the Partnership and Waters Landing Two-Oxford
Limited Partnership, a Maryland limited partnership
("Oxford").
10B. Promissory Note dated May 26, 1987 from Oxford *
to the Partnership in the original principal
amount of $3,121,600.
10C. Joint Venture Interest Pledge and Security *
Agreement, dated as of May 26, 1987, between
the Partnership and Oxford.
10D. Joint Venture Agreement of Graham Road Joint *
Venture, dated as of June 30, 1987, between the
Partnership and Connell-Scott Ventures V.
10E. General Partnership Agreement of IBG Dahlia *
Associates, dated as of September 21, 1987,
between the Partnership and 20 Dahlia Partnership.
10F. General Partnership Agreement of Hewson University *
Associates, dated as of September 30, 1987, between
Hewson Properties, Inc. and the Partnership.
10G. General Partnership Agreement of Gateway 51 *
Partnership, dated as of December 21, 1987,
among M.O.R. Gateway 51 Associates Limited
Partnership, the Partnership and New England
Life Pension Properties IV; A Real Estate
Limited Partnership.
10H. Ground Lease dated January 23, 1988 between *
Nielson Properties, LTD., a California
limited partnership ("Landlord"), and Rodde
McNellis/Salinas, a California general partnership
("Tenant").
10I. Leasehold Indenture dated February 12, 1988 by *
Rodde McNellis/Salinas, Borrower, to Santa
Clara Land Title Company, Trustee, for New
England Pension Properties V, A Real Estate
Limited Partnership ("NEPP V"), Beneficiary.
</TABLE>
___________________________________________________________
* Previously filed and incorporated herein by reference.
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Number
- ------ ------- ------
<S> <C> <C>
10J. Promissory Note dated February 12, 1988 in *
the principal amount of $1,800,000 by Rodde
McNellis/Salinas to NEPP V.
10K. Pledge of Note and Security Agreement dated as *
of February 12, 1988 by and between Rodde
McNellis/Salinas and NEPP V.
10L. R/M Salinas Predevelopment Agreement dated *
February 12, 1988 by and between NEPP V and
Rodde McNellis/Salinas.
10M. Joint Venture Agreement of Rancho Road *
Associates II dated as of March 7, 1988 by
and between NEPP V and Commerce Centre
Partners.
10N. Pledge and Security Agreement dated as of *
March 7, 1988 by and between Commerce Centre
Partners and NEPP V.
10O. General Partnership Agreement of Muller Brea *
Associates dated as of April 29, 1988 between
Tar Partners and the Registrant.
10P. Lakewood Associates General Partnership *
Agreement dated August, 1988 between EW
Lakewood Limited Partnership, Copley Pension
Properties VI; A Real Estate Limited Partnership
and Registrant.
10Q. First Amendment to Rancho Road Associates II Joint *
Venture Agreement dated as of May 31, 1988 by and
between the Registrant and Commerce Centre Partners.
10R. First Amendment to Pledge and Security Agreement *
dated as of May 31, 1988 by and between the
Registrant and Commerce Centre Partners.
10S. Joint Venture Agreement of R/M Salinas Venture dated *
as of February 1, 1989 by and between New England
Pension Properties V; A Real Estate Limited
Partnership and Rodde McNellis/Salinas.
</TABLE>
____________________________________________________________
* Previously filed and incorporated herein by reference.
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Number
- ------ ------- ------
<S> <C> <C>
10T. First Amendment to Joint Venture Agreement of R/M *
Salinas Venture dated as of February 1, 1989
by and between New England Pension Properties V;
A Real Estate Limited Partnership and Rodde
McNellis/Salinas.
10U. Amended and Restated General Partnership Agreement *
of Gateway 51 Partnership dated as of April 20,
1989 between M.O.R. Gateway 51 Associates
Limited Partnership, New England Life Pension
Properties IV; a Real Estate Limited Partnership
and New England Pension Properties V; a Real
Estate Limited Partnership.
10V. Second Amendment to Pledge and Security *
Agreement dated as of June 20, 1990 by and
between Commerce Centre Partners, a
California general partnership and
Registrant.
10W. Second Amendment to Rancho Road Associates *
II Joint Venture Agreement dated as of June 20,
1990 by and between Registrant and Commerce
Centre Partners.
10X. Second Amendment to Joint Venture Agreement of *
R/M Salinas Venture dated as of July 20, 1990 by
and between the Registrant and Rodde McNellis/
Salinas.
10Y. Agreement for Dissolution, Distribution and *
Winding-up of Muller Brea Associates dated
May 31, 1991 by and between TAR Partners, a
California partnership, and the Registrant.
10Z. Property Management Agreement effective as of *
May 31, 1991 by and between TAR Partners, a
California general partnership, and the Registrant.
10AA. Asset Contribution Agreement by and among Evans *
Withycombe Residential, Inc., a Maryland Corporation,
and Evans Withycombe Residential, L.P., a Delaware
limited partnership, as Purchasers and Lakewood
Associates, an Arizona limited Partnership composed of
Registrant, Copley Pension Properties VI and EW
Lakewood L.P., as Sellers dated June 9, 1994.
</TABLE>
____________________________________________________________
* Previously filed and incorporated herein by reference.
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Number
- ------ ------- ------
<S> <C> <C>
10BB. Purchase and Sale Agreement between Graham Road *
Joint Venture and Prentiss Properties Atlanta Industrial
Properties, L.P., dated June 17, 1994.
10CC. $1,750,000 note secured by Deed of Trust between *
the Partnership, as Lender, and Nielsen Properties, Ltd,
as Borrower dated August 1, 1995.
10DD. Third Amendment to Agreement of Lease dated August *
1, 1995 by and between Nielsen Properties, Ltd., a
California limited partnership, R/M Salinas Venture,
a California general partnership, and R/M Salinas, L.P.,
a California limited partnership.
10EE. R/M Salinas L.P. Limited Partnership Agreement dated *
August 1, 1995 between Rodde McNellis/Salinas,
a California general partnership and Registrant.
10FF. Limited Partnership Agreement of IBG Dahlia Associates *
dated September 1, 1995 between Registrant and
20 Dahlia Partnership, a California limited partnership.
27. Financial Data Schedule
</TABLE>
__________________________________________________________________
* Previously filed and incorporated herein by reference.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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
Date: March 30, 1998 By: /s/ Wesley M. Gardiner, Jr.
-------------------------------
Wesley M. Gardiner, Jr.
President of the Managing General
Partner
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
President
/s/ Wesley M. Gardiner, Jr. Chief Executive Officer March 30, 1998
- ------------------------------
Wesley M. Gardiner, Jr. and Director
Vice President
/s/ Pamela J. Herbst and Director March 30, 1998
- ------------------------------
Pamela J. Herbst
Vice President
/s/ J. Grant Monahon and Director March 30, 1998
- ------------------------------
J. Grant Monahon
/s/ James J. Finnegan Vice President March 30, 1998
- ------------------------------
James J. Finnegan
Treasurer and Principal
Financial and
/s/ Karin J. Lagerlund Accounting Officer March 30, 1998
- ------------------------------
Karin J. Lagerlund
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,303,386
<SECURITIES> 4,362,030
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,665,416
<PP&E> 32,123,406
<DEPRECIATION> 0
<TOTAL-ASSETS> 42,788,822
<CURRENT-LIABILITIES> 177,236
<BONDS> 1,106,292
0
0
<COMMON> 0
<OTHER-SE> 41,505,294
<TOTAL-LIABILITY-AND-EQUITY> 42,788,822
<SALES> 16,477,473
<TOTAL-REVENUES> 17,197,366
<CGS> 1,949,211
<TOTAL-COSTS> 1,949,211
<OTHER-EXPENSES> 2,094,235
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,153,920
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,153,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,153,920
<EPS-PRIMARY> 158.07
<EPS-DILUTED> 158.07
</TABLE>
