<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------------------------------------------------------------
For Quarter Ended June 30, 1998 Commission File Number 0-17808
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2940131
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
225 Franklin Street, 25th Fl.
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
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Former name, former address and former fiscal year if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1998
PART I
FINANCIAL INFORMATION
----------------------
<PAGE>
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
ASSETS
Real estate investments:
Property, net $27,101,134 $27,287,367
Joint ventures 4,838,773 4,836,039
----------- -----------
31,939,907 32,123,406
Cash and cash equivalents 10,277,706 6,303,386
Short-term investments - 4,362,030
----------- -----------
$42,217,613 $42,788,822
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 89,017 $ 129,158
Accrued management fee 36,438 48,078
Deferred management and
disposition fees 1,179,170 1,106,292
----------- -----------
Total liabilities 1,304,625 1,283,528
----------- -----------
Commitments to fund real estate
investments
Partners' capital (deficit):
Limited partners ($616 per
unit; 160,000 units
authorized, 82,336
units issued and outstanding) 40,925,574 41,511,957
General partners (12,586) (6,663)
----------- -----------
Total partners' capital 40,912,988 41,505,294
----------- -----------
$42,217,613 $42,788,822
=========== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY
Property rentals $1,094,393 $2,013,800 $1,766,349 $3,398,150
Interest income on loan to
ground lessor 35,634 71,890 36,509 75,077
Property operating expenses (223,951) (480,720) (360,346) (797,142)
Ground rent expense (97,500) (195,000) (97,500) (195,000)
Depreciation and amortization (237,868) (473,293) (378,757) (762,227)
---------- ---------- ---------- ----------
570,708 936,677 966,255 1,718,858
Joint venture earnings 113,062 199,434 89,566 174,787
---------- ---------- ---------- ----------
Total real estate operations 683,770 1,136,111 1,055,821 1,893,645
Gain on sale of wholly-owned property - - 2,160,404 2,160,404
---------- ---------- ---------- ----------
Total real estate activity 683,770 1,136,111 3,216,225 4,054,049
Interest on cash equivalents
and short-term investments 133,195 268,071 186,073 337,283
---------- ---------- ---------- ----------
Total investment activity 816,965 1,404,182 3,402,298 4,391,332
---------- ---------- ---------- ----------
Portfolio Expenses
Management fee 72,877 145,754 118,849 237,753
General and administrative 73,958 141,638 83,578 155,867
---------- ---------- ---------- ----------
146,835 287,392 202,427 393,620
---------- ---------- ---------- ----------
Net Income $ 670,130 $1,116,790 $3,199,871 $3,997,712
========== ========== ========== ==========
Net income per weighted average
limited partnership unit $8.06 $13.43 $38.45 $48.03
========== ========== ========== ==========
Cash distributions per
limited partnership unit
outstanding for the entire
period $8.86 $20.55 $106.44 $120.30
========== ========== ========== ==========
Weighted average number of limited
partnership units outstanding
during the period 82,336 82,336 82,388 82,407
========== ========== ========== ==========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
---------------------- ---------------------- ---------------------- ----------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
-------- ----------- -------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
period $(11,918) $40,991,642 $(6,663) $41,511,957 $(91,307) $58,533,701 $(87,745) $58,916,206
Repurchase of
Limited partnership
Units - - - - - - - (29,944)
Cash
distributions (7,369) (729,497) (17,091) (1,692,005) (12,023) (8,769,927) (23,563) (9,912,351)
Net income 6,701 663,429 11,168 1,105,622 31,999 3,167,872 39,977 3,957,735
-------- ----------- -------- ----------- -------- ----------- -------- -----------
Balance at
end of period $(12,586) $40,925,574 $(12,586) $(40,925,574) $(71,331) $52,931,646 $(71,331) $52,931,646
======== =========== ======== =========== ======== =========== ======== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net cash provided by operating activities $ 1,630,404 $ 2,431,382
----------- -----------
Cash flows from investing activities:
Deferred disposition fees - 250,500
Investment in property (344,698) (124,871)
Decrease in short-term investments, net 4,362,030 2,292,204
Repayment of loan to ground lessor 35,680 32,702
Net proceeds from sale of property - 7,743,630
----------- -----------
Net cash provided by
investing activities 4,053,012 10,194,165
----------- -----------
Cash flows from financing activities:
Distributions to partners (1,709,096) (9,935,914)
Repurchase of limited partnership
units - (29,944)
----------- -----------
Net cash used in financing
activities (1,709,096) (9,965,858)
----------- -----------
Net increase in cash and
cash equivalents 3,974,320 2,659,689
Cash and cash equivalents:
Beginning of period 6,303,386 4,706,279
----------- -----------
End of period $10,277,706 $ 7,365,968
=========== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of June 30, 1998 and December 31, 1997 and the results of
its operations, its cash flows and partners' capital (deficit) for the interim
periods ended June 30, 1998 and 1997. These adjustments are of a normal
recurring nature.
See notes to financial statements included in the Partnership's 1997 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
NOTE 1 - ORGANIZATION AND BUSINESS
- ----------------------------------
New England Pension Properties V; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other entities intended to be exempt from federal
income tax. The Partnership commenced operations in May, 1987 and acquired the
five real estate investments it currently owns prior to the end of 1989. The
Partnership intends to dispose of its investments within eight to twelve years
of their acquisition, and then liquidate. The Partnership has engaged AEW Real
Estate Advisors, Inc. (the "Advisor") to provide asset management services.
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 $129,326 and $96,937 at June 30, 1998 and
December 31, 1997, respectively.
NOTE 2 - REAL ESTATE JOINT VENTURES
- -----------------------------------
Ownership of the Columbia Gateway Corporate Park joint venture has been
restructured to give the Partnership and its affiliate full control over the
business of the joint venture effective January 1, 1998.
<PAGE>
The following summarized financial information is presented in the
aggregate for the Partnership's remaining joint venture:
<TABLE>
<CAPTION>
Assets and Liabilities
----------------------
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation
of $1,634,771 and $1,506,022,
respectively $16,029,627 $15,781,399
Other 528,426 739,025
----------- -----------
16,558,053 16,520,424
Liabilities 218,298 192,816
----------- -----------
Net Assets $16,339,755 $16,327,608
=========== ===========
<CAPTION>
Results of Operations
----------------------
Six Months Ended June 30,
-------------------------
1998 1997
---------- --------
<S> <C> <C>
Revenue
Rental income $1,028,012 $940,529
---------- --------
1,028,012 940,529
---------- --------
Expenses
Operating expenses 245,180 238,506
Depreciation and amortization 128,950 128,950
---------- --------
374,130 367,456
---------- --------
Net income $ 653,882 $573,073
========== ========
</TABLE>
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliate on behalf of their financing arrangements with the
joint venture.
<PAGE>
NOTE 3 - PROPERTY
- -----------------
The following is a summary of the Partnership's four investments in property:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
-------------- ------------------
<S> <C> <C>
Land $ 7,445,208 $ 7,445,208
Building and improvements 23,281,444 22,936,747
Accumulated depreciation (3,208,891) (2,805,296)
Investment valuation allowance (3,500,000) (3,500,000)
Loan to ground lessor 1,562,186 1,597,866
Lease commissions and other
assets, net 1,318,804 1,388,391
Accounts receivable 463,235 515,182
Accounts payable (260,852) (290,731)
----------- -----------
$27,101,134 $27,287,367
=========== ===========
</TABLE>
NOTE 4 - SUBSEQUENT EVENT
- -------------------------
Distributions of cash from operations relating to the quarter ended June
30, 1998 were made on July 30, 1998 in the aggregate amount of $736,866 ($8.86
per limited partnership unit.)
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership completed its offering of limited partnership units in
December 1988. A total of 83,291 units were sold. The Partnership received
proceeds of $74,895,253, net of selling commissions and other offering costs,
which have been used for investment in real estate, for the payment of related
acquisition costs and for working capital reserves. The Partnership made nine
real estate investments, four of which have been sold: two in 1994 and two in
1997. As a result of the sales, capital of $31,646,076 has been returned to the
limited partners through June 30, 1998. The adjusted capital contribution was
reduced from $1,000 to $952 per unit in 1994, to $924 in 1995, and then to $616
in 1997.
At June 30, 1998, the Partnership had $10,277,706 in cash and cash
equivalents, of which $736,866 was used for cash distributions to partners on
July 30, 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 and cash distributions to partners will be cash generated by the
Partnership's invested cash and cash equivalents and real estate investments.
Distributions of cash from operations relating to the first two quarters of 1998
were made at the annualized rate of 5.75% on the adjusted capital contribution
of $616. Distributions of cash from operations relating to the first and second
quarters of 1997 were made at the annualized rate of 6.25% on the adjusted
capital contribution of $924. The distribution rate was decreased due to the
sale of properties in 1997.
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 $129,326 and $96,937 at June 30, 1998 and
December 31, 1997, respectively. Through June 30, 1998, 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
is at depreciated cost, or if the investment's carrying value is determined not
to be recoverable through expected undiscounted future cash flows, the carrying
value is reduced to estimated fair market value. The fair market value of such
investments is further reduced by the estimated cost of sale for properties held
for sale. Carrying value may be greater or less than current appraised value.
At June 30, 1998, the appraised values of certain investments exceeded their
related carrying values by an aggregate of $4,100,000, and the appraised values
of the remaining investments were less than their related carrying values by an
aggregate of $28,000. 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 Advisor and
independent appraisers. Because of the subjectivity inherent in the valuation
process, the estimated current appraised value may differ significantly from
that which could be realized if the real estate were actually offered for sale
in the marketplace.
<PAGE>
Results of Operations
- ---------------------
Puente Street, Santa Rita Plaza, Dahlia, and Waters Landing II are wholly-
owned properties. Columbia Gateway Corporate Park is structured as a joint
venture with an affiliate of the Partnership.
Operating Factors
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.
Overall occupancy at Columbia Gateway Corporate Park remained at 100%
during the second quarter of 1998, consistent with March 31, 1998 and up from
95% at June 30, 1997. Ownership of the Columbia Gateway Corporate Park joint
venture has been restructured to give the Partnership and its affiliate full
control over the business of the joint venture. This restructuring was
effective January 1, 1998. One lease is due to expire in October, 1998, but an
existing tenant has expressed an interest in exercising its right of first
refusal to expand into this space upon the lease expiration.
Occupancy at Puente Street has remained at 100% since the first quarter of
1994. Operations are stable and no leases are due to expire until April 1999.
As a result of a settlement of previous litigation, a former tenant of Puente
Street assigned its lease to the other existing tenant on February 1, 1998. The
former tenant sub-leased the space from the existing tenant until June 1, 1998,
at which time it vacated the premises. There was no material effect on the
Partnership's financial position or results of operations as a result of this
lease assignment. During 1997, negotiations were finalized for a 53,000 square-
foot build-to-suit facility to be built on Partnership land for a tenant of an
affiliated partnership. A 10-year lease will commence upon completion of the
building, which is scheduled for the fourth quarter of 1998.
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.
Occupancy at the Palms Business Center III and IV was 100% at June 30,
1997. The Palms Business Center III and IV was sold on October 24, 1997, and
the Partnership recognized a gain of $8,016,586. At the time of sale, the
property was 100% leased.
Occupancy at the Dahlia property remained at 100% during the second quarter
of 1998, where it has been since the first quarter of 1994. The lease of a
tenant that occupied approximately 30% of the space expired in May 1998 and has
been fully re-leased to two new tenants for 40-month and 72-month leases.
Occupancy at Santa Rita Plaza during the second quarter of 1998 was 97%, up
slightly from 96% at June 30, 1997. Although occupancy is strong at this time,
one lease of approximately 5% of the space expires in December, 1998 and the
tenant intends to vacate at that time.
Investment Activity
Interest on cash equivalents and short-term investments for the first six
months of 1998 decreased 20% compared to the same period of 1997 due to the
temporary investment of proceeds from the sale of University Business Park in
1997 and due to lower investment balances as a result of less cash generated by
real estate investments due to the sale of two such investments during 1997.
Real estate operating activity for the first six months of 1998 was
$1,136,111 compared to $1,893,645 for the same period in 1997. This decrease
<PAGE>
of approximately $758,000 is primarily due to the sales of University Business
Park and Palms Business Center III and IV during 1997.
Cash flow from operations decreased by approximately $801,000 between the
first six months of 1997 and 1998. This decrease is largely attributable to the
decrease in real estate operations discussed above.
Portfolio Expenses
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the managing general partner. General and administrative expenses
consist primarily of real estate appraisal, printing, legal, accounting and
investor servicing fees.
The Partnership management fee decreased between the first six months of
1998 and 1997 due to a decrease in distributable cash flow. General and
administrative expenses decreased 9% between the respective six-month periods
due primarily to lower accounting fees as a result of price negotiations and
lower appraisal expenses resulting from the sale of two assets in 1997.
<PAGE>
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1998
PART II
OTHER INFORMATION
-------------------
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: (27) Financial Data Schedule
b. Reports on Form 8-K: No current reports on Form 8-K
were filed during the quarter ended June 30, 1998.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
August 12, 1998
/s/ Wesley M. Gardiner, Jr.
-------------------------------
Wesley M. Gardiner, Jr.
President, Chief Executive Officer
and Director of Managing General Partner
Fifth Copley Corp.
August 12, 1998
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Fifth Copley Corp.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 10,277,106
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,277,706
<PP&E> 31,939,907
<DEPRECIATION> 0
<TOTAL-ASSETS> 42,217,613
<CURRENT-LIABILITIES> 125,455
<BONDS> 1,179,170
0
0
<COMMON> 0
<OTHER-SE> 40,912,988
<TOTAL-LIABILITY-AND-EQUITY> 42,217,613
<SALES> 2,285,124
<TOTAL-REVENUES> 2,553,195
<CGS> 675,720
<TOTAL-COSTS> 675,720
<OTHER-EXPENSES> 760,685
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,116,790
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,116,790
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,116,790
<EPS-PRIMARY> 13.43
<EPS-DILUTED> 13.43
</TABLE>
