-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EsfBNKbvTjUk6laamcivVehGsJrtfUtMlYBPXrOz3t+MukYUN6JA5mp1TY1iKSa3 hSTYh+aO+OlihqXd4ZLUKw== 0000927016-99-001975.txt : 19990514 0000927016-99-001975.hdr.sgml : 19990514 ACCESSION NUMBER: 0000927016-99-001975 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND PENSION PROPERTIES V CENTRAL INDEX KEY: 0000806028 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042940131 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17808 FILM NUMBER: 99620005 BUSINESS ADDRESS: STREET 1: 225 FRANKLIN ST 25TH FL CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6175781200 10-Q 1 FORM 10-Q 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 March 31, 1999 Commission File Number 0-17808 NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Massachusetts 04-2940131 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 225 Franklin Street, 25th Fl. Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 261-9000 - ---------------------------------------------------------------------------- Former name, former address and former fiscal year if changed since last report Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED MARCH 31, 1999 PART I FINANCIAL INFORMATION ---------------------- 2 BALANCE SHEETS
March 31, 1999 December 31, 1998 (Unaudited) (Audited) --------------- ------------------ ASSETS Real estate investments: Property, net $26,852,740 $27,181,777 Joint venture 4,841,226 4,843,933 ----------- ----------- 31,693,966 32,025,710 Property held for disposition, net 1,491,742 1,491,742 Cash and cash equivalents 7,284,092 7,220,155 ----------- ----------- $40,469,800 $40,737,607 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 99,705 $ 122,505 Accrued management fee 41,114 36,391 Deferred management and disposition fees 1,293,112 1,251,998 ----------- ----------- Total liabilities 1,433,931 1,410,894 ----------- ----------- Commitments to fund real estate investments Partners' capital (deficit): Limited partners ($616 per unit; 160,000 units authorized, 82,228 units issued and outstanding) 39,066,609 39,354,545 General partners (30,740) (27,832) ----------- ----------- Total partners' capital (deficit) 39,035,869 39,326,713 ----------- ----------- $40,469,800 $40,737,607 =========== ===========
(See accompanying notes to financial statements) 3 STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended March 31, --------------------------- 1999 1998 -------------- ---------- INVESTMENT ACTIVITY Property rentals $1,010,716 $ 919,407 Interest income on loan to ground lessor 34,094 36,256 Property operating expenses (268,217) (256,769) Ground rent expense (97,500) (97,500) Depreciation and amortization (287,620) (235,425) ---------- --------- 391,473 365,969 Joint venture earnings 100,259 86,372 ---------- --------- Total real estate operations 491,732 452,341 Interest on cash equivalents and short-term investments 103,652 134,876 ---------- --------- Total investment activity 595,384 587,217 ---------- --------- PORTFOLIO EXPENSES Management fee 82,228 72,877 General and administrative 68,101 67,680 ---------- --------- 150,329 140,557 ---------- --------- Net Income $ 445,055 $ 446,660 ========== ========= Net income per weighted average limited partnership unit $5.35 $5.37 ========== ========= Cash distributions per limited partnership unit outstanding for the entire period $8.86 $11.69 ========== ========= Weighted average number of limited partnership units outstanding during the period 82,336 82,336 ========== =========
(See accompanying notes to financial statements) 4 STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) (Unaudited)
Quarter Ended March 31, ----------------------------------------------- 1999 1998 ------------------------ --------------------- General Limited General Limited Partners Partners Partners Partners -------- ------------ -------- ----------- Balance at beginning of period $ (27,832) $39,354,545 $ (6,663) $41,511,957 Cash distributions (7,359) (728,540) (9,722) (962,508) Net income 4,451 440,604 4,467 442,193 -------- ------------ -------- ----------- Balance at end of period $ (30,740) $39,066,609 $(11,918) $40,991,642 ========= =========== ======== ===========
(See accompanying notes to financial statements) 5 SUMMARIZED STATEMENTS OF CASH FLOWS (Unaudited)
Quarter Ended March 31, ------------------------ 1999 1998 ---------- ----------- Net cash provided by operating activities $ 752,517 $ 624,690 ---------- ----------- Cash flows from investing activities: Investment in property 28,066 (32,076) Decrease in short-term investments, net - 4,362,030 Repayment of loan to ground lessor 19,253 17,646 ---------- ----------- Net cash provided by investing activities 47,319 4,347,600 ---------- ----------- Cash flows from financing activities: Distributions to partners (735,899) (972,230) Net increase in cash and cash equivalents 63,937 4,000,060 Cash and cash equivalents: Beginning of period 7,220,155 6,303,386 ---------- ----------- End of period $7,284,092 $10,303,446 ========== ===========
(See accompanying notes to financial statements) 6 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 March 31, 1999 and December 31, 1998 and the results of its operations, its cash flows and partners' capital (deficit) for the interim periods ended March 31, 1999 and 1998. These adjustments are of a normal recurring nature. See notes to financial statements included in the Partnership's 1998 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 $141,753 and $124,302 at March 31, 1999 and December 31, 1998, respectively. NOTE 2 - REAL ESTATE JOINT VENTURES - ----------------------------------- The following summarized financial information is presented in the aggregate for the Partnership's remaining joint venture:
Assets and Liabilities ---------------------- March 31, 1999 December 31, 1998 -------------- ----------------- Assets Real property, at cost less accumulated depreciation of $1,894,102 and $1,829,627, respectively $15,885,101 $15,881,624 Other 694,550 742,813 ----------- ----------- 16,579,651 16,624,437 Liabilities 227,084 264,579 ----------- ----------- Net Assets $16,352,567 $16,359,858 =========== ===========
7
Results of Operations --------------------- Quarter ended March 31, ----------------------- 1999 1998 ---------- ---------- Revenue Rental income $ 535,680 $ 471,279 ---------- ---------- 535,680 471,279 ---------- ---------- Expenses Operating expenses 142,496 123,616 Depreciation and amortization 64,475 64,475 ---------- ---------- 206,971 188,091 ---------- ---------- Net income $ 328,709 $ 283,188 ========== ==========
Liabilities and expenses exclude amounts owed and attributable to the Partnership and its affiliate on behalf of their financing arrangements with the joint venture. NOTE 3 - PROPERTY - ----------------- The following is a summary of the Partnership's four investments in property:
March 31, 1999 December 31, 1998 --------------- ------------------ Land $ 5,953,466 $ 5,953,466 Building and improvements 24,936,070 24,964,136 Accumulated depreciation (3,911,942) (3,664,791) Investment valuation allowance (3,500,000) (3,500,000) Loan to ground lessor 1,505,662 1,524,916 Lease commissions and other assets, net 1,649,422 1,576,883 Accounts receivable 461,421 551,538 Accounts payable (241,359) (224,371) Property held for disposition 1,491,742 1,491,742 ----------- ----------- $28,344,482 $28,673,519 =========== ===========
8 NOTE 4 - SUBSEQUENT EVENT - ------------------------- Distributions of cash from operations relating to the quarter ended March 31, 1999 were made on April 29, 1999 in the aggregate amount of $831,416 ($10.01 per limited partnership unit.) 9 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 March 31, 1999. The adjusted capital contribution was reduced to $952 from $1,000 per unit in 1994, to $924 in 1995, and then to $616 in 1997. At March 31, 1999, the Partnership had $7,284,092 in cash and cash equivalents, of which $831,416 was used for cash distributions to partners on April 29, 1999; 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 quarter of 1999 were made at the annualized rate of 6.50% on the adjusted capital contribution of $616.00. Distributions of cash from operations relating to the first quarter of 1998 were made at the annualized rate of 5.75% on the adjusted capital contribution of $616.00. The distribution rate was increased due to the increase in rental rates at Dahlia and lower rental concessions at Gateway Corporate Park during the first quarter of 1999. 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 $141,753 and $124,302 at March 31, 1999, and December 31, 1998, respectively. Through March 31, 1999, the Partnership repurchased and retired 1,063 limited partnership units for an aggregate cost of $867,485. 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 March 31, 1999, the appraised values of certain investments exceeded their related carrying values by an aggregate of $4,458,000, and the appraised values of the remaining investments were less than their related carrying values by an aggregate of $89,000. 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. 10 Year 2000 Readiness Disclosure - ------------------------------ The Year 2000 Issue is a result of computer programs being written using two digits rather than four to define the applicable year. 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 Partnership relies on AEW Capital Management L.P. ("AEW Capital Management"), the parent of AEW Real Estate Advisors, Inc., to generate financial information and to provide other services which are dependent on the use of computers. The Partnership has obtained assurances from AEW Capital Management that: . AEW Capital Management has developed a Year 2000 Plan (the "Plan") consisting of five phases: inventory, assessment, testing, remediation/repair and certification. . As of September 30, 1998, AEW Capital Management had completed the inventory and assessment phases of this Plan and had commenced the testing and remediation/repair of internal systems. . AEW Capital Management expects to conclude the internal testing, remediation/repair and certifications of its Plan no later than June 30, 1999. The Partnership also relies on joint venture partners and/or property managers to supply financial and other data with respect to its real properties. The Partnership is in the process of surveying these third party providers and assessing their compliance with Year 2000 requirements. To date, the Partnership is not aware of any problems that would materially impact its results of operations, liquidity or capital resources. However, the Partnership has not yet obtained written assurances that these providers would be Year 2000 compliant. The Partnership currently does not have a contingency plan in the event of a particular provider or system not being Year 2000 compliant. Such a plan will be developed if it becomes clear that a provider (including AEW Capital Management) is not going to achieve its scheduled compliance objectives by June 30, 1999. The inability of one of these providers to complete its Year 2000 resolution process could materially impact the Partnership. In addition, the Partnership is also subject to external forces that might generally affect industry and commerce, such as utility or transportation company Year 2000 compliance failures and related service interruptions. Given the nature of its operations, the Partnership will not incur any costs associated with Year 2000 compliance. All such costs are borne by AEW Capital Management and the property managers. 11 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 a real estate development/management firm and an affiliate of the Partnership. Operating Factors Overall occupancy at Columbia Gateway Corporate Park increased to 100% during the first quarter of 1998 and continued so through March 31, 1999. Ownership of the Columbia Gateway Corporate Park joint venture has been restructured whereby the Partnership and its affiliate obtained additional control over the business of the joint venture. This restructuring was effective January 1, 1998. Occupancy at Puente Street has been 100% since the first quarter of 1994. Operations will increase due to the completion of a 53,000 square-foot build-to- suit facility during the fourth quarter of 1998 on Partnership land. A 10-year lease for this facility commenced in November, 1998. The other lease at Puente Street is not due to expire until March, 2004. 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. In early November, 1998, a Purchase and Sale agreement was executed by the Partnership to sell the Waters Landing II investment. Although there can be no assurance that this sale will occur, it is anticipated to be concluded during the second quarter of 1999. Occupancy at the Dahlia property has been 100% since the first quarter of 1994. The lease of a tenant that had 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 dropped during the first quarter of 1999 to 91%, compared with 97% at March 31, 1998. Investment Activity Interest on cash equivalents and short-term investments for the first quarter of 1999 decreased $31,000 compared to the same period of 1998. This was in large part due to lower investment balances as a result of the operating cash flow reserve distribution in October, 1998. Real estate operations increased $39,391 between the first quarter of 1999 and the comparable quarter of 1998. This increase is primarily due to an increase in income at the Dahlia property from improved rental rates as well as an increase in joint venture earnings from Columbia Gateway Corporate Park due to a decrease in rent concessions. 12 Cash flow from operations increased approximately $128,000 between the first quarter of 1999 and 1998. This increase is largely attributable to the distribution of operating cash flow from Columbia Gateway Corporate Park as a result of the decrease in rent concessions. Portfolio Expenses The Partnership management fee is 9% of distributable cash flow from operations after any increase or decrease in working capital reserves as determined by the managing general partner. General and administrative expenses consist primarily of real estate appraisal, printing, legal, accounting and investor servicing fees. The Partnership management fee increased between the first quarter of 1998 and 1999 due to an increase in distributable cash flow. General and administrative expenses remained relatively unchanged between the first quarter of 1998 and 1999. 13 NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED MARCH 31, 1999 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 March 31, 1999. 14 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) May 13, 1999 /s/ J. Christopher Meyer, III ------------------------------- J. Christopher Meyer, III President, Chief Executive Officer and Director of Managing General Partner, Fifth Copley Corp. May 13, 1999 /s/ Karin J. Lagerlund -------------------------------- Karin J. Lagerlund Principal Financial and Accounting Officer of Managing General Partner, Fifth Copley Corp. 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1999 MAR-31-1999 7,284,092 0 0 0 0 7,284,092 33,185,708 0 40,469,800 140,819 1,293,112 0 0 0 39,035,869 40,469,800 1,145,069 1,248,721 365,717 365,717 437,949 0 0 445,055 0 445,055 0 0 0 445,055 5.35 5.35
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