-----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, LcSOPPsFgOr0kAgbrSzjVsMrsRIpFPr+t32xR7TtqgoMDAL8dRIFJXc+mgPb2wiD /ggN+7AmzGigbFlQcPe5sg== 0000927016-99-001114.txt : 19990326 0000927016-99-001114.hdr.sgml : 19990326 ACCESSION NUMBER: 0000927016-99-001114 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990325 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-K405 SEC ACT: SEC FILE NUMBER: 000-17808 FILM NUMBER: 99572356 BUSINESS ADDRESS: STREET 1: 225 FRANKLIN ST 25TH FL CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6175781200 10-K405 1 FORM 10-K405 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, 1998 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 PART I 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, 1998, 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. 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 entitles 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 to apply proceeds of financings or sales received from the joint venture to payments of the interest on and principal of the 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 thereon. Development had been postponed due to the excess supply of apartment units in the Germantown area. During 1995, after receiving a number of feasibility studies of alternative development proposals for the site, the Managing General Partner determined development would not yield a sufficient return to justify the investment risk. 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 expected to be concluded during the second quarter of 1999. 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, 1998, 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, 1998, 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 capital contributed to the joint venture by the Partnership and the Affiliate. As of December 31, 1998, 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 obtained full control over the business of the joint venture 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, 1998 the property was 100% 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. During the last quarter of 1998, a 53,000 square-foot build-to-suit facility was completed on Partnership land. A 10-year lease for this facility commenced in November 1998. As of December 31, 1998, the other existing building was also 100% leased to two tenants. 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. Bridgeport Management then sub-leased the space from 20th Century Plastics until June 1, 1998, at which time it vacated the premises. 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, 1998, the Partnership had contributed $11,211,380 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, 1998, the buildings were 98% 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. 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. 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 the Partnership's properties.
- ---------------------------------------------------------------------------------------------------------------------------------- Estimated Number of 1998 Tenants Annual Annual with Square Feet Contract Realty 10% or More Name(s) of of Each Rent Lease Renewal Line of Business Property Taxes of GLA Tenant(s) Tenant Per Square Expiration Options of Principal Tenants Foot - ----------------------------------------------------------------------------------------------------------------------------------- Office/R&D Bldgs in Columbia, MD $211,966 4 Wiltel 27,480 $13.19 12/2007 Two for Telecommunications 5 Years Columbia National 45,951 $11.07 8/2004 Two for Home Mortgages EVI, Inc. 38,225 $12.01 2/2006 5 Years Environmental/Testing One for 5 Years Avnet 21,991 $ 9.97 10/1999 One for Telecommunications 5 Years Land in Germantown, MD $ 18,191 N/A N/A N/A N/A N/A N/A N/A Warehouse Bldg. in Fontana, CA $ 84,960 3 M.W. Kasch 157,460 $ 3.54 5/2003 One for Distribution 5 Years Controlled Warehouse 35,000 $ 3.78 10/2001 None Distribution General Garden and Pet 86,100 $ 3.05 6/2004 One for 5 Years Distribution Industrial Bldg. in Brea, CA 20th Century Plastics (two $117,540 2 leases) 218,520 $ 3.73 4/1999 and Two for Plastics Manuf./ 3/2004 5 Years Assembler Nature's Best 52,750 $ 5.04 12/2008 Two for Health Food 5 Years Distributor Shopping Ctr in Salinas, CA $137,569 2 Food Maxx 51,008 $ 7.30 8/2010 Three for Supermarket 5 Years Ross Dress for Less 17,068 $11.03 1/2001 Three for Apparel Retailer 5 Years - ----------------------------------------------------------------------------------------------------------------------------------
The following table sets forth for each of the last five years the gross leasable area, occupancy rates, rental revenue, and net effective rent for the Partnership's properties:
- -------------------------------------------------------------------------------------------------- Property Gross Leasable Year-End Rental Net Effective Area Occupancy Revenue Rent Recognized ($/sf/yr)* - -------------------------------------------------------------------------------------------------- Office/ R&D Buildings in Columbia, MD 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 1998 188,649 100% $2,328,501 $12.34 Land in Germantown, MD 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 1998 N/A N/A N/A N/A Warehouse Building in Fontana, CA 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 1998 278,220 100% $1,196,456 $ 4.30 Industrial Building in Brea, CA 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 1998** 271,520 100% $1,211,235 $ 4.46 Shopping Center in Salinas, CA 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 1998 125,247 98% $1,818,936 $14.97 - --------------------------------------------------------------------------------------------------
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. ** Rental revenue from the new building is annualized. Following is a schedule of lease expirations for each of the next ten years for the Partnership's properties based on the annual contract rent in effect at December 31, 1998:
- -------------------------------------------------------------------------------------------------- TENANT AGING REPORT - -------------------------------------------------------------------------------------------------- Property # of Lease Total Total Percentage of Expirations Square Feet Annual Contract Gross Annual Rent Rental* - ------------------------------------------------------------------------------------------------- Office/R&D Buildings in Columbia, MD 1999 2 32,570 $387,685 15% 2000 1 14,825 $180,611 8% 2001 0 0 $0 0% 2002 2 14,787 $214,003 10% 2003 0 0 $0 0% 2004 2 60,932 $711,192 31% 2005 0 0 $0 0% 2006 1 38,225 $459,023 20% 2007 1 27,480 $362,598 16% 2008 0 0 $0 0% Land in Germantown, MD 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 2008 N/A N/A N/A N/A Warehouse Building in Fontana, CA 1999 0 0 $0 0% 2000 0 0 $0 0% 2001 1 35,000 $132,300 13% 2002 0 0 $0 0% 2003 1 157,460 $610,236 59% 2004 1 86,100 $291,600 28% 2005 0 0 0 0% 2006 0 0 $0 0% 2007 0 0 $0 0% 2008 0 0 $0 0% - -------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------- Industrial Building in Brea, CA 1999 1 65,944 $245,316 22% 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 53% 2005 0 0 $0 0% 2006 0 0 $0 0% 2007 0 0 $0 0% 2008 1 52,750 $267,120 25% Shopping Center in Salinas, CA 1999 4 5,150 $80,301 5% 2000 7 18,513 $440,140 27% 2001 8 35,148 $565,283 34% 2002 0 0 $0 0% 2003 2 4,322 $78,792 5% 2004 0 0 $0 0% 2005 0 0 $0 0% 2006 0 0 $0 0% 2007 0 0 $0 0% 2008 0 0 $0 0% - -------------------------------------------------------------------------------------------------
* Does not include expenses paid by tenants. Note: N/A denotes that the disclosure is not applicable based on the nature of the property. 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:
- ----------------------------------------------------------------------------------------------------------------------------- Rate of Life Accumulated Entity / Property Tax Basis Depreciation Method in years Depreciation - ----------------------------------------------------------------------------------------------------------------------------- Office/Research and Development Buildings, Columbia, MD - ------------------------------------- Land Improvements $ 94,022 N/A 150% DB 15 $ 40,586 Land Improvements 3,955,863 2.56% SL 39 147,059 Building & Improvements 7,829,962 3.18% SL 31.5 2,152,425 ----------- ---------- Total Depreciable Assets 11,879,847 2,340,070 Warehouse Building, Fontana, CA - ------------------------------------- Building & Improvements 5,333,698 2.50% SL 40 1,109,294 ----------- ---------- Total Depreciable Assets 5,333,698 1,109,294 Industrial Building, Brea, CA - ------------------------------------- Building & Improvements 7,976,123 3.18% SL 31.5 2,567,957 Building Improvements 2,695,217 2.56% SL 39 107,868 ----------- ---------- Total Depreciable Assets 10,671,340 2,675,825 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 20,168 Building & Improvements 9,157,310 3.18% SL 31.5 2,263,222 ----------- ---------- Total Depreciable Assets 9,463,178 2,283,390 Total Depreciable Assets $37,348,063 $8,408,579 ----------- ---------- - -----------------------------------------------------------------------------------------------------------------------------
SL= Straight Line DB= Declining Balance 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 North Orange County industrial market. The North Orange County market, which represents 43% of the Orange County market, includes 2,492 industrial buildings totaling approximately 104 million square feet. New industrial supply in the Orange County market totaled approximately 3.9 million square feet, up from 3.7 million square feet at year-end 1997. Demand for industrial space increased approximately 2.7% during 1998, compared to a 6.7% increase in 1997. Year-end 1998 industrial vacancy increased to 7.2% from 6.5% at year-end 1997. Brea continues to be a desirable industrial location due to its close proximity to Los Angeles County and the central portion of Orange County. 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 is the focus of most major retailers. Santa Rita Plaza is in the heart of the Salinas retail core, however, it must compete for tenants with power centers such as the Northridge Mall (1.2 million square feet), the Harden Ranch Plaza (680,000 square feet) and the recently constructed Westridge Center (652,000 square feet). Office/Research and Development Buildings in Columbia, Maryland - --------------------------------------------------------------- The property is located within the Howard County R&D submarket. Employment in Howard County increased approximately 6.9% over 1997. Due to the limited availability of space in the marketplace, tenants are moving from Washington, DC to the Baltimore suburbs in search of space that will accommodate their future growth needs. The Columbia flex submarket contains approximately seven million square feet of space and had 4.9% vacancy at year-end 1998. Approximately 110,000 square feet of new R&D product came on the Columbia market during the year. Rents for the Columbia flex market ranged between $9.50 and $11.00 per square foot during 1998. Warehouse Building in Fontana, California - ----------------------------------------- The property is located within the Inland Empire metropolitan industrial market, which consists of approximately 21.8 million square feet of space. Riverside's economy continues to expand, as part of the area's strength has been derived from population migration out of Los Angeles and Orange Counties. During 1998, employment expanded approximately 4%, and for the first time since 1990 the jobless rate dipped below 6%. Year-end 1998 industrial vacancy was 7.8%, a slight increase from 7.5% at year-end 1997. 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. 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, 1998, there were 12,281 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 1998 or distributed after year end with respect to 1998 to the Limited Partners as a group totaled $4,0156,393. 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 exceeded net income in 1998 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. Item 6. Selected Financial Data -----------------------
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 12/31/98 12/31/97(1) 12/31/96 12/31/95(2) 12/31/94(3) ------------- ------------- ------------- ------------- ------------- Revenues $ 5,174,753 $17,197,366 $ 7,716,609 $ 5,522,086 $ 6,096,743 Net Income $ 2,175,480 $13,153,920 $ 3,392,534 $ 2,248,715 $ 3,375,406 Net Income per Weighted Average Limited Partnership Unit $ 26.17 $ 158.07 $ 40.72 $ 26.96 $ 40.42 Total Assets $40,737,607 $42,788,822 $59,590,134 $60,535,231 $64,530,075 Total Cash Distributions per Limited Partnership Unit outstanding for the entire period, including amounts distributed after year end with respect to such year $ 48.78 $ 366.45 $ 55.44 $ 77.36 $ 87.44
(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. 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, 1998. 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, 1998, the Partnership had $7,220,155 in cash and cash equivalents, of which $735,899 was used for cash distributions to partners on January 28, 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 or cash distributions to partners will be cash generated by the Partnership's invested cash and cash equivalents and real estate investments. Quarterly distributions of cash from operations relating to 1998 were made at the annualized rate of 5.75% on the adjusted capital contribution of $616. A special distribution from operating reserves of $1,109,457 was also made in 1998. Quarterly distributions of cash from operations relating to 1997 were made at the annualized rate of 6.25% on the adjusted capital contribution of $924 for the first and second quarter, of $832 for the third quarter, and on the weighted average adjusted contribution of $748 for the fourth quarter. 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 $124,302 and $96,937 at December 31, 1998 and 1997, respectively. Through December 31, 1998 the Partnership had repurchased and retired 1,063 limited partnership units for an aggregate cost of $942,188. The carrying value of real estate investments in the financial statements at December 31, 1998 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, 1998, the appraised value of certain investments exceeded the related carrying values by an aggregate of approximately $4,306,000, and the remaining investments had carrying values which exceeded their appraised values by a total of approximately $235,000. 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. 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 borned by AEW Capital Management and the property managers. 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, the 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, which was originally structured as a joint venture with a real estate development/management firm and an affiliate of the Partnership, has been restructured whereby the Partnership and the affiliate of the Partnership obtained full control over the business of joint venture effective January 1, 1998. Operating Factors As mentioned above, 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 100% at December 31, 1998, an increase from both 98% at December 31, 1997 and 94% at December 31, 1996. 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. Three leases totalling 41,451 square feet or approximately 22% of the space expire during 1999. One tenant that currently occupies 8,781 square feet of this space has signed a letter of intent to extend its lease for another three years and one tenant that currently occupies 21,991 square feet of this space has exercised its renewal option to lease for another five years. 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 at the time 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 expected to be concluded during the second quarter of 1999. As mentioned above, 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% at December 31, 1996. 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. 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 98% at December 31, 1998, an increase from 95% at December 31, 1997 and consistent with 98% at December 31, 1996. Although occupancy is strong at this time, leases for another 12% of the space will expire during 1999. Renewals for these leases are being actively pursued at this time. Investment Results ------------------ Interest on short-term investments and cash equivalents decreased by approximately $231,000 in 1998 as compared to 1997 as a result of lower average investment balances due to the distribution of the sales proceeds from University Business Park and the Palms Business Center that were received in May 1997 and October 1997, respectively. Interest on short-term investments and cash equivalents increased by approximately $115,000 in 1997 as compared to 1996 as a result of higher average investment balances due to the temporary investment of proceeds from these 1997 sales. 1998 Compared to 1997 Real estate operations decreased overall by approximately $692,000 between 1998 and 1997. This decrease is due to the fact that there are no 1998 operating results from both University Business Park and the Palms Business Center because they were sold during 1997. 1997 operating results included approximately $317,000 and $789,000 of partial-year operations from University Business Parks and Palms Business Center. These decreases were offset by increases in operating results during 1998 at all four operating investments of the portfolio. Operations at Puente Street increased by approximately $113,000 as a result of a new lease at the property that commenced in early November, coupled with lower litigation expenses and lower parking lot repairs. Operating results at the Dahlia property increased by approximately $186,000, due primarily to the receipt of $175,000 (including interest) from a bankrupt tenant. Operating results at the Columbia Gateway Corporate Park increased by approximately $97,000 due to higher occupancy, higher tenant reimbursements (due to a 1997 adjustment), an increase in straight-line rental income as a result of a new lease at the property, and also due to the 1997 abandonment of tenant improvements. Operating results at Santa Rita Plaza also increased slightly by approximately $66,000, primarily due to higher occupancy and late charges at the property, off set by lower interest income and higher depreciation expense. Cash flow from operations decreased by approximately $560,000 between 1998 and 1997. This decrease is primarily due to the decrease in operating results discussed above. 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 (partial year operations in 1997 versus full year operations in 1998). 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. 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. 1998 Compared to 1997 The Partnership management fee decreased due to a decrease in distributable cash flow from operations as a result of the sale of two assets in 1997. General and administrative expenses decreased by approximately $43,000 or 14%, primarily due to lower legal expenses and lower out-of-pocket expenses (expenses incurred due to special investor letters and mailings). 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. 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. Item 7A. Quantitative and Qualitative Disclosures about Market Risk ---------------------------------------------------------- The Partnership was not party to derivative financial instruments or derivative commodity instruments at or during the year ended December 31, 1998. The Partnership's only other financial instruments (as defined by Financial Accounting Standards Board Statement No. 107) are its cash and cash equivalents for which cost approximates market value. 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, 1998.
Name Position(s) with the Managing General Partner Age - ---- --------------------------------------------- --- J. Christopher Meyer, III President, Chief Executive Officer and Director 51 Pamela J. Herbst Vice President and Director 43 J. Grant Monahon Vice President and Director 53 James J. Finnegan Vice President 38 Karin J. Lagerlund Treasurer and Principal Financial and Accounting Officer 34
(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: J. Christopher Meyer, III. joined AEW Real Estate Advisors, Inc. ("AEW") , formerly known as Copley Real Estate Advisors, Inc., in 1987 and has been an officer at AEW since then. AEW is a subsidiary of AEW Capital Management, L.P. ("AEW Capital Management"), of which he is also a Director. Prior to joining AEW, he had senior positions with several regional real estate development concerns, including Chief Financial Officer of Ford Motor Land Development Corporation. His career at AEW has included asset management responsibility for the company's Eastern Region, and portfolio manager for several commingled real estate funds. Presently, Mr. Meyer has overall responsibility for all the partnerships advised by AEW whose securities are registered under the Securities and Exchange Act of 1934, and for several commingled funds. He received a B.A. in Statistics from Princeton University and an MBA from the Wharton School of the University of Pennsylvania. Pamela J. Herbst directs AEW Capital Management's Institutional Real Estate 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 the predecessor of 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 Institutional Real Estate 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, 1998. Cash distributions to General Partners include amounts distributed after year end with respect to 1998.
Amount of Compensation and Receiving Entity Type of Compensation Reimbursement - ---------------- -------------------- ----------------- General Partners Share of Distributable Cash $ 40,560 AEW Real Estate Advisors, Inc. Management Fees and 418,138 (formerly known as Copley Real Reimbursement of Expenses Estate Advisors, Inc.) New England Securities Corporation Servicing Fees plus out-of- pocket reimbursements 20,852 ---------- TOTAL $ 479,550 ==========
For the year ended December 31, 1998 the Partnership allocated $23,701 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, 1998. 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, 1998. (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. 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 and Financial Statements Index No. 2 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. None New England Pension Properties V; A Real Estate Limited Partnership Financial Statements * * * * * * * * December 31, 1998 NEW ENGLAND PENSION PROPERTIES V; --------------------------------- A REAL ESTATE LIMITED PARTNERSHIP --------------------------------- INDEX TO FINANCIAL STATEMENTS AND SCHEDULE ------------------------------------------ Report of Independent Accountants Financial Statements: Balance Sheets - December 31, 1998 and 1997 Statements of Operations - Years ended December 31, 1998, 1997 and 1996 Statements of Partners' Capital (Deficit) - Years ended December 31, 1998, 1997 and 1996 Statements of Cash Flows - Years ended December 31, 1998, 1997 and 1996 Notes to Financial Statements Financial Statement Schedule: Schedule III - Real Estate and Accumulated Depreciation at December 31, 1998, 1997 and 1996 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, 1998, 1997 and 1996, 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, 1998 and 1997, and the results of its operation and its cash flows for each of the three years in the period ended December 31, 1998, 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 Santa Rita Plaza, Palms Business Center III and IV, Puente Street, University Business Park and Dahlia, wholly-owned properties, for the year ended December 31, 1996 which statements reflect aggregated operating income of $4,400,379. We also did not audit the financial statements of the Partnership's Columbia Gateway Corporate Park joint venture investee for the year ended December 31, 1996 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 for the year ended December 31, 1996. 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 for Santa Rita Plaza, Palms Business Center III and IV, Puente Street, University Business Park, and Dahlia for the year ended December 31, 1996, and equity in joint venture income for Columbia Gateway Corporate Park for the year ended December 31, 1996 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, 1998, 1997 and 1996 provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP - ------------------------------ Boston, Massachusetts March 9, 1999 NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP BALANCE SHEETS
December 31, ------------------------------------------- 1998 1997 ---------------- ----------------- Assets Real estate investments: Property, net $ 27,181,777 $ 27,287,367 Joint ventures 4,843,933 4,836,039 --------------- ---------------- 32,025,710 32,123,406 Property held for disposition, net 1,491,742 - Cash and cash equivalents 7,220,155 6,303,386 Short-term investments - 4,362,030 --------------- ---------------- $ 40,737,607 $ 42,788,822 =============== ================ Liabilities and Partners' Capital Accounts payable $ 122,505 $ 129,158 Accrued management fees 36,391 48,078 Deferred management and disposition fees 1,251,998 1,106,292 --------------- ---------------- Total liabilities 1,410,894 1,283,528 --------------- ---------------- Commitments to fund real estate investments Partners' capital (deficit): Limited partners ($616 per unit; 160,000 units authorized, 82,228 and 82,336 issued and outstanding, respectively) 39,354,545 41,511,957 General partners (27,832) (6,663) --------------- ---------------- Total partners' capital 39,326,713 41,505,294 --------------- ---------------- $ 40,737,607 $ 42,788,822 =============== ================
(See accompanying notes to financial statements) NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS
Year ended December 31, ----------------------------------------------------------------- 1998 1997 1996 ------------------ ------------------ ------------------- Investment Activity Property rentals $ 4,103,360 $ 5,775,821 $ 6,566,057 Interest income on loan to ground lessor 142,492 180,821 185,379 Property operating expenses (949,126) (1,559,211) (1,775,678) Ground rent expense (390,000) (390,000) (390,000) Depreciation and amortization (1,003,722) (1,315,384) (1,403,481) --------------- -------------- --------------- 1,903,004 2,692,047 3,182,277 Equity in joint venture earnings 440,440 343,841 360,214 -------------- -------------- -------------- Total real estate operations 2,343,444 3,035,888 3,542,491 Gain on sales of property - 10,176,990 - -------------- -------------- ------------------ Total real estate activity 2,343,444 13,212,878 3,542,491 Interest on cash equivalents and short-term investments 488,461 719,893 604,959 Total investment activity 2,831,905 13,932,771 4,147,450 -------------- -------------- -------------- Portfolio Expenses Management fee 401,138 481,045 456,846 General and administrative 255,287 297,806 298,070 -------------- -------------- -------------- 656,425 778,851 754,916 -------------- -------------- -------------- Net Income $ 2,175,480 $ 13,153,920 $ 3,392,534 ============== ============== ============== Net income per weighted average limited partnership unit $ 26.17 $ 158.07 $ 40.72 ============== ============== ============== Cash distributions per limited partnership unit outstanding for the entire year $ 51.61 $ 368.62 $ 53.73 ============== ============== ============== Weighted average number of limited partnership units outstanding during the year 82,309 82,385 82,486 ============== ============== ==============
(See accompanying notes to financial statements) NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
Year ended December 31, -------------------------------------------------------------------------------------------- 1998 1997 1996 ----------------------------- ------------------------------- --------------------------- General Limited General Limited General Limited Partners Partners Partners Partners Partners Partners Balance at beginning of year $ (6,663) $ 41,511,957 $ (87,745) $ 58,916,206 $ (76,904) $ 60,073,461 Repurchase of limited partnership units - (61,776) - (67,176) - (84,104) Cash distributions (42,924) (4,249,361) (50,457) (30,359,454) (44,766) (4,431,760) Net income 21,755 2,153,725 131,539 13,022,381 33,925 3,358,609 ---------- --------------- -------------- ---------- ----------- -------------- Balance at end of year $ (27,832) $ 39,354,545 $ (6,663) $ 41,511,957 $ (87,745) $ 58,916,206 ========== =============== ============== =============== ============ ==============
(See accompanying notes to financial statements) NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS
Year ended December 31, --------------------------------------------------------------- 1998 1997 1996 ----------------- ------------------- ------------------- Cash flows from operating activities: Net income $ 2,175,480 $ 13,153,920 $ 3,392,534 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,003,722 1,315,384 1,403,481 Gain on sales of property - (10,176,990) - Increase in deferred lease commissions (224,692) (106,319) (126,625) Equity in joint venture earnings (440,440) (343,841) (360,214) Cash distributions from joint ventures 430,606 228,086 335,500 Decrease (increase) in investment income receivable 64,217 19,093 (36,107) Decrease (increase) in property working capital (208,803) (333,224) 350,402 Payment of deferred management fee - (447,745) - Increase in operating liabilities 127,366 179,100 222,999 ---------------- ------------------ ------------------ Net cash provided by operating activities 2,927,456 3,487,464 5,181,970 ---------------- ------------------ ------------------ Cash flows from investing activities: Net proceeds from sale of investments - 25,026,889 - Deferred disposition fees - 790,500 - Investments in property (2,027,390) (249,274) (334,973) Repayments received on loan to ground lessor 72,951 66,860 61,278 Decrease in short-term investments, net 4,297,813 2,951,755 568,036 ---------------- ------------------ ------------------ Net cash provided by investing activities 2,343,374 28,586,730 294,341 ---------------- ------------------ ------------------ Cash flows from financing activities: Distributions to partners (4,292,285) (30,409,911) (4,476,526) Repurchase of limited partnership units (61,776) (67,176) (84,104) ---------------- ------------------ ------------------- Net cash used in financing activities (4,354,061) (30,477,087) (4,560,630) ---------------- ------------------- ------------------- Net increase in cash and cash equivalents 916,769 1,597,107 915,681 Cash and cash equivalents: Beginning of year 6,303,386 4,706,279 3,790,598 ---------------- ------------------ ------------------ End of year $ 7,220,155 $ 6,303,386 $ 4,706,279 ================ ================== ==================
Supplemental Disclosure of 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 totaled $7,122,323. (See accompanying notes to financial statements) 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. Accordingly, at December 31, 1997, AEW Capital Management, L.P. was wholly owned by NEIC Operating Partnership, L.P. AEW is a subsidiary of AEW Capital Management L.P. Effective April 1, 1998, NEIC changed its name to Nvest, L.P. and NEIC Operating Partnership, L.P. changed its name to Nvest Companies, 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 $124,302 and $96,937 at December 31, 1998 and 1997, respectively. As of December 31, 1998 and 1997, the Partnership had cumulatively repurchased and retired 1,063 units and 955 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 ($17,000 in 1998, $17,004 in 1997, and $15,740 in 1996). Acquisition fees were based on 2% of gross proceeds from the offering. Disposition fees are limited to the lesser of 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 at both December 31, 1998 and 1997, 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 $20,852, $19,601 and $18,733, in 1998, 1997 and 1996, 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 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, 1998 and 1997, the appraised values of certain investments exceeded their related carrying values by an aggregate of approximately $4,306,000 and $3,600,000, respectively, and the appraised values of the remaining investments were less than their related carrying values by an aggregate of approximately $235,000 and $40,000, 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, all short-term investments were in commercial paper with less than six months remaining to maturity. Deferred Disposition Fees ------------------------- As discussed in Note 1, 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. Segment Data ------------ Effective January 1, 1998, the Partnership adopted Financial Accounting Standards Board Statement No. 131, "Disclosure about Segments on an Enterprise and Related Information" (FAS 131). Based on the criteria established in FAS 131, the Managing General Partner has determined that the Partnership operates in one operating segment which is investing in real estate properties which are domiciled in the United States of America. 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 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:
Original December 31, Investment/ Rate of Ownership -------------------------- Location Return/Interest Interest 1998 1997 - -------------- ----------------- ---------- ------------ ------------ Columbia Gateway Corporate Park Columbia, MD 10.5% 15.25% $5,517,497 $5,517,497
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 had 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 obtained additional 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: $1,524,603 in 1999; $827,454 in 2000; $726,557 in 2001; $736,016 in 2002 and $745,758 in 2003. Summarized Financial Information - -------------------------------- The following summarized financial information is presented in the aggregate for Columbia Gateway Corporate Park joint venture : Assets and Liabilities ----------------------
December 31, ----------------------------- 1998 1997 -------------- ------------- Assets Real property, at cost less accumulated depreciation of $1,829,627 and $1,506,022, respectively $ 15,881,624 $ 15,781,399 Other 742,813 739,025 ------------ ------------ 16,624,437 16,520,424 Liabilities 264,579 192,816 ------------ ------------ Net assets $ 16,359,858 $ 16,327,608 ============ ============ Result of Operations -------------------- Year ended December 31, ------------------------------------------------------ 1998 1997 1996 ------ ------ ------ Revenue Rental income $ 2,312,692 $ 1,953,704 $ 1,941,458 Other income 15,809 20 18,163 ----------------- --------------- ----------------- 2,328,501 1,953,724 1,959,621 ----------------- --------------- ----------------- Expenses Operating expenses 560,829 461,780 482,749 Depreciation and amortization 323,605 364,595 295,841 ----------------- --------------- ----------------- 884,434 826,375 778,590 ----------------- --------------- ----------------- Net Income $ 1,444,067 $ 1,127,349 $ 1,181,031 ================= =============== =================
Liabilities and expenses exclude amounts owed and attributable to the Partnership and its affiliate 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. 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 originally included an industrial building, together with a parking lot and storage area in Brea, California. During the fourth quarter of 1998, a 53,000 square-foot build-to-suit facility was completed on Partnership land. The Managing General Partner determined that the carrying value of the original 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 original building and improvements are being depreciated over 30 years beginning June 1, 1991. The depreciation of the new building is also over a 30-year period, commencing during the fourth quarter of 1998. 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. 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 expected to be concluded during the second quarter of 1999. The following is a summary of the Partnership's four investments in property:
December 31, ----------------------------------- 1998 1997 --------------- ---------------- Land $ 5,953,466 $ 7,445,208 Buildings and improvements 24,964,136 22,936,747 Accumulated depreciation (3,664,791) (2,805,296) Impairment provision (3,500,000) (3,500,000) Loan to ground lessor 1,524,916 1,597,866 Lease commissions and other assets, net 1,576,883 1,388,391 Accounts receivable 551,538 515,182 Accounts payable (224,371) (290,731) Property held for disposition 1,491,742 - --------------- ---------------- $ 28,673,519 $ 27,287,367 =============== =================
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: $3,340,099 in 1999; $3,179,588 in 2000; $2,714,784 in 2001; $2,412,203 in 2002; $2,070,795 in 2003 and $4,840,237 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:
Year ended December 31, --------------------------------------------------------- 1998 1997 1996 ---------------- ----------------- ----------------- Net income per financial statements $ 2,175,480 $ 13,153,920 $ 3,392,534 Timing differences: Joint venture earnings 77,713 48,147 87,002 Property rentals 34,398 (11,223) (77,972) Expenses 147,427 (258,142) 230,364 Depreciation and amortization (64,957) (51,506) (61,668) Investment valuation allowances - - - Gain on sale - (614,595) - ----------------- ------------------ ---------------- Taxable income $ 2,370,061 $ 12,266,601 $ 3,570,260 ================= ================= ==============
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 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, 1998 were made on January 28, 1999 in the aggregate amount of $735,899 ($8.86 per limited partnership unit). NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION AT DECEMBER 31, 1998
Initial Cost to the Partnership ------------------------------------------------------------------- Lease Comm. Buildings & & Other Other Net Description Land Improvements Capital Costs Assets (Liabilities) - ------------------------------------------------- ------------------------------------------------------------------- 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 ============================================================ 15.25% interest in Columbia Gateway Corporate Park ------------------------------------------------------------ Partnership. Develop and operate office/R & D bldgs. in Columbia, MD. ------------------------------------------------------------ Total Joint Ventures ------------------------------------------------------------
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) - ------------------------------------------------ ----------------------------------------------------------------------------------- Brea, CA. - Puente Street (See Note A) $2,709,518 ($409,228) ($1,273,000) ($2,900,000) $1,244,996 Las Vegas, NV. - Palms Business Center III and IV (See Note A) 65,573 0 0 0 (75,052) Fontana, CA. - Dahlia (See Note A) 194,540 0 0 0 (75,501) Salinas, CA. - Santa Rita Plaza (See Note A) 398,005 0 0 0 209,571 Germantown, MD - Waters Landing II (See Note A) 0 0 0 (600,000) 0 Phoeniz, AZ - University Business Park 121,932 0 0 0 113,041 ================================================================================== Total Wholly-Owned Property $3,489,568 ($409,228) ($1,273,000) ($3,500,000) $1,417,055 ================================================================================== 15.25% interest in Columbia Gateway Corporate Park See Note B ------------------------------------------------------- Partnership. Develop and operate office/R & D bldgs. in Columbia, MD. ------------------------------------------------------- Total Joint Ventures -------------------------------------------------------
Balance at end of year --------------------------------------------------------------------------------- Accumulated Buildings & Other Disposal Depreciation Description Land Improvements Net Assets of Asset Total and Amortization - -------------------------------------------------- --------------------------------------------------------------------------------- Brea, CA. - Puente Street (See Note A) $3,985,498 $7,942,991 $1,244,377 $0 $13,172,866 $(2,031,636) Las Vegas, NV. - Palms Business Center III and IV (See Note A) 2,195,482 7,849,554 253,750 (10,298,786) 0 0 Fontana, CA. - Dahlia (See Note A) 1,367,969 5,666,418 497,827 0 7,532,214 (851,415) Salinas, CA. - Santa Rita Plaza (See Note A) 0 8,454,727 2,369,508 0 10,824,235 (1,475,835) Germantown, MD - Waters Landing II (See Note A) 1,491,742 0 0 0 1,491,742 0 Phoeniz, AZ - University Business Park 1,834,354 3,846,230 184,970 (5,854,206) 11,348(1) 0 ================================================================================ Total Wholly-Owned Property $10,875,04 $33,759,920 $4,550,432 ($16,152,992) $33,032,405 $(4,358,886) ================================================================================ 15.25% interest in Columbia Gateway Corporate Park $4,843,933 N/A -------------------------------------------------------------------------------- Partnership. Develop and operate office/R & D bldgs. in Columbia, MD. -------------------------------------------------------------------------------- Total Joint Ventures $4,843,933 --------------------------------------------------------------------------------
Date of Date Depreciable Description Construction Acquired Life - --------------------------------------------------- ------------- -------------- -------------- 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 15.25% interest in Columbia Gateway Corporate Park Phase I - 1990 12/21/87 50 Years Partnership. Develop and operate Phase II - Under Construction office/R & D bldgs. in Columbia, MD. Total Joint Ventures
(1) Represents remaining working capital at 12/31/98 57 NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP - --------------------------------------------------------------------- NOTE A TO SCHEDULE III
Balance Conversion to Additions to Additons/ Change in as of Wholly-Owned Lease Deletions to Write Down Property Working Disposal Description 12/31/95 Property Commissions Property of Property Capital of Asset - -------------------------------------- ----------- ------------- ------------ ------------ ----------- ---------------- ---------- Brea, CA. - Puente Street $10,992,487 $0 $58,848 $0 $0 $42,589 $0 Las Vegas, NV. - Palms Business Center III and IV 10,213,358 0 18,908 16,908 0 63,181 0 Fontana, CA. - Dahlia 7,376,162 0 1,860 0 0 (290,044) 0 Salinas, CA. - Santa Rita Plaza 10,421,259 0 27,868 253,368 0 (156,141) 0 Germantown, MD - Waters Landing II 0 1,491,742 0 0 0 0 0 Phoenix, AZ - University Business Park 0 5,630,581 19,141 64,697 0 (71,265) 0 ----------- ------------- ------------ ------------ ----------- -------------- ----------- Total Wholly-Owned Property $39,003,266 $7,122,323 $126,625 $334,973 $0 ($411,680) $0 =========== ============= ============ ============ =========== ============== ============ 12/31/95 1996 1996 12/31/96 Balance Accumulated Depreciation Depreciation Accumulated as of Depreciation and and Amortization and Amortization Disposal Depreciation and Description 12/31/96 Amortization Expense Subtotal of Asset Amortization - ----------------------------------- -------- ---------------- ---------------- ---------------- -------- --------------- Brea, CA. - Puente Street $11,093,924 $1,267,937 ($248,209) $1,516,146 $0 $1,516,146 Las Vegas, NV. - Palms Business Center III and IV 10,312,355 395,448 (346,036) $741,484 0 $741,484 Fontana, CA. - Dahlia 7,087,978 42,908 (258,685) $301,593 0 $301,593 Salinas, CA. - Santa Rita Plaza 10,546,354 238,920 (365,154) $604,074 0 $604,074 Germantown, MD - Waters Landing II 1,491,742 0 0 $0 0 $0 Phoenix, AZ - University Business Park 5,643,154 0 (183,456) $183,456 0 $183,456 ----------- ------------ ------------- ------------------ --------- --------------- Total Wholly-Owned Property $46,175,507 $1,945,213 ($1,401,540) $3,346,753 $0 $3,346,753 =========== ============ ============= ================== ========= =============== - ----------------------------------------------------------------------------- Balance Conversion to Additions to Additions/ Change in as of Wholly-Owned Lease Deletions to Write Down Property Working Disposal Description 12/31/96 Property Commissions Property of Property Capital of Asset - ------------------------------------ ----------- ------------- ------------ ------------ ----------- ---------------- ---------- Brea, CA. - Puente Street $11,093,924 $0 $88,482 $261,312 $0 ($19,065) $0 Las Vegas, NV. - Palms Business Center III and IV 10,312,355 0 5,011 0 0 (23,572) (10,298,786) Fontana, CA. - Dahlia 7,087,978 0 0 6,727 0 30,597 0 Salinas, CA. - Santa Rita Plaza 10,546,354 0 5,273 (76,000) 0 94,266 0 Germantown, MD - Waters Landing II 1,491,742 0 0 0 0 0 0 Phoenix, AZ - University Business Park 5,643,154 0 7,553 57,235 0 184,137 (5,854,206) ------------ ------------- ------------ ------------ ----------- --------------- -------------- Total Wholly-Owned Property $46,175,507 $0 $106,319 $249,274 $0 $266,363 ($16,152,992) ============ ============= ============ ============ =========== ================ ============= 12/31/96 1997 1997 12/31/97 Balance Accumulated Depreciation Depreciation Accumulated as of Depreciation and and Amortization and Amortization Disposal Depreciation and Description 12/31/97 Amortization Expense Subtotal of Asset Amortization - ----------------------------------- ---------- ---------------- ---------------- ---------------- ---------------- ----------------- Brea, CA. - Puente Street $11,424,653 $1,516,146 ($248,140) $1,764,286 $1,764,286 Las Vegas, NV. - Palms Business Center III and IV (4,992)(1) 741,484 (290,629) $1,032,113 (1,032,113) 0 Fontana, CA. - Dahlia 7,125,302 301,593 (258,789) $560,382 560,382 Salinas, CA. - Santa Rita Plaza 10,569,893 604,074 (428,362) $1,032,436 1,032,436 Germantown, MD - Waters Landing II 1,491,742 0 0 $0 0 Phoenix, AZ - University Business Park 37,873(1) 183,456 (87,524) $270,980 (270,980) 0 ----------- ------------- -------------- --------------- ---------------- --------------- Total Wholly-Owned Property $30,644,671 $3,346,753 ($1,313,444) $4,660,197 ($1,303,093) $3,357,104 =========== ============= ============== ================ ================ ================ (1) Represents remaining working capital at 12/31/97 66860Salinas ground lease, in investing activity on c/f ----------------- $333,223 subtotal 333,224increase in w/c per c/f -1 variance ================ - --------------------------------------------------------------------------------------------------------------------------------- Balance Conversion to Additions to Additions/ Change in as of Wholly-Owned Lease Deletions to Write Down Property Working Disposal Description 12/31/97 Property Commissions Property of Property Capital of Asset - -------------------------------------------------- ------------- ------------ ------------ ----------- ---------------- ---------- Brea, CA. - Puente Street $11,424,653 $0 $73,988 $1,671,440 $0 $2,785 $0 Las Vegas, NV. - Palms Business Center III and IV (4,992) 0 0 0 0 4,992 0 Fontana, CA. - Dahlia 7,125,302 0 129,939 187,813 0 89,160 0 Salinas, CA. - Santa Rita Plaza 10,569,893 0 20,765 168,137 0 65,440 0 Germantown, MD - Waters Landing II 1,491,742 0 0 0 0 0 0 Phoenix, AZ - University Business Park 37,873 0 0 0 0 (26,525) 0 ----------- ------------ ------------ ------------- ----------- ---------------- --------- Total Wholly-Owned Property $30,644,471 $0 $224,692 $2,027,390 $0 $135,852 $0 ============ ============ ============ ============= =========== ================ ========= 12/31/97 1998 1998 12/31/98 Balance Accumulated Depreciation Depreciation Accumulated as of Depreciation and and Amortization and Amortization Disposal Depreciation and Description 12/31/98 Amortization Expense Subtotal of Asset Amortization - ----------------------------------- ---------- ---------------- ---------------- ---------------- ---------------- ----------------- Brea, CA. - Puente Street $13,172,866 $1,764,286 ($276,350) $2,031,636 $0 $2,031,636 Las Vegas, NV. - Palms Business Center III and IV 0 0 0 0 0 0 Fontana, CA. - Dahlia 7,532,214 560,382 (291,033) 851,415 0 851,415 Salinas, CA. - Santa Rita Plaza 10,824,235 1,032,436 (443,399) 1,475,835 0 1,475,835 Germantown, MD - Waters Landing II 1,491,742 0 0 0 0 0 Phoenix, AZ - University Business Park 11,348(1) 0 0 0 0 0 ----------- ---------- ------------ ---------- -------------- ---------- Total Wholly-Owned Property $33,032,405 $3,357,104 ($1,001,782) $4,358,886 $0 $4,358,886 ============ ========== ============ ========== ============== ==========
(1) Represents remaining working capital at 12/31/98 72,951 Salinas ground lease, in investing activity on c/f -------- $208,803 subtotal 208,803 increase in w/c per c/f 0 variance ======== NEW ENGLAND PENSION PROPERTIES V; A REAL ESTATE LIMITED PARTNERSHIP - --------------------------------- NOTE B TO SCHEDULE III
CASH BALANCE CASH EQUITY IN 1996 AMORTIZATION DISTRIBUTED PERCENT OF AS OF INVESTMENTS IN INCOME/ OF DEFERRED FROM WRITE-DOWN DESCRIPTION OWNERSHIP 12/31/95 JOINT VENTURES (LOSS) ACQUISITION FEES JOINT VENTURE OF PROPERTY - ------------------------------- ---------- ----------- -------------- ---------- ----------------- ------------- ----------- Waters Landing II (2) 60% $ 1,491,742 $0 $ 0 $0 $ 0 $0 University Business Park (1) 60% 5,630,581 0 0 0 0 0 Columbia Gateway Corporate Park 15.25 4,699,450 0 360,214 (1,941) (335,500) 0 ----------- -------------- --------- ----------------- ------------- ----------- $11,821,773 $0 $360,214 $(1,941) ($335,500) $0 =========== ============== ========= ================= ============= =========== CONVERSION TO BALANCE WHOLLY-OWNED AS OF PROPERTY 12/31/96 ------------- ---------- Waters Landing II (2) ($1,491,742) $ 0 University Business Park (1) (5,630,581) 0 Columbia Gateway Corporate Park 0 4,722,223 ----------- ---------- ($7,122,323) $4,722,223 ========= =============
(1) Effective January 1, 1996 converted to wholly-owned property. (2) Effective April 1, 1996 converted to wholly-owned property.
CASH BALANCE CASH EQUITY IN 1996 AMORTIZATION DISTRIBUTED PERCENT OF AS OF INVESTMENTS IN INCOME/ OF DEFERRED FROM WRITE-DOWN DESCRIPTION OWNERSHIP 12/31/96 JOINT VENTURES (LOSS) ACQUISITION FEES JOINT VENTURE OF PROPERTY - ------------------------------- ---------- ----------- -------------- ---------- ----------------- ------------- ----------- Columbia Gateway Corporate Park 15.25% 4,722,223 0 343,841 (1,939) (228,086) 0 ----------- -------------- ---------- ----------------- ------------- ----------- $4,722,223 $0 $343,841 $(1,939) ($228,086) $0 =========== ============== ========== ================= ============= ========== CONVERSION TO BALANCE WHOLLY-OWNED AS OF DESCRIPTION PROPERTY 12/31/97 - ------------------------------- ------------- ---------- Columbia Gateway Corporate Park 0 4,836,039 ------------- ---------- $0 $4,836,039 ============= ==========
CASH BALANCE CASH EQUITY IN 1998 AMORTIZATION DISTRIBUTED PERCENT OF AS OF INVESTMENTS IN INCOME/ OF DEFERRED FROM WRITE-DOWN DESCRIPTION OWNERSHIP 12/31/97 JOINT VENTURES (LOSS) ACQUISITION FEES JOINT VENTURE OF PROPERTY - ------------------------------- ---------- ----------- -------------- ---------- ----------------- ------------- ----------- Columbia Gateway Corporate Park 15.25% 4,836,039 0 440,440 (1,940) (430,606) 0 ----------- -------------- ---------- ----------------- ------------- ----------- $4,836,039 $0 $440,440 $(1,940) ($430,606) $0 =========== ============== ========== ================= ============= ========== CONVERSION TO BALANCE WHOLLY-OWNED AS OF DESCRIPTION PROPERTY 12/31/98 - ------------------------------- ------------- ---------- Columbia Gateway Corporate Park 0 4,843,933 ------------- ---------- $0 $4,843,933 ============= ==========
FINANCIAL STATEMENTS INDEX NO. 2 Auditor's Report and Financial Statements of Gateway 51 Partnership Independent Auditor's Report of Wolpoff and Company, LLP Balance Sheet - December 31, 1998 and 1997 Statement of Income - For the Years ended December 31, 1998, 1997 and 1996 Statement of Partners' Capital - For the Years ended December 31, 1998, 1997 and 1996 Statement of Cash Flows - For the Years ended December 31, 1998, 1997 and 1996 Notes to Financial Statements 37 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) FINANCIAL REPORT DECEMBER 31, 1998 38 GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- CONTENTS -------- DECEMBER 31, 1998 ----------------- INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS 1 FINANCIAL STATEMENTS Balance Sheet 2 - 3 Statement of Income 4 Statement of Partners' Capital 5 Statement of Cash Flows 6 Notes to Financial Statements 7 - 10 INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION 11 SUPPLEMENTARY INFORMATION Schedule of Partners' Capital 12 Schedule of Changes in Partners' Capital - Income Tax Basis 13
39 [LETTERHEAD OF WOLPOFF & COMPANY, LLP] To the Partners Gateway 51 Partnership (A Maryland General Partnership) Columbia, Maryland INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS ---------------------------------------------------- We have audited the balance sheet of Gateway 51 Partnership (A Maryland General Partnership) as of December 31, 1998 and 1997, and the related statements of income, partners' capital, and cash flows for each of the three years in the period ended December 31, 1998, 1997, and 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gateway 51 Partnership (A Maryland General Partnership) as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, 1997, and 1996, in conformity with generally accepted accounting principles. /s/ Wolpoff & Company, LLP -------------------------- WOLPOFF & COMPANY, LLP Baltimore, Maryland January 13, 1999 40 GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- BALANCE SHEET ------------- ASSETS ------
December 31, --------------------------------------- 1998 1997 ----------------- ----------------- PROPERTY, AT COST - Note 1 Land $ 4,966,738 $ 4,966,738 Building and Improvements 11,892,943 11,614,717 Preliminary Development Costs 42,247 42,247 Deferred Costs - Note 3 809,323 663,719 ----------------- ----------------- 17,711,251 17,287,421 Less Accumulated Depreciation and Amortization 1,984,627 1,630,022 ----------------- ----------------- PROPERTY, NET 15,726,624 15,657,399 ----------------- ----------------- OTHER ASSETS Cash and Cash Equivalents - Note 1 421,833 558,136 ----------------- ----------------- Receivables From Tenants Rents and Expense Billings 106,282 -0- Deferred Rent Receivable - Note 1 202,228 73,447 Allowance for Doubtful Accounts (95,174) -0- ----------------- ----------------- 213,336 73,447 ----------------- ----------------- Prepaid Expenses 107,644 107,442 ----------------- ----------------- TOTAL OTHER ASSETS 742,813 739,025 ----------------- ----------------- $ 16,469,437 $ 16,396,424 ================= =================
_______________ The notes to financial statements are an integral part of this statement. - 2 - GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- BALANCE SHEET ------------- LIABILITIES AND PARTNERS' CAPITAL ---------------------------------
December 31, --------------------------------------- 1998 1997 ----------------- ----------------- LIABILITIES Accounts Payable and Accrued Expenses $ 67,398 $ 34,935 Tenant Security Deposits 150,000 15,193 Prepaid Tenant Reimbursements 47,181 142,688 ----------------- ----------------- TOTAL LIABILITIES 264,579 192,816 PARTNERS' CAPITAL - Notes 1 and 2 16,204,858 16,203,608 ----------------- ----------------- $ 16,469,437 $ 16,396,424 ================= =================
_______________ The notes to financial statements are an integral part of this statement. - 3 - GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- STATEMENT OF INCOME -------------------
Year Ended December 31, -------------------------------------------------------- 1998 1997 1996 ---------------- ---------------- ---------------- REVENUE - Notes 1 and 5 Gross Rent Potential $ 1,943,734 $ 1,775,359 $ 1,684,997 Less Vacancies and Free Rent 72,135 80,444 108,412 ---------------- ---------------- ---------------- Net Rental Income 1,871,599 1,694,915 1,576,585 Expense Reimbursements From Tenants 441,093 258,789 364,873 Other Income 15,809 20 18,163 ---------------- ---------------- ---------------- TOTAL REVENUE 2,328,501 1,953,724 1,959,621 ---------------- ---------------- ---------------- OPERATING EXPENSES Real Property Taxes 211,009 211,967 207,855 Building and Grounds Maintenance 144,004 142,678 157,314 Bad Debts 95,174 -0- -0- Management Fees - Note 3 62,338 61,036 57,542 Utilities 26,165 27,297 24,890 General and Administrative 17,966 12,229 25,856 Insurance 4,173 6,573 9,292 ---------------- ---------------- ---------------- TOTAL OPERATING EXPENSES 560,829 461,780 482,749 ---------------- ---------------- ---------------- OPERATING INCOME 1,767,672 1,491,944 1,476,872 ---------------- ---------------- ---------------- ADJUSTMENTS TO ARRIVE AT NET INCOME Depreciation and Amortization (354,605) (315,417) (302,585) Abandonment of Tenant Improvements - Note 1 -0- (80,178) (24,256) ---------------- ---------------- ---------------- (354,605) (395,595) (326,841) ---------------- ---------------- ---------------- NET INCOME - Note 4 $ 1,413,067 $ 1,096,349 $ 1,150,031 ================ ================ ================
_______________ The notes to financial statements are an integral part of this statement. - 4 - GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- STATEMENT OF PARTNERS' CAPITAL ------------------------------
Year Ended December 31, ------------------------------------------------------------- 1998 1997 1996 ------------------ ----------------- ----------------- CAPITAL CONTRIBUTIONS - Note 2 Prior Years $ 20,267,826 $ 20,267,826 $ 20,267,826 ------------------ ----------------- ----------------- CAPITAL PLACEMENT FEE - Notes 1 and 2 Prior Years (202,678) (202,678) (202,678) ------------------ ----------------- ----------------- DISTRIBUTIONS Prior Years (8,796,724) (8,048,893) (6,948,893) Current Year (1,411,817) (747,831) (1,100,000) ------------------ ----------------- ----------------- (10,208,541) (8,796,724) (8,048,893) ------------------ ----------------- ----------------- ACCUMULATED INCOME Prior Years 4,935,184 3,838,835 2,688,804 Current Year 1,413,067 1,096,349 1,150,031 ------------------ ----------------- ----------------- 6,348,251 4,935,184 3,838,835 ------------------ ----------------- ----------------- TOTAL PARTNERS' CAPITAL $ 16,204,858 $ 16,203,608 $ 15,855,090 ================== ================= =================
_______________ The notes to financial statements are an integral part of this statement. - 5 - GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- STATEMENT OF CASH FLOWS -----------------------
Year Ended December 31, ------------------------------------------------- 1998 1997 1996 -------------- -------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $1,413,067 $1,096,349 $1,150,031 -------------- -------------- --------------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and Amortization 354,605 315,417 302,585 Abandonment of Tenant Improvements -0- 80,178 24,256 Change in Receivables From Tenants (139,889) 8,667 (41,033) Increase in Prepaid Expenses (202) (64,870) (6,302) Change in Accounts Payable and Accrued Expenses 32,463 (6,176) 16,526 Change in Prepaid Tenant Reimbursements (95,507) 142,688 -0- -------------- -------------- --------------- Total Adjustments 151,470 475,904 296,032 -------------- -------------- --------------- Net Cash Provided by Operating Activities 1,564,537 1,572,253 1,446,063 -------------- -------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES: Building and Improvement Costs (278,227) (359,189) (258,309) Leasing Costs (145,603) (116,524) (80,786) Increase in Tenant Security Deposits 134,807 12,784 -0- Decrease in Tenant Improvement Loans -0- 688 32,057 -------------- -------------- --------------- Net Cash Used by Investing Activities (289,023) (462,241) (307,038) -------------- -------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to Partners (1,411,817) (747,831) (1,100,000) -------------- -------------- --------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (136,303) 362,181 39,025 CASH AND CASH EQUIVALENTS, BEGINNING 558,136 195,955 156,930 -------------- -------------- --------------- CASH AND CASH EQUIVALENTS, ENDING $ 421,833 $ 558,136 $ 195,955 ============== ============== ===============
_______________ The notes to financial statements are an integral part of this statement. - 6 - GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 1998 ----------------- Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization ------------ Gateway 51 Partnership (A Maryland General Partnership) (the Partnership) was formed on December 21, 1987, under the Maryland Uniform Partnership Act. The agreement was amended and restated in 1989 to reflect changes in partner ownership percentages. The partnership agreement was amended and restated effective January 1, 1998, whereby M.O.R. Gateway 51, Limited Partnership (M.O.R.) transferred 34.055% and 14.945% to New England Life Pension Properties IV (NELPP IV) and New England Pension Properties V (NEPP V), respectively. Subsequently, NELPP IV transferred a 0.695% partnership interest, NEPP V transferred a 0.305% partnership interest, and M.O.R. transferred a 1% partnership interest to NE/Gateway 51 Limited Partnership (NE/Gateway), bringing the ownership as of January 1, 1998, to the following: NELPP IV 68.11% NEPP V 29.89% NE/Gateway 2.00% Property -------- The Partnership owns 21 acres of land in Howard County, Maryland. The property has been developed with six office/research buildings. Plans call for a seventh building with approximately 15,000 square feet of space. All property is recorded at cost. Information regarding the buildings is as follows:
Occupancy ------------------------------------ Square Date Placed Building Footage Into Service Tenants 12/31/98 12/31/97 12/31/96 - ------------ ------------ --------------- ---------------------- ----------- ----------- ---------- A 46,840 3/1/91 Multiple 100% 92% 92% B 21,991 9/1/90 AVNET 100% 100% 100% C 38,225 7/15/91 EVI, Inc. 100% 100% 100% F 35,812 2/1/92 Multiple 100% 100% 82% D-E 45,951 8/8/94 Columbia National 100% 100% 100% ------------ 188,819 100% 98% 94% ============
Carrying costs, operating expenses, and depreciation begin as a charge against operations on the date the buildings were placed into service. - 7 - Note 1 - During 1997, tenant improvements completed in prior years were (Cont.) demolished in order to build out the space for new tenants. The loss on abandonment of tenant improvements is calculated as follows: Cost $ 127,688 Accumulated Depreciation (47,510) -------------- Abandonment of Tenant Improvements $ 80,178 ==============
Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Cash and Cash Equivalents ------------------------- The Partnership considers all highly liquid debt instruments purchased with a maturity of 3 months or less to be cash equivalents. The majority of the Partnership's cash is held in financial institutions with insurance provided by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. Periodically during the year, the balance may have exceeded the FDIC insurance limitation. Depreciation ------------ Building costs are being depreciated using the straight-line method over the estimated useful lives of 50 years. Beginning in January 1998, the Partnership changed depreciation methods for tenant improvements. Tenant improvements are being depreciated using the straight-line method over the life of the tenants' lease; in prior years, the improvements were depreciated over 50 years. Rental Income ------------- Rental income for major leases is being recognized on a straight-line basis over the terms of the leases. The excess of the rental income recognized over the amount stipulated in the lease is shown as deferred rent receivable. Amortization ------------ Deferred costs are amortized as follows: Amortization Amount Period ------------- ---------------- Organization Costs $13,555 Complete Leasing Costs and Commissions 795,767 Lease Terms ------------- $809,322 ============= - 8 - Note 1 - Income Taxes ------------ (Cont.) Partnerships, as such, are not subject to income taxes. The partners are required to report their respective shares of partnership income and other tax items on their income tax returns (see Note 4). Capital Placement Fee --------------------- Costs incurred for arranging the Partnership's equity have been treated as a reduction of partners' capital (see Note 2). Note 2 - PARTNERS' CAPITAL Capital Investment ------------------ NELPP IV and NEPP V have agreed to provide equity of $14,598,000 and $6,402,000, respectively, totaling $21,000,000. As of December 31, 1998, 1997, and 1996, total capital contributions amounted to $20,267,826. Cumulative Priority Return -------------------------- NELPP IV and NEPP V are entitled to cumulative priority returns of 10.5%, compounded monthly on capital invested. The Partnership paid priority returns totaling $1,411,817, $747,831, and $1,100,000 during 1998, 1997, and 1996, respectively. As of December 31, 1998, 1997, and 1996, unpaid priority returns amounted to $10,855,114, $9,127,936, and $6,888,115, respectively. Capital Placement Fee --------------------- The Partnership incurred fees of $202,678 with Paine Webber Mortgage Finance, Inc. with respect to capital raised by the Partnership. This amount has been charged against partners' capital. Note 3 - RELATED PARTY TRANSACTIONS Management Fees --------------- The Partnership has entered into an agreement with Manekin Corporation, a related entity, to act as management agent for the property. The management agreement provides for a management fee equal to 3% of rent and tenant expense billings. Leasing Commissions ------------------- Leasing commissions in the amount of $145,603, $105,387, and $80,786 were paid to related parties during 1998, 1997, and 1996, respectively. - 9 - Note 4 - TAX ACCOUNTING Tax accounting differs from financial accounting as follows:
Current Year Prior Years Total --------------- --------------- --------------- Financial Income $1,413,067 $4,935,184 $6,348,251 Additional Depreciation (87,820) (757,466) (845,286) Lease-Up Period Items Capitalized for GAAP -0- 4,264 4,264 Allowance for Doubtful Accounts 95,174 -0- 95,174 Deferred Rent Receivable (128,781) (73,447) (202,228) Prepaid Property Taxes (956) (105,026) (105,982) Prepaid Tenant Reimbursements (95,507) 142,688 47,181 --------------- --------------- --------------- Taxable Income $1,195,177 $4,146,197 $5,341,374 =============== =============== ===============
Note 5 - LEASES The following is a schedule of future minimum lease payments to be received under noncancelable operating leases at December 31, 1998: Year Ending December 31, 1999 $1,524,603 2000 827,454 2001 726,557 2002 736,016 2003 745,758 --------------- $3,814,630 =============== - 10 - To the Partners Gateway 51 Partnership (A Maryland General Partnership) Columbia, Maryland INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION --------------------------------------------------------- Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information contained on pages 12 and 13 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the basic financial statements, and accordingly, we express no opinion on it. /s/ Wolpoff & Company, LLP -------------------------- WOLPOFF & COMPANY, LLP Baltimore, Maryland January 13, 1999 - 11 - GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- SCHEDULE OF PARTNERS' CAPITAL ----------------------------- YEAR ENDED DECEMBER 31, 1998 ----------------------------
NE/ M.O.R. 51 New England New England Gateway 51 Gateway Life Pension Pension Limited Limited Properties IV Properties V Partnership Partnership Total ---------------- --------------- ---------------- --------------- ---------------- OWNERSHIP PERCENTAGE Through December 31, 1997 34.75% 15.25% 0.00% 50.00% 100.00% ================ =============== ================ =============== ================ As of January 1, 1998 68.11% 29.89% 2.00% 0.00% 100.00% ================ =============== ================ =============== ================ CAPITAL CONTRIBUTIONS Prior Years $14,086,139 $ 6,181,687 $ -0- $ -0- $20,267,826 ---------------- --------------- ---------------- --------------- ---------------- CAPITAL PLACEMENT FEE Prior Years (106,427) (96,251) -0- -0- (202,678) ---------------- --------------- ---------------- --------------- ---------------- DISTRIBUTIONS - Note 2 Prior Years (5,969,698) (2,827,026) -0- -0- (8,796,724) Current Year (981,211) (430,606) -0- -0- (1,411,817) ---------------- --------------- ---------------- --------------- ---------------- (6,950,909) (3,257,632) -0- -0- (10,208,541) ---------------- --------------- ---------------- --------------- ---------------- ACCUMULATED INCOME Prior Years 3,429,956 1,505,228 -0- -0- 4,935,184 Current Year 982,082 430,985 -0- -0- 1,413,067 ---------------- --------------- ---------------- --------------- ---------------- 4,412,038 1,936,213 -0- -0- 6,348,251 ---------------- --------------- ---------------- --------------- ---------------- PARTNERS' CAPITAL, 12/31/98 $11,440,841 $ 4,764,017 $ -0- $ -0- $16,204,858 ================ =============== ================ =============== ================
_______________ See Independent Auditor's Report on Supplementary Information. - 12 - GATEWAY 51 PARTNERSHIP ---------------------- (A MARYLAND GENERAL PARTNERSHIP) -------------------------------- SCHEDULE OF CHANGES IN PARTNERS' CAPITAL - INCOME TAX BASIS ----------------------------------------------------------- YEAR ENDED DECEMBER 31, 1998 ----------------------------
NE/ M.O.R. 51 New England New England Gateway 51 Gateway Life Pension Pension Limited Limited Properties IV Properties V Partnership Partnership Total ---------------- --------------- ---------------- --------------- ---------------- OWNERSHIP PERCENTAGE Through December 31, 1997 34.75% 15.25% 0.00% 50.00% 100.00% ================ =============== ================ =============== ================ As of January 1, 1998 68.11% 29.89% 2.00% 0.00% 100.00% ================ =============== ================ =============== ================ CAPITAL CONTRIBUTIONS Prior Years $14,086,139 $ 6,181,687 $ -0- $ -0- $20,267,826 ---------------- --------------- ---------------- --------------- ---------------- CAPITAL PLACEMENT FEE Prior Years (106,427) (96,251) -0- -0- (202,678) ---------------- --------------- ---------------- --------------- ---------------- DISTRIBUTIONS - Note 2 Prior Years (5,969,698) (2,827,026) -0- -0- (8,796,724) Current Year (981,211) (430,606) -0- -0- (1,411,817) ---------------- --------------- ---------------- --------------- ---------------- (6,950,909) (3,257,632) -0- -0- (10,208,541) ---------------- --------------- ---------------- --------------- ---------------- ACCUMULATED INCOME Prior Years 2,883,779 1,262,418 -0- -0- 4,146,197 Current Year 830,648 364,529 -0- -0- 1,195,177 ---------------- --------------- ---------------- --------------- ---------------- 3,714,427 1,626,947 -0- -0- 5,341,374 ---------------- --------------- ---------------- --------------- ---------------- PARTNERS' CAPITAL, 12/31/98 $10,743,230 $ 4,454,751 $ -0- $ -0- $15,197,981 ================ =============== ================ =============== ================
_______________ See Independent Auditor's Report on Supplementary Information. - 13 - EXHIBIT INDEX -------------
Exhibit Page Number Number ------- ------ 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.
53 EXHIBIT INDEX -------------
Exhibit Page Number Number ------- ------ 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.
54 EXHIBIT INDEX -------------
Exhibit Page Number Number ------- ------ 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.
55 EXHIBIT INDEX -------------
Exhibit Page Number Number ------- ------ 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. 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
- ----------------------------------------------------------------- * Previously filed and incorporated herein by reference. 56 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 25, 1999 By: /s/ J. Christopher Meyer, III ----------------------------------- J. Christopher Meyer, III President of the Managing General Partner 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/ J. Christopher Meyer, III Chief Executive Officer March 25, 1999 - ----------------------------- and Director J. Christopher Meyer, III Vice President /s/ Pamela J. Herbst and Director March 25, 1999 - --------------------------- Pamela J. Herbst Vice President /s/ J. Grant Monahon and Director March 25, 1999 - --------------------------- J. Grant Monahon /s/ James J. Finnegan Vice President March 25, 1999 - --------------------------- James J. Finnegan Treasurer and Principal Financial and /s/ Karin J. Lagerlund Accounting Officer March 25, 1999 - --------------------------- Karin J. Lagerlund 60 EX-27 2 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1998 DEC-31-1998 7,220,155 0 0 0 0 7,220,155 33,517,452 0 40,737,607 158,896 1,251,998 0 0 0 39,326,713 40,737,607 4,686,292 5,174,753 1,339,126 1,339,126 1,660,147 0 0 2,175,480 0 2,175,480 0 0 0 2,175,480 26.17 26.17
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