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, 2001
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)
World Trade Center East
Two Seaport Lane, 16th Floor
Boston, Massachusetts 02210
(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
1
PART I
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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 has no employees. Services are performed for the
Partnership by the Managing General Partner and affiliates of the Managing
General Partner.
As of December 31, 2001, the Partnership had disposed of all its
real estate property investments. The Partnership plans to liquidate and
dissolve in 2002. The Partnership sold its last remaining asset in 2001, as
described below. The Partnership sold nine real estate investments between
1994 and 2001. The principal terms of these sales are set forth in the
following table:
Date Net Sale Distribution Distribution
Investment Sold Proceeds Per Unit Date
---------- ---- -------- -------- ----
Santa Rita Plaza 3/01 $8,311,296 $114.00(1) 4/01
Waters Landing II 2/00 $2,114,506 $24.00 3/00
Columbia Gateway Corporate Park 12/99 $5,891,032 $70.00 1/00
Dahlia 8/99 $9,723,207 $115.00 9/99
Puente Street 6/99 $11,211,554 $134.00 7/99
Palms Business Center III & IV 10/97 $17,823,259 $216.00 11/97
University Business Park 5/97 $7,994,130 $92.00 6/97
Lakewood 8/94 $4,297,367 $48.00(2) 9/94(2)
C.S. Graham 6/94 $3,720,076 $48.00(2) 9/94(2)
(1) The distribution per Unit consists of the sale proceeds as well as
payment of the note receivable and accrued interest thereon.
(2) The distributions per Unit relating to Lakewood and C.S. Graham were not
calculated individually and the $48.00 per Unit is an aggregate of the
proceeds from the two sales.
2
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 was characterized as Senior Capital and
$4,850,000 was characterized as Junior Capital. Through the date of sale, the
Partnership had contributed $11,263,539 to the capital of the joint venture.
The joint venture agreement entitled 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 was due and payable ten years after the date of the Partnership's
first investment of Senior Capital. It was anticipated that the Senior
Capital would be repaid in full in March 2001, upon the sale of the property.
The joint venture agreement also entitled 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 accrued and bore interest at the rate of
10.5% per annum, if sufficient cash was not available therefor. At such time
as the aggregate of accrued junior priority return payments totaled
$1,000,000, all junior priority return payments and the return on the accrued
junior priority return payments would thereafter be paid currently; provided,
however, that the $1,000,000 threshold was increased by each dollar of Junior
Capital which the Partnership elected not to contribute to fund its return.
The Junior Capital was 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 partnership agreement also
entitled 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 had a leasehold interest in approximately
10.56 acres of land in Salinas, California (the "Land") and had completed
construction thereon of five one-story retail buildings containing a total of
approximately 125,247 square feet. The ground lease had 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 was 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, was also payable.
On August 1, 1995 the Partnership made a $1,750,000 loan to Nielsen
Properties, Ltd., which was the ground lessor, for a term of 15 years. The
loan earned interest at the rate of 8.75% per annum. The note was 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. The Partnership had the right to
require full payment of the note on or after August 1, 2000. On August 3,
2000, the Partnership exercised this right and notified Nielsen Properties,
Ltd. that the maturity date had been accelerated to a date specified by the
Partnership, not less than 365 days from the date of notice. Accordingly, all
amounts of principal and interest then unpaid were due and payable on August
6, 2001.
On March 27, 2001, the Partnership sold the Santa Rita Plaza
property for $8,850,000. The Partnership received net proceeds of $8,311,296.
Subsequent to the sale date, the note receivable and accrued interest related
to this property in the amount of $1,338,797 were paid in full to the
Partnership on April 10, 2001. On April 26, 2001 the Partnership made a
capital distribution of $9,373,992 ($114.00 per Unit) consisting of the sale
proceeds as well as payment of the note receivable and accrued interest
thereon. The buildings were 100% leased at the time of sale.
Item 2. Properties.
----------
The Partnership has disposed of all its real property investments.
3
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
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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, 2001, there were 11,740 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 2001or
distributed after year end with respect to 2001 to the Limited Partners as a
group totaled $11,557,968, including $9,373,992 of returned capital from the
proceeds of property sales and $1,562,332 of returned capital previously held
in reserves. Cash distributions paid in 2000 or distributed after year end
with respect to 2000 to the Limited Partners as a group totaled $6,788,744,
including $1,973,472 of returned capital from the proceeds of property sales
and $3,618,032 of returned capital previously held in reserves.
Cash distributions exceeded net income in 2001 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 Statements of Partners' Capital (Deficit) and Statements of Cash
Flows in Item 8 hereof.
4
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
12/31/01(1) 12/31/00(2) 12/31/99(3) 12/31/98 12/31/97(4)
-------- -------- -------- -------- --------
Revenues $ 264,722 $ 2,487,704 $ 3,709,675 $ 5,174,753 $17,197,366
Net Income $ 3,146,460 $ 1,360,398 $ 5,540,881 $ 2,175,480 $13,153,920
Net Income
per Weighted
Average
Limited
Partnership
Unit $ 37.88 $ 16.38 $ 66.71 $ 26.17 $ 158.07
Total Assets $ 901,993 $ 11,136,652 $22,367,036 $40,737,607 $42,788,822
Total Cash
Distributions
per Limited
Partnership
Unit outstanding
for the entire
period, including
amounts distributed
after year end with
respect to
such year $ 140.56 $ 82.56 $ 363.23 $ 48.78 $ 366.45
(1) During 2001, net income includes a gain of $1,614,745 recognized on the
sale of one investment and $1,956,543 of other income resulting from
the reversal of deferred disposition fees. Cash distributions include
a return of capital of $133 per Unit.
(2) During 2000, net income includes a gain of $556,164 recognized on the
sale of one investment. Cash distributions include a return of
capital of $68 per Unit.
(3) During 1999, net income includes gains of $4,429,391 recognized on the
sale of three investments. Cash distributions include a return of
capital of $319 per Unit.
(4) 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.
See the audited financial statements for details of significant tranactions.
5
Item 7.
- -------
Management's Discussion and Analysis of Financial Condition and Results of
- --------------------------------------------------------------------------
Operations
- ----------
ACCOUNTING POLICIES
Revenue Recognition
-------------------
The Partnership recognizes rental revenue on a straight-line basis over
the lease terms.
The Partnership accounts for its investments in joint ventures using the
equity method of accounting. Under the equity method of accounting, the net
equity investment of the Partnership is reflected on the balance sheets, and the
Partnership's share of net income or loss from the joint ventures is included in
the statements of operations.
The Partnership records real estate sales at the time a sale is
consummated. A sale is consummated when the parties are bound by the terms of a
contract, all consideration has been exchanged, all conditions precedent to
closing have been met, and title has passed from seller to buyer.
Liquidation Basis of Accounting
-------------------------------
The Partnership adopted a plan of liquidation on December 31, 2001, and,
as a result, the Partnership also adopted the liquidation basis of accounting
which, among other things, requires that assets and liabilities be stated at
their estimated net realizable value and that estimated costs of liquidating the
Partnership be provided to the extent that they are reasonably determinable.
Accrued expenses for liquidation as of December 31, 2001 include estimates of
costs to be incurred in carrying out the dissolution and liquidation of the
Partnership. These costs include estimates of legal fees, accounting fees, tax
preparation and filing fees and other professional services. The actual costs
could vary from the related provisions due to the uncertainty related to the
length of time required to complete the liquidation and dissolution of the
Partnership. The accrued expenses do not take into consideration possible
litigation arising from the customary representations and warranties made as
part of each sale. Such costs, if any, are unknown and are not estimable at this
time. Similarly, there can be no assurance as to the timing of a distribution of
the Partnership's assets or the amount of assets that will be distributed to the
Partnership's Unit holders.
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. Nine investments
have been sold, one in each of June 1994, August 1994, May 1997, October 1997,
June 1999, August 1999, December 1999, February 2000 and March 2001.
As a result of the sales and other capital transactions, capital of
$74,404,636 has been returned to the limited partners through December 31,
2001. 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, then to $367 in
1999, then to $229 in 2000 and then to $96 in 2001. A portion of the sales
proceeds was used to pay previously accrued, but deferred, management fees to
AEW Real Estate Advisors, Inc. (the "Advisor") ($59,802 in 2001, $40,580 in
2000, $234,897 in 1999, $447,745 in 1997, $183,426 in 1995 and $1,259,988 in
1994).
At December 31, 2001, the Partnership had $891,935 in cash and cash
equivalents which is being retained primarily as a reserve in connection with
the liquidation of the Partnership. Distributions of cash from operations and
operational cash previously held in reserves relating to the first quarter of
2001 were made at an annualized rate of 9% on the adjusted capital contribution
of $229.00. At the time of the first quarter 2001 distribution, the
Partnership also made two capital distributions: one consisting of original
working capital previously held in reserves in the amount of $1,562,332 and the
other consisting of the Santa Rita Plaza sale proceeds in the amount of
$9,373,992. The sale distribution also includes payment of the note receivable
and accrued interest proceeds received subsequent to the end of the first
quarter in the amount of $1,338,797. There were no operational cash
distributions related to the remaining quarters of 2001 due to the sale of the
last remaining asset during the first quarter of 2001. Distributions of cash
from operations relating to the first quarter of 2000 were made at the
annualized rate of 5.50% on the weighted average adjusted capital contribution
of $312.52, while distributions of cash from operations relating to the second
and third quarters of 2000 were made at the annualized rates of 7.50% and 4%,
respectively, on the adjusted capital contribution of $273. At the time of the
operating distribution relating to the third quarter of 2000, the Partnership
also made a capital distribution from unallocated original working capital
reserves in the amount of $3,618,032 ($44.00 per limited partnership unit).
The rate decrease in the third quarter of 2000 was primarily due to lower cash
available for distribution due to timing of distributions from the last
remaining investment to the Partnership. Distributions of cash relating to the
fourth quarter of 2000 were made at the annualized rate of 4% on the weighted
average capital contribution of $240.96.
Results of Operations
- ---------------------
Form of Real Estate Investments
-------------------------------
Effective April 1, 1996, the Waters Landing II joint venture was
restructured and the venture partner's ownership interest was assigned to the
Partnership. This investment was sold during 2000. Effective August 1, 1995 and
September 1, 1995, respectively, the Santa Rita Plaza and Dahlia joint
6
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 Dahlia investment was sold
during 1999 and the Santa Rita Plaza investment was sold during 2001. The
Puente Street investment was a wholly-owned property and was also sold during
1999. The Columbia Gateway Corporate Park investment, which was originally
structured as a joint venture with a real estate development/management firm
and an affiliate of the Partnership, was restructured to give the Partnership
and the affiliate of the Partnership full control over the business of joint
venture effective January 1, 1998. This investment was also sold during 1999.
Operating Factors
-----------------
As mentioned above, the Santa Rita Plaza investment was sold on March 27,
2001 and the Partnership recognized a gain of $1,614,745. The property was
100% leased at the time of sale.
As mentioned above, the Waters Landing II investment was sold on February
17, 2000 and the Partnership recognized a gain of $556,164.
As mentioned above, the Columbia Gateway Corporate Park joint venture
investment in which the Partnership and an affiliate owned a 30.5% and 69.5%
interest, respectively, sold its property on December 20, 1999. The
Partnership recognized its 30.5% share of the gain in the amount of $957,057.
The property was 100% leased at the time of sale.
As mentioned above, the Puente Street property was sold on June 25, 1999
and the Partnership recognized a gain of $104,975. The property was 100%
leased at the time of sale.
As mentioned above, the Dahlia property was sold on August 27, 1999 and
the Partnership recognized a gain of $3,367,359. The property was 100% leased
at the time of sale.
Investment Results
------------------
Interest on cash and cash equivalents decreased by approximately $284,000
in 2001 compared to 2000 as a result of lower investment balances due to the
sale of Santa Rita Plaza in March 2001 as well as a capital distribution made
from allocated and unallocated original working capital reserves in 2001.
Interest on cash and cash equivalents decreased by approximately $47,000 in
2000 compared to 1999 as a result of lower investment balances due to the sale
of Waters Landing II in February 2000 as well as a capital distribution made
from unallocated original working capital reserves in 2000.
2001 Compared to 2000
Real estate operations decreased overall by approximately $900,000
primarily due to the sale of Santa Rita Plaza in March 2001.
The Partnership recognized $1,956,543 in other revenue during 2001, which
was attributable to the reversal of previously accrued disposition fees, in
accordance with the Partnership agreement.
2000 Compared to 1999
Real estate operations decreased overall by approximately $469,000
between 2000 and 1999.
This decrease is primarily due to the sale of Columbia Gateway Corporate Park
joint venture in December 1999. Operating results at Santa Rita Plaza
increased due to 1) a higher yearly average occupancy between 2000 and 1999, 2)
an increase in 2000 rental rates and 3) no depreciation and amortization
expense taken for the last quarter of 2000 due to the asset being held for
sale. This increase in operations was offset by the sales of Puente Street in
June 1999 and Dahlia in August 1999.
7
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.
2001 Compared to 2000
The Partnership management fee decreased approximately $78,000 to $42,305
due to a decrease in distributable cash flow from operations as a result of the
sale of the Partnership's remaining asset in March 2001. General and
administrative expenses decreased by approximately $80,000 or 26%, due to
decreases in investor servicing fees, accounting fees, printing fees and legal
fees, primarily as a result of the sale of the last asset in March 2001.
2000 Compared to 1999
The Partnership management fee decreased due to a decrease in
distributable cash flow from operations as a result of the sale of three assets
in 1999 and one asset in 2000. General and administrative expenses increased by
approximately $35,000 or 13%, primarily due to an increase in investor
servicing and legal fees which were partially offset by a decrease in appraisal
fees due to one less asset in 2000 compared to 1999.
Inflation
- ---------
By their nature, real estate investments tend not to be adversely
affected by inflation. Inflation may result in appreciation in the value of
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, 2001
and 2000.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The independent auditor's report and financial statements listed in the
accompanying index are filed as part of this report. See Index to the Financial
Statement on page 14.
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.
8
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, 2001.
Name Position(s) with the Managing General Partner Age
- ---- --------------------------------------------- ---
Alison L. Husid President, Chief Executive Officer and Director 39
Pamela J. Herbst Vice President and Director 46
J. Grant Monahon Vice President and Director 56
James J. Finnegan Vice President 41
Jonathan Martin Treasurer and Principal Financial and Accounting Officer 31
(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:
Alison L. Husid is a Portfolio Manager in the Direct Investments group of
AEW Capital Management, L.P. ("AEW"), the Advisor's parent, with responsibility
for several real estate equity portfolios representing approximately $700
million in client capital. She has over 17 years of experience in real estate
finance and investment management. Alison joined AEW in 1987 as Controller for
a portfolio management team responsible for the acquisition, management,
restructuring and disposition of client assets in New England and the western
U.S. She later served as Asset Manager for a portfolio of assets in Arizona
and the West Coast. Prior to joining AEW, Alison worked for several years as a
Senior Auditor with Peat Marwick, Main & Co. She is a member of New England
Women in Real Estate (NEWIRE), a Certified Public Accountant and a graduate of
the University of Massachusetts (B.A.).
Pamela J. Herbst is Head of AEW's Direct Investments group, with
oversight responsibility for approximately $4 billion of client assets.
With over 20 years of direct real estate experience, Pam is a Principal of
AEW, and a member of AEW's Management Committee, Investment Committee and
Investment Policy Group. Since joining AEW in 1982, Pam has held various
senior level positions in investment management, acquisitions and
corporate operations. In addition to holding a number of industry
certifications, she is a member of various real estate industry trade
organizations and sits on the Board of Directors of the National
Association of Real Estate Investment Managers (NAREIM). Pam is a graduate
of the University of Massachusetts (B.A.) and Boston University (M.B.A.).
9
J. Grant Monahon is a Principal of AEW focused primarily on expanding
AEW's activities in a variety of global real estate markets. Grant is a member
of AEW's Management Committee, Investment Committee and Investment Policy
Group. He has over 25 years of experience in real estate law and investments
and formerly has served as AEW's Chief Operating Officer and as General
Counsel. Prior to joining AEW in 1987, Grant 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. Grant is a graduate of Dartmouth College (B.A.)
and Georgetown University Law Center (J.D.).
James J. Finnegan is AEW's General Counsel. He has over fifteen years of
experience in real estate, including seven years in private practice with major
New York City and Boston law firms. Jay has extensive experience in creating
and implementing real estate investment and portfolio management strategies for
institutional investors. Jay joined AEW in 1992 and has been actively involved
in various aspects of AEW's investment activities, including public and private
debt and equity investments. He also serves as AEW's securities and regulatory
compliance officer, and is the Principal of AEW Securities, L.P., AEW's
affiliated broker/dealer. Jay is a member of the General Counsel section of
the National Association of Real Estate Investment Managers. He is a graduate
of the University of Vermont (B.A.) and Fordham University School of Law
(J.D.).
Jonathan Martin is the Director of Portfolio Accounting for AEW's Direct
Investment group, with responsibility for overseeing all accounting,
performance measurement and financial reporting matters for the firm's direct
equity investment portfolios. Prior to joining AEW, Jon worked for nine years
as a Senior Manager with PricewaterhouseCoopers, LLP where he was an auditor
and financial consultant specializing in the real estate and mortgage banking
industries. A Certified Public Accountant and a member of NCREIF's Accounting
Committee, Jon is a graduate of the University of Notre Dame (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 7 of
Notes to Financial Statements.
The following table sets forth the amounts of the fees and cash dis-
tributions and reimbursements for out-of-pocket expenses which the
Partnership paid to or accrued for the account of the General Partners
and their affiliate for the year ended December 31, 2001. Cash
distributions to General Partners include amounts distributed after year
end with respect to 2001.
Amount of
Compensation and
Receiving Entity Type of Compensation Reimbursement
- ---------------- -------------------- -------------
General Partners Share of Distributable Cash $ 4,278
AEW Real Estate Advisors, Inc. Management Fees and 65,813
(formerly known as Copley Real Reimbursement of Expenses -------------
Estate Advisors, Inc.)
TOTAL $ 70,091
=============
For the year ended December 31, 2001 the Partnership allocated
$13,333 of taxable income to the General Partners. See Note 1 to the
audited financial statements for additional information about
transactions between the Partnership and the General Partner and their
affiliates.
10
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
-----------------------------------------------
As of December 31, 2001, Archon Partners owned approximately 7.3%
of the total number of units outstanding by the Partnership. No other person
or group is known by the Partnership to be the beneficial owner of more than 5%
of the outstanding units at December 31, 2001. 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, 2001.
(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 10, above.
11
PART IV
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Item 14. Exhibits, Financial Statements, and Reports on Form 8-K.
-------------------------------------------------------
(a) The following documents are filed as part of this report:
Financial Statements--The Financial Statements listed on the
accompanying Index to Financial Statements and Financial
Statements are filed as part of this Annual Report.
(b) Reports on Form 8-K. No Current Reports on Form 8-K were filed
during the fourth quarter ended December 31, 2001.
12
New England Pension Properties V;
A Real Estate Limited Partnership
Financial Statements
* * * * * * * *
December 31, 2001
13
NEW ENGLAND PENSION PROPERTIES V;
---------------------------------
A REAL ESTATE LIMITED PARTNERSHIP
---------------------------------
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Report of Independent Accountants
Financial Statements (in liquidation as of December 31, 2001):
Balance Sheets - December 31, 2001 and 2000
Statements of Operations - Years ended December 31, 2001, 2000 and 1999
Statements of Partners' Capital (Deficit) - Years ended December 31,
2001, 2000, and 1999
Statements of Cash Flows - Years ended December 31, 2001, 2000, and 1999
Notes to Financial Statements
All schedules are omitted because they are not applicable.
14
Report of Independent Accountants
To the Partners of New England Pension Properties V; A Real Estate Limited
Partnership:
In our opinion, 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, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the
responsibility of Fifth Copley Corp., the Managing General Partner of the
Partnership (the "Managing General Partner"); our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, 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 provide a reasonable basis
for our opinion.
As described in Note 2 to the financial statements, the Partnership adopted a
plan of liquidation on December 31, 2001 and as a result changed its basis of
accounting for periods subsequent to December 31, 2001 from the going concern
basis to the liquidation basis of accounting.
/s/ PriceWaterhouseCoopers LLP
Boston, MA
March 18, 2002
15
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
(in liquidation as of December 31, 2001)
December 31,
---------------------------------
2001 2000
--------- ------------
ASSETS
Property held for disposition, net $ - $ 8,374,264
Cash and cash equivalents 891,935 2,762,388
Other assets 10,058 -
---------- -------------
$ 901,993 $ 11,136,652
========== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 129,340 $ 123,393
Accrued expenses for liquidation 203,425 -
Accrued management fees - 9,899
Deferred management and disposition fees - 2,016,345
---------- -------------
Total liabilities 332,765 2,149,637
---------- -------------
Partners' capital (deficit):
Limited partners ($96 and $229 per unit;
respectively, 160,000 units authorized,
82,228 issued and outstanding,) 557,050 9,000,022
General partners 12,178 (13,007)
---------- -------------
Total partners' capital 569,228 8,987,015
---------- -------------
$ 901,993 $ 11,136,652
========== =============
(See accompanying notes to financial statements)
16
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(in liquidation as of December 31, 2001)
Year ended December 31,
---------------------------------------------
2001 2000 1999
---------- ---------- ----------
INVESTMENT ACTIVITY
Property rentals $ 130,290 $1,976,430 $2,707,017
Interest income on loan to ground lessor 34,532 127,688 135,330
Property operating expenses (101,994) (499,211) (828,020)
Ground rent expense (109,748) (390,000) (390,000)
Depreciation and amortization - (362,570) (739,415)
---------- ---------- ----------
(46,920) 852,337 884,912
Equity in joint venture earnings - - 436,427
---------- ---------- ----------
Total real estate operations (46,920) 852,337 1,321,339
Gain on sale of investment in joint venture - - 957,057
Gain on sales of property 1,614,745 556,164 3,472,334
---------- ---------- ----------
Total real estate activity 1,567,825 1,408,501 5,750,730
Interest on cash equivalents 99,900 383,586 430,901
Reversal of deferred disposition fees 1,956,543 - -
---------- ---------- ----------
Total investment activity 3,624,268 1,792,087 6,181,631
---------- ---------- ----------
PORTFOLIO EXPENSES
Management fee 42,305 119,604 363,331
General and administrative 232,078 312,085 277,419
Estimated liquidation period expenses 203,425 - -
---------- ---------- ----------
477,808 431,689 640,750
---------- ---------- ----------
NET INCOME $3,146,460 $1,360,398 $5,540,881
========== ========== ==========
Net income per limited partnership unit $ 37.88 $ 16.38 $ 66.71
========== ========== ==========
Cash distributions per limited partnership
unit $ 140.56 $ 154.28 $ 297.96
========== ========== ==========
Number of limited partnership units
outstanding during the year 82,228 82,228 82,228
========== ========== ==========
(See accompanying notes to financial statements)
17
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(in liquidation as of December 31, 2001)
Year ended December 31,
------------------------------------------------------------------------------------
2001 2000 1999
-------------------------- -------------------------- -------------------------
General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners
-------- -------- -------- -------- -------- --------
Balance at beginning of year $ (13,007) $ 9,000,022 $ (13,088) $ 20,339,363 $ (27,832) $ 39,354,545
Cash distributions (6,280) (11,557,967) (13,523) (12,686,135) (40,665) (24,500,654)
Net income 31,465 3,114,995 13,604 1,346,794 55,409 5,485,472
--------- ------------ --------- ------------ --------- ------------
Balance at end of year $ 12,178 $ 557,050 $ (13,007) $ 9,000,022 $ (13,088) $ 20,339,363
========= ============ ========= ============ ========= ============
(See accompanying notes to financial statements)
18
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(in liquidation as of December 31, 2001)
Year ended December 31,
--------------------------------------------
2001 2000 1999
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,146,460 $ 1,360,398 $ 5,540,881
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization - 362,570 739,415
Gain on sale of investment in joint venture - - (957,057)
Gain on sales of property (1,614,745) (556,164) (3,472,334)
Increase in property deferred lease commissions (6,851) (48,175) (67,465)
Equity in joint venture earnings - - (436,427)
Cash distributions from joint ventures - 152,500 374,058
Decrease (increase) in property
working capital 326,035 (64,335) 598,955
Increase (decrease) of deferred
management fee (69,701) 19,222 (153,203)
Reversal of deferred disposition fee (1,956,543) - -
Increase (decrease) in operating liabilities 209,372 23,054 (48,658)
------------ ------------ ------------
Net cash provided by operating
activities 34,027 1,249,070 2,118,165
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of investments 8,311,296 2,047,906 26,347,165
Deferred disposition fees - 66,600 831,728
Investments in property (10,000) (15,265) (28,602)
Repayments received on loan to ground lessor 1,358,471 86,847 79,596
------------ ------------ ------------
Net cash provided by investing activities 9,659,767 2,186,088 27,229,887
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (11,564,247) (12,699,658) (24,541,319)
------------ ------------ ------------
Net cash used in financing activities (11,564,247) (12,699,658) (24,541,319)
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents (1,870,453) (9,264,500) 4,806,733
Cash and cash equivalents:
Beginning of year 2,762,388 12,026,888 7,220,155
------------ ------------ ------------
End of year $ 891,935 $ 2,762,388 $ 12,026,888
============ ============ ============
(See accompanying notes to financial statements)
19
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 had disposed of all of its investments as of December 31, 2001. On
December 31, 2001, the Partnership adopted a plan of liquidation and intends to
liquidate in 2002.
The Managing General Partner of the Partnership is Fifth Copley Corp., a
wholly-owned subsidiary of AEW Real Estate Advisors, Inc. (the "Advisor"),
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 the Advisor pursuant to an advisory
contract.
The Advisor is a wholly-owned subsidiary of AEW Capital Management L.P.,
a wholly-owned subsidiary of Nvest Companies, L.P. (the "Company"). On October
30, 2000, Paris-based CDC IXIS Asset Management ("CDCIAM") acquired the Company
and its affiliated partnership, Nvest, L.P. (the "Acquisition"). Subsequently,
the Company's name was changed to CDC IXIS Asset Management North America, LP.
CDCIAM is the investment management arm of France's CDC IXIS, a subsidiary of
Caisse des Depots Group ("CDC").
The Acquisition was accomplished through CDCIAM's wholly owned
subsidiary, CDC IXIS Asset Management US Corporation ("CDCIAM US Corp."), which
has a 99% direct limited partnership interest in the Company and is the sole
owner of the Company's 1% general partner, CDC IXIS Asset Management US, LLC.
Prior to the Acquisition, the Company was owned by Nvest, L.P. ("Nvest"),
a publicly traded limited partnership with an approximate 15 percent interest,
and by private unitholders. The general partner of Nvest and the managing
general partner of the Company was a wholly-owned subsidiary of Metropolitan
Life Insurance Company ("MetLife"). In total, MetLife owned approximately 48%
of the partnership units of the Company at October 30, 2000 (including those
owned indirectly through ownership of Nvest units). Upon the consummation of
the Acquisition on October 30, 2000, all unitholders received cash in exchange
for each unit owned. Nvest, whose primary asset was its ownership of Nvest
Companies' units, was merged with and into the Company on December 31, 2000,
with the Company as the surviving entity.
Management
----------
The 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. The Advisor is also
reimbursed for expenses incurred in connection with administering the
Partnership ($17,000 in each of 2001, 2000 and 1999, respectively).
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. Payments of disposition fees are subject to
the prior receipt by the limited partners of their capital contributions plus a
stipulated return thereon. Based on the Partnership's returns to date and the
sale of the Partnership's sole remaining asset, the Managing General Partner
20
determined that previously accrued disposition fees of $1,956,543 would not be
paid, and, accordingly, recognized the reversal of such fees as revenue in
2001.
New England Securities Corporation, an indirect subsidiary of Met Life
during 2000 and 1999, was engaged by the Partnership to act as its unit holder
servicing agent. Fees and out-of pocket expenses for such services totaled
$23,061 and $22,679 in 2000 and 1999, respectively.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Revenue Recognition
-------------------
The Partnership recognizes rental revenue on a straight-line basis over
the lease terms.
The Partnership accounts for its investments in joint ventures using the
equity method of accounting. Under the equity method of accounting, the net
equity investment of the Partnership is reflected on the balance sheets, and the
Partnership's share of net income or loss from the joint ventures is included in
the statements of operations.
The Partnership records real estate sales at the time a sale is
consummated. A sale is consummated when the parties are bound by the terms of a
contract, all consideration has been exchanged, all conditions precedent to
closing have been met, and title has passed from seller to buyer.
Liquidation Basis of Accounting
-------------------------------
In connection with its adoption of a plan of liquidation on December 31,
2001, the Partnership also adopted the liquidation basis of accounting which,
among other things, requires that assets and liabilities be stated at their
estimated net realizable value and that estimated costs of liquidating the
Partnership be provided to the extent that they are reasonably determinable.
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 were in substance real estate investments, were 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. Economic
equity was measured by the excess of the appraised value of the property over
the Partnership's total cash investment plus accrued preferential returns and
interest thereon. Currently, the Partnership has no joint ventures.
Property
--------
Property included land and buildings and improvements, which were 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 equaled the Partnership's carrying value of the predecessor
investment on the conversion date.
Capitalized Costs, Depreciation, and Amortization
-------------------------------------------------
Maintenance and repair costs were expensed as incurred. Significant
improvements and renewals were capitalized. Depreciation was computed using
the straight-line method based on estimated useful lives of the buildings and
improvements. Leasing costs were 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 were amortized using the straight-
line method over the estimated useful lives of the underlying property.
Leases at the properties provided for rental increases over the
respective lease terms. Rental revenue was being recognized on a straight-line
basis over the lease terms.
Realizability of Real Estate Investments
----------------------------------------
The Partnership considered a real estate investment to be impaired when
it determined the carrying value of the investment was not recoverable through
expected undiscounted cash flows
21
generated from the operations and disposition of property. The impairment loss
was 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 included estimated costs of sale. Property held for sale was not
depreciated during the holding period. Investments were considered to be held
for disposition at the time management committed the Partnership to a plan to
dispose of the investment.
Cash Equivalents
----------------
Cash equivalents are stated at cost, plus accrued interest. The
Partnership considers all highly liquid debt investments purchased with a
maturity of ninety days or less to be cash equivalents; otherwise, they are
classified as short-term investments.
Deferred Disposition Fees
-------------------------
As discussed in Note 1, disposition fees due to the Advisor related to
sales of investments are included in the determination of gains or losses
resulting from such transactions. In accordance with 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.
Based on the Partnership's returns to date and the sale of the Partnership's
sole remaining asset, the Managing General Partner determined that previously
accrued disposition fees of $1,956,543 would not be paid, and, accordingly,
recognized the reversal of such fees as revenue in 2001.
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.
NOTE 3 - Accrued Expenses for Liquidation
- -----------------------------------------
Accrued expenses for liquidation as of December 31, 2001 include
estimates of costs to be incurred in carrying out the dissolution and
liquidation of the Partnership. These costs include estimates of legal fees,
accounting fees, tax preparation and filing fees and other professional
services. As of December 31, 2001 the Partnership accrued $203,425 for such
expenses.
The actual costs could vary from the related provisions due to the
uncertainty related to the length of time required to complete the liquidation
and dissolution of the Partnership. The accrued expenses do not take into
consideration possible litigation arising from the customary representations
and warranties made as part of each sale. Such costs, if any, are unknown and
are not estimable at this time.
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:
investing in real estate properties which are domiciled in the United
States of America.
22
NOTE 4 - Real Estate Joint Ventures
- -----------------------------------
The Partnership had invested in nine real estate joint ventures, each
organized as a general partnership 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, one joint venture project was sold in 1999,
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 were in either of two forms. In one form, the Partnership
made an equity contribution which was 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 made an equity contribution to the venture, subject to preferential
returns, and also made a loan to its venture partner which, in turn,
contributed the proceeds to the venture. The loans bore interest at a
specified rate, matured in full in ten years, and were 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 provided 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 did not contribute proportionately.
The respective real estate management/development firm was responsible
for day-to-day development and operating activities, although overall authority
and responsibility for the business was shared by the venturers. The real
estate development/management firms or their affiliates also provided various
services to the respective joint ventures for a fee.
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 had been constructed at the time of the
sale of the property. The Partnership committed to make a $6,402,000
equity contribution to the joint venture. The Partnership and New England
Life Pension Properties IV (the "Affiliate") collectively had a 50%
ownership interest in the joint venture. Ownership of the Columbia
Gateway Corporate Park joint venture was restructured to give the
Partnership and its Affiliate additional control over the business of the
joint venture effective January 1, 1998 and they became entitled to 30.5%
and 69.5%, respectively, of the operating activity of the joint venture.
On December 20, 1999, the Columbia Gateway Corporate Park joint venture
investment in which the Partnership and the affiliate owned a 29.89% and 68.11%
interest, respectively, sold its property to an unaffiliated third party for
gross proceeds of $19,850,000, of which the Partnership's share was $6,054,250.
The Partnership received its 30.5% share of the net proceeds, $5,891,032 after
closing costs, and recognized a gain of $957,057 ($11.52 per Unit) on the sale.
On January 27, 2000 the Partnership made a capital distribution of $5,755,960
($70.00 per Unit) from the proceeds of the sale. In addition, a portion of
the proceeds was used to pay previously accrued but deferred management fees to
the Advisor of $23,617.
23
Summarized Financial Information
- --------------------------------
The following summarized financial information is presented in the
aggregate for Columbia Gateway Corporate Park joint venture:
Result of Operations
--------------------
Year ended December 31,
-------------------------------------
2001 2000 1999
-------- -------- --------
Revenue
Rental income $ - $ - $ 1,994,186
Other income - - 115,948
---------- ---------- -----------
- - 2,110,134
---------- ---------- -----------
Expenses
Operating expenses - - 485,802
Depreciation and amortization - - 193,425
---------- ---------- -----------
- - 679,227
---------- ---------- -----------
Net Income $ - $ - $ 1,430,907
========== ========== ===========
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 5 - PROPERTY
- -----------------
Santa Rita Plaza
----------------
Effective August 1, 1995, the Santa Rita Plaza joint venture was
restructured into a limited partnership, giving the Partnership control over
management decisions. Accordingly, the investment was 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 August 1, 1995, the Partnership also 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 loan to the ground lessor bore interest at 8.75%, with
payments to be made monthly based on a 15-year amortization schedule, and was
collateralized by the ground lessor's interest in the Santa Rita Plaza land.
The Partnership had the right to require full payment of the loan after August
1, 2000. On August 3, 2000, the Partnership exercised this right and notified
the ground lessor that the maturity date had been accelerated to a date
specified by the Partnership not less than 365 days from the date of notice.
Accordingly, all amounts of principal and interest then unpaid were due and
payable on August 6, 2001. The ground lease required an annual base payment of
$390,000 per year through 2063, plus 11.55% of excess rents, as defined.
The buildings and improvements (a shopping center in Salinas, California)
were being depreciated over 25 years beginning August 1, 1995.
On March 27, 2001, the Partnership sold the Santa Rita Plaza
property for $8,850,000. The Partnership received net proceeds of
$8,311,296 and recognized a gain on the sale of $1,614,745 ($19.44 per
Unit). Subsequent to the sale date, the note receivable and accrued
interest related to this property in the amount of $1,338,797 was paid
in full to the Partnership on April 10, 2001. On April 26, 2001 the
Partnership made a capital distribution of
24
$9,373,992 ($114.00 per Unit) consisting of the sale proceeds as well as
payment of the note receivable and accrued interest.
This investment was classified as "Property held for disposition"
on the balance sheet at December 31, 2000. During the year ended
December 31, 2001 and 2000, the Partnership recognized $(46,920) and
$824,132 in net (loss) income from this investment, respectively.
Dahlia
------
Effective September 1, 1995, the Dahlia joint venture was restructured
into a limited partnership, giving the Partnership control over management
decisions. Accordingly, the investment was 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.
The buildings and improvements (a warehouse facility in Fontana,
California) were being depreciated over 25 years beginning September 1, 1995.
On August 27, 1999, the Partnership sold the Dahlia property for
$9,900,000. The Partnership received net proceeds of $9,723,207 and recognized
a gain of $3,367,359 ($40.54 per Unit). A disposition fee of $297,000 was
accrued but not paid to the Advisor. This fee was reversed in 2001 (see Note
2). On September 21, 1999, the Partnership made a capital distribution of
$9,456,220 ($115 per Unit) from the sale proceeds.
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 original building and improvements were being depreciated over 30
years beginning June 1, 1991. The depreciation of the new building was also
over a 30-year period, commencing during the fourth quarter of 1998.
On June 25, 1999, the Partnership sold the Puente Street property for
$11,770,000. The Partnership received net proceeds of $11,211,554 and
recognized a gain of $104,975 ($1.26 per Unit). A disposition fee of $353,100
was accrued but not paid to the Advisor. This fee was reversed in 2001 (see
Note 2). On July 28, 1999, the Partnership made a capital distribution of
$11,018,552 ($134 per Unit) from the sale proceeds. In addition, a portion of
the proceeds was used to pay deferred management fees to the Advisor of
$234,897.
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.
On February 17, 2000, the Partnership sold the Waters Landing II property
for $2,220,000. The Partnership received net proceeds of $2,114,506 and
recognized a gain of $556,164 ($6.70 per Unit). A disposition fee of $66,600
was accrued but not paid to the Advisor. This fee was reversed in 2001 (see
Note 2). On March 15, 2000, the Partnership made a capital distribution of
$1,973,472 ($24 per Unit) from the sale proceeds.
25
The following is a summary of the Partnership's investment in property
(none at December 31, 2001 and one at December 31, 2000):
December 31,
--------------------------
2001 2000
---------- ------------
Property held for disposition $ - $ 8,374,264
---------- ------------
$ - $ 8,374,264
========== ============
The Partnership recognized net income of $824,132 for the year ended
December 31, 2000 from the Santa Rita Plaza investment, which was held for
disposition at December 31, 2000.
NOTE 6 - 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,
----------------------------------
2001 2000 1999
----------- ---------- -----------
Net income per financial statements $ 3,146,460 $1,360,398 $ 5,540,881
Timing differences:
Joint venture earnings (loss) - (6,761) 409,810
Property rentals (2,300,559) (215,601) (44,057)
Expenses 69,327 84,170 (151,748)
Depreciation and amortization (146,003) 29,715 (33,681)
Gain (loss) on sale 564,064 (1,845,968) 396,197
----------- ---------- -----------
Taxable income (loss) $ 1,333,289 $ (594,047) $ 6,117,402
=========== ========== ===========
NOTE 7 - 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, then to $616 in 1997, then to $367 in 1999, then to
$229 in 2000, and further reduced to $96 in 2001 as a result of the return of
capital from the sale of nine investments and other capital transactions. 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.
26
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 29, 2002 By: /s/ Alison L. Husid
-------------------------------
Alison L. Husid
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/ Alison L. Husid Chief Executive Officer March 29, 2002
- --------------------- and Director of the Managing
Alison L. Husid General Partner
/s/ Pamela J. Herbst Vice President March 29, 2002
- --------------------------- and Director of the Managing
Pamela J. Herbst General Partner
/s/ J. Grant Monahon Vice President March 29, 2002
- --------------------------- and Director of the Managing
J. Grant Monahon General Partner
/s/ James J. Finnegan
- --------------------------- Vice President of the Managing March 29, 2002
James J. Finnegan General Partner
Treasurer and Principal
/s/ Jonathan Martin Financial and March 29, 2002
- --------------------------- Accounting Officer of the
Jonathan Martin Managing General Partner
27