UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-16467

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

California	33-0098488
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

400 South El Camino Real, Suite 1100
San Mateo, California	94402-1708
(Address of principal	(Zip Code)
executive offices)

(650) 343-9300

(Registrant's telephone number, including area code)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer, large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-accelerated filer ¨ Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

INDEX

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

		Page No.
PART I	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements of Rancon Realty Fund V (Unaudited):

	Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014	3

	Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014	4

	Consolidated Statement of Partners’ Equity for the three months ended March 31, 2015	5

	Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014	6

	Notes to Consolidated Financial Statements	7-13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13-15

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	15

Item 4.	Controls and Procedures	15

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 3.	Defaults Upon Senior Securities	17

Item 4.	Mine Safety Disclosures	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

SIGNATURES		18

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Balance Sheets

(in thousands, except units outstanding)

(Unaudited)

	March 31,			December 31,
	2015			2014
Assets
Cash and cash equivalents	$	23,012		$	7,125
Accounts receivable, net		1,574			-
Deferred costs, net of accumulated amortization of $719 as of
December 31, 2014		-			88
Prepaid expenses and other assets		238			162
Assets held for sale		-			40,621
Total assets	$	24,824		$	47,996

Liabilities and Partners’ Equity (Deficit)
Liabilities:
Notes payable	$	-		$	48,395
Accounts payable and other liabilities		633			194
Deferred gain on disposition of assets		1,260			-
Liabilities related to assets held for sale		-			651
Total liabilities		1,893			49,240

Commitments and contingent liabilities (Note 8)

Partners’ Equity (Deficit):
General Partner		(1,095	)		(2,434	)
Limited partners, 83,898 limited partnership units outstanding
as of March 31, 2015 and December 31, 2014		24,026			1,190

Total partners’ equity		22,931			(1,244	)

Total liabilities and partners’ equity	$	24,824		$	47,996

The accompanying notes are an integral part of these consolidated financial statements.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Discontinued Operations

(in thousands, except per unit amounts and units outstanding)

(Unaudited)

	Three Months Ended
	March 31,
	2015			2014

Revenue
Rental revenue and other	$	2,035		$	2,047
Tenant reimbursements		125			105
Total operating revenue		2,160			2,152

Expenses
Property operating expenses		1,250			1,277
Depreciation and amortization		-			841
General and administrative		299			425
Total operating expenses		1,549			2,543

Income (loss)		611			(391	)

Interest expense (including amortization of loan fees)		(552	)		(705	)

Income (loss) from discontinued operations		59			(1,096	)


Loss on extinguishment of debt		(2,549	)		-
Gain on sale		26,665			-
Net income (loss)	$	24,175		$	(1,096	)

Basic and diluted net income (loss) per limited partnership unit	$	272.19		$	(13.06	)

Weighted average number of limited partnership units outstanding		83,898			83,898

The accompanying notes are an integral part of these consolidated financial statements.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statement of Partners’ Equity

For the three months ended March 31, 2015

(in thousands)

(Unaudited)

	General			Limited
	Partner			Partners		Total

Balance (deficit) at December 31, 2014	$	(2,434	)	$	1,190	$	(1,244	)

Net income		1,339			22,836		24,175

Balance (deficit) at March 31, 2015	$	(1,095	)	$	24,026	$	22,931

The accompanying notes are an integral part of these consolidated financial statements.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three Months Ended
	March 31,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	24,175		$	(1,096	)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization		-			841
Amortization of loan fees, included in interest expense		-			21
Loss on early extinguishment of debt		2,549			-
Gain on sale of real estate		(26,665	)		-
Changes in certain assets and liabilities:
Accounts receivable		(1,417	)		(21	)
Deferred costs		(496	)		(28	)
Prepaid expenses and other assets		217			(219	)
Deferred gain on disposition of assets		1,260			-
Accounts payable and other liabilities		(47	)		32
Prepaid rent		(164	)		38

Net cash used in operating activities		(588	)		(432	)

Cash flows from investing activities:
Additions to real estate investments		(1,219	)		(10	)
Proceeds from sale of real estate		68,550			-

Net cash provided by (used in) investing activities		67,331			(10	)

Cash flows from financing activities:
Notes payable principal payments		(48,395	)		(286	)
Payment of prepayment penalties		(2,461	)		-

Net cash used in financing activities		(50,856	)		(286	)

Net increase (decrease) in cash and cash equivalents		15,887			(728	)

Cash and cash equivalents at beginning of period		7,125			10,323

Cash and cash equivalents at end of period	$	23,012		$	9,595

Supplemental disclosure of cash flow information:

Cash paid for interest	$	552		$	684

Supplemental disclosure of non-cash operating activities:

Write-off of fully depreciated rental property assets	$	-		$	224

Write-off of fully amortized deferred costs	$	-		$	133

Supplemental disclosure of non-cash investing activities:

Note receivable from sale of real estate	$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements (Unaudited)

Note 1. ORGANIZATION

Rancon Realty Fund V, a California Limited Partnership (“the Partnership”), was organized in accordance with the provisions of the California Uniform Limited Partnership Act for the purpose of acquiring, developing, operating and disposing of real property. The Partnership was organized in 1985 and reached final funding in February 1989. The general partners of the Partnership are Daniel L. Stephenson and Rancon Financial Corporation (“RFC”), hereinafter collectively referred to as the General Partner. RFC is wholly owned by Daniel L. Stephenson. The Partnership has no employees.

As of March 31, 2015, there were 83,898 Units (“Units”) outstanding.

The Partnership commenced on May 8, 1985 and had a term which was set to expire on December 31, 2015 in accordance with the provisions of the Partnership Agreement. On April 21, 2014, the Partnership sent a Consent Solicitation Statement to its Limited Partners seeking their consent to the dissolution of the Partnership prior to December 31, 2015, in accordance with the terms of the Partnership Agreement and as detailed by a Plan of Liquidation and Dissolution adopted by the General Partner on April 10, 2014. The dissolution required the approval of Limited Partners holding 50% of the outstanding units. On May 8, 2014, the dissolution was approved by Limited Partners holding 50% of the outstanding units, and the Plan of Liquidation and Dissolution became effective. Consequently the General Partner began an orderly sale of the Partnership’s assets and on March 20, 2015, the last property was sold. With the sale of all the properties, dissolution will continue but can be a complex process that may depend on a number of factors, most of which are beyond the Partnership’s control. There can be no assurance that the dissolution will be completed within a specific time frame.

Allocation of Net Income and Net Loss

Allocation of net income and net loss is made pursuant to the terms of the Partnership Agreement. Generally, net income and net losses from operations are allocated 90% to the limited partners and 10% to the General Partner; however, if the limited partners or the General Partner would have, as a result of an allocation of cumulative net losses, a deficit balance in their capital accounts, then net losses shall not be allocated to the limited partners or General Partner, as the case may be, so as to create a capital account deficit, but such losses shall be allocated to the limited partners or General Partner with positive capital account balances until the positive capital account balances of such other partners are reduced to zero. However, if deficits are the result of cumulative distributions in excess of earnings, losses will continue to be allocated to the General Partner. Capital accounts shall be determined after taking into account all other allocations and distributions for the fiscal year.

Net income other than net income from operations shall be allocated as follows: (i) first, to the partners who have a deficit balance in their capital account, provided that, in no event shall the General Partner be allocated more than 5% of the net income other than net income from operations until the earlier of sale or disposition of substantially all of the assets or the distribution of cash (other than cash from operations) equal to the Unitholder’s original invested capital; (ii) second, to the limited partners in proportion to and to the extent of the amounts required to increase their capital accounts to an amount equal to the sum of the adjusted invested capital of their units plus an additional cumulative non-compounded 12% return per annum (plus additional amounts depending on the date Units were purchased); (iii) third, to the partners in the minimum amount required to first equalize their capital accounts in proportion to the number of units owned, and then, to bring the sum of the balances of the capital accounts of the limited partners and the General Partner into the ratio of 4 to 1; and (iv) the balance, if any, 80% to the limited partners and 20% to the General Partner. In no event shall the General Partner be allocated less than 1% of the net income other than net income from operations for any period.

Net losses other than net losses from operations are allocated 99% to the limited partners and 1% to the General Partner. Such net losses will be allocated among limited partners as necessary to equalize their capital accounts in proportion to their Units, and thereafter will be allocated in proportion to their Units.

The terms of the Partnership Agreement call for the General Partner to restore any deficits that may exist in its tax capital account. Such deficit will not exist as a result of the allocation to the General Partners pursuant to the terms of the Partnership Agreement of taxable gains from the sale of the properties owned by the Partnership.

Distribution of Cash

The Partnership shall make annual or more frequent distributions of substantially all cash available to be distributed to partners as determined by the General Partner, subject to the following: (i) distributions may be restricted or suspended for limited periods when the General Partner determines in their absolute discretion that it is in the best interests of the Partnership; and (ii) all distributions are subject to the payment of Partnership expenses and maintenance of reasonable reserves for debt service, alterations and improvements, maintenance, replacement of furniture and fixtures, working capital and contingent liabilities.

All excess cash from operations shall be distributed 90% to the limited partners and 10% to the General Partner.

All cash from sales or refinancing and any other cash determined by the General Partner to be available for distribution other than cash from operations shall be distributed in the following order of priority: (i) first, 1% to the General Partner and 99% to the limited partners in proportion to the outstanding positive amounts of Adjusted Invested Capital (as defined in the Partnership Agreement) for each of their Units until Adjusted Invested Capital (as defined in the Partnership Agreement) for each Unit is reduced to zero; (ii) second, 1% to the General Partner and 99% to the limited partners until each of the limited partners has received an amount which, including cash from operations previously distributed to the limited partners equals a 12% annual cumulative non-compounded return on the Adjusted Invested Capital (as defined in the Partnership Agreement) of their Units plus such limited partners’ Limited Incremental Preferential Return (as defined in the Partnership Agreement), if any, with respect to each such Unit, on the Adjusted Investment Capital (as defined in the Partnership Agreement) of such Units for the twelve month period following the date upon which such Unit was purchased from the Partnership and following the admission of such limited partner; (iii) third, 99% to the General Partner and 1% to the limited partners, until the General Partner has received an amount equal to 20% of all distributions of cash from sales or refinancing; and (iv) the balance, 80% to the limited partners, pro rata in proportion to the number of Units held by each, and 20% to the General Partner.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements (Unaudited)

Note 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements present the consolidated financial position of the Partnership and its subsidiaries as of March 31, 2015 and December 31, 2014, the consolidated results of discontinued operations of the Partnership and its subsidiaries for the three months ended March 31, 2015 and 2014, the consolidated statement of partners’ equity for the three months ended March 31, 2015 and cash flows of the Partnership for the three months ended March 31, 2015 and 2014. All significant intercompany transactions, receivables and payables have been eliminated in consolidation.

The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.

In the opinion of the General Partner, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal accruals) necessary to present fairly the consolidated financial position of the Partnership as of March 31, 2015 and December 31, 2014, and the related consolidated statements of discontinued operations and cash flows for the three months ended March 31, 2015 and 2014, and the consolidated statement of partners’ equity for the three months ended March 31, 2015.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results of operations during the reporting period. Actual results could differ from those estimates.

Rental Properties

Rental properties, including the related land, are stated at depreciated cost unless events or circumstances indicate that such amounts cannot be recovered, in which case, the carrying value of the property is reduced to its estimated fair value to the extent the carrying value is greater than the undiscounted future cash flows excluding interest. Estimated fair value is computed using estimated sales price, as determined by prevailing market values for comparable properties and/or the use of capitalization rates applied to annualized net operating income based upon the age, construction and use of the building. Due to uncertainties inherent in the valuation process and in the economy, it is reasonably possible that the actual results of operating and disposing of the Partnership’s properties could be materially different than current expectations. Rental properties are reviewed for impairment whenever there is a triggering event and at least annually.

Depreciation is provided using the straight-line method over the useful lives of the respective assets. The useful lives are as follows:

Building and improvements	5 to 40 years
Tenant improvements	Lesser of the initial term of the related lease, or the estimated useful life of the improvements
Furniture and equipment	5 to 7 years

The Partnership periodically classified real estate as held for sale. An asset is classified as held for sale after the approval of Management and after an active program to sell the asset has commenced. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying consolidated balance sheets. Upon a decision to no longer market an asset for sale, the asset is classified as an operating asset and depreciation expense is reinstated. As of September 30, 2014, the Partnership had eight office properties and four retail properties classified as held for sale on the consolidated balance sheet.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements (Unaudited)

Construction in Progress and Land Held for Development

Construction in progress and land held for development are stated at cost unless events or circumstances indicate that cost cannot be recovered, in which case, the carrying value is reduced to estimated fair value. Estimated fair value is computed using estimated sales price, based upon market values for comparable properties and considers the cost to complete and the estimated fair value of the completed project. Construction in progress and land held for development are reviewed for impairment whenever there is a triggering event and at least annually.

The pre-development costs for a new project are capitalized and include survey fees and consulting fees. Interest, property taxes and insurance related to the new project are capitalized during periods when activities that are necessary to get the project ready for its intended use are in progress. The capitalization ends when the construction is substantially completed and the project is ready for its intended use.

Sales of Real Estate

The Partnership recognizes sales of real estate when a contract has been executed, a closing has occurred, the buyer’s initial and continuing investment is adequate to demonstrate a commitment to pay for the property and the Partnership does not have a substantial continuing involvement in the property. For the year ended December 31, 2014, each property is deemed a separately identifiable component of the Partnership and is reported in discontinued operations when the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Partnership as a result of a disposal transaction or the property is classified as held for sale. Beginning January 1, 2015, the Partnership adopted ASU No. 2014-08 which clarifies that discontinued operations presentation applies only to disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results (e.g., a disposal of a major geographical area, a major line of business, a major equity method investment or other major parts of an entity). Interest expense associated with a mortgage loan is classified as a component of discontinued operations if that loan is directly collateralized by a property classified as a discontinued operation.

Fair Value of Investments

The guidance related to accounting for fair value measurements defines fair value and establishes a framework for measuring fair value in order to meet disclosure requirements for fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This hierarchy describes three levels of inputs that may be used to measure fair value.

Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1. Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market.

Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation using unobservable inputs. This category generally includes long-term derivative contracts, real estate and unconsolidated joint ventures.

Cash and Cash Equivalents

The Partnership considers short-term investments with an original maturity of ninety days or less at the time of investment to be cash and cash equivalents.

Deferred Costs

Deferred loan fees are capitalized and amortized on a straight-line basis, which approximates the effective interest method, over the life of the related loan. Deferred lease commissions are capitalized and amortized on a straight-line basis over the initial fixed term of the related lease agreements.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements (Unaudited)

Revenues

The Partnership recognizes rental revenue on a straight-line basis over the term of the leases. Actual amounts collected could be lower than the amounts recognized on a straight-line basis if specific tenants are unable to pay rent that the Partnership has previously recognized as revenue. For tenants with percentage rent, the Partnership recognizes revenue when the tenants’ specified sales targets have been met. The reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as revenue on an estimated basis during the current year. The Partnership develops a revised estimate of the amount recoverable from tenants based on updated expenses for the year and amounts to be recovered and records adjustments to income in the current year financial statement accounts. Any final changes in estimate based on lease-by-lease reconciliations and tenant negotiations and collection are recorded in the period those negotiations are settled.

Net Income (Loss) Per Limited Partnership Unit

Net income (loss) per Unit is calculated using the weighted average number of Units outstanding during the period and the limited partners’ allocable share of the net income (loss).

Net income (loss) per Unit is as follows (in thousands, except for weighted average units and per unit amounts):

	For the three months ended
	March 31, 2015				March 31, 2014
	General		Limited		General		Limited
Income (loss) allocation:	Partner		Partners		Partner		Partners

Net income (loss)	$	1,339	$	22,836	$	-	$	(1,096	)

Weighted average number of limited partnership units outstanding during each period				83,898				83,898

Basic and diluted income (loss) per limited partnership unit			$	272.19			$	(13.06	)

The calculation of net income (loss) per Unit assumes that the income (loss) otherwise allocable to the limited partners is first used to fund distributions to the General Partner. As discussed in Note 1, the terms of the Partnership Agreement call for the General Partner to restore any deficits that may exist in its tax capital account. Such deficit will not exist as a result of the allocation to the General Partners pursuant to the terms of the Partnership Agreement of taxable gains from the sale of the properties owned by the Partnership.

Income Taxes

Income taxes on Partnership income are the responsibility of the individual partners. Accordingly, no provision for income taxes is included in the accompanying consolidated financial statements. The Partnership determines whether a tax position of the Partnership is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Partnership recording a tax liability that would reduce partners’ capital. Based on its analysis, the Partnership has determined that it has not incurred any liability for unrecognized tax benefits as of March 31, 2015. However, the Partnership’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, ongoing analysis of changes to tax laws, regulations and interpretations thereof. As of March 31, 2015, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are 2011, 2012, 2013 and 2014.

The Partnership files US Federal tax returns and state tax returns in California, Georgia, Indiana, Maine, Missouri, New Jersey, New York, Oregon, Pennsylvania and West Virginia.

Reference to 2014 audited consolidated financial statements

These unaudited consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements included in the Partnership’s December 31, 2014 audited consolidated financial statements on Form 10-K.

Recent Accounting Pronouncements

On April 10, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU No. 2014-08”). ASU No 2014-08 clarifies that discontinued operations presentation applies only to disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results (e.g., a disposal of a major geographical area, a major line of business, a major equity method investment or other major parts of an entity). ASU No. 2014-08 is effective prospectively for the reporting periods beginning after December 15, 2014. The Partnership adopted this guidance effective January 1, 2015. As the assets that this guidance applies to were classified as held for sale as of September 30, 2014 in accordance with ASC 360-10-45-9, the adoption of this standard has no impact on the consolidated financial statements of the Partnership.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements (Unaudited)

Note 3. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

In response to the Limited Partners May 8, 2014 approval of the dissolution of the Partnership, the General Partner began an orderly liquidation of the Partnership’s assets and all properties were sold as of March 20, 2015. In accordance with the guidance, the related assets and liabilities of the Partnership’s properties have been classified as held for sale on the accompanying balance sheet as follows:

Reconciliation of Total Assets and Liabilities

of the Properties Held for Sale

That are Presented Separately in the Consolidated Balance Sheet

(in thousands)

	December 31,
	2014
Carrying amounts of major classes of assets included as part of assets held for sale:

Investments in real estate: Rental properties net	$	36,355

Accounts receivable, net		157
Deferred costs, net of accumulated amortization		1,578
Prepaid expenses and other assets		2,531

Total assets classified as held for sale	$	40,621

Carrying amounts of major classes of liabilities included as part of assets held for sale:

Accounts payable and other liabilities	$	487
Prepaid rent		164

Total liabilities	$	651

Investments in real estate held for sale consist of the following (in thousands):

	December 31,
	2014
Land	$	7,893
Land improvements		1,536
Buildings		46,970
Building and tenant improvements		10,338
		66,737
Less: accumulated depreciation		(30,382	)
Total rental properties, net	$	36,355

As of March 20, 2015, the Partnership’s rental properties had been sold.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements (Unaudited)

Note 4. DISPOSITION OF RENTAL PROPERTY

During the first quarter of 2015, all of the Partnership’s rental properties were sold. 690 E. Hospitality was sold on January 15, 2015 for $3,100,100, Outback was sold on January 23, 2015 for $2,024,100, Palm Retail 3 was sold on March 12, 2015 for $2,400,000 and the remainder of the portfolio was sold in one transaction on March 20, 2014 for $66,775,000.

Note 5. NOTES PAYABLE

Notes payable consists of the following (in thousands):

	March 31,		December 31,
	2015		2014
Note payable #1 collateralized by first deeds of trust on seven properties. The note had a fixed interest rate of 5.46%, a maturity date of January 1, 2016 with a 30-year amortization requiring monthly principal and interest payments of $151.	$	-	$	22,690

Note payable #2 collateralized by first deeds of trust on four properties. The note had a fixed interest rate of 5.61%, a maturity date of May 1, 2016 with a 30-year amortization requiring monthly principal and interest payments of $173.		-		25,705
Total notes payable	$	-	$	48,395

Note payable #1 was collateralized by 784 East Hospitality, Carnegie Business Center II, Lakeside Tower, Outback Steakhouse, 690 East Hospitality, Palm Court Retail III and One Carnegie Plaza and Note payable #2 was collateralized by Brier Corporate Center, One Parkside, Two Parkside and Two Carnegie Plaza. As buildings were sold in 2015, the proceeds were used to pay down the notes payable and upon the closing of the final sale on March 20, 2015, the notes were repaid in full.

Note 6. RELATED PARTY TRANSACTIONS

Glenborough LLC earns fees from the Partnership as prescribed by the Property Management and Services Agreement (the “Agreement”). The Agreement is in effect until the earlier of December 31, 2015 or the completion of the sale of all real property assets of the Partnership. The terms and conditions of the Agreement are to perform services for the following fees:

	Three Months Ended
	March 31,		March 31,
	2015		2014

(i) property management fees of 2.5% of gross rental revenue which were included in property operating expenses in the accompanying consolidated statements of operations	$	60,000	$	54,000
(ii) construction services fees which were capitalized and included in rental properties on the accompanying consolidated balance sheets		27,000		8,000
(iii) an asset and Partnership management fee which was included in general and administrative expenses in the accompanying consolidated statements of operations		313,000		63,000
(iv) leasing services fees which were included in deferred costs on the accompanying consolidated balance sheets		160,000		7,000
(v) a sales fee of 1% for all properties		768,000		-
(vi) data processing fees which were included in property operating expenses in the accompanying consolidated statements of operations		19,000		30,000
(vii) engineering fees which were included in property operating expenses in the accompanying consolidated statements of operations		-		8,000

On October 1, 2010, Glenborough Holdings, LLC (Glenborough Holdings) transferred all of its interest in the Partnership to Glenborough Investors, LLC, which currently holds those units in its subsidiary, Glenborough Property Partners, LLC (“Glenborough Property Partners”). As part of the same transaction, Glenborough Holdings transferred its ownership of Glenborough LLC to Glenborough Investors, LLC, which currently holds the ownership interests in that entity in its subsidiary, Glenborough Service, LP, the parent of Glenborough Property Partners. As of March 31, 2015, Glenborough Property Partners, an affiliate of Glenborough LLC, held 11,565 or 13.78% of the Units.

In addition, an affiliate of the General Partner, unrelated to Glenborough LLC, earned $371,495 in sales fees during the first quarter of 2015, net in the gain on sale.

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements (Unaudited)

Note 7. COMMITMENTS AND CONTINGENT LIABILITIES

Environmental Matters

The Partnership follows a policy of monitoring its properties for the presence of hazardous or toxic substances. The Partnership is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Partnership’s business, assets or results of operations. There can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Partnership’s consolidated results of operations and cash flows.

General Uninsured Losses

The Partnership carries property and liability insurance with respect to the properties. This coverage has policy specification and insured limits customarily carried for similar properties. However, certain types of losses (such as from earthquakes and floods) may be either uninsurable or not economically insurable. Should the properties sustain damage as a result of an earthquake or flood, the Partnership may incur losses due to insurance deductibles, co-payments on insured losses or uninsured losses. Additionally, the Partnership has elected to obtain insurance coverage for “certified acts of terrorism” as defined in the Terrorism Risk Insurance Act of 2002 as amended and reauthorized to date; however, our policies of insurance may not provide coverage for other acts of terrorism. Any losses from such other acts of terrorism might be uninsured. Should an uninsured loss occur, the Partnership could lose some or all of its capital investment, cash flow and anticipated profits related to the properties.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our December 31, 2014 audited consolidated financial statements and the notes thereto included in our latest Annual Report on Form 10-K.

Background

In June 1985, our initial acquisition of property consisted of approximately 76.21 acres of partially developed and unimproved land located in San Bernardino, California. The property is part of a master-planned development of 153 acres known as Tri-City Corporate Centre (“Tri-City”) and is zoned for mixed commercial, office, hotel, transportation-related, and light industrial uses and all of the parcels thereof are separately owned by us and Rancon Realty Fund IV (“Fund IV”), a partnership sponsored by the General Partner.

Overview

Tri-City Properties

As of March 31, 2015, all of our rental properties previously consisting of eight office and four retail properties, aggregating approximately 668,000 rentable square feet, of which 625,000 square feet were office space, and 43,000 square feet were retail space, had been sold.

Results of Discontinued Operations

Comparison of the three months ended March 31, 2015 to the three months ended March 31, 2014

Revenue

Rental revenue and other decreased by $12,000, or 1% for the three months ended March 31, 2015 compared to the three months ended March 31, 2014, due primarily to the sales of the properties.

Tenant reimbursements increased $20,000 or 19%, for the three months ended March 31, 2015 compared to the three months ended March 31, 2014, due to an increase in reimbursements from tenants for work orders.

Expenses

Property operating expenses decreased by $27,000, or 2%, for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 primarily due to the sales of the properties.

Depreciation and amortization decreased by $841,000, or 100%, for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 as the assets were classified as held for sale as of September 30, 2014 at which point depreciation and amortization ceased.

General and administrative expenses decreased by $126,000, or 30%, for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 due to high investor relations costs relating to the dissolution proxy in the first quarter of 2014.

Interest expense decreased by $153,000, or 22%, for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 due to the early extinguishment of debt as properties were sold.

Liquidity and Capital Resources

As of March 31, 2015, we had cash and cash equivalents of $23,012,000 and all notes payable had been paid in full.

Cash flows

Cash used in operating activities was $588,000 for the three months ended March 31, 2015 as compared to cash used in operating activities of $432,000 for the three months ended March 31, 2014 due to changes in certain assets and liabilities including deferred gain on sale, accounts receivable, deferred costs and prepaid expenses.

Cash provided by investing activities was $67,331,000 for the three months ended March 31, 2015 as compared to cash used in investing activities of $10,000 for the three months ended March 31, 2014 due to the proceeds from the sale of real estate.

Cash used in financing activities was $50,856,000 for the three months ended March 31, 2015 as compared to $286,000 for the three months ended March 31, 2014. The increase was due to the payoff of the notes payable and related prepayment penalties.

Critical Accounting Policies

In the preparation of financial statements, we utilize certain critical accounting policies. There has been no change to our significant accounting policies included in the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Forward Looking Statements; Factors That May Affect Operating Results

This Report on Form 10-Q contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our expectations, hopes, intentions, beliefs and strategies regarding the future. These forward looking statements include statements relating to our belief that we will be able to complete our dissolution within a certain timeframe.

All forward-looking statements included in this document are based on information available to us on the date hereof. Because these forward looking statements involve risk and uncertainty, there are important factors that could cause our actual results to differ materially from those stated or implied in the forward-looking statements.

The forward-looking statements in this Quarterly Report on Form 10-Q are subject to additional risks and uncertainties further discussed under “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2014. We assume no obligation to update or supplement any forward looking-statement.

Risks of Litigation

Certain claims and lawsuits have arisen against us in our normal course of business. We believe that such claims and lawsuits will not have a material adverse effect on our financial position, cash flow or results of operations.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Not applicable.

Item 4. Controls and Procedures

The principal executive officer and principal financial officer of the General Partner have evaluated the disclosure controls and procedures of the Partnership as of the end of the period covered by this quarterly report. As used herein, the term “disclosure controls and procedures” has the meaning given to the term by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and includes the controls and other procedures of the Partnership that are designed to ensure that information required to be disclosed by the Partnership in the reports that it files with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon his evaluation, the principal executive officer and principal financial officer of the General Partner has concluded that the Partnership’s disclosure controls and procedures were effective such that the information required to be disclosed by the Partnership in this quarterly report is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms applicable to the preparation of this report and is accumulated and communicated to the General Partner’s management, including the General Partner’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

There have not been any changes in the Partnership’s internal control over financial reporting that occurred during the Partnership’s fiscal quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Certain claims and lawsuits have arisen against the Partnership in its normal course of business. The Partnership believes that such claims and lawsuits will not have a material adverse effect on the Partnership’s financial position, cash flow or results of operations.

Item 1A.

Risk Factors

There are no material changes to any of the risk factors as previously disclosed in Item 1A. to Part I of the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6.

Exhibits

Purchase and Sale Agreement between the Partnership, Rancon Realty Fund IV Subsidiary, LLC and Tri City Grand Avenue Partners, LLC, dated January 16, 2015.

Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of the General Partner Pursuant to Rule 13a-14(a) of the Exchange Act.

Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of the General Partner Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	RANCON REALTY FUND V,
	a California limited partnership

	By:	Rancon Financial Corporation
		a California corporation,
		its General Partner


Date: May 14, 2015	By:	/s/ Daniel L. Stephenson
		Daniel L. Stephenson, President

Date: May 14, 2015	By:	/s/ Daniel L. Stephenson
		Daniel L. Stephenson, General Partner

EXHIBIT INDEX

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Exhibit 10		Purchase and Sale Agreement between the Partnership, Rancon Realty Fund IV Subsidiary, LLC and Tri City Grand Avenue Partners, LLC, dated January 16, 2015.

Exhibit 31		Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of the General Partner Pursuant to Rule 13a-14(a) of the Exchange Act.

Exhibit 32		Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of the General Partner Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.

101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

RANCON REALTY FUND V 10-Q