<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               _________________

                                   FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                 FOR THE FISCAL YEAR ENDED DECEMBER 31,  1998
                          COMMISSION FILE NO. 0-11884

                            ________________________

                     NEW ENGLAND LIFE PENSION PROPERTIES;
                       A REAL ESTATE LIMITED PARTNERSHIP

            (Exact name of registrant as specified in its charter)

       MASSACHUSETTS                                        04-2774875
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                         Identification No.)

    225 Franklin Street, 25th Floor                 
         Boston, Massachusetts                                02110
(Address of principal executive offices)                    (Zip Code)

              Registrant's telephone number, including area code:
                                (617) 261-9000

          Securities registered pursuant to Section 12(b) of the Act:
                                     None

          Securities registered pursuant to Section 12(g) of the Act:
                     Units of Limited Partnership Interest

                               (Title of Class)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes  X     No  ___
                                  ---           

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

     No voting stock is held by non-affiliates of the Registrant.


                      DOCUMENTS INCORPORATED BY REFERENCE
                      -----------------------------------


                                     None
 
<PAGE>
 
                                    PART I
                                    ------

Item 1.   Business.
          --------     

          New England Life Pension Properties; A Real Estate Limited Partnership
(the "Partnership") was organized under the Uniform Limited Partnership Act of
the Commonwealth of Massachusetts on December 17, 1982, to invest primarily in
newly-constructed and existing income-producing real properties.

          The Partnership was initially capitalized with contributions of $2,000
from Copley Properties Company, Inc. (the "General Partner") and $10,000 from
NELRECO Troy, Inc. (the "Initial Limited Partner"). On December 23, 1982 the
Partnership filed a Registration Statement on Form S-11 (the "Registration
Statement") with the Securities and Exchange Commission with respect to the
public offering of 20,000 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 10,000 Units (an aggregate of $30,000,000). The Registration
Statement was declared effective on March 22, 1983. On June 29, 1983 the
Partnership sold all 30,000 Units, and the Partnership admitted 3,193 investors
as limited partners (the "Limited Partners"), with $29,652,760 being contributed
to the capital of the Partnership. At the same time, the Initial Limited Partner
withdrew its contribution from the Partnership.

          The Partnership does not have any employees. Services are performed
for the Partnership by the General Partner and by affiliates of the General
Partner.

          As of December 31, 1998 the Partnership had sold its last real estate
investment described in A. below, and made a capital distribution of $231.34
from the proceeds from this sale and partially from proceeds from previously
established capital reserves. In 1985 a joint venture in which the Partnership
was a partner sold its interest in a second real estate investment. In May,
1991, the Partnership sold a third real estate investment that resulted in a
capital distribution of $50.00 per Unit. In June 1994, a fourth investment, an
industrial building in Ontario, California, was sold, resulting in a capital
distribution of $193.34 per Unit. In October 1996, the Partnership sold a fifth
investment, an office building in Decatur, Georgia, resulting in a capital
distribution of $186.66 per Unit. In September 1997, the Partnership sold a
sixth investment, a shopping center in Concord, California, resulting in a
capital distribution of $233.75 per Unit.
   
     A.      Research and Development Facility in Columbia, Maryland ("Rivers
             ----------------------------------------------------------------
Corporate Park").
----------------

             In 1984 the Partnership consummated a land purchase-leaseback and
leasehold mortgage loan investment totaling $5,100,000 in a 75,500 square foot
research and development facility located in Rivers Corporate Park, Columbia,
Maryland. The ground lease provided that the Partnership receive an annual
rental of $126,500 plus 50% of the ground lessee's gross revenues from the
building in excess of a base amount. The mortgage loan matured on March 31, 1994
and bore interest at the rate of 11.5% per annum. The lease for the space in the
building gave the tenant occupying the building a right of first offer during
the period which began in September, 1992 and continues through November, 2004.

             In September 1996, the sole tenant filed for chapter 11 bankruptcy
protection and ceased paying rent. As part of the bankruptcy, the tenant sold
its assets to another company. During September 1997, the Partnership's ground
lessee/borrower received a settlement for amounts due under the tenant's lease
and paid the Partnership ground rent and interest payments on the mortgage loan
that had not been paid since the bankruptcy filing.
<PAGE>
 
             In October 1996, the Partnership reached an agreement in principle
with the ground lessee/borrower to extend the maturity date of the mortgage
loan, which had matured in 1994 to December 1997. In addition, the fixed
interest and ground rental payments were to be reduced, but the Partnership's
rate of participation in revenue from the underlying property was to be
increased. In October 1997, the Partnership formally executed an agreement to
extend the mortgage loan at the previously agreed upon terms. These changes were
retroactive to January 1, 1996; however, any adjustment to amounts previously
recognized by the Partnership as revenue were not material, and accordingly no
adjustments have been made to previously recorded amounts. In addition, the
Partnership gained the right to cause a sale of the property without the consent
of the borrower.

             On March 4, 1998, this property was sold to an unaffiliated third
party (the "Buyer") for $6,375,000. The selling price was determined by arm's
length negotiations between the Partnership and the Buyer. The Partnership
received net proceeds of $5,104,038 in full satisfaction of its ground lease and
mortgage loan investments and related accrued interest. The Partnership received
additional proceeds of approximately $789,000 after closing costs as its
participation share of the remaining proceeds after it recovered its investment
in the land and mortgage loan. On December 18, 1998, the Partnership distributed
$6,946,200 as a capital distribution ($231.54 per Unit) which includes
previously established capital reserves.

       B.     Office Building in Decatur, Georgia ("Decatur TownCenter").
              ----------------------------------------------------------

              In 1985 the Partnership acquired a 3.28 acre parcel of land in
Decatur, Georgia, for $1,675,000 and leased it back to the seller. Situated on
the land was a four-story, 79,855 square foot office building. The Partnership
also fully funded its $5,825,000 non-recourse mortgage loan commitment to the
ground lessee. The loan was secured by a first mortgage of the building and the
leasehold interest in the land.

       The Partnership also made an additional loan of $633,076 to fund tenant
improvements. This loan was secured by a second mortgage of the building and the
leasehold interest in the land.

       On October 10, 1996, the property was sold, at which time the
Partnership received proceeds of $6,573,178 in satisfaction of its mortgage loan
and ground lease.  Of the proceeds, $970,000 was held at the Partnership level
in order to augment reserves, and $5,599,800 was distributed to the Limited
Partners as a capital distribution in the amount of $186.66 per Unit on October
25, 1996.

       C.    Shopping Center in Concord, California ("Willows Shopping Center").
             ------------------------------------------------------------------

             On July 30, 1984, the Partnership and an affiliate of the
Partnership (the "Affiliate") jointly made land purchase-leaseback and leasehold
mortgage loan investments aggregating $15,719,317 in a 24.8 acre shopping center
located in Concord, California, known as the Willows Shopping Center. The
Partnership's share of the investments aggregated $3,929,829, giving the
Partnership a 25% interest in each component of the investment held in common
with the Affiliate. The investments entitled the Partnership and the Affiliate
jointly to receive an annual interest return of 13% on the $10,719,317 ten-year
mortgage, together with an annual fixed rental under the ground lease equal to a
12.2% return on the $5,000,000 land purchase price plus an annual percentage
rental equal to 50% of the ground tenant's annual gross revenues in excess of
specified base amounts.
<PAGE>
 
             On August 15, 1985, the Partnership and the Affiliate consented to
a sale by the ground tenant, Willows Concord Venture ("Willows Concord"), of the
ground tenant's ownership interest in the buildings and leasehold interest in
the land to an affiliate of VMS Realty, Inc., an Illinois corporation. In
conjunction with the sale, the ground lease was amended to provide that the
Partnership and the Affiliate would no longer participate in excess rental
revenues from the Shopping Center or in net appreciation from the sale of the
property. The mortgage loan was also amended to increase the principal amount by
$3,880,683 to $14,600,000, to extend the maturity date one year to August, 1995,
and to lower the interest rate from 13% per annum to a stepped rate beginning at
9% per annum and increasing to 12% over six years. Under the terms of the
original ground lease, the joint ground lessors were entitled to 50% of the net
proceeds from a sale. The Partnership received cash of $1,071,875 and an
interest in the incremental mortgage loan amount equal to $970,171, 50% of which
was payable to the former ground lessee upon full payment of the loan principal
by the new mortgagor. The joint mortgagees also entered into a Collection and
Disbursement Agreement pursuant to which Willows Concord was entitled to share
in 50% of interest paid under the new note in excess of the interest that would
have been payable under the original note.

             The Partnership and the Affiliate had not received interest
payments currently on the mortgage loan since the payment due in March, 1990,
and as a result, the Partnership and the Affiliate began foreclosure proceedings
to take possession of the property. On October 4, 1990, Pacific First Bank, the
second leasehold mortgagee, filed an involuntary bankruptcy petition in the
United States Bankruptcy Court for the Northern District of California against
the ground lessee/debtor, to which filing the ground lessee/debtor subsequently
consented. The ground lessee/debtor later consented to relief from stay of
foreclosure proceedings. The Partnership and its Affiliate sold their interest
in the leasehold mortgage loan to Willows Concord on June 14, 1991. In return,
the Partnership and the Affiliate took back a note in the amount of $14,863,206.


             On June 18, 1991, Willows Concord foreclosed on the leasehold
mortgage. The Partnership, the Affiliate and Willows Concord entered into a
replacement promissory note in the principal amount of $14,863,206, effective
June 18, 1991. The new loan was secured by the leasehold interest, bore interest
at the rate of 9.323% per annum and provided for a reduction in principal if the
note was paid prior to maturity. The Partnership, the Affiliate and Willows
Concord also entered into a new ground lease which provides for annual rent in
the amount of $550,000 plus an annual percentage rent equal to 70% of the ground
lessee's annual gross revenues in excess of a specified amount. The Partnership
had a 25% share of such rent. To the extent that operating cash flow from the
shopping center was not sufficient to pay the ground rent, such rent was
accruable until June 1996, at which time Willows Concord was obligated to pay
all unpaid accrued rent and to pay all future ground rent on a current basis.
The Partnership and the Affiliate permitted the accrual of additional ground
rent.

             On January 1, 1995 the Partnership and the Affiliate provided a
$2.5 million construction loan to the ground lessee to fund the renovation of
the Center. The Partnership committed to fund $625,000 of this amount. The loan
bore interest at 11% per annum, provided for amortization on a 15-year schedule,
and was to mature on December 31, 1997. In addition, the ground lease was
amended to provide the Partnership and the Affiliate with the sole right to
cause a sale on or after January 1, 1996.

             On September 18, 1997, the property was sold. The Partnership
received its 25% share of the net proceeds totaling $7,009,315. On October 30,
1997, the Partnership distributed $7,012,500 as a capital distribution in the
amount of $233.75 per Unit which included proceeds from prior sales previously
held in reserves.
<PAGE>
 
Item 3.   Legal Proceedings.
          -----------------     

          The Partnership is not a party to, nor are any of its properties
subject to, any material pending legal proceedings.

Item 4.   Submission of Matters to a Vote of Security Holders.
          ---------------------------------------------------     

          No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Annual Report on Form 10-K.


                                    PART II
                                    -------

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters.
          ---------------------------------------------------------------------

          There is no active market for the Units. Trading in the Units is
sporadic and occurs solely through private transactions.

          As of December 31, 1998, there were 3,258 holders of Units.

          The Partnership's Amended and Restated Agreement of Limited
Partnership dated June 29, 1983, as amended (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. For the year ended December 31, 1998 cash
distributions paid in 1998 to the Limited Partners as a group totaled
$7,253,698. This total includes $307,498 ($153.98 per limited partnership) paid
as an additional distribution to limited partners who hold Units ("Incentive
Units") that are entitled to a minimum return because of the early date of
admission of such unit holders as limited partners. This additional distribution
to those limited partners was paid out of funds that otherwise would have been
distributed to the General Partners. All 1998 distributions represented a return
of capital from the proceeds of a sale and from previously established reserves.
For the year ended December 31, 1997 cash distributions paid in 1997 or
distributed after year end with respect to 1997 to the Limited Partners as a
group totaled $7,840,119 including $7,338,900 ($244.63 per limited partnership
unit) representing a return of capital from the proceeds of a property sale and
proceeds from previously sold properties.

          Cash distributions exceeded net income in both 1998 and 1997, and
therefore resulted in a reduction in partners' capital. Distributions of
operating cash flow were less than cash provided by operating activities in both
years. Reference is made to the Partnership's Statement of Partners' Capital and
Statement of Cash Flows in Item 8 hereof.
<PAGE>
 
Item 6.   Selected Financial Data.
          ----------------------- 

<TABLE>
<CAPTION>
                       For Year        For Year        For Year        For Year        For Year
                       Ended or        Ended or        Ended or        Ended or        Ended or
                       As of:          As of:          As of:          As of:          As of:
                       12/31/98(1)     12/31/97(2)     12/31/96(3)     12/31/95(4)     12/31/94(5)
                       -----------     -----------     -----------     -----------     -----------
<S>                    <C>             <C>             <C>             <C>             <C> 
Revenues               $1,587,869      $3,105,654      $ 1,712,474     $ 2,104,802     $ 3,691,109
 
Net Income             $1,437,560      $2,420,094      $   539,500     $ 1,569,268     $ 3,129,077
 
Net Income per
Unit of Limited
Partnership
Interest               $    47.44      $    79.86      $     17.80     $     51.79     $    103.26
 
Total Assets           $  823,481      $8,025,233      $13,431,421     $19,239,985     $18,681,253
 
Total Cash
Distributions
per Limited
Partnership Unit,
including amounts
distributed after
year end with
respect to
such year              $   237.45      $   255.43      $    223.57     $     32.80     $    236.54

Additional Cash
Distributions per
Incentive Limited
Partnership Unit       $   153.98      $        -      $         -     $         -     $         -
</TABLE> 

(1)  The Partnership consummated a sale in 1998 which increased Net Income by
     $751,335 ($24.79 per Unit).
     The Partnership made a capital distribution of $6,946,200 ($231.54 per
     Unit) from this sale and from previously established reserves.
     The Partnership also made an additional capital distribution of $307,498
     ($153.98 per Incentive Unit) from previously established reserves.
(2)  The Partnership consummated a sale in 1997 which increased Net Income by
     $1,117,467 ($36.88 per Unit) and capital distributions of $7,012,500
     ($233.75 per Unit).
     The Partnership also recorded a credit of $400,000 ($13.20 per Unit)
     related to impaired mortgage loans during 1997.
     The Partnership also made capital distributions of $326,400 ($10.88 per
     Unit) from previously undistributed sale proceeds.
(3)  The Partnership consummated a sale in 1996 which resulted in capital
     distributions of $5,599,800 ($186.66 per Unit).
     The Partnership also recorded a provision of $409,592 ($13.52 per Unit) for
     impaired mortgage loans during 1996.
(4)  The Partnership recorded a credit of $260,000 ($8.58 per Unit) related to
     impaired mortgage loans during 1995.
(5)  The Partnership consummated a sale in 1994 which increased Net Income by
     $1,385,562 ($45.72 per Unit) and capital distributions by $5,800,200
     ($193.34 per Unit).
     The Partnership also recorded a credit of $200,000 ($6.60 per Unit) related
     to impaired mortgage loans during 1994.
<PAGE>
 
Item 7.
-------

Management's Discussion and Analysis of Financial Condition and Results of
--------------------------------------------------------------------------
Operations
----------

Liquidity and Capital Resources
-------------------------------

The Partnership completed its offering of units of limited partnership interest
in June 1983. A total of 30,000 units were sold. The Partnership received
proceeds of $27,253,251, net of selling commissions and other offering costs,
which were invested in real estate, used to pay related acquisition costs, or
retained as working capital reserves. The Partnership made six real estate
investments, all of which have been sold: one in each of 1985, 1991, 1994, 1996,
1997 and 1998. As a result of these sales and similar transactions, capital of
$33,485,100 ($1,116.17 per Unit) has been returned to the limited partners
through December 31, 1998. Additional capital of $307,498 has been returned to
Incentive Unit holders in accordance with the terms of the Partnership
Agreement.

On October 10, 1996, the Decatur TownCenter investment was sold and the
Partnership received net proceeds of $6,573,178 which were used to repay the
ground lease investment and the carrying value of the mortgage loans. Since the
mortgage loans were impaired, their carrying value had been previously reduced
to estimated fair market value, less anticipated costs of sale; thus, no gain or
loss on the sale was recognized. The total valuation allowance was $2,349,592 at
the time of the sale, which included a disposition fee of $196,775 payable to
AEW Real Estate Advisors, Inc. ("AEW"). The resulting capital distribution to
limited partners of $5,599,800 on October 25, 1996 ($186.66 per Unit) reduced
the adjusted capital contribution to $360.00 per Unit.

On September 18, 1997, the Willows Shopping Center, which was owned by the
Partnership (25%) and an affiliate (75%), was sold and the Partnership received
its 25% share of the net proceeds totaling $7,009,315, after closing costs, and
recognized a gain of $1,117,467 ($36.88 per Unit). A disposition fee of $214,312
was accrued but not paid to AEW. The resulting capital distribution to limited
partners of $7,012,500 on October 30, 1997 ($233.75 per Unit) reduced the
adjusted capital contribution to $126.25 per Unit. In addition, a capital
distribution of $10.88 per Unit was made at this time from cash reserves
accumulated from prior sales, further reducing the adjusted capital contribution
to $115.37 per Unit.

On March 4, 1998, the Rivers Corporate Park investment was sold. The Partnership
received $5,890,685 which represents repayment of the Partnership's leasehold
mortgage loan and ground investment plus its 80% participation in net sale
proceeds. The Partnership recognized a gain of $751,335 ($24.79 per Unit). On
December 18, 1998, the Partnership made a capital distribution to the limited
partners in the aggregate amount of $6,946,200 ($231.54 per Unit) with proceeds
from this sale and partially from proceeds from previously established capital
reserves.

At December 31, 1998, the Partnership had $820,108 in cash and cash equivalents,
which is primarily being retained as working capital reserves . Due to the sale
of the Partnership's last investment, discussed above, the General Partner
suspended operating distribution as of the first quarter of 1998 and has elected
not to make any further distributions until all Partnership expenses have been
paid or reconciled. The Partnership intends to liquidate and dissolve in 1999.

In the third quarter of 1997, due to the increased cash flow from Rivers
Corporate Park and Willows Shopping Center, the General Partner decided to
resume operating cash distributions at an annualized rate of 12% on the adjusted
capital contribution. Operating cash distributions had not previously been made
since the distribution for the third quarter of 1996.
<PAGE>
 
Year 2000 Readiness Disclosure
------------------------------

The Year 2000 Issue is a result of computer programs being written using two
digits rather than four to define the applicable year. Computer programs that
have date-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions or engage in normal
business operations.

The Partnership relies on AEW Capital Management L.P. ("AEW Capital
Management"), the parent of AEW Real Estate Advisors, Inc., to generate
financial information and to provide other services which are dependent on the
use of computers. The Partnership has obtained assurances from AEW Capital
Management that:

     .  AEW Capital Management has developed a Year 2000 Plan (the "Plan")
        consisting of five phases: inventory, assessment, testing,
        remediation/repair and certification.

     .  As of September 30, 1998, AEW Capital Management had completed the
        inventory and assessment phases of this Plan and had commenced the
        testing and remediation/repair of internal systems.

     .  AEW Capital Management expects to conclude the internal testing,
        remediation/repair and certifications of its Plan no later than June 30,
        1999.


The Partnership also relies on joint venture partners and/or property managers
to supply financial and other data with respect to its real properties. The
Partnership is in the process of surveying these third party providers and
assessing their compliance with Year 2000 requirements. To date, the Partnership
is not aware of any problems that would materially impact its results of
operations, liquidity or capital resources. However, the Partnership has not yet
obtained written assurances that these providers would be Year 2000 compliant.
 
The Partnership currently does not have a contingency plan in the event of a
particular provider or system not being Year 2000 compliant. Such a plan will be
developed if it becomes clear that a provider (including AEW Capital Management)
is not going to achieve its scheduled compliance objectives by June 30, 1999.
The inability of one of these providers to complete its Year 2000 resolution
process could materially impact the Partnership. In addition, the Partnership is
also subject to external forces that might generally affect industry and
commerce, such as utility or transportation company Year 2000 compliance
failures and related service interruptions. Given the nature of its operations, 
the Partnership will not incur any costs associated with Year 2000 compliant. 
All such costs are borned by AEW Capital Management and the property managers.
 
Results of Operations
---------------------

Form of Real Estate Investments

The Willows Shopping Center, which was sold in September 1997, had been
structured as a ground lease/mortgage loan investment. However, for financial
reporting purposes it had been accounted for as a jointly-owned property.
Through October 1997 the Rivers Corporate Park was structured and accounted for
as a ground lease/ mortgage loan investments. In October 1997, the ground lease
and mortgage loan investment were restructured to provide the Partnership
substantially the same risks and potential rewards as ownership of the asset
would entail. Accordingly, the Partnership reported this investment as an owned
property beginning in October 1997. This investment was sold in March 1998.
<PAGE>
 
Operating Factors

As described above, the Willows Shopping Center was sold on September 18, 1997,
and the Partnership recognized a gain of $1,117,467. At the time of sale, the
Willows Shopping Center was 94% leased.

The Decatur Town Center investment was sold on October 10, 1996, as described
above.

As described above, the Rivers Corporate Park investment was sold on March 4,
1998, and the Partnership recognized a gain of $751,335. At the time of sale,
the property was 29% leased.

Investment Results
------------------

In 1996, the Partnership determined that the mortgage loan on Rivers Corporate
Park was impaired and recognized a provision for impaired mortgage loans of
$400,000 which was charged to operations in the fourth quarter of 1996. As a
result of favorable market conditions in 1997, this impairment provision was
reversed in October 1997 through a credit to the impairment and valuation
accounts.

During 1995 the estimated market value of the loan collateral of Decatur
TownCenter was increased and the valuation allowance was reduced by $260,000
through a credit to operating results. During 1996, a valuation provision of
$9,592 was recognized to adjust the carrying value to the amount of sale
proceeds received, less disposition costs.

1998 Compared to 1997

Exclusive of the 1997 credit from impaired mortgage loans, real estate operating
results were $82,889 and $855,028 for the years ended 1998 and 1997,
respectively. The decrease in operations of $772,139 is due to both the sale of
the Willows Shopping Center in September 1997 and the sale of Rivers Corporate
Park in March 1998.

Interest on cash equivalents and short-term investments increased by $202,775
between 1998 and 1997 primarily due to higher average invested balances caused
by the Rivers Corporate Park sales proceeds being held in reserves for a nine-
month period before being distributed to investors.

During 1998, the Partnership also recognized other income of $285,303. This
income is the result of the reversal of previously accrued disposition fees.

Operating cash flow decreased $280,161 between 1998 and 1997. This decrease is
primarily due to the decrease in operations discussed above.

1997 Compared to 1996

Exclusive of the 1997 and 1996 credit from and (provision for) impaired mortgage
loans and the operating results from Decatur TownCenter ($341,585) reported
through the date of sale in 1996, real estate operating results increased to
$855,028 in 1997 from $669,507 in 1996. This increase of $185,521 was due to
both overall improved operating results at Willows Shopping Center ($93,894) and
increased interest income, ground rent and operating income (from October 1997)
from Rivers Corporate Park ($91,627). The improved operating results at Willows
Shopping Center were primarily due to lower operating expenses and depreciation
and amortization due to the third quarter sale. The increase in income from the
Rivers Corporate Park was the result of re-leasing the space vacated in 1996.

Interest on cash equivalents and short-term investments increased between 1997
and 1996 primarily due to higher average invested balances caused by a portion
of the Decatur TownCenter sales proceeds being held in reserves combined with
the receipt of the Willows Shopping Center proceeds in September 1997.
<PAGE>
 
Operating cash flow decreased approximately $94,000 between 1997 and 1996. This
decrease was due to the lack of cash flow from Decatur TownCenter which was sold
in 1996, offset by improved operating results at Willows Shopping Center,
discussed above.

Portfolio Expenses

The Partnership management fee is 9% of distributable cash flow from operations
after any increase or decrease in working capital reserves as determined by the
General Partner. General and administrative expenses primarily consist of real
estate appraisal, printing, legal, accounting and investor servicing fees.

1998 Compared to 1997

The Partnership management fee decreased $50,072 due to the suspension of cash
distributions during 1998. General and administrative expenses decreased
approximately 18% between 1998 and 1997 due to lower accounting and printing
fees.

1997 Compared to 1996

The Partnership management fee decreased $35,972 due to the suspension of cash
distributions for the first and second quarters of 1997. General and
administrative expenses were relatively unchanged between 1997 and 1996.


Inflation
---------

By their nature, real estate investments tend not to be adversely affected by
inflation. Inflation may result in appreciation in the value of the
Partnership's real estate investments over time, if rental rates and replacement
costs increase. Declines in real property values, during the period of
Partnership operations, due to market and economic conditions, have overshadowed
the positive effect inflation may have on the value of the Partnership's
investments.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk
          ----------------------------------------------------------
 
The Partnership was not party to derivative financial instruments or derivative
commodity instruments at or during the year ended December 31, 1998. The
Partnership's only other financial instruments (as defined by Financial
Accounting Standards Board Statement No. 107) are its cash and cash equivalents
for which cost approximates market value.

Item 8.   Financial Statements and Supplementary Data.
          ---------------------------------------------     

          See the Financial Statements of the Partnership included as a part of
this Annual Report on Form 10-K.

Item 9.   Changes in and Disagreements with Accountants on Accounting and
          ---------------------------------------------------------------
          Financial Disclosure.
          ----------------------     

          The Partnership has had no disagreements with its accountants on any
matters of accounting principles or practices or financial statement disclosure.
<PAGE>
 
                                   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 General Partner and the age and position held by each
of them as of December 31, 1998.

<TABLE>
<CAPTION>
Name                         Position(s) with the General Partner                         Age
----                         ------------------------------------                         ---
<S>                          <C>                                                          <C>
J. Christopher Meyer, III    President, Chief Executive Officer and Director              51
Pamela J. Herbst             Vice President and Director                                  43
J. Grant Monahon             Vice President and Director                                  53
James L. Finnegan            Vice President                                               38
Karin J. Lagerlund           Treasurer and Principal Financial and Accounting Officer     34
</TABLE>

         (c)  Identification of Certain Significant Employees.
              -------------------------------------------------     

              None.
 
         (d)  Family Relationships.
              -----------------------------

              None.

         (e)  Business Experience.
              ---------------------     

              The General Partner was incorporated in Massachusetts on December
16, 1982. The background and experience of the executive officers and directors
of the General Partner are as follows:

     J. Christopher Meyer, III. joined AEW Real Estate Advisors, Inc. ("AEW") ,
formerly known as Copley Real Estate Advisors, Inc., in 1987 and has been an
officer at AEW since then. AEW is a subsidiary of AEW Capital Management, L.P.
("AEW Capital Management"), of which he is also a Director. Prior to joining
AEW, he had senior positions with several regional real estate development
concerns, including Chief Financial Officer of Ford Motor Land Development
Corporation. His career at AEW has included asset management responsibility for
the company's Eastern Region, and portfolio manager for several commingled real
estate funds. Presently, Mr. Meyer has overall responsibility for all the
partnerships advised by AEW whose securities are registered under the Securities
and Exchange Act of 1934, and for several commingled funds. He received a B.A.
in Statistics from Princeton University and in MBA from the Wharton School of
the University of Pennsylvania.

     Pamela J. Herbst directs AEW Capital Management's Institutional Real Estate
Services, with oversight responsibility for the asset and portfolio management
areas. Ms. Herbst is a member of AEW Capital Management's Investment Policy
Group and Management Committee. She came to AEW Capital Management in December
1996 as a result of the firm's merger with Copley Real Estate Advisors, Inc.
where she held various senior level positions in asset and portfolio management,
acquisitions and corporate operations since 1982. Ms. Herbst is a graduate of
the University of Massachusetts (B.A.) and Boston University (M.B.A.).

     J. Grant Monahon is AEW Capital Management's General Counsel and a member
of the firm's Management Committee and Investment Policy Group. He has over 25
years of experience in real estate law and investments. Prior to joining the
predecessor of AEW Capital Management in 1987, Mr. Monahon was a partner with a
major Boston law firm. As the head of that firm's real estate finance
<PAGE>
 
department, he represented a wide variety of institutional clients, both
domestic and international, in complex equity and debt transactions. He is the
former Chairman of the General Counsel section of the National Association of
Real Estate Investment Managers. Mr. Monahon is a graduate of Dartmouth College
(B.A.) and Georgetown University Law Center (J.D.).

     James J. Finnegan is the Assistant General Counsel of AEW Capital
Management. Mr. Finnegan served as Vice President and Assistant General Counsel
of Aldrich, Eastman & Waltch, L.P., a predecessor to AEW Capital Management. Mr.
Finnegan has over ten years of experience in real estate law, including seven
years of experience in private practice with major New York City and Boston law
firms. Mr. Finnegan also serves as AEW's securities and regulatory compliance
officer. Mr. Finnegan is a graduate of the University of Vermont (B.A.) and
Fordham University School of law (J.D.).

     Karin J. Lagerlund directs the Institutional Real Estate Services Portfolio
Accounting Group at AEW Capital Management, overseeing portfolio accounting,
performance measurement and client financial reporting for AEW's private equity
investment portfolios. Ms. Lagerlund is a Certified Public Accountant and has
over ten years experience in real estate consulting and accounting. Prior to
joining AEW Capital Management in 1994, she was an Audit Manager at EY/Kenneth
Leventhal LLP. Ms. Lagerlund is a graduate of Washington State University
(B.A.).

         (f)  Involvement in Certain Legal Proceedings.
              ------------------------------------------     

              None.

Item 11. Executive Compensation.
         ------------------------     

         Under the Partnership Agreement, the General Partner and its affiliates
are entitled to receive various fees, commissions, cash distributions,
allocations of taxable income or loss and expense reimbursements from the
Partnership. See Notes 1, 2 and 6 of Notes to Financial Statements.

         The following table sets forth the amounts of the fees and cash
distributions and reimbursements for out-of-pocket expenses which the
Partnership paid to or accrued for the account of the General Partner and its
affiliates for the year ended December 31, 1998.

<TABLE>
<CAPTION>
 
                                                                          Amount of Compensation
Receiving Entity                  Type of Compensation                       and Reimbursement   
----------------                  -----------------------------           ----------------------
<S>                               <C>                                     <C>
General Partner                   Share of Distributable Cash                      $   307,498
 
AEW Real Estate Advisors, Inc.    Disposition Fees                                     583,552
(formerly known as Copley Real
Estate Advisors, Inc.)
 
New England Securities            Servicing Fees and Out of
Corporation                       Pocket Reimbursements                                  5,837
                                                                                   -----------
 
                                  TOTAL                                            $   896,887
                                                                                   ===========
</TABLE>

         For the year ended December 31, 1998, the Partnership allocated $32,343
of taxable loss to the General Partner.
<PAGE>
 
Item 12. Security Ownership of Certain Beneficial Owners and Management.
         ---------------------------------------------------------------

         (a)  Security Ownership of Certain Beneficial Owners.
              ------------------------------------------------

              No person or group is known by the Partnership to be the
beneficial owner of more than 5% of the outstanding Units at December 31, 1998.
Under the Partnership Agreement, the voting rights of the Limited Partners are
limited and, in some circumstances, are subject to the prior receipt of certain
opinions of counsel or judicial decisions.

              Except as expressly provided in the Partnership Agreement, the
right to manage the business of the Partnership is vested exclusively in the
General Partner.

         (b)  Security Ownership of Management.
              ---------------------------------     

              An affiliate of the General Partner of the Partnership owned 1,094
Units at December 31, 1998.

         (c)  Changes in Control.
              -------------------

              There exists no arrangement known to the Partnership the operation
of which may at a subsequent date result in a change in control of the
Partnership.

Item 13. Certain Relationships and Related Transactions.
         ------------------------------------------------     

         The Partnership has no relationships or transactions to report other
than as reported in Item 11, above.

                                    PART IV
                                    -------

Item 14. Exhibits, Financial Statement Schedules, Reports on Form 8-K, and 
         -----------------------------------------------------------------
         Reports on Form 8-K/A
         ---------------------

         (a)  The following documents are filed as part of this report:

              (1)  Financial Statements--The Financial Statements listed on the
accompanying Index to Financial Statements.

              (2)  Financial Statement Schedules--The Financial Statement
Schedules listed on the accompanying Index to Financial Statements and Schedules
are filed as part of this Annual Report.

              (3)  Exhibits--The Exhibits listed in the accompanying Exhibit
Index are filed as a part of this Annual Report and incorporated in this Annual
Report as set forth in said Index.

         (b)  Reports on Form 8-K. No Current Report on Form 8-K was filed
during the fourth quarter of 1998.
<PAGE>
 
                     NEW ENGLAND LIFE PENSION PROPERTIES;
                       A REAL ESTATE LIMITED PARTNERSHIP



                             Financial Statements


                                * * * * * * * 



                               December 31, 1998
<PAGE>
 
                     NEW ENGLAND LIFE PENSION PROPERTIES;
                     ----------------------------------- 
                       A REAL ESTATE LIMITED PARTNERSHIP
                       ---------------------------------

                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
                  -------------------------------------------



 
Report of Independent Accountants

Financial Statements:

      Balance Sheets - December 31, 1998 and 1997

      Statements of Operations - Years ended December 31, 1998, 1997 and 1996

      Statements of Partners' Capital - Years ended December 31, 1998, 1997 and
1996

      Statements of Cash Flows - Years ended December 31, 1998, 1997 and 1996

      Notes to Financial Statements

Financial Statement Schedules:

      Schedule III - Real Estate and Accumulated Depreciation at December 31,
1998

      Schedule IV - Mortgage Loans on Real Estate at December 31, 1998



All other schedules have been omitted because they are either not applicable or
the required information is shown in the financial statements or notes thereto.
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
                       ---------------------------------


                                        
To the Partners


NEW ENGLAND LIFE PENSION PROPERTIES;
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
Life Pension Properties; A Real Estate Limited Partnership (the "Partnership")
at December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of Copley Properties Company, Inc., the
General Partner of the Partnership; 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 generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by the General Partner, and evaluating the
overall financial statement presentation. We believe our audits provide a
reasonable basis for the opinion expressed above.



/s/  PricewaterhouseCoopers LLP
------------------------------------
Boston, Massachusetts
March, 26, 1999
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
 
BALANCE SHEETS

<TABLE> 
<CAPTION> 
                                                           December 31,
                                                     -----------------------
 
                                                           1998         1997
                                                     ----------   ----------
<S>                                                  <C>          <C> 
ASSETS
 
Real estate investments:
   Property held for disposition                     $        -   $5,161,213
                                                     ----------   ----------
                                                              -    5,161,213
 
Cash and cash equivalents                               820,108    1,309,837
Short-term investments                                        -    1,543,736
Interest, rent and other receivables                      3,373       10,447
                                                     ----------   ----------
 
                                                     $  823,481   $8,025,233
                                                     ==========   ==========
 
LIABILITIES AND PARTNERS' CAPITAL
 
Accounts payable                                     $   32,492   $   44,957
Accrued management fee                                        -       17,705
Deferred disposition fees                                     -      868,855
                                                     ----------   ----------
Total liabilities                                        32,492      931,517
                                                     ----------   ----------
 
Partners' capital (deficit):
Limited partners ($0 and $115.37
 per unit, respectively; 30,000 units authorized,
  issued and outstanding)                             1,019,890    7,027,704
General partner                                        (228,901)      66,012
                                                     ----------   ----------
Total partners' capital                                 790,989    7,093,716
                                                     ----------   ----------
 
                                                     $  823,481   $8,025,233
                                                     ==========   ==========
</TABLE>

                (See accompanying notes to financial statements)
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
 
STATEMENTS OF OPERATIONS

<TABLE> 
<CAPTION> 
                                                 Year ended December 31,
                                           -----------------------------------
 
                                                 1998         1997        1996
                                           ----------   ----------   ---------
<S>                                        <C>          <C>          <C>
INVESTMENT ACTIVITY
Property rentals                           $  153,809   $  964,413   $ 788,265
Property operating expenses                   (70,920)    (350,224)   (343,067)
Depreciation and amortization                       -     (188,288)   (234,316)
                                           ----------   ----------   ---------
                                               82,889      425,901     210,882
 
Ground rentals and interest
 on mortgage loans                                  -      429,127     800,210
(Provision for) credit from impaired
 mortgage loans                                     -      400,000    (409,592)
                                           ----------   ----------   ---------
  Total real estate operations                 82,889    1,255,028     601,500
 
Gain on sale of investment                    751,335    1,117,467           -
                                           ----------   ----------   ---------
  Total real estate activity                  834,224    2,372,495     601,500
 
Interest on cash equivalents
 and short-term investments                   397,422      194,647     123,999
Other Income                                  285,303            -           -
                                           ----------   ----------   ---------
  Total investment activity                 1,516,949    2,567,142     725,499
                                           ----------   ----------   ---------
 
PORTFOLIO EXPENSES
 
Management fee                                      -       50,072      86,044
General and administrative                     79,389       96,976      99,955
                                           ----------   ----------   ---------
                                               79,389      147,048     185,999
                                           ----------   ----------   ---------
 
NET INCOME                                 $1,437,560   $2,420,094   $ 539,500
                                           ==========   ==========   =========
 
Net income per limited
  partnership unit                         $    47.44       $79.86      $17.80
                                           ==========   ==========   =========
 
Cash distributions per limited
  partnership unit                         $   237.45      $255.43     $223.57
                                           ==========   ==========   =========
 
Cash distributions per unit paid on
  certain limited partnership incentive
  units (See Note 6)                       $   153.98   $        -   $       -
                                           ==========   ==========   =========
 
Number of limited partnership units
  outstanding during the year                  30,000       30,000      30,000
                                           ==========   ==========   =========
 
Number of limited partnership incentive
  units outstanding during the year            21,353            -           -
                                           ==========   ==========   =========
</TABLE>

                (See accompanying notes to financial statements)
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

STATEMENTS OF PARTNERS' CAPITAL

<TABLE>
<CAPTION>
                                                Year ended December 31,
                        -------------------------------------------------------------------------
                             1998                    1997                     1996
                        -------------             -----------             ------------

                        General     Limited       General   Limited       General    Limited
                        Partner     Partners      Partner   Partners      Partner    Partners
                        -------     --------      -------   --------      -------    --------
<S>                     <C>         <C>           <C>       <C>           <C>        <C> 
Balance at beginning
  of year               $  66,012   $ 7,027,704   $45,084   $12,294,711   $ 50,874   $18,467,706
 
Cash distributions       (309,289)   (7,430,998)   (3,273)   (7,662,900)   (11,185)   (6,707,100)
 
Net income                 14,376     1,423,184    24,201     2,395,893      5,395       534,105
                        ---------   -----------   -------   -----------   --------   -----------
 
Balance at end
  of year               $(228,901)  $ 1,019,890   $66,012   $ 7,027,704   $ 45,084   $12,294,711
                        =========   ===========   =======   ===========   ========   ===========
</TABLE>

                (See accompanying notes to financial statements)
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                            ---------------------------------------

                                                                   1998          1997          1996
                                                            -----------   -----------   -----------
<S>                                                         <C>           <C>           <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                 $ 1,437,560   $ 2,420,094   $   539,500
 Adjustments to reconcile net income
 to net cash provided by operating activities:
  Depreciation and amortization                                       -       188,288       234,316
  Provision for (credit from) impaired
   mortgage loans                                                     -      (400,000)      409,592
  Gain on sale of investment                                   (751,335)   (1,117,467)            -
  Increase in deferred leasing costs
   and other assets                                                   -        (7,623)     (116,164)
  Decrease in working capital                                    21,863             -             -
  Decrease in operating receivables                               7,074         1,672        73,476
  Decrease in operating liabilities                             (30,170)     (119,811)      (81,166)
                                                            -----------   -----------   -----------
   Net cash provided by operating activities                    684,992       965,153     1,059,554
                                                            -----------   -----------   -----------
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 Net proceeds from sale of investment                         5,890,685     6,795,003     2,267,919
 Repayment of mortgage loan investment                                -             -     4,108,484
 Capital expenditures on owned property and
  property collateralizing ground lease/
  mortgage loan investments                                           -      (254,476)     (428,550)
 Decrease (increase) in short-term investments,
  net                                                         1,543,736    (1,044,867)      610,945
 Payment of deferred disposition fees                          (583,552)            -             -
   Provision for (reversal of) deferred disposition fees       (285,303)      214,312       196,775
                                                            -----------   -----------   -----------
 Net cash provided by investing activities                    6,565,566     5,709,972     6,755,573
                                                            -----------   -----------   -----------
 
CASH FLOWS FROM FINANCING ACTIVITY:
 Distributions to partners                                   (7,740,287)   (7,666,173)   (6,718,285)
                                                            -----------   -----------   -----------
    Net cash used in financing activity                      (7,740,287)   (7,666,173)   (6,718,285)
                                                            -----------   -----------   -----------
 
 Net increase (decrease) in cash and cash
  equivalents                                                  (489,729)     (991,048)    1,096,842
 
 Cash and cash equivalents:
  Beginning of year                                           1,309,837     2,300,885     1,204,043
                                                            -----------   -----------   -----------
 
  End of year                                               $   820,108   $ 1,309,837   $ 2,300,885
                                                            ===========   ===========   ===========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTION:

     Effective October 14, 1997, the Partnership's ground lease and mortgage
loan investment in Rivers Corporate Park was converted to a wholly-owned
property.  The carrying value of the investment at conversion was $5,161,213.

               (See accompanying notes to financial statements)
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND BUSINESS
----------------------------------

     General
     -------

     New England Life Pension Properties; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other entities intended to be exempt from federal
income tax. The Partnership commenced operations in June 1983, and acquired six
real estate investments through 1985. The Partnership sold its last remaining
investment in March 1998 and therefore intends to liquidate and dissolve in
1999.

     The general partner of the Partnership is Copley Properties Company, Inc.,
a wholly-owned subsidiary of AEW Real Estate Advisors, Inc. ("AEW"), formerly
known as Copley Real Estate Advisors, Inc. ("Copley"). Subject to the general
partner's overall authority, the business of the Partnership is managed by AEW
pursuant to an advisory contract.

     On December 10, 1996, Copley's parent, New England Investment Companies,
Limited Partnership ("NEIC"), a publicly traded master limited partnership,
acquired certain assets subject to then existing liabilities from Aldrich
Eastman & Waltch, Inc. and its affiliates and principals (collectively, "the AEW
operations"). Simultaneously, a new entity, AEW Capital Management, L.P., was
formed into which NEIC contributed its interest in Copley and its affiliates. As
a result, the AEW operations were combined with Copley to form the business
operations of AEW Capital Management, L.P. At year end 1997, NEIC completed a
restructuring plan under which it contributed all of its operations to a newly
formed private partnership, NEIC Operating Partnership, L.P., in exchange for a
general partnership interest in the newly formed entity. Accordingly, at
December 31, 1997, AEW Capital Management, L.P. is wholly owned by NEIC
Operating Partnership, L.P. AEW is a subsidiary of AEW Capital Management, L.P.
Effective April 1, 1998, NEIC changed its name to Nvest, L.P. and NEIC Operating
Partnership, L.P. changed its name to Nvest Companies, L.P.

     Prior to August 30, 1996, New England Mutual Life Insurance Company ("The
New England") was NEIC's principal unit holder and owner of all of the
outstanding stock of NEIC's general partner. On August 30, 1996, The New England
merged with and into Metropolitan Life Insurance Company ("Met Life"). Met Life
is the surviving entity and, therefore, through a wholly-owned subsidiary,
became the owner of the units of partnership interest previously owned by The
New England and of the stock of NEIC's general partner.

     At December 31, 1998 and 1997 an affiliate of the general partner owned
1,094 units of limited partnership interest, which were repurchased from certain
qualified plans, within specified annual limitations provided for in the
Partnership Agreement.

     Management
     ----------

     AEW, as advisor, is entitled to receive stipulated fees from the
Partnership in consideration of services performed in connection with the
management of the Partnership and the acquisition and disposition of Partnership
investments in real property. Partnership management fees are 9% of
distributable cash flow from operations, as defined, before deducting such fees.
No management fees were accrued during 1998 because the Partnership ceased
making operating distributions in the first 
<PAGE>
 
quarter of 1998. Acquisition fees were paid in an amount equal to 2% of the
gross proceeds from the offering available for investment. Disposition fees are
limited to the lesser of 3% of the selling price of the property or 50% of the
standard real estate commission customarily charged by an independent real
estate broker. Payment of disposition fees is subject to the prior receipt by
the limited partners of their capital contributions plus a stipulated return
thereon. (See Note 2 for further discussion).

     New England Securities Corporation ("NESC"), an indirect subsidiary of Met
Life, is engaged by the Partnership to act as its unit holder servicing agent.
Fees and out-of-pocket expenses for such services totaled $5,837, $5,486 and
$5,231 in 1998, 1997 and 1996, respectively.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

     Accounting Estimates
     --------------------

     The preparation of financial statements in conformity with generally
accepted accounting principles requires the 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.

     Ground Leases and Mortgage Loans
     --------------------------------

     While the related land and loan investments are legally separable, the
terms thereof have been negotiated jointly and the investment performance is
evaluated on a combined basis. They are, therefore, presented together in the
accompanying statement of operations.

     Investments in land subject to ground leases were stated at cost, plus
accrued revenue. Investments in mortgage loans to the related ground lessees
were originally stated at cost, plus accrued interest. If the mortgage loan was
impaired (see "Impaired Mortgage Loans" below), the carrying amount was adjusted
to the estimated market value of the underlying collateral less anticipated
costs of sale.

     Impaired Mortgage Loans
     -----------------------

     The Partnership considers a loan to be impaired when it is probable that it
will be unable to collect all amounts due under the contractual terms of the
loan agreement. Factors that the Partnership considers in determining whether a
loan is impaired include its past due status, fair value of the underlying
collateral and economic prospects of the borrower. When a loan is impaired, its
carrying value is periodically adjusted, through a valuation allowance, to its
estimated market value which is based on the appraised value of the underlying
collateral less anticipated costs of sale. Changes in the valuation allowance
are reported in the Statement of Operations.

     Property
     --------

     Property, including ground lease and mortgage loans which are in substance
real estate investments, includes land, building and improvements which are
stated at cost less accumulated depreciation plus other operating assets and
liabilities. The Partnership's initial carrying value of property previously
reported as a ground lease/mortgage loan equals the carrying value of the
predecessor investment on the conversion date.

     The Partnership and an affiliate previously shared common ownership of an
investment. The form of the investment was a combination ground lease and
mortgage loan, as described above; however, in this case (Willows Shopping
Center), substantial economic risks of property ownership rested with the
<PAGE>
 
Partnership and its affiliate. Accordingly, the investment was accounted for as
owned property, although the Partnership and its affiliate had a priority claim
to all unrecognized contractual revenue. The Partnership's financial statements
included its proportionate ownership share (25%) of the individual assets,
liabilities, revenue and expenses related to the property. Land and buildings
and improvements (net of accumulated depreciation) were classified as property
in the balance sheet. This investment asset was sold during 1997.

     Realizability of Real Estate Investments
     ----------------------------------------

     The Partnership considers a real estate investment to be impaired when it
determines the carrying value of the investment is not recoverable through
expected undiscounted cash flows from the operations and disposition of the
property. The impairment loss is based on the excess of the investment's
carrying value over its estimated fair market value. For investments held for
disposition, the impairment loss also includes estimated costs of sale.
Investments held for disposition are not depreciated during the holding period.

     The carrying value of an investment may be more or less than its current
appraised value. At December 31, 1997, the appraised value of the Partnership's
remaining investment exceeded its carrying value by approximately $700,000.

     The appraised value of the Partnership's real estate investment at December
31, 1997 was estimated by the General Partner and was generally based on a
combination of traditional appraisal approaches performed by AEW and an
independent appraiser.

     Capitalized Costs, Depreciation and Amortization
     ------------------------------------------------

     Maintenance and repair costs are expensed as incurred. Significant
improvements and renewals are capitalized. Depreciation is computed using the
straight-line method based on estimated useful lives of the buildings and
improvements. Leasing costs are also capitalized and amortized over the related
lease terms.

     Acquisition fees have been capitalized as part of the cost of real estate
investments. Amounts not related to land are being amortized using the straight-
line method over the terms of the mortgage loans or the estimated useful lives
of the property.

     Leases provide for rental increases over the respective lease terms. Rental
revenue is being recognized on a straight-line basis over the lease terms.

     Cash Equivalents and Short-Term Investments
     -------------------------------------------

     Cash equivalents are stated at cost, plus accrued interest. The Partnership
considers all highly liquid debt instruments purchased with a maturity of ninety
days or less to be cash equivalents; otherwise, they are classified as short-
term investments.

     The Partnership has the positive intent and ability to hold all short-term
investments to maturity; therefore, short-term investments are carried at cost
plus accrued interest, which approximates market value. At December 31, 1997,
all short-term investments were in commercial paper with less than six months
remaining to maturity.
<PAGE>
 
     Deferred Disposition Fees
     -------------------------

     As discussed in Note 1, disposition fees due to AEW related to sales or
restructuring of investments are included in the determination of gains or
losses resulting from such transactions. According to the terms of the advisory
contract, payment of such fees had been deferred until the limited partners
first received their capital contributions, plus stipulated returns thereon.
Upon the sale of the Partnership's remaining real property asset during the
first quarter of 1998 (as discussed in Note 3), and as required by the
Partnership Agreement, the General Partner performed an analysis of standard
real estate commissions customarily charged by independent real estate brokers
and determined that $583,552 of the previously accrued disposition fee of
$868,855 was payable, and, therefore the remaining $285,303 would not be paid
and, accordingly, reversed such fees in 1998. As a result, previously accrued
disposition fees payable to AEW totaling $285,303 ($9.41 per limited partnership
unit) were recognized as Other Income in 1998. The recognized disposition fees
of $583,552 were paid to the General Partner in December 1998.

     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
     ---------------------

     Per unit computations are based on the number of units of limited
partnership interest outstanding during the year. The actual per unit amount
will vary by partner depending on the date of admission to, or withdrawal from,
the Partnership.

     Segment Data
     ------------

     Effective January 1, 1998, the Partnership adopted Financial Accounting
Standards Board Statement No. 131, "Disclosure about Segments on an Enterprise
and Related Information" (FAS 131). Based on the criteria established in FAS
131, the Managing General Partner has determined that the Partnership operates
in one operating segment which is investing in real estate properties which are
domiciled in the United States of America.


NOTE 3 - INVESTMENTS IN GROUND LEASES AND MORTGAGE LOANS
--------------------------------------------------------

Rivers Corporate Park, Columbia, Maryland
-----------------------------------------

     In 1984, the Partnership acquired a ground lease investment and a mortgage
loan investment for $1,100,000 and $4,000,000, respectively. The ground lease
investment and mortgage loan investment originally had fixed interest rates of
11.5% and were payable monthly. The mortgage loan is secured by a first mortgage
on the Rivers Corporate Park buildings and by the ground leasehold interest. The
mortgage loan on Rivers Corporate Park matured on March 31, 1994.

     In September 1996, the sole tenant filed for Chapter 11 bankruptcy
protection and ceased paying rent. As part of the bankruptcy, the tenant sold
its assets to another company. During the fourth quarter of 1996, the
Partnership determined that the mortgage loan was impaired and recorded a
valuation allowance of $400,000. In September 1997, the Partnership's ground
lessee/borrower received a settlement for amounts due under the tenant's lease
and paid the Partnership ground rent and interest payments on the mortgage loan
that had not been paid since the bankruptcy filing.

     In October 1996, the Partnership reached an agreement in principle with the
borrower to extend the maturity date of the mortgage loan, which had matured in
March 1994, the fixed interest and ground 
<PAGE>
 
rental payments were to be reduced from 11.5% to 9.5% and the Partnership's rate
of participation in revenue were to be increased from 50% to 80%. In October
1997, the Partnership formally executed an agreement (the "Agreement") to extend
the mortgage loan at the previously agreed upon terms. These changes were
retroactive to January 1, 1996; however, any adjustment to amounts previously
recognized by the Partnership as revenue were insignificant. In addition, the
Partnership gained the right to cause a sale of the property without the
borrower's consent.

     The ground lease had a term of fifty years and provided for additional rent
equal to a percentage, ranging from 50% to 80%, of gross revenues in excess of a
base amount from the rental of the buildings situated on the land. Percentage
rent totaled $12,021 and $1,322 in 1997 and 1996, respectively. The Partnership
was also entitled to that same percentage of the net proceeds from the sale of
the entire property after it had recovered its cash investment in the land and
mortgage loan. The lease agreements required the lessee to pay all operating
expenses related to the subject land.

     As a result of the execution of the Agreement which, among other changes,
increased the Partnership's participation in revenues and proceeds from sale of
the collateral to 80%, the Partnership recorded the Rivers Corporate Park
investments as an owned "Property" effective October 1997. Due to the execution
of a purchase and sale agreement during the fourth quarter of 1997, such
property was classified as Property Held for Disposition at December 31, 1997.
Net income from real estate operations for the fourth quarter of 1997 amounted
to approximately $120,000 for Rivers Corporate Park.

     The Rivers Corporate Park investment was sold on March 4, 1998. The
Partnership received $5,890,685 which represents repayment of the Partnership's
leasehold mortgage loan and ground investment plus its 80% participation in net
sale proceeds The Partnership recognized a net gain of $751,335. On December 18,
1998, the Partnership made a capital distribution to the limited partners in the
aggregate amount of $6,946,200 ($231.54 per Unit) with proceeds from this sale
and partially from proceeds from previously established capital reserves.

     The following is a summary of the Partnership's investments in the Rivers
Corporate Park ground lease and mortgage loan investment:

<TABLE>
<CAPTION>
                                            December 31,   December 31,
                                                1998          1997
                                            ------------   ------------
<S>                                         <C>            <C>
     Cash invested                          $          -   $ 5,100,000
 
     Unamortized closing costs and
      acquisition fees, net                            -        22,880
 
     Accrued ground lease and
      mortgage loan receivables                        -        38,333
 
     Valuation allowance for
      impaired mortgage loans                          -      (400,000)
 
     Recovery of valuation allowance for
      Impaired mortgage loans                          -       400,000
 
     Transfer to property held for
      disposition                                      -    (5,161,213)
                                            ------------   -----------
                                            $              $         -
                                            ============   ===========
</TABLE>
<PAGE>
 
     Sale of Decatur TownCenter
     --------------------------

     Decatur TownCenter in Decatur, Georgia was sold on October 10, 1996. The
net sale proceeds received by the Partnership were used to repay the ground
lease investment and the carrying value of the mortgage loans. Since the
mortgage loans were impaired, their carrying value had been previously reduced
to estimated fair market value, less anticipated costs of sale and thus no gain
or loss on the sale was recognized. The total valuation allowance at the date of
sale was $2,349,592, including $9,592 provided in 1996, which included a
disposition fee of $196,775 payable to AEW. On October 25, 1996, the Partnership
made a capital distribution to the limited partners in the aggregate amount of
$5,599,800 ($186.66 per Unit) with proceeds from this sale.

     Valuation Allowance
     -------------------

     The activity in the valuation allowance during 1997, together with the
related recorded and carrying value of the impaired mortgage loan at the
beginning of the year, are summarized in the table below.

<TABLE>
<CAPTION>
                                               Recorded      Valuation       Carrying   
                                                 Value       Allowance         Value     
                                             ------------    ----------    ------------ 
<S>                                          <C>             <C>           <C>          
Balance at January 1, 1997                   $ 4,000,000     $(400,000)    $ 3,600,000  
                                             ===========     =========     ===========  
                                                                                        
Accrued interest receivable                       38,333                        38,333  
                                                                                        
Reversal of impairment of loan                         -       400,000         400,000  
                                                                                        
Transfer to Property Held for Disposition                                               
     (Rivers Corporate Park)                  (4,038,333)            -      (4,038,333) 
                                                                                        
Balance at December 31, 1997                 $         -     $       -     $         -  
                                             ===========     =========     ===========   
</TABLE>

Except for the effect of the mortgage loan restructuring, the average recorded
value of the impaired mortgage loans did not differ materially from the balances
at the end of the period.

NOTE 4 - INVESTMENTS IN PROPERTY
--------------------------------

     The Willows Shopping Center investment (the "Willows"), acquired in 1984,
was owned jointly with an affiliate of the Partnership (the "Affiliate"); the
Partnership had a 25% ownership share. The ground lessee/mortgagor stopped
paying interest on the mortgage loan as of March 1990. As a result, the
Partnership and its Affiliate began foreclosure proceedings to take possession
of the property. A protracted series of legal interactions ensued, including the
filing of an involuntary bankruptcy petition by the second leasehold mortgagee.
In June 1991, the Partnership and its Affiliate sold the mortgage note to the
original owner of the Willows, who in turn undertook and completed the
foreclosure action. The Partnership and its Affiliate received a new mortgage
note; the principal related to the Partnership's share was $3,715,802. The note
bore interest at 9.323% per annum, payable monthly; however, it could accrue
with interest compounded at 11%. The loan was to mature on June 18, 2001. The
original owner also assumed the ground lease. The ground lease provided for
annual rental payments to the Partnership of $137,500. Rental payments were
accruable through June 1996, with interest compounding at 11%; however, the
Partnership had permitted additional accrual beyond that date as it evaluated
various alternatives. The ground lease also provided for participation rentals
at 70% of gross revenues in excess of a base amount to the Partnership and its
Affiliate. Under this investment arrangement, the Partnership 
<PAGE>
 
and its Affiliate were bearing substantial economic risks of ownership;
accordingly, the investment was accounted for as a jointly owned property.

     In connection with a major renovation of the property, on January 1, 1995,
the Partnership and its Affiliate committed to make a construction loan to the
ground lessee in the amount of $2,500,000. This loan was also accounted for as
an investment in property. The Partnership's share was $625,000 of which
$309,181 had been funded as of December 31, 1996. Interest accrued at 11%
compounded monthly; debt service payments began on January 1, 1996, including
principal payments based upon a 15-year amortization schedule. The note was to
mature on December 31, 1997, however, this property was sold on September 18,
1997. The Partnership received its 25% share of the net proceeds totaling
$7,009,315, after closing costs, and recognized a gain of $1,117,467 ($36.88 per
Unit). A disposition fee of $214,312 was accrued but not paid to AEW. On October
30, 1997, the Partnership made a capital distribution to the limited partners in
the aggregate amount $7,012,500 ($233.75 per Unit) with proceeds from this sale
and partially from proceeds from previously established capital reserves.

NOTE 5 - INCOME TAXES
---------------------

     The Partnership's income for federal income tax purposes differs from that
reported in the accompanying statement of operations as follows:

<TABLE>
<CAPTION>
                                                         Year ended December 31,
                                                   ---------------------------------
                                                      1998            1997          1996
                                                      ----            ----          ----
<S>                                             <C>            <C>             <C>
Net income per financial
 statements                                     $1,437,560     $ 2,420,094     $   539,500
Timing differences:
 Ground rent and mortgage loan interest (1)       (284,460)        283,515         947,478
 (Loss) gain on sale                               (43,212)     (3,886,969)     (3,631,081)
 Valuation allowance (recovery)                          -        (400,000)        400,000
                                                ----------     -----------     -----------
 
Taxable (loss)                                  $1,109,888     $(1,583,360)    $(1,744,103)
                                                ==========     ===========     ===========
</TABLE>

(1)  Represents additional contractual revenue recognized for tax purposes
     related to the Willows Shopping Center.

NOTE 6 - PARTNERS' CAPITAL
--------------------------

     Allocations of net income (losses) 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 partner. Cash distributions are made
quarterly.

     Net sales 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 partner. As a result of such transactions, the
adjusted capital contribution per Unit was reduced from $1,000 to $790 during
1985, from $790 to $740 during 1991, from $740 to $546.66 during 1994, from
$546.66 to $360 during 1996, from $360 to $115.37 during 1997, and from $115.37
to $0 in during 1998. Income from a sale is allocated in proportion to the
distribution of related proceeds, provided that the general partner is 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 partner.
<PAGE>
 
     On March 26, 1999, the Partnership made an additional distribution of
$278,726.40 ($14.40 per unit) to certain incentive unitholders, in
reconciliation to the 21,353 incentive unitholders at December 31, 1998.
<PAGE>
 
                                                                    SCHEDULE III


                     NEW ENGLAND LIFE PENSION PROPERTIES;
                       A REAL ESTATE LIMITED PARTNERSHIP
                                     
                   REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AT DECEMBER 31, 1998


<TABLE> 
<CAPTION> 
                                                                               Costs Subsequent      Gross Amount at Which
                                        Initial Costs to Partnership           to Acquisitions     Carried at Close of Period
                                -------------------------------------------    ------------------------------------------------ 

                                 Encum -                         Buildings &    Improve -                        Buildings &    
Description                     brances          Land           Improvements     ments              Land         Improvements   
------------------------        ---------     -----------       ------------   -----------        ---------     ---------------  
<S>                             <C>           <C>               <C>            <C>                <C>           <C>             
Research and Development                                                                                                        
 Facility                                                                                                                       
 Columbia, Maryland             Note A          1,122,880           --              --            1,122,880           4,038,333 
                                                                                                                                
                                ----------------------------------------------------------------------------------------------- 
              Total                            $1,122,880          $ 0             $ 0           $1,122,880          $4,038,333 
                                ===============================================================================================

<CAPTION> 
                                                       Accrued                      Accumulated                          Date  
Description                           Other          Ground Rent        Total       Depreciation         Disposition   Acquired
------------------------          ------------    ----------------   ---------   -----------------      -------------  --------
<S>                               <C>             <C>                <C>         <C>                    <C>            <C> 
Research and Development           
 Facility                           
 Columbia, Maryland                (21,863)             --            5,139,350          --                (5,139,350) 03/28/84

                                  ---------------------------------------------------------------------------------------------
              Total               ($21,863)           $ 0            $5,139,350         $ 0               ($5,139,350)       
                                  =============================================================================================
                   
<CAPTION>                                              
                                         Depreciable
Description                                 Life      
------------------------               ---------------
<S>                                    <C> 
Research and Development  
 Facility                 
 Columbia, Maryland                          --

                                       ---------------
              Total       
                                       ===============
</TABLE> 
                                             
              Notes:
              (A) The senior mortgage on the property is held by New England
                  Life Pension Properties.
                  1997 additions represent a reclass of mortgage loan investment
                  to property (see Note 3 to the Financial Statements)


 (B)  Reconciliation of real estate owned:

<TABLE> 
<CAPTION> 
                                                                     1996:               1997:            1998:       
<S>                                                               <C>                <C>              <C>         
                             Balance at beginning of year         $ 8,951,218        $ 7,690,314      $  5,161,213 
                                 Acquisitions                         683,162          4,038,333                  
                                 Dispositions                      (1,944,066)        (6,567,434)       (5,161,213)
                                                                  -----------        -----------      ------------
                             Balance at end of year               $ 7,690,314        $ 5,161,213      $          0
                                                                  ===========        ===========      ============ 

 Accumulated depreciation:   Balance at beginning of year         $   766,954        $   978,975      $          0
                                 Depreciation expense                 212,021            171,825                 0
                                 Disposition                                0         (1,150,800)                0
                                                                  -----------        -----------      ------------
                             Balance at end of year               $   978,975        $         0      $          0
                                                                  ===========        ===========      ============
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                NEW ENGLAND LIFE PENSION PROPERTIES
                                       
                                                      NOTE A TO SCHEDULE III
                                       
     Reconciliation of Real                                        1998          1998                                       
          Estate Owned             COST        CONVERSION TO    INVESTMENT    INCREASE IN      1998 DECREASE        COST    
                                   AS OF       WHOLLY-OWNED         IN         DEFERRED         IN PROPERTY      BALANCE AT 
           DESCRIPTION           12/31/97        PROPERTY        PROPERTY    LEASING COSTS    WORKING CAPITAL      3/4/98   
-----------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>            <C>              <C>          <C>              <C>                <C> 
      Rivers Corporate Park     $5,161,213                                                        ($21,863)      $5,139,350 

<CAPTION> 
     Reconciliation of Real      ACCUMULATED           1998            ACCUMULATED   
          Estate Owned         AMORTIZATION &     AMORTIZATION &     AMORTIZATION &       3/4/98         DISPOSITIONS    12/31/98
                                DEPRECIATION       DEPRECIATION       DEPRECIATION       PROPERTY            1998        PROPERTY
           DESCRIPTION         AS OF 12/31/97         EXPENSE         AS OF 3/4/98          NET                            NET   
----------------------------------------------------------------------------------------------------   ----------------  ---------
<S>                            <C>                <C>                <C>                 <C>             <C>             <C>      
      Rivers Corporate Park          $0                 $0                $0            $5,139,350       ($5,139,350)        $0 
</TABLE> 
<PAGE>
                                                                     Schedule IV

 
<TABLE> 
<CAPTION> 
                                               NEW ENGLAND LIFE PENSION PROPERTIES;
                                                 A REAL ESTATE LIMITED PARTNERSHIP

                                                    MORTGAGE LOANS ON REAL ESTATE                                                  
                                                       AT DECEMBER 31, 1998                                                        
                                                                                                                                   
                                                                                                                                   
                                                             Final                           Periodic                              
                                   Interest                 Maturity                         Payment            Face Amount        
Description                          Rate                     Date                            Terms             of Mortgage        
-----------                    -----------------        -----------------               -----------------     ---------------      
<S>                            <C>                      <C>                             <C>                   <C>                 
Research and Development                                                                                                           
 Facility                                                                                    Interest                              
 Columbia, Maryland                      11.50%                 03/28/94                     Monthly               4,000,000       
                               (See Note 3)                                                 Principal                              
                                                                                           at Maturity                             
                               -----------------        -----------------               -----------------     ----------------     
                                                                                                                                   
                   Total                                                                                          $4,000,000       
                               ===============================================================================================

                                                            Valuation                                                              
                                   Cost                     allowance                  Accrued                           Carrying  
                                 Recovery                  for impaired                Interest             Reclass      Amount of 
Description                      Allowance                Mortgage loans              Receivable              (1)        Mortgage  
-----------                 ---------------------     ----------------------        -------------         ----------    -----------
<S>                         <C>                       <C>                           <C>                   <C>           <C>        
Research and Development                                                                                                           
 Facility                                                                                                                          
 Columbia, Maryland               --                          --                        38,333            (4,038,333)        $0    
                                                                                                                                   
                                                                                                                                   
                            ---------------------     ----------------------        -------------         ----------    -----------
                                                                                                                                   
                   Total           $0                          $0                      $38,333           ($4,038,333)        $0    
                            ======================================================================================================= 

                                                                                                1996:               1997:
                                                                                                              
                               Balance at beginning of year                                   $8,441,928          $3,600,000
                               Reclass of accrued interest receivable                                  0             $38,333
                               Valuation recovery (allowance) for impaired loans                (409,592)            400,000
                               Increase in acccrued ground lease/mortgage                                  
                                     loan receivables                                                  0                   0
                               Amortization of deferred acquisition fees                               0                   0
                               Reclass (1)                                                             0          (4,038,333)
                               Disposition                                                    (4,432,336)                  0
                                                                                      -------------------  -----------------
                                                                                                           
                               Balance at end of year                                         $3,600,000                  $0
                                                                                      ===================  =================
</TABLE> 

Notes:
(1) - Represents the reclass of the Partnership's mortgage loan investment to
Property (see Note 3 to the Financial Statements)
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

<TABLE> 
<CAPTION> 
EXHIBIT NO.                                EXHIBIT                                        PAGE NO.          
----------                                 -------                                        -------           
<S>                      <C>                                                              <C>               
4.                       Amended and Restated Agreement of Limited                           *              
                         Partnership of the Registrant, dated June 29,                         
                         1983 (filed as Exhibit 4 to the Registrant's                          
                         Annual Report on Form 10-K for the fiscal                             
                         year ended December 31, 1983 [the "1983 Annual                        
                         Report"]).                                                            
                                                                                               
10A.                     Form of Escrow Deposit Agreement among the                          * 
                         Registrant, NEL Equity Services Corporation                           
                         and The First National Bank of Boston (filed                          
                         as Exhibit 10A to the Registrant's Registration                       
                         Statement on Form S-11, dated December 22, 1982,                      
                         file no. 2-81059 [the "Registration Statement"]).                     
                                                                                               
10B.                     Advisory Contract dated March 22, 1983, between                     * 
                         the Registrant and Copley Real Estate Advisors,                       
                         Inc. (filed as Exhibit 10 to the 1983 Annual Report).                 
                                                                                               
10C.                     Form of Agreement between the Registrant and                        * 
                         Copley Properties Company, Inc. relating to                           
                         organizational expenses (filed as Exhibit 10C                         
                         to the Registration Statement).                                       
                                                                                               
10D.                     Purchase Agreement and Deposit Receipt dated                        * 
                         April 14, 1983 between Doyle Development Company                      
                         and NBS Investment Corporation, which assigned                        
                         its rights and obligations thereunder to the                          
                         Registrant (filed as Exhibit 10 to Current Report                     
                         on Form 8-K dated June 29, 1983, as filed on                          
                         July 14, 1983).                                                       
                                                                                               
10E.                     Purchase and Sale Agreement dated December 1984,                    * 
                         as amended by First Addendum to Purchase and Sale                     
                         Agreement dated as of January 10, 1985 (filed as                      
                         Exhibit 28 to Current Report on Form 8-K dated                        
                         January 23, 1985).                                                    
                                                                                               
10F.                     Amended and Restated Secured Promissory Note                        * 
                         dated August 20, 1985, by VMS 1984-133, Ltd.,                         
                         for the benefit of the Registrant and New                             
                         England Life Pension Properties II; A Real                            
                         Estate Limited Partnership.                                            
</TABLE> 

_________________________________________
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

<TABLE> 
<CAPTION> 
EXHIBIT NUMBER                                                                            PAGE NUMBER
--------------                                                                            -----------
<S>                      <C>                                                              <C>        
10G.                     Amended and Restated Ground Lease dated                               * 
                         August 20, 1985 between the Registrant, New                            
                         England Life Pension Properties II; A Real                             
                         Estate Limited Partnership and VMS 1984-133,                           
                         Ltd.                                                                   
                                                                                                
10H.                     Amended and Restated Memorandum of Ground                             *
                         Lease dated August 20, 1985 by and among the                           
                         Registrant, New England Life Pension Properties                        
                         II; A Real Estate Limited Partnership and                              
                         VMS 1984-133, Ltd.                                                     
                                                                                                
10I.                     Contract of Sale dated as of March 30, 1984 by                        *
                         and between Decatur TownCenter Associates, Ltd.,                       
                         and the Registrant.                                                    
                                                                                                
10J.                     Three Party Agreement dated as of March 30, 1984                      *
                         by and among Decatur Town Center Associates,                           
                         the Registrant and the Citizens and Southern                           
                         National Bank.                                                         
                                                                                                
10K.                     Promissory Note dated February 20, 1985, in the                       *
                         principal amount of $5,825,000 from the Registrant                     
                         to Decatur Town Center Associates, Ltd.                                
                                                                                                
10L.                     Ground Lease dated February 20, 1985 between                          *
                         the Registrant and Decatur Town Center Associates,                     
                         Ltd.                                                                   
                                                                                                
10M.                     First Consolidated Amendatory Agreement dated                         *
                         December 29, 1988 by and between Decatur                               
                         TownCenter Associates, Ltd. and the Registrant.                        
                                                                                                
10N.                     Purchase and Sale Agreement dated September 27,                       *
                         1990 by and between New England Mutual Life              
                         Insurance Company, a Massachusetts corporation,          
                         and Tom Hennig Co., Inc., a California corporation,      
                         as amended by Letter dated December 12, 1990.             
</TABLE> 

______________________________
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

<TABLE> 
<CAPTION> 
EXHIBIT NUMBER                                                                            PAGE NUMBER
--------------                                                                            -----------
<S>                      <C>                                                              <C>        
10O.                     Letter Agreement between New England Life                             *
                         Pension Properties II; A Real Estate Limited                           
                         Partnership, the Registrant and Willows                                
                         Concord Venture dated June 14, 1991.                                   
                                                                                                
10P.                     Promissory Note dated June 14, 1991, in the                           *
                         principal amount of $14,863,206.38 from Willows                        
                         Concord Venture to New England Life Pension                            
                         Properties II; A Real Estate Limited Partnership                       
                         and the Registrant.                                                    
                                                                                                
10Q.                     Assignment of Note and Liens Including Deed of                        *
                         Trust dated as of June 13, 1991 by New England                         
                         Life Pension Properties II; A Real Estate Limited                      
                         Partnership and the Registrant to Willows Concord                      
                         Venture.                                                               
                                                                                                
10R.                     Assignment of VMS Loan Documents dated June 14,                       *
                         1991 by Willows Concord Venture to New England                         
                         Life Pension Properties II; A Real Estate Limited                      
                         Partnership and the Registrant.                                        
                                                                                                
10S.                     Deed of Trust and Security Agreement dated June 13,                   *
                         1991 between Willows Concord Venture, as Trustor,                      
                         Chicago Title Company, as Trustee, and New England                     
                         Life Pension Properties II; A Real Estate Limited                      
                         Partnership and the Registrant, as Beneficiary.                        
                                                                                                
10T.                     Assignment of Leases and Rents dated June 13, 1991                    *
                         by Willows Concord Venture to New England Life                         
                         Pension Properties II; A Real Estate Limited                           
                         Partnership and the Registrant.                                        
                                                                                                
10U.                     Amended and Completely Restated Ground Lease                          *
                         dated effective as of June 18, 1991 between             
                         Registrant, New England Life Pension Properties         
                         II; A Real Estate Limited Partnership and               
                         Willows Concord Venture.                                 
</TABLE> 

_________________________________________
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

<TABLE> 
<CAPTION> 
EXHIBIT NUMBER                                                                            PAGE NUMBER
--------------                                                                            -----------
<S>                      <C>                                                              <C>        
10V.                     Amended and Restated Secured Promissory Note                          *
                         effective as of June 14, 1991, in the principal                        
                         amount of $14,863,206.38 from Willows                                  
                         Concord Venture to the Registrant and                                  
                         New England Life Pension Properties II;                                
                         A Real Estate Limited Partnership.                                     
                                                                                                
10W.                     Modification Agreement and First Amendment to                         *
                         Loan Documents dated August 13, 1991, by and                           
                         between Willows Concord Venture, the                                   
                         Registrant and New England Life Pension                                
                         Properties II; A Real Estate Limited Partnership.                      
                                                                                                
10X.                     Modification Agreement and Second Amendment to                        *
                         Loan Documents dated September 12, 1991, by                            
                         and between Willows Concord Venture, the                               
                         Registrant and New England Life Pension Properties                     
                         II; A Real Estate Limited Partnership.                                 
                                                                                                
10Y.                     Modification Agreement and Third Amendment to                         *
                         Loan Documents dated October 15, 1991, by and                          
                         between Willows Concord Venture, the Registrant                        
                         and New England Life Pension Properties II;                            
                         A Real Estate Limited Partnership.                                     
                                                                                                
10Z.                     Fourth Amendment to Loan Documents dated                              *
                         December 17, 1992 by and between Willows                               
                         Concord Venture, Registrant and New England                            
                         Life Pension Properties II; A Real Estate                              
                         Limited Partnership.                                                   
                                                                                                
10AA.                    Amendment to Promissory Note executed as of                           *
                         March 1, 1993 made by Decatur TownCenter                               
                         Associates, Ltd. in favor of Registrant.                               
                                                                                                
10BB.                    First Amendment to First Consolidated                                 *
                         Amendatory Agreement executed as of March 1,            
                         1993 made by and between the Registrant and             
                         Decatur TownCenter Associates, Ltd.                      
</TABLE> 

_________________________________________
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

<TABLE> 
<CAPTION> 
EXHIBIT NUMBER                                                                            PAGE NUMBER
--------------                                                                            -----------
<S>                      <C>                                                              <C>        
10CC.                    Fee Transfer and Lien Release Agreement dated                         * 
                         June 1, 1994 by and between New England Life                           
                         Pension Properties, A Real Estate Limited Partnership.                
                         a Massachusetts limited partnership and 5141 E.                        
                         Santa Ana Property  Company, a California Limited                      
                         Partnership.                                                           
                                                                                                
10DD.                    Construction Loan Agreement dated January 1, 1995 by                  *
                         and between Willows Concord Venture, A California                      
                         Limited Partnership as Borrower, and New England                       
                         Life Pension Properties; A Real Estate Limited                         
                         Partnership as Lender.                                                 
                                                                                                
10EE.                    Second Amendment to Promissory Note dated as of February              *
                         19, 1995 between the Registrant and Decatur TownCenter                 
                         Associates, Ltd. ("Decatur").                                          
                                                                                                
10FF.                    Second Amendment to Ground Lease dated as of February                 *
                         19, 1995 between the Registrant and Decatur.                           
                                                                                                
10GG.                    Second Amendment to First Consolidated Amendatory                     *
                         Agreement dated as of February 19, 1995 between the                    
                         Registrant and Decatur.                                                
                                                                                                
10HH.                    Third Amendment to Participation Agreement dated as of                *
                         February 19, 1995 among the Registrant, A.J. Land, Jr.,       
                         David B. Pattillo and Lawrence P. Kelly.                      
                                                                                       
27.                      Financial Data Schedule                                        
</TABLE> 

_________________________________________
* Previously filed and incorporated herein by reference.
<PAGE>
 
                                  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 LIFE PENSION PROPERTIES;
                              A REAL ESTATE LIMITED PARTNERSHIP



Date:  March 30, 1999         By:  /s/ J. Christopher Meyer, III.
                                   ------------------------------
                                       J. Christopher Meyer, III
                                       President of  the
                                       Managing General Partner


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE> 
<CAPTION> 
     Signature                                Title                                       Date            
     ---------                                -----                                       ----            
<S>                                     <C>                                          <C>                  
                                        President, Chief                                
                                        Executive Officer and                           
/s/  J. Christopher Meyer, III          Director                                     March 30, 1999        
-------------------------------                                                                           
     J. Christopher Meyer, III                                                                            
                                                                                                          
                                                                                                          
                                        Vice President and                                                
/s/  Pamela J. Herbst                   Director                                     March 30, 1999       
-------------------------------                                                                           
     Pamela J. Herbst                                                                                     
                                                                                                          
                                        Vice President and                                                
/s/  J. Grant Monahon                   Director                                     March 30, 1999       
-------------------------------                                                                           
     J. Grant Monahon                                                                                     
                                                                                                          
                                                                                                          
/s/  James J. Finnegan                  Vice President                               March 30, 1999        
-------------------------------                                                                           
     James J. Finnegan                                                                                    
                                                                                                          
                                                                                                          
                                        Treasurer and Principal Financial                                 
/s/  Karin J. Lagerlund                 and Accounting Officer                       March 30, 1999       
------------------------------- 
     Karin J. Lagerlund
</TABLE>