<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                                 ------------
                                   FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

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

For Quarter Ended September 30, 1998              Commission File Number 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 Identification No.)
 incorporation or organization)


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


              Registrant's telephone number, including area code:

                                 (617) 261-9000

--------------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report

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


                               Yes [X]    No [_]
<PAGE>
 
                     NEW ENGLAND LIFE PENSION PROPERTIES;
                       A REAL ESTATE LIMITED PARTNERSHIP

                                   FORM 10-Q

                      FOR QUARTER ENDED SEPTEMBER 30, 1998

                                    PART I

                             FINANCIAL INFORMATION
                            ----------------------
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

BALANCE SHEETS
(Unaudited)
<TABLE> 
<CAPTION> 
                                         September 30, 1998    December 31, 1997
                                         ------------------    -----------------
<S>                                       <C>                  <C>
ASSETS

Real estate investments: 
  Property, held for disposition           $             -     $     5,161,213      
                                           ---------------     ---------------       
                                                         -           5,161,213      

Cash and cash equivalents                        8,877,170           1,309,837
Short-term investments                                   -           1,543,736
Interest, rent and other receivables                 5,316              10,447
                                           ---------------     ---------------       
                                           $     8,882,486     $     8,025,233
                                           ===============     ===============

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                           $        18,291     $        44,957
Accrued management fee                                   -              17,705
Deferred disposition fees                          964,480             868,855
                                           ---------------     ---------------       
Total liabilities                                  982,771             931,517
                                           ---------------     ---------------       
Partners' capital:
 Limited partners ($115.37 per
  unit; 30,000 units authorized,
  issued and outstanding)                        7,825,643           7,027,704
 General partner                                    74,072              66,012
                                           ---------------     ---------------       
Total partners' capital                          7,899,715           7,093,716
                                           ---------------     ---------------       
                                           $     8,882,486     $     8,025,233
                                           ===============     ===============
</TABLE>

           (See accompanying notes to unaudited financial statements)
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
 
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
                                           Three Months Ended  Nine Months Ended    Three Months Ended   Nine Months Ended
                                           September 30, 1998  September 30, 1998   September 30, 1997   September 30, 1997
                                           ------------------  ------------------   ------------------   ------------------
<S>                                        <C>                 <C>                  <C>                  <C>  
INVESTMENT ACTIVITY
Property rentals                           $                -  $          153,809   $          227,370   $          742,326
Property operating expenses                                 -             (68,653)             (94,996)            (233,408)
Depreciation and amortization                               -                   -              (62,252)            (188,288)
                                           ------------------  ------------------   ------------------   ------------------  
                                                            -              85,156               70,122              320,630
Ground rentals and interest on mortgage
  loans                                                     -                   -              429,127              429,127
                                           ------------------  ------------------   ------------------   ------------------  
    Total real estate operations                            -              85,156              499,249              749,757
 
Gain on sale of investment                                  -             655,710            1,120,783            1,120,783
                                           ------------------  ------------------   ------------------   ------------------  
    Total real estate activity                              -             740,866            1,620,032            1,870,540
 
Interest on cash equivalents
  and short term investments                          120,844             299,546               53,281              123,956
                                           ------------------  ------------------   ------------------   ------------------  
    Total investment activity                         120,844           1,040,412            1,673,313            1,994,496
                                           ------------------  ------------------   ------------------   ------------------  
Portfolio Expenses
 
Management fee                                              -                   -               32,368               32,368
General and administrative                             12,035              55,322               20,920               77,900
                                           ------------------  ------------------   ------------------   ------------------  
                                                       12,035              55,322               53,288              110,268
                                           ------------------  ------------------   ------------------   ------------------  
Net Income                                 $          108,809  $          985,090   $        1,620,025   $        1,884,228
                                           ==================  ==================   ==================   ================== 
Net income per limited partnership
  unit                                     $             3.59  $            32.51   $            53.46   $            62.18
                                           ==================  ==================   ==================   ================== 
Cash distributions per
  limited partnership unit                 $                -  $             5.91   $                -   $                -
                                           ==================  ==================   ==================   ================== 
Number of limited partnership
  units outstanding during the period                  30,000              30,000               30,000               30,000
                                           ==================  ==================   ==================   ================== 
</TABLE>

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

STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)

<TABLE>
<CAPTION>
                          Three Months Ended          Nine Months Ended            Three Months Ended         Nine Months Ended    
                          September 30, 1998          September 30, 1998           September 30, 1997         September 30, 1997   
                          ------------------          ------------------           ------------------         ------------------   
                        General       Limited      General        Limited        General        Limited      General       Limited  
                        Partner       Partners     Partner        Partners       Partner        Partners     Partner       Partners 
                        -------       --------     -------        --------       -------        --------     -------       -------- 

<S>                  <C>            <C>         <C>             <C>            <C>           <C>           <C>          <C>
Balance at                                                                                                                  
beginning of period  $   72,984     $7,717,922  $   66,012      $7,027,704     $   47,726    $12,556,272   $  45,084    $12,294,711 

Cash
distributions                 -              -      (1,791)       (177,300)            -             -             -              -

Net income                1,088        107,721       9,851         975,239         16,200      1,603,825      18,842      1,865,386
                     ----------     ----------  ----------      ----------     ----------    -----------  ----------    ----------- 

Balance at
end of period        $   74,072     $7,825,643  $   74,072      $7,825,643     $   63,926    $14,160,097  $   63,926    $14,160,097
                     ----------     ----------  ----------      ----------     ----------    -----------  ----------    ----------- 

</TABLE> 

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

SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>   
<CAPTION> 
                                           Nine Months Ended September 30,
                                           -------------------------------
                                              1998                 1997     
                                              ----                 ----    
<S>                                        <C>                 <C>        
Net cash provided by operating activities  $  312,003          $  848,316 
                                           ----------          ---------- 
Cash flows from investing activities:                                     
   Net proceeds from sale of investment     5,795,060           6,798,318 
   Deferred disposition fee                    95,625             214,312 
   Capital expenditures on owned property           -            (254,476)
   (Increase) decrease in short-term                                      
      investments, net                      1,543,736            (986,283)
                                           ----------          ---------- 
         Net cash provided by                                             
         investing activities               7,434,421           5,771,871 
                                           ----------          ---------- 
Cash flows from financing activity:                                       
   Distributions to partners                 (179,091)                  - 
                                           ----------          ---------- 
         Net increase in cash and                                         
           cash equivalents                 7,567,333           6,620,187 
Cash and cash equivalents:                                                
   Beginning of period                      1,309,837           2,300,885 
                                           ----------          ---------- 
                                                                          
   End of period                           $8,877,170          $8,921,072 
                                           ==========          ==========  
</TABLE>

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

NOTES TO FINANCIAL STATEMENTS (Unaudited)

     In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of September 30, 1998 and December 31, 1997 and the
results of its operations, its cash flows and partners' capital for the three
and nine months ended September 30, 1998 and 1997.  These adjustments are of a
normal recurring nature.

     See notes to financial statements included in the Partnership's 1997 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.


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

     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.  The Partnership 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 prior to the end of 1985.  The Partnership
sold its remaining investment in March 1998 and therefore intends to liquidate
and dissolve in 1999.


NOTE 2 - INVESTMENTS IN PROPERTY
---------------------------------

     On March 4, 1998, the Rivers Corporate Park property, located in Columbia,
Maryland, was sold to an unaffiliated third party.  The selling price was
determined by arm's length negotiations between the Partnership and the buyer.
The gross sales price was $6,375,000.  The Partnership received net proceeds of
$5,890,685 after closing costs and recognized a gain of $655,710 ($21.64 per
limited partnership unit).  A disposition fee of $95,625 was accrued but not
paid to AEW Real Estate Advisors, Inc. (the "Advisor").
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

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 and the payment of 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 $26,538,900 ($884.63 per limited partnership) has been returned to
the limited partners.

     On March 4, 1998, the Rivers Corporate Park property was sold to an
unaffiliated third party.  The Partnership received net proceeds of $5,890,685
after closing costs and recognized a gain of $655,710 ($21.64 per limited
partnership unit).  A disposition fee of $95,625 was accrued but not paid to the
Advisor.

     At September 30, 1998, the Partnership had $8,877,170 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 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 early 1999.  Distributions for the first two quarters of 1997 had
also been suspended due to the bankruptcy of the sole tenant at Rivers Corporate
Park.  Operating distributions were resumed for the third quarter of 1997 at an
annualized rate of 12% on the adjusted capital contribution, due to increased
cash flow from Rivers Corporate Park and Willows Shopping Center.

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


     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.  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.



Results of Operations
---------------------

Operating Factors
 
     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.

     As discussed above, the Rivers Corporate Park was sold on March 4, 1998,
and the Partnership recognized a gain of $655,710.  At the time of sale, this
property was 29% leased.

Investment Results

     Real estate operations for the comparable nine month periods ended
September 30, 1998 and 1997 were $85,156 and $749,757, respectively.  This
decrease of $664,601 is due to both the sale of the Willows Shopping Center in
September 1997 and the sale of Rivers Corporate Park in March 1998.  There are
no comparative operating results for the three month periods ended September 30,
1998 and 1997, also due to the two sales mentioned above.

     Interest on cash equivalents and short-term investments for the three and
nine month periods ended September 30, 1998 was $120,844 and $299,546 compared
to $53,281 and $123,956 for the same periods in 1997. The increases in both
periods are due primarily to higher invested balances caused by the receipt of
proceeds from the Rivers Corporate Park sale in early March 1998.

     Operating cash flow decreased $536,313 between the first nine months of
1997 and 1998.  This decrease is primarily due to the sales of the Willows
Shopping Center in September 1997 and Rivers Corporate Park in March 1998.

Portfolio Expenses

     The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
<PAGE>
 
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

determined by the general partner.  General and administrative expenses
primarily consist of real estate appraisal, printing, legal, accounting and
investor servicing fees.

     There were no management fees incurred during the three and nine month
periods of 1998 due to the suspension of cash distributions as a result of the
sale of the last Partnership asset in early March 1998.

     General and administrative expenses for the three and nine months ended
September 30, 1998 were $12,035 and $55,322, respectively, compared to $20,920
and $77,900 for the same periods in 1997.  The decreases for both comparative
periods are due to lower overall expenses as a result of sales of all remaining
Partnership assets.
<PAGE>
 
                      NEW ENGLAND LIFE PENSION PROPERTIES;
                       A REAL ESTATE LIMITED PARTNERSHIP

                                   FORM 10-Q

                      FOR QUARTER ENDED SEPTEMBER 30, 1998

                                    PART II

                               OTHER INFORMATION
                              -------------------

     Items 1 - 5. Not Applicable

     Item 6.      Exhibits and Reports on Form 8-K

                  a.  Exhibits:   (27) Financial Data Schedule.
                      
                  b.  Reports on Form 8-K:  No reports on Form 8-K
                      were filed during the quarter ended September 30,
                      1998.
<PAGE>
 
                                   SIGNATURES
                                   ----------



     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                  NEW ENGLAND LIFE PENSION PROPERTIES;
                                  A REAL ESTATE LIMITED PARTNERSHIP
                                          (Registrant)



November 13, 1998
                              /s/ J. Christopher Meyer III
                              -------------------------------
                                  J. Christopher Meyer III          
                                  President, Chief Executive Officer 
                                  and Director of General Partner,  
                                  Copley Properties Company, Inc.    



November 13, 1998
                              /s/ Karin J. Lagerlund
                              --------------------------------
                                  Karin J. Lagerlund
                                  Principal Financial and Accounting
                                  Officer of General Partner,
                                  Copley Properties Company, Inc.