##### Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

OR

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

THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-16467

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)



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



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

(650) 343-9300

(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.    Yes  X    No

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933, as amended.    Yes   
    No  X

Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities Act of 1934, as amended.    Yes        No  X

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 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]

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

Large Accelerated Filer        Accelerated Filer  
     Non-accelerated filer  X

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

No market for the Limited Partnership units exists and therefore a market value for such units cannot be determined.

Total number of units outstanding as of May 15, 2006: 84,168



---

##### Table of Contents

INDEX

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP



|                             |  |                                                                                       |  |                                                                                          |  |     
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ----
|                             |  | Page No.                                                                             
|PART I FINANCIAL INFORMATION |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Consolidated Financial Statements of Rancon Realty Fund V (Unaudited):                |  |                                                                                         
|                             |  |                                                                                       | 
|                             |  |                                                                                       |  | Consolidated Balance Sheets at March 31, 2006 and December 31, 2005                      |  | 3   
|                             |  |                                                                                       | 
|                             |  |                                                                                       |  | Consolidated Statements of Operations for the three months ended March 31, 2006 and 2005 |  | 4   
|                             |  |                                                                                       | 
|                             |  |                                                                                       |  | Consolidated Statement of Partners Equity for the three months ended March 31, 2006     |  | 5   
|                             |  |                                                                                       | 
|                             |  |                                                                                       |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2006 and 2005 |  | 6   
|                             |  |                                                                                       | 
|                             |  |                                                                                       |  | Notes to Consolidated Financial Statements                                               |  | 7-13
|                             |  |                                                                                      
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 14-18                                                                                   
|                             |  |                                                                                      
|Item 3.                      |  | Qualitative and Quantitative Information About Market Risk                            |  | 18                                                                                      
|                             |  |                                                                                      
|Item 4.                      |  | Controls and Procedures                                                               |  | 18                                                                                      
|                             | 
|PART II OTHER INFORMATION    |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Legal Proceedings                                                                     |  | 19                                                                                      
|                             |  |                                                                                      
|Item 2.                      |  | Unregistered Sales of Equity Securities and use of Proceeds                           |  | 19                                                                                      
|                             |  |                                                                                      
|Item 3.                      |  | Defaults Upon Senior Securities                                                       |  | 19                                                                                      
|                             |  |                                                                                      
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                   |  | 19                                                                                      
|                             |  |                                                                                      
|Item 5.                      |  | Other Information                                                                     |  | 19                                                                                      
|                             |  |                                                                                      
|Item 6.                      |  | Exhibits                                                                              |  | 19                                                                                      
|                             | 
|SIGNATURES                   |  | 20                                                                                   



2



---

##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Balance Sheets

(in thousands,
except units outstanding)

(Unaudited)



|                                                                                                                               |  |               |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                               |  | March 31,2006 |         |   | December 31,2005 |  
|Assets                                                                                                                         |  |               |         |   |                  |   |         |  
|                                                                                                                               |  |              
|Investments in real estate:                                                                                                    |  |               |         |   |                  |   |         |  
|Rental properties                                                                                                              |  | $             | 75,665  |   |                  | $ | 57,538  |  
|Accumulated depreciation                                                                                                       |  |               | (15,500 | ) |                  |   | (14,693 | )
|                                                                                                                               |  |               |         |   |                  |   |         |  
|Rental properties, net                                                                                                         |  |               | 60,165  |   |                  |   | 42,845  |  
|                                                                                                                               |  |              
|Construction in progress                                                                                                       |  |               | 451     |   |                  |   | 15,437  |  
|Land held for development                                                                                                      |  |               | 899     |   |                  |   | 899     |  
|                                                                                                                               |  |               |         |   |                  |   |         |  
|Total investments in real estate                                                                                               |  |               | 61,515  |   |                  |   | 59,181  |  
|Cash and cash equivalents                                                                                                      |  |               | 1,149   |   |                  |   | 3,437   |  
|Accounts receivable                                                                                                            |  |               | 744     |   |                  |   | 704     |  
|Deferred costs, net of accumulated amortization of $1,245 and $1,061 at March 31, 2006 and December 31, 2005,
respectively     |  |               | 2,850   |   |                  |   | 2,666   |  
|Prepaid expenses and other assets                                                                                              |  |               | 1,735   |   |                  |   | 666     |  
|                                                                                                                               |  |               |         |   |                  |   |         |  
|Total assets                                                                                                                   |  | $             | 67,993  |   |                  | $ | 66,654  |  
|                                                                                                                               |  |               |         |   |                  |   |         |  
|Liabilities and Partners equity                                                                                               |  |               |         |   |                  |   |         |  
|                                                                                                                               |  |              
|Liabilities:                                                                                                                   |  |               |         |   |                  |   |         |  
|Note payable and line of credit                                                                                                |  | $             | 40,072  |   |                  | $ | 37,824  |  
|Accounts payable and other liabilities                                                                                         |  |               | 968     |   |                  |   | 759     |  
|Construction costs payable                                                                                                     |  |               | 1,205   |   |                  |   | 2,545   |  
|Prepaid rent                                                                                                                   |  |               | 301     |   |                  |   | 212     |  
|                                                                                                                               |  |               |         |   |                  |   |         |  
|Total liabilities                                                                                                              |  |               | 42,546  |   |                  |   | 41,340  |  
|                                                                                                                               |  |               |         |   |                  |   |         |  
|Commitments and contingent liabilities (Note 6)                                                                                |  |               |         |   |                  |   |         |  
|                                                                                                                               |  |              
|Partners equity:                                                                                                              |  |               |         |   |                  |   |         |  
|General Partner                                                                                                                |  |               | (573    | ) |                  |   | (610    | )
|Limited Partners 84,404 and 85,206 limited partnership units outstanding at March 31, 2006 and December 31, 2005, respectively |  |               | 26,020  |   |                  |   | 25,924  |  
|                                                                                                                               |  |               |         |   |                  |   |         |  
|Total partners equity                                                                                                         |  |               | 25,447  |   |                  |   | 25,314  |  
|                                                                                                                               |  |               |         |   |                  |   |         |  
|Total liabilities and partners equity                                                                                         |  | $             | 67,993  |   |                  | $ | 66,654  |  
|                                                                                                                               |  |               |         |   |                  |   |         |  

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



3



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Operations

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

(Unaudited)



|                                                                                              |  |                             |        |   |      |   |        |  
|--------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                              |  | Three months endedMarch 31, |       
|                                                                                              |  | 2006                        |        |   | 2005 |  
|Operating Revenue Rental income                                                              |  | $                           | 3,130  |   |      | $ | 2,541  |  
|                                                                                              |  |                            
|Operating Expenses                                                                            |  |                             |        |   |      |   |        |  
|Property operating                                                                            |  |                             | 1,194  |   |      |   | 974    |  
|Depreciation and amortization                                                                 |  |                             | 942    |   |      |   | 682    |  
|Expenses associated with undeveloped land                                                     |  |                             | 24     |   |      |   | 43     |  
|General and administrative                                                                    |  |                             | 253    |   |      |   | 215    |  
|                                                                                              |  |                             |        |   |      |   |        |  
|Total operating expenses                                                                      |  |                             | 2,413  |   |      |   | 1,914  |  
|                                                                                              |  |                             |        |   |      |   |        |  
|Operating income                                                                              |  |                             | 717    |   |      |   | 627    |  
|                                                                                              |  |                            
|Interest and other income                                                                     |  |                             | 20     |   |      |   | 17     |  
|Interest expense                                                                              |  |                             | (366   | ) |      |   | (289   | )
|                                                                                              |  |                             |        |   |      |   |        |  
|Income from continuing operations                                                             |  |                             | 371    |   |      |   | 355    |  
|Income from discontinued operations (including gain on sale of real estate of $1,202 in 2005) |  |                             |       |   |      |   | 1,232  |  
|                                                                                              |  |                             |        |   |      |   |        |  
|Net income                                                                                    |  | $                           | 371    |   |      | $ | 1,587  |  
|                                                                                              |  |                             |        |   |      |   |        |  
|Basic and diluted net income per limited partnership unit                                     |  |                             |        |   |      |   |        |  
|Continuing operations                                                                         |  | $                           | 3.94   |   |      | $ | 3.67   |  
|Discontinued operations                                                                       |  |                             |       |   |      |   | 13.40  |  
|                                                                                              |  |                             |        |   |      |   |        |  
|                                                                                              |  | $                           | 3.94   |   |      | $ | 17.07  |  
|                                                                                              |  |                             |        |   |      |   |        |  
|Weighted average number of limited partnership units outstanding during each period           |  |                             | 84,730 |   |      |   | 87,147 |  
|                                                                                              |  |                             |        |   |      |   |        |  

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



4



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statement of Partners Equity

For the three months ended March 31, 2006

(in thousands)

(Unaudited)



|                                        |  |                 |      |   |                 |   |        |       |  |   |        |  
|--------------------------------------- |  | --------------- | ---- | - | --------------- | - | ------ | ----- |  | - | ------ | -
|                                        |  | General Partner |      |   | LimitedPartners |   |        | Total | 
|Balance (deficit) at December 31, 2005  |  | $               | (610 | ) |                 | $ | 25,924 |       |  | $ | 25,314 |  
|Redemption of limited partnership units |  |                 |     |   |                 |   | (238   | )     |  |   | (238   | )
|Net income                              |  |                 | 37   |   |                 |   | 334    |       |  |   | 371    |  
|                                        |  |                 |      |   |                 |   |        |       |  |   |        |  
|Balance (deficit) at March 31, 2006     |  | $               | (573 | ) |                 | $ | 26,020 |       |  | $ | 25,447 |  
|                                        |  |                 |      |   |                 |   |        |       |  |   |        |  

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



5



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Cash Flows

(in
thousands)

(Unaudited)



|                                                                                                                        |  |                             |        |   |      |   |        |  
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                                        |  | Three months endedMarch 31, |       
|                                                                                                                        |  | 2006                        |        |   | 2005 |  
|Cash flows from operating activities:                                                                                   |  |                             |        |   |      |   |        |  
|Net income                                                                                                              |  | $                           | 371    |   |      | $ | 1,587  |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                       |  |                             |        |   |      |   |        |  
|Gain on sale of real estate                                                                                             |  |                             |       |   |      |   | (1,202 | )
|Depreciation and amortization (including discontinued operations)                                                       |  |                             | 942    |   |      |   | 686    |  
|Amortization of loan fees, included in interest expense (including discontinued operations)                             |  |                             | 35     |   |      |   | 20     |  
|Changes in certain assets and liabilities:                                                                              |  |                             |        |   |      |   |        |  
|Accounts receivable                                                                                                     |  |                             | (67    | ) |      |   | 16     |  
|Deferred costs                                                                                                          |  |                             | (375   | ) |      |   | (145   | )
|Prepaid expenses and other assets                                                                                       |  |                             | (469   | ) |      |   | (121   | )
|Accounts payable and other liabilities                                                                                  |  |                             | 329    |   |      |   | 70     |  
|Prepaid rent                                                                                                            |  |                             | 89     |   |      |   | 61     |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Net cash provided by operating activities                                                                               |  |                             | 855    |   |      |   | 972    |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Cash flows from investing activities:                                                                                   |  |                             |        |   |      |   |        |  
|Net proceeds from sale of real estate                                                                                   |  |                             |       |   |      |   | 2,032  |  
|Net additions to real estate investments                                                                                |  |                             | (4,187 | ) |      |   | (3,302 | )
|Payments received from tenant improvement note receivable                                                               |  |                             | 26     |   |      |   | 26     |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Net cash used for investing activities                                                                                  |  |                             | (4,161 | ) |      |   | (1,244 | )
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Cash flows from financing activities:                                                                                   |  |                             |        |   |      |   |        |  
|Draws from construction loan                                                                                            |  |                             | 2,337  |   |      |   |       |  
|Draws on line of credit                                                                                                 |  |                             |       |   |      |   | 2,026  |  
|Principal payments on note payable                                                                                      |  |                             | (89    | ) |      |   | (54    | )
|Loan fee and application deposit                                                                                        |  |                             | (606   | ) |      |   |       |  
|Distribution to General Partner                                                                                         |  |                             | (200   | ) |      |   |       |  
|Redemption of limited partnership units                                                                                 |  |                             | (424   | ) |      |   | (136   | )
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Net cash provided by financing activities                                                                               |  |                             | 1,018  |   |      |   | 1,836  |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Net (decrease) increase in cash and cash equivalents                                                                    |  |                             | (2,288 | ) |      |   | 1,564  |  
|Cash and cash equivalents at beginning of period                                                                        |  |                             | 3,437  |   |      |   | 967    |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                                                              |  | $                           | 1,149  |   |      | $ | 2,531  |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Supplemental disclosure of cash flow information:                                                                       |  |                             |        |   |      |   |        |  
|Cash paid for interest (net of capitalized interest of $254 and $83 at March 31, 2006 and March 31, 2005,
respectively) |  | $                           | 331    |   |      | $ | 269    |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Supplemental disclosure of non-cash financing activities:                                                               |  |                             |        |   |      |   |        |  
|Redemption of limited partnership units                                                                                 |  | $                           | 181    |   |      | $ | 30     |  
|Redemption payable                                                                                                      |  |                             | (181   | ) |      |   | (30    | )
|                                                                                                                        |  |                             |        |   |      |   |        |  
|                                                                                                                        |  | $                           |       |   |      | $ |       |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|Premium paid on redemption of limited partnership units                                                                 |  | $                           | 266    |   |      | $ |       |  
|Premium paid on redemption of limited partnership units                                                                 |  |                             | (266   | ) |      |   |       |  
|                                                                                                                        |  |                             |        |   |      |   |        |  
|                                                                                                                        |  | $                           |       |   |      | $ |       |  
|                                                                                                                        |  |                             |        |   |      |   |        |  

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



6



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. ORGANIZATION

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

During the three months ended
March 31, 2006, a total of 802 units of limited partnership interest (Units) were redeemed at an average price of $629. As of March 31, 2006, there were 84,404 Units outstanding.

The partnership commenced on May 8, 1985 and shall continue until December 31, 2015, unless previously terminated in accordance with the provisions of the
Partnership Agreement.

Allocation of Net Income and Net Loss

Allocations of net income and net losses are made pursuant to the terms of the Partnership Agreement. Generally, net income and net losses from operations are allocated 90% to the limited partners and 10% to the
General Partner; however, if the limited partners and the General Partner have, as a result of an allocation of net loss, a deficit balance in their capital accounts, net loss shall not be allocated to the limited partners and General Partner in
excess of the positive balance until the balances of the limited partners and General Partners capital accounts are reduced to zero. Capital accounts shall be determined after taking into account the other allocations and distributions
for the fiscal year.

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

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

The
terms of the Partnership agreement call for the General Partner to restore any deficit that may exist in its capital account after allocation of gains and losses from the sale of the final property owned by the Partnership, but prior to any
liquidating distributions being made to the partners.

Distribution of Cash

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

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

All cash from sales or refinancing and any other cash determined by the General Partner to be available for distribution other than cash from operations shall be distributed in the following order of priority: (i) first, 1 percent to
the General Partner and 99 percent to the limited partners in proportion to the outstanding positive amounts of Adjusted Invested Capital (as defined in the Partnership Agreement) for each of their Units until Adjusted Invested Capital (as defined
in the Partnership Agreement) for each Unit is reduced to zero; (ii) second, 1 percent to the General Partner and 99 percent to the limited partners until each of the limited partners has received an amount which, including cash from operations
previously distributed to the limited partners, equals a 12 percent annual cumulative non-compounded return on the Adjusted Invested Capital (as defined in the Partnership Agreement) of their Units plus such limited partners Limited
Incremental Preferential Return (as defined in the Partnership Agreement), if any, with respect to each such Unit, on the Adjusted Investment Capital (as defined in the Partnership Agreement)



7



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements

(Unaudited)

of such Units for the twelve month period
following the date upon which such Unit was purchased from the Partnership and following the admission of such limited partner; (iii) third, 99 percent to the General Partner and 1 percent to the limited partners, until the General Partner has
received an amount equal to 20 percent of all distributions of cash from sales or refinancing; and (iv) the balance, 80 percent to the limited partners, pro rata in proportion to the number of Units held by each, and 20 percent to the General
Partner.

Management Agreement

In July 2004,
the Partnership extended its management relationship with Glenborough Properties L.P. (Glenborough) through December 31, 2006. Commencing on January 1, 2005 and set to expire on December 31, 2006, the Partnership engaged
Glenborough to perform services for the following fees: (i) a property management fee of 3% of gross rental revenue; (ii) a construction services fee per certain schedules ($10,000 and $18,000 in the first quarter of 2006, and 2005,
respectively); (iii) a specified asset and Partnership management fee of $300,000 per year with reimbursements of certain expenses and consulting service fees ($75,000 and $73,000 in the first quarter of 2006 and 2005, respectively);
(iv) a leasing services fee ($103,000 and $0 in the first quarter of 2006 and 2005, respectively); (v) a sales fee of 2% for improved properties ($0 and $43,000 in the first quarter of 2006 and 2005, respectively) and 4% for unimproved
properties; (vi) a financing services fee of 1% of gross loan amount; and (vii) a development fee equal to 5% of the hard costs of the development project, excluding the cost of the land, and the development fee and the general
contractors fee shall not exceed 11.5%, in the aggregate, of the hard costs of the development project ($172,000 and $192,000 in the first quarter of 2006 and December 31, 2005, respectively).

The new management agreement has resulted in reduced asset and Partnership services fee from 2004 to 2005, as well as a reduction of 2% in the property management fee
from 5% to 3%.

Risks and Uncertainties

The
Partnerships ability to (i) achieve positive cash flow from operations, (ii) meet its debt obligations, (iii) provide distributions either from operations or the ultimate disposition of the Partnerships properties or
(iv) continue as a going concern may be impacted by changes in interest rates, property values, local and regional economic conditions, or the entry of other competitors into the market. The accompanying consolidated financial statements do not
provide for adjustments with regard to these uncertainties.

Note 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying consolidated financial
statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (U.S. GAAP). They include the accounts of wholly-owned subsidiaries. All significant intercompany transactions and balances
have been eliminated in consolidation.

In the opinion of RFC, the General Partner, the accompanying unaudited consolidated financial statements contain
all adjustments (consisting of only normal accruals) necessary to present fairly the consolidated financial position of the Partnership as of March 31, 2006 and December 31, 2005, the related consolidated statements of operations for the
three months ended March 31, 2006 and 2005, partners equity for the three months ended March 31, 2006 and cash flows for the three months ended March 31, 2006 and 2005.

Use of Estimates

The preparation of financial statements in
conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
results of operations during the reporting period. Actual results could differ from those estimates.

Consolidation

In May 1996, the Partnership formed RRF V Tri-City Limited Partnership, a Delaware limited partnership (RRF V Tri-City). The limited partner of RRF V Tri-City
is the Partnership and the general partner is RRF V, Inc. (RRF V, Inc.), a corporation wholly-owned by the Partnership. Since the Partnership owns 100% of RRF V, Inc. and indirectly owns 100% of RRF V Tri-City, the financial statements
of RRF V, Inc. and RRF V Tri-City have been consolidated with those of the Partnership. In November 2005, the Partnership formed Rancon Realty Fund V Subsidiary LLC, a Delaware limited liability company (RRF V SUB) which is wholly owned
by the Partnership. Since RRF V SUB is wholly owned by the Partnership, the financial statements of RRF V SUB have been consolidated with those of the Partnership. All intercompany balances and transactions have been eliminated in consolidation.



8



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements

(Unaudited)

Rental Properties

Rental properties, including the related land, are stated at depreciated cost unless events or circumstances indicate that such amount cannot be recovered, in which case,
the carrying value of the property is reduced to its estimated fair value. Estimated fair value: (i) is based upon the Partnerships plans for the continued operations of each property; and (ii) is computed using estimated sales
price, as determined by prevailing market values for comparable properties and/or the use of capitalization rates applied to annualized net operating income based upon the age, construction and use of the building. The fulfillment of the
Partnerships plans related to each of its properties is dependent upon, among other things, the presence of economic conditions which will enable the Partnership to continue to hold and operate the properties prior to their eventual sale. Due
to uncertainties inherent in the valuation process and in the economy, it is reasonably possible that the actual results of operating and disposing of the Partnerships properties could be materially different than current expectations. Rental
properties are reviewed for impairment whenever there is a triggering event and at least annually.

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



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

Construction In Progress and Land Held for Development

Construction in progress and land held for development are stated at cost, unless events or circumstances indicate that cost cannot be recovered, in which case the
carrying value is reduced to estimated fair value. Estimated fair value: (i) is based on the Partnerships plans for the development of each property; and (ii) considers the cost to complete and the estimated fair value of the
completed project. The fulfillment of the Partnerships plans related to each of its properties is dependent upon, among other things, the presence of economic conditions which will enable the Partnership to either hold the properties for
eventual sale or obtain financing to further develop the properties. Construction in progress and land held for development are reviewed for impairment whenever there is a triggering event and at least annually.

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

Cash and Cash Equivalents

The Partnership considers
certificates of deposit and money market funds with original maturities of less than ninety days when purchased to be cash equivalents.

Fair Value
of Financial Instruments

For certain financial instruments, including cash and cash equivalents, accounts receivable, notes payable (construction
loan was recorded at fair value and excluded from the estimated fair value calculation) and line of credit payable, accounts payable and other liabilities and construction costs payable, recorded amounts approximate fair value due to the relatively
short maturity period. Based on interest rates available to the Partnership for debt with comparable maturities and other terms, the estimated fair value of the Partnerships collateralized fixed rate debt payable as of March 31, 2006 and
December 31, 2005 would be approximately $25,764,000 and $26,991,000, respectively.

Deferred Costs

Deferred loan fees are capitalized and amortized on a straight-line basis over the life of the related loan and deferred lease commissions are capitalized and amortized
on a straight-line basis over the initial fixed term of the related lease agreements.

Revenues

The Partnership recognizes rental revenue on a straight-line basis over the term of the leases. Actual amounts collected could be lower or higher than the amounts
recognized on a straight-line basis if specific tenants are unable to pay rent that the Partnership has previously recognized as revenue. The reimbursements from tenants for real estate taxes are recognized as revenue in the period the expenses are
incurred. Other recoverable operating expenses are recognized as revenue on an estimated basis and the differences between estimated and actual amounts are recognized as revenue in the subsequent year when the amounts are collected.



9



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements

(Unaudited)

Net Income Per Limited Partnership Unit

Net income per limited partnership unit is calculated using the weighted average number of limited partnership units outstanding during the period
and the Limited Partners allocable share of the net income.

Sales of Real Estate

The Partnership recognizes sales of real estate when a contract is in place, a closing has taken place, the buyers investment is adequate to demonstrate a
commitment to pay for the property and the Partnership does not have a substantial continuing involvement in the property. Each property is considered a separately identifiable component of the Partnership and is reported in discontinued operations
when the operations and cash flows of the Property have been (or will be) eliminated from the ongoing operations of the Partnership as a result of the disposal transaction and the Property will not have any significant continuing involvement in the
operations of the Partnership after the disposal transaction.

Income Taxes

No provision for income taxes is included in the accompanying consolidated financial statements, as the Partnerships results of operations are allocated to the partners for inclusion in their respective income
tax returns. Net income (loss) and partners equity (deficit) for financial reporting purposes will differ from the Partnerships income tax return because of different accounting methods used for certain items, including depreciation
expense, capitalization of development period interest and property taxes, income recognition and provisions for impairment of investments in real estate.

Concentration risk

Two tenants represented a combined 23% and one tenant represented 14% of rental income as of March 31, 2006
and 2005, respectively.

Reclassification

Certain prior year balances have been reclassified to conform to the current year presentation, with no effect on consolidated net income.

Reference to 2005 audited consolidated financial statements

These unaudited consolidated financial statements should be read in
conjunction with the notes to audited consolidated financial statements included in the December 31, 2005 audited consolidated financial statements on Form 10-K.

Note 3. INVESTMENTS IN REAL ESTATE

Rental properties consisted of the following at March 31, 2006 and
December 31, 2005 (in thousands):



|                               |  |      |         |   |      |   |         |  
|------------------------------ |  | ---- | ------- | - | ---- | - | ------- | -
|                               |  | 2006 |         |   | 2005 |  
|Land                           |  | $    | 6,944   |   |      | $ | 6,293   |  
|Land improvements              |  |      | 1,536   |   |      |   | 1,536   |  
|Buildings                      |  |      | 52,448  |   |      |   | 40,424  |  
|Tenant improvements            |  |      | 14,737  |   |      |   | 9,285   |  
|                               |  |      |         |   |      |   |         |  
|                               |  |      | 75,665  |   |      |   | 57,538  |  
|Less: accumulated depreciation |  |      | (15,500 | ) |      |   | (14,693 | )
|                               |  |      |         |   |      |   |         |  
|Total rental properties, net   |  | $    | 60,165  |   |      | $ | 42,845  |  
|                               |  |      |         |   |      |   |         |  

In January 2005, the Partnership entered into a contract with a construction company for $10,337,000 to build the
core and shell of a three-story office building on a five-acre land parcel known as Brier Corporate Center with a total of approximately 104,000 square feet. The Partnership also entered into a contract with the construction company for $4,708,000
to construct tenant improvements at this new building. In the first quarter of 2006, the core and shell of the building and the tenant improvement for an office space of approximately 87,000 square feet were completed. In February 2006, the total
costs were transferred from construction in progress to land, building and tenant improvements.

In accordance with SFAS 144 Accounting for the
Impairment or Disposal of Long Lived Assets, effective for financial statements issued for fiscal years beginning after December 15, 2002, net income and gain or loss on sales of real estate for properties sold or classified as held for
sale subsequent to December 31, 2002 are reflected in the consolidated statements of operations as Discontinued operations for all periods presented.



10



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements

(Unaudited)

Below is a
summary of the results of operations of Chuck E. Cheese through its disposition date (dollars in thousands):



|                                          |  |          |      
|----------------------------------------- |  | -------- | -----
|                                          |  | 2005 (1)
|Operating revenue  rental income         |  | $        | 50   
|                                          |  |          |      
|Property operating                        |  |          | 17   
|Depreciation and amortization             |  |          | 3    
|                                          |  |          |      
|Total operating expenses                  |  |          | 20   
|                                          |  |          |      
|Income before gain on sale of real estate |  |          | 30   
|Gain on sale of real estate               |  |          | 1,202
|                                          |  |          |      
|Income from discontinued operations       |  | $        | 1,232
|                                          |  |          |      

---

|(1) | Reflects 2005 operations through date of sale.
|--- | ----------------------------------------------

Note 4. CONSTRUCTION
IN PROGRESS AND LAND HELD FOR DEVELOPMENT

Construction in progress consisted of the following at March 31, 2006 and December 31, 2005
(in thousands):



|                                                                                                                                           |  |               |     |                  |   |       
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | --- | ---------------- | - | ------
|                                                                                                                                           |  | March 31,2006 |     | December 31,2005
|Tri-City(approximately 0.5 and 5.5 acres of land with a cost basis of $166 and $817 at March 31, 2006 and December 31, 2005,
respectively) |  | $             | 451 |                  | $ | 15,437
|                                                                                                                                           |  |               |     |                  |   |       

The construction costs of Brier Corporate Center were transferred to land, building and tenant improvements when
the property was completed and the first tenant moved in during the first quarter of 2006 (See Note 3 for discussion).

The site for the remaining 0.5 acre of land was improved in 2004 while the site for Pat & Oscars was constructed.

Land held for
development consisted of the following at March 31, 2006 and December 31, 2005 (in thousands):



|                                                                                                 |  |               |     |                  |   |    
|------------------------------------------------------------------------------------------------ |  | ------------- | --- | ---------------- | - | ---
|                                                                                                 |  | March 31,2006 |     | December 31,2005
|Tri-City(approximately 4 acres of land as of March 31, 2006 and December 31, 2005, respectively) |  | $             | 899 |                  | $ | 899
|                                                                                                 |  |               |     |                  |   |    

Currently 0.5 acre of land is undeveloped. The remaining 3.5 acres of land are
currently used as parking lots.

Note 5. NOTES PAYABLE AND LINE OF CREDIT

Notes payable and line of credit as of March 31, 2006 and December 31, 2005, were as follows (in thousands):



|                                                                                                                                                                                                                                                                                                                                 |  |               |        |                  |   |       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | ---------------- | - | ------
|                                                                                                                                                                                                                                                                                                                                 |  | March 31,2006 |        | December 31,2005
|Note payable collateralized by first deeds of trust on seven properties (discussed below). The note has a fixed interest rate of 5.46%, a
maturity date of January 1, 2016 and a 10-year term with a 30-year amortization requiring monthly payments of principal and interest totaling $151.                                    |  | $             | 26,711 |                  | $ | 26,800
|Construction note payable collateralized by Brier Corporate Center. The note has a variable interest rate of 30-day LIBOR plus 2% (6.75% and
6.37% as of March 31, 2006 and December 31, 2005, respectively), monthly interest-only payments and a maturity date of April 27, 2007.                                              |  |               | 9,361  |                  |   | 7,024 
|Line of credit collateralized by first deed of trust on Two Parkside. The line of credit has a total availability of $7.425 million, a
variable interest rate of Prime Rate (7.75% and 7.25% as of March 31, 2006 and December 31, 2005, respectively), monthly interest-only payments, and a maturity date of April 15, 2007. |  |               | 4,000  |                  |   | 4,000 
|                                                                                                                                                                                                                                                                                                                                 |  |               |        |                  |   |       
|Total                                                                                                                                                                                                                                                                                                                            |  | $             | 40,072 |                  | $ | 37,824
|                                                                                                                                                                                                                                                                                                                                 |  |               |        |                  |   |       



11



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements

(Unaudited)

The note payable is collateralized by
Ballys Health Club, Carnegie Business Center II, Lakeside Tower, Outback Steakhouse, Pat & Oscars, Palm Court Retail #3 and One Carnegie Plaza. This note provides a one-time loan assumption and a release provision for an individual
asset.

In 2005, a construction loan with capacity of $11,917,000, collateralized by Brier Corporate Center was obtained to provide funding for the
construction costs at Brier Corporate Center. The Partnership was required to pay a minimum equity contribution to the project in the amount of $4,800,000 prior to the first draw from the construction loan. The Partnership began drawing from the
construction loan for the payments of the construction costs at Brier Corporate Center in the third quarter of 2005 after the Partnership had fulfilled the lenders contribution requirement.

The annual maturities of the Partnerships notes payable and line of credit as of March 31, 2006, are as follows (in thousands):



|           |  |   |       
|---------- |  | - | ------
|2006       |  | $ | 275   
|2007       |  |   | 13,745
|2008       |  |   | 406   
|2009       |  |   | 428   
|2010       |  |   | 452   
|Thereafter |  |   | 24,766
|           |  |   |       
|Total      |  | $ | 40,072
|           |  |   |       

Note 6. COMMITMENTS AND CONTINGENT LIABILITIES

Environmental Matters

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

General Uninsured Losses

The Partnership carries property and liability insurance with respect to the properties. This coverage has policy specification and insured limits customarily carried for similar properties. However, certain types of
losses (such as from earthquakes and floods) may be either uninsurable or not economically insurable. Should the properties sustain damage as a result of an earthquake or flood, the Partnership may incur losses due to insurance deductibles,
co-payments on insured losses or uninsured losses. Additionally, the Partnership has elected to obtain insurance coverage for certified acts of terrorism as defined in the Terrorism Risk Insurance Act of 2004; however, our policies of
insurance may not provide coverage for other acts of terrorism. Any losses from such other acts of terrorism might be uninsured. Should an uninsured loss occur, the Partnership could lose some or all of its capital investment, cash flow and
anticipated profits related to the properties.

Other Matters

The Partnership is contingently liable for subordinated real estate commissions payable to the General Partner in the amount of $102,000 at March 31, 2006, for sales that occurred in previous years. The
subordinated real estate commissions are payable only after the Limited Partners have received distributions equal to their original invested capital plus a cumulative non-compounded return of 12% per annum on their adjusted invested capital.
Since the circumstances under which these commissions would be payable are not currently met, the liability has not been recognized in the accompanying consolidated financial statements; however, the amount will be recorded when and if it becomes
payable.

Note 7. SUBSEQUENT EVENTS

In April 2006, the
Partnership closed a loan in the amount of $30,000,000. The note payable has a fixed interest rate of 5.61%, a maturity date of May 1, 2016 and a 10-year term. This note payable is collateralized by Brier Corporate Center, One Parkside, Two
Parkside and Two Carnegie Plaza. The Brier construction loan collateralized by Brier Corporate Center and the line of credit collateralized by Two Parkside were paid off with the loan proceeds at the time of the close of this new loan. The loss on
early extinguishment in connection with the pay off of the Brier construction loan and the line of credit is approximately $227,000.



12



---

##### Table of Contents

RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP

Notes to Consolidated Financial Statements

(Unaudited)

On April 25, 2006, Glenborough, the
Partnerships asset and property manager, purchased a total of 4,865 units of limited partnership interest from an unaffiliated third party. As a result of that purchase, Glenborough became a related party of the Partnership.

On April 20, 2006, Mackenzie Patterson Fuller, LP and various other bidders listed therein (the Bidders) filed a Tender Offer Statement with the
Securities and Exchange Commission, relating to an offer to purchase up to 6300 units of limited partnership interest in the Partnership, at a price of $635 per unit. In response, on May 4, 2006, the Partnership filed a
Solicitation/Recommendation Statement on Schedule 14D-9 relating to the Tender Offer Statement, and the Partnership has mailed to its limited partners a letter (the Response Letter) setting forth its statement of position with respect to
the Bidders offer to purchase.

Effective May 1, 2006, the Partnership entered into a Third Amendment to Property Management and Services
Agreement with Glenborough Properties, L.P., whereby the term of the Management Agreement was extended from December 31, 2006 until December 31, 2008. All other terms and conditions remained unchanged.



13



---

##### Table of Contents

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

The following
discussion should be read in conjunction with the Partnerships December 31, 2005 audited consolidated financial statements and the notes thereto.

Background

The Partnerships initial acquisition of property in June 1985 consisted of approximately 76.21 acres of partially
developed and unimproved land located in San Bernardino, California. The property is part of a master-planned development of 153 acres known as Tri-City Corporate Centre (Tri-City) and is zoned for mixed commercial, office, hotel,
transportation-related, and light industrial uses. The balance of Tri-City is owned by Rancon Realty Fund IV (Fund IV), a partnership sponsored by the General Partner of the Partnership.

Overview

Tri-City Properties

As of March 31, 2006, the Partnerships rental properties include four retail and eight office buildings, aggregating approximately 722,000 rentable square
feet. The Partnership has approximately 42,000 square feet of retail space which is fully occupied, and 680,000 square feet of office space, of which 492,000 square feet of office space were operated more than a year with an occupancy rate of 91%,
84,000 square feet of office space which commenced operation in July 2005 with an occupancy rate of 44%, and 104,000 square feet of office space which commenced operation in February 2006 with an occupancy rate of 84%. Carnegie Business Center II,
formerly an industrial flex building, was repositioned to an office building.



|                                                              |  |                               |  |               
|------------------------------------------------------------- |  | ----------------------------- |  | --------------
|Property                                                      |  | Type                          |  | Square Footage
|One Carnegie Plaza                                            |  | Two two-story office building |  | 107,278       
|Two Carnegie Plaza                                            |  | Two-story office building     |  | 68,957        
|Carnegie Business Center II                                   |  | Two-story office building     |  | 50,867        
|Lakeside Tower                                                |  | Six-story office building     |  | 112,791       
|One Parkside                                                  |  | Four-story office building    |  | 70,068        
|Ballys Health Club (Ballys)                                 |  | Health club facility          |  | 25,000        
|Outback Steakhouse (Outback)                                  |  | Restaurant                    |  | 6,500         
|Palm Court Retail #3                                          |  | Retail                        |  | 6,004         
|Two Parkside                                                  |  | Three-story office building   |  | 82,004        
|Pat & Oscars                                                  |  | Restaurant                    |  | 5,100         
|Three Carnegie (commenced operation in July 2005)             |  | Two-story office building     |  | 83,635        
|Brier Corporate Center (commenced operation in February 2006) |  | Three-story office building   |  | 104,048       

As of March 31, 2006, the weighted average occupancy of the ten rental properties which were operated more
than a year was 92%. The occupancies of the two new rental properties which were operated less than a year were 44% and 84%, respectively.

As of
March 31, 2006, there are nine tenants at Tri-City occupying substantial portions of leased rental space. These nine tenants, in the aggregate, occupy approximately 309,000 square feet of the 722,000 total rentable square feet at Tri-City and
account for approximately 42% of the rental income generated at Tri-City for the Partnership as of March 31, 2006.

Tri-City Land

As of March 31, 2006, the Partnership owned approximately 4 acres of land, 3.5 acres are currently used as parking lots, and the remaining
land is undeveloped. The Partnerships plan is to develop the remaining 0.5 acre of land to generate more operating income for the Partnership.

Financing

The Partnerships Tri-City rental properties are owned by the Partnership, in fee, subject to the following note and
lines of credit:



|                               |  |                     |            |          |                   |               |                      |                 |                     |               |          
|------------------------------ |  | ------------------- | ---------- | -------- | ----------------- | ------------- | -------------------- | --------------- | ------------------- | ------------- | ---------
|Collateral                     |  | Outstanding balance |            | Mortgage |                   | Interest rate |                      | Monthly payment |                     | Maturity date
|Brier Corporate Center         |  | $                   | 9,361,000  |          | Construction Note |               | LIBOR plus 2%(6.75%) |                 | Interest-only       |               | 4/27/2007
|Two Parkside                   |  | $                   | 4,000,000  |          | Line of credit    |               | Prime rate (7.75%)   |                 | Interest-only       |               | 4/15/2007
|Seven properties(listed below) |  | $                   | 26,711,000 |          | Note              |               | 5.46%                |                 | Principal& Interest |               | 1/01/2016

The note payable is collateralized by Ballys, Carnegie Business Center II, Lakeside Tower, Outback,
Pat & Oscars, Palm Court Retail #3 and One Carnegie Plaza.



14



---

##### Table of Contents

Results of Operations

Comparison of the three months ended March 31, 2006 to the three months ended March 31, 2005

Revenue

Rental income for the three months ended March 31, 2006 increased $589,000, or 23%, compared to the three months ended March 31, 2005, primarily due to the
commencement of operations at Three Carnegie and Brier Corporation Center, offset by a decrease in occupancy at One Carnegie, Carnegie Business Center II and Lakeside Tower.

Expenses

Operating expenses increased $220,000, or 23%, for the three months ended March 31, 2006, compared to
the three months ended March 31, 2005, primarily due to commencement of operations at Three Carnegie and Brier Corporation Center, offset by a decrease in occupancy at One Carnegie, Carnegie Business Center II and Lakeside Tower.

Depreciation and amortization increased $260,000, or 38%, for the three months ended March 31, 2006, compared to the three months ended March 31, 2005,
primarily due to an increase in depreciation of the two new buildings and tenant improvements placed into service.

Expenses associated with undeveloped
land decreased $19,000, or 44%, for the three months ended March 31, 2006, compared to the three months ended March 31, 2005, primarily due to a decrease in expenses associated with Three Carnegie and Brier Corporate Center, which
commenced operation in July 2005 and February 2006, respectively.

General and administrative expenses increased $38,000, or 18%, for the three months
ended March 31, 2006, compared to the three months ended March 31, 2005, primarily due to an increase in investor service expenses as a result of an increase in correspondence with investors.

Non-operating income / expenses

Interest and other income increased
$3,000 for the three months ended March 31, 2006, compared to the three months ended March 31, 2005, primarily due to higher average invested cash balances resulting from the proceeds of the loan which closed in December 2005.

Interest expense increased $77,000, or 27%, during the three months ended March 31, 2006, compared to the three months ended March 31, 2005, primarily due
to increases in borrowings and interest capitalized in the first quarter of 2005 related to Three Carnegie and Brier Corporate Center.

Liquidity and
Capital Resources

As of March 31, 2006, the Partnership had cash and cash equivalents of $1,149,000.

The Partnerships liabilities at March 31, 2006, include a note payable, a line of credit and a construction loan. The borrowings totaled
approximately $40,072,000, collateralized by properties with an aggregate net book value of approximately $42,862,000. The note payable requires monthly principal and interest payments of $151,000, bears a fixed interest rate of 5.46% and has a
maturity date of January 1, 2016. The line of credit with a total availability of $7,425,000 requires monthly interest-only payments, bears interest at the prime rate (7.75% and 7.25% as of March 31, 2006 and December 31, 2005,
respectively), and has a maturity date of April 15, 2007. The construction loan requires monthly interest-only payments (currently the interest payments are drawn from the interest reserve), with a variable interest rate of 30-day LIBOR plus 2%
(6.75% and 6.37% as of March 31, 2006 and December 31, 2005, respectively), is collateralized by Brier Corporate Center, and has a maturity date of April 27, 2007 (See Note 5 of the financial statements for discussion).

In the fourth quarter of 2005, the Partnership refinanced a fixed-rate note, which was collateralized by Lakeside Tower, One Parkside and Two Carnegie Plaza, and two
lines of credit, which were collateralized by One Carnegie Plaza, Carnegie Business Center II and Two Parkside. The previous note had a balance of approximately $8.132 million at the time of the refinance, a maturity date of June 1, 2006, and a
fixed interest rate of 9.39%. There was no prepayment penalty incurred at the time of payoff of this note. The two lines of credit had balances of approximately $10 million and $7.425 million, respectively, and a variable interest rate of 8% (Prime
Rate plus 0.75%) and 7.25% (Prime Rate), respectively. At the time of refinance, the line of credit collateralized by Two Parkside was paid down to a $0 balance, and the line of credit collateralized by One Carnegie Plaza and Carnegie Business
Center II was paid off in full. After the payoff, the two assets were then released and used as collateral for the new note payable. The new note is collateralized by Ballys, Carnegie Business Center II, Lakeside Tower, Outback, Pat &
Oscars, Palm Court Retail #3 and One Carnegie Plaza. This new note in the amount of $26.7 million has a fixed interest rate of 5.46%, and a 10-year term with a 30-year amortization requiring monthly payments of principal and interest totaling
approximately $151,000. This note provides a one-time loan assumption and a release provision for an individual asset. The net note proceeds were then added to the Partnership cash reserve.



15



---

##### Table of Contents

The Partnership is contingently liable for subordinated real estate commissions payable to the General Partner in the
amount of $102,000 at March 31, 2006 for sales that occurred in previous years. The subordinated real estate commissions are payable only after the Limited Partners have received distributions equal to their original invested capital plus a
cumulative non-compounded return of 12% per annum on their adjusted invested capital. Since the circumstances under which these commissions would be payable are not currently met, the liability has not been recognized in the accompanying
consolidated financial statements; however, the amount will be recorded when and if it becomes payable.

Operationally, the Partnerships primary
source of funds consists of cash provided by its rental activities. Other sources of funds may include permanent financing, draws on the line of credit, proceeds from property sales, and interest income on money market funds. Cash generated from
property sales is generally added to the Partnerships cash reserves, pending use in development of other properties or distribution to the partners.

Management expects that the Partnerships cash balance at March 31, 2006, together with cash from operations, sales and financings will be sufficient to finance the Partnerships and the properties continuing operations
and development plans on a short-term basis and for the reasonably foreseeable future. There can be no assurance that the Partnerships results of operations will not fluctuate in the future and at times affect its ability to meet its operating
requirements.

Contractual Obligations

At March 31, 2006, we had contractual obligations as follows (in thousands):



|                                   |  |                 |       |              |   |              |  |                  |       |       |   |        |  |   |       
|---------------------------------- |  | --------------- | ----- | ------------ | - | ------------ |  | ---------------- | ----- | ----- | - | ------ |  | - | ------
|                                   |  | Less than1 year |       | 1 to 3 years |   | 3 to 5 years |  | More than5 years |       | Total
|Collateralized mortgage loan       |  | $               | 275   |              | $ | 790          |  | $                | 880   |       | $ | 24,766 |  | $ | 26,711
|Collateralized bank line of credit |  |                 |      |              |   | 4,000        |  |                  |      |       |   |       |  |   | 4,000 
|Collateralized construction loan   |  |                 |      |              |   | 9,361        |  |                  |      |       |   |       |  |   | 9,361 
|Interest on indebtedness(1)        |  |                 | 1,088 |              |   | 3,142        |  |                  | 2,755 |       |   | 6,420  |  |   | 14,125
|                                   |  |                 |       |              |   |              |  |                  |       |       |   |        |  |   |       
|Total                              |  | $               | 1,363 |              | $ | 17,293       |  | $                | 3,635 |       | $ | 31,186 |  | $ | 54,197
|                                   |  |                 |       |              |   |              |  |                  |       |       |   |        |  |   |       

---

|(1) | For variable rate loans, this represents estimated interest expense based on outstanding balances and interest rates at March 31, 2006.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

The Partnership knows of no demands, commitments, events or uncertainties, which might affect its capital resources in any material respect. In addition, the Partnership
is not subject to any covenants pursuant to its secured debt that would constrain its ability to obtain additional capital.

Operating Activities

For the year ended March 31, 2006, the Partnerships cash provided by operating activities totaled $855,000.

The $67,000 increase in accounts receivable at March 31, 2006, compared to December 31, 2005, was primarily due to an increase in tenant rents
receivable.

The $375,000 increase in deferred costs at March 31, 2006, compared to December 31, 2005, was primarily due to lease commissions
paid for Three Carnegie and Brier Corporate Center.

The $469,000 increase in prepaid expenses and other assets at March 31, 2006, compared to
December 31, 2005, was primarily due to an increase in the straight line rents receivable and prepayment of the second quarter investor service fees.

The $329,000 increase in accounts payable and other liabilities at March 31, 2006, compared to December 31, 2005, was primarily due to an increase in accruals for property taxes, interest expense, audit fees and tax preparation
fees.

The $89,000 increase in prepaid rents at March 31, 2006 was due to April 2006 rents received in March 2006, offset by January 2006 rents
received in December 2005.

Investing Activities

During the year ended March 31, 2006, the Partnerships cash used for investing activities totaled $4,161,000, which consisted of $4,187,000 primarily used for building and tenant improvements at Three Carnegie and Brier Corporate
Center, offset by the partial collection of $26,000 from a note receivable related to tenant improvements.

Financing Activities

During the year ended March 31, 2006, the Partnerships cash provided by financing activities totaled $1,018,000, which consisted of $2,337,000 from draws on
the construction loan, partially offset by $89,000 of principal payments on the note payable, $606,000 for a deposit associated with a loan application, as well as loan fee related expenses for the note payable, $200,000 for payment of distributions
to General Partner which were accrued in 2005, and $424,000 for payment of redemption of limited partnership units.



16



---

##### Table of Contents

Cash flows

For the
period ended March 31, 2006, cash provided by operating activities was $855,000, as compared to $972,000 for the same period in 2005. The change was primarily due to lease commissions paid for new leases at the new buildings. For the year ended
March 31, 2006, cash used for investing activities was $4,161,000, as compared to $1,244,000 for the same period in 2005. The change was primarily due to the proceeds from the property sale in 2005, partially offset by an increase in
construction costs. For the year ended March 31, 2006, cash provided by financing activities was $1,018,000, as compared to $1,836,000 for the same period in 2005. The change was primarily due to a deposit for a loan application, as well as an
increase in redemption of limited partnership units.

Inflation

Leases at the office properties typically provide for rent adjustment and pass-through of certain operating expenses during the term of the lease. We anticipate that these provisions may permit us to increase rental
rates or other charges to tenants in response to rising prices and therefore, serve to reduce our exposure to the adverse effects of inflation.

Forward Looking Statements; Factors That May Affect Operating Results

This Report on Form 10-Q contains forward looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding the Partnerships expectations, hopes, intentions, beliefs and strategies regarding
the future. These forward looking statements include statements relating to:



| |  | The Partnerships expectation to make annual or more frequent cash distributions to partners;
|- |  | ---------------------------------------------------------------------------------------------



| |  | The Partnerships plan to develop its remaining land to generate more operating income;
|- |  | ---------------------------------------------------------------------------------------



| |  | The Partnerships belief that its cash balance and cash generated by its operations, sales and financings will be sufficient to meet its operating requirements in both the
short and the reasonably foreseeable long-term;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Partnerships expectation that changes in market interest rates will not have a material impact on the performance or fair value of its portfolio;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Partnerships belief that certain claims and lawsuits which have arisen against it in the normal course of business will not have a material adverse effect on its financial
position, cash flow or results of operations;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Partnerships belief that its properties are competitive within its market;
|- |  | -------------------------------------------------------------------------------



| |  | The Partnerships expectation to achieve certain occupancy levels;
|- |  | ------------------------------------------------------------------



| |  | The Partnerships estimation of market strength;
|- |  | ------------------------------------------------



| |  | The Partnerships knowledge of any material environmental matters; and
|- |  | ----------------------------------------------------------------------



| |  | The Partnerships expectation that lease provisions may permit the Partnership to increase rental rates or other charges to tenants in response to rising prices, and therefore
serve to reduce exposure to the adverse effects of inflation.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All forward-looking statements included in this document are based on
information available to the Partnership on the date hereof. It is important to note that the Partnerships actual results could differ materially from those stated or implied in such forward-looking statements. The following factors, among
others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:



| |  | failure to obtain anticipated outside financing;
|- |  | ------------------------------------------------



| |  | market fluctuations in rental rates, concessions and occupancy;
|- |  | ---------------------------------------------------------------



| |  | reduced demand for rental space;
|- |  | --------------------------------



| |  | defaults or non-renewal of leases by customers;
|- |  | -----------------------------------------------



| |  | availability and credit worthiness of prospective tenants and our ability to execute lease deals with them;
|- |  | -----------------------------------------------------------------------------------------------------------



| |  | differing interpretations of lease provisions regarding recovery of expenses;
|- |  | -----------------------------------------------------------------------------



17



---

##### Table of Contents

| |  | increased operating costs;
|- |  | --------------------------



| |  | risks and uncertainties affecting property development and construction including construction delays, cost overruns, our inability to obtain permits and public opposition to these
activities;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | changes in interest rates and availability of financing that may render the sale or financing of a property difficult or unattractive;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  | the unpredictability of both the frequency and final outcome of litigation; and
|- |  | -------------------------------------------------------------------------------



| |  | the inability of the Partnership to develop all or any portion of the former landfill site, due to environmental, legal or economic impediments.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------

The forward-looking statements in this Quarterly Report on Form 10-Q are subject to additional risks and uncertainties further discussed under Item 1A. Risk
Factors of the Partnerships Annual Report on Form 10-K for the year ended December 31, 2005. The Partnership assumes no obligation to update or supplement any forward-looking statement or statements.

Risks of Litigation

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

Item 3. Qualitative and Quantitative Disclosures about Market Risk

Interest Rates

The Partnerships primary market risk exposure is to changes in interest rates obtainable on its secured borrowings. The Partnership expects that changes in market
interest rates will not have a material impact on the performance or fair value of its portfolio. The Partnership does not own any derivative instruments.

For debt obligations, the table below presents required principal payments and interest rates by expected maturity dates.



|                                  |  |                        |      |   |      |   |        |      |  |   |      |   |  |      |      |   |            |   |      |       |  |   |           |   |  |   |        |   |  |   |       
|--------------------------------- |  | ---------------------- | ---- | - | ---- | - | ------ | ---- |  | - | ---- | - |  | ---- | ---- | - | ---------- | - | ---- | ----- |  | - | --------- | - |  | - | ------ | - |  | - | ------
|                                  |  | Expected Maturity Date |      |   |      |   |        |     
|                                  |  | 2006                   |      |   | 2007 |   |        | 2008 |  |   | 2009 |   |  | 2010 |      |   | Thereafter |   |      | Total |  |   | FairValue
|                                  |  | (in thousands)         |      |   |      |   |        |     
|Collateralized Fixed Rate Debt    |  | $                      | 275  |   |      | $ | 384    |      |  | $ | 406  |   |  | $    | 428  |   |            | $ | 452  |       |  | $ | 24,766    |   |  | $ | 26,711 |   |  | $ | 25,764
|Average interest rate             |  |                        | 5.46 | % |      |   | 5.46   | %    |  |   | 5.46 | % |  |      | 5.46 | % |            |   | 5.46 | %     |  |   | 5.46      | % |  |   | 5.46   | % |  |   |       
|                                  |  |                        |      |   |      |   |        |     
|Collateralized Variable Rate Debt |  | $                      |     |   |      | $ | 13,361 |      |  | $ |     |   |  | $    |     |   |            | $ |     |       |  | $ |          |   |  | $ | 13,361 |   |  | $ | 13,361
|Average interest rate             |  |                        |     | % |      |   | 7.05   | %    |  |   |     | % |  |      |     | % |            |   |     | %     |  |   |          | % |  |   | 7.05   | % |  |   |       

A change of 1/8% in the index rate to which the Partnerships variable rate debt is tied would change the
annual interest the Partnership incurred by approximately $17,000, based upon the balances outstanding on variable rate instruments at March 31, 2006.

As of March 31, 2006, the Partnership had cash equivalents of $674,000 invested in an interest-bearing money market account. Declines in interest rates over time would reduce Partnership interest income.

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under
the supervision of the General Partners Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the General Partners Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in alerting the General Partner on a timely basis to material information required to be included in this report. There has been no
change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.



18



---

##### Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

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

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other information

None.

Item 6. Exhibits



|     |  |                                                                                                                               
|---- |  | ------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Section 302 Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership.
|     | 
|32.1 |  | Section 906 Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership.



19



---

##### Table of Contents

SIGNATURES

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



| |  |                                  |  |                             
| |  | -------------------------------- |  | ----------------------------
| |  | RANCON REALTY FUND V,           
| |  | a California limited partnership
| |  |                                 
| |  | By                               |  | Rancon Financial Corporation
| |  |                                  |  | a California corporation,   
| |  |                                  |  | its General Partner         



|                   |  |     |  |                                      
|------------------ |  | --- |  | -------------------------------------
|Date: May 15, 2006 |  | By: |  | /s/ Daniel L. Stephenson             
|                   |  |     |  | Daniel L. Stephenson, President      
|                   |  |    
|Date: May 15, 2006 |  | By: |  | /s/ Daniel L. Stephenson             
|                   |  |     |  | Daniel L. Stephenson, General Partner



20