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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 September 30, 2004



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



|                                                           |  |           
|---------------------------------------------------------- |  | ----------
|400 South El Camino Real, Suite 1100 San Mateo, California |  | 94402-1708
|(Address of principal executive offices)                   |  | (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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ̈No x



Total
number of units outstanding as November 15, 2004: 87,838



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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 September 30, 2004 and December 31, 2003                               |  | 3       
|           |  |                                                                                                      
|           |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003 |  | 4       
|           |  |                                                                                                      
|           |  | Consolidated Statement of Partners Equity for the nine months ended September 30, 2004               |  | 5       
|           |  |                                                                                                      
|           |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003           |  | 6       
|           |  |                                                                                                      
|           |  | Notes to Consolidated Financial Statements                                                            |  | 7-13    
|           |  |                                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 14-21   
|           |  |                                                                                                      
|Item 3.    |  | Qualitative and Quantitative Information About Market Risk                                            |  | 21      
|           |  |                                                                                                      
|Item 4.    |  | Controls and Procedures                                                                               |  | 21-22   
|           |  |                                                                                                      
|PART II    |  | OTHER INFORMATION                                                                                     |  |         
|           |  |                                                                                                      
|Item 1.    |  | Legal Proceedings                                                                                     |  | 23      
|           |  |                                                                                                      
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                   |  | 23      
|           |  |                                                                                                      
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                      |  | 23      
|           | 
|SIGNATURES |  | 24                                                                                                   



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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)



|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                   |  | September 30,2004 |         |   | December 31,2003 |  
|Assets                                                                                                                             |  |                   |         |   |                  |   |         |  
|Investments in real estate:                                                                                                        |  |                   |         |   |                  |   |         |  
|Rental properties                                                                                                                  |  | $                 | 49,414  |   |                  | $ | 59,167  |  
|Accumulated depreciation                                                                                                           |  |                   | (12,744 | ) |                  |   | (23,314 | )
|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Rental properties, net                                                                                                             |  |                   | 36,670  |   |                  |   | 35,853  |  
|Construction in progress                                                                                                           |  |                   | 2,080   |   |                  |   | 769     |  
|Land held for development                                                                                                          |  |                   | 870     |   |                  |   | 1,549   |  
|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Total real estate investments                                                                                                      |  |                   | 39,620  |   |                  |   | 38,171  |  
|Cash and cash equivalents                                                                                                          |  |                   | 1,891   |   |                  |   | 1,136   |  
|Accounts receivable                                                                                                                |  |                   | 800     |   |                  |   | 951     |  
|Deferred costs, net of accumulated amortization of $982 and $3,328 at September 30, 2004 and December 31, 2003, respectively       |  |                   | 1,710   |   |                  |   | 1,505   |  
|Prepaid expenses and other assets                                                                                                  |  |                   | 1,078   |   |                  |   | 885     |  
|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Total assets                                                                                                                       |  | $                 | 45,099  |   |                  | $ | 42,648  |  
|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Liabilities and Partners Equity                                                                                                   |  |                   |         |   |                  |   |         |  
|Liabilities:                                                                                                                       |  |                   |         |   |                  |   |         |  
|Notes payable and lines of credit                                                                                                  |  | $                 | 15,871  |   |                  | $ | 13,828  |  
|Accounts payable and other liabilities                                                                                             |  |                   | 938     |   |                  |   | 388     |  
|Construction costs payable                                                                                                         |  |                   | 786     |   |                  |   | 74      |  
|Prepaid rent                                                                                                                       |  |                   | 148     |   |                  |   | 518     |  
|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                                                                  |  |                   | 17,743  |   |                  |   | 14,808  |  
|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Commitments and contingent liabilities (Note 5)                                                                                    |  |                   |         |   |                  |   |         |  
|Partners Equity:                                                                                                                  |  |                   |         |   |                  |   |         |  
|General partners                                                                                                                   |  |                   | (401    | ) |                  |   | (465    | )
|Limited partners 88,046 and 88,919 limited partnership units outstanding at September 30, 2004 and December 31, 2003,
respectively |  |                   | 27,757  |   |                  |   | 28,305  |  
|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Total partners equity                                                                                                             |  |                   | 27,356  |   |                  |   | 27,840  |  
|                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Total liabilities and partners equity                                                                                             |  | $                 | 45,099  |   |                  | $ | 42,648  |  
|                                                                                                                                   |  |                   |         |   |                  |   |         |  



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



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RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP



Consolidated Statements of Operations

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

(Unaudited)



|                                                                                    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                    |  | Three months endedSeptember 30, |        |   | Nine months endedSeptember 30, |  
|                                                                                    |  | 2004                            |        |   | 2003                           |   |        | 2004 |  |   | 2003   |  
|Operating Revenue- Rental income                                                    |  | $                               | 2,607  |   |                                | $ | 2,059  |      |  | $ | 7,587  |   |  | $ | 6,012  |  
|Operating Expenses                                                                  |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Property operating                                                                  |  |                                 | 1,149  |   |                                |   | 1,055  |      |  |   | 3,133  |   |  |   | 2,732  |  
|Depreciation and amortization                                                       |  |                                 | 664    |   |                                |   | 587    |      |  |   | 1,935  |   |  |   | 1,662  |  
|Expenses associated with undeveloped land                                           |  |                                 | 35     |   |                                |   | 55     |      |  |   | 143    |   |  |   | 212    |  
|General and administrative                                                          |  |                                 | 309    |   |                                |   | 300    |      |  |   | 927    |   |  |   | 866    |  
|                                                                                    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total operating expenses                                                            |  |                                 | 2,157  |   |                                |   | 1,997  |      |  |   | 6,138  |   |  |   | 5,472  |  
|                                                                                    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Operating income                                                                    |  |                                 | 450    |   |                                |   | 62     |      |  |   | 1,449  |   |  |   | 540    |  
|                                                                                    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Interest and other income                                                           |  |                                 | 22     |   |                                |   | 24     |      |  |   | 66     |   |  |   | 87     |  
|Interest expense                                                                    |  |                                 | (322   | ) |                                |   | (101   | )    |  |   | (877   | ) |  |   | (271   | )
|                                                                                    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net income (loss)                                                                   |  | $                               | 150    |   |                                | $ | (15    | )    |  | $ | 638    |   |  | $ | 356    |  
|                                                                                    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted net income (loss) per limited partnership unit                    |  | $                               | 1.53   |   |                                | $ | (0.14  | )    |  | $ | 6.49   |   |  | $ | 3.55   |  
|                                                                                    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Weighted average number of limited partnership units outstanding during each period |  |                                 | 88,217 |   |                                |   | 89,676 |      |  |   | 88,480 |   |  |   | 90,256 |  
|                                                                                    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  



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



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RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP



Consolidated Statement of Partners Equity

For the nine months ended September 30, 2004

(in thousands)

(Unaudited)



|                                                   |  |                 |      |   |                 |   |        |       |  |   |        |  
|-------------------------------------------------- |  | --------------- | ---- | - | --------------- | - | ------ | ----- |  | - | ------ | -
|                                                   |  | GeneralPartners |      |   | LimitedPartners |   |        | Total | 
|Balance (deficit) at December 31, 2003             |  | $               | (465 | ) |                 | $ | 28,305 |       |  | $ | 27,840 |  
|Redemption of limited partnership units            |  |                 |     |   |                 |   | (344   | )     |  |   | (344   | )
|Net income                                         |  |                 | 64   |   |                 |   | 574    |       |  |   | 638    |  
|Distributions ($8.82 per limited partnership unit) |  |                 |     |   |                 |   | (778   | )     |  |   | (778   | )
|                                                   |  |                 |      |   |                 |   |        |       |  |   |        |  
|Balance (deficit) at September 30, 2004            |  | $               | (401 | ) |                 | $ | 27,757 |       |  | $ | 27,356 |  
|                                                   |  |                 |      |   |                 |   |        |       |  |   |        |  



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



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RANCON REALTY FUND V,

A CALIFORNIA LIMITED PARTNERSHIP



Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)



|                                                                                  |  |                                 |        |   |      |   |        |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                  |  | Nine months ended September 30, |       
|                                                                                  |  | 2004                            |        |   | 2003 |  
|Cash flows from operating activities:                                             |  |                                 |        |   |      |   |        |  
|Net income                                                                        |  | $                               | 638    |   |      | $ | 356    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |        |   |      |   |        |  
|Depreciation and amortization                                                     |  |                                 | 1,935  |   |      |   | 1,662  |  
|Amortization of loan fees, included in interest expense                           |  |                                 | 111    |   |      |   | 29     |  
|Changes in certain assets and liabilities:                                        |  |                                 |        |   |      |   |        |  
|Accounts receivable                                                               |  |                                 | 66     |   |      |   | 243    |  
|Deferred costs                                                                    |  |                                 | (479   | ) |      |   | (510   | )
|Prepaid expenses and other assets                                                 |  |                                 | (193   | ) |      |   | (186   | )
|Accounts payable and other liabilities                                            |  |                                 | 485    |   |      |   | 158    |  
|Prepaid rent                                                                      |  |                                 | (370   | ) |      |   | 252    |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Net cash provided by operating activities                                         |  |                                 | 2,193  |   |      |   | 2,004  |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Cash flows from investing activities:                                             |  |                                 |        |   |      |   |        |  
|Additions to real estate investments                                              |  |                                 | (2,368 | ) |      |   | (7,277 | )
|Tenant improvements note receivable                                               |  |                                 | 85     |   |      |   | 78     |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Net cash used in operating activities                                             |  |                                 | (2,283 | ) |      |   | (7,199 | )
|                                                                                  |  |                                 |        |   |      |   |        |  
|Cash flows from financing activities:                                             |  |                                 |        |   |      |   |        |  
|Line of credit draws                                                              |  |                                 | 2,193  |   |      |   | 2,920  |  
|Notes payable principal payments                                                  |  |                                 | (150   | ) |      |   | (136   | )
|Loan fees                                                                         |  |                                 | (141   | ) |      |   | (139   | )
|Redemption of limited partnership units                                           |  |                                 | (279   | ) |      |   | (594   | )
|Distributions to limited partners                                                 |  |                                 | (778   | ) |      |   |       |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Net cash provided by financing activities                                         |  |                                 | 845    |   |      |   | 2,051  |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Net increase (decrease) in cash and cash equivalents                              |  |                                 | 755    |   |      |   | (3,144 | )
|Cash and cash equivalents at beginning of period                                  |  |                                 | 1,136  |   |      |   | 3,588  |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                        |  | $                               | 1,891  |   |      | $ | 444    |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Supplemental disclosure of cash flow information:                                 |  |                                 |        |   |      |   |        |  
|Cash paid for interest                                                            |  | $                               | 847    |   |      | $ | 645    |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Interest capitalized                                                              |  | $                               | 81     |   |      | $ | 401    |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Supplemental disclosure of non-cash operating activities:                         |  |                                 |        |   |      |   |        |  
|Write-off of fully depreciated rental property assets                             |  | $                               | 12,201 |   |      | $ |       |  
|                                                                                  |  |                                 |        |   |      |   |        |  
|Write-off of fully amortized deferred costs                                       |  | $                               | 172    |   |      | $ |       |  
|                                                                                  |  |                                 |        |   |      |   |        |  



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



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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 disposing of real property. The Partnership was organized in 1985 and reached final funding in February 1989. The general partners of the Partnership are Daniel L. Stephenson
and Rancon Financial Corporation (RFC), hereinafter collectively referred to as the Sponsor or the General Partner. RFC is wholly owned by Daniel L. Stephenson. The Partnership has no employees.



During the nine months ended September 30, 2004, a total of 873 units of limited partnership
interest (Units) were redeemed at an average price of $394. As of September 30, 2004, there were 88,046 Units outstanding.



In the opinion of RFC and 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 September 30, 2004 and December 31, 2003, and the related consolidated statements of operations for the three and nine months ended September 30, 2004 and 2003,
partners equity for the nine months ended September 30, 2004, and cash flows for the nine months ended September 30, 2004 and 2003.



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



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RANCON REALTY FUND V

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



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) 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



Effective January 1, 1995, Glenborough Corporation (GC) entered into an
agreement with the Partnership and other related Partnerships (collectively, the Rancon Partnerships) to perform or contract on the Partnerships behalf for financial, accounting, data processing, marketing, legal, investor relations, asset and
development management and consulting services for a period of ten years or until the liquidation of the Partnership, whichever comes first. Effective January 1, 1998, the agreement was amended to eliminate GCs responsibilities for providing
investor relation services. Preferred Partnership Services, Inc., a California corporation unaffiliated with the Partnership, contracted to assume the investor relation services. In October 2000, GC merged into Glenborough.



The Partnership will pay Glenborough for its services as follows: (i) a specified asset
administration fee ($496,000 and $489,000 as of September 30, 2004 and 2003, respectively); (ii) sales fees of 2% for improved properties and 4% for land; (iii) a refinancing fee of 1% ($74,000 and $59,000 as of September 30, 2004 and 2003,
respectively) and (iv) a management fee of 5% of gross rental receipts. As part of this agreement, Glenborough will perform certain duties for the General Partner of the Rancon Partnerships. The General Partner has assigned any distributions it
receives to Glenborough. Such distributions were $0 for the nine months ended September 30, 2004. RFC agreed to cooperate with Glenborough should Glenborough attempt to obtain a majority vote of the limited partners to substitute itself as the
Sponsor for the Rancon Partnerships. Glenborough is not an affiliate of RFC or the Partnership.



In July 2004, the Partnership extended its management relationship with Glenborough through December 31, 2006. The following provides the general terms of the new agreement. Commencing on January 1, 2005 and ending
December 31, 2006, the Partnership engages Glenborough to perform services for the following fees: (i) a management fee of 3 % of gross rental revenue (ii) a construction services fee per certain schedules; (iii) a specified asset and Partnership
services fee of $300,000 per year with reimbursements of certain expenses and consulting service fee; (vi) a sales fee of 2% for improved properties and 4% for unimproved properties; (v) a financing services fee of 1% of gross loan amount; and (vi)
a development fee of up to 5%. As part of this agreement, Glenborough will perform certain duties for the General Partner of the Rancon Partnerships.



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 financial statements have been prepared on the accrual basis of accounting in accordance with U.S. GAAP. They include the accounts of certain wholly
owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.



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.



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RANCON REALTY FUND V

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



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. All intercompany balances and transactions have been eliminated in consolidation.



Rental Properties



Rental properties, including the related land, are stated at cost unless events or circumstances indicate that cost 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 multiplied by annualized rental 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.



Depreciation is provided using the straight-line method over useful lives ranging from five
to forty years for the respective assets.



Land Held for Development and
Construction In Progress



Land held for development and construction
in progress 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.



Interest and property taxes related to property constructed by the Partnership are capitalized during the period of construction.



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, accounts payable, other liabilities, construction costs payable, and lines of credit payable ($7,463,000 and $5,270,000 as of September 30, 2004 and
December 31, 2003), 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 secured note payable as of September 30, 2004, and December 31, 2003 was approximately $9,499,000 and $10,218,000, respectively.



Deferred Costs



Deferred loan fees are amortized on a straight-line basis over the life of the related loan, which approximates the interest method, and deferred lease commissions are 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 at
amounts that it believes it will collect on a tenant by tenant basis. The estimation process may result in higher or lower levels from period to period as the Partnerships collection experience and the credit quality of the Partnerships
tenants changes. 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 Partnerships portfolio of leases turns over continuously, with the number and value
of expiring leases varying from year to



9



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##### Table of Contents

RANCON REALTY FUND V

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



year. The Partnerships ability to re-lease the space to existing or new tenants at rates equal to or greater than those realized historically is
impacted by, among other things, the economic conditions of the market in which a property is located, the availability of competing space, and the level of improvements which may be required at the property. No assurance can be given that the
rental rates that the Partnership will obtain in the future will be equal to or greater than those obtained under existing contractual commitments.



Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as revenue in the period the applicable expenses are incurred.
Differences between estimated and actual amounts are recognized in the subsequent year.



Net Income (Loss) Per Limited Partnership Unit



Net
income (loss) 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 (loss).



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 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



One tenant represented 14% of rental income for the nine months ended September 30, 2004. No
tenant represented more than 10% of rental income for the nine months ended September 30, 2003.



Reclassification



Certain prior
year balances have been reclassified to confirm to the current year presentation.



Variable Interest Entities



In
January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, which addresses consolidation by business enterprises of variable interest entities
(VIEs) either: (1) that do not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support, or (2) in which the equity investors lack an essential
characteristic of a controlling financial interest. In December 2003, the FASB completed deliberations of proposed modifications to FIN 46 (FIN 46 Revised) resulting in multiple effective dates based on the nature as well as the creation date of the
VIE. However, FIN 46 Revised must be applied no later than the first quarter of fiscal 2004. Special Purpose Entities (SPEs) created prior to February 1, 2003 may be accounted for under FIN 46 or FIN 46 Reviseds provisions no later
than the fourth quarter of fiscal 2003. The Partnership has not entered into any arrangements which are considered SPEs. FIN 46 Revised may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or
by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated. The disclosure requirements of FIN 46 Revised are effective for all financial statements
initially issued after December 31, 2003. The adoption of FIN 46 Revised did not have any impact on the consolidated financial statements of the Partnership, since the Partnership has not entered into any arrangements that are VIEs.



Reference to 2003 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, 2003 audited consolidated financial statements on Form 10-K.



10



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##### Table of Contents

RANCON REALTY FUND V

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



Note 3. INVESTMENTS IN REAL ESTATE



Rental properties consisted of the following at September 30, 2004 and December 31, 2003 (in thousands):



|                               |  |      |         |   |      |   |         |  
|------------------------------ |  | ---- | ------- | - | ---- | - | ------- | -
|                               |  | 2004 |         |   | 2003 |  
|Land                           |  | $    | 6,246   |   |      | $ | 5,739   |  
|Land improvements              |  |      | 2,381   |   |      |   | 1,532   |  
|Buildings                      |  |      | 32,627  |   |      |   | 33,150  |  
|Tenant improvements            |  |      | 8,160   |   |      |   | 18,746  |  
|                               |  |      |         |   |      |   |         |  
|                               |  |      | 49,414  |   |      |   | 59,167  |  
|Less: accumulated depreciation |  |      | (12,744 | ) |      |   | (23,314 | )
|                               |  |      |         |   |      |   |         |  
|Total rental properties, net   |  | $    | 36,670  |   |      | $ | 35,853  |  
|                               |  |      |         |   |      |   |         |  



The Partnerships rental
properties include six office and five retail projects, aggregating approximately 547,000 rentable square feet, at the Tri-City Corporate Centre in San Bernardino, California.



Land and land improvements increased primarily due to the conversion of two East Lake pads from construction in progress. The two East Lake
pads were completed in March 2004. In March 2004, a new tenant on one of the sites commenced a 15-year ground lease. Currently, management is aggressively marketing the remaining site which is on a build-to-suit basis as tenants become
available.



During the nine months ended September 30, 2004, fully
depreciated buildings and tenant improvements of $12,201 were removed from the balances of such accounts.



Construction in progress consisted of the following at September 30, 2004 and December 31, 2003 (in thousands):



|                                                                                                                                                                                      |  |      |       |      |    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- | ---
|                                                                                                                                                                                      |  | 2004 |       | 2003
|Tri-City Corporate Centre, San Bernardino, CA (approximately 6 acres and 1 acre of land with a cost basis of $678 and $507 at September 30,
2004 and December 31, 2003, respectively) |  | $    | 2,080 |      | 769
|                                                                                                                                                                                      |  |      |       |      |    



Construction in progress increased
primarily due to a new development project at Three Carnegie, and a pre-design 5-acre land parcel, known as Brier Business Center II, transferred from land held for development, offset by the conversion of two East Lake pads to land and land
improvements upon their completion in March 2004. The project is a two-story office building expected to total 86,200 square feet. The estimated construction cost is approximately $6,100,000, which is estimated to be completed in June 2005. As of
September 30, 2004, construction costs of $1,378,000 had been incurred. In April 2004, the Partnership obtained a new line of credit with a total availability of $7,425,000, secured by Two Parkside, to fund the construction costs (as discussed in
Note 4 below).



Land held for development consisted of the following at
September 30, 2004 and December 31, 2003 (in thousands):



|                                                                                                                                                 |  |      |     |      |   |      
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | --- | ---- | - | -----
|                                                                                                                                                 |  | 2004 |     | 2003
|Tri-City Corporate Centre, San Bernardino, CA (approximately 4.5 acres and 10.5 acres at September 30, 2004 and December 31, 2003,
respectively) |  | $    | 870 |      | $ | 1,549
|                                                                                                                                                 |  |      |     |      |   |      



Land held for development decreased
primarily due to a conversion of Three Carnegie and Brier Business Center II to construction in progress.



Note 4. NOTE PAYABLE AND LINES OF CREDIT



Note payable and lines of credit as of September 30, 2004 and December 31, 2003, were as follows (in thousands):



|                                                                                                                                                                                                                                                                               |  |      |       |      |   |      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ----- | ---- | - | -----
|                                                                                                                                                                                                                                                                               |  | 2004 |       | 2003
|Note payable, secured by first deed of trust on Lakeside Tower, One Parkside and Two Carnegie Plaza buildings. The note, which matures June 1,
2006, is a 10-year, 9.39% fixed rate loan with a 25-year amortization requiring monthly principal and interest payments of $83. |  | $    | 8,408 |      | $ | 8,558



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##### Table of Contents

RANCON REALTY FUND V

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



|                                                                                                                                                                                                                                                                                                                                                                                      |  |      |        |      |   |       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                                                                                                                                                                                                                                                                                                                                                                      |  | 2004 |        | 2003
|Line of credit with a total availability of $6 million secured by first deeds of trust on One Carnegie Plaza and Carnegie Business Center II
buildings with a variable interest rate of Prime Rate plus 0.75% with the floor set at 5.5% (5.5% as of September 30, 2004 and December 31, 2003, respectively), monthly interest-only payments, and a maturity date of March 5,
2005. |  |      | 5,920  |      |   | 5,270 
|Line of credit with a total availability of $7.425 million secured by first deed of trust on Two Parkside buildings with a variable interest
rate of Prime Rate (4.5% as of September 30, 2004), monthly interest-only payments, and a maturity date of April 15, 2007.                                                                                                             |  |      | 1,543  |      |   |      
|                                                                                                                                                                                                                                                                                                                                                                                      |  |      |        |      |   |       
|                                                                                                                                                                                                                                                                                                                                                                                      |  | $    | 15,871 |      | $ | 13,828
|                                                                                                                                                                                                                                                                                                                                                                                      |  |      |        |      |   |       



On March 30, 2004, the Partnership
obtained a new line of credit with a total availability of $7,425,000, secured by Two Parkside, with a maturity date of April 15, 2007, to provide the funding for the construction costs at Three Carnegie which are estimated to be approximately
$6,100,000. As of September 30, 2004, construction costs of $1,378,000 had been incurred. The construction began in March 2004 and is estimated to be completed in June 2005.



The note payable may be prepaid with a penalty based on a yield maintenance formula. There is no prepayment penalty if the note is repaid
within nine months of the maturity date of the note. The Partnerships plan is to either sell the property or refinance the property with a lower interest rate loan to pay off this high interest rate note when the prepayment penalty period ends
on December 1, 2005.



The annual maturities of the Partnerships
note payable and lines of credit subsequent to September 30, 2004, are as follows (in thousands):



|      |  |   |       
|----- |  | - | ------
|2004  |  | $ | 53    
|2005  |  |   | 6,143 
|2006  |  |   | 8,132 
|2007  |  |   | 1,543 
|      |  |   |       
|Total |  | $ | 15,871
|      |  |   |       



Note 5. 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 results of operations and cash flows.



General Uninsured Losses



The Partnership carries property and liability insurance with respect to the properties.
This coverage has policy specification and insured limits customarily carried for similar properties. However, certain types of losses (such as from earthquakes and floods) may be either uninsurable or not economically insurable. Should the
properties sustain damage as a result of an earthquake or flood, the Partnership may incur losses due to insurance deductibles, co-payments on insured losses or uninsured losses. Additionally, the Partnership has elected to obtain insurance coverage
for certified acts of terrorism as defined in the Terrorism Risk Insurance Act of 2002; 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 September 30, 2004 for sales
that occurred in previous years. The subordinated real estate commissions are payable only



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##### Table of Contents

RANCON REALTY FUND V

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



after the Limited Partners have received distributions equal to their original invested capital plus a cumulative non-compounded return of six percent per
annum on their adjusted invested capital. Since the circumstances under which these commissions would be payable are limited, the liability has not been recognized in the accompanying consolidated financial statements; however, the amount will be
recorded when and if it becomes payable.



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##### Table of Contents

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



Background



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 ultimately selling real property. The Partnership was organized in 1985 and completed its public offering of limited partnership units (Units) in February 1989. The
general partners of the Partnership are Daniel L. Stephenson (DLS) and Rancon Financial Corporation (RFC), collectively, the General Partner. RFC is wholly owned by DLS. The Partnership has no employees.



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 Partnership considers all assets owned by RRF V, Inc. and RRF V Tri-City to be owned by the Partnership.



Overview



The Partnerships initial acquisition of property in September 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. Since the acquisition of the land, the Partnership
has constructed eleven projects at Tri-City consisting of five office projects, one industrial property, a 25,000 square foot health club, three restaurants, and a retail space. The Partnerships properties are more fully described below.



As of September 30, 2004, the Partnership owned eleven rental properties
(Tri-City Properties), and approximately 10.5 acres of land (Tri-City land). Construction has commenced on a one-acre land parcel and approximately 5 acres land parcel are at a pre-design stage. The remaining 4.5 acres are
currently undeveloped. The Partnerships plan is to develop more properties on the remaining acres of unimproved land to generate more operating income for the Partnership in this fast-growing market.



Tri-City Corporate Center



On September 3, 1985, the Partnership acquired 76.21 acres of partially developed land in
Tri-City for a total acquisition price of $14,118,000. In 1984 and 1985, a total of 76.56 acres within Tri-City were acquired by Fund IV.



Tri-City Corporate Centre is located at the northeastern quadrant of the intersection of Interstate 10 (San Bernardino Freeway) and Waterman Avenue in the southernmost
part of the City of San Bernardino, and is in the heart of the Inland Empire, the most densely populated area of San Bernardino and Riverside counties.



The Inland Empire is generally broken down into two major markets, Inland Empire East and Inland Empire West. Tri-City Corporate Centre is located within the Inland
Empire East market, which consists of approximately 12.3 million square feet of office space and an overall vacancy rate of approximately 11.51% as of September 30, 2004, according to research conducted by an independent broker.



Within the Tri-City Corporate Centre at September 30, 2004, the Partnership has 441,000
square feet of office space with a vacancy rate of 4%, 51,000 square feet of R & D space with a vacancy rate of 13%, and 55,000 square feet of retail space with no vacancy.



Tri-City Properties



The Partnerships improved properties in the Tri-City Corporate Centre are as follows:



|                            |  |                                 |  |            
|--------------------------- |  | ------------------------------- |  | -----------
|Property                    |  | Type                            |  | Square Feet
|One Carnegie Plaza          |  | Two, two story office buildings |  | 107,278    
|Two Carnegie Plaza          |  | Two story office building       |  | 68,957     
|Carnegie Business Center II |  | Two R & D buildings             |  | 50,867     
|Lakeside Tower              |  | Nine story office building      |  | 112,791    
|One Parkside                |  | Four story office building      |  | 70,068     
|Ballys Health Club         |  | Health club facility            |  | 25,000     
|Outback Steakhouse          |  | Restaurant                      |  | 6,500      
|Palm Court Retail #3        |  | Retail                          |  | 6,004      
|Chuck E. Cheese             |  | Restaurant                      |  | 12,200     
|Two Parkside                |  | Three story office building     |  | 82,004     
|Pat & Oscars                |  | Restaurant                      |  | 5,100      



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##### Table of Contents

These eleven properties total approximately 547,000 rentable square feet and offer a wide range of commercial, R & D,
office and retail product to the market.



Occupancy rates at the
Partnerships Tri-City properties were as follows:



|                            |  |               |   |  |      |  
|--------------------------- |  | ------------- | - |  | ---- | -
|                            |  | September 30, |  
|                            |  | 2004          |   |  | 2003 |  
|One Carnegie Plaza          |  | 91            | % |  | 97   | %
|Two Carnegie Plaza          |  | 100           | % |  | 100  | %
|Carnegie Business Center II |  | 87            | % |  | 82   | %
|Lakeside Tower              |  | 93            | % |  | 95   | %
|One Parkside                |  | 100           | % |  | 100  | %
|Ballys Health Club         |  | 100           | % |  | 100  | %
|Outback Steakhouse          |  | 100           | % |  | 100  | %
|Palm Court Retail #3        |  | 100           | % |  | 100  | %
|Chuck E. Cheese             |  | 100           | % |  | 100  | %
|Two Parkside                |  | 100           | % |  | 65   | %
|Pat & Oscars                |  | 100           | % |  |     |  
|Weighted average occupancy  |  | 96            | % |  | 91   | %



As of September 30, 2004, tenants at
Tri-City Corporate Centre occupying substantial portions of leased rental space included: (i) New York Life Insurance with a lease through December 2004; (ii) Paychex with a lease through July 2005; (iii) Computer Associates with a lease through
November 2005; (iv) Chicago Title with a lease through February 2009; (v) First Franklin Financial with a lease through February 2009; (vi) Gresham, Savage, Nolan & Tilden with a lease through March 2009; (vii) Arrowhead Central Credit Union
with two leases through September 2005 and 2010; (viii) Holiday Spa Health Club with a lease through December 2010; and (ix) Lewis, Damato, Brisbois and Bisgaard, LLP with a lease through November 2012. These nine tenants, in the aggregate,
occupy approximately 228,000 square feet of the 547,000 total rentable square feet at Tri-City and account for approximately 49% of the rental income generated at Tri-City for the Partnership.



New York Life insurance extended its lease at One Parkside to the end of 2004 at which time
they will relocate to Vanderbilt Plaza  a new building developed by Fund IV- a partnership sponsored by the General Partner of the Partnership.



The 6% decrease in occupancy from September 30, 2003 to September 30, 2004 at One Carnegie Plaza was due to two tenants totaling 5,000 square feet moving out upon their
lease expirations, and a tenant with 8,500 square feet who moved to Two Parkside, a new building completed by the Partnership in September 2003, offset by leasing 6,500 square feet to two new tenants and an existing tenant.



The 5% increase in occupancy from September 30, 2003 to September 30, 2004 at Carnegie
Business Center II was due to leasing 2,400 square-feet space to a new tenant.



Two Parkside began lease-up in September 2003. The 35% increase in occupancy from September 30, 2003 to September 30, 2004 at Two Parkside is due to leasing the remaining 29,000 square feet to two new tenants in March and April 2004.



Pat & Oscars began occupancy in March 2004 with a ground lease of 15
years.



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



|                     |  |                                                     |           |   |                                                   |   |                |              |  |   |                |       
|-------------------- |  | --------------------------------------------------- | --------- | - | ------------------------------------------------- | - | -------------- | ------------ |  | - | -------------- | ------
|Security             |  | Lakeside Tower, One Parkside and Two Carnegie Plaza |           |   | One Carnegie Plaza and Carnegie Business CenterII |   |                | Two Parkside | 
|Outstanding balance  |  | $                                                   | 8,408,000 |   |                                                   | $ | 5,920,000      |              |  | $ | 1,543,000      |       
|Form of debt         |  |                                                     | Note      |   |                                                   |   | Line of credit |              |  |   | Line of credit |       
|Annual interest rate |  |                                                     | 9.39      | % |                                                   |   | 5.5            | %            |  |   | Prime rate     | (4.5%)
|Monthly payment      |  | $                                                   | 83,142    |   |                                                   |   | Interest-only  |              |  |   | Interest-only  |       
|Maturity date        |  |                                                     | 6/1/06    |   |                                                   |   | 3/5/05         |              |  |   | 4/15/07        |       



The interest rate for the line of
credit related to One Carnegie Plaza and Carnegie Business Center II is a variable interest rate of Prime Rate plus 0.75% with the floor set at 5.5% as of September 30, 2004.



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##### Table of Contents

The note payable may be prepaid with a penalty based on a yield maintenance formula. There is no prepayment penalty if
the note is repaid within six months of the maturity date of the note. The Partnerships plan is to either sell the property or refinance the property with a lower interest rate loan to pay off this high interest rate note when the prepayment
penalty period ends on December 1, 2005.



Tri-City Land



As of September 30, 2004, the Partnership owned approximately 10.5
acres of land. Construction has commenced on a one-acre land parcel (discussed below). Approximately 5 acres land parcel, know as Brier Business Center II, are at a pre-design stage. The remaining 4.5 acres are currently undeveloped. The
Partnerships plan is to develop properties on the remaining acres of unimproved land to generate more operating income for the Partnership in this fast-growing market.



A two-story office building of 86,200 square feet, known as Three Carnegie, is currently under construction. The estimated construction cost
is approximately $6,100,000, which is estimated to be completed in June 2005. In April 2004, the Partnership obtained a new line of credit with a total availability of $7,425,000, secured by Two Parkside, to provide the funding for the construction
costs.



Results of Operations



Comparison of the nine months ended September 30, 2004 to the nine months ended September
30, 2003



Revenue



Rental income increased $1,575,000 for the nine months ended September 30, 2004, compared to
the nine months ended September 30, 2003, primarily due to an increase in rental income resulting from the completion of three new properties developed by the Partnership.



Operating Expenses



Operating expenses increased $401,000, or 15%, for the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003 primarily due to the
additional operating costs associated with the completion of three new properties developed by the Partnership.



Depreciation and amortization increased $273,000, or 17%, for the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003, primarily
due to depreciation of one new building, land improvements and tenant improvements placed into service.



Expenses associated with undeveloped land decreased $69,000, or 33%, for the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003, primarily due to decreased capitalization of
property taxes and insurance at two East Lake pads and Three Carnegie during the construction period. The two East Lake pads were completed in March 2004.



General and administrative expenses increased $61,000, or 7%, for the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003,
primarily due to an increase in investor service expenses related to printing, postage and investor open house expenses.



Non-operating income /expenses



Interest and other income decreased $21,000 for the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003, primarily due to a lower
invested cash balance resulting from payment of the construction costs at Two Parkside and Chuck E. Cheese.



Interest expense increased $606,000, or 224%, for the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003, primarily due to interest paid on the two lines of credit, offset by
interest capitalized during construction at Three Carnegie and two East Lake pads.



Comparison of the three months ended September 30, 2004 to the three months ended September 30, 2003



Revenue



Rental income increased $548,000 for the three months ended September 30, 2004, compared to the three months ended September 30, 2003, primarily due to an increase in rental income resulting from the completion of
three new properties developed by the Partnership.



16



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##### Table of Contents

Operating Expenses



Operating expenses increased $94,000, or 9%, for the three months ended September 30, 2004, compared to the three months ended September 30, 2003 primarily due to the
additional operating costs associated with the completion of three new properties developed by the Partnership.



Depreciation and amortization increased $77,000, or 13%, for the three months ended September 30, 2004, compared to the three months ended September 30, 2003, primarily
due to depreciation of one new building, land improvements and tenant improvements placed into service.



Expenses associated with undeveloped land decreased $20,000, or 36%, for the three months ended September 30, 2004, compared to the three months ended September 30, 2003, primarily due to decreased capitalization of
property taxes and insurance at two East Lake pads and Three Carnegie during the construction period. The two East Lake pads were completed in March 2004.



Non-operating income /expenses



Interest expense increased $221,000, or 219%, during the three months ended September 30, 2004, compared to the three months ended September 30, 2003, primarily due to
interest paid on the two lines of credit, offset by interest capitalized during construction at two East Lake pads and Three Carnegie.



Liquidity and Capital Resources



The following discussion should be read in conjunction with the Partnerships December 31, 2003 audited consolidated financial statements and the notes thereto.



As of September 30, 2004, the Partnership had cash and cash equivalents of
$1,891,000.



The Partnerships liabilities at September 30, 2004, included
a note payable and two lines of credit totaling approximately $15,871,000 secured by properties with an aggregate net book value of approximately $30,740,000. The note payable requires monthly principal and interest payments of $83,000, bears a
fixed interest rate of 9.39%, and has a maturity date of June 1, 2006. One line of credit with a total availability of $6,000,000 requires monthly interest-only payments, bears an interest rate of prime plus 0.75% with a floor set at 5.5% (5.5% as
of September 30, 2004 and December 31, 2003), and has a maturity date of March 5, 2005. Another line of credit with a total availability of $7,425,000 requires monthly interest-only payments, bears an interest rate of prime rate (4.5% and 4% as of
September 30, 2004 and December 31, 2003, respectively), and has a maturity date of April 15, 2007.



The Partnership is contingently liable for subordinated real estate commissions payable to the General Partner in the amount of $102,000 at September 30, 2004 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 nine percent per annum on their adjusted invested
capital. Since the circumstances under which these commissions would be payable are limited, 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, interest income on certificates of deposit and other deposits of funds invested
temporarily. 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 believes that the Partnerships cash balance at September 30, 2004, 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 the reasonably foreseeable future. In April 2004, the Partnership obtained a new line of credit with
a total availability of $7,425,000 to cover the construction costs at Three Carnegie, a two-story office building of 86,200 square feet (as discussed above). 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.



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 nine months ended September 30,
2004, the Partnerships cash provided by operating activities totaled $2,193,000.



The $66,000 decrease in accounts receivable at September 30, 2004, compared to December 31, 2003, was primarily due to the collection of tenant rents.



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The $479,000 increase in deferred costs at September 30, 2004, compared to December 31, 2003, was primarily due to lease
commissions paid for Lakeside Tower, Pat & Oscars and One & Two Parkside.



The $193,000 increase in prepaid expenses and other assets at September 30, 2004, compared to December 31, 2003, was primarily due to an increase in tenant rents recognized on a straight line basis and increase in impound accounts and
prepaid insurance.



The $485,000 increase in accounts payable and other
liabilities at September 30, 2004, compared to December 31, 2003, was primarily due to accruals of property taxes and investor service expenses.



The $370,000 decrease in prepaid rent at September 30, 2004, compared to December 31, 2003, was due to October 2004 rents received in September 2004, offset by January
2004 rents received in December 2003.



Investing Activities



During the nine months ended September 30, 2004, the Partnerships cash used for
investing activities totaled $2,283,000, which consisted of $587,000 for land improvements at two East Lake pads, $201,000 for building improvements at One & Two Parkside, One & Two Carnegie Plaza and Carnegie Business Center II, $889,000
for tenant improvements at Lakeside Tower and One & Two Parkside, and $691,000 for construction costs at Three Carnegie, offset by the partial collection of $85,000 from a note related to tenant improvement.



Financing Activities



During the nine months ended September 30, 2004, the Partnerships cash provided by financing activities totaled $845,000, which
consisted of $2,193,000 of draws on the two lines of credit (as discussed above), offset by $150,000 in principal payments on the note payable, $141,000 in loan fees paid for the refinance of the line of credit, redeemed 873 limited partnership
Units for $344,000, of which $65,000 was accrued at September 30, 2004 for final settlement in the fourth quarter of 2004, and $778,000 distributions to the Limited Partners.



Critical Accounting Policies



Revenue recognized on a straight-line basis



The Partnership recognizes rental revenue on a straight-line basis at amounts that it believes it will collect on a tenant-by-tenant basis. The estimation process may
result in higher or lower levels from period to period as the Partnerships collection experience and the credit quality of the Partnerships tenants changes. 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.



Carrying value of rental properties and land held for development



The Partnerships rental properties, including the related land, are stated at cost unless events or circumstances indicate that cost cannot be recovered, in which
case, the carrying value of the property is reduced to its estimated fair value. Estimated fair value is based upon (i) 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 multiplied by annualized rental 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.



Land held for development is 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; (ii) is computed using estimated sales price, based
upon market values for comparable properties; and (iii) 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.



The actual value of the Partnerships portfolio of properties and land held for development could be significantly higher or lower than
their carrying amounts.



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 and 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:



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| |  | 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 cash balance and cash generated by its operations will be adequate to meet its operating requirements in both the short and the reasonably
foreseeable long-term;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Partnerships plan to develop one or more properties to generate more operating income;
| | - | -------------------------------------------------------------------------------------------



| |  | The Partnerships plan to refinance properties with lower interest rate loans when prepayment penalty periods end; and
| | - | ----------------------------------------------------------------------------------------------------------------------



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



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:



| |  | 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;
| | - | -----------------------------------------------------------------------------



| |  | increased interest rates and operating costs;
| | - | ---------------------------------------------



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



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



| |  | the unpredictability of changes in accounting rules;
| | - | ----------------------------------------------------



| |  | failure of market conditions and occupancy levels to improve in certain geographic areas; and
| | - | ---------------------------------------------------------------------------------------------



| |  | continuing threat of terrorist attacks.
| | - | ---------------------------------------



The forward-looking statements in this Quarterly Report on Form 10-Q are subject to additional risks and uncertainties further discussed below under Risk Factors. The
Partnership assumes no obligation to update any forward looking-statement or statements.



Risk Factors



Market
Fluctuations in Rental Rates and Occupancy Could Adversely Affect Our Operations



As leases turn over, our ability to re-lease the space to existing or new tenants at rates equal to or greater than those realized historically is impacted by, among other things, the economic conditions of the market in which a property is
located, the availability of competing space (including sublease space offered by tenants who have vacated space in competing buildings prior to the expiration of their lease term), and the level of improvements which may be required at the
property. We cannot assure you that the rental rates we obtain in the future will be equal to or greater than those obtained under existing contractual commitments. If we cannot lease all or substantially all of the expiring space at our properties
promptly, or if the rental rates are significantly lower than expected, then our results of operations and financial condition could be negatively impacted.



Tenants Defaults Could Adversely Affect Our Operations



Our ability to manage our assets is subject to federal bankruptcy laws and state laws that limit creditors rights and remedies available to real property owners to
collect delinquent rents. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in any bankruptcy proceeding relating to that tenant. We
also cannot be sure that we would receive rent in the proceeding sufficient to cover our expenses with respect to the premises. If a tenant becomes bankrupt, the federal bankruptcy code will apply, which in some instances may restrict the amount and
recoverability of our claims against the tenant. A tenants default on its obligations to us could adversely



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affect our results of operations and financial condition.



Potential Liability Due to Environmental Matters



Under federal, state and local laws relating to protection of the environment, or Environmental Laws, a current or previous owner or operator of real estate may be liable
for contamination resulting from the presence or discharge of petroleum products or other hazardous or toxic substances on the property. These owners may be required to investigate and clean-up the contamination on the property as well as the
contamination which has migrated from the property. Environmental Laws typically impose liability and clean-up responsibility without regard to whether the owner or operator knew of, or was responsible for, the presence of the contamination. This
liability may be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. In addition, the owner or operator of a property may be subject to claims by third parties based on personal injury,
property damage and/or other costs, including investigation and clean-up costs, resulting from environmental contamination. Environmental Laws may also impose restrictions on the manner in which a property may be used or transferred or in which
businesses may be operated. These restrictions may require expenditures. Under the Environmental Laws, any person who arranges for the transportation, disposal or treatment of hazardous or toxic substances may also be liable for the costs of
investigation or clean-up of those substances at the disposal or treatment facility, whether or not the facility is or ever was owned or operated by that person.



Our tenants generally are required by their leases to operate in compliance with all applicable Environmental Laws, and to indemnify us
against any environmental liability arising from their activities on the properties. However, we could be subject to strict liability by virtue of our ownership interest in the properties. Also, tenants may not satisfy their indemnification
obligations under the leases. We are also subject to the risk that:



| |  | any environmental assessments of our properties may not have revealed all potential environmental liabilities,
| | - | --------------------------------------------------------------------------------------------------------------



| |  | any prior owner or prior or current operator of these properties may have created an environmental condition not known to us, or
| | - | --------------------------------------------------------------------------------------------------------------------------------



| |  | an environmental condition may otherwise exist as to any one or more of these properties.
| | - | -----------------------------------------------------------------------------------------



Any one of these conditions could have an adverse effect on our results of operations and financial condition. Moreover, future
environmental laws, ordinances or regulations may have an adverse effect on our results of operations and financial condition. Also, the current environmental condition of those properties may be affected by tenants and occupants of the properties,
by the condition of land or operations in the vicinity of the properties (such as the presence of underground storage tanks), or by third parties unrelated to us.



Environmental Liabilities May Adversely Affect Operating Costs and Ability to Borrow



The obligation to pay for the cost of complying with existing Environmental Laws as well as
the cost of complying with future legislation may affect our operating costs. In addition, the presence of petroleum products or other hazardous or toxic substances at any of our properties, or the failure to remediate those properties properly, may
adversely affect our ability to borrow by using those properties as collateral. The cost of defending against claims of liability and the cost of complying with Environmental Laws, including investigation or clean-up of contaminated property, could
materially adversely affect our results of operations and financial condition.



General Risks of Ownership of Real Estate



We are subject to
risks generally incidental to the ownership of real estate. These risks include:



| |  | changes in general economic or local conditions;
| | - | ------------------------------------------------



| |  | changes in supply of or demand for similar or competing properties in an area;
| | - | ------------------------------------------------------------------------------



| |  | the impact of environmental protection laws;
| | - | --------------------------------------------



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



| |  | changes in tax, real estate and zoning laws; and
| | - | ------------------------------------------------



| |  | the creation of mechanics liens or similar encumbrances placed on the property by a lessee or other parties without our knowledge and consent.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



Should any of these events occur, our results of operations and financial condition could be
adversely affected.



Uninsured Losses May Adversely Affect Operations



We, or in certain instances, tenants of our properties, carry 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. Further, certain of the properties are located in areas that are subject to earthquake activity and floods. Should a property sustain damage as a result of an earthquake or flood, we may incur losses due to
insurance deductibles, co-payments on insured losses or uninsured losses. Additionally, we have elected to obtain insurance coverage for certified acts of terrorism as defined in the Terrorism Risk



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Insurance Act of 2002; 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, we could lose some or all of our capital investment, cash flow and anticipated profits related to one or more properties. This could have an adverse effect on our results of operations and
financial condition.



Illiquidity of Real Estate May Limit Our Ability to
Vary Our Portfolio



Real estate investments are relatively illiquid and,
therefore, will tend to limit our ability to vary our portfolio quickly in response to changes in economic or other conditions.



Potential Liability Under the Americans With Disabilities Act



All of our properties are required to be in compliance with the Americans With Disabilities Act. The Americans With Disabilities Act generally requires that places of
public accommodation be made accessible to people with disabilities to the extent readily achievable. Compliance with the Americans With Disabilities Act requirements could require removal of access barriers. Non-compliance could result in
imposition of fines by the federal government, an award of damages to private litigants and/or a court order to remove access barriers. Because of the limited history of the Americans With Disabilities Act, the impact of its application to our
properties, including the extent and timing of required renovations, is uncertain. Pursuant to lease agreements with tenants in certain of the single-tenant properties, the tenants are obligated to comply with the Americans With
Disabilities Act provisions. If our costs are greater than anticipated or tenants are unable to meet their obligations, our results of operations and financial condition could be adversely affected.



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 Information 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 does not believe that changes in market interest rates will have a material
impact on the performance or fair value of its portfolio.



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



|                                     |  |                        |      |   |      |   |       |      |  |   |       |   |  |       |       |   |            |   |       |   |  |   |      
|------------------------------------ |  | ---------------------- | ---- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ----- | ----- | - | ---------- | - | ----- | - |  | - | -----
|                                     |  | Expected Maturity Date |      |   |      |   |       |     
|                                     |  | 2004                   |      |   | 2005 |   |       | 2006 |  |   | 2007  |   |  | Total |       |   | Fair Value
|                                     |  | (in thousands)         |      |   |      |   |       |     
|Secured Fixed Rate Debt              |  | $                      | 53   |   |      | $ | 223   |      |  | $ | 8,132 |   |  | $     |      |   |            | $ | 8,408 |   |  | $ | 9,499
|Average interest rate                |  |                        | 9.39 | % |      |   | 9.39  | %    |  |   | 9.39  | % |  |       |      |   |            |   | 9.39  | % |  |   |      
|Secured Variable Rate-line of credit |  | $                      |     |   |      | $ | 5,920 |      |  | $ |      |   |  | $     |      |   |            | $ | 5,920 |   |  | $ | 5,920
|Average interest rate                |  |                        |     | % |      |   | 5.5   | %    |  |   |      | % |  |       |      | % |            |   | 5.5   | % |  |   |      
|Secured Variable Rate-line of credit |  | $                      |     |   |      | $ |      |      |  | $ |      |   |  | $     | 1,543 |   |            | $ | 1,543 |   |  | $ | 1,543
|Average interest rate                |  |                        |     | % |      |   |      | %    |  |   |      | % |  |       | 4.5   | % |            |   | 4.5   | % |  |   |      



A change of 1/8% in the index rate to
which the Partnerships variable rate debt is tied would not have a material impact on the annual interest incurred by the Partnership, based upon the balances outstanding on variable rate instruments at September 30, 2004.



As of September 30, 2004, the Partnership had cash of $800,000 invested in interest-bearing
money market account. This investment is subject to interest rate risk due to changes in interest rates. Declines in interest rates over time would reduce Partnership interest income. The Partnership does not own any derivative instruments.



As of September 30, 2004, the Partnership had no investments in
interest-bearing certificates of deposit. The Partnership does not own any derivative instruments.



|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



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that our disclosure controls and procedures are effective in alerting him 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.



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



None.



|Item 6. | Exhibits and Reports on Form 8-K
|------- | --------------------------------



(a) Exhibits:



|     |  |                                                                                                                               
|---- |  | ------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.4 |  | Property Management and Services Agreement dated July 30, 2004.                                                               
|     | 
|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.



(b) Reports on Form
8-K (incorporated herein by reference):



None.



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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: November 15, 2004 |  |                                  |  | By:                                   |  | /s/ Daniel L. Stephenson       
|                        |  |                                  |  |                                       |  | Daniel L. Stephenson, President
|                        |  |                                 
|Date: November 15, 2004 |  | By:                              |  | /s/ Daniel L. Stephenson             
|                        |  |                                  |  | Daniel L. Stephenson, General Partner



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