SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended MARCH 31, 1995 COMMISSION FILE NUMBER 0-11884
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2774875
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
399 BOYLSTON STREET, 13TH FL.
BOSTON, MASSACHUSETTS 02116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 578-1200
Former Name, former address and former fiscal year if changed since last
report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No ___
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1995
PART I
FINANCIAL INFORMATION
Page(s)
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operation
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
March 31, 1995 December 31, 1994 1994
-------------- ---------------
ASSETS
Real estate investments:
Ground leases and mortgage
loans, net $11,113,875 $11,115,609
Property, net 4,913,092 4,886,582
Deferred leasing costs and
other assets, net 200,470 197,320
---------- ----------
16,227,437 16,199,511
Cash and cash equivalents 1,555,900 2,431,089
Short-term investments 760,490 -
Interest, rent and other
receivables 60,899 50,654
----------- -----------
$18,604,726 $18,681,254
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 92,715 $ 255,659
Accrued management fee 24,575 24,575
Deferred disposition fees 457,768 457,768
----------- -----------
Total liabilities 575,058 738,002
----------- -----------
Partners' capital:
Limited partners ($546.66
per unit, respectively;
30,000 units authorized,
issued and outstanding) 17,983,683 17,898,131
General partner 45,985 45,121
----------- ----------
18,029,668 17,943,252
----------- ----------
Total partners' capital $18,604,726 $18,681,254
=========== ===========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
(Unaudited)
Quarter ended March, 31 31, ------------------
-----------------------
1995 1994
---- -----
INVESTMENT ACTIVITY
Property rentals $194,110 $152,593
Property operations (71,249) (77,711)
Depreciation and amortization (48,204) (47,661)
-------- -------- 74,657
74,657 27,221
Ground rentals and interest on
mortgage loans 277,410 444,094
------- --------
Total real estate activity 352,067 471,315
Interest on cash equivalents
and short-term investments 33,405 13,828
------ ------
Total investment activity 385,472 485,143
------- -------
PORTFOLIO EXPENSES
Management fee 24,575 38,811
General and administrative 25,996 26,528
------ ------
50,571 65,339
------ ------
NET INCOME $334,901 $419,804
======== ========
Net income per limited partnership
unit $ 11.05 $ 13.85
======== ========
Cash distributions per limited
partnership unit $ 8.20 $ 12.95
======== ========
Number of limited partnership units
outstanding during the period 30,000 30,000
======== ========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
Quarter ended March 31,
----------------------------------
1995 1994
---- -----
General Limited General Limited
Partners Partners Partners Partners
-------- -------- -------- --------
Balance at beginning
of period $ 45,121 $17,898,131 $28,359 $22,039,045
Cash distributions (2,485) (246,000) (3,924) (388,500)
Net income 3,349 331,552 4,198 415,606
-------- ----------- ------- ----------
Balance at end of
period $ 45,985 $17,983,683 $28,633 $22,066,151
======== =========== ======= ===========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
Summarized Statement of Cash Flows
(Unaudited)
Quarter Ended March 31,
---------------------------
1995 1994
----- ------
Net cash provided by operating activities $ 265,813 $454,936
---------- ----------
Cash flows from investing activities:
Capital expenditures on owned property (134,036) (50,027)
Decrease (increase) in short-term
investments, net (758,481) 119,541
----------- ---------
Net cash provided by (used in)
investing activities (892,517) 69,514
----------- ---------
Cash flows from financing activity:
Distributions to partners (248,485) (392,424)
----------- ----------
Net increase (decrease) in cash and
cash equivalents (875,189) 132,026
Cash and cash equivalents:
Beginning of period 2,431,089 1,038,303
----------- ----------
End of period $1,555,900 $1,170,329
=========== ==========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
Notes to Financial Statements
(Unaudited)
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the Partnership's
financial position as of March 31, 1995 and December 31, 1994 and the results
of its operations, its cash flows and changes in partners' capital for the
interim periods ended March 31, 1995 and 1994. These adjustments are of a
normal recurring nature.
See notes to financial statements included in the Partnership's 1994 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
NOTE 1 - ORGANIZATION AND BUSINESS
- - - - - ----------------------------------
New England Life Pension Properties; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the
purpose of investing primarily in newly constructed and existing income
producing real properties. The Partnership commenced operations in June 1983
and acquired several real estate investments through 1985. It intends to
dispose of its investments within twelve years of their acquisition, and then
liquidate;however, the general partner will extend the investment period if it
is in the best interest of the limited partners.
NOTE 2 - INVESTMENTS IN GROUND LEASES AND MORTGAGE LOANS
- - - - - --------------------------------------------------------
In accordance with Statement of Financial Accounting Standards No. 114 which
the Partnership adopted as of January 1, 1993, the mortgage loan on Decatur
TownCenter is impaired. Accordingly, a valuation allowance has been
established to adjust the carrying value of the loan to its estimated fair
market value less anticipated costs of sale. The recorded and carrying values
of the impaired mortgage loan at the beginning and end of the respective
periods are as follows:
Recorded Valuation Carrying
Value Allowance Value
Balance at December 31, 1993 $6,561,846 $(2,800,000) $3,761,846
========== =========== ==========
Balance at March 31, 1994 $6,558,558 $(2,800,000) $3,758,558
========== =========== ==========
Balance at December 31, 1994 $6,646,927 $(2,600,000) $4,046,927
========== =========== ==========
Balance at March 31, 1995 $6,645,193 $(2,600,000) $4,045,193
========== =========== ==========
During the second and fourth quarters of 1994, the valuation allowance
was reduced by a total of $200,000.
NOTE 3 - SUBSEQUENT EVENT
- - - - - -------------------------
Distributions of cash from operations relating to the quarter ended March 31,
1995 were made on April 27, 1995 in the aggregate amount of $248,485 ($8.20
per limited partnership unit).
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial Condition and Results
of Operations
LIQUIDITY AND CAPITAL RESOURCES
- - - - - -------------------------------
The Partnership completed its offering of units of limited partnership
interest in June, 1983. A total of 30,000 units were sold. The Partnership
received proceeds of $27,253,251, net of selling commissions and other
offering costs, which were invested in real estate, used to pay related
acquisition costs, or retained as working capital reserves. The Partnership
made six real estate investments; one was sold in 1985, one in 1991 and
another in 1994. As a result of these sales and similar transactions, capital
of $13,600,200 has been returned to the limited partners as of March 31, 1995.
One of the Partnership's mortgage loan investments had a maturity in 1994 and
another matured in February 1995. The Partnership is in the process of
evaluating various alternatives to renewing these loans.
At March 31, 1995, the Partnership had $2,316,390 in cash, cash equivalents
and short-term investments, $248,485 of which was used for cash distributions
to partners on April 27, 1995; the remainder will be used to fund the
rehabilitation of the Willows Shopping Center or retained as working capital
reserves. The source of future liquidity and cash distributions to partners
is expected to be cash generated by the Partnership's real estate investments
and proceeds from the sale of such investments. Distributions of cash from
operations for the first quarter of 1995 were made at the annualized rate of
6% on the adjusted capital contribution. The cash distribution rate for the
comparative prior year quarter was 7% on the adjusted capital contribution.
The adjusted capital contribution was reduced from $740 per unit to $546.66 in
July 1994 as a result of the distribution of sales proceeds from the Ontario
Distribution Center sale in June 1994. The reduction in the cash distribution
rate is due to the absence of cash flow from Ontario.
The carrying value of real estate investments in the financial statements,
other than impaired mortgage loans, is at cost or is reduced to its lower net
realizable value if the investment's carrying value is determined not to be
recoverable through expected undiscounted cash flows. At March 31, 1995, the
carrying value of Willows Shopping Center exceeded its appraised value by
approximately $300,000 and the appraised value of the Rivers Corporate Park
exceeded its related carrying value by approximately $45,000. The current
appraised value of real estate investments has been estimated by the advisor
and is generally based on a combination of traditional appraisal approaches
performed by the advisor and independent appraisers. Because of the
subjectivity inherent in the valuation process, the estimated current
appraised value may differ significantly from that which could be realized if
the real estate were actually offered for sale in the marketplace.
RESULTS OF OPERATIONS
- - - - - ---------------------
OPERATING FACTORS
Leasing at the Willows Shopping Center remained at 91% during the first
quarter of 1995. The center was 78% leased at March 31, 1994 and December 31,
1993. This property is undergoing a full rehabilitation, including the
complete renovation and reconfiguration of the center. The general partner
has determined that it is in the best interest of the Partnership to provide
funding for the rehabilitation costs together with its affiliate. The
Partnership's share of the estimated rehabilitation cost is approximately
$750,000. Two new tenants (totaling 3,200 square feet) have signed leases
this quarter and are scheduled to occupy the space beginning in the second
quarter. The two remaining anchor spaces continue to be actively marketed.
Decatur TownCenter occupancy remained at 90% during the first quarter of 1995
(occupancy was 82% at March 1994). Market conditions have improved and the
property faces minimal lease rollover during 1995. The Partnership is
currently negotiating a loan modification with the borrower in return for the
Partnership's sole right to cause a sale. However, there can be no assurance
that this negotiation will be successful.
INVESTMENT RESULTS
Exclusive of the activity from the Ontario Distribution Center during the
first quarter of 1994 ($151,441), real estate operating results were $352,067
and $319,874 for the quarters ended March 31, 1995 and 1994, respectively.
The 10% increase was due primarily to an increase in rental revenue from the
Willows Shopping Center due to improved occupancy. This increase was
partially offset by a decrease of approximately $12,000 in the operating
income generated by Decatur TownCenter.
Operating cash flow, exclusive of Ontario Distribution Center in 1994,
decreased approximately $38,000 or 12% between the first quarter of 1994 and
1995. Notwithstanding the improvement in real estate operations between the
comparative periods, the change is also due to the change in working capital.
PORTFOLIO EXPENSES
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the general partner. General and administrative expenses
primarily consist of real estate appraisal, printing, legal, accounting and
investor servicing fees.
The Partnership management fee for the first quarter of 1995 decreased by
approximately $14,000 or 37% from the prior year period due to the decrease in
distributable cash flow. General and administrative expenses remained
relatively unchanged between these respective periods.
INFLATION
- - - - - ---------
By their nature, real estate investments tend not to be adversely affected by
inflation. Inflation may result in appreciation in the value of the
Partnership's real estate investments over time, if rental rates and
replacement costs increase. Recently, declines in property values, due to
market and economic conditions, have overshadowed the positive effect
inflation may have on the value of the Partnership's investments.
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31,1995
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: NONE.
b. Reports on Form 8-K: No reports on Form 8-K were filed
during the quarter ended March 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW ENGLAND LIFE PENSION PROPERTIES; A REAL
ESTATE LIMITED PARTNERSHIP
(Registrant)
-----------------------------------------------
May 10, 1995 Peter P. Twining
Managing Director and General Counsel of
Managing General Partner,
Copley Properties Company, Inc.
-----------------------------------------------
May 10, 1995 Marie A. Welch
Investment Officer and Chief Accounting Officer
of Managing General Partner,
Copley Properties Company, Inc.