SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For Quarter Ended September 30, 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
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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 SEPTEMBER 30, 1995
PART I
FINANCIAL INFORMATION
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NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
September 30, 1995 December 31, 1994
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ASSETS
Real estate investments:
Ground leases and mortgage loans,
net $ 11,143,875 $ 11,115,609
Property, net 5,009,042 4,886,582
Deferred leasing costs and
other assets, net 192,507 197,320
--------------- ---------------
16,345,424 16,199,511
Cash and cash equivalents 1,249,367 2,431,089
Short-term investments 1,055,393 --
Interest, rent and other receivables 145,854 50,654
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$ 18,796,038 $ 18,681,254
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 103,854 $ 255,659
Accrued management fee 24,575 24,575
Deferred disposition fees 457,768 457,768
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Total liabilities 586,197 738,002
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Partners' capital:
Limited partners ($546.66 per
unit; 30,000 units authorized,
issued and outstanding) 18,162,055 17,898,131
General partner 47,786 45,121
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Total partners' capital 18,209,841 17,943,252
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$ 18,796,038 $ 18,681,254
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<FN>
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
(Unaudited)
Quarter Ended Nine Months Ended Quarter Ended Nine Months Ended
September 30, 1995 September 30, 1995 September 30, 1994 September 30, 1994
------------------ ------------------ ------------------- ------------------
INVESTMENT ACTIVITY
Property rentals $ 161,203 $ 587,785 $ 153,575 $ 435,149
Property operations expense (87,340) (232,331) (103,646) (253,687)
Depreciation and amortization (54,654) (149,719) (43,819) (137,163)
--------------- --------------- ---------------- ---------------
19,209 205,735 6,110 44,299
Credit from (provision for) impaired
mortgage loans -- 30,000 -- 100,000
Ground rentals and interest on mortgage
loans 283,355 837,625 297,065 1,190,858
--------------- --------------- ---------------- ---------------
Total real estate operations 302,564 1,073,360 303,175 1,335,157
Gain on sale of property -- -- -- 1,385,561
--------------- --------------- ---------------- ---------------
Total real estate activity 302,564 1,073,360 303,175 2,720,718
Interest on cash equivalents
and short term investments 31,840 99,083 44,325 81,895
--------------- --------------- ---------------- ---------------
Total investment activity 334,404 1,172,443 347,500 2,802,613
--------------- --------------- ---------------- ---------------
Portfolio Expenses
Management fee 24,575 73,726 27,273 104,895
General and administrative 28,894 86,673 22,328 82,056
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53,469 160,399 49,601 186,951
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Net Income $ 280,935 $ 1,012,044 $ 297,899 $ 2,615,662
=============== =============== ================ ===============
Net income per limited partnership
unit $ 9.27 $ 33.40 $ 9.83 $ 86.32
=============== =============== ================ ===============
Cash distributions per
limited partnership unit $ 8.20 $ 24.60 $ 206.29 $ 232.19
=============== =============== ================ ===============
Number of limited partnership
units outstanding during the period 30,000 30,000 30,000 30,000
=============== =============== ================ ===============
<FN>
(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 Nine Months Ended Quarter Ended Nine Months Ended
September 30, 1995 September 30, 1995 September 30, 1994 September 30, 1994
------------------- ------------------- ------------------- ------------------
General Limited General Limited General Limited General Limited
Partner Partners Partner Partners Partner Partners Partner Partners
--------- -------- -------- --------- -------- --------- --------- ---------
Balance at
beginning of
period $ 47,462 $18,129,929 $ 45,121 $17,898,131 $ 43,689 $ 23,556,630 $ 28,359 $22,039,045
Cash
distributions (2,485) (246,000) (7,455) (738,000) (3,924) (6,188,700) (11,772) (6,965,700)
Net income 2,809 278,126 10,120 1,001,924 2,979 294,920 26,157 2,589,505
--------- ---------- -------- ---------- --------- ---------- -------- ---------
Balance at
end of period$ 47,786 $18,162,055 $ 47,786 $18,162,055 $ 42,744 $ 17,662,850 $ 42,744 $17,662,850
========= ============ ========= =========== ======== ============ ========= ===========
<FN>
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
--------------------------------
1995 1994
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Net cash provided by operating activities $ 932,092 $ 1,283,974
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Cash flows from investing activities:
Net proceeds from sale of investment -- 6,222,295
Capital expenditures on owned property (319,945) (202,769)
Decrease (increase) in short-term
investments, net (1,048,414) 581,914
Increase in deferred disposition fees -- 192,442
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Net cash provided by (used in)
investing activities (1,368,359) 6,793,882
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Cash flows from financing activity:
Distributions to partners (745,455) (6,977,472)
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Net increase (decrease) in cash
and cash equivalents (1,181,722) 1,100,384
Cash and cash equivalents:
Beginning of period 2,431,089 1,038,303
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End of period $ 1,249,367 $ 2,138,687
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<FN>
(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 September 30, 1995 and December 31, 1994 and the
results of its operations, its cash flows and changes in partners' capital for
the interim periods ended September 30, 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
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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 July, 1983 and acquired
several investments through 1985. It intends to dispose of its investments
within twelve years of their acquisition, and then liquidate; however, the
general partner could 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,
subsequently amended by Financial Accounting Standard No. 118, 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 January 1, 1994 $ 6,561,846 $ (2,800,000) $ 3,761,846
============= =============
Increase in estimated
fair market value of
collateral 100,000
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Balance at September 30, 1994 $ 6,551,951 $ (2,700,000) $ 3,851,951
============ ============= ============
Balance at December 31, 1994 $ 6,646,927 $ (2,600,000) $ 4,046,927
============ ============
Increase in estimated fair
market value of collateral 30,000
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Balance at September 30, 1995 $ 6,848,933 $ (2,570,000) $ 4,278,933
============ ============= ============
During the fourth quarter of 1994, the allowance was reduced by $100,000.
NOTE 3 - SUBSEQUENT EVENT
- -------------------------
Distributions of cash from operations relating to the quarter ended September
30, 1995 were made on October 26, 1995 in the aggregate amount of $248,485
($8.20 per limited partnership unit).
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 September 30, 1995. One of the
Partnership's mortgage loan investments matured in 1994 and another matured in
February, 1995. The Partnership is in the process of evaluating various
alternatives to renewing these loans.
At September 30, 1995, the Partnership had $2,304,760 in cash, cash equivalents
and short-term investments, $248,485 of which was used for cash distributions to
partners on October 26, 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, second and third quarters of 1995 were made at the
annualized rate of 6% on the adjusted capital contribution while the cash
distribution rate for the comparative prior year quarters was 7%, 7% and 6%,
respectively. The adjusted capital contribution was reduced from $740 per unit
to $546.66 per unit 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 (Decatur TownCenter), 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 September
30, 1995, the carrying value of Willows Shopping Center exceeded its appraised
value by approximately $455,000 and the appraised value of the Rivers Corporate
Park exceeded its related carrying value by approximately $40,000. The current
appraised value of real estate investments has been estimated by the general
partner 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
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Operating Factors
The Willows Shopping Center has remained 91% leased since the end of 1994.
(The Center was 74% leased at September 30, 1994.) 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 which shares in the ownership. The Partnership's share of
the remaining estimated rehabilitation cost is approximately $600,000. During
the second quarter a lease buyout was agreed upon with the tenant who had
vacated the pad site at the entrance to the Center. One of the anchor tenants
at the Center has been experiencing financial difficulties. During October
1995, this tenant requested an early termination of its lease. The Partnership
is currently in negotiations with this tenant.
Decatur TownCenter occupancy has remained at 93% during 1995. (The
property was 95% leased at September 30, 1994.) Market conditions are good and
the property faces minimal lease rollover exposure during 1995. Late in the
third quarter, the Partnership was successful in restructuring the ground lease
and reaching an agreement with the borrower that allows the Partnership the sole
right to cause a sale on or after January 1, 1996.
Investment Results
In June, 1994, the Ontario Distribution Center investment was sold. After
the accrual of the disposition fee of $192,442 payable to the advisor, the
Partnership recognized a gain of $1,385,561. During the nine months ended
September 30, 1994, $309,718 in ground rentals and interest on mortgage loans
was recognized from this investment.
The credit from (provision for) impaired mortgage loans relates solely to
changes in the net fair market value of the collateral underlying the Decatur
TownCenter mortgage loans. Exclusive of the credit from (provision for)
impaired mortgage loans and the activity from Ontario Distribution Center, real
estate investment results were $1,043,360 and $925,439 for the nine months ended
September 30, 1995 and 1994, respectively. This increase of $117,921 or 13% was
due to an increase in income of $160,000 generated by Willows Shopping Center as
a result of both improved occupancy and the Partnership's share of the lease
buyout proceeds (approximately $65,000) received in the second quarter. This
increase was partially offset by a decrease of approximately $40,000 in
operating income generated by Decatur TownCenter due to lower average occupancy.
Interest on cash equivalents and short-term investments increased by
$17,188 or 21% due primarily to higher average investment balances.
Cash flow from operations decreased by $351,882 or 27% between the
respective nine month periods. This change is reflective of the aforementioned
changes in operating results and the changes in net 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 nine months of 1995 decreased
approximately $31,000 compared to the respective prior year period due to the
decrease in distributable cash flow. General and administrative expenses
between these respective periods increased approximately $4,200 or 6% primarily
due to an increase in legal fees associated with the Decatur TownCenter
agreement.
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1995
PART II
OTHER INFORMATION
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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 September 30,
1995.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
November 9, 1995 -----------------------------------------
Peter P. Twining
Managing Director and General Counsel
of Managing General Partner,
Copley Properties Company, Inc.
November 9, 1995 -----------------------------------------
Marie A. Welch
Investment Officer and Chief Accounting
Officer of Managing General Partner,
Copley Properties Company, Inc.