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 March 31, 1996 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 MARCH 31, 1996
PART I
FINANCIAL INFORMATION
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BALANCE SHEET
(Unaudited)
March 31, 1996 December 31, 1995
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ASSETS
Real estate investments:
Ground leases and mortgage
loans, net $11,508,875 $11,508,875
Property, net 5,076,655 5,117,318
Deferred leasing costs and
other assets, net 183,484 176,007
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16,769,014 16,802,200
Cash and cash equivalents 1,226,036 1,204,043
Short-term investments 995,264 1,109,814
Interest, rent and other
receivables 196,317 123,928
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$19,186,631 $19,239,985
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 98,592 $ 239,062
Accrued management fee 28,681 24,575
Deferred disposition fees 457,768 457,768
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Total liabilities 585,041 721,405
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Partners' capital:
Limited partners ($546.66 per
unit; 30,000 units authorized,
issued and outstanding) 18,549,886 18,467,706
General partner 51,704 50,874
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Total partners' capital 18,601,590 18,518,580
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$19,186,631 $19,239,985
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<FN>
(See accompanying notes to financial statements)
STATEMENT OF OPERATIONS
(Unaudited)
Quarter Ended March 31,
1996 1995
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INVESTMENT ACTIVITY
Property rentals $ 191,362 $ 194,110
Property operating expenses (86,004) (71,249)
Depreciation and amortization (52,117) (48,204)
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53,241 74,657
Ground rentals and interest on
mortgage loans 306,625 277,410
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Total real estate activity 359,866 352,067
Interest on cash equivalents
and short term investments 27,575 33,405
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Total investment activity 387,441 385,472
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Portfolio Expenses
Management fee 28,681 24,575
General and administrative 27,265 25,996
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55,946 50,571
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Net Income $ 331,495 $ 334,901
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Net income per limited partnership
unit $ 10.94 $ 11.05
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Cash distributions per
limited partnership unit $ 8.20 $ 8.20
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Number of limited partnership
units outstanding during the
period 30,000 30,000
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<FN>
(See accompanying notes to financial statements)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
Quarter Ended March 31,
1996 1995
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General Limited General Limited
Partner Partners Partner Partners
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Balance at
beginning of
period $ 50,874 $18,467,706 $45,121 $17,898,131
Cash
distributions (2,485) (246,000) (2,485) (246,000)
Net income 3,315 328,180 3,349 331,552
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Balance at
end of period $ 51,704 $18,549,886 $45,985 $17,983,683
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<FN>
(See accompanying notes to financial statements)
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
Quarter Ended March 31,
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1996 1995
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Net cash provided by operating
activities $ 161,526 $ 265,813
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Cash flows from investing activities:
Capital expenditures on owned
property (5,598) (134,036)
Decrease (increase) in short-term
investments, net 114,550 (758,481)
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Net cash provided by (used in)
investing activities 108,952 (892,517)
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Cash flows from financing activity:
Distributions to partners (248,485) (248,485)
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Net increase (decrease) in
cash and cash equivalents 21,993 (875,189)
Cash and cash equivalents:
Beginning of period 1,204,043 2,431,089
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End of period $ 1,226,036 $ 1,555,900
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<FN>
(See accompanying notes to financial statements)
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, 1996 and December 31,
1995 and the results of its operations, its cash flows and changes in
partners' capital for the interim periods ended March 31, 1996 and 1995.
These adjustments are of a normal recurring nature.
See notes to financial statements included in the Partnership's 1995
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. It primarily serves as an
investment for qualified pension and profit sharing plans and other
entities intended to be exempt from Federal income tax. The Partnership
commenced operations in June, 1983 and acquired 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
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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 activity in the valuation allowance during 1995 and 1996,
together with the related 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
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Balance at January 1, 1995 $6,646,927 $(2,600,000) $ 4,046,927
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Balance at March 31, 1995 $6,645,193 $(2,600,000) $ 4,045,193
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Increase in estimated fair
market value of collateral $ 260,000
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Balance at December 31, 1995 $6,781,928 $(2,340,000) $ 4,441,928
========== =========== ==========
Balance at March 31, 1996 $6,781,928 $(2,340,000) $ 4,441,928
========== =========== ==========
The average recorded value of the impaired mortgage loan did not differ
materially from the balance at the end of the period.
NOTE 3 - SUBSEQUENT EVENT
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Distributions of cash from operations relating to the quarter ended March
31, 1996 were made on April 25, 1996 in the aggregate amount of $290,000
($9.57 per limited partnership unit).
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
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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, 1996. One of the Partnership's mortgage
loan investments matured in 1994. Renewal discussions are ongoing;
however, the Partnership intends to extend the maturity until the
underlying property can be sold at terms which are in the best interest of
the limited partners. Two other mortgage loan investments matured in
February, 1995, but were subsequently extended to December 31, 1996.
At March 31, 1996, the Partnership had $2,221,300 in cash, cash
equivalents and short-term investments, $290,000 of which was used for
cash distributions to partners on April 25, 1996; 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 1996 were made at the annualized rate of 7% on the adjusted capital
contribution. The cash distribution rate for the comparative prior year
quarter was 6%. The cash distribution rate was increased with the
attainment of appropriate cash reserve levels and the stabilization of
property operations.
The carrying value of real estate investments in the financial
statements, other than impaired mortgage loans (Decatur TownCenter), is at
depreciated cost or, if the investment's carrying value is determined not
to be recoverable through expected undiscounted future cash flows, the
carrying value is reduced to estimated fair market value. The fair market
value of such investments is further reduced by the estimated cost of sale
for properties held for sale. Carrying value may be greater or less than
current appraised value. At March 31, 1996, the carrying value of Willows
Shopping Center exceeded its appraised value by approximately $360,000 and
the appraised value of Rivers Corporate Park exceeded its related carrying
value by approximately $46,000. 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 Partnership's 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 ground lessee/borrower is rehabilitating this property,
including the complete renovation and reconfiguration of the Center. The
general partner determined that it is in the best interest of the
Partnership, together with its affiliate which owns a share of the Center,
to provide funding for the rehabilitation costs. The Partnership's share
of the remaining estimated rehabilitation cost is approximately $600,000
at March 31, 1996.
Decatur TownCenter occupancy increased to 97% in the first quarter of
1996. (The property was 90% leased at March 31, 1995.) Market conditions
have improved and the property faces minimal lease rollover exposure
during 1996. In the third quarter of 1995, the Partnership restructured
the ground lease to provide it with the sole right to cause a sale.
Investment Results
Real estate investment results were $359,866 and $352,067 for the
quarters ended March 31, 1996 and 1995, respectively. This relatively
consistent performance was due to an increase in operating results at
Decatur TownCenter due to the increased occupancy, partially offset by
slightly lower operating income at Willows.
Interest on cash equivalents and short-term investments decreased by
$5,830, or 17%, between the two first quarters due primarily to lower
average investment balances and lower average yields.
Cash flow from operations decreased by $104,287, or 39%, between the
respective first quarters primarily due to the timing of distributions
from Decatur TownCenter.
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 1996
increased as compared to the respective prior year period due to the
increase in distributable cash flow. General and administrative expenses
between these respective periods increased approximately $1,300, or 5%,
primarily due to an increase in professional fees.
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1996
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 Current Reports on
Form 8-K were filed during the quarter ended
March 31, 1996.
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)
May 10, 1996
/s/ Peter P. Twining
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Peter P. Twining
Managing Director and General Counsel
of General Partner,
Copley Properties Company, Inc.
May 10, 1996
/s/ Daniel C. Mackowiak
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Daniel C. Mackowiak
Principal Financial and Accounting
Officer of General Partner,
Copley Properties Company, Inc.