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 JUNE 30, 1995 COMMISSION FILE NUMBER 0-14052
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2847256
(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 III;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1995
PART I
FINANCIAL INFORMATION
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
June 30, 1995 December 31, 1994
ASSETS
Real estate investments:
Joint ventures $18,276,707 $ 18,674,563
Property, net 1,213,274 1,189,011
----------- --------------
19,489,981 19,863,574
Cash and cash equivalents 1,927,244 2,423,836
Short-term investments 1,687,138 996,814
----------- --------------
$23,104,363 $ 23,284,224
=========== ==============
Liabilities and Partners' Capital (Deficit)
Accounts payable $ 56,276 $ 86,049
Accrued management fee 42,101 42,101
----------- --------------
Total liabilities 98,377 128,150
----------- --------------
Partners' capital (deficit):
Limited partners ($493.14 per
unit; 75,000 units authorized,
68,414 units issued and outstanding)
23,046,653 23,195,240
General partners (40,667) (39,166)
----------- --------------
Total partners' capital 23,005,986 23,156,074
----------- --------------
$23,104,363 $ 23,284,224
=========== ==============
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED QUARTER ENDED SIX MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1994
INVESTMENT ACTIVITY
Property rentals $ 44,368 $ 92,714 $ - $ -
Property operations expense (18,350) (51,101) - -
Depreciation and amortization (9,143) (18,940) - -
----------- ------------- ----------- -------------
16,875 22,673 - -
Joint venture earnings 363,912 795,707 383,447 770,954
Ground rentals and interest on mortgage loans
- - 13,758 27,515
Amortization (2,366) (4,732) (3,812) (7,624)
----------- ------------- ----------- -------------
Total real estate operations 378,421 813,648 393,393 790,845
Interest on cash equivalents
and short term investments 51,757 100,840 30,825 59,008
----------- ------------- ----------- -------------
Total investment activity 430,178 914,488 424,218 849,853
----------- ------------- ----------- -------------
Portfolio Expenses
General and administrative 61,313 129,000 71,022 118,487
Management fee 42,101 84,202 36,223 67,594
----------- ------------- ----------- -------------
103,414 213,202 107,245 186,081
----------- ------------- ----------- -------------
Net income $ 326,764 $ 701,286 $ 316,973 $ 663,772
=========== ============= =========== =============
Net income per limited
partnership unit
$ 4.73 $10.15 $ 4.59 $ 9.61
=========== ============= =========== =============
Cash distributions per
limited partnership unit
$ 6.16 $ 12.32 $ 4.34 $ 39.93
=========== ============= =========== =============
Number of limited partnership
units outstanding during
the period
68,414 68,414 68,414 68,414
=========== ============= =========== =============
<FN>
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Deficit)
(Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1995 June 30, 1995 June 30, 1994 June 30, 1994
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
Balance at
beginning
of period $(39,678) $23,144,587 $(39,166) $23,195,240 $(38,638) $23,247,570 $ (38,934)$ 25,339,093
Cash dis-
tributions (4,257) (421,430) (8,514) (842,860) (2,999) (296,917) (6,171) (2,731,771)
Net income
3,268 323,496 7,013 694,273 3,170 313,803 6,638 657,134
-------- ----------- -------- ----------- -------- ----------- -------- -----------
Balance at
end of
period $(40,667) $23,046,653 $ (40,667)$23,046,653 $(38,467) $23,264,456 $ (38,467)$ 23,264,456
======== =========== ======== =========== ======== =========== ======== ===========
<FN>
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
1995 1994
Net cash provided by operating activities $1,087,890 $ 862,821
---------- --------
Cash flows from investing activities:
Capital expenditures on owned property (54,826) -
Decrease (increase) in short-term
investments, net (678,282) 1,085,875
---------- --------
Net cash provided by (used in)
investing activities (733,108) 1,085,875
---------- --------
Cash flows from financing activity:
Distributions to partners (851,374) (2,737,942)
---------- --------
Net decrease in cash and
cash equivalents (496,592) (789,246)
Cash and cash equivalents:
Beginning of period 2,423,836 3,252,535
---------- --------
End of period $1,927,244 $2,463,289
========== ========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES III;
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 June 30, 1995 and December 31,
1994 and the results of its operations, its cash flows and changes in
partners' capital (deficit) for the interim periods ended June 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
New England Life Pension Properties III; 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, 1985 and made several investments through
1988. It intends to dispose of its investments within twelve years of
their acquisition, and then liquidate; however, the managing general
partner could extend the investment period if it is in the best
interest of the limited partners.
NOTE 2 - REAL ESTATE JOINT VENTURES
The following summarized financial information is presented in the
aggregate for the joint ventures:
ASSETS AND LIABILITIES
June 30, 1995 December 31, 1994
Assets
Real property, at cost less
accumulated depreciation
of $3,975,335 and $3,697,894,
respectively $ 16,004,401 $ 16,188,586
Other assets 438,769 664,906
------------ ---------------
16,443,170 16,853,492
Liabilities (128,357) (198,804)
------------ ---------------
Net Assets $ 16,314,813 $ 16,654,688
============ ===============
RESULTS OF OPERATIONS
Six Months Ended June 30,
1995 1994
Revenue
Rental income $1,549,707 $ 1,530,207
Other 3,901 4,979
---------- ----------
1,553,608 1,535,186
---------- ----------
Expenses
Operating expenses 480,460 486,390
Depreciation and amortization 277,441 277,842
---------- ----------
757,901 764,232
---------- ----------
Net income $ 795,707 $ 770,954
========== ==========
Liabilities and expenses exclude amounts owed and attributable to
the Partnership on behalf of its various financing arrangements with
the joint ventures.
NOTE 3 - PROPERTY
On November 15, 1994, the Partnership restructured its ground
lease/mortgage loan investment into a wholly-owned property, due to the
inability of the ground lessee/mortgagee to meet its financial
obligations. The following is a summary of the Partnership's
investment in this property:
June 30, 1995 December 31, 1994
Land $ 347,772 $ 347,772
Buildings and improvements 901,010 846,184
Accumulated depreciation (21,061) (2,802)
Net operating liabilities (14,447) (2,143)
----------- ---------------
$ 1,213,274 $ 1,189,011
=========== ===============
The buildings are being depreciated over a 25 year period.
NOTE 4 - SUBSEQUENT EVENT
Distributions of cash from operations relating to the quarter
ended June 30, 1995 were made on July 27, 1995 in the aggregate amount
of $425,687 ($6.16 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 December, 1985. A total of 68,414 units were
sold. The Partnership received proceeds of $61,950,285, 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 nine real estate investments,
six of which were sold prior to 1994. As a result of the sales,
capital of $34,676,320 has been returned to the limited partners
through June 30, 1995.
At June 30, 1995, the Partnership had $3,614,382 in cash, cash
equivalents and short-term investments, of which $425,687 was
distributed to partners on July 27, 1995; the remainder is being
retained as working capital reserves. The source of future liquidity
and cash distributions to partners will be cash generated by the
Partnership's investments and proceeds from the sale of investments.
Distributions of cash from operations for the first two quarters of
1995 were made at the annualized rate of 5% on the adjusted capital
contribution. Distributions of cash from operations relating to the
first and second quarters of 1994 were made at the annualized rate of
3.5% and 4.5%, respectively, on a weighted average adjusted capital
contribution. On January 27, 1994, the Partnership made a capital
distribution of $31 per limited partnership unit from the proceeds of
the Heritage Green Plaza sale in December 1993. The adjusted capital
contribution after this distribution is $493.14 per unit. The increase
in the distribution rate results from the attainment of appropriate
cash reserve levels and the improvement in cash flow from operations.
The carrying value of real estate investments in the financial
statements 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 future cash flows. At June 30, 1995, the
appraised value of each real estate investment exceeded its related
carrying value; the aggregate excess was approximately $5,500,000. The
current appraised value of real estate investments has been estimated
by the managing 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
FORM OF REAL ESTATE INVESTMENTS
Effective November 15, 1994, North Cabot Industrial Park (formerly
Marathon / Hayward) was converted to a wholly-owned property; it was
previously structured as a ground lease with a mortgage loan to the
ground lessee. Bayberry Apartments and 270 Technology Center are
structured as joint ventures with real estate management/development
firms.
OPERATING FACTORS
Occupancy at North Cabot Industrial Park increased from 58% to 66%
during the second quarter of 1995, with the signing of two new leases,
partially offset by the loss of a month-to-month tenant. (Occupancy
was 66% one year ago and 58% at year end 1994.) Subsequent to the
second quarter, a new lease increased occupancy to 79%. Although
occupancy has improved, the managing general partner does not expect
this investment to achieve the Partnership's investment objectives.
Occupancy at Bayberry Apartments ended the second quarter of 1995
at 93%. During the first half of both 1994 and 1995 occupancy
fluctuated between 92% and 94%. Rental rates in the Gaithersburg
market have increased over the past year, as supply and demand remain
in equilibrium.
Occupancy at 270 Technology Park increased to 98% from 95% during
the second quarter of 1995. (Occupancy was 97% one year ago.) The
property faces minimal lease expiration exposure in 1995.
INVESTMENT ACTIVITY
Interest on cash equivalents and short-term investments increased
between the comparative six month periods due to higher short-term
interest rates and larger average investment balances.
Real estate operating results were $813,648 for the first six
months of 1995 as compared to $790,845 for the comparable six months of
1994. The increase was primarily due to an increase in net operating
income at Bayberry Apartments ($55,000) which was partially offset by a
decrease in net operating income at 270 Technology Park ($31,000). The
increase at Bayberry Apartments results from an increase in rental
rates, while the decrease at 270 Technology Park results from a
decrease in rental income.
Operating cash flow increased $225,069 or 26% between 1994 and
1995. Cash flow from Bayberry Apartments increased approximately
$175,000, primarily from the distribution of amounts which had been
previously retained as working capital reserves. Cash flow from 270
Technology Park increased approximately $46,000 due to the timing of
distributions.
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 managing general partner. General and
administrative expenses primarily consist of real estate appraisal,
printing, legal, accounting and investor servicing fees.
The Partnership management fee increased between the first six
months of 1994 and 1995 due to an increase in distributable cash flow.
General and administrative expenses increased by $10,513 or 9% between
the respective periods. This increase was due to the professional fees
associated with the restructuring periods of North Cabot Industrial
Park.
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 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 June 30, 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 III; A
REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
August 11, 1995
Peter P. Twining
Managing Director and General Counsel of
Managing General Partner,
Copley Properties Company III, Inc.
August 11, 1995
Marie A. Welch
Investment Officer and Chief Accounting
Officer of Managing General Partner,
Copley Properties Company III, Inc.