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 0-15429
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2893298
(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 IV;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1995
PART I
FINANCIAL INFORMATION
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
JUNE 30, 1995 DECEMBER 31, 1994
ASSETS
Real estate investments:
Real estate joint ventures $ 41,012,776 $ 53,837,786
Property, net 12,218,756 -
----------- ---------------
53,231,532 53,837,786
Cash and cash equivalents 6,725,800 12,370,267
Short-term investments 586,494 922,981
Other receivables - 13,976
----------- ---------------
$ 60,543,826 $ 67,145,010
=========== ===============
Liabilities and Partners' Capital
Accounts payable $ 76,460 $ 127,950
Accrued management fee 163,449 65,340
Deferred management and
disposition fees
2,682,934 2,797,930
----------- ---------------
Total liabilities 2,922,843 2,991,220
----------- ---------------
Commitments to fund
real estate investments
Partners' capital (deficit):
Limited partners ($863 and $918
per unit, respectively; 120,000
units authorized, 94,997 units
issued and outstanding) 57,769,418 64,289,145
General partners (148,435) (135,355)
----------- ---------------
Total partners' capital 57,620,983 64,153,790
----------- ---------------
$ 60,543,826 $ 67,145,010
=========== ===============
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
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 $ 621,520 $ 1,178,860 $ - $ -
Property operations expense (166,147) (292,467) - -
Depreciation and amortization (97,291) (250,208) - -
---------- ------------- ---------- ------------
358,082 636,185 - -
Joint venture earnings 753,011 1,688,294 894,951 1,783,085
Amortization (4,844) (9,689) (6,632) (13,265)
---------- ------------- ---------- ------------
Total real estate operations 1,106,249 2,314,790 888,319 1,769,820
Interest on cash equivalents
and short-term investments 104,775 236,602 86,106 155,796
---------- ------------- ---------- ------------
Total investment activity 1,211,024 2,551,392 974,425 1,925,616
---------- ------------- ---------- ------------
Portfolio Expenses
Management fee 122,898 324,755 119,766 228,714
General and administrative 87,059 172,291 93,964 157,185
---------- ------------- ---------- ------------
209,957 497,046 213,730 385,899
---------- ------------- ---------- ------------
Net income $ 1,001,067 $ 2,054,346 $ 760,695 $ 1,539,717
========== ============= ========== ============
Net income per limited
partnership unit $ 10.43 $ 21.41 $ 7.93 $ 16.05
========== ============= ========== ============
Cash distributions per
limited partnership unit $ 21.27 $ 90.04 $ 11.48 $ 21.95
========== ============= ========== ============
Number of limited
partnership units outstanding
during the period 94,997 94,997 94,997 94,997
========== ============= ========== ============
<FN>
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED JUNE 30,
1995 1994
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,667,029 $3,182,890
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint ventures - (552,562)
Investment in property (52,406) -
Decrease in short-term investments, net 328,063 3,910,370
---------- ----------
Net cash provided by investing activities 275,657 3,357,808
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (8,587,153) (2,106,246)
---------- ----------
Net increase (decrease) in cash
and cash equivalents (5,644,467) 4,434,452
Cash and cash equivalents:
Beginning of period 12,370,267 2,146,673
---------- ----------
End of period $ 6,725,800 $6,581,125
========== ==========
Non-cash transaction:
Effective January 1, 1995, the Partnership's joint venture investment
in Palms Business Center was converted to a wholly-owned property. The
carrying value of this investment at conversion was $12,519,961.
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
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
Bal. at
beginning
of period $(138,036) $ 58,798,948 $(135,355) $ 64,289,145 $(129,750) $64,834,086 $(127,594) $65,057,473
Cash
distributions (20,410) (2,020,586) (33,623) (8,553,530) (11,116) (1,090,565) (21,062) (2,085,184)
Net income 10,011 991,056 20,543 2,033,803 7,607 753,088 15,397 1,524,320
---------- ----------- --------- ----------- --------- ----------- --------- -----------
Balance at
end of period$(148,435) $ 57,769,418 $(148,435) $57,769,418 $(133,259) $64,496,609 $(133,259) $64,496,609
========= =========== ========= =========== ========= =========== ========= ===========
<FN>
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
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 and its cash flows 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 IV; 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
organizations intended to be exempt from federal income tax. The
Partnership commenced operations in May, 1986 and acquired the six real
estate investments it currently owns prior to the end of 1987. It
intends to dispose of the investments within eight to twelve years of
their acquisition, and then liquidate.
NOTE 2 - REAL ESTATE JOINT VENTURES
In the second quarter of 1995, the Palms Business Center
investment was converted to a wholly-owned property effective January
1, 1995. Accordingly, amounts previously reported as joint venture
earnings in the first quarter of 1995 have been reclassified in the
Statement of Operations. This reclassification had no effect on the
Partnership's operating results.
The following summarized financial information is presented in the
aggregate for the Partnership's joint ventures:
ASSETS AND LIABILITIES
JUNE 30, 1995 DECEMBER 31, 1994
Assets
Real property, at cost less
accumulated depreciation
of $10,491,517 and
$12,483,694, respectively $41,559,417 $52,351,990
Other 1,300,804 1,881,118
----------- -----------
42,860,221 54,233,108
Liabilities (453,100) (644,808)
----------- -----------
Net assets $42,407,121 $53,588,300
=========== ===========
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1995 1994
Revenue
Rental income $3,871,198 $4,228,337
Other income 72,941 271,460
---------- ----------
3,944,139 4,499,797
---------- ----------
Expenses
Operating expenses 1,201,327 1,415,780
Depreciation and amortization 874,597 1,281,446
---------- ----------
2,075,924 2,697,226
---------- ----------
Net income $1,868,215 $1,802,571
========== ==========
Liabilities and expenses exclude amounts owed and attributable to
the Partnership and (with respect to one joint venture) its affiliates
on behalf of its various financing arrangements with the joint
ventures.
The Partnership's Rancho Cucamonga investment was sold on December
30, 1994. The above 1994 amounts include the results of operations for
this investment. A capital distribution of $55 per limited partnership
unit was made in January 1995 from the proceeds of this sale.
NOTE 3 - PROPERTY
Effective January 1, 1995, the Palms Business Center joint venture
was restructured and the venture partner's ownership interest assigned
to the Partnership. Accordingly, as of this date, the investment is
being accounted for as a wholly-owned property. The carrying value of
the joint venture investment at conversion was allocated to land,
building and improvements, amount payable to developer and other net
operating liabilities. The former venture partner will receive 40% of
the excess cash flow above a specified level until its cash investment
of $360,000 is repaid in full.
The following is a summary of the Partnership's investment at June
30, 1995:
Land $ 3,072,333
Buildings, improvements
and other capitalized costs 9,781,461
Accumulated depreciation and amortization (250,208)
Payable to developer (280,000)
Net operating liabilities (104,830)
-----------
$12,218,756
===========
The buildings and improvements are being depreciated over 25
years, beginning January 1, 1995.
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
$1,242,638 ($12.95 per limited partnership unit).
NEW ENGLAND LIFE PENSION PROPERTIES IV;
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 December, 1986. A total of 94,997 units were
sold. The Partnership received proceeds of $85,677,259, net of selling
commissions and other offering costs, which have been invested in real
estate, used to pay related acquisition costs or retained as working
capital reserves. The Partnership made nine real estate investments.
Three investments have been sold; one in 1988 and one each in 1993 and
1994.
On December 30, 1994, the Partnership's Rancho Cucamonga joint
venture sold its property and the Partnership received net sale
proceeds of $5,261,275. On January 26, 1995, the Partnership made a
capital distribution of $55 per limited partnership unit ($5,224,835)
from the proceeds of the sale. The adjusted capital contribution after
this distribution is $863 per unit.
At June 30, 1995, the Partnership had $7,312,294 in cash, cash
equivalents and short-term investments, of which $1,242,638 was used
for cash distributions to partners on July 27, 1995; the remainder will
primarily be used to complete the funding of investment commitments and
for working capital reserves. The source of future liquidity and cash
distributions to partners will be cash generated by the Partnership's
real estate and short-term investments. Distributions of cash from
operations for the second quarter of 1995 were at the annualized rate
of 6% on the adjusted capital contribution noted above. Distributions
of cash from operations relating to the first quarter of 1995 were made
at the annualized rate of 6% on a weighted average adjusted capital
contribution; in addition, a special distribution totaling $776,289
($8.09 per limited partnership unit) was made which is attributable to
a discretionary reduction of cash reserves which had been previously
accumulated through operating activities. Since the total quarterly
distribution exceeded the annualized rate of 8%, previously deferred
management fees to the advisor became currently payable in the amount
of $175,000 or 50% of the excess distribution. The managing general
partner will continue to evaluate reserve levels in the context of the
Partnership's investment objectives. Distributions of cash from
operations relating to the first and second quarters of 1994 were at
the annualized rates of 5% and 5.5% on an adjusted capital contribution
of $918 per unit.
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. Carrying value may be
greater or less than current appraised value. At June 30, 1995,
certain appraised values exceeded the related carrying values by an
aggregate of $8,300,000 and certain appraised values were less than
their related carrying values by an aggregate of $1,900,000. 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 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
The investments currently in the portfolio are structured as joint
ventures with real estate development/management firms. The Rancho
Cucamonga investment, which property was sold in December 1994, was
also structured as a joint venture. Effective January 1, 1995, the
Palms Business Center joint venture was restructured and converted to a
wholly-owned property.
OPERATING FACTORS
Overall occupancy at the Columbia Gateway Corporate Park remained
at 92% during the first six months of 1995 (occupancy was 82% one year
prior).
Occupancy at Reflections ended the second quarter of 1995 at 95%,
consistent with one year ago. Although the Fort Myers apartment market
remains competitive, rental rates have improved.
Occupancy at Metro Business Center at June 30, 1995 was 98%,
consistent with the previous quarter, but down slightly from 100% one
year ago. Rental rates have begun to increase as the Phoenix market
appears to have stabilized. However, this property faces leasing
exposure during 1995 as 18% of the leases are due to expire.
Leasing at Decatur TownCenter II decreased slightly from 100% to
98% during the second quarter of 1995 (occupancy was 98% one year
prior).
Occupancy at Palms Business Center increased to 99% at June 30,
1995 (up from 97% and 98% one quarter and one year prior,
respectively). The overall health of the Las Vegas market has improved
and there appears to be some upward movement in rental rates.
Discussions were concluded with the venture partner to restructure this
joint venture during the second quarter of 1995, and effective January
1, 1995, the venture partner's ownership interest was assigned to the
Partnership, thereby giving sole control of the property to the
Partnership.
Leasing at 270 Technology Center was 70% at June 30, 1994 and
increased to 100% during the third quarter of 1994 where it has
remained through the second quarter of 1995. However, during 1995
approximately 14% of the leases at this property are due to expire.
INVESTMENT ACTIVITY
Interest on cash equivalents and short-term investments increased
during the first six months of 1995 as compared to the same period of
1994 as a result of larger invested balances, as well as an increase in
interest rates. Invested balances were higher due to the temporary
investment of proceeds from the Rancho Cucamonga sale.
Exclusive of the operating results from Rancho Cucamonga, real
estate operating activity for the first six months of 1995 and 1994 was
$2,314,790 and $1,616,720, respectively. This 43% increase was due to
improved operating results at all of the Partnership's investments.
Improvement was most notable at Columbia Gateway Corporate Park, at
which results increased by approximately $338,000 due to improvements
in occupancy. Improved occupancy also resulted in a $60,000 increase
in results from 270 Technology Center. Net operating income at Metro
Business Center and Palms Business Center improved by $84,000 and
$124,000, respectively, primarily due to increases in rental rates.
Net operating income also increased at Decatur TownCenter II by
$56,000, due to the receipt of a loan termination fee of $205,000
during the first quarter of 1995, partially offset by a decrease in
other rental revenue and an increase in operating expenses.
Notwithstanding the improved real estate operating results and
$234,173 in cash flow from Rancho Cucamonga in 1994, operating cash
flow from investments currently owned for the first six months of 1995
decreased $281,688 or 10% as compared to the comparable period in 1994.
This decrease was primarily due to Columbia Gateway Corporate Park and
270 Technology Park retaining working capital reserves at the joint
venture level during the first six months of 1995. These decreases
were partially offset by an increase in operating cash flow from Metro
Business Center due to the timing of distributions. Operating cash
flow from the remainder of the Partnership's investments was consistent
with the change in operating results.
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 management fee increased between the six months ended June 30,
1994 and 1995 due to an increase in distributable cash flow from
operations. The increase is primarily attributable to the
discretionary reduction in cash reserves noted previously. General and
administrative expenses increased approximately $15,000 between these
respective periods primarily due to increased professional fees.
NEW ENGLAND LIFE PENSION PROPERTIES IV;
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 IV; A
REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
August 11, 1995 Peter P. Twining
Managing Director and General Counsel of
Managing General Partner,
Fourth Copley Corp.
August 11, 1995 Marie A. Welch
Investment Officer and Chief Accounting
Officer of Managing General Partner,
Fourth Copley Corp.