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 0-18735
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-3058134
(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
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1996
PART I
FINANCIAL INFORMATION
BALANCE SHEET
(Unaudited)
March 31, 1996 December 31, 1995
--------------- ------------------
Assets
Real estate joint ventures $ 6,873,801 $ 6,917,131
Cash and cash equivalents 1,133,088 1,362,861
Short-term investments 494,172 296,315
----------- -----------
$ 8,501,061 $ 8,576,307
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Liabilities and Partners' Capital
Accounts payable $ 22,232 $ 45,492
Accrued management fee 18,653 15,781
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Total liabilities 40,885 61,273
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Partners' capital (deficit):
Limited partners ($963 per unit;
100,000 units authorized, 11,931
units issued and outstanding) 8,468,039 8,522,348
General partners (7,863) (7,314)
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Total partners' capital 8,460,176 8,515,034
----------- -----------
$ 8,501,061 $ 8,576,307
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<FN>
(See accompanying notes to financial statements)
STATEMENT OF OPERATIONS (Unaudited)
Quarter Ended March 31,
------------------------
1996 1995
----- -----
Investment Activity
Joint venture earnings $ 125,198 $ 131,004
Interest on cash equivalents
and short-term investments 20,329 29,223
----------- -----------
145,527 160,227
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Portfolio Expenses
General and administrative 20,309 18,887
Management fee 18,653 16,389
Amortization 1,861 1,861
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40,823 37,137
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Net Income $ 104,704 $ 123,090
=========== ===========
Net income per limited
partnership unit $ 8.69 $ 10.21
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Cash distributions per limited
partnership unit $ 13.24 $ 11.25
=========== ===========
Number of limited partnership
units outstanding during
the period 11,931 11,931
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<FN>
(See accompanying notes to financial statements)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Quarter Ended March 31,
----------------------------------------------------
1996 1995
----------------------- ------------------------
General Limited General Limited
Partners Partners Partners Partners
-------- -------- -------- --------
Balance at beginning
of period $ (7,314) $8,522,348 $ (4,762) $9,216,420
Cash distributions (1,596) (157,966) (1,356) (134,224)
Net income 1,047 103,657 1,231 121,859
-------- --------- --------- ---------
Balance at end
of period $ (7,863) $8,468,039 $ (4,887) $9,204,055
======== ========== ========= =========
<FN>
(See accompanying notes to financial statements)
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
Quarter Ended March 31,
-----------------------
1996 1995
---------- ----------
Net cash provided by operating activities $ 124,076 $ 99,902
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Cash flows from investing activity:
Increase in short-term investments, net (194,287) -
--------- ----------
Cash flows from financing activity:
Distributions to partners (159,562) (135,580)
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Net decrease in cash and cash
equivalents (229,773) (35,678)
Cash and cash equivalents:
Beginning of period 1,362,861 2,041,833
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End of period $ 1,133,088 $2,006,155
========== ==========
<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 (deficit) 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
Copley Realty Income Partners 4; A 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 commenced operations in September 1989, and
acquired the two real estate investments it currently owns prior to 1992.
It intends to dispose of its investments within six to nine years of their
acquisition, and then liquidate.
NOTE 2 - REAL ESTATE JOINT VENTURES
The following summarized financial information is presented in the
aggregate for the joint ventures:
Assets and Liabilities
------------------------
March 31, 1996 December 31, 1995
--------------- -----------------
Assets
Real property, at cost less
accumulated depreciation of
$1,859,076 and $1,723,970 $ 12,007,621 $ 12,034,508
Other 789,728 809,782
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12,797,349 12,844,290
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Liabilities
Note payable (a) 1,097,320 1,101,426
Other 248,154 184,916
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1,345,474 1,286,342
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Net assets $ 11,451,875 $ 11,557,948
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<FN>
(a) Note payable to an insurance company, secured by one building within
the Newhew joint venture, accrues interest at 9.25% per annum. Principal
and interest installments of $9,848 are due monthly until July 1, 1999, at
which time the principal balance and any unpaid interest will be due and
payable.
Results of Operations
----------------------
Quarter Ended March 31,
1996 1995
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Revenue
Rental income $ 492,085 $ 520,707
Other income 226 -
---------- ---------
492,311 520,707
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Expenses
Operating expenses 93,962 110,246
Depreciation and amortization 149,800 146,263
Interest expense 25,439 25,800
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269,201 282,309
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Net income $ 223,110 $ 238,398
========== =========
</TABLE?
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and (with respect to one joint venture) its affiliate on behalf
of their various financing arrangements with the joint ventures.
NOTE 3 - SUBSEQUENT EVENT
Distributions of cash from operations relating to the quarter ended
March 31, 1996 were made on April 25, 1996 in the aggregate amount of
$188,606 ($15.65 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 1990 and a total of 11,931 units were sold. The
Partnership received proceeds of $10,097,962, net of selling commissions
and other offering costs, which have been used for investment in real
estate, used to pay related acquisition costs or retained as working
capital reserves.
At March 31, 1996, the Partnership had $1,627,260 in cash, cash
equivalents, and short-term investments, of which $188,606 was used for
cash distributions to the partners on April 25, 1996; the remainder is
being retained for working capital reserves. In July 1995, the Partnership
reduced these working capital reserves by making a capital distribution of
$441,447 ($37 per limited partnership unit). After the distribution, the
Partnership's adjusted capital contribution was $963 per unit. The source
of future liquidity and cash distributions to partners will be cash
generated by the Partnership's real estate and short-term investments. The
distribution of cash from operations related to the first quarter of 1996
was made at the annualized rate of 6.5% on the adjusted capital
contribution. The distribution of cash from operations relating to the
first quarter of 1995 was made at the annualized rate of 5.5% on a capital
contribution of $1,000 per unit. The distribution rate was increased in
1996 due to improvements in cash flow from the Partnership's investments.
The carrying value of real estate investments in the financial
statements at March 31, 1996 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 appraised values of the Newhew and Shasta Way
investments exceeded their carrying values by $1,300,000 and $200,000,
respectively. The current appraised value of real estate investments has
been determined by the managing general partner and is generally based on a
combination of traditional appraisal approaches performed by the
Partnership's advisor, Copley Real Estate Advisors, Inc., and independent
appraisers. Because of the subjectivity inherent in the valuation process,
the 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
The Newhew and Shasta Way investments have been structured as joint
ventures with a real estate management/development firm and, in one case,
an affiliate of the Partnership. As of January 1, 1996, the Shasta Way
joint venture was restructured, and the management/development firm's
interest was assigned to the Partnership and its affiliate in proportion to
their respective ownership interests. The Partnership's ownership
percentage increased to 42%.
Operating Factors
Occupancy increased to 100% at Hohokam Corporate Center (Newhew's
Phase I investment) during the first quarter of 1996 as two vacant suites
were re-leased. The property was 83% leased at December 31, 1995, and 100%
leased at March 31, 1995. Fairmont Commerce Center (Newhew's Phase II
investment) has been 100% leased to two tenants since May 1992.
Shasta Way is 100% occupied by a single tenant under a lease which
expires December 31, 1998.
Investment Results
Interest income on cash equivalents and short-term investments for the
three months ended March 31, 1996 decreased approximately $9,000, or 30%,
compared to the corresponding period in 1995, primarily due to decreased
invested balances with the distribution of excess working capital reserves
in mid-1995, as well as lower short-term yields.
Joint venture earnings were $125,198 and $131,004 for the three months
ended March 31, 1996 and 1995, respectively. Joint venture earnings in
1996 are comprised of operating income of $54,655 at Newhew and $70,543 at
Shasta Way; corresponding 1995 earnings were $53,595 at Newhew and $77,409
at Shasta Way.
Operating cash flow increased by approximately $24,000 between the
first three months of 1995 and 1996, primarily due to the timing of
distributions from Shasta Way.
Portfolio Expenses
General and administrative expenses primarily consist of real estate
appraisal, legal, accounting, printing and servicing agent fees. These
expenses increased by approximately $1,400, or 8%, for the first three
months of 1996 as compared to the corresponding period in 1995 primarily
due to increased printing costs.
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. Management fees increased
between the two three-month periods due to the increase in distributable
cash flow.
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1996
PART II
OTHER INFORMATION
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
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.
COPLEY REALTY INCOME PARTNERS
4; A LIMITED PARTNERSHIP
(Registrant)
May 14, 1996 /s/ Peter P. Twining
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Peter P. Twining
Managing Director and General Counsel
of Managing General Partner,
Fourth Income Corp.
May 14, 1996 /s/ Daniel C. Mackowiak
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Daniel C. Mackowiak
Principal Financial and Accounting
Officer of Managing General Partner,
Fourth Income Corp.