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, 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
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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
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1996
PART I
FINANCIAL INFORMATION
BALANCE SHEET
(Unaudited)
September 30, 1996 December 31, 1995
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Assets
Real estate joint ventures $ 6,706,305 $ 6,917,131
Cash and cash equivalents 1,501,273 1,362,861
Short-term investments 196,350 296,315
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$ 8,403,928 $ 8,576,307
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Liabilities and Partners' Capital
Accounts payable $ 43,983 $ 45,492
Accrued management fee 18,653 15,781
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Total liabilities 62,636 61,273
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Partners' capital (deficit):
Limited partners ($963 per unit;
100,000 units authorized, 11,931
units issued and outstanding) 8,350,344 8,522,348
General partners (9,052) (7,314)
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Total partners' capital 8,341,292 8,515,034
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$ 8,403,928 $ 8,576,307
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<FN>
(See accompanying notes to financial statements)
STATEMENT OF OPERATIONS (Unaudited)
Quarter Ended Nine Months Ended Quarter Ended Nine Months Ended
September 30, 1996 September 30, 1996 September 30, 1995 September 30, 1995
------------------- ------------------ ------------------ ------------------
Investment Activity
Joint venture earnings $ 145,529 $ 427,583 $ 103,343 $ 352,268
Interest on cash equivalents
and short-term investments 21,073 61,284 24,199 83,223
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166,602 488,867 127,542 435,491
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Portfolio Expenses
General and administrative 21,711 64,291 23,998 65,313
Management fee 18,653 55,960 15,960 48,737
Amortization 1,861 5,584 1,861 5,584
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42,225 125,835 41,819 119,634
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Net Income $ 124,377 $ 363,032 $ 85,723 $ 315,857
========== ========== =========== ===========
Net income per limited
partnership unit $ 10.32 $ 30.12 $ 7.11 $ 26.21
========== ========== =========== ===========
Cash distributions per limited
partnership unit $ 15.65 $ 44.54 $ 50.75 $ 75.75
========== ========== =========== ===========
Number of limited partnership
units outstanding during the
period 11,931 11,931 11,931 11,931
========== ========== =========== ===========
<FN>
(See accompanying notes to financial statements)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Quarter Ended Nine Months Ended Quarter Ended Nine Months Ended
September 30, 1996 September 30, 1996 September 30, 1995 September 30, 1995
--------------------- --------------------- -------------------- -----------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
-------- -------- -------- -------- -------- -------- -------- --------
Balance at
beginning
of period $ (8,409) $8,413,930 $ (7,314) $8,522,348 $ (5,474) $ 9,145,978 $ (4,762) $9,216,420
Cash
distributions (1,886) (186,720) (5,368) (531,406) (1,657) (605,498) (4,670) (903,773)
Net income 1,243 123,134 3,630 359,402 858 84,865 3,159 312,698
--------- ---------- ---------- ---------- ---------- ----------- ----------- ------------
Balance at end
of period $ (9,052) $8,350,344 $ (9,052) $8,350,344 $ (6,273) $ 8,625,345 $ (6,273) $8,625,345
========= =========== ========== ========== ========== =========== =========== ============
<FN>
(See accompanying notes to financial statements)
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
-------------------------------
1996 1995
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Net cash provided by operating
activities $ 575,525 $ 565,209
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Cash flows from investing activity:
Decrease (increase) in short-term
investments, net 99,661 (536,562)
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Cash flows from financing activity:
Distributions to partners (536,774) (908,443)
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Net increase (decrease) in cash and
cash equivalents 138,412 (879,796)
Cash and cash equivalents:
Beginning of period 1,362,861 2,041,833
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End of period $ 1,501,273 $ 1,162,037
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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 September 30, 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 September 30,
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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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 the end
of 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
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The following summarized financial information is presented in the
aggregate for the joint ventures:
Assets and Liabilities
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September 30, 1996 December 31, 1995
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Assets
Real property, at cost less
accumulated depreciation of
$2,135,813 and $1,723,970 $ 11,758,847 $ 12,034,508
Other 684,262 809,782
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12,443,109 12,844,290
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Liabilities
Note payable (a) 1,088,819 1,101,426
Other 251,155 184,916
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1,339,974 1,286,342
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Net assets $ 11,103,135 $ 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
----------------------
Nine Months Ended September 30,
1996 1995
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Revenue
Rental income $ 1,524,036 $ 1,389,032
Other income 3,999 2,756
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1,528,035 1,391,788
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Expenses
Operating expenses 329,495 290,572
Depreciation and amortization 456,951 443,756
Interest expense 76,028 77,137
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862,474 811,465
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Net income $ 665,561 $ 580,323
========== ==========
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
September 30, 1996 were made on October 24, 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
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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 September 30, 1996, the Partnership had $1,697,623 in cash, cash
equivalents, and short-term investments, of which $188,606 was used for
cash distributions to the partners on October 24, 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.
Distributions of cash from operations related to the first three quarters
of 1996 were made at the annualized rate of 6.5% on the adjusted capital
contribution. Distributions of cash from operations in 1995 were made at
the annualized rate of 5.5% on a capital contribution of $1,000 per unit
for the first two quarters and on the weighted average adjusted capital
contribution for the third quarter. 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 September 30, 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
September 30, 1996, the appraised values of the Newhew and Shasta Way
investments exceeded their carrying values by $1,700,000 and $600,000,
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 had 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 remained at 100% at Hohokam Corporate Center (Newhew's Phase
I investment) during the third quarter of 1996. The property was 83%
leased at December 31, 1995 and September 30, 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
nine months ended September 30, 1996 decreased approximately $22,000, or
26%, compared to the corresponding period in 1995, primarily due to lower
invested balances as a result of the distribution of excess working capital
reserves in mid-1995, as well as to lower short-term yields.
Joint venture earnings were $427,583 and $352,268 for the nine months
ended September 30, 1996 and 1995, respectively. Joint venture earnings in
1996 are comprised of operating income of $256,330 at Newhew and $171,253
at Shasta Way; corresponding 1995 earnings were $188,201 at Newhew and
$164,067 at Shasta Way. The improvement at Newhew is primarily due to
increased rental income at Hohokam as a result of an increase in occupancy
and rental rates.
Operating cash flow increased by approximately $10,000 between the
first nine months of 1995 and 1996, which is less than the increase in
operating results, primarily due to the timing of distributions from both
Shasta Way and Newhew.
Portfolio Expenses
General and administrative expenses primarily consist of real estate
appraisal, legal, accounting, printing and servicing agent fees. These
expenses were substantially unchanged between the first nine months of 1996
and 1995 as decreases in legal and appraisal fees were partially offset by
increases in certain professional fees and 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 nine-month periods due to the increase in distributable
cash flow.
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 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 September 30, 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)
November 12, 1996 /s/ Peter P. Twining
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Peter P. Twining
Managing Director and General Counsel
of Managing General Partner,
Fourth Income Corp.
November 12, 1996 /s/ Daniel C. Mackowiak
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Daniel C. Mackowiak
Principal Financial and Accounting
Officer of Managing General Partner,
Fourth Income Corp.