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, 2000 Commission File Number 0-17807
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2988542
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
World Trade Center East
Two Seaport Lane, 16th Fl.
Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
----------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report:
225 Franklin Street, 25th Fl.
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
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 PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2000
PART I
FINANCIAL INFORMATION
2
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, 2000 December 31, 1999
(Unaudited) (Audited)
--------------- -----------------
ASSETS
Real estate investments:
Joint venture $1,648,020 $1,595,569
Property, net 4,337,663 4,061,102
---------- ----------
5,985,683 5,656,671
Cash and cash equivalents 1,876,305 2,305,383
---------- ----------
$7,861,988 $7,962,054
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 62,543 $ 75,335
Accrued management fee -- 13,696
Deferred disposition fees 1,369,577 1,369,577
---------- ----------
Total liabilities 1,432,120 1,458,608
---------- ----------
Partners' capital:
Limited partners ($223.49
per unit; 160,000 units authorized,
48,788 units issued and outstanding) 6,419,393 6,492,235
General partners 10,475 11,211
---------- ----------
Total partners' capital 6,429,868 6,503,446
---------- ----------
$7,861,988 $7,962,054
========== ==========
(See accompanying notes to unaudited financial statements)
3
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000 June 30, 1999 June 30, 1999
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY
Property rentals $ 142,225 $ 334,725 $ 188,760 $ 372,015
Property operating expenses (60,304) (108,820) (44,682) (99,133)
Depreciation and amortization (46,218) (77,812) (15,201) (48,052)
--------- --------- --------- ---------
35,703 148,093 128,877 224,830
Joint venture earnings (losses) (25,974) (67,610) 48,097 99,635
--------- --------- --------- ---------
Total real estate activity 9,729 80,483 176,974 324,465
--------- --------- --------- ---------
Interest on cash equivalents 30,910 63,154 31,314 73,463
--------- --------- --------- ---------
Total investment activity 40,639 143,637 208,288 397,928
--------- --------- --------- ---------
PORTFOLIO EXPENSES
Management fee -- -- 15,304 30,608
General and administrative 38,723 78,736 38,316 92,956
--------- --------- --------- ---------
38,723 78,736 53,620 123,564
--------- --------- --------- ---------
Net income (loss) $ 1,916 $ 64,901 $ 154,668 $ 274,364
========= ========= ========= =========
4
COPLEY PENSION PROPERTIES VI
A REAL ESTATE LIMITED PARTNERSHIP;
Net income per limited
partnership unit $ .04 $ 1.32 $ 3.14 $ 5.57
============= ============ ============= ==========
Cash distributions per limited
partnership unit $ -- $ 2.81 $ 3.14 $ 6.75
============= ============ ============= ==========
Number of limited partnership units
outstanding during the period 48,788 48,788 48,788 48,788
============= ============ ============= ==========
(See accompanying notes to unaudited financial statements)
5
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000 June 30, 1999 June 30, 1999
------------------------- --------------------- ----------------------- ----------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
-------- -------- -------- -------- -------- -------- -------- --------
Balance at beginning
of period $ 10,456 $ 6,417,496 $ 11,211 $ 6,492,235 $ 13,250 $ 6,923,877 $ 13,832 $ 6,981,503
Cash distributions -- -- (1,385) (137,094) (1,547) (153,194) (3,326) (329,319)
Net income (loss) 19 1,897 649 64,252 1,547 153,121 2,744 271,620
--------- ----------- --------- ----------- --------- ----------- --------- -----------
Balance at end
of period $ 10,475 $ 6,419,393 $ 10,475 $ 6,419,393 $ 13,250 $ 6,923,804 $ 13,250 $ 6,923,804
========= =========== ========= =========== ========= =========== ========= ===========
(See accompanying notes to unaudited financial statements)
6
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
2000 1999
----------- -----------
Net cash provided by operating activities $ 127,135 $ 257,916
----------- -----------
Cash flows from investing activities:
Investment in property (297,673) -
Investment in joint venture (120,061) -
----------- -----------
Net cash used in investing activities (417,734) -
----------- -----------
Cash flows from financing activities:
Distributions to partners (138,479) (332,645)
----------- -----------
Net cash used in financing activities (138,479) (332,645)
----------- -----------
Net decrease in cash and cash equivalents (429,078) (74,729)
Cash and cash equivalents:
Beginning of period 2,305,383 2,605,486
----------- -----------
End of period $ 1,876,305 $ 2,530,757
=========== ===========
(See accompanying notes to unaudited financial statements)
7
COPLEY PENSION PROPERTIES VI;
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, 2000 and December 31, 1999, its results of
operations, and partners' capital for the three and six months ended June 30,
2000 and 1999 and its cash flows for the six month periods ended June 30, 2000
and 1999. These adjustments are of a normal recurring nature.
See notes to financial statements included in the Partnership's 1999
Annual Report on Form 10-K for additional information relating to the
Partnership's financial statements.
Note 1 - Organization and Business
- ----------------------------------
Copley Pension Properties VI; 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 July 1988, and acquired the
two real estate investments it currently owns prior to the end of 1991. 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 considered to be in the best interest of the limited
partners. The Partnership has engaged AEW Real Estate Advisors, Inc. (the
"Advisor") to provide asset management advisory services.
Note 2 - Investments in Joint Ventures
- --------------------------------------
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the Prentiss Copystar joint venture:
8
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Assets and Liabilities
------------------------
June 30, 2000 December 31, 1999
------------- -----------------
Assets
Real property, at cost less
accumulated depreciation
of $449,062 and $423,431,
respectively $2,455,077 $2,355,436
Other 61,057 11,877
---------- ----------
2,516,134 2,367,313
Liabilities 146,471 73,813
---------- ----------
Net assets $2,369,663 $2,293,500
========== ==========
Results of Operations
---------------------
Six Months Ended June 30,
2000 1999
---------- ---------
Revenue:
Rental income $ - $ 243,948
---------- ---------
- 243,948
---------- ---------
Expenses:
Operating expenses 72,208 59,293
Depreciation and amortization 25,631 34,715
---------- ---------
97,839 94,008
---------- ---------
Net income (loss) $ (97,839) $ 149,940
========== =========
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliates on behalf of financing arrangements with the
joint venture.
9
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Note 3 - Property
- -----------------
The following is a summary of the Partnership's last remaining wholly-
owned property (Wilmington Industrial):
June 30, 2000 December 31, 1999
--------------- -----------------
Land $ 2,770,056 $ 2,770,056
Buildings, improvements and
other capitalized costs 5,276,380 4,908,078
Investment valuation allowance (1,500,000) (1,500,000)
Accumulated depreciation and
amortization (2,254,563) (2,176,751)
Other assets and liabilities, net 45,790 59,719
------------- -------------
$ 4,337,663 $ 4,061,102
============= =============
10
COPLEY PENSION PROPERTIES VI;
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 on December 31, 1988. A total of 48,788 units were sold. The
Partnership received proceeds of $43,472,858, net of selling commissions and
other offering costs, which have been used for investment in real estate and for
the payment of related acquisition costs, or retained as working capital
reserves. The Partnership made seven real estate investments; one investment was
sold in each of 1990, 1994 and 1997 and two investments were sold in 1998.
Through June 30, 2000, capital of $37,884,369 ($776.51 per limited partnership
unit) has been returned to the limited partners; $36,194,353 as a result of
sales and $1,690,016 as a result of a discretionary reduction of original
working capital previously held in reserves.
At June 30, 2000, the Partnership had $1,876,305 in cash and cash
equivalents which is being retained as working capital reserves. The source of
future liquidity and cash distributions to partners will primarily be cash
generated by the Partnership's invested cash and cash equivalents and real
estate investments, and proceeds from the sale of such investments. There were
no cash distributions made relating to the first and second quarters of 2000 due
to insufficient cash flow from the properties. One property has been vacant
since September 30, 1999 and the other remaining property has reduced its cash
flow to the Partnership due to payments of capital expenditures. Based on an
adjusted capital contribution of $228.20 per limited partnership unit,
distributions of cash from operations relating to the first and second quarters
of 1999 were made at the annualized rate of 5.5%.
The carrying value of real estate investments in the financial
statements 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 June 30, 2000, the aggregate appraised value of the
real estate investments exceeded their carrying value by approximately
$2,200,000. The current appraised value of real estate investments has been
estimated by the managing general partner and is generally based on a
correlation 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.
11
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Results of Operations
Form of Real Estate Investments
The Wilmington Industrial investment is a wholly-owned property. The
Prentiss Copystar real estate investment is structured as a joint venture.
Operating Factors
One of the Partnership's two industrial properties, Wilmington
Industrial, was 77% leased at June 30, 2000 compared to 100% leased at June 30,
1999. The other industrial property, Prentiss Copystar was vacant at June 30,
2000 compared to 100% leased at June 30, 1999. During the first quarter of 2000,
the Partnership executed a long-term lease with a single tenant, which is
expected to commence during August 2000, upon completion of tenant improvements.
Investment Results
For the three and six months ended June 30, 2000, results from real
estate operations were $9,729 and $80,483, respectively, compared to $176,974
and $324,465 for the comparable periods in 1999. The decreases of $167,245 and
$243,982 for the comparative three and six month periods, respectively, are
primarily due to a decrease in joint venture earnings as a result of Prentiss
Copystar's vacancy and a decrease in operating results at Wilmington Industrial.
The decrease at Wilmington Industrial is due to lower occupancy and an increase
in depreciation and operating expenses.
Interest on cash equivalents for the three and six months ended June
30, 2000, was $30,910 and $63,154, respectively, compared to $31,314 and $73,463
for the same periods in 1999. The decreases of approximately $400 and $10,000
for the comparative three and six month periods are primarily due to lower
average investment balances.
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.
12
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
The Partnership did not incur a management fee during the three
and six month periods ended June 30, 2000 due to the suspension of cash
distributions for the first and second quarters of 2000 due to the joint
venture's property being vacant and the other remaining property has reduced its
cash flow to the Partnership due to payments of capital expenditures.
General and administrative expenses for the three and six month periods
ended June 30, 2000 were $38,723 and $78,736, respectively, compared to $38,316
and $92,956 for the same periods in 1999. The overall six month decrease is
primarily due to lower taxes offset by increases in investor servicing fees,
legal fees and printing fees.
13
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2000
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: (27) Financial Data Schedule
b. Reports on Form 8-K: No Current Reports on Form 8-K were filed
during the quarter ended June 30, 2000.
14
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 PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
August 9, 2000
/s/ Alison L. Husid
--------------------------------
Alison L. Husid
President, Chief Executive Officer
And Director of Managing General Partner, Sixth
Copley Corp.
August 9, 2000
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.
15