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 June 30, 2000 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)
World Trade Center East
Two Seaport Lane, 16/th/ Fl.
Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
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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)
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, 2000
PART I
FINANCIAL INFORMATION
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, 2000 December 31, 1999
(Unaudited) (Audited)
-------------- ------------------
ASSETS
Real estate investments:
Joint venture $ - $ 4,608,955
Joint venture held for
disposition, net 4,311,588 -
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4,311,588 4,608,955
Cash and cash equivalents 2,620,757 17,597,405
Other net assets 30,123 97,603
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$6,962,468 $22,303,963
========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 113,193 $ 112,183
Accrued management fee 3,274 24,390
Deferred management and
disposition fees 4,467,341 4,436,165
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Total liabilities 4,583,808 4,572,738
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Partners' capital:
Limited partners ($137 and
$290.18 per unit, respectively;
120,000 units authorized, 94,997
units issued and outstanding) 2,389,838 17,734,394
General partners (11,178) (3,169)
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Total partners' capital 2,378,660 17,731,225
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$6,962,468 $22,303,963
========== ===========
(See accompanying notes to unaudited financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
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 $ - $ - $ 500,816 $1,026,922
Property operating expenses - - (289,681) (552,567)
Depreciation and amortization - - - (83,830)
-------- -------- --------- ----------
- - 211,135 390,525
Joint venture earnings 174,325 346,053 443,249 819,686
Amortization (460) (920) (1,327) (2,654)
-------- -------- --------- ----------
Total real estate operations 173,865 345,133 653,057 1,207,557
Interest on cash equivalents 44,645 148,579 71,194 140,309
-------- -------- --------- ----------
Total investment activity 218,510 493,712 724,251 1,347,866
-------- -------- --------- ----------
Portfolio Expenses
Management fee 6,548 62,350 57,605 115,211
General and administrative 89,400 174,846 86,483 146,624
-------- -------- --------- ----------
95,948 237,196 144,088 261,835
-------- -------- --------- ----------
Net Income $122,562 $256,516 $ 580,163 $1,086,031
======== ======== ========= ==========
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Net income per limited
partnership unit $ 1.27 $ 2.67 $ 6.05 $ 11.32
======= ======= ======= =======
Cash distributions per
limited partnership unit $ 5.88 $164.20 $ 6.07 $ 12.88
======= ======= ======= =======
Number of limited partnership
units outstanding during
the period 94,997 94,997 94,997 94,997
======= ======= ======= =======
(See accompanying notes to unaudited financial statements)
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(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 $ (6,761) $2,827,083 $ (3,169) $ 17,734,394 $(44,189) $26,195,808 $(42,713) $26,341,929
Cash
distributions (5,642) (558,582) (10,574) (15,598,507) (5,825) (576,632) (12,360) (1,223,562)
Net income 1,225 121,337 2,565 253,951 5,801 574,362 10,860 1,075,171
-------- ---------- -------- ------------ -------- ----------- -------- -----------
Balance at
end of period $(11,178) $2,389,838 $(11,178) $ 2,389,838 $(44,213) $26,193,538 $(44,213) $26,193,538
======== ========== ======== ============ ======== =========== ======== ===========
(See accompanying notes to unaudited financial statements)
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
-------------------------
2000 1999
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Net cash provided by operating
activities $ 632,433 $ 1,330,251
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Cash flows from financing activity:
Distributions to partners (15,609,081) (1,235,922)
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Net increase (decrease) in
cash and cash equivalents (14,976,648) 94,329
Cash and cash equivalents:
Beginning of period 17,597,405 5,932,931
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End of period $ 2,620,757 $ 6,027,260
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(See accompanying notes to unaudited financial statements)
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO UNAUDITED 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, the results of its
operations and partners' capital (deficit) for the three and six months ended
June 30, 2000 and 1999, and its cash flows for the six months ended June 30,
2000 and 1999. These adjustments are of a normal recurring nature.
See notes to unaudited 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
- ----------------------------------
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 its real estate investments prior to the end of 1987. It intended to
dispose of the investments within twelve years of their acquisition, and then
liquidate; however, the managing general partner has extended the holding
period, having determined it 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 - REAL ESTATE JOINT VENTURES
- -----------------------------------
On December 20, 1999, the Columbia Gateway Corporate Park joint venture
investment in which the Partnership and an affiliate were entitled to 69.5% and
30.5%, respectively, of the operating activity, sold its property to an
unaffiliated third party for gross proceeds of $19,850,000, of which the
Partnership's share was $13,795,750. The Partnership received its 69.5% share
of the net proceeds, $13,423,827 after closing costs, and recognized a gain of
$1,927,893 ($20.09 per limited partnership unit) on the sale. A disposition fee
of $413,872 was accrued but not paid to the Advisor. On January 27, 2000, the
Partnership made a capital distribution of $13,204,583 ($139 per limited
partnership unit) from the proceeds of the sale. At December 31, 1999, $500,000
remained in the joint venture, of which the Partnership's 69.5% share, $347,500,
was distributed to the Partnership in February 2000.
The following summarized financial information is presented in the
aggregate for the Partnership's joint ventures (one at June 30, 2000 and
December 31, 1999, two at June 30, 1999):
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Assets and Liabilities
----------------------
June 30, 2000 December 31, 1999
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Assets
Real property, at cost less
accumulated depreciation
of $1,039,331 $ - $ 3,939,825
Other - 634,949
Joint venture held for
disposition, net 3,957,416 -
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3,957,416 4,574,774
Liabilities - 136,869
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Net Assets $ 3,957,416 $ 4,437,905
============ ============
Results of Operations
Six Months ended June 30,
2000 1999
---- ----
Revenue
Rental income $491,388 $1,569,247
Other income - 13,331
-------- ----------
491,388 1,582,578
-------- ----------
Expenses
Operating expenses 86,967 356,622
Depreciation and amortization 58,368 187,318
-------- ----------
145,335 543,940
-------- ----------
Net income $346,053 $1,038,638
======== ==========
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.
9
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
On June 30, 2000, the Partnership executed a Purchase and Sale Agreement to
sell the 270 Technology Park investment. Although there can be no assurance that
this sale will occur, it is expected to be concluded by year end 2000. This
investment is classified as Joint Venture Held for Disposition, net, on the
Balance Sheet ended June 30, 2000. During the six months ended June 30, 2000 and
1999, the Partnership recognized $346,053 and $320,764 in net income from the
270 Technology Park investment, respectively.
NOTE 3 - PROPERTY
- -----------------
Effective April 1, 1996, the Reflections joint venture was restructured,
whereby the Partnership's venture partner became an indirect limited partner.
Accordingly, the investment was accounted for as a wholly-owned property since
that date. The carrying value of the joint venture investment at conversion was
allocated to land, building and improvements and other net operating assets.
On September 23, 1999, the Reflections Apartments was sold to a third party
which is unaffiliated with the Partnership. The gross sale price was
$13,100,000. The Partnership received net proceeds totaling $12,773,052, after
closing costs, and recognized a gain of $3,474,005 ($36.20 per limited
partnership unit). A disposition fee of $393,000 was accrued but not paid to
the Advisor. On October 28, 1999, the Partnership made a capital distribution
of $12,522,505 ($131.82 per Limited Partnership Unit) from the proceeds of the
sale.
NOTE 4 - SUBSEQUENT EVENT
- -------------------------
Distributions of cash from operations relating to the quarter ended June
30, 2000 were made on July 27, 2000 in the aggregate amount of $66,210 ($0.69
per limited partnership unit).
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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. Eight investments have been sold: one each in 1988, 1993,
1994, 1996, 1997 and 1998 and two in 1999. As a result of the sales, and similar
transactions, capital of $81,982,411 ($863 per limited partnership unit) has
been returned to the limited partners through June 30, 2000.
At June 30, 2000, the Partnership had $2,620,757 in cash and cash
equivalents, of which $66,210 was used for cash distributions to partners on
July 27, 2000; the remainder will primarily be used 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 invested cash and cash
equivalents. Distributions of cash from operations for the first quarter of 2000
were made at the annualized rate of 13% on the weighted average adjusted capital
contribution of $180.77 per limited partnership unit. Distributions of cash from
operations for the second quarter of 2000 was made at the annualized rate of 2%
on the adjusted capital contribution of $137.00 per limited partnership unit.
The first quarter 2000 distribution rate was higher than the second quarter of
2000 as a result of greater cash available for distribution due to final
receipts of operating cash flow received by the Partnership from previously sold
properties. Distributions of cash from operations relating to the first and
second quarters of 1999 were made at the annualized rate of 5.75% on the
adjusted capital contribution of $422 per limited partnership unit.
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 the 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 appraised value of the last remaining real estate
investment exceeded its related carrying value by approximately $1,500,000. 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 Advisor and independent appraisers, and
includes consideration of the amounts negotiated in the Purchase and Sale
Agreement for this investment executed on June 30, 2000. Because of the
subjectivity inherent in the valuation process, the estimated current appraised
value may differ significantly from amounts ultimately realized from the sale of
the Partnership's real estate investment.
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Results of Operations
- ---------------------
At June 30, 2000, the remaining investment in the portfolio is structured
as a joint venture with a real estate development/management firm. The Columbia
Gateway Corporate Park, a joint venture with an affiliate of the Partnership,
was sold in December 1999. The Reflections Apartments investment, a wholly-owned
property, was sold in September 1999.
Operating Factors
As mentioned above, the Columbia Gateway Corporate Park joint venture, in
which the Partnership and an affiliate were entitled to 69.5% and 30.5% of the
operating activity, respectively, sold its property on December 20, 1999. The
Partnership recognized its 69.5% share of the gain of $1,927,893. The property
was 100% leased at the time of sale.
As discussed above, the Reflections Apartments investment was sold on
September 23, 1999, and the Partnership recognized a gain in the amount of
$3,474,005. At the time of the sale, occupancy at Reflections Apartments was
94%.
Occupancy at 270 Technology Center was 99% at June 30, 2000, down slightly
from 100% at June 30, 1999.
Investment Activity
Interest on cash equivalents for the three and six months ended June 30,
2000, was $44,645 and $148,579, respectively, compared to $71,194 and $140,309
for the same periods in 1999. The comparative three month decrease of
approximately $27,000 is primarily due to lower average investment balances in
2000 as a result of the sales of Reflections Apartments and Columbia Gateway
Corporate Park in September and December 1999, respectively. The comparative six
month increase of approximately $8,000 is due to interest earned on the
temporary investment of proceeds from the sale of Columbia Gateway Corporate
Park during the first quarter of 2000 prior to distribution.
For the three and six months ended June 30, 2000, operating results from
real estate operations were $173,865 and $345,133, respectively, compared to
$653,057 and $1,207,557 for the comparable periods in 1999. The decreases of
$479,192 and $862,424 for the comparative three and six month periods are
primarily due to the sales of Reflections Apartments and Columbia Gateway
Corporate Park in September and December 1999, respectively.
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.
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
For the three and six months ended June 30, 2000, management fees were
$6,548 and $62,350, respectively, compared to $57,605 and $115,211 for the
comparable periods in 1999. The decreases in management fees for the respective
three and six month periods are due to lower operational cash distributions as a
result of the sales of Reflections Apartments and Columbia Gateway Corporate
Park in September and December 1999, respectively.
General and administrative expenses for the three and six months ended June
30, 2000 were $89,400 and $174,846, respectively, compared to $86,483 and
$146,624 for the same periods in 1999. While expenses for the comparative three
month periods were relatively stable, the increase of approximately $28,000 for
the comparable six month periods is primarily due to an increase in investor
servicing fees as well as an increase in legal fees and state taxes.
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
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: None.
b. Reports on Form 8-K: No Current Reports on
Form 8-K were filed during the quarter ended
June 30, 2000.
14
SIGNATURES
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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 14, 2000
/s/ Alison L. Husid
-------------------------------
Alison L. Husid
President, Chief Executive Officer
and Director of the Managing General Partner,
Fourth Copley Corp.
August 14, 2000
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Fourth Copley Corp.
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