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 September 30, 2000 Commission File Number 0-17810
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2961376
(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:
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 ___
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 2000
PART I
FINANCIAL INFORMATION
2
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF NET ASSETS IN LIQUIDATION
September 30, 2000 December 31, 1999
(Unaudited) (Audited)
------------------ -----------------
Assets
Cash and cash equivalents $ 420,267 $ 470,554
--------- ---------
$ 420,267 $ 470,554
========= =========
Liabilities and net assets in liquidation
Accounts payable $ - $ 38,922
Accrued expenses for liquidation 35,000 55,000
--------- ---------
Total liabilities 35,000 93,922
--------- ---------
Net assets in liquidation:
Limited partners ($582.04 per unit;
100,000 units authorized, 32,767
units issued and outstanding) 534,426 525,878
General partners (149,159) (149,246)
--------- ---------
Total partners' capital 385,267 376,632
--------- ---------
$ 420,267 $ 470,554
========= =========
(See accompanying notes to unaudited financial statements)
3
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF CHANGES OF NET ASSETS IN LIQUIDATION
(Unaudited)
Three Months Ended Nine Months Ended
September 30, 2000 September 30, 2000
------------------- -------------------
Net assets in liquidation at
beginning of period $380,208 $ 376,632
-------- ---------
Increase during period:
Operating activities
Interest income 6,924 $ 23,289
-------- ---------
6,924 23,289
Liquidating activities
Change in provision for
liquidation expenses (1,865) $ (14,654)
-------- ---------
(1,865) (14,654)
-------- ---------
Net change in net assets
in liquidation 5,059 8,635
-------- ---------
Net assets in liquidation at
end of period $385,267 $ 385,267
======== =========
(See accompanying notes to unaudited financial statements)
4
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, 1999 September 30, 1999
------------------ ------------------
INVESTMENT ACTIVITY
Property rentals $ 191 $126,764
Property operating expenses 9,731 (37,682)
------- --------
9,922 89,082
Gain on sale of investment - 590,563
------- --------
Total real estate operations 9,922 679,645
Interest on cash equivalents 5,732 69,949
------- --------
Total investment activity 15,654 749,594
------- --------
PORTFOLIO EXPENSES
General and administrative 15,892 54,374
Management fee - 25,991
------- --------
15,892 80,365
------- --------
Net income (loss) $ (238) $669,229
======= ========
Net income (loss) per
limited partnership unit $ (0.01) $ 20.22
======= ========
Cash distributions per
limited partnership unit $ - $ 210.81
======= ========
Number of limited partnership
units outstanding during the period 32,767 32,767
======= ========
(See accompanying notes to unaudited financial statements)
5
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30, 1999
--------------
Net cash used by operating
activities $ (54,427)
-----------
Cash flows from investing activities:
Net proceeds from sale of property 6,938,468
-----------
Net cash provided by investing activities 6,938,468
-----------
Cash flows from financing activity:
Distributions to partners (6,911,533)
-----------
Net decrease in cash and cash
equivalents (27,492)
Cash and cash equivalents:
Beginning of period 518,094
-----------
End of period $ 490,602
===========
(See accompanying notes to unaudited financial statements)
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COPLEY REALTY INCOME PARTNERS 2;
A 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 September 30, 2000 and December 31, 1999 and the changes of net
assets in liquidation for the three and nine month periods ended September 30,
2000, the results of its operations for the three and nine month periods ended
September 30, 1999, and its cash flows for the nine month period ended September
30, 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 Realty Income Partners 2; 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.
The Partnership commenced operations in October 1987, and acquired its real
estate investments prior to the end of 1987. The Partnership sold its remaining
investment in February 1999. On December 31, 1999, the Partnership adopted a
plan of liquidation and intends to dissolve in the first quarter of 2001.
In connection with its adoption of a plan of liquidation on December 31,
1999, the Partnership also adopted the liquidation basis of accounting which,
among other things, requires that assets and liabilities be stated at their
estimated net realizable value and that estimated costs of liquidating the
Partnership be provided to the extent that they are reasonably determinable.
NOTE 2 - PROPERTY
- -----------------
On February 26, 1999, the La Mirada buildings were sold for a gross sale
price of $7,150,000. The Partnership received net proceeds of $6,938,468 after
closing costs, and recognized a gain of $590,563 ($17.84 per limited partnership
unit) on the sale. On April 29, 1999 the Partnership made a capital
distribution of $6,519,322 ($198.96 per limited partnership unit) from the
proceeds of the sale.
Note 3 - ACCRUED EXPENSES FOR LIQUIDATION
- -----------------------------------------
Accrued expenses for liquidation as of September 30, 2000 include estimates
of costs to be incurred in carrying out the dissolution and liquidation of the
Partnership. These costs include estimates of legal fees, accounting fees, tax
preparation and filing fees and other professional services.
7
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
During the nine months ended September 30, 2000 the Partnership incurred
$34,654 of such expenses and the managing general partner re-evaluated the
estimated costs to dissolve the Partnership. The provision for liquidation
expenses was accordingly increased by an additional $14,654 to reflect the
revised estimates.
The actual costs could vary from the related provisions due to the
uncertainty related to the length of time required to complete the liquidation
and dissolution of the Partnership. The accrued expenses do not take into
consideration possible litigation arising from the customary representations and
warranties made as part of each sale. Such costs are unknown and are not
estimable at this time.
8
COPLEY REALTY INCOME PARTNERS 2;
A 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 April 1988, and a total of 32,997 units were sold. The Partnership
received proceeds of $29,379,522, 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.
On February 26, 1999, the Partnership sold the La Mirada buildings for
$7,150,000. The Partnership received net proceeds of $6,938,468, after closing
costs. On April 29, 1999, the Partnership made a capital distribution of
$6,519,322 ($198.96 per unit) from the proceeds.
In connection with two sales in May and December of 1997, respectively, and
the sale in February of 1999, capital of $13,701,415 ($417.96 per limited
partnership unit) has been returned to the limited partners, reducing the
adjusted capital contribution to $582.04 per unit.
At September 30, 2000, the Partnership had $420,267 in cash and cash
equivalents which is being retained primarily as a reserve in connection with
the liquidation of the Partnership. Distributions of cash from operations
related to the first quarter of 1999 were made at an annualized rate of 1.75% on
the adjusted capital contribution of $781 per unit. At the time of this
distribution, the Partnership also made a special distribution of $4.52 per
limited partnership unit from operational cash previously held in reserves.
There have been no distributions from operations since that time due to the sale
of the Partnership's remaining investment in February 1999. When all Partnership
expenses have been settled, a distribution of the remaining cash reserves will
be made.
9
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
Results of Operations
- ---------------------
Investment Results
As discussed above, the La Mirada buildings were sold on February 26,
1999. The Partnership received net proceeds of $6,938,468, after closing costs
and recognized a gain of $590,563 ($17.84 per limited partnership unit). The
buildings were 100% leased at the time of sale.
There are no real estate comparative operating results for the nine month
periods ended September 30, 2000 and 1999, due to the sale of the Partnership's
last remaining property in February 1999, as discussed above.
Interest on cash and cash equivalents remained relatively stable for the
comparable three month periods of 1999 and 2000, while interest on cash and cash
equivalents decreased $46,660, for the comparable nine month periods. The
overall decrease is due to the sale of the Partnership's last remaining property
in February 1999, discussed above.
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. General and administrative expenses for the three and
nine month periods ended September 30, 1999 were $15,892 and $54,374,
respectively.
There was no management fee incurred during the first three quarters of
2000 due to the discontinuance of operating cash distributions as a result of
the sale of the Partnership's last remaining property in 1999, discussed above.
Costs to dissolve and liquidate the Partnership include legal fees,
accounting fees, tax preparation fees, filing fees and other professional
services. During the nine months ended September 30, 2000, the Partnership
incurred $34,654 of such expenses and the managing general partner re-evaluated
the estimated costs to dissolve the Partnership. The provision for liquidation
expenses was accordingly increased by $14,654 to reflect the revised estimates.
10
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 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 September 30, 2000.
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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 2; A LIMITED
PARTNERSHIP
(Registrant)
November 7, 2000
/s/ Alison L. Husid
-------------------------------
Alison L. Husid
President, Chief Executive Officer and Director
of Managing General Partner,
Second Income Corp.
November 7, 2000
/s/ Jem A. Hudgins
--------------------------------
Jem A. Hudgins
Treasurer and Principal Financial and Accounting
Officer of Managing General Partner, Second
Income Corp.
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