SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission File No. 0-15429
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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
incorporation or organization) Identification No.)
World Trade Center East
Two Seaport Lane, 16th Floor
Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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 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 |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |X|
No voting stock is held by non-affiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Business.
New England Life Pension Properties IV; A Real Estate Limited Partnership
(the "Partnership") was organized under the Uniform Limited Partnership Act of
the Commonwealth of Massachusetts on October 16, 1985, to invest primarily in
newly constructed and existing income-producing real properties.
The Partnership was initially capitalized with contributions of $2,000 in
the aggregate from Fourth Copley Corp. (the "Managing General Partner") and CCOP
Associates Limited Partnership (the "Associate General Partner") (collectively,
the "General Partners") and $10,000 from Copley Real Estate Advisors, Inc. (the
"Initial Limited Partner"). The Partnership filed a Registration Statement on
Form S-11 (the "Registration Statement") with the Securities and Exchange
Commission on November 12, 1985, with respect to a public offering of 60,000
units of limited partnership interest at a purchase price of $1,000 per unit
(the "Units") with an option to sell up to an additional 60,000 Units (an
aggregate of $120,000,000). The Registration Statement was declared effective on
January 3, 1986.
The first sale of Units occurred on May 29, 1986, at which time the
Initial Limited Partner withdrew its contribution from the Partnership.
Investors were admitted to the Partnership thereafter at monthly closings; the
offering terminated and the last group of subscription agreements was accepted
by the Partnership on December 31, 1986. As of January 31, 1987, a total of
94,997 Units had been sold, a total of 17,207 investors had been admitted as
limited partners (the "Limited Partners") and a total of $94,348,550 had been
contributed to the capital of the Partnership. The remaining 25,003 Units were
de-registered on February 23, 1987.
As of December 31, 2000, the Partnership had disposed of all its real
estate investments. The Partnership plans to liquidate and dissolve in 2001. The
Partnership sold its last remaining real estate asset in 2000, as described
below. In December 1988, the Partnership sold another one of its investments and
received sale proceeds of $10,577,476 which were substantially reinvested. Seven
other investments have been sold. One investment in Atlanta, Georgia was sold on
August 6, 1993, resulting in sale proceeds of $7,917,000. Capital was
distributed to the Limited Partners in October 1993, in the amount of $82 per
Unit. A second investment in Rancho Cucamonga, California was sold on December
30, 1994, resulting in sale proceeds of $5,261,275. On January 26, 1995, capital
of $5,224,835 ($55 per Unit) was distributed to the Limited Partners. A third
investment located in Decatur, Georgia was sold on October 10, 1996, resulting
in sale proceeds of $9,333,325. On October 24, 1996, capital of $9,214,709 ($97
per unit) was distributed to the Limited Partners. A fourth investment located
in Las Vegas, Nevada was sold on October 24, 1997, resulting in sale proceeds of
$22,983,007. On November 25, 1997, the Partnership made a capital distribution
of $22,989,274 ($242 per Limited Partnership Unit) from the proceeds of the sale
and prior sales proceeds previously held in reserves. A fifth investment located
in Phoenix, Arizona was sold on September 23, 1998, resulting in net sale
proceeds of $9,680,132. On October 29, 1998, the Partnership made a capital
distribution of $9,689,694 ($102 per Limited Partnership Unit) from the proceeds
of the sale and prior sales proceeds previously held in reserves. A sixth
investment located in Fort Myers, Florida was sold on September 23, 1999,
resulting in net proceeds of $12,773,052. 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. A seventh investment located in Columbia,
Maryland was sold on December 20, 1999 resulting in net proceeds of $13,423,827.
On January 27, 2000 the Partnership made a capital distribution of $13,204,583
($139.00 per Limited Partnership Unit) from the proceeds of the sale. An eighth
investment located in Frederick, Maryland was sold on October 31, 2000,
resulting in net proceeds of $5,202,429. On November 28, 2000, the Partnership
made a capital distribution of $4,439,844 ($52.00 per Limited Partnership Unit)
from the proceeds of the sale.
The Partnership has no employees. Services are performed for the
Partnership by the Managing General Partner and affiliates of the Managing
General Partner.
2
Office/Research and Development Buildings in Frederick, Maryland ("270
Technology Center").
On December 22, 1987, the Partnership acquired a 50% interest in a joint
venture formed with MORF Associates VI Limited Partnership. As of December 31,
1998, the Partnership had contributed $4,857,000 to the capital of the joint
venture out of a maximum commitment of $5,150,000. The joint venture agreement
entitled the Partnership to receive a preferred return on its invested capital
at the rate of 10% per annum. Such preferred return was payable currently
through September 30, 1988; thereafter, and until the termination of the joint
venture's operations, to the extent that sufficient cash flow was not available
therefor, the preferred return would accrue and bear interest at the rate of 10%
per annum, compounded monthly. The joint venture agreement entitled the
Partnership to receive 50% of the net proceeds of sales and financings after
return of its equity and preferred return.
As of July 3, 1990, the joint venture sold approximately 3.9 acres of land
to an unrelated third party. In return, the joint venture received approximately
$500,000 and a parcel of land consisting of approximately .4 acres. The joint
venture owned approximately 8 acres of land in the 270 Technology Center in
Frederick, Maryland, together with two one-story research and development/office
buildings, containing approximately 73,360 square feet of space, located
thereon.
On October 31, 2000, the Partnership sold its 50% interest in the 270
Technology Park joint venture to its joint venture partner for a gross sales
price of $5,941,783. The Partnership received its share of the net proceeds in
the amount of $5,202,429. On November 28, 2000, the Partnership made a capital
distribution of $4,939,844 ($52.00 per Limited Partnership Unit) from the
proceeds of the sale. At the time of sale, the buildings were 100% leased.
Item 2. Properties.
The Partnership has disposed of all its real property investments.
Item 3. Legal Proceedings
The Partnership is not a party to, nor are any of its properties subject
to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Annual Report on Form 10-K.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
There is no active market for the Units. Trading in the Units is sporadic
and occurs solely through private transactions.
As of December 31, 2000, there were 15,948 holders of Units.
3
The Partnership's Amended and Restated Agreement of Limited Partnership
dated May 29, 1986, as amended to date (the "Partnership Agreement"), requires
that any Distributable Cash (as defined therein) be distributed quarterly to the
Partners in specified proportions and priorities. There are no restrictions on
the Partnership's present or future ability to make distributions of
Distributable Cash. For the year ended December 31, 2000, cash distributions
paid in 2000 or distributed after year end with respect to 2000 to the Limited
Partners as a group totaled $6,228,953, including $4,939,844 ($52 per Limited
Partnership Unit) from the proceeds of a property sale and $664,979 ($7.00 per
Limited Partnership Unit) from capital previously held in reserves. For the year
ended December 31, 1999, cash distributions paid in 1999 or distributed after
year end with respect to 1999 to the Limited Partners as a group totaled
$30,184,347, including $9,689,694 ($102 per Limited Partnership Unit) from the
proceeds of property sales.
Cash distributions exceeded net income in 2000 and 1999 and, therefore,
resulted in a reduction of partners' capital. Reference is made to the
Partnership's Statement of Partner's Capital (Deficit) and Statement of Cash
Flows in Item 8 hereof.
4
Item 6. Selected Financial Data.
For Year For Year For Year For Year For Year
Ended or Ended or Ended or Ended or Ended or
as of : as of : as of : as of : as of :
12/31/00(1) 12/31/99(2) 12/31/98(3) 12/31/97(4) 12/31/96(5)
----------- ----------- ----------- ----------- -----------
Revenues $6,047,594 $ 8,913,259 $ 8,561,528 $16,837,755 $ 7,582,119
Net Income $5,409,596 $ 7,256,381 $ 5,988,711 $13,211,159 $ 4,392,513
Net Income per Unit of
Limited
Partnership
Interest $ 56.38 $ 75.62 $ 62.41 $ 137.68 $ 45.78
Total Assets $2,253,578 $22,303,963 $30,706,031 $37,925,503 $50,710,887
Total Cash
Distributions
per Unit of
Limited
Partnership
Interest,
including
amounts
distributed after
year end with
respect to such
year $ 65.57 $ 317.74 $ 137.17 $ 279.14 $ 147.71
(1) Revenues and net income includes a gain on the sale of property of $845,348
and $4,334,266 of other income resulting from the reversal of deferred
disposition and management fees. Cash distributions include a return of capital
of $59.00 per Limited Partnership Unit.
(2) Revenues and net income includes a gain on the sales of properties of
$7,510,818. Cash distributions include a return of capital of $285.00 per
Limited Partnership Unit.
(3) Revenues and net income includes a gain on the sale of property of
$3,742,541. Cash distributions include a return of capital of $102.00 per
Limited Partnership Unit.
(4) Revenues and net income includes a gain on the sale of property of
$10,482,458. Cash distributions include a return of capital of $242.00 per
Limited Partnership Unit.
(5) Revenues and net income includes a gain on the sale of a joint venture
investment of $1,055,591. Cash distributions include a return of capital of
$97.00 per Limited Partnership Unit.
5
Item 7
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; all of which have been sold: one each in 1988, 1993, 1994,
1996, 1997, 1998, 2000 and two in 1999. Capital of $87,587,234 ($922.00 per
Limited Partnership Unit) has been returned to the limited partners through
December 31, 2000.
On August 21, 1998, the Reflections joint venture sold a parcel of land to
the City of Fort Myers. The Partnership received net proceeds totaling $67,881
and recognized a gain of $35,591.
On September 23, 1998, the Metro Business Center in Phoenix Arizona was
sold to an institutional buyer which is unaffiliated with the Partnership. The
gross sale price was $9,900,000. The Partnership received net proceeds totaling
$9,680,132, after closing costs and recognized a gain of $3,706,950 ($38.63 per
Limited Partnership Unit). A disposition fee of $297,000 was accrued but not
paid to AEW Real Estate Advisors Inc. (the "Advisor"). This fee was reversed in
2000 (see discussion below). On October 29, 1998, the Partnership made a capital
distribution of $9,689,694 ($102 per Limited Partnership Unit) from the proceeds
of the sale and prior sales proceeds held in reserves.
On September 23, 1999, the Reflections Apartments in Fort Myers, Florida
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 AEW. This fee was reversed in 2000 (see discussion below). 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.
On December 20, 1999, the Columbia Gateway Corporate Park joint venture in
which the Partnership and an affiliate owned a 69.5% and 30.5% interest,
respectively, 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. This fee was reversed in 2000 (see discussion below). On
January 27, 2000 the Partnership made a capital distribution of $13,204,583
($139.00 per Limited Partnership Unit) from the proceeds of the sale.
On October 31, 2000, the Partnership sold its 50% interest in the 270
Technology Park joint venture to its joint venture partner for a gross sales
price of $5,941,783. The Partnership received net proceeds of $5,202,429, after
closing costs and recognized a gain of $845,348 ($8.81 per Limited Partnership
Unit) on the sale. On November 28, 2000, the Partnership made a capital
distribution of $4,939,844 ($52.00 per Limited Partnership Unit) from the
proceeds of the sale.
6
At December 31, 2000, the Partnership had $2,224,369 in cash and cash
equivalents, which is being retained pending dissolution and liquidation of the
Partnership in 2001. Distributions of cash from operations related to 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 related to the second quarter of 2000 were
made at the annualized rate of 2% on the adjusted capital contribution of $137
per Limited Partnership Unit. Due to the sale of the last remaining asset in
October, 2000, distributions from operations were suspended effective the third
quarter of 2000 to enable the Partnership to meet its fund level obligations for
the remainder of its life cycle. However, a special distribution from capital
previously held in reserves in the amount of $7.00 per Limited Partnership Unit
was made during the fourth quarter of 2000. Distributions of cash from
operations for 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. Distributions of cash from operations for the third and fourth
quarter of 1999 were made at the annualized rate of 6.25% on the adjusted
capital contribution of $422 per Limited Partnership Unit and the weighted
average adjusted capital contribution of $328.87 per Limited Partnership Unit,
respectively. At the time of the fourth quarter operating distribution, the
Partnership also made a special distribution of working capital previously held
in reserves in the amount of $14.18 per limited partnership unit. The
fluctuations in distribution rates are a result of both the sales of the
Partnership's real estate investments and the timing of cash flow from the
Partnership's real estate investments held at the time of the distributions.
Results of Operations
Form of Real Estate Investments
On October 31, 2000 the Partnership sold its interest in the joint venture
that owned 270 Technology Center. Reflections Apartments and Metro Business
Center investments were originally structured as joint ventures. However,
effective April 1, 1996 and July 1, 1996, respectively, the Partnership was
granted full control over management decisions and the investments had been
accounted for as wholly-owned properties since those dates. As previously
stated, the Metro Business Center and Reflections Apartments were sold on
September 23, 1998 and September 23, 1999, respectively. The Columbia Gateway
Corporate Park investment, which was sold on December 20, 1999, was structured
as a joint venture.
Operating Factors
As mentioned above, the Columbia Gateway Corporate Park joint venture, in
which the Partnership and an affiliate owned a 69.5% and 30.5% interest,
respectively, sold its property on December 20,1999. The Partnership recognized
its share of the gain of $1,927,893. The property was 100% leased at the time of
sale, consistent with December 31, 1998.
As discussed above, the Reflections Apartments investment was sold on
September 23, 1999, and the Partnership recognized a gain of $3,474,005. At the
time of the sale, occupancy at Reflections Apartments was 94%, consistent with
occupancy at December 31, 1998.
As discussed above, Metro Business Center was sold on September 23, 1998
and the Partnership recognized a gain of $3,706,950. At the time of sale, the
property was 100% leased.
As discussed above, the Partnership sold its 50% interest in the 270
Technology Park joint venture to its joint venture partner on October 31, 2000
and the Partnership recognized a gain of $845,348. At the time of sale,
occupancy at 270 Technology Center was 100%.
7
Investment Activity
2000 Compared to 1999
Interest on cash equivalents and short-term investments decreased by
approximately $103,000 or 28% compared to 1999, primarily due to lower average
investment balances as a result of sales in both 2000 and 1999 and distributions
during 2000 of cash previously held in reserves.
Total real estate operations were $606,650 and $2,108,920 for the twelve
months ended December 31, 2000 and 1999, respectively. The decrease of
$1,502,270 is primarily due to the sales of Reflections Apartments, Columbia
Gateway Corporate Park and 270 Technology Park in September 1999, December 1999
and October 2000, respectively.
The Partnership recognized $4,334,266 in revenue during the year ended
December 31, 2000: $1,535,514 is attributable to the reversal of deferred
management fees and $2,798,752 is attributable to the reversal of the deferred
disposition fees, both in accordance with the Partnership Agreement.
1999 Compared to 1998
Interest on cash equivalents and short-term investments decreased by
approximately $34,000 or 8% compared to 1998, primarily due to lower average
investment balances as a result of sales in both 1999 and 1998.
Total real estate operations were $2,108,920 and $2,509,656 for the twelve
months ended December 31, 1999 and 1998, respectively. The decrease of $400,736
is primarily due to a decrease in operating income from wholly owned properties
of $547,746, primarily due to the sales of Metro Business Center in 1998 and
Reflections Apartments in 1999. These decreases are partially offset by an
increase in operating performance at Columbia Gateway Corporate Park
attributable to decreases in rent concessions and the recovery of the prior year
write off of bad debt. Operating performance at 270 Technology Center improved
as well due to fewer rent concessions in 1999 and higher average occupancy for
1999.
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.
2000 Compared to 1999
The Partnership management fee decreased approximately $248,000 due to
less operational cash available for distribution as a result of the sales of
Reflections Apartments, Columbia Gateway Corporate Park and 270 Technology Park
in September 1999, December 1999 and October 2000, respectively. General and
administrative expenses remained stable in 2000.
1999 Compared to 1998
General and administrative expenses decreased approximately $20,000 or 6%
primarily due to decreases in legal, printing and appraisal fees. Management
fees decreased in 1999 compared to 1998 by approximately $23,000 due to a
decrease in distributable cash flow and a corresponding decrease in operating
distributions to partners as a result of the sale of investments.
8
Inflation
By their nature, real estate investments tend not to be adversely affected
by inflation. Inflation may tend to result in appreciation in the value of the
real estate investments over time if rental rates and replacement costs
increase. Declines in real property values during the period of the Partnership
operations, due to market and economic conditions, have overshadowed the overall
positive effect inflation may have on the value of the Partnership's
investments.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Partnership was not party to derivative financial instruments or
derivative commodity instruments at or during the year ended December 31, 2000.
Item 8. Financial Statements and Supplementary Data.
The independent auditor's reports and financial statements listed in the
accompanying index are filed as part of this report. See Index to the Financial
Statements on page 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
The Partnership has had no disagreements with its accountants on any
matters of accounting principles or practices or financial statement disclosure.
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) and (b) Identification of Directors and Executive Officers.
The following table sets forth the names of the directors and executive
officers of the General Partner and the age and position held by each of them as
of December 31, 2000:
Name Position(s) with the Managing General Partner Age
- ---- --------------------------------------------- ---
Alison L. Husid President, Chief Executive Officer and Director 38
Pamela J. Herbst Vice President and Director 45
J. Grant Monahon Vice President and Director 55
James J. Finnegan Vice President 40
Dana C. Spires Treasurer and Principal Financial and Accounting Officer 34
(c) Identification of Certain Significant Employees.
None.
(d) Family Relationships.
None.
(e) Business Experience.
9
The Managing General Partner was incorporated in Massachusetts on October
16, 1985. The background and experience of the executive officers and directors
of the Managing General Partner are as follows:
Alison L. Husid is a Portfolio Manager in the Direct Investments group of
AEW Capital Management, L.P. ("AEW"), the Advisor's parent, with responsibility
for several real estate equity portfolios representing approximately $700
million in client capital. She has over 15 years of experience in real estate
finance and investment management. Alison joined AEW in 1987 as Controller for a
portfolio management team responsible for the acquisition, management,
restructuring and disposition of client assets in New England and the western
U.S. She later served as Asset Manager for a portfolio of assets in Arizona and
the West Coast. Prior to joining AEW, Alison worked for several years as a
Senior Auditor with Peat Marwick, Main & Co. She is a Certified Public
Accountant and a graduate of the University of Massachusetts (B.A.).
Pamela J. Herbst is Head of AEW's Direct Investments group, with oversight
responsibility for approximately $4 billion of client assets. With over 20 years
of direct real estate experience, Pam is a Principal of AEW, and a member of its
Management Committee, Investment Committee and Investment Policy Group. Since
joining AEW's predecessor in 1982, Pam has held various senior level positions
in investment management, acquisitions and corporate operations. In addition to
holding a number of industry certifications, she is a member of various real
estate industry trade organizations, and sits on the Board of Directors of the
National Association of Real Estate Investment Managers (NAREIM). Pam is a
graduate of the University of Massachusetts (B.A.) and Boston University
(M.B.A.).
J. Grant Monahon is AEW's Chief Operating Officer and a member of its
Management Committee, Investment Committee and Investment Policy Group. He has
over 25 years of experience in real estate law and investments and formerly
served as AEW's General Counsel. Prior to joining AEW in 1987, Grant was a
partner with a major Boston law firm. As the head of that firm's real estate
finance department, he represented a wide variety of institutional clients, both
domestic and international, in complex equity and debt transactions. He is the
former Chairman of the General Counsel section of the National Association of
Real Estate Investment Managers. Grant is a graduate of Dartmouth College (B.A.)
and Georgetown University Law Center (J.D.).
James J. Finnegan is AEW's General Counsel. He has over fifteen years of
experience in real estate, including seven years in private practice with major
New York City and Boston law firms. Jay has extensive experience in creating and
implementing real estate investment and portfolio management strategies for
institutional investors. Jay joined AEW in 1992 and has been actively involved
in various aspects of AEW's investment activities, including public and private
debt and equity investments. He also serves as AEW's securities and regulatory
compliance officer, and is the Principal of AEW Securities, L.P., AEW's
affiliated broker/dealer. Jay is a member of the General Counsel section of the
National Association of Real Estate Investment Managers. He is a graduate of the
University of Vermont (B.A.) and Fordham University School of Law (J.D.).
Dana C. Spires is a Controller in AEW's Direct Investment group, with
responsibility for overseeing the accounting and financial reporting for several
direct investment clients. Prior to joining AEW in 2000, he worked as a
Controller for both Finard & Company, LLC and Leggat McCall Retirement
Properties LLC. Mr. Spires has over twelve years of financial experience in the
real estate field. He is a graduate of Thiel College.
(f) Involvement in Certain Legal Proceedings.
None.
Item 11. Executive Compensation.
Under the Partnership Agreement, the General Partners and their affiliates
are entitled to receive various fees, commissions, cash distributions,
allocations of taxable income or loss and expense reimbursements from the
Partnership. See Notes 1, 2 and 6 to Notes to Financial Statements.
10
The following table sets forth the amounts of the fees and cash
distributions and reimbursements of out-of-pocket expenses which the Partnership
paid to or accrued for the account of the General Partners and their affiliates
for the year ended December 31, 2000.
Amount of
Compensation
and
Receiving Entity Type of Compensation Reimbursement
- ---------------- -------------------- -------------
General Partners Share of Distributable Cash $ 6,304
AEW Real Estate Advisors, Inc. Management Fees and
(formerly known as Copley Real Reimbursement of Expenses 77,351
Estate Advisors, Inc.)
New England Securities Corporation Servicing Fees and
Reimbursement of Expenses 29,597
-------------
TOTAL $ 113,252
=============
For the year ended December 31, 2000 the Partnership allocated $(16,276)
of taxable loss to the General Partners.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners
No person or group is known by the Partnership to be the beneficial owner
of more than 5% of the outstanding Units at December 31, 2000. Under the
Partnership Agreement, the voting rights of the Limited Partners are limited
and, in some circumstances, are subject to the prior receipt of certain opinions
of counsel or judicial decisions.
Except as expressly provided in the Partnership Agreement, the right to
manage the business of the Partnership is vested exclusively in the Managing
General Partner.
(b) Security Ownership of Management.
An affiliate of the General Partners of the Partnership owned 1,648 Units
as of December 31, 2000.
(c) Changes in Control.
There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions.
The Partnership has no relationships or transactions to report other than
as reported in Item 11 above.
11
PART IV
Item 14. Exhibits, Financial Statements, and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
(1) Financial Statements--The Financial Statements listed on the
accompanying Index to Financial Statements and Financial Statement Index
No. 2 are filed as part of this Annual Report.
(2) Exhibits--The Exhibits listed in the accompanying Exhibit Index are
filed as a part of this Annual Report and incorporated in this Annual
Report as set forth in said Index.
(b) Reports on Form 8-K. During the last quarter of the year ended December
31, 2000, the Partnership filed one Current Report on Form 8-K dated
November 13, 2000, reporting on Item No. 2 (Acquisition or Disposition of
Assets) and Item No. 7 (Financial Statements and Exhibits), relating to
the October 31, 2000 sale of its interest in the 270 Technology Center
joint venture.
12
New England Life Pension Properties IV;
A Real Estate Limited Partnership
Financial Statements
* * * * * * *
December 31, 2000
13
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants
Financial Statements (in liquidation as of December 31, 2000):
Balance Sheets - December 31, 2000 and 1999
Statements of Operations - Years ended December 31, 2000, 1999 and 1998
Statements of Partners' Capital (Deficit) - Years ended December 31,
2000, 1999 and 1998
Statements of Cash Flows - Years ended December 31, 2000, 1999 and 1998
Notes to Financial Statements
All schedules are omitted because they are not applicable.
14
Report of Independent Accountants
To the Partners of New England Life Pension Properties IV; A Real Estate Limited
Partnership:
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of New England
Life Pension Properties IV; A Real Estate Limited Partnership (the
"Partnership") at December 31, 2000 and 1999, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2000 in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of Fourth
Copley Corp., the Managing General Partner of the Partnership (the "Managing
General Partner"); our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by the Managing
General Partner, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Partnership adopted a
plan of liquidation on December 31, 2000 and as a result changed its basis of
accounting for periods subsequent to December 31, 2000 from the going concern
basis to the liquidation basis of accounting.
/s/ PriceWaterhouseCoopers LLP
Boston, MA
March 13, 2001
15
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
(in liquidation as of December 31, 2000)
December 31,
--------------------------
2000 1999
----------- ------------
Assets
Real estate investments:
Joint ventures $ -- $ 4,608,955
Cash and cash equivalents 2,224,369 17,597,405
Other net assets 29,209 97,603
----------- ------------
$ 2,253,578 $ 22,303,963
=========== ============
Liabilities and Partners' Capital
Accounts payable $ 128,871 $ 112,183
Accrued expenses for liquidation 264,000 --
Accrued management fee -- 24,390
Deferred management and disposition fees -- 4,436,165
----------- ------------
Total liabilities 392,871 4,572,738
----------- ------------
Partners' capital (deficit):
Limited partners ($78.00 and $290.18 per unit,
respectively; 120,000 units authorized,
94,997 units issued and outstanding) 1,821,016 17,734,394
General partners 39,691 (3,169)
----------- ------------
Total partners' capital 1,860,707 17,731,225
----------- ------------
$ 2,253,578 $ 22,303,963
=========== ============
(See accompanying notes to financial statements)
16
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(in liquidation as of December 31, 2000)
Year ended December 31,
--------------------------------------
2000 1999 1998
---------- ---------- -----------
Investment Activity
Property rentals $ -- $1,487,638 $ 2,907,757
Property operating expenses -- (951,623) (1,358,566)
Depreciation and amortization -- (83,830) (549,260)
---------- ---------- -----------
452,185 999,931
Joint venture earnings 608,030 1,661,176 1,515,033
Amortization (1,380) (4,441) (5,308)
---------- ---------- -----------
Total real estate operations 606,650 2,108,920 2,509,656
Gain on sale of joint venture 845,348 1,927,893 --
Gain on sales of property -- 3,474,005 3,742,541
Reversal of deferred management
and disposition fees 4,334,266 -- --
---------- ---------- -----------
Total real estate activity 5,786,264 7,510,818 6,252,197
Interest on cash equivalents
and short-term investments 259,950 362,547 396,197
---------- ---------- -----------
Total investment activity 6,046,214 7,873,365 6,648,394
---------- ---------- -----------
Portfolio Expenses
Management fee 62,351 310,709 333,771
Estimated liquidation period expenses 264,000 -- --
General and administrative 310,267 306,275 325,912
---------- ---------- -----------
636,618 616,984 659,683
---------- ---------- -----------
Net Income $5,409,596 $7,256,381 $ 5,988,711
========== ========== ===========
Net income per limited
partnership unit $ 56.38 $ 75.62 $ 62.41
========== ========== ===========
Cash distributions per limited
partnership unit $ 223.89 $ 166.23 $ 138.76
========== ========== ===========
Number of limited partnership units
outstanding during the year 94,997 94,997 94,997
========== ========== ===========
(See accompanying notes to financial statements)
17
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(in liquidation as of December 31, 2000)
Year ended December 31,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 5,409,596 $ 7,256,381 $ 5,988,711
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,380 88,271 554,568
Reversal of deferred management and
disposition fees (4,334,266) -- --
Equity in joint venture earnings (608,030) (1,661,176) (1,515,033)
Cash distributions from joint ventures 858,524 1,632,361 1,722,212
Gain on sales of property -- (3,474,005) (3,742,541)
Gain on sale of joint ventures (845,348) (1,927,893) --
Decrease (increase) in investment income
and other receivables -- -- 51,042
Increase in property deferred leasing costs -- -- (35,241)
Decrease (increase) in property working capital 68,394 18,977 (256,107)
Increase (decrease) in operating liabilities 154,399 (640,949) (288,128)
------------ ------------ ------------
Net cash provided by operating activities 704,649 1,291,967 2,479,483
------------ ------------ ------------
Cash flows from investing activities:
Net proceeds from sales of property -- 12,380,052 9,451,013
Net proceeds from sale of joint venture 5,202,429 13,009,955 --
Deferred disposition fees 806,872 297,000
Investment in property -- -- (70,131)
Decrease (increase) in short-term
investments, net -- -- 2,838,711
Loan repayment by joint venture partner -- -- 136,437
------------ ------------ ------------
Net cash provided by investing
activities 5,202,429 26,196,879 12,653,030
------------ ------------ ------------
Cash flows from financing activity:
Distributions to partners (21,280,114) (15,824,372) (13,217,055)
------------ ------------ ------------
Net cash used in financing activity (21,280,114) (15,824,372) (13,217,055)
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents (15,373,036) 11,664,474 1,915,458
Cash and cash equivalents:
Beginning of year 17,597,405 5,932,931 4,017,473
------------ ------------ ------------
End of year $ 2,224,369 $ 17,597,405 $ 5,932,931
============ ============ ============
(See accompanying notes to financial statements)
18
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(in liquidation as of December 31, 2000)
Year ended December 31,
--------------------------------------------------------------------------------
2000 1999 1998
---------- ---------- ----------
General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners
-------- -------- -------- -------- -------- --------
Balance at beginning
of year $ (3,169) $ 17,734,394 $(42,713) $ 26,341,929 $(67,328) $ 33,594,888
Cash distributions (11,236) (21,268,878) (33,020) (15,791,352) (35,272) (13,181,783)
Net income 54,096 5,355,500 72,564 7,183,817 59,887 5,928,824
-------- ------------ -------- ------------ -------- ------------
Balance at end
of year $ 39,691 $ 1,821,016 $ (3,169) $ 17,734,394 $(42,713) $ 26,341,929
======== ============ ======== ============ ======== ============
(See accompanying notes to financial statements)
19
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Business
General
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
had disposed of all of its investments as of December 31, 2000. On December 31,
2000, the Partnership adopted a plan of liquidation and intends to liquidate in
2001.
The Managing General Partner of the Partnership is Fourth Copley Corp., a
wholly-owned subsidiary of AEW Real Estate Advisors, Inc. (the "Advisor"),
formerly known as Copley Real Estate Advisors, Inc. ("Copley"). The associate
general partner is CCOP Associates Limited Partnership, a Massachusetts limited
partnership. Subject to the Managing General Partner's overall authority, the
business of the Partnership is managed by the Advisor pursuant to an advisory
contract.
The Advisor is a wholly-owned subsidiary of AEW Capital management L.P., a
wholly-owned subsidiary of Nvest Companies, L.P. (the "Company"). On October 30,
2000, Paris-based CDC IXIS Asset Management ("CDCIAM") acquired the Company and
its affiliated partnership, Nvest, L.P. (the "Acquisition"). Subsequently, the
Company's name was changed to CDC IXIS Asset Management North America, LP.
CDCIAM is the investment management arm of France's CDC IXIS, a subsidiary of
Caisse des Depots Group ("CDC").
The Acquisition was accomplished through CDCIAM's wholly owned subsidiary,
CDC IXIS Asset Management US Corporation ("CDCIAM US Corp."), which has a 99%
direct limited partnership interest in the Company and is the sole owner of the
Company's 1% general partner, CDC IXIS Asset Management US, LLC.
Prior to the Acquisition, the Company was owned by Nvest, L.P. ("Nvest"),
a publicly traded limited partnership with an approximate 15 percent interest,
and by private unitholders. The general partner of Nvest and the managing
general partner of the Company was a wholly-owned subsidiary of Metropolitan
Life Insurance Company ("MetLife"). In total, MetLife owned approximately 48% of
the partnership units of the Company at October 30, 2000 (including those owned
indirectly through ownership of Nvest units). Upon the consummation of the
Acquisition on October 30, 2000, all unitholders received cash in exchange for
each unit owned. Nvest, whose primary asset was its ownership of Nvest
Companies' units, was merged with and into the Company on December 31, 2000,
with the Company as the surviving entity.
At December 31, 2000 and 1999, an affiliate of the Managing General
Partner owned 1,648 units of limited partnership interest, which were
repurchased from certain qualified plans, within specified annual limitations
provided for in the Partnership Agreement.
20
Management
The Advisor is entitled to receive stipulated fees from the Partnership in
consideration of services performed in connection with the management of the
Partnership and the acquisition and disposition of Partnership investments in
real property. Partnership management fees are 9% of distributable cash flow
from operations, as defined, before deducting such fees. Payment of 50% of
management fees incurred is deferred until cash distributions to limited
partners exceed a specified rate. Deferred management fees were $0 and
$1,637,414 at December 31, 2000 and 1999, respectively. Due to the sale of the
Partnership's sole remaining asset in October 2000, distributions from
operations will cease, and therefore deferred management fees of $1,535,514 were
reversed and recognized as other income in 2000. During 2000, the Partnership
paid $164,250 of current and deferred management fees. The Advisor is also
reimbursed for expenses incurred in connection with administering the
Partnership ($15,000 in 2000, in 1999 and in 1998, respectively). Acquisition
fees paid were based on 2% of the gross proceeds from the offering. Disposition
fees are limited to the lesser of 3% of the selling price of the property, or
50% of the standard real estate commission customarily charged by an independent
real estate broker. Payments of disposition fees are subject to the prior
receipt by the limited partners of their capital contributions plus a stipulated
return thereon. Based on the Partnership's returns to date and the sale of the
Partnership's sole remaining asset in October, 2000 (as discussed in Note 3),
the Managing General Partner determined that previously accrued deferred
management fees of $2,798,752 would not be paid and, accordingly, reversed such
fees in 2000.
New England Securities Corporation, an indirect subsidiary of Met Life,
was engaged by the Partnership to act as its unit holder servicing agent. Fees
and out-of-pocket expenses for such services totaled $29,597, $29,089, and
$37,823 in 2000, 1999 and 1998, respectively.
Note 2 - Summary of Significant Accounting Policies
Liquidation Basis of Accounting
In connection with its adoption of a plan of liquidation on December 31,
2000, 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.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Managing General Partner to make
estimates affecting the reported amounts of assets and liabilities, and of
revenues and expenses. In the Partnership's business, certain estimates require
an assessment of factors not within management's control, such as the ability of
tenants to perform under long-term leases and the ability of the properties to
sustain their occupancies in changing markets. Actual results, therefore, could
differ from those estimates.
Real Estate Joint Ventures
Investments in joint ventures, including loans made to venture partners,
which are in substance real estate investments, are stated at cost plus (minus)
equity in undistributed joint venture income (losses). Allocations of joint
venture income (losses) were made to the Partnership's venture partners as long
as they had substantial economic equity in the project. Economic equity is
measured by the excess of the appraised value of the property over the
Partnership's total cash investment plus accrued preferential returns thereon.
The Partnership recorded an amount equal to 100% of the operating results of
each joint venture, after the elimination of all inter-entity transactions,
except for the one venture jointly owned by an affiliate of the Partnership,
which had substantial economic equity in the project. Joint ventures are
consolidated with the accounts of the Partnership if, and when, the venture
partner no longer shares in the control of the business.
21
Property
Property includes land and buildings and improvements, which are stated at
cost less accumulated depreciation, plus other operating net assets
(liabilities). The Partnership's initial carrying value of a property previously
owned by a joint venture equals the Partnership's carrying value of the
predecessor investment on the conversion date.
Capitalized Costs, Depreciation and Amortization
Maintenance and repair costs are expensed as incurred. Significant
improvements and renewals are capitalized. Depreciation is computed using the
straight-line method based on estimated useful lives of the buildings and
improvements. Leasing costs are also capitalized and amortized over the related
lease terms.
Acquisition fees have been capitalized as part of the cost of real estate
investments. Amounts not related to land are being amortized using the
straight-line method over the estimated useful lives of the underlying property.
Certain tenant leases provide for rental increases over the respective
lease terms. Rental revenue is being recognized on a straight-line basis over
the lease terms.
Realizability of Real Estate Investments
The Partnership considers a real estate investment to be impaired when it
determines the carrying value of the investment is not recoverable through
expected undiscounted cash flows generated from the operations and disposal of
the property. The impairment loss is based on the excess of the investment's
carrying value over its estimated fair market value. For investments held for
sale, the impairment loss also includes estimated costs of sale. Property held
for sale is not depreciated during the holding period. Investments are
considered to be held for disposition at the time management commits the
Partnership to a plan to dispose of the investment.
Cash Equivalents
Cash equivalents are stated at cost plus accrued interest. The Partnership
considers all highly liquid investments purchased with a maturity of ninety days
or less to be cash equivalents; otherwise, they are classified as short-term
investments.
Deferred Disposition Fees
Disposition fees due to the Advisor related to sales of investments are
included in the determination of gains or losses resulting from such
transactions. According to the terms of the advisory contract, payment of such
fees has been deferred until the limited partners first receive their capital
contributions, plus stipulated returns thereon. Based on the Partnership's
returns to date and the sale of the Partnership's sole remaining asset, the
Managing General Partner determined that previously accrued disposition fees of
$2,798,752 would not be paid, and, accordingly, recognized the reversal of such
fees as revenue in 2000.
Income Taxes
A partnership is not liable for income taxes and, therefore, no provision
for income taxes is made in the financial statements of the Partnership. A
proportionate share of the Partnership's income is reportable on each partner's
tax return.
22
Per Unit Computations
Per unit computations are based on the number of units of limited
partnership interest outstanding during the year. The actual per unit amount
will vary by partner depending on the date of admission to, or withdrawal from,
the Partnership.
Segment Data
Effective January 1, 1998, the Partnership adopted Financial Accounting
Standards Board Statement No. 131, "Disclosure about Segments on an Enterprise
and Related Information" (FAS 131). Based on the criteria established in FAS
131, the Managing General Partner has determined that the Partnership operates
in one operating segment: investing in real estate properties which are
domiciled in the United States of America.
Note 3 - Accrued Expenses for Liquidation
Accrued expenses for liquidation as of December 31, 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. During the year
ended December 31, 2000 the Partnership accrued $264,000 of such expenses.
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.
Note 4 - Real Estate Joint Ventures
The Partnership had invested in seven real estate joint ventures,
organized as general partnerships with a real estate management/development
firm, and in one case, with an affiliate of the Partnership. One joint venture
sold its property in 1994; another sold its property in 1996. One joint venture
investment was restructured into a wholly-owned property in 1995; and two joint
venture investments were restructured into wholly-owned properties in 1996. The
Partnership made capital contributions to the ventures, which are generally
subject to preferential cash distributions at a specified rate and to priority
distributions with respect to sale or refinancing proceeds. The Partnership also
made loans to certain of its venture partners who, in turn, contributed the
proceeds to the capital of the venture. The loans bear interest at a specified
rate. The loans are, in substance, real estate investments and are accounted for
accordingly. The joint venture agreements provide for the funding of cash flow
deficits by the venture partners in proportion to their ownership interests, and
for the dilution of their ownership share in the event a venture partner does
not contribute proportionately.
The respective real estate management/development firms are responsible
for day-to-day development and operating activities, although overall authority
and responsibility for the business is shared by the venturers. The real estate
development/management firms or their affiliates also provide various services
to the respective joint ventures for a fee.
23
The following is a summary of cash invested in joint ventures, net of
returns of capital and excluding acquisition fees:
Preferential December 31,
Investment/ Rate of Ownership -------------------------------------
Location Return Interest 2000 1999
-------- ------------ --------- ----------- -------------
270 Technology Center
Frederick, Maryland 10.0% 50% $ -- $ 4,857,000
Columbia Gateway Corporate Park
On December 21, 1987, the Partnership entered into a joint venture with an
affiliate of the Partnership and with an affiliate of the Manekin Corporation to
construct and operate seven research and development/office buildings, of which
six had been constructed at the time of the sale of the property. The
Partnership committed to make a $14,598,000 capital contribution. The
Partnership and New England Pension Properties V (the "Affiliate") collectively
had a 50% interest in the joint venture. Ownership of the Columbia Gateway
Corporate Park joint venture was restructured to give the Partnership and its
Affiliate additional voting rights in the joint venture effective January 1,
1998; the Partnership and its Affiliate, were entitled to 69.5% and 30.5%,
respectively, of the operating activity of the joint venture.
On December 20, 1999, the Columbia Gateway Corporate Park joint venture
investment in which the Partnership and the Affiliate owned a 68.11% and 29.89%
interest, respectively, 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. This fee was reversed in 2000 (see Note 2). On January 27,
2000 the Partnership made a capital distribution of $13,204,583 ($139.00 per
Limited Partnership Unit) from the proceeds of the sale.
270 Technology Center
On December 22, 1987, the Partnership entered into a joint venture with an
affiliate of the Manekin Corporation to construct and operate two research and
development/office buildings. The Partnership committed to make a $5,150,000
capital contribution. The Partnership had a 50% interest in the joint venture.
On October 31, 2000, the Partnership sold its 50% interest in the 270
Technology Park joint venture to its joint venture partner for a gross sales
price of $5,941,783. The Partnership received net proceeds of $5,202,429, after
closing costs and recognized a gain of $845,348 ($8.81 per Limited Partnership
Unit) on the sale. On November 28, 2000, the Partnership made a capital
distribution of $4,939,844 ($52.00 per Limited Partnership Unit) from the
proceeds of the sale.
Reflections
On August 1, 1986, the Partnership entered into a joint venture with an
affiliate of Oxford Development Corporation to construct and operate a
multi-family apartment complex. The Partnership's commitment was for a total
cash investment of $14,475,000, $5,790,000 of which was a loan to the venture
partner. In May 1992, the Partnership agreed to extend the maturity of the loan
from August, 1996 to December, 1999 and the venture partner agreed to pay
interest at a minimum of 7% per annum with the unpaid amount subject to
compounding at 10.5% per annum. The loan was secured by the venture partner's
interest in the joint venture, as well as a guarantee from an affiliate of the
venture partner. In the second quarter of 1996, the joint venture agreement was
amended, pursuant to which the Partnership's venture partner became an indirect
limited partner. Accordingly, this investment has been accounted for as a
wholly-owned property since April 1, 1996. (See Note 5.)
24
In connection with the ownership restructuring, the Partnership agreed to
release the affiliate of the venture partner from its guarantee upon payment to
the Partnership of $650,000. The Partnership received $250,000 at the time the
agreement was executed. During the third quarter of 1996, the Partnership
received an additional $263,563. The final payment of $136,437 was received
during the first quarter of 1998. The first payment was accounted for as a
reduction of previously accrued investment income. The second and third payments
were accounted for as a reduction of the Partnership's investment in the
property. (See Note 5.)
Metro Business Center
On September 15, 1986, the Partnership entered into a joint venture with
an affiliate of Hewson Properties, Inc. (the "Developer"), to construct and
operate four multi-tenant office/warehouse buildings. The Partnership committed
to make a maximum cash investment of $9,568,000, $3,988,000 of which was a loan
to the venture partner. The loan was to mature in October 1996 and was secured
by the venture partner's interest in the joint venture. Effective January 1,
1996, the joint venture agreement was amended to grant the Partnership full
control over management decisions, beginning July 1, 1996. As full control over
the operation of this investment was not transferred until July 1, 1996, the
Partnership accounted for this investment as a joint venture until that date.
Effective December 30, 1996, the property owned by the joint venture was
distributed to the venture partners as tenants-in-common. The Partnership,
however, retained its overall decision-making authority. The property interest
distributed to the Developer was encumbered by the aforementioned loan. The note
was amended to mature on February 1, 1997 and was secured by a recorded
deed-of-trust which provided that the note would be due upon the sale of the
collateral. The note was subsequently amended to mature on March 31, 1998. In
connection with this transaction, the Partnership obtained the option to
purchase the tenancy-in-common interest of the developer at its fair market
value beginning February 1, 1997.
On February 28, 1998, the Partnership executed a purchase and sale
agreement to purchase the tenancy-in-common interest of the Developer. The
Partnership finalized the acquisition on July 17, 1998. The purchase price was
$7,113,255 and was paid by the Partnership as follows: (i) A portion of the
purchase price was paid through the discharge of all outstanding amounts,
including but not limited to accrued but unpaid interest, owed by the Developer
to the Partnership under the loan made by the Partnership to the Developer in
connection with the original acquisition of the property and (ii) the
Partnership paid the remainder of the purchase price in cash in the amount of
$2,210.
On September 23, 1998, the Metro Business Center was sold to an
institutional buyer which is unaffiliated with the Partnership. The gross sale
price was $9,900,000. The Partnership received net proceeds totaling $9,680,132,
after closing costs and recognized a gain of $3,706,950 ($38.63 per Limited
Partnership Unit). A disposition fee of $297,000 was accrued but not paid to the
Advisor. This fee was reversed in 2000 (See Note 2). On October 29, 1998, the
Partnership made a capital distribution of $9,689,694 ($102 per Limited
Partnership Unit) from the proceeds of the sale.
25
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the joint ventures:
Assets and Liabilities
December 31,
----------------------------
2000 1999
------------ ------------
Assets
Real property, at cost less
accumulated depreciation
of $1,039,331 -- $ 3,939,825
Other -- 634,949
------------ ------------
$ -- 4,574,774
Liabilities -- 136,869
------------ ------------
Net assets $ -- $ 4,437,905
============ ============
Results of Operations
Year ended December 31,
-----------------------------------------
2000 1999 1998
---------- ---------- -----------
Revenue
Rental income $ 728,097 $2,959,645 $ 3,047,719
Other income 98,301 118,802 119,729
---------- ---------- -----------
826,398 3,078,447 3,167,448
---------- ---------- -----------
Expenses
Operating expenses 172,108 662,137 723,908
Depreciation and amortization 123,091 318,707 488,068
---------- ---------- -----------
295,199 980,844 1,211,976
---------- ---------- -----------
Net income $ 531,199 $2,097,603 $ 1,955,472
========== ========== ===========
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 5 - Property
Reflections
Effective April 1, 1996, the Reflections joint venture was restructured,
pursuant to which 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 ($10,469,511) was allocated to land, building and improvements and
other net operating assets.
On August 21, 1998 the joint venture sold a parcel of land to the City of
Fort Myers. The gross sale price was $74,731. The Partnership received net
proceeds totaling $67,881 and recognized a gain of $35,591.
26
The buildings and improvements (a multi-family apartment complex in Ft.
Myers, Florida) were being depreciated over 25 years, beginning April 1, 1996.
On September 23, 1999, the Reflections Apartments was sold to a third
party which was 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. This fee was reversed in 2000 (see Note 2). 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.
Metro Business Center
Effective July 1, 1996, the Partnership obtained control over all
management decisions related to the properties owned by the Metro Business
Center joint venture (and subsequently by the tenants-in common). (See Note 4.)
Since that date, the investment has been accounted for as a wholly-owned
property. The carrying value of the joint venture investment at conversion
($5,889,261) was allocated to land, buildings and improvements, and other net
operating assets.
As described above the Partnership sold the Metro Business Center on
September 23, 1998 and recognized a gain of $3,706,950.
The buildings and improvements (four office/warehouse buildings in
Phoenix, Arizona) were being depreciated over 25 years, beginning July 1, 1996.
Note 6 - Income Taxes
The Partnership's income for federal income tax purposes differs from that
reported in the accompanying statement of operations as follows:
Year ended December 31,
----------------------------------------
2000 1999 1998
----------- ----------- -----------
Net income per financial
statements $ 5,409,596 $ 7,256,381 $ 5,988,712
Timing differences:
Joint venture earnings (237,954) 169,210 775,991
Depreciation and amortization 1,380 (53,730) 549,260
Expenses (4,436,167) (282,938) (244,327)
Gain (loss) on sale 890,770 (4,722,636) (4,687,593)
----------- ----------- -----------
Taxable income $ 1,627,625 $ 2,366,287 $ 2,382,043
=========== =========== ===========
Note 7 - Partners' Capital
Allocation of net income (losses) from operations and distributions of
distributable cash from operations, as defined, are in the ratio of 99% to the
limited partners and 1% to the general partners. Cash distributions are made
quarterly.
Net sale proceeds and financing proceeds are allocated first to limited
partners to the extent of their contributed capital plus a stipulated return
thereon, as defined, second to pay disposition fees, and then 85% to the limited
partners and 15% to the general partners. As a result of returns of capital from
sales transactions, the adjusted capital contribution per limited partnership
unit was reduced from $1,000 to $918 in 1993, to $863 in 1995, to $766 in 1996,
to $524 in 1997, to $422 in 1998, to $290.18 in 1999 and to $78.00 in 2000. No
capital distributions have been made to the general partners. Income from a sale
is allocated in proportion to the distribution of related proceeds, provided
that the general partners are allocated at least 1%. Income or losses from a
sale, if there are no residual proceeds after the repayment of the related debt,
will be allocated 99% to the limited partners and 1% to the general partners.
27
FINANCIAL STATEMENTS
INDEX NO. 2
Auditor's Report and Financial Statements
of Gateway 51 Partnership
Independent Auditor's Report of Wolpoff and Company, LLP
Balance Sheet - December 31, 1998 and 1997
Statement of Income - For the Years ended December 31, 1998, 1997 and 1996
Statement of Partners' Capital - For the Years ended December 31, 1998, 1997 and
1996
Statement of Cash Flows - For the Years ended December 31, 1998, 1997 and 1996
Notes to Financial Statements
28
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
FINANCIAL REPORT
DECEMBER 31, 1998
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
CONTENTS
DECEMBER 31, 1998
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS 1
FINANCIAL STATEMENTS
Balance Sheet 2-3
Statement of Income 4
Statement of Partners' Capital 5
Statement of Cash Flows 6
Notes to Financial Statements 7-10
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION 11
SUPPLEMENTARY INFORMATION
Schedule of Partners' Capital 12
Schedule of Changes in Partners' Capital - Income Tax Basis 13
[LETTERHEAD OF WOLPOFF & COMPANY, LLP]
To the Partners
Gateway 51 Partnership (A Maryland General Partnership)
Columbia, Maryland
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
We have audited the balance sheet of Gateway 51 Partnership (A Maryland General
Partnership) as of December 31, 1998 and 1997, and the related statements of
income, partners' capital, and cash flows for each of the three years in the
period ended December 31, 1998, 1997, and 1996. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gateway 51 Partnership (A
Maryland General Partnership) as of December 31, 1998 and 1997, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1998, 1997, and 1996, in conformity with generally accepted
accounting principles.
/s/ Wolpoff & Company, LLP
WOLPOFF & COMPANY, LLP
Baltimore, Maryland
January 13, 1999
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
BALANCE SHEET
ASSETS
December 31,
--------------------------
1998 1997
----------- -----------
PROPERTY, AT COST - Note 1
Land $ 4,966,738 $ 4,966,738
Building and Improvements 11,892,943 11,614,717
Preliminary Development Costs 42,247 42,247
Deferred Costs - Note 3 809,323 663,719
----------- -----------
17,711,251 17,287,421
Less Accumulated Depreciation and Amortization 1,984,627 1,630,022
----------- -----------
PROPERTY, NET 15,726,624 15,657,399
----------- -----------
OTHER ASSETS
Cash and Cash Equivalents - Note 1 421,833 558,136
----------- -----------
Receivables From Tenants
Rents and Expense Billings 106,282 -0-
Deferred Rent Receivable - Note 1 202,228 73,447
Allowance for Doubtful Accounts (95,174) -0-
----------- -----------
213,336 73,447
----------- -----------
Prepaid Expenses 107,644 107,442
----------- -----------
TOTAL OTHER ASSETS 742,813 739,025
----------- -----------
$16,469,437 $16,396,424
=========== ===========
- ----------
The notes to financial statements are an integral part of this statement.
- 2 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
BALANCE SHEET
LIABILITIES AND PARTNERS' CAPITAL
December 31,
---------------------------
1998 1997
----------- -----------
LIABILITIES
Accounts Payable and Accrued Expenses $ 67,398 $ 34,935
Tenant Security Deposits 150,000 15,193
Prepaid Tenant Reimbursements 47,181 142,688
----------- -----------
TOTAL LIABILITIES 264,579 192,816
PARTNERS' CAPITAL - Notes 1 and 2 16,204,858 16,203,608
----------- -----------
$16,469,437 $16,396,424
=========== ===========
- ----------
The notes to financial statements are an integral part of this statement.
- 3 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
STATEMENT OF INCOME
Year Ended December 31,
--------------------------------------
1998 1997 1996
---------- ---------- ----------
REVENUE - Notes 1 and 5
Gross Rent Potential $1,943,734 $1,775,359 $1,684,997
Less Vacancies and Free Rent 72,135 80,444 108,412
---------- ---------- ----------
Net Rental Income 1,871,599 1,694,915 1,576,585
Expense Reimbursements From Tenants 441,093 258,789 364,873
Other Income 15,809 20 18,163
---------- ---------- ----------
TOTAL REVENUE 2,328,501 1,953,724 1,959,621
---------- ---------- ----------
OPERATING EXPENSES
Real Property Taxes 211,009 211,967 207,855
Building and Grounds Maintenance 144,004 142,678 157,314
Bad Debts 95,174 -0- -0-
Management Fees - Note 3 62,338 61,036 57,542
Utilities 26,165 27,297 24,890
General and Administrative 17,966 12,229 25,856
Insurance 4,173 6,573 9,292
---------- ---------- ----------
TOTAL OPERATING EXPENSES 560,829 461,780 482,749
---------- ---------- ----------
OPERATING INCOME 1,767,672 1,491,944 1,476,872
---------- ---------- ----------
ADJUSTMENTS TO ARRIVE AT NET INCOME
Depreciation and Amortization (354,605) (315,417) (302,585)
Abandonment of Tenant Improvements - Note 1 -0- (80,178) (24,256)
---------- ---------- ----------
(354,605) (395,595) (326,841)
---------- ---------- ----------
NET INCOME - Note 4 $1,413,067 $1,096,349 $1,150,031
========== ========== ==========
- ----------
The notes to financial statements are an integral part of this statement.
- 4 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
STATEMENT OF PARTNERS' CAPITAL
Year Ended December 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
CAPITAL CONTRIBUTIONS - Note 2
Prior Years $ 20,267,826 $ 20,267,826 $ 20,267,826
------------ ------------ ------------
CAPITAL PLACEMENT FEE - Notes 1 and 2
Prior Years (202,678) (202,678) (202,678)
------------ ------------ ------------
DISTRIBUTIONS
Prior Years (8,796,724) (8,048,893) (6,948,893)
Current Year (1,411,817) (747,831) (1,100,000)
------------ ------------ ------------
(10,208,541) (8,796,724) (8,048,893)
------------ ------------ ------------
ACCUMULATED INCOME
Prior Years 4,935,184 3,838,835 2,688,804
Current Year 1,413,067 1,096,349 1,150,031
------------ ------------ ------------
6,348,251 4,935,184 3,838,835
------------ ------------ ------------
TOTAL PARTNERS' CAPITAL $ 16,204,858 $ 16,203,608 $ 15,855,090
============ ============ ============
- ----------
The notes to financial statements are an integral part of this statement.
- 5 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
STATEMENT OF CASH FLOWS
Year Ended December 31,
-----------------------------------------
1998 1997 1996
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,413,067 $ 1,096,349 $ 1,150,031
----------- ----------- -----------
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Depreciation and Amortization 354,605 315,417 302,585
Abandonment of Tenant Improvements -0- 80,178 24,256
Change in Receivables From Tenants (139,889) 8,667 (41,033)
Increase in Prepaid Expenses (202) (64,870) (6,302)
Change in Accounts Payable and Accrued Expenses 32,463 (6,176) 16,526
Change in Prepaid Tenant Reimbursements (95,507) 142,688 -0-
----------- ----------- -----------
Total Adjustments 151,470 475,904 296,032
----------- ----------- -----------
Net Cash Provided by Operating Activities 1,564,537 1,572,253 1,446,063
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Building and Improvement Costs (278,227) (359,189) (258,309)
Leasing Costs (145,603) (116,524) (80,786)
Increase in Tenant Security Deposits 134,807 12,784 -0-
Decrease in Tenant Improvement Loans -0- 688 32,057
----------- ----------- -----------
Net Cash Used by Investing Activities (289,023) (462,241) (307,038)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Partners (1,411,817) (747,831) (1,100,000)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (136,303) 362,181 39,025
CASH AND CASH EQUIVALENTS, BEGINNING 558,136 195,955 156,930
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, ENDING $ 421,833 $ 558,136 $ 195,955
=========== =========== ===========
- ----------
The notes to financial statements are an integral part of this statement.
- 6 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Gateway 51 Partnership (A Maryland General Partnership) (the
Partnership) was formed on December 21, 1987, under the Maryland
Uniform Partnership Act. The agreement was amended and restated in 1989
to reflect changes in partner ownership percentages.
The partnership agreement was amended and restated effective January 1,
1998, whereby M.O.R. Gateway 51, Limited Partnership (M.O.R.)
transferred 34.055% and 14.945% to New England Life Pension Properties
IV (NELPP IV) and New England Pension Properties V (NEPP V),
respectively. Subsequently, NELPP IV transferred a 0.695% partnership
interest, NEPP V transferred a 0.305% partnership interest, and M.O.R.
transferred a 1% partnership interest to NE/Gateway 51 Limited
Partnership (NE/Gateway), bringing the ownership as of January 1, 1998,
to the following:
NELPP IV 68.11%
NEPP V 29.89%
NE/Gateway 2.00%
Property
The Partnership owns 21 acres of land in Howard County, Maryland. The
property has been developed with six office/research buildings. Plans
call for a seventh building with approximately 15,000 square feet of
space.
All property is recorded at cost. Information regarding the buildings
is as follows:
Occupancy
------------------------------
Square Date Placed
Building Footage Into Service Tenants 12/31/98 12/31/97 12/31/96
-------- ------- ------------ ---------------- -------- -------- --------
A 46,840 3/1/91 Multiple 100% 92% 92%
B 21,991 9/1/90 AVNET 100% 100% 100%
C 38,225 7/15/91 EVI, Inc. 100% 100% 100%
F 35,812 2/1/92 Multiple 100% 100% 82%
D-E 45,951 8/8/94 Columbia National 100% 100% 100%
-------
188,819 100% 98% 94%
=======
Carrying costs, operating expenses, and depreciation begin as a charge
against operations on the date the buildings were placed into service.
- 7 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998
Note 1 - During 1997, tenant improvements completed in prior years were
(Cont.) demolished in order to build out the space for new tenants. The loss on
abandonment of tenant improvements is calculated as follows:
Cost $127,688
Accumulated Depreciation (47,510)
--------
Abandonment of Tenant Improvements $ 80,178
========
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with a maturity of 3 months or less to be cash equivalents.
The majority of the Partnership's cash is held in financial
institutions with insurance provided by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. Periodically during the year, the
balance may have exceeded the FDIC insurance limitation.
Depreciation
Building costs are being depreciated using the straight-line method
over the estimated useful lives of 50 years. Beginning in January 1998,
the Partnership changed depreciation methods for tenant improvements.
Tenant improvements are being depreciated using the straight-line
method over the life of the tenants' lease; in prior years, the
improvements were depreciated over 50 years.
Rental Income
Rental income for major leases is being recognized on a straight-line
basis over the terms of the leases. The excess of the rental income
recognized over the amount stipulated in the lease is shown as deferred
rent receivable.
Amortization
Deferred costs are amortized as follows:
Amortization
Amount Period
-------- ------------
Organization Costs $ 13,555 Complete
Leasing Costs and Commissions 795,767 Lease Terms
--------
$809,322
========
- 8 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998
Note 1 - Income Taxes
(Cont.)
Partnerships, as such, are not subject to income taxes. The partners
are required to report their respective shares of partnership income
and other tax items on their income tax returns (see Note 4).
Capital Placement Fee
Costs incurred for arranging the Partnership's equity have been treated
as a reduction of partners' capital (see Note 2).
Note 2 - PARTNERS' CAPITAL
Capital Investment
NELPP IV and NEPP V have agreed to provide equity of $14,598,000 and
$6,402,000, respectively, totaling $21,000,000. As of December 31,
1998, 1997, and 1996, total capital contributions amounted to
$20,267,826.
Cumulative Priority Return
NELPP IV and NEPP V are entitled to cumulative priority returns of
10.5%, compounded monthly on capital invested. The Partnership paid
priority returns totaling $1,411,817, $747,831, and $1,100,000 during
1998, 1997, and 1996, respectively. As of December 31, 1998, 1997, and
1996, unpaid priority returns amounted to $10,855,114, $9,127,936, and
$6,888,115, respectively.
Capital Placement Fee
The Partnership incurred fees of $202,678 with Paine Webber Mortgage
Finance, Inc. with respect to capital raised by the Partnership. This
amount has been charged against partners' capital.
Note 3 - RELATED PARTY TRANSACTIONS
Management Fees
The Partnership has entered into an agreement with Manekin Corporation,
a related entity, to act as management agent for the property. The
management agreement provides for a management fee equal to 3% of rent
and tenant expense billings.
Leasing Commissions
Leasing commissions in the amount of $145,603, $105,387, and $80,786
were paid to related parties during 1998, 1997, and 1996, respectively.
- 9 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998
Note 4 - TAX ACCOUNTING
Tax accounting differs from financial accounting as follows:
Current Year Prior Years Total
------------ ----------- ----------
Financial Income $1,413,067 $4,935,184 $6,348,251
Additional Depreciation (87,820) (757,466) (845,286)
Lease-Up Period Items
Capitalized for GAAP -0- 4,264 4,264
Allowance for Doubtful Accounts 95,174 -0- 95,174
Deferred Rent Receivable (128,781) (73,447) (202,228)
Prepaid Property Taxes (956) (105,026) (105,982)
Prepaid Tenant Reimbursements (95,507) 142,688 47,181
---------- ---------- ----------
Taxable Income $1,195,177 $4,146,197 $5,341,374
========== ========== ==========
Note 5 - LEASES
The following is a schedule of future minimum lease payments to be
received under noncancelable operating leases at December 31, 1998:
Year Ending December 31, 1999 $1,524,603
2000 827,454
2001 726,557
2002 736,016
2003 745,758
----------
$3,814,630
==========
- 10 -
To the Partners
Gateway 51 Partnership (A Maryland General Partnership)
Columbia, Maryland
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information contained on pages 12 and 13 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements. Such information has not been subjected to the auditing procedures
applied in the audits of the basic financial statements, and accordingly, we
express no opinion on it.
/s/ Wolpoff & Company, LLP
WOLPOFF & COMPANY, LLP
Baltimore, Maryland
January 13, 1999
- 11 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
SCHEDULE OF PARTNERS' CAPITAL
YEAR ENDED DECEMBER 31, 1998
NE/ M.O.R. 51
New England New England Gateway 51 Gateway
Life Pension Pension Limited Limited
Properties IV Properties V Partnership Partnership Total
------------- ------------ ------------ ------------ ------------
OWNERSHIP PERCENTAGE
Through December 31, 1997 34.75% 15.25% 0.00% 50.00% 100.00%
============ ============ ============ ============ ============
As of January 1, 1998 68.11% 29.89% 2.00% 0.00% 100.00%
============ ============ ============ ============ ============
CAPITAL CONTRIBUTIONS
Prior Years $ 14,086,139 $ 6,181,687 $ -0- $ -0- $ 20,267,826
------------ ------------ ------------ ------------ ------------
CAPITAL PLACEMENT FEE
Prior Years (106,427) (96,251) -0- -0- (202,678)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS - Note 2
Prior Years (5,969,698) (2,827,026) -0- -0- (8,796,724)
Current Year (981,211) (430,606) -0- -0- (1,411,817)
------------ ------------ ------------ ------------ ------------
(6,950,909) (3,257,632) -0- -0- (10,208,541)
------------ ------------ ------------ ------------ ------------
ACCUMULATED INCOME
Prior Years 3,429,956 1,505,228 -0- -0- 4,935,184
Current Year 982,082 430,985 -0- -0- 1,413,067
------------ ------------ ------------ ------------ ------------
4,412,038 1,936,213 -0- -0- 6,348,251
------------ ------------ ------------ ------------ ------------
PARTNERS' CAPITAL, 12/31/98 $ 11,440,841 $ 4,764,017 $ -0- $ -0- $ 16,204,858
============ ============ ============ ============ ============
- ----------
See Independent Auditor's Report on Supplementary Information.
- 12 -
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
SCHEDULE OF CHANGES IN PARTNERS' CAPITAL - INCOME TAX BASIS
YEAR ENDED DECEMBER 31, 1998
NE/ M.O.R. 51
New England New England Gateway 51 Gateway
Life Pension Pension Limited Limited
Properties IV Properties V Partnership Partnership Total
------------- ------------ ------------ ------------ ------------
OWNERSHIP PERCENTAGE
Through December 31, 1997 34.75% 15.25% 0.00% 50.00% 100.00%
============ ============ ============ ============ ============
As of January 1, 1998 68.11% 29.89% 2.00% 0.00% 100.00%
============ ============ ============ ============ ============
CAPITAL CONTRIBUTIONS
Prior Years $ 14,086,139 $ 6,181,687 $ -0- $ -0- $ 20,267,826
------------ ------------ ------------ ------------ ------------
CAPITAL PLACEMENT FEE
Prior Years (106,427) (96,251) -0- -0- (202,678)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS - Note 2
Prior Years (5,969,698) (2,827,026) -0- -0- (8,796,724)
Current Year (981,211) (430,606) -0- -0- (1,411,817)
------------ ------------ ------------ ------------ ------------
(6,950,909) (3,257,632) -0- -0- (10,208,541)
------------ ------------ ------------ ------------ ------------
ACCUMULATED INCOME
Prior Years 2,883,779 1,262,418 -0- -0- 4,146,197
Current Year 830,648 364,529 -0- -0- 1,195,177
------------ ------------ ------------ ------------ ------------
3,714,427 1,626,947 -0- -0- 5,341,374
------------ ------------ ------------ ------------ ------------
PARTNERS' CAPITAL, 12/31/98 $ 10,743,230 $ 4,454,751 $ -0- $ -0- $ 15,197,981
============ ============ ============ ============ ============
- ----------
See Independent Auditor's Report on Supplementary Information.
- 13 -
EXHIBIT INDEX
Exhibit Page
Number Number
- ------ ------
10M. Promissory Note dated September 15, 1986 in the amount *
of $3,720,000 from Hewson, Inc. to the Registrant.
10U. General Partnership Agreement of MORF 6 Venture, dated *
as of December 18, 1987, between M.O.R.F. 6 Associates
Limited Partnership and the Partnership.
10SS. Amended and Restated Pooling Agreement dated as of *
December 1, 1995 by and among the Registrant,
Montgomery-Oxford Associates Limited Partnership,
Waters Landing-Oxford Associates Limited Partnership
and related documents dated as of December 1, 1995 and
May 14, 1996.
27. Financial Data Schedule
- ----------
* Previously filed and incorporated herein by reference
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: March 27, 2001 By: /s/ Alison L. Husid
------------------------
Alison L. Husid
President of the
Managing General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Alison L. Husid President, Chief
- ---------------------------- Executive Officer and
Alison L. Husid Director of the March 27, 2001
Managing General Partner
/s/ Pamela J. Herbst Vice President and
- ---------------------------- Director of the March 27, 2001
Pamela J. Herbst Managing General Partner
/s/ J. Grant Monahon Vice President and
- ---------------------------- Director of the March 27, 2001
J. Grant Monahon Managing General Partner
/s/ James J. Finnegan Vice President of the March 27, 2001
- ---------------------------- Managing General Partner
James J. Finnegan
/s/ Dana C. Spires Treasurer and Principal
- ---------------------------- Financial and Accounting
Dana C. Spires Officer of the March 27, 2001
Managing General Partner
45