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. 0-14052
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NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2847256
(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 nonaffiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
None
PART I
Item 1. Business.
New England Life Pension Properties III; A Real Estate Limited Partnership
(the "Partnership") was organized under the Uniform Limited Partnership Act of
the Commonwealth of Massachusetts on November 1, 1984, 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 Copley Properties Company III, Inc. (the "Managing General
Partner") and ACOP 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 15, 1984, with respect to a
public offering of 50,000 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 25,000 Units (an aggregate of $75,000,000). The Registration
Statement was declared effective on January 25, 1985.
The first sale of Units occurred on July 15, 1985, 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 initial investors was admitted to the
Partnership on December 19, 1985. A total of 68,414 Units had been sold, a total
of 11,437 investors had been admitted as limited partners (the "Limited
Partners") and a total of $67,748,960 had been contributed to the capital of the
Partnership. The remaining 6,586 Units were de-registered on February 18, 1986.
The Partnership has no employees. Services are performed for the
Partnership by the Managing General Partner and affiliates of the Managing
General Partner.
As of December 31, 2000, the Partnership had disposed of all its real
estate property investments. The Partnership plans to liquidate and dissolve in
2001. The Partnership sold its last remaining asset in 2000, as described below.
The Partnership sold nine real estate investments between 1987 and 2000. The
principal terms of these sales are set forth in the following table:
Month/Year of Net Sale Distribution
Investment Sale Proceeds Distribution/Unit(1) Month/Year
Investment Four 12/87 $15,771,830 $17.86 1/88
Investment Five 9/88 $3,002,643 $36.00 10/88
Investment Six 3/89 $10,943,495 $150.00 4/89
Investment Seven 2/92 $7,724,589 $102.00 4/92
Investment Eight(2) 12/92 $11,600,183 $170.00 1/93
Investment Nine 12/93 $2,161,552 $31.00 1/94
Investment Ten 8/98 $16,985,000 $248.00 8/98
Investment Eleven 3/99 $2,639,445 $37.12 4/99
Investment Twelve 10/00 $6,800,575 $95.00 11/00
- --------
(1) In October 1996, October 1998 and October 1999, additional distributions
of $7.60, $6.00 and $10.82 per Unit, respectively, were made, representing
proceeds from several prior sales which were being held in working capital
reserves.
(2) These sale proceeds represent the proceeds received by the Partnership
when two mortgage loans made by the Partnership were paid off and the
investment was liquidated.
2
Research and Development/Office Buildings in Frederick, Maryland ("270
Technology Park").
In August, 1987, the Partnership exercised its option to purchase for
$247,650 an 8.288-acre parcel of land in 270 Technology Park, Frederick,
Maryland. Situated on the land are three single-story research and
development/office buildings containing an aggregate of 86,169 square feet of
space. The Partnership simultaneously leased the land back to the seller for a
term of 60 years. The ground lease provided for a fixed annual rent of $26,003
plus additional rent equal to 50% of gross revenues from the rental of the
buildings in excess of a base amount. Upon exercising its option, the
Partnership also made a non-recourse mortgage loan to the ground lessee of
$5,712,350.
On January 1, 1988, the Partnership converted this investment to a joint
venture in which it has a 50% interest. The Partnership contributed the land and
funds to retire the mortgage debt. In addition, the Partnership contributed an
additional $260,000 of capital. The Partnership was entitled to receive a 10.5%
per annum preferred return on its invested capital payable currently, and 50% of
remaining cash flow and of sale and refinancing proceeds after return of its
equity. The preferred return was permitted to accrue if sufficient cash flow was
not available. Effective January 1, 1998, the management and control of the
business and affairs of the 270 Technology Park joint venture, including the
right to sell the property, was vested solely in the Partnership through its 98%
general partner interest in the joint venture. The remaining 2% general partner
interest was owned by NELPP III/MORF III Associates Limited Partnership, an
entity in which the Partnership owns a 50% interest.
On October 31, 2000, the Partnership sold its partnership interests and
all related property rights to its 50% partner in NELPP III/MORF III Associates
Limited Partnership for a gross sales price of $6,732,467. The Partnership
received net proceeds of $6,800,575 which included a reimbursement of
approximately $90,000 for leasing commissions previously paid by the
Partnership, which, per the purchase and sale agreement, were the responsibility
of the buyer. On November 28, 2000, the Partnership made a capital distribution
of $6,499,330 ($95.00 per Limited Partnership Unit) from the proceeds of the
sale. At the time of sale, the buildings were 83% 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.
3
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 10,176 holders of Units.
The Partnership's Amended and Restated Agreement of Limited Partnership
dated July 15, 1985, 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 to the Limited Partners as a group totaled $6,766,145, including
$6,499,330 ($95.00 per Limited Partnership Unit) from the proceeds of a property
sale. Cash distributions exceeded net income in 2000 and, therefore, resulted in
a reduction of partners' capital. Reference is made to the Partnership's
Statement of Partners' Capital (Deficit) and Statement of Cash Flows in Item 8
hereof.
Item 6. Selected Financial Data.
For Year For Year For Year For Year For Year
Ended Ended Ended Ended Ended
or as of or as of or as of or as of or as of
12/31/00 12/31/99 12/31/98 12/31/97 12/31/96
----------- ----------- ----------- ----------- -----------
Revenues $ 1,946,034 $ 2,756,215 $ 8,472,836 $ 1,942,159 $ 1,961,564
Net Income $ 1,216,404 $ 1,715,845 $ 7,526,363 $ 1,310,288 $ 1,313,894
Net Income per Limited Partnership Unit $ 17.60 $ 24.83 $ 108.91 $ 18.96 $ 19.01
Total Assets $ 741,321 $ 6,243,521 $ 9,306,143 $20,946,631 $21,459,173
Total Cash Distributions per Limited
Partnership Unit, including amounts
distributed after year end with respect to
such year $ 98.90 $ 68.18 $ 275.92 $ 26.72 $ 39.91
----------- ----------- ----------- ----------- -----------
See financial statements for description of significant transactions.
4
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 1985 and a total of 68,414 units were sold. The Partnership
received proceeds of $61,950,285, net of selling commissions and other offering
costs, which were invested in real estate, used to pay related acquisition
costs, or retained as working capital reserves. As of December 31, 2000, the
Partnership had sold all of its real estate investments: six of which were sold
prior to 1994 and one of which was sold in each of 1998, 1999 and 2000. Through
December 31, 2000, capital of $62,352,520 ($911.40 per Llimited Partnership
Unit) has been returned to the limited partners.
On March 18, 1999, the North Cabot Industrial Park investment was sold to
an unaffiliated third party for gross proceeds of $2,800,000. The Partnership
received net proceeds of $2,639,445, after closing costs and recognized a gain
of $1,509,931 ($21.85 per Limited Partnership Unit). On April 29, 1999, the
Partnership made a capital distribution of $2,539,528 ($37.12 per Limited
Partnership Unit) from the proceeds of the sale. This distribution reduced the
adjusted capital contribution to $194.42 per Limited Partnership Unit.
On October 28, 1999, the Partnership made a special capital distribution
from prior sale proceeds held in reserves in the amount of $740,239 ($10.82 per
Limited Partnership Unit). This distribution further reduced the adjusted
capital contribution to $183.60 per Limited Partnership Unit.
On October 31, 2000, the Partnership sold its partnership interests in the
entity owning 270 Technology Park and all related property rights for a gross
sales price of $6,732,467. The Partnership received net proceeds of $6,800,575,
after closing costs and a reimbursement of approximately $90,000 for leasing
commissions previously paid by the Partnership, which, per the purchase and sale
agreement, were the responsibility of the buyer. The Partnership recognized a
gain of $1,110,277 ($16.07 per Limited Partnership Unit). On November 28, 2000,
the Partnership made a capital distribution of $6,499,330 ($95.00 per Limited
Partnership Unit) from the proceeds of the sale. This distribution reduced the
adjusted capital contribution to $88.60 per Limited Partnership Unit.
At December 31, 2000, the Partnership had $691,321 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
and second quarters of 2000 were made at the annualized rate of 4.25% on the
adjusted capital contribution of $183.60. Due to the sale of the last remaining
asset in October, 2000, distributions 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. Distributions of cash from operations for the
first, second, third and fourth quarters of 1999 were made at the annualized
rate of 4.25% on the adjusted capital contribution of $231.54, the weighted
average adjusted capital contribution of $205.97, the weighted average adjusted
capital contribution of $194.42 and the weighted average adjusted capital
contribution of $186.78 per Limited Partnership Unit, respectively. At the time
of the operating distribution related to the third quarter of 1999, the
Partnership also made a special distribution of operating cash previously held
in reserves in the amount of $5.77 per Limited Partnership Unit, as well as a
capital distribution from sale proceeds previously held in reserves in the
amount of $10.82 per Limited Partnership Unit.
5
Results of Operations
Form of Real Estate Investments
Effective November 15, 1994, North Cabot Industrial Park was converted to
a wholly-owned property; it was previously structured as a ground lease with a
mortgage loan to the ground lessee. The North Cabot Industrial Park property was
sold in March 1999. Effective January 1, 1998, 270 Technology Park was converted
to a wholly-owned property; it was previously structured as a joint venture with
a real estate management/development firm. This investment was sold on October
31, 2000. The Bayberry Apartments investment, which was sold in August 1998, was
structured as a joint venture with a real estate management/development firm.
Operating Factors
The North Cabot Industrial Park was sold on March 18, 1999, and the
Partnership recognized a gain of $1,509,931. Occupancy at North Cabot Industrial
Park was 92% at the time of the sale and at December 31, 1998.
The Bayberry Apartments was sold on August 7, 1998, and the Partnership
recognized a gain of $5,881,800. At the time of the sale, the Bayberry
Apartments was 95% leased.
On October 31, 2000, the Partnership sold its partnership interests and
all related property rights in the entity owning 270 Technology Park and
recognized a gain of $1,110,277, At the time of sale, the buildings were 83%
leased.
Investment Results
2000 Compared to 1999
Interest on cash equivalents decreased approximately $30,000 or 38%
between 1999 and 2000. The decrease is primarily due to higher average
investment balances in 1999 as a result of sale proceeds held prior to
distribution as well as operating cash and capital held in reserves prior to
distribution.
Real estate operating results were $461,719 and $504,297 in 2000 and 1999,
respectively. The decrease of approximately $43,000 is a result of lower
property rentals due to both lower average occupancy at 270 Technology Park and
the sale of such investment on October 31, 2000. This decrease in property
rental income was offset by the discontinuance of depreciation and amortization
expense pending the sale of the property and lower property expenses.
1999 Compared to 1998
Interest on cash equivalents and short-term investments decreased
approximately $87,000 or 52% primarily due to lower average investment balances
in 1999 as a result of the sale of Bayberry Apartments in August 1998 and the
sale of North Cabot Industrial Park in March 1999.
Real estate operating results were $504,297 and $1,321,142 in 1999 and
1998, respectively. The decrease of approximately $817,000 is primarily due to
no joint venture earnings as a result of the sale of Bayberry Apartments in
August 1998 and lower property operating results as a result of the North Cabot
Industrial Park sale in March 1999. At 270 Technology Park, operating results
increased, as a result of higher rental rates and an increase in recovery
income. Partially offsetting these increases are higher bad debt expense and the
subsequent legal costs associated with resolving a tenant issue.
6
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 $111,700 due to
less operational cash available for distribution as a result of the sale of 270
Technology Park. General and administrative expenses decreased approximately
$54,000 or 23% due primarily to a refund of state taxes received in 2000.
1999 Compared to 1998
The Partnership management fee decreased approximately $11,500 due to less
operational cash available for distribution as a result of the sale of Bayberry
Apartments in 1998 and North Cabot Industrial Park in 1999. General and
administrative expenses increased by approximately $37,000 or 18% between the
respective years primarily due to increases in state taxes, accounting fees and
investor servicing fees due to sales.
Inflation
By their nature, real estate investments tend not to be adversely affected
by inflation. Inflation may 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 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, financial statements and financial
statement schedule listed in the accompanying index are filed as part of this
report. See Index to the Financial Statements on page 13.
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.
7
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 Managing 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.
The Managing General Partner was incorporated in Massachusetts on
November 1, 1984. 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 parent of AEW Real Estate Advisors,
Inc. (the "Advisor"), 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.).
8
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 Note 1, Note 2 and Note 7 of Notes to Financial Statements.
9
The following table sets forth the amounts of the fees and cash
distributions and reimbursements for 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. Cash distributions to General
Partners include amounts distributed after year end with respect to 2000.
Amount of
Compensation
and
Receiving Entity Type of Compensation Reimbursement
- ---------------- -------------------- -------------
AEW Real Estate Advisors, Inc. Management Fees and
Reimbursement of Expenses $38,654
General Partners Share of Distributable Cash 2,695
New England Securities Corporation Servicing Fees and
Reimbursement of Expenses 21,559
-------
TOTAL $62,908
=======
For the year ended December 31, 2000, the Partnership allocated $19,602 of
taxable income to the General Partners. See Note 1 of Notes to Financial
Statements for additional information about transactions between the Partnership
and the General Partners and their affiliates.
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 Managing General Partner of the Partnership owned 803
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.
10
Item 13. Certain Relationships and Related Transactions.
The Partnership has no relationships or transactions to report other than
as reported in Item 11, above.
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 Statements 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. The partnership filed one Current Report on
Form 8-K dated November 13, 2000, reporting on Items No. 2
(Acquisition or Disposition of Assets) and No. 7 (Financial
Statements and Exhibits), relating in both cases to the October 31,
2000 sale of its interests in 270 Technology Park.
11
New England Life Pension Properties III;
A Real Estate Limited Partnership
Financial Statements
* * * * * * *
December 31, 2000
12
NEW ENGLAND LIFE PENSION PROPERTIES III;
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
Statement 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.
13
Report of Independent Accountants
To the Partners of New England Life Pension Properties III; 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 III; 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 Copley
Properties Company III, Inc., 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
14
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
(in liquidation as of December 31, 2000) December 31,
-----------------------
2000 1999
---------- ----------
Assets
Real estate investments:
Property, net $ -- $5,918,532
Other assets 50,000 --
Cash and cash equivalents 691,321 324,989
---------- ----------
$ 741,321 $6,243,521
========== ==========
Liabilities and Partners' Capital
Accounts payable $ 88,935 $ 81,339
Accrued expenses for liquidation 193,000 --
Accrued management fee -- 13,532
---------- ----------
Total liabilities 281,935 94,871
---------- ----------
Partners' capital:
Limited partners ($88.60 and $183.60 per
unit, respectively; 75,000 units authorized,
68,414 units issued and outstanding) 448,755 6,146,119
General partners 10,631 2,531
---------- ----------
Total partners' capital 459,386 6,148,650
---------- ----------
$ 741,321 $6,243,521
========== ==========
(See accompanying notes to financial statements)
15
NEW ENGLAND LIFE PENSION PROPERTIES III;
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 $ 785,281 $1,165,510 $1,294,563
Property operating expenses (211,488) (424,157) (295,874)
Depreciation and amortization (112,074) (237,056) (293,460)
---------- ---------- ----------
461,719 504,297 705,229
Joint venture earnings -- -- 619,051
Amortization -- -- (3,138)
---------- ---------- ----------
Total real estate operations 461,719 504,297 1,321,142
Gain on sale of investment in joint venture -- -- 6,391,800
Gain on sale of property 1,110,277 1,509,931 --
---------- ---------- ----------
Total real estate activity 1,571,996 2,014,228 7,712,942
Interest on cash equivalents
and short-term investments 50,476 80,774 167,422
---------- ---------- ----------
Total investment activity 1,622,472 2,095,002 7,880,364
---------- ---------- ----------
Portfolio Expenses
General and administrative 186,413 240,825 204,187
Estimated liquidation period expenses 193,000 -- --
Management fee 26,655 138,332 149,814
---------- ---------- ----------
406,068 379,157 354,001
---------- ---------- ----------
Net Income $1,216,404 $1,715,845 $7,526,363
========== ========== ==========
Net income per limited
partnership unit $ 17.60 $ 24.83 $ 108.91
========== ========== ==========
Cash distributions per limited
partnership unit $ 100.88 $ 69.41 $ 279.39
========== ========== ==========
Number of limited partnership units
outstanding during the year 68,414 68,414 68,414
========== ========== ==========
(See accompanying notes to financial statements)
16
NEW ENGLAND LIFE PENSION PROPERTIES III;
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 $ 1,216,404 $ 1,715,845 $ 7,526,363
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 112,074 237,056 296,598
Equity in joint venture net income -- -- (619,051)
Cash distributions from joint ventures -- -- 1,148,092
Gain on sale of investment in joint venture -- -- (6,391,800)
Gain on sale of property (1,110,277) (1,509,931) --
(Increase) decrease in investment income
receivable (50,000) -- 15,711
Increase in property deferred leasing costs (108,722) (38,266) (78,894)
Increase (decrease) in property
working capital 310,636 120,538 (263,595)
Increase (decrease) in liabilities 187,064 (15,015) (35,117)
------------ ------------ ------------
Net cash provided by operating activities 557,179 510,227 1,598,307
------------ ------------ ------------
Cash flows from investing activities:
Net proceeds from sale of real estate 6,800,575 2,639,445 16,985,000
Capital expenditures on owned property (85,754) (13,735) (75,438)
Decrease in short-term
investments, net -- -- 931,125
------------ ------------ ------------
Net cash provided by investing
activities 6,714,821 2,625,710 17,840,687
------------ ------------ ------------
Cash flows from financing activity:
Distributions to partners (6,905,668) (4,763,452) (19,131,734)
------------ ------------ ------------
Net cash used in financing activity (6,905,668) (4,763,452) (19,131,734)
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents 366,332 (1,627,515) 307,260
Cash and cash equivalents:
Beginning of year 324,989 1,952,504 1,645,244
------------ ------------ ------------
End of year $ 691,321 $ 324,989 $ 1,952,504
============ ============ ============
(See accompanying notes to financial statements)
17
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT 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 $ 2,531 $ 6,146,119 $ 209 $ 9,196,048 $ (57,510) $ 20,859,138
Cash distributions (4,064) (6,901,604) (14,836) (4,748,616) (17,545) (19,114,189)
Net income 12,164 1,204,240 17,158 1,698,687 75,264 7,451,099
------------ ------------ ------------ ------------ ------------ ------------
Balance at end
of year $ 10,631 $ 448,755 $ 2,531 $ 6,146,119 $ 209 $ 9,196,048
============ ============ ============ ============ ============ ============
(See accompanying notes to financial statements)
18
NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS
General
New England Life Pension Properties III; 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 entities intended to be
exempt from federal income tax. The Partnership commenced operations in July
1985 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 Copley Properties
Company III, Inc., 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 ACOP 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, 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 803 units of limited partnership interest, which were repurchased
from certain qualified plans within specified annual limitations provided for in
the Partnership Agreement.
19
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. The Advisor is also
reimbursed for expenses incurred in connection with administering the
Partnership ($12,000 in 2000, 1999, and 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. Payment of disposition fees is subject to the prior receipt by
the limited partners of their capital contributions plus a stipulated return
thereon. See further discussion in Note 2.
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 $21,559, $21,172 and
$19,489 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, 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. Currently, the Partnership records an
amount equal to 100% of the operating results of the property, after the
elimination of all inter-entity transactions. 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.
Property
Property includes land and buildings and improvements, which are stated at
cost less accumulated depreciation, and other operating net assets
(liabilities). The Partnership's initial carrying value of a property previously
subject to a ground lease/mortgage loan arrangement equals the Partnership's
carrying value of the predecessor investment on the conversion date.
20
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.
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 real
property.
Leases
Leases are accounted for as operating leases. Leasing commissions are
amortized over the terms of the respective leases. Rental income is being
recognized on a straight-line basis over the respective lease terms.
Realizability of Real Estate Investments
The Partnership considers a real estate investment, other than a mortgage
loan, 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 investments' carrying value over its estimated fair market value.
For investments being 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
According to the terms of the advisory contract, the Advisor is entitled
to disposition fees related to sales of real estate investments. Payment of
these fees, however, is contingent upon the limited partners' first receiving
their capital, plus stipulated returns thereon. In light of the current value of
the Partnership's remaining investment and the expectations for improvement over
the Partnership's investment horizon, the Managing General Partner has
determined that the likelihood of payment of these fees is remote. Accordingly,
no disposition fees have been accrued in conjunction with the sale of the
Partnership's investments.
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.
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.
21
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 $193,000 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, if any, are unknown and are
not estimable at this time.
NOTE 4 - REAL ESTATE JOINT VENTURES
The Partnership invested in two real estate joint ventures, each of which
was organized as a general partnership with a real estate management/development
firm. It made capital contributions to the ventures, which were subject to
preferential cash distributions at a specified rate and to priority
distributions with respect to sale or refinancing proceeds. The joint venture
agreements provided for the funding of cash flow deficits by the venture
partners in proportion to ownership interests, and for the dilution of ownership
share in the event a venture partner did not contribute proportionately.
The respective real estate management/development firms were responsible
for day-to-day development and operating activities, although overall authority
and responsibility for the businesses was shared by the venturers. The real
estate management/development firm, or its affiliates, also provided various
services to the respective joint venture for a fee.
270 Technology Park
Effective January 1, 1988, one of the Partnership's ground lease/mortgage
loan investments was converted to a 50% ownership interest in a joint venture
with an affiliate of Manekin Corporation. The venture owns and operates three
research and development/office buildings in Frederick, Maryland. The
Partnership was credited with a capital contribution of $5,960,000, an amount
equal to the cost of the land plus the then outstanding principal on the
mortgage loan. In addition, during 1988, the Partnership contributed cash of
$260,000. The preferential return rate on the capital contributed is 10.50% per
annum. Effective January 1, 1998, ownership of the joint venture was
restructured to give the Partnership full control over the business of the joint
venture. (See Note 5).
22
Bayberry Apartments
On April 4, 1988, the Partnership entered into a joint venture with an
affiliate of Bozzuto and Associates to construct and operate a garden apartment
community in Gaithersburg, Maryland. The Partnership had a 65% ownership
interest and committed to a maximum capital contribution of $14,350,000, and a
maximum deficit contribution (characterized as junior capital) of $230,000. The
preferential return rate was 10.25% per annum on the capital contributed and the
greater of the prime rate plus 2% or 10.25% on the deficit contribution. At
December 31, 1997, the Partnership had contributed $14,349,983 of its capital
commitment, plus $225,957 as a prorata deficit contribution. Sixty-five percent
of the Partnership's capital contribution was characterized as "senior" capital.
If senior capital was prepaid, the Partnership was entitled to a special
distribution intended to preserve the preferential return yield on senior
capital through the ninth anniversary of the venture. No senior capital had been
prepaid as of the date of sale of the property discussed below.
On August 7, 1998, the joint venture sold its property to an institutional
buyer which is unaffiliated with the Partnership. The gross sale price was
$17,000,000. The Partnership received its share of the net proceeds totaling
$16,985,000. The Partnership recognized a gain of $6,391,800 ($92.49 per Limited
Partnership Unit). On August 26, 1998, the Partnership made a capital
distribution to the limited partners of $16,966,672 ($248 per Limited
Partnership Unit) from the proceeds of the sale.
Summarized Financial Information
The following summarized financial information is presented for the joint
venture:
Results of Operations
Year ended December 31,
--------------------------------------
2000 1999 1998
---------- ---------- ----------
Revenue
Rental income $ -- $ -- $1,444,678
Other income -- -- 3,862
---------- ---------- ----------
-- -- 1,448,540
---------- ---------- ----------
Expenses
Operating expenses -- 650,935
Depreciation and amortization -- -- 198,187
---------- ---------- ----------
-- -- 849,122
---------- ---------- ----------
Net income $ -- $ -- $ 599,418
========== ========== ==========
Liabilities and expenses exclude amounts owed and attributable to the
Partnership on behalf of its various financing arrangements with the joint
venture.
23
NOTE 5 - PROPERTY
270 Technology Park
Effective January 1, 1998, the management and control of the business and
affairs of the 270 Technology Park joint venture, including the sale of the
property, was vested soley in the Partnership through its 98% general partner
interest in the joint venture. Accordingly, as of January 1, 1998, the
investment has been accounted for as a wholly-owned property. The remaining 2%
general partner interest is owned by NELPP III/MORF III Associates Limited
Partnership, an entity in which the Partnership owns a 50% interest. The
carrying value of the joint venture investment at conversion ($6,162,959) was
allocated to land, building and improvements, and other net operating assets.
The building was being depreciated over 30 years, beginning January 1,
1998.
On October 31, 2000, the Partnership sold its partnership interests and
all related property rights to its 50% partner in NELPP III/MORF III Associates
Limited Partnership for a gross sales price of $6,732,467. The Partnership
received net proceeds of $6,800,575, which included a reimbursement of
approximately $90,000 for leasing commissions previously paid by the
Partnership, which, per the purchase and sale agreement, were the responsibility
of the buyer. The Partnership recognized a gain of $1,110,277 ($16.07 per
Limited Partnership Unit). On November 28, 2000, the Partnership made a capital
distribution of $6,499,330 ($95.00 per Limited Partnership Unit) from the
proceeds of the sale.
North Cabot Industrial Park (formerly Marathon/Hayward)
In September 1985, the Partnership acquired land in Hayward, California,
for $786,130 and leased it back to the seller. The Partnership also made a
nonrecourse permanent mortgage loan of $2,663,870 to the ground lessee to
finance the two research and development buildings.
On November 15, 1994, the Partnership restructured this ground
lease/mortgage loan investment into a wholly-owned property, due to the
inability of the ground lessee/mortgagee to meet its financial obligations. The
Partnership received $85,000 in settlement of the guaranty provided by
principals of the ground lessee. The Partnership obtained title to the
improvements on the land, and to certain other operating assets in full
satisfaction of the related mortgage loan and obligations under the ground
lease, and in consideration of the assumption by the Partnership of certain
operating liabilities. The carrying value of the ground lease/mortgage loan
investment as of the date of restructuring was allocated to land, buildings and
net operating assets.
The buildings and improvements (two industrial buildings in Hayward,
California) were being depreciated over 25 years beginning November 15, 1994.
On March 18, 1999, the North Cabot Industrial Park investment was sold to
an unaffiliated third party (the "Buyer") for gross proceeds of $2,800,000. The
Partnership received net proceeds of $2,639,445 and recognized a gain of
$1,509,931 ($21.85 per Limited Partnership Unit). On April 29, 1999, the
Partnership made a capital distribution of $2,539,528 ($37.12 per Limited
Partnership Unit) from the proceeds of the sale.
The following is summary of the Partnership's investment in property (one
at December 31, 1999):
December 31,
--------------------------
2000 1999
------------ -----------
Land $ -- $ 215,404
Buildings and improvements -- 5,667,126
Accumulated depreciation and amortization -- (343,490)
Net operating assets -- 379,492
------------ -----------
$ -- $ 5,918,532
============ ===========
24
NOTE 6 - INCOME TAXES
The Partnership's income (loss) 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 $ 1,216,404 $ 1,715,845 $ 7,526,363
Timing differences:
Joint venture earnings (356,409) 111,931 (14,989)
Depreciation and amortization -- (4,827) 31,269
Expenses -- -- 3,139
Gain (loss) on Sale 1,100,161 (194,020) 3,938,614
------------ ------------ ------------
Taxable income $ 1,960,156 $ 1,628,929 $ 11,484,396
============ ============ ============
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
sale transactions, the adjusted capital contribution per Limited Partnership
Unit was reduced from $1,000 to $982.14 during 1987, to $946.14 during 1988, to
$796.14 during 1989, to $694.14 during 1992, to $524.14 during 1993, to $493.14
during 1994, to $485.54 during 1996, to $231.54 during 1998, to $183.60 during
1999 and to $88.60 in 2000. No capital distributions have been made to the
general partners. Income from sales will be allocated in proportion to the
distribution of related proceeds, provided that the general partners are
allocated at least 1%. Income or losses from sales, 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.
25
EXHIBIT INDEX
Exhibit Page
Number Number
- ------- ------
4. Amended and Restated Agreement of Limited Partnership of
New England Life Pension Properties III; A Real Estate
Limited Partnership (filed as Exhibit 28A to Form 8-K
dated July 15, 1985, as filed with the Commission on
July 16, 1985). *
10B. Form of Advisory Contract between the Registrant and
Copley Real Estate Advisors, Inc. (filed as Exhibit 10B
to the Registration Statement). *
27. Financial Data Schedule
*Previously filed and incorporated herein by reference.
26
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 III;
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
--------- ----- ----
President, Chief
/s/ Alison L. Husid Executive Officer and
- ------------------------ Director of the March 27, 2001
Alison L. Husid 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
Treasurer and Principal
/s/ Dana C. Spires Financial and Accounting
- ------------------------ Officer of the March 27, 2001
Dana C. Spires Managing General Partner
27