SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
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. 0-17807
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2988542
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
World Trade Center East
Two Seaport Lane
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.
--------
Copley Pension Properties VI; A Real Estate Limited Partnership
(the "Partnership") (formerly New England Pension Properties VI; A Real
Estate Limited Partnership) was organized under the Uniform Limited
Partnership Act of the Commonwealth of Massachusetts on October 16, 1987,
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 Sixth Copley Corp. (the "Managing General
Partner") and GCOP 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 October 26,
1987, with respect to a public offering of 80,000 units of limited
partnership interest at a price of $1,000 per unit (the "Units") with an
option to sell up to an additional 80,000 Units (an aggregate of
$160,000,000). The Registration Statement was declared effective on
January 20, 1988.
The first sale of Units occurred on July 28, 1988, 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,
1988. At the termination of the offering, a total of 48,788 Units had been
sold, a total of 6,396 investors had been admitted as limited partners
(the "Limited Partners") and a total of $48,511,620 net of discounts had
been contributed to the capital of the Partnership. The remaining 111,212
Units were de-registered on February 10, 1989.
The Partnership has no current plans to renovate, improve or
further develop any of its real property investments. In the opinion of
the Managing General Partner of the Partnership, the properties are
adequately covered by insurance.
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 is invested in the two
real property investments described below. Additionally, the Partnership
sold five other real estate investments between 1990 and 2000. The
principal terms of these sales are set forth in the following table:
DATE NET SALE DISTRIBUTION DISTRIBUTION
INVESTMENT SOLD PROCEEDS PER UNIT DATE
---------- ---- -------- -------- ----
Waterford Apartments 8/98 $16,338,750 $334.29 8/98
White Phonic 6/98 $ 4,279,751 $ 87.72 7/98
Stemmons Industrial 9/97 $ 4,334,193 $ 88.84 10/97
Lakewood Apartments 8/94 $ 9,131,207 $182.85 10/94
Payne Ranch 6/90 $ 8,199,836 $ 48.17 7/90
2
A. Industrial Building in Carson, California ("Wilmington
------------------------------------------------------
Industrial").
------------
On July 18, 1988, the Partnership acquired a 60% interest in a
joint venture with an affiliate of The Hewson Company. On November 15,
1989, the Partnership agreed to increase its maximum commitment from
$6,685,000 to $7,285,000. On February 1, 1991, the Partnership agreed to
further increase its maximum commitment to $8,085,000. The Partnership
made capital contributions totaling $7,774,402. As of December 31, 1991,
because of the developer partner's inability to fund its share of capital
contributions, the Partnership assumed 100% ownership of the joint
venture's assets, which consisted primarily of approximately 5.77 acres of
land in Carson, California and an approximately 115,732 square foot
multi-tenant industrial building located thereon. As of December 31, 2000,
the building was 100% leased.
B. Industrial Building in Itasca, Illinois ("Prentiss
--------------------------------------------------
Copystar").
----------
On May 23, 1991, the Partnership acquired a 51.75% interest in a
joint venture formed with Copley Pension Properties VII; A Real Estate
Limited Partnership, an affiliate of the Partnership (the "Affiliate")
with a 23.25% interest, and with an affiliate of Prentiss Properties, Ltd
(the "Developer"). As of December 31, 2000, the Partnership had
contributed $2,739,013 to the capital of the joint venture, which includes
default contributions made on behalf of the Developer, of which $63,563
had been returned to the Partnership. Of the capital contributed and not
returned, $1,542,848 is characterized as Senior Capital, $690,000 is
characterized as Junior Capital and $442,602 is characterized as Deficit
and Default Contributions. The joint venture agreement entitles the
Partnership to receive a preferred compounded monthly return of 11% per
annum on capital contributed. The return on Senior Capital will be payable
currently, the return on Junior Capital, Deficit and Default Contributions
may accrue and compound monthly if sufficient cash flow is not available
therefor. If the Senior Capital is repaid prior to the termination of the
joint venture, the Partnership will be entitled to receive a return on the
Senior Capital at the lesser of 11% per annum or the interest rate for
treasury bonds having a maturity date coinciding with the termination of
the joint venture, plus 75 basis points. The joint venture agreement also
entitles the Partnership to receive 51.75% of the net proceeds of sales
and financings after return of its capital and 51.75% of cash flow
remaining after payment of the preferred return, both of which have been
adjusted to 61.64% as a result of its Default Contributions, in accordance
with the joint venture agreement.
The joint venture owns approximately 3.75 acres of land in Itasca,
Illinois and during 1991 completed construction thereon of an
approximately 70,535 square foot single-story industrial building. At
December 31, 2000, the building was 100% leased.
On January 24, 2001, the Partnership, its Affiliate and the
Developer executed a Purchase and Sale Agreement to sell the Prentiss
Copystar investment. This sale was concluded on February 26, 2001 at which
time the Partnership recognized approximately $1,133,000 of its share of
the gain from sale of this investment.
3
Item 2. Properties
The following table sets forth the annual realty taxes for the
Partnership's properties and information regarding tenants who occupy 10% or
more of gross leasable area (GLA) in the Partnership's properties:
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER
OF
ESTIMATED TENANTS ANNUAL
2001 WITH 10% CONTRACT LINE OF
ANNUAL OR SQUARE RENT BUSINESS
REALTY MORE OF NAMES (S) OF FEET OF PER LEASE RENEWAL OF PRINCIPAL
PROPERTY TAXES GLA TENANT(S) EACH TENANT SQ. FT. EXPIRATION OPTIONS TENANTS
- -------- ----- --- --------- ----------- ------- ---------- ------- -------
Industrial Building
in Carson, CA $74,307 5 Practical Packaging 38,930 $5.04 Mar, 2001 N/A Packaging
CF Airfreight 18,253 $6.60 Aug, 2005 N/A Airfreight
GSL Transportation 11,682 $6.24 Mar, 2003 N/A Cargo
Transportation
and Logistics
Haagen-Dazs 12,000 $6.48 June, 2001 N/A Ice Cream Storage
General Mills 26,545 $7.56 May, 2005 N/A Fruit and Yogurt
Storage
- ---------------------------------------------------------------------------------------------------------------------------------
Industrial Building,
Itasca, IL $80,100 1 Pittman Company 70,535 $5.50 Aug, 2015 N/A Printing and
Supplies
- ---------------------------------------------------------------------------------------------------------------------------------
4
The following table sets forth for each of the last five years the
gross leasable area, occupancy rates, rental revenue, and net effective rent for
the Partnership's properties:
GROSS RENTAL
PROPERTY LEASABLE YEAR-END REVENUE NET EFFECTIVE
AREA OCCUPANCY RECOGNIZED RENT ($/SF/YR)*
- ----------------------------------------------------------------------------
Industrial Building
in Carson, CA
1996 115,732 100% $709,199 $7.08
1997 115,732 100% $752,941 $6.51
1998 115,732 100% $726,314 $6.28
1999 115,732 100% $761,603 $6.58
2000 115,732 100% $779,807 $7.83
Industrial Building,
Itasca, IL
1996 70,535 100% $492,000 $6.98
1997 70,535 100% $462,000 $6.55
1998 70,535 100% $468,095 $6.64
1999 70,535 0% $367,942 $6.96
2000 70,535 100% $220,715 $6.26
- ----------------------------------------------------------------------------
* Net effective rent calculation is based on average occupancy during the
respective years.
5
Following is a schedule of lease expirations for each of the next ten
years for the Partnership's properties based on the annual contract rent in
effect at December 31, 2000:
TENANT AGING REPORT
PERCENTAGE OF
# OF LEASE TOTAL TOTAL GROSS ANNUAL
PROPERTY EXPIRATIONS SQUARE FEET ANNUAL RENTAL RENTAL*
- --------------------------------------------------------------------------------
Industrial Building
in Carson, CA
2001 2 50,930 $273,967 38%
2002 0 0 $0 0%
2003 2 19,974 $129,608 18%
2004 0 0 $0 0%
2005 2 44,798 $321,146 44%
2006 0 0 $0 0%
2007 0 0 $0 0%
2008 0 0 $0 0%
2009 0 0 $0 0%
2010 0 0 $0 0%
Industrial Building,
Itasca, IL(1)
2001 0 0 $0 0%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 0 0 $0 0%
2006 0 0 $0 0%
2007 0 0 $0 0%
2008 0 0 $0 0%
2009 0 0 $0 0%
2010 0 0 $0 0%
- --------------------------------------------------------------------------------
* Does not include expenses paid by tenants.
(1) Remaining lease does not expire within 10 years.
6
The following table sets forth for each of the Partnership's
properties the: (i) federal tax basis, (ii) rate of depreciation, (iii) method
of depreciation, (iv) life claimed for purposes of depreciation, and
(v) accumulated depreciation.
Rate of Life Accumulated
Entity / Property Tax Basis Depreciation Method in years Depreciation
- ---------------------------------------------------------------------------------------------------------------------
Industrial Building in Carson, CA
Building & Improvements $3,877,571 2.50% SL 40 $1,022,077
---------- ----------
Total Depreciable Assets $3,877,571 $1,022,077
Industrial Building in Itasca, IL
Building $2,302,015 2.50% SL 40 $494,260
----------- ---------
Total Depreciable Assets $2,302,015 $494,260
Total Depreciable Assets $6,179,586 $1,516,337
========== ==========
- ---------------------------------------------------------------------------------------------------------------------
SL = Straight Line
7
Following is information regarding the competitive market conditions
for each of the Partnership's properties. This information has been gathered
from sources deemed reliable. However, the Partnership has not independently
verified the information and, as such, cannot guarantee its accuracy or
completeness.
Industrial Building in Carson, California
- -----------------------------------------
The Los Angeles South Bay's industrial market, totaling approximately
229-million-square-feet, spans six submarkets in an area bordered by LAX to the
North, the 605 Freeway to the East, Orange County to the South, and the Pacific
Ocean to the West. The South Bay is part of the over 800-million-square-foot
Southern California Industrial Market.
Within the overall Southern California market, the strength of the
South Bay market is evident by its central location, regional transportation
infrastructure, port and airport resources, preferred residential housing and
entertainment amenities, and dominant position in the international trade area.
These strengths have attracted and retained local entrepreneurial,
telecommunications, computer related, manufacturing, and entertainment companies
that are seeking state-of-the-art quality industrial space.
The combination of low vacancy and rising rental rates have resulted
in speculative construction. Developers have constructed approximately
3.8-million-square-feet of new industrial buildings in 2000. As of the fourth
quarter 2000, approximately 2-million-square-feet of this new product was either
pre-leased or immediately absorbed, with the remainder just completed at year's
end.
The South Bay continues to be a focal point of industrial real estate
optimism as a result of a dramatic decline in vacancy and simultaneous increase
in rental rates. Investors are drawn to the market because of its diverse
economy, major transportation hubs within its borders, and a strong labor
market.
Industrial Building in Itasca, Illinois
- ---------------------------------------
The metropolitan Chicago Industrial market contains in excess of
900-million-square-feet of inventory with a year-end 2000 vacancy rate of 6.9%,
a decrease from the 8.0% vacancy rate at year-end 1999. Both speculative
construction and build-to-suit activity was strong in 2000, adding
6.3-million-square-feet and 3.9-million-square-feet, respectively. The market
with the highest concentration of development is in the I-55 corridor, located
south of the Itasca building. With the scarcity of land in the DuPage and O'Hare
markets, users are moving farther south into the I-55 corridor and beyond. The
Partnership's property is located in the North DuPage County submarket. Most
tenants in this submarket rely on close proximity to the O'Hare International
Airport and to convenient access to Interstates 355, 290, 90, and the O'Hare
Expressway.
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.
8
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 6,127 holders of Units.
The Partnership's Amended and Restated Agreement of Limited
Partnership dated July 28, 1988, 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 were no cash distributions paid that related to the year ended December
31, 2000 due to insufficient cash flows from the properties. Distributions will
resume when practical. 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 $821,319.
There were no cash distributions paid in 2000 that relate to the
year ended December 31, 2000. Net income in 2000 resulted in an increase in
partners' capital, while cash distributions exceeded net income in 1999 and
therefore resulted in a reduction of partners' capital. Cash distributions in
1999 exceeded cash provided by operating activities. Reference is made to the
Partnership's Statements of Partners' Capital (Deficit) and Statements of Cash
Flows in Item 8 hereof.
9
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 12/31/99 12/31/98 (1) 12/31/97 (2) 12/31/96
-------- -------- ------------ ------------ --------
Revenues $ 945,048 $ 992,399 $ 9,098,258 $ 2,688,336 $ 2,250,424
Net Income $ 369,763 $ 365,739 $ 8,384,390 $ 1,588,309 $ 1,186,133
Net Income
per Limited
Partnership Unit $ 7.50 $ 7.42 $ 170.13 $ 32.23 $ 24.07
Total Assets $ 8,202,862 $ 7,962,054 $ 8,497,702 $ 22,706,302 $ 29,099,680
Total Cash Distributions
per Limited Partnership
Unit, including amounts
distributed after year
end with respect to
such year $ 0.00 $ 16.65 $ 468.47 $ 166.26 $ 42.28
(1) Revenues and net income in 1998 include a gain of $7,563,334 on the sales
of the White Phonic and Waterford Apartments investments.
(2) Revenues and net income in 1997 include a gain of $248,172 on the sale of
the Stemmons Industrial property.
10
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 1988 and a total of 48,788 units were sold. The
Partnership received proceeds of $43,472,858, net of selling commissions and
other offering costs, which have been used for investment in real estate, for
the payment of related acquisition costs or retained as working capital
reserves. As of December 31, 2000, the Partnership held the two investments
described in A. and B. of Item 1 hereof. In addition, one investment was sold in
each of 1990, 1994 and 1997 and two investments were sold in 1998. Through
December 31, 2000, capital of $37,884,369 ($776.51 per Limited Partnership Unit)
has been returned to the limited partners: $36,194,353 as a result of sales and
$1,690,016 as a result of a discretionary reduction of original working capital
previously held in reserves.
At December 31, 2000, the Partnership had $2,053,663 in cash and cash
equivalents which is being retained as working capital reserves. The source of
future liquidity and cash distributions to partners will be primarily cash
generated by the Partnership's cash and cash equivalents and real estate
investments. There were no cash distributions paid in 2000 that relate to the
year ended December 31, 2000 due to insufficient cash flow from the properties.
One property has just become fully occupied during the third quarter of 2000 and
the other remaining property has reduced its cash flow to the Partnership due to
payments of capital expenditures. Based on an adjusted capital contribution of
$228.20 per Limited Partnership Unit, distributions of cash from operations
relating to the first and second quarters of 1999 were made at the annualized
rate of 5.5%, while operating distributions related to the third and fourth
quarters of 1999 were made at the annualized rate of 5.0% on the adjusted
capital contribution of $228.20 and on the weighted average adjusted capital
contribution of $224.87, respectively. At the time of the operating distribution
related to the third quarter of 1999, the Partnership also elected to make a
capital distribution of original working capital previously held in reserves in
the amount of $4.71 per Limited Partnership Unit.
The carrying value of real estate investments in the financial
statements at December 31, 2000 is at depreciated cost, or if the investment's
carrying value is determined not to be recoverable through expected undiscounted
future cash flows, the carrying value is reduced to estimated fair market value.
The fair market value of such investments is further reduced by the estimated
cost of sale for properties held for sale. Carrying value may be greater or less
than current appraised value. At December 31, 2000, the appraised value of the
Partnership's real estate investments exceeded their related carrying value by
an aggregate of approximately $4,000,000. The current appraised value of real
estate investments has been estimated by the Managing General Partner and is
generally based on a combination of traditional appraisal approaches performed
by AEW Real Estate Advisors, Inc. (the "Advisor") and independent appraisers,
and for one of the investments, is based on the amount negotiated in the
Purchase and Sale Agreement. Because of the subjectivity inherent in the
valuation process, the estimated current appraised value of the other remaining
investment may differ significantly from that which could be realized if the
real estate were actually offered for sale in the marketplace.
RESULTS OF OPERATIONS
- ---------------------
FORM OF REAL ESTATE INVESTMENTS
The Wilmington Industrial investment is a wholly-owned property and
the Prentiss Copystar investment is a joint venture.
OPERATING FACTORS
One of the Partnership's two industrial properties, Wilmington
Industrial, was 100% leased at December 31, 2000 and December 31, 1999,
respectively, whereas the other industrial property, Prentiss Copystar, was 100%
leased at December 31, 2000 and was vacant at December 31, 1999.
11
On January 24, 2001, a Purchase and Sale agreement was executed by
the Partnership, its Affiliate and the Developer to sell the Prentiss Copystar
investment. The sale was concluded on February 26, 2001.
INVESTMENT ACTIVITY
Interest income on cash equivalents in 2000 decreased by
approximately $14,000 or 10% compared to 1999 due primarily due to lower average
investment balances as a result of the joint venture's property being vacant for
eight months of 2000 versus three months of vacancy in 1999. Interest income on
cash equivalents and short-term investments in 1999 decreased by approximately
$81,000 or 37% compared to 1998 due primarily to lower average investment
balances as a result of the sale of investments.
2000 COMPARED TO 1999
Total real estate operations for 2000 was $425,789, a decrease from
$457,162 for the comparable period of 1999. The decrease of approximately
$30,000, or 7%, is due to lower joint venture earnings due to Prentiss Copystar
being vacant for eight months of 2000 versus three months of vacancy in 1999
offset by an overall increase in Wilmington Industrial's operations. The
increase in Wilmington Industrial's operations is due to an increase in
occupancy and lower operating expenses offset by an increase in depreciation and
amortization expenses.
1999 COMPARED TO 1998
Total real estate operations for 1999 was $457,162, a decrease from
$962,716 for the comparable period of 1998. The decrease of approximately
$500,000 or 53% is primarily due to lower joint venture earnings as a result of
the sale of White Phonic and Waterford Apartments in 1998 and the vacancy at
Prentiss Copystar during the last three months of 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
consist primarily of real estate appraisal, printing, legal, accounting and
investor servicing fees.
2000 COMPARED TO 1999
The Partnership did not incur management fees during the year ended
December 31, 2000 due to the suspension of cash distributions as a result of the
joint venture's property being vacant during the first eight months of 2000 and
the other remaining property having reduced its cash flow to the Partnership due
to payments of capital expenditures. General and administrative expenses in 2000
remained relatively stable in comparison to 1999.
1999 COMPARED TO 1998
The Partnership management fee decreased approximately $119,000 between
1999 and 1998 due to less operational cash available for distributions as a
result of the sales of White Phonic and Waterford Apartments in 1998. General
and administrative expenses decreased approximately $12,000 or 7% primarily due
to a decrease in legal fees incurred in 1999.
INFLATION
- ---------
By their nature, real estate investments tend not to be adversely
affected by inflation. Inflation may result in appreciation in the value of real
estate investments over time if rental rates and replacement costs increase.
Declines in property values during the period of Partnership operations, due to
market and economic conditions, have overshadowed the positive affect inflation
may have on the value of the Partnership's investments.
12
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 and Financial Statement Schedules
on page 17.
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 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 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 October 13, 1987. 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"), 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.).
13
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 AEW'S 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 of Notes to Financial Statements.
The following table sets forth the amounts of the fees 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:
14
Amount of
Compensation
and
Receiving Entity Type of Compensation Reimbursement
- ---------------- -------------------- -------------
AEW Real Estate Advisors, Inc. Management Fees and $17,000
Expense Reimbursements
New England Securities Corporation Servicing Fees and
Expense Reimbursement 11,376
-------
TOTAL: $28,376
=======
For the year ended December 31, 2000, the Partnership allocated $4,032 of
taxable income 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.
---------------------------------
The General Partners of the Partnership owned no Units at 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.
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 Schedule, and Financial
Statements Index No. 2 are filed as part of this Annual Report.
(2) Financial Statement Schedules--The Financial Statement
Schedule listed on the accompanying Index to Financial Statements and Schedule
is filed as part of this Annual Report.
(3) 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 no Current Report on
Form 8-K.
15
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Financial Statements
* * * * * * * * * * * *
December 31, 2000
16
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Report of Independent Accountants
Financial Statements:
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
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at December 31, 2000
All other schedules are omitted because they are not applicable
17
Report of Independent Accountants
To the Partners of Copley Pension Properties VI; 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 Copley Pension Properties VI; 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. In addition, in our
opinion, the financial statement schedule listed in the accompanying
index presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related financial
statements. These financial statements and the financial statement
schedule are the responsibility of Sixth Copley Corp., the Managing
General Partner of the Partnership (the "Managing General Partner");
our responsibility is to express an opinion on these financial
statements and the financial statement schedule 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.
/s/ PricewaterhouseCoopers LLP
Boston, MA
March 21, 2001
18
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
December 31,
------------------
2000 1999
---- ----
ASSETS
Real estate investments:
Joint ventures $ - $1,595,569
Property, net 4,284,794 4,061,102
---------- ----------
4,284,794 5,656,671
Joint Venture held for disposition 1,864,405 -
Cash and cash equivalents 2,053,663 2,305,383
---------- ----------
$8,202,862 $7,962,054
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 98,555 $ 75,335
Accrued management fee - 13,696
Deferred disposition fees 1,369,577 1,369,577
---------- ----------
Total liabilities 1,468,132 1,458,608
---------- ----------
Partners' capital:
Limited partners ($223.49 per Unit, at
December 31, 2000 and 1999, respectively
160,000 units authorized; 48,788 units
issued and outstanding) 6,721,206 6,492,235
General partners 13,524 11,211
---------- ----------
Total partners' capital 6,734,730 6,503,446
---------- ----------
$8,202,862 $7,962,054
========== ==========
(See accompanying notes to financial statements)
19
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
Year ended December 31,
------------------------------------
2000 1999 1998
---- ---- ----
INVESTMENT ACTIVITY
Property rentals $ 779,807 $ 726,612 $ 729,877
Property operating expenses (221,323) (268,902) (216,377)
Depreciation and amortization (173,627) (128,053) (136,912)
---------- ---------- ----------
384,857 329,657 376,588
Joint venture earnings 40,932 127,505 586,128
--------- --------- ----------
Total real estate operations 425,789 457,162 962,716
Gain on sales of property - - 7,563,334
--------- --------- ----------
Total real estate activity 425,789 457,162 8,526,050
Interest on cash equivalents
and short-term investments 124,309 138,282 218,919
--------- --------- ----------
Total investment activity 550,098 595,444 8,744,969
--------- --------- ----------
PORTFOLIO EXPENSES
Management fee - 58,195 177,313
General and administrative 180,335 171,510 183,266
--------- --------- ----------
180,335 229,705 360,579
--------- --------- ----------
NET INCOME $ 369,763 $ 365,739 $8,384,390
========= ========= ==========
Net income per limited
partnership unit $ 7.50 $ 7.42 $ 170.13
========= ======== ==========
Cash distributions per limited
partnership unit $ 2.81 $ 17.45 $ 475.74
========= ======== ==========
Number of limited partnership
units outstanding during the year 48,788 48,788 48,788
========= ========= ==========
(See accompanying notes to financial statements)
20
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
Year ended December 31,
---------------------------------------------------------------------------------------
2000 1999 1998
------------------------ ------------------------ ------------------------
General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners
-------- -------- -------- -------- -------- --------
Balance at beginning of year $11,211 $6,492,235 $13,832 $6,981,503 $(48,500) $ 21,891,360
Cash distributions (1,385) (137,094) (6,278) (851,350) (21,512) (23,210,403)
Net income 3,698 366,065 3,657 362,082 83,844 8,300,546
------- ---------- ------- ---------- -------- ------------
Balance at end
of year $13,524 $6,721,206 $11,211 $6,492,235 $ 13,832 $ 6,981,503
======= ========== ======= ========== ======== ============
(See accompanying notes to financial statements)
21
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
Year ended December 31,
-------------------------------------------
2000 1999 1998
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 369,763 $ 365,739 $ 8,384,390
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 173,627 128,053 136,912
Equity in joint venture income (40,932) (127,505) (586,128)
Cash distributions from joint ventures - 184,210 1,511,850
Gain on sales of joint ventures - - (7,563,334)
Increase in property deferred leasing costs
and other assets (118,224) (4,860) (8,577)
Decrease in investment income receivable - - 27,032
Decrease (increase) in property working capital 30,810 58,488 (162,397)
Increase (decrease) in operating liabilities 9,524 (43,759) (12,975)
---------- ----------- ------------
Net cash provided by operating activities 424,568 560,366 1,726,773
---------- ---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture (227,905) (2,841) -
Investment in property (309,904) - -
Net proceeds from sale of investment - - 19,947,381
Deferred disposition fee - - 651,900
Decrease in short-term investments, net - - 1,405,619
---------- ---------- ------------
Net cash provided (used) by
investing activities (537,809) (2,841) 22,004,900
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITY:
Distributions to partners (138,479) (857,628) (23,231,915)
----------- ----------- ------------
Net cash used in financing activity (138,479) (857,628) (23,231,915)
----------- ----------- ------------
Net increase (decrease) in cash and
cash equivalents (251,720) (300,103) 499,758
Cash and cash equivalents:
Beginning of year 2,305,383 2,605,486 2,105,728
---------- ---------- ------------
End of year $2,053,663 $2,305,383 $ 2,605,486
========== ========== ============
(See accompanying notes to financial statements)
22
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS
- ----------------------------------
General
-------
Copley Pension Properties VI; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income-producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other organizations intended to be exempt from federal
income tax. The Partnership commenced operations in July 1988 and acquired the
two real estate investments it currently owns prior to the end of 1991. It
intends to dispose of its investments within eight to twelve years of their
acquisition and then liquidate.
The Managing General Partner of the Partnership is Sixth 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 GCOP 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.
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 from operations, as defined, before deducting such fees. The
deferred management fees of $112,441 incurred through 1990 were paid to AEW in
September 1994 with a portion of the proceeds from the sale of Lakewood
Apartments. AEW is also reimbursed for expenses incurred in connection with
administering the Partnership ($17,000 in 2000, 1999, and 1998 respectively).
Acquisition fees were paid in an amount equal to 2% of the gross proceeds from
the offering, at the time commitments were initially funded. 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. Deferred disposition fees were $1,369,577 at December 31, 2000 and
1999.
23
New England Securities Corporation ("NESC"), an indirect subsidiary
of Met Life, was engaged by the Partnership to act as its unitholder servicing
agent. Fees and out-of-pocket expenses for such services totaled $11,376,
$11,187 and $10,287 in 2000, 1999 and 1998, respectively.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
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, (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 venture which
includes an affiliate of the Partnership, which has substantial economic equity
in its project.
Property
--------
Property includes land and buildings, which are stated at cost less
accumulated depreciation, and 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 prior 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 term.
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.
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
disposition 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.
24
Cash Equivalents
----------------
Cash equivalents are stated at cost, plus accrued interest. The
Partnership considers all highly liquid instruments 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.
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.
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 - 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 three cases, with an affiliate of the Partnership. One joint venture
sold its property in 1990; another joint venture investment was restructured
into a wholly-owned property in 1991. During 1994, the Lakewood joint venture
sold its property and the Stemmons Industrial investment was converted to a
wholly-owned property; the latter property was subsequently sold in 1997. In
1998, the White Phonic and Waterford Apartments joint ventures sold their
properties in July and August, respectively. The Partnership committed to make
capital contributions to the ventures, which are or were generally subject to
preferential cash distributions at a specified rate and to priority
distributions with respect to sale or refinancing proceeds. The joint venture
agreements provide or provided, as the case may be, for the funding of cash flow
deficits by the venture partners in proportion to 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 firm is 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
management/development firm, or its affiliates, also provides or provided, as
the case may be, various services to the respective joint venture for a fee.
25
The following is a summary of cash invested in the remaining joint
venture, net of returns of capital and excluding acquisition fees:
Preferential
Investment/ Rate of Ownership December 31,
Location Return Interest 2000 1999
-------- ------ -------- ------ ------
Prentiss Copystar 11.0% 53.79% - $2,292,186
Itasca, IL 11.0% 61.64% $2,675,450 -
Waterford Apartments
--------------------
On March 20, 1989, the Partnership entered into a joint venture with
an affiliate of Bozzuto and Associates, and with an affiliate of the
Partnership, to develop and operate a garden-style apartment complex. The
Partnership and its affiliate collectively had a 65% ownership interest in the
joint venture. The Partnership committed to contribute up to $14,100,000 to the
capital of the joint venture. The preferential return related to $3,525,000 was
payable currently only to the extent of available cash flow. In the event of a
sale or refinancing prior to the tenth anniversary of the joint venture
agreement, 25% of the Partnership's contribution would be repaid without
premium. The remaining 75% would be entitled to a premium designed to preserve
the stipulated rate of return through the ninth anniversary of the joint venture
agreement.
On August 7, 1998, the joint venture sold the Waterford Apartments to
an institutional buyer which is unaffiliated with the Partnership. The total
gross sale price was $21,800,000. The Partnership received its share of the net
proceeds in the amount of $16,338,750, after closing costs, and recognized a
gain of $6,227,526 ($126.37 per Limited Partnership Unit). A disposition fee of
$490,500 was accrued but not paid to the Advisor. On August 26, 1998, the
Partnership made a capital distribution of $16,309,341 ($334.29 per Limited
Partnership Unit) from the proceeds of the sale.
White Phonic
------------
On April 30, 1990, the Partnership entered into a joint venture with
an affiliate of William C. White and George Vila to develop and operate an
office/industrial building. The Partnership committed to make a maximum capital
contribution of $3,450,000. During the first ten years, up to 1% of the
preferential return could be deferred to the extent payments could not be made
from operating and extraordinary cash flow.
On July 14, 1998, the joint venture, in which the Partnership held a
50% interest, sold the White Phonic property in Petaluma, California, to an
unaffiliated third party for a total gross sale price of $5,380,000. The
Partnership received its share of the net proceeds of $4,279,751 after closing
costs, representing a return of capital and accrued interest plus its
participation in net sales proceeds of $965,671 and recognized a gain of
$1,335,808 ($27.11 per Limited Partnership Unit). A disposition fee of $161,400
was accrued but not paid to the Advisor. On July 30, 1998, the Partnership made
a capital distribution of $4,279,683 ($87.72 per Limited Partnership Unit) from
the proceeds of the sale.
Prentiss Copystar
-----------------
On May 23, 1991, the Partnership entered into a joint venture with an
affiliate of Prentiss Properties, Ltd., and an affiliate of the Partnership, to
develop and operate an industrial facility. The Partnership and its Affiliate
initially had a collective 75% interest in the joint venture. The Partnership
committed to make a maximum capital contribution of $2,300,000 but has
subsequently made additional contributions classified as deficit contributions
as well as contributions on behalf of the affiliate of Prentiss Properties,
classified as Default Contributions. The Default Contributions subsequently
increased the Partnership and its Affiliate's collective interest to 89.34% as
of December 31, 2000. The preferential return related to $690,000 is payable
currently only to the extent of available cash flow. If $1,610,000, or any
portion thereof, is returned to the Partnership between the second and tenth
anniversary of the joint venture agreement, the return will be increased by an
amount sufficient to preserve the stipulated rate of return through the tenth
anniversary. As of December 31, 2000, the property was 100% leased.
26
Summarized Financial Information
- --------------------------------
The following summarized financial information is presented in the
aggregate for the joint venture:
ASSETS AND LIABILITIES
----------------------
December 31,
---------------------------------
2000 1999
------ ------
Assets
Real property, at cost less
accumulated depreciation
of $496,142 and $432,764 at
December 31, 2000 and
1999, respectively $2,746,869 $2,386,939
Other 73,107 11,877
---------- ----------
2,819,976 2,398,816
Liabilities 106,201 73,813
---------- ----------
Net assets 2,713,775 $2,325,003
========== ==========
RESULTS OF OPERATIONS
---------------------
Year ended December 31,
-----------------------------------------
2000 1999 1998
------- ------- ------
Revenue:
Rental income $ 220,715 $ 367,942 $2,353,857
Interest and other income - - 11,666
----------- ---------- ----------
220,715 367,942 2,365,523
----------- ---------- ----------
Expenses:
Operating expenses 98,891 109,644 1,018,966
Depreciation and amortization 62,211 65,787 419,451
----------- ---------- ----------
161,102 175,431 1,438,417
----------- ---------- ----------
Net income $ 59,613 $ 192,511 $ 927,106
=========== ========== ==========
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliates on behalf of their various financing arrangements
with the joint ventures.
On January 24, 2001, the Partnership, its Affiliate and the Developer
executed a Purchase and Sale Agreement to sell the Prentiss Copystar investment.
On February 26, 2001, this investment was sold and the Partnership recognized
its share of the gain of approximately $1,133,000.
This investment is classified as Joint Venture held for disposition
on the Balance Sheet at December 31, 2000. During the years ended December 31,
2000 and 1999, the Partnership recognized $40,932 and $127,505 in net income
from this investment, respectively.
27
NOTE 4 - PROPERTY
- -----------------
On July 18, 1988, the Partnership entered into a joint venture with
an affiliate of The Hewson Company to acquire and operate an industrial building
known as Wilmington Industrial in Carson, California. The Partnership made
capital contributions totaling $7,774,402. In 1991, when the venture partner did
not fund its proportionate share of the cash flow deficit, the Partnership's
ownership interest increased to 100%.
The following is a summary of the Partnership's remaining investment
in property:
December 31,
-------------------------
2000 1999
---- ----
Land $ 2,770,056 $ 2,770,056
Buildings, improvements and
other capitalized costs 5,336,205 4,908,078
Impairment provision (1,500,000) (1,500,000)
Accumulated depreciation and
amortization (2,350,377) (2,176,751)
Net operating assets 28,910 59,719
----------- -----------
$ 4,284,794 $ 4,061,102
=========== ===========
The Wilmington Industrial building is being depreciated over 30 years
and capitalized improvements are being depreciated over seven years. The
$1,500,000 impairment provision was recorded in 1995.
Tenant leases provide for minimum rents, subject to adjustment as
stated in each lease. Tenants are also obligated to reimburse their pro-rata
share of operating expenses. The minimum rents due under non-cancelable
operating leases at Wilmington Industrial are as follows: $541,105 in 2001,
$450,753 in 2002, $372,146 in 2003, $321,146 in 2004, $137,166 in 2005 and
$137,166 thereafter.
NOTE 5 - 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 $ 369,763 $365,739 $ 8,384,391
Timing differences:
Joint venture earnings (24,089) (1,666) (2,393,561)
Property rentals 37,899 71,247 595,319
Depreciation 35,655 27,078 15,276
Expenses (16,001) - 7,166
Gain on sale - - 1,911,966
--------- -------- -----------
Taxable income $ 403,227 $462,398 $ 8,520,557
========= ======== ===========
28
NOTE 6 - 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 have
been made quarterly through the fourth quarter of 1999. The partnership will
resume quarterly distributions when practical.
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. The adjusted capital
contribution per limited partnership unit was reduced from $1,000 to $951.83
during 1990, from $951.83 to $768.98 during 1994, from $768.98 to $660.29 during
1997, from $660.29 to $228.20 during 1998, and from $228.20 to $223.49 during
1999. Income from a sale is allocated in proportion to the distribution of
related proceeds, provided that the general partners are allocated at least 1%.
Losses from a sale, and income 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.
NOTE 7 - SUBSEQUENT EVENT
- -------------------------
See Note 3 for discussion of sale of investment on February 26, 2001.
29
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION
AT DECEMBER 31, 2000
Initial Cost to
the Partnership Costs Subsequent to Acquisition
---------------------------------------- ---------------------------------------
Buildings,
improvements, Change in
and other Other Capitalized Other Valuation
Description Land Capital Costs Net Assets Improvements Net Assets Allowance
- ----------- ---- ------------- ---------- ------------ ---------- ---------
CARSON, CA. (See Note A)
- - Industrial bldg. $2,770,056 $4,380,463 $8,285 $955,734 $20,621 ($1,500,000)
DALLAS, TX (See Note A) $638,147 $3,966,791 $46,661 $8,581 ($46,672) -
- -Idustrial bldg.
Total wholly-owned property $3,408,203 $8,347,254 $54,946 $964,315 ($26,051) ($1,500,000)
ITASCA, IL.
- - 61.64% interest in Prentiss
Copley/Itasca Assoc. J/V
- - Develop and operate - - See Note B - - - - - - -
an industrial building
FREDERICK, MD.
- - 48.75% interest in Frederick
Partners Joint Venture - - See Note B - - - - - - -
- - Develop and operate
an apartment complex
PETALUMA, CA.
- - 50% interest in White Phonic
Associates Joint Venture - - See Note B - - - - - - -
- - Develop and operate
an industrial building
- - - - - - - - - - - -
Total joint venture investments:
= = = = = = = = = =
Gross Amount at which Carried at Close of Period
Buildings,
improvements,
and other Other Disposal Accum. Depr.
Description Land Capital Costs Net Assets of Asset Total & Amort.
- ----------- ---- ------------- ---------- -------- ----- --------
CARSON, CA. (See Note A)
- - Industrial bldg. 2,770,056 $3,836,205 $28,910 0 $6,635,171 ($2,350,365)
DALLAS, TX (See Note A) 638,147 $3,975,372 ($11) ($4,613,508) $0 $0
- -Idustrial bldg.
Total wholly-owned property 3,408,203 $7,811,577 28,899 ($4,613,508) $6,635,171 ($2,350,365)
ITASCA, IL.
- - 61.64% interest in Prentiss
Copley/Itasca Assoc. J/V
- - Develop and operate - - - - - - 1,864,405 N/A N/A
an industrial building
FREDERICK, MD.
- - 48.75% interest in Frederick
Partners Joint Venture - - - - - - 0 N/A N/A
- - Develop and operate
an apartment complex
PETALUMA, CA.
- - 50% interest in White Phonic
Associates Joint Venture - - - - - - 0 N/A N/A
- - Develop and operate
an industrial building
- - - - - -
Total joint venture investments: $1,864,405
= = = = = =
Status of Date Depreciable
Description Construction Acquired Life
- ----------- ------------ -------- ----
CARSON, CA. (See Note A)
- - Industrial bldg. Completed 7/18/88 30 Years
1990
DALLAS, TX (See Note A) Completed 12/7/88 40 Years
- -Idustrial bldg. 1989
Total wholly-owned property
ITASCA, IL.
- - 61.64% interest in Prentiss
Copley/Itasca Assoc. J/V
- - Develop and operate Completed 5/20/91 35 Years
an industrial building 1991
FREDERICK, MD.
- - 48.75% interest in Frederick
Partners Joint Venture Completed 03/20/89 27.5 Years
- - Develop and operate PhI - 1990
an apartment complex PhI - 1991
PETALUMA, CA.
- - 50% interest in White Phonic
Associates Joint Venture Completed 04/30/90 40 Years
- - Develop and operate 1991
an industrial building
Total joint venture investments:
30
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION - WHOLLY OWNED PROPERTY
SCHEDULE III NOTE A
AT DECEMBER 31, 2000
Balance Conversion to Additions to Change in
as of Wholly-Owned Lease Additions to Write down Property Working
Description 1/1/98 Property Commissions Property of Property Capital
- -------------------------------------------------------------------------------------------------------------------------------
Hewson/Wilmington 6,120,495 0 8,577 0 162,397
---------------------------------------------------------------------------------------------------
Total Wholly-Owned Property 6,120,495 0 8,577 0 0 162,397
===================================================================================================
Balance Conversion to Additions to Change in
as of Wholly-Owned Lease Additions to Write down Property Working
Description 1/1/99 Property Commissions Property of Property Capital
- -------------------------------------------------------------------------------------------------------------------------------
Hewson/Wilmington 6,291,469 0 4,860 0 (58,488)
---------------------------------------------------------------------------------------------------
Total Wholly-Owned Property 6,291,469 0 4,860 0 0 (58,488)
===================================================================================================
Balance Conversion to Additions to Change in
as of Wholly-Owned Lease Additions to Write down Property Working
Description 1/1/00 Property Commissions Property of Property Capital
- -------------------------------------------------------------------------------------------------------------------------------
Hewson/Wilmington 6,237,841 0 118,224 309,904 (30,810)
---------------------------------------------------------------------------------------------------
Total Wholly-Owned Property 6,237,841 0 118,224 309,904 0 (30,810)
===================================================================================================
Balance 12/31/97 1998 12/31/98 1998
Disposal as of Accumulated Depreciation Accumulated Disposal Balance per
Description of Asset 12/31/98 Depreciation Amort/Expense Depreciation of Asset G/L @ 12/31/98
- -------------------------------------------------------------------------------------------------------------------------------
Hewson/Wilmington 0 6,291,469 1,918,942 (129,744) 2,048,686 0 4,242,783
---------------------------------------------------------------------------------------------------
Total Wholly-Owned Property 6,291,469 1,918,942 (129,744) 2,048,686 4,242,783
===================================================================================================
Balance 12/31/98 1999 12/31/99 1999
Disposal as of Accumulated Depreciation Accumulated Disposal Balance per
Description of Asset 12/31/99 Depreciation Amort/Expense Depreciation of Asset G/L @ 12/31/99
- -------------------------------------------------------------------------------------------------------------------------------
Hewson/Wilmington 0 6,237,841 2,048,686 (128,053) 2,176,739 0 4,061,102
---------------------------------------------------------------------------------------------------
Total Wholly-Owned Property 6,237,841 2,048,686 (128,053) 2,176,739 4,061,102
===================================================================================================
Balance 12/31/99 2000 12/31/00 2000
Disposal as of Accumulated Depreciation Accumulated Disposal Balance per
Description of Asset 12/31/00 Depreciation Amort/Expense Depreciation of Asset G/L @ 12/31/00
- -------------------------------------------------------------------------------------------------------------------------------
Hewson/Wilmington 0 6,635,159 2,176,739 (173,626) 2,350,365 0 4,284,794
---------------------------------------------------------------------------------------------------
Total Wholly-Owned Property 6,635,159 2,176,739 (173,626) 2,350,365 4,284,794
===================================================================================================
31
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
SCHEDULE III NOTE B - JOINT VENTURES
AT DECEMBER 31, 2000
BALANCE
AS OF EQUITY IN
PERCENT OF DECEMBER 31, INVESTMENT IN INCOME/
DESCRIPTION OWNERSHIP 1997 J/V (LOSS)
- -------------------------------------------------------------------------------------------------------------------------------
Prentiss Copystar 51.75% 1,711,204 0 183,843
Waterford Apartments 48.75% 10,163,029 0 517,650
White Phonic 50% 3,092,137 0 (115,365)
------------------------------------------------------------------------
Investments in Joint
Ventures at December 31,
1998: $14,966,370 $586,128
========================================================================
BALANCE
AS OF EQUITY IN
PERCENT OF DECEMBER 31, INVESTMENT IN INCOME/
DESCRIPTION OWNERSHIP 1997 J/V (LOSS)
- -------------------------------------------------------------------------------------------------------------------------------
Prentiss Copystar 53.79% 1,649,433 2,841 127,505
-------------------------------------------------------------------------
Investments in
Joint Ventures at
December 31, 1999: $ 1,649,433 $2,841 $127,505
=========================================================================
BALANCE
AS OF EQUITY IN
PERCENT OF DECEMBER 31, INVESTMENT IN INCOME/
DESCRIPTION OWNERSHIP 1997 J/V (LOSS)
- -------------------------------------------------------------------------------------------------------------------------------
Prentiss Copystar 61.64% 1,595,569 227,905 40,932
------------------------------------------------------------------------
Investments in
Joint Ventures at
December 31, 2000: $ 1,595,569 $227,905 $40,932
========================================================================
BALANCE
1998 AMORTIZATION CASH DISPOSALS AS OF
OF DEFERRED DISTRIBUTED 1998 DECEMBER 31,
DESCRIPTION ACQUISITION FEES FROM J/V 1998
- -------------------------------------------------------------------------------------------------------------------------------
Prentiss Copystar - (245,614) 1,649,433
Waterford Apartments (5,136) (1,054,818) (9,620,725) 0
White Phonic (2,030) (211,419) (2,763,324) 0
------------------------------------------------------------------------------------------------
Investments in Joint
Ventures at December 31,
1998: ($7,166) ($1,511,851) ($12,384,049) $1,649,433
================================================================================================
BALANCE
1998 AMORTIZATION CASH DISPOSALS AS OF
OF DEFERRED DISTRIBUTED 1998 DECEMBER 31,
DESCRIPTION ACQUISITION FEES FROM J/V 1998
- -------------------------------------------------------------------------------------------------------------------------------
Prentiss Copystar - (184,210) 1,595,569
------------------------------------------------------------------------------------------------
Investments in
Joint Ventures at
December 31, 1999: $0 ($184,210) $0 $1,595,569
================================================================================================
BALANCE
1998 AMORTIZATION CASH DISPOSALS AS OF
OF DEFERRED DISTRIBUTED 1998 DECEMBER 31,
DESCRIPTION ACQUISITION FEES FROM J/V 1998
- -------------------------------------------------------------------------------------------------------------------------------
Prentiss Copystar - 0 1,864,405
------------------------------------------------------------------------------------------------
Investments in
Joint Ventures at
December 31, 2000: $0 $0 $0 $1,864,405
================================================================================================
32
FINANCIAL STATEMENTS
INDEX NO. 2
AUDITOR'S REPORT AND FINANCIAL STATEMENTS
OF PRENTISS/COPLEY ITASCA ASSOCIATES
Report of Independent Accountants from PricewaterhouseCoopers LLP
Balance Sheets - December 31, 2000 and 1999
Statements of Operations - For the Years ended December 31, 2000, 1999 and
1998
Statements of Partners' Equity - For the Years ended December 31, 2000,
1999 and 1998
Statements of Cash Flows - For the Years ended December 31, 2000, 1999 and
1998
Notes to Financial Statements
33
PRENTISS/COPLEY ITASCA
ASSOCIATES
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
34
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Prentiss/Copley Itasca Associates:
In our opinion, the accompanying balance sheets and the related statements of
operations, of partners' equity and of cash flows present fairly, in all
material respects, the financial position of Prentiss/Copley Itasca Associates
(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 the Partnership's management; 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 management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
March 21, 2001
35
PRENTISS/COPLEY ITASCA ASSOCIATES
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(dollars in thousands)
- --------------------------------------------------------------------------------
2000 1999
---- ----
ASSETS
Real estate, net $2,334 $2,387
Deferred charges, net 413 -
Accruable rental income 30 -
Accounts receivable 12 -
Cash and cash equivalents 31 12
------ ------
Total assets $2,820 $2,399
====== ======
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and other liabilities $ 106 $ 74
Amounts due to affiliates 209 37
------ ------
Total liabilities 315 111
====== ======
Partners' equity 2,505 2,288
------ ------
Total liabilities and partners' equity $2,820 $2,399
====== ======
The accompanying notes are an integral part of the financial statements
36
PRENTISS/COPLEY ITASCA ASSOCIATES
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(dollars in thousands)
- --------------------------------------------------------------------------------
2000 1999 1998
---- ---- ----
Rental operations:
Rental income $ 221 $ 368 $ 468
Property operating expenses (99) (110) (126)
------ ------ ------
122 258 342
====== ====== ======
Interest expense 397 356 355
Depreciation 53 52 53
Amortization 10 14 18
------ ------ ------
Net loss $ (338) $ (164) $ (84)
====== ====== ======
The accompanying notes are an integral part of the financial statements
37
PRENTISS/COPLEY ITASCA ASSOCIATES
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(dollars in thousands)
- --------------------------------------------------------------------------------
Developer CPP 6 CPP 7 Total
--------- ------ ------ ------
Partners' equity (deficit),
December 31, 1997 $ (195) $1,827 $ 819 $2,451
Net loss (21) (43) (20) (84)
------ ------ ------ ------
Partners' equity (deficit),
December 31, 1998 (216) 1,784 799 2,367
Contributions - 59 26 85
Net loss (41) (85) (38) (164)
------ ------ ------ ------
Partners' equity (deficit),
December 31, 1999 (257) 1,758 787 2,288
Contributions 383 172 555
Net loss (57) (194) (87) (338)
------ ------ ------ ------
Partners' equity (deficit),
December 31, 2000 $ (314) $1,947 $ 872 $2,505
====== ====== ====== ======
The accompanying notes are an integral part of the financial statements
38
PRENTISS/COPLEY ITASCA ASSOCIATES
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(dollars in thousands)
- --------------------------------------------------------------------------------
2000 1999 1998
---- ---- ----
Cash flows from operating activities:
Net loss $(338) $(164) $(84)
Adjustment to reconcile net loss
to cash provided by (used in)
operating activities:
Depreciation and amortization 63 66 71
Non-cash interest 225 85 -
Changes in operating assets and
liabilities:
Accruable rental income (30) 9 2
Accounts receivable (12) 1 4
Accounts payable and other
liabilities 32 (13) -
Amounts due to affiliates 172 7 (5)
----- ----- ----
Net cash provided by
(used in) operating
activities 112 (9) (12)
----- ----- ----
Cash flows from investing activities:
Additions to deferred charges (423) - -
----- ----- ----
Net cash used in investing
activities (423) - -
----- ----- ----
Cash flows from financing activities:
Cash contributions from partners 330 - -
----- ----- ----
Net cash provided by
financing activities 330 - -
----- ----- ----
Net increase (decrease) in cash and
cash equivalents 19 (9) (12)
Cash and cash equivalents, beginning
of year 12 21 33
----- ----- ----
Cash and cash equivalents, end of
year $ 31 $ 12 $ 21
===== ===== ====
Supplemental information:
Interest paid $ - $ 264 $355
===== ===== ====
The accompanying notes are an integral part of the financial statements
39
PRENTISS/COPLEY ITASCA ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Prentiss/Copley Itasca Associates (the "Partnership") was formed effective
May 20, 1991, pursuant to a general partnership agreement between
Prentiss Properties Itasca, L.P. (the "Developer") (25%), as managing
partner; Copley Pension Properties VI, a Real Estate Limited Partnership
("CPP 6") (51.75%); and Copley Pension Properties VII, a Real Estate
Limited Partnership ("CCP 7") (23.25%), for the purpose of owning,
constructing and operating an industrial building in Itasca, Illinois. The
interests of each partner change as default capital contributions are made.
See Note 5 for further discussion of default capital contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REAL ESTATE
Real estate is carried at the lower of depreciated cost or net realizable
value. Management of the Partnership periodically reviews the carrying
value of the property to determine if circumstances exist indicating an
impairment in the carrying value of the investment in real estate or that
depreciation periods should be modified. If facts or circumstances support
the possibility of impairment, management of the Partnership will prepare a
projection of the undiscounted future cash flows, without interest charges,
of the property and determine if the investment in real estate is
recoverable based on the undiscounted future cash flows. Management of the
Partnership does not believe that there are any factors or circumstances
indicating impairment of the property. Depreciation on the building and
improvements is provided under the straight-line method over an estimated
useful life of 35 years.
Maintenance and repairs are charged to operations as incurred; major
renewals and betterments are capitalized. Upon the sale or disposition of a
fixed asset, the asset and the related accumulated depreciation are removed
from the accounts and the gain or loss is included in operations.
DEFERRED CHARGES
Tenant improvements and leasing charges are deferred and amortized on a
straight-line basis over the term of the related lease. Accumulated
amortization was $10 at December 31, 2000.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents consists of
cash on hand and investments with maturities of three months or less when
purchased.
LEASES
The Partnership, as a lessor, has retained substantially all of the risks
and benefits of ownership and accounts for the lease as an operating lease.
Rental income is recognized on a straight-line basis over the term of the
lease as it is earned. Accruable rental income represents rental income
earned in excess of rent payments received pursuant to the terms of the
lease agreement.
40
PRENTISS/COPLEY ITASCA ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands)
- --------------------------------------------------------------------------------
INCOME TAXES
No provision for income taxes is necessary in the financial statements of
the Partnership because, as a partnership, it is not subject to income tax
and the tax effect of its activities accrues to the individual partners.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. REAL ESTATE
Real estate is comprised of the following at December 31:
2000 1999
---- ----
Land $ 983 $ 983
Building and improvements 1,837 1,837
------ ------
2,820 2,820
Accumulated depreciation (486) (433)
------ ------
$2,334 $2,387
====== ======
4. LEASING ACTIVITIES
In August 2000, a single tenant commenced a 15-year lease for 100% of the
building. The future minimum lease payments to be received by the
Partnership under the noncancelable lease are as follows:
2001 $ 391
2002 402
2003 413
2004 425
2005 436
Subsequent to 2005 4,887
-------
$ 6,954
=======
41
PRENTISS/COPLEY ITASCA ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands)
- --------------------------------------------------------------------------------
5. RELATED PARTY TRANSACTIONS
The operations of the Partnership are managed by an affiliate of the
Developer in accordance with a management agreement. Management fees
charged to the Partnership during the years ended December 31, 2000 and
1999, totaled approximately $4 and $8, respectively.
The partnership agreement provides for a priority return, which has been
reflected in the financial statements as a payment of interest, on the
capital contributions made by CPP 6 and CPP 7; interest is charged at the
rate of 11% per annum. The partnership agreement provides for a senior and
a junior priority return. As prescribed by the partnership agreement the
senior priority return is paid annually and, if necessary, funded from
deficit contributions while the junior return may accrue. The junior
priority return has been accrued by the Partnership since September 1999
and is reflected in amounts due to affiliates at December 31, 2000 and 1999
as shown in the table below.
If a partner fails to make a deficit contribution within the time
specified, the remaining partners may contribute the funds necessary to
meet the Partnership's obligations. Such contributions are referred to as
default capital contributions. If default capital contributions are made,
the interest of each partner is recalculated in accordance with the
partnership agreement.
During 2000 and 1999, CPP 6 and CPP 7 contributed a total of $555 and $85,
respectively, which are being treated as deficit and default capital
contributions. Per the partnership agreement, the deficit and default
capital contributions earn an 11% return which may accrue should the
property not have enough cash flow to pay the return. At December 31, 2000,
CPP 6 and CPP 7 earned approximately $32 on these contributions. This
amount is reflected in amounts due to affiliates as shown below.
Amounts due to affiliates is comprised of the following at December 31:
2000 1999
---- ----
Accrued Junior Priority Return $ 157 $ 37
Accrued Senior Priority Return 20 -
Accrued Priority Return on Deficit and Default
Contributions 32 -
------ ------
$ 209 $ 37
====== ======
6. SUBSEQUENT EVENT
The property was sold to an unrelated party for a sales price of
$4.58 million on February 26, 2001.
42
EXHIBIT INDEX
-------------
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ------ ------- ------
10H. First Amendment to Hewson Wilmington Associates *
General Partnership Agreement dated as of
December 31, 1989 by and between Hewson/Wilmington,
L.P., a California limited partnership and the Registrant.
27. Financial Data Schedule
* Previously filed and incorporated herein by reference.
43
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.
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Date: March 28, 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 March 28, 2001
- -------------------------------- Executive Officer and
Alison L. Husid Director of the Managing
General Partner
/s/ Pamela J. Herbst Vice President and March 28, 2001
- --------------------------------- Director of the Managing
Pamela J. Herbst General Partner
/s/ J. Grant Monahon Vice President and March 28, 2001
- ---------------------------------- Director of the Managing
J. Grant Monahon General Partner
/s/ James J. Finnegan Vice President of the Managing March 28, 2001
- ------------------------------------ General Partner
James J. Finnegan
/s/ Dana C. Spires Treasurer and Principal Financial March 28, 2001
- --------------------------------- and Accounting Officer of the
Dana C. Spires Managing General Partner
44