SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------
For Quarter Ended March 31, 2001 Commission File Number 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 Identification No.)
incorporation or organization)
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
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Former name, former address and former fiscal year if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2001
PART I
FINANCIAL INFORMATION
2
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
March 31, 2001 December 31, 2000
(Unaudited) (Audited)
-------------- -----------------
Assets
Real estate investments:
Property, net $4,304,381 $4,284,794
---------- ----------
4,304,381 4,284,794
Joint Venture held for disposition - 1,864,405
Other assets 90,121 -
Cash and cash equivalents 2,313,857 2,053,663
---------- ----------
$6,708,359 $8,202,862
========== ==========
Liabilities and Partners' Capital
Accounts payable $ 93,269 $ 98,555
Deferred disposition fees 1,464,280 1,369,577
---------- ----------
Total liabilities 1,557,549 1,468,132
---------- ----------
Partners' capital:
Limited partners ($168.49 and $223.49,
respectively, per unit; 160,000 units
authorized 48,788 units issued and
outstanding) 5,126,292 6,721,206
General partners 24,518 13,524
---------- ----------
Total partners' capital 5,150,810 6,734,730
---------- ----------
$6,708,359 $8,202,862
========== ==========
(See accompanying notes to unaudited financial statements)
3
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
2001 2000
-------- --------
INVESTMENT ACTIVITY
Property rentals $ 226,509 $192,500
Property operating expenses (63,045) (48,516)
Depreciation and amortization (48,078) (31,594)
---------- --------
115,386 112,390
Joint venture earnings (loss) 16,673 (41,636)
---------- --------
Total real estate operations 132,059 70,754
Gain on sale of joint venture 972,678 -
---------- --------
Total real estate activity 1,104,737 70,754
Interest on cash equivalents 30,821 32,244
---------- --------
Total investment activity 1,135,558 102,998
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PORTFOLIO EXPENSES
General and administrative 36,138 40,013
---------- --------
36,138 40,013
---------- --------
Net income $1,099,420 $ 62,985
========== ========
Net income per limited
partnership unit $ 22.31 $ 1.28
========== ========
Cash distributions per limited
partnership unit $ 55.00 $ 2.81
========== ========
Number of limited partnership units
outstanding during the period 48,788 48,788
========== ========
(See accompanying notes to unaudited financial statements)
4
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Three Months Ended March 31,
-----------------------------------------------
2001 2000
---------------------- ---------------------
General Limited General Limited
Partners Partners Partners Partners
-------- ---------- -------- ----------
Balance at beginning
of period $13,524 $ 6,721,206 $11,211 $6,492,235
Cash distributions - (2,683,340) (1,385) (137,094)
Net income 10,994 1,088,426 630 62,355
------- ----------- ------- ----------
Balance at end
of period $24,518 $ 5,126,292 $10,456 $6,417,496
======= =========== ======= ==========
(See accompanying notes to unaudited financial statements)
5
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
2001 2000
-------- --------
Net cash provided by (used in)
operating activities $ 85,196 $ (24,567)
---------- ----------
Cash flows from investing activities:
Deferred disposition fee 94,703 -
Investment in property - (3,636)
Investment in joint venture (43,405) -
Net proceeds from sale 2,807,040 -
---------- ----------
Net cash provided by (used in)
investing activities 2,858,338 (3,636)
---------- ----------
Cash flows from financing activity:
Distributions to partners (2,683,340) (138,479)
---------- ----------
Net cash used in financing activities (2,683,340) (138,479)
---------- ----------
Net increase (decrease) in cash
and cash equivalents 260,194 (166,682)
Cash and cash equivalents:
Beginning of period 2,053,663 2,305,383
---------- ----------
End of period $2,313,857 $2,138,701
========== ==========
(See accompanying notes to unaudited financial statements)
6
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of March 31, 2001 and December 31, 2000 and its
operations, its cash flows and partners' capital for the three months ended
March 31, 2001 and 2000. These adjustments are of a normal recurring nature.
See notes to financial statements included in the Partnership's 2000 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
Note 1 - Organization and Business
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
real estate investment 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; however, the managing general partner could extend the
investment period if it is considered to be in the best interest of the limited
partners. The Partnership has engaged AEW Real Estate Advisors, Inc. (the
"Advisor") to provide asset management advisory services.
Note 2 - Investment in Joint Venture
On February 26, 2001, the Prentiss Copystar joint venture investment in
which the Partnership and an affiliate are entitled to 69% and 31%,
respectively, of the operating activity, sold its property to an unaffiliated
third party for gross proceeds of $4,575,000, of which the Partnership's share
was $3,156,750. The Partnership received its 69% share of the net proceeds,
$2,901,743 after closing costs, and recognized a gain of $972,678 ($19.74 per
Limited Partnership Unit) on the sale. A disposition fee of $94,703 was accrued
but not paid to the Advisor. On March 29, 2001, the Partnership made a capital
distribution of $2,683,340 ($55.00 per Limited Partnership Unit) from the
proceeds of the sale.
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the Prentiss Copystar joint venture:
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COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Assets and Liabilities
----------------------
March 31, 2001 December 31, 2000
-------------- -----------------
Assets
Real property, at cost less
accumulated depreciation
of $496,142 $ - $2,746,869
Other 158,280 73,107
-------- ----------
158,280 2,819,976
Liabilities - 106,201
-------- ----------
Net assets $158,280 $2,713,775
======== ==========
Results of Operations
---------------------
Three Months Ended March 31,
----------------------------
2001 2000
-------- --------
Revenue:
Rental income $87,305 $ -
------- --------
87,305 -
------- --------
Expenses:
Operating expenses 63,140 28,370
Depreciation and amortization 12,151 12,815
------- --------
75,291 41,185
------- --------
Net income (loss) $12,014 $(41,185)
======= ========
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliate on behalf of their various financing arrangements
with the joint venture.
8
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Note 3 - Property
The following is a summary of the Partnership's remaining wholly-owned
property (Wilmington Industrial):
March 31, 2001 December 31, 2000
-------------- -----------------
Land $ 2,770,056 $ 2,770,056
Buildings, improvements and
other capitalized costs 5,336,205 5,336,205
Investment valuation allowance (1,500,000) (1,500,000)
Accumulated depreciation and
amortization (2,398,456) (2,350,377)
Net operating assets 96,576 28,910
----------- -----------
$ 4,304,381 $ 4,284,794
=========== ===========
Note 4 - Subsequent Event
On April 26, 2001, a capital distribution was made from original working
capital reserves in the amount of $1,194,818 ($24.49 per Limited Partnership
Unit).
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COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial Condition and
- ---------------------------------------------------------------
Results of Operations
- ---------------------
Liquidity and Capital Resources
The Partnership completed its offering of units of limited partnership
interest on December 31, 1988. 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 and for
the payment of related acquisition costs, or retained as working capital
reserves. The Partnership made seven real estate investments; one investment
was sold in each of 1990, 1994, 1997 and 2001 and two investments were sold in
1998. Through March 31, 2001, capital of $40,567,709 ($831.51 per limited
partnership unit) has been returned to the limited partners; $38,877,693 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 March 31, 2001, the Partnership had $2,313,857 in cash and cash
equivalents, of which $1,194,818 was used for a capital distribution from
original working capital reserves to the limited partners on April 26, 2001, the
remainder is being retained as working capital reserves. The source of future
liquidity and cash distributions to partners will primarily be cash generated by
the Partnership's invested cash and cash equivalents and its remaining real
estate investment, and proceeds from the sale of such investment. There have
been no operating cash distributions made since the fourth quarter of 1999 due
to Prentiss Copystar's vacancy from September 1999 through August 2000 and it's
subsequent sale in February 2001 as well as insufficient cash flow from
Wilmington Industrial as a result of property level obligations which reduced
its cash flow to the Partnership.
The carrying value of real estate investments in the financial statements
is at depreciated cost, or if the investment's carrying value is determined not
to be recoverable through expected undiscounted future cash flows, the carrying
value is reduced to 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
March 31, 2001, the appraised value of the Partnership's remaining investment
exceeded its carrying value by approximately $2,700,000. The current appraised
value of real estate investments has been estimated by the managing general
partner and is generally based on a combination of traditional appraisal
approaches performed by the Advisor and independent appraisers. Because of the
subjectivity inherent in the valuation process, the estimated current appraised
value may differ significantly from that which could be realized if the real
estate were actually offered for sale in the marketplace.
10
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Results of Operations
- ---------------------
Form of Real Estate Investments
The Wilmington Industrial investment is a wholly-owned property. The
Prentiss Copystar real estate investment was structured as a joint venture.
Prentiss Copystar was sold on February 26, 2001.
Operating Factors
As mentioned above, the Prentiss Copystar joint venture investment in
which the Partnership and an affiliate were entitled to 69% and 31% of the
operating activity, respectively, sold its property on February 26, 2001. The
Partnership recognized its 69% share of the gain of $972,678. At the time of the
sale, Prentiss Copystar was 100% leased, while it was vacant at March 31, 2000.
The Partnership's remaining property, Wilmington Industrial, was 100%
leased at March 31, 2001 compared to 67% leased at March 31, 2000.
Investment Results
Interest income on cash equivalents remained relatively stable between the
first quarters of 2000 and 2001.
Real estate operating results were $132,059 for the first three months of
2001, and $70,754 for the comparable period of 2000. The increase of $61,305 is
primarily due to an increase in joint venture earnings in 2001 as compared to
joint venture loss in 2000 due to Prentiss Copystar's vacancy in the first
quarter of 2000. Operating results from Wilmington Industrial have remained
relatively stable between the first three months of 2001 and 2000. Rental
activity has increased due to the decrease in vacancy, however it is offset by
an increase in operating expenses.
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.
The Partnership did not incur management fees during the three months ended
March 31, 2001 and 2000, respectively, due to the suspension of cash
distributions since the fourth quarter of 1999. General and administrative
expenses remained relatively stable between the first quarters of 2001 and 2000.
11
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2001
PART II
OTHER INFORMATION
Item 6. Reports on Form 8-K
Reports on Form 8-K: During the quarter ended March 31, 2001, one
Current Report on Form 8-K was filed on March 12, 2001 reporting
on Item No. 2 (Acquisition or Disposition of Assets) and Item No.
7 (Financial statements and Exhibits), relating in both cases to
the February 26, 2001 sale of Prentiss Copystar.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
May 14, 2001
/s/ Alison L. Husid
-------------------------------
Alison L. Husid
President, Chief Executive Officer
and Director of Managing General Partner,
Sixth Copley Corp.
May 14, 2000
/s/ Jonathan Martin
--------------------------------
Jonathan Martin
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.
13