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 June 30, 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
- -------------------------------------------------------------------------------
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 JUNE 30, 2001
PART I
FINANCIAL INFORMATION
2
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, 2001 December 31, 2000
(Unaudited) (Audited)
-------------- ------------------
Assets
Real estate investments:
Property, net $ - $4,284,794
Property held for disposition 4,293,582 -
Joint Venture held for disposition - 1,864,405
Other assets 90,121 -
Cash and cash equivalents 1,178,645 2,053,663
---------- ----------
$5,562,348 $8,202,862
========== ==========
Liabilities and Partners' Capital
Accounts payable $ 54,055 $ 98,555
Accrued management fees 31,193 -
Deferred disposition fees 1,464,280 1,369,577
---------- ----------
Total liabilities 1,549,528 1,468,132
---------- ----------
Partners' capital:
Limited partners ($144.00 and $168.49,
respectively, per unit; 160,000 units
authorized, 48,788 units issued and
outstanding) 3,987,734 6,721,206
General partners 25,086 13,524
---------- ----------
Total partners' capital 4,012,820 6,734,730
---------- ----------
$5,562,348 $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 Six Months Ended Three Months Ended Six Months Ended
June 30, 2001 June 30, 2001 June 30, 2000 June 30, 2000
---------------- ------------------ ------------------ ----------------
INVESTMENT ACTIVITY
Property rentals $197,234 $ 423,743 $142,225 $ 334,725
Property operating expenses (47,081) (110,126) (60,304) (108,820)
Depreciation and amortization (46,827) (94,905) (46,218) (77,812)
-------- ---------- -------- ---------
103,326 218,712 35,703 148,093
Joint venture earnings (losses) 8,255 24,928 (25,974) (67,610)
-------- ---------- -------- ---------
Total real estate operations 111,581 243,640 9,729 80,483
Gain (loss) on sale of joint venture (9,788) 962,890 - -
-------- ---------- -------- ---------
Total real estate activity 101,793 1,206,530 9,729 80,483
Interest on cash equivalents 26,466 57,287 30,910 63,154
-------- ---------- -------- ---------
Total investment activity 128,259 1,263,817 40,639 143,637
-------- ---------- -------- ---------
PORTFOLIO EXPENSES
Management fee 31,193 31,193 - -
General and administrative 40,238 76,376 38,723 78,736
-------- ---------- -------- ---------
71,431 107,569 38,723 78,736
-------- ---------- -------- ---------
Net income (loss) $ 56,828 $1,156,248 $ 1,916 $ 64,901
======== ========== ======== =========
4
COPLEY PENSION PROPERTIES VI
A REAL ESTATE LIMITED PARTNERSHIP;
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, 2001 June 30, 2001 June 30, 2000 June 30, 2000
---------------- ------------------ ------------------ ----------------
Net income per limited
partnership unit $ 1.15 $ 23.46 $ .04 $ 1.32
======== ========== ======== =========
Cash distributions per limited
partnership unit $ 24.49 $ 79.49 $ - $ 2.81
======== ========== ======== =========
Number of limited partnership units
outstanding during the period 48,788 48,788 48,788 48,788
======== ========== ======== =========
(See accompanying notes to unaudited financial statements)COPLEY PENSION
5
PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, 2001 June 30, 2001 June 30, 2000 June 30, 2000
---------------------- ---------------------- -------------------- ----------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
-------- ------------ -------- ------------ -------- ---------- --------- -----------
Balance at beginning
of period $24,518 $ 5,126,292 $13,524 $ 6,721,206 $10,456 $6,417,496 $11,211 $6,492,235
Cash distributions - (1,194,818) - (3,878,158) - - (1,385) (137,094)
Net income (loss) 568 56,260 11,562 1,144,686 19 1,897 649 64,252
------- ----------- ------- ----------- -------- ---------- ------- ----------
Balance at end
of period $25,086 $ 3,987,734 $25,086 $ 3,987,734 $10,475 $6,419,393 $10,475 $6,419,393
======= =========== ======= =========== ======== ========== ======= ==========
(See accompanying notes to unaudited financial statements)
6
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
2001 2000
----------- ----------
Net cash provided by
operating activities $ 146,392 $ 127,135
----------- ----------
Cash flows from investing activities:
Deferred disposition fee 94,703 -
Investment in property - (297,673)
Investment in joint venture (44,995) (120,061)
Net proceeds from sale 2,807,040 -
----------- ----------
Net cash provided by (used in)
investing activities 2,856,748 (417,734)
----------- ----------
Cash flows from financing activity:
Distributions to partners (3,878,158) (138,479)
----------- ----------
Net cash used in financing activities (3,878,158) (138,479)
----------- ----------
Net decrease in cash
and cash equivalents (875,018) (429,078)
Cash and cash equivalents:
Beginning of period 2,053,663 2,305,383
----------- ----------
End of period $ 1,178,645 $1,876,305
=========== ==========
(See accompanying notes to unaudited financial statements)
7
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 June 30, 2001 and December 31, 2000, its results of operations,
and partners' capital for the three and six months ended June 30, 2001 and 2000
and its cash flows for the six month periods ended June 30, 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 an initial gain on the sale of $972,678, which,
due to additional costs of sale, was decreased to $962,890 ($19.54 per Limited
Partnership Unit). 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 for the Prentiss
Copystar joint venture:
8
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Assets and Liabilities
----------------------
June 30, 2001 December 31, 2000
------------- -----------------
Assets
Real property, at cost less
accumulated depreciation
of $496,142 $ - $2,746,869
Other 171,018 73,107
-------- ----------
171,018 2,819,976
Liabilities - 106,201
-------- ----------
Net assets $171,018 $2,713,775
======== ==========
Results of Operations
---------------------
Six Months Ended June 30,
2001 2000
------- --------
Revenue:
Rental income $87,305 $ -
------- --------
87,305 -
------- --------
Expenses:
Operating expenses 51,177 72,208
Depreciation and amortization 12,151 25,631
------- --------
63,328 97,839
------- --------
Net income (loss) $23,977 $(97,839)
======= ========
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.
9
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Note 3 - Property
In July 2001, the Partnership executed a Purchase and Sale Agreement to
sell the Wilmington Industrial investment. On August 8, 2001, this investment
was sold and the Partnership recognized a gain of approximately $3,700,000.
This investment is classified as Property held for disposition on the
balance sheet at June 30, 2001. During the year ended December 31, 2000, the
Partnership recognized $384,858 in net income from this investment.
The following is a summary of the Partnership's remaining wholly-owned
property (Wilmington Industrial):
June 30, 2001 December 31, 2000
------------- ------------------
Land $ - $ 2,770,056
Buildings, improvements and
other capitalized costs - 5,336,205
Investment valuation allowance - (1,500,000)
Accumulated depreciation and
amortization - (2,350,377)
Net operating assets - 28,910
Property held for disposition, net 4,293,582 -
---------- -----------
$4,293,582 $ 4,284,794
========== ===========
Note 4 - Subsequent Event
On July 26, 2001, a distribution was made from operational cash
previously held in reserves in the amount of $315,397 ($6.40 per Limited
Partnership Unit).
See Note 3 for discussion of investment sale on August 8, 2001.
10
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 June 30, 2001, capital of $41,762,527 ($856 per limited
partnership unit) has been returned to the limited partners; $38,877,693 as a
result of sales and $2,884,834, as a result of a discretionary reduction of
original working capital previously held in reserves.
At June 30, 2001, the Partnership had $1,178,645 in cash and cash
equivalents, of which $315,397 was used for a distribution from operational cash
previously held in reserves to partners on July 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. With the exception of the operational
cash distribution of reserves discussed above, 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 its 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 June 30, 2001, the appraised value of the
Partnership's remaining investment exceeded its carrying value by approximately
$3,900,000. The current appraised value of the real estate investment has been
estimated by the managing general partner and is based on the amount negotiated
in the Purchase and Sale Agreement executed on July 5, 2001.
11
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 $962,890. At the time of the
sale, Prentiss Copystar was 100% leased.
The Partnership's remaining property, Wilmington Industrial, was 100%
leased at June 30, 2001 compared to 77% leased at June 30, 2000.
Investment Results
Interest income on cash equivalents for the three and six months ended
June 30, 2001, was $26,466 and $57,287, respectively, compared to $30,910 and
$63,154 for the same periods in 2000. The decreases of approximately $4,000 and
$6,000 for the comparative three and six month periods are primarily due to
lower average investment balances.
For the three and six month periods ended June 30, 2001, real estate
operating results were $111,581 and $243,640, respectively, compared to $9,729
and $80,483 for the same periods in 2000. The increases of approximately
$102,000 and $163,000 for the comparative three and six month periods are
primarily due to an increase in joint venture earnings in 2001 as compared to
joint venture losses in 2000 due to Prentiss Copystar's vacancy in the second
quarter of 2000. Operating results from Wilmington Industrial have increased
between the comparative three and six month periods of 2001 and 2000 due to the
decrease in vacancy in 2001.
12
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
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 management fee increase during the three and six month
periods ended June 30, 2001, is due to the distribution of operational cash flow
previously held in reserves.
During the respective three and six month periods of 2000 and 2001, general
administrative expenses remained relatively stable.
13
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2001
PART II
OTHER INFORMATION
Item 6. Reports on Form 8-K
Reports on Form 8-K: No current reports on form 8-K were filed
during the quarter ended June 30, 2001.
14
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)
August 14, 2001
/s/ Alison L. Husid
-------------------------------
Alison L. Husid
President, Chief Executive Officer
And Director of Managing General Partner, Sixth
Copley Corp.
August 14, 2001
/s/ Jonathan Martin
--------------------------------
Jonathan Martin
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.
15