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 0-20126
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-3035851
(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 VII;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2001
PART I
FINANCIAL INFORMATION
2
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, 2001 December 31, 2000
(Unaudited) (Audited)
----------- -----------------
Assets
Real estate investments:
Joint venture held for disposition $ - $ 938,614
Property held for disposition - 2,318,455
---------- ----------
- 3,257,069
Other assets 41,922 -
Cash and cash equivalents 1,327,677 2,215,637
---------- ----------
$1,369,599 $5,472,706
========== ==========
Liabilities and Partners' Capital
Accounts payable $ 65,606 $ 88,687
Accrued management fees 52,331 -
Deferred disposition fees - 1,384,858
---------- ----------
Total liabilities 117,938 1,473,545
---------- ----------
Partners' capital:
Limited partners ($57.00 and $138.00
per unit, respectively; 160,000 units
authorized, 42,076 units issued
and outstanding) 1,205,525 3,971,413
General partners 46,136 27,748
---------- ----------
Total partners' capital 1,251,661 3,999,161
---------- ----------
$1,369,599 $5,472,706
========== ==========
(See accompanying notes to unaudited financial statements)
3
COPLEY PENSION PROPERTIES VII;
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 $ 4,618 $ 113,217 $ 31,534 $ 158,858
Property operating expenses (33,286) (41,841) (7,528) (58,953)
Depreciation and amortization - - (35,592) (71,236)
---------- ---------- ---------- ----------
(28,668) 71,376 (11,586) 28,669
Joint venture earnings 3,709 11,200 151,888 385,779
---------- ---------- ---------- ----------
Total real estate operations (24,959) 82,576 140,302 414,448
Gain (loss) on sale of joint venture (4,397) 325,767 2,604,939 2,604,939
Gain on sale of property 68,264 68,264 - -
Reversal of deferred
disposition fees 1,427,406 1,427,406 - -
---------- ---------- ---------- ---------
Total real estate activity 1,466,314 1,904,013 2,745,241 3,019,387
Interest on cash equivalents 30,901 63,725 56,372 107,498
---------- ---------- ---------- ----------
Total investment activity 1,497,215 1,967,738 2,801,613 3,126,885
---------- ---------- ---------- ----------
4
COPLEY PENSION PROPERTIES VII;
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
------------------ ---------------- ------------------ ----------------
PORTFOLIO EXPENSES
Management fees 52,332 52,332 23,875 54,896
General and administrative 36,631 76,622 47,085 92,785
---------- ---------- ---------- ----------
88,963 128,954 70,960 147,681
---------- ---------- ---------- ----------
Net Income $1,408,252 $1,838,784 $2,730,653 $2,979,204
========== ========== ========== ==========
Net income per limited partnership
unit $ 33.13 $ 43.26 $ 64.25 $ 70.10
========== ========== ========== ==========
Cash distributions per limited
partnership unit $ 138.00 $ 109.00 $ 260.16 $ 271.53
========== ========== ========== ==========
Number of limited partnership units
outstanding during the period 42,076 42,076 42,076 42,076
========== ========== ========== ==========
(See accompanying notes to unaudited financial statements)
5
COPLEY PENSION PROPERTIES VII;
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 $32,053 $ 3,219,513 $27,748 $ 3,971,413 $ 3,987 $ 13,746,095 $ 6,333 $ 13,978,434
of period
Cash distributions - (3,408,157) - (4,586,284) (3,137) (10,946,492) (7,969) (11,424,896)
Net income 14,083 1,394,169 18,388 1,820,396 27,306 2,703,347 29,792 2,949,412
------- ---------- ------- ---------- ------- ---------- ------- ----------
Balance at end
of period $46,136 $ 1,205,525 $46,136 $ 1,205,525 $28,156 $ 5,502,950 $28,156 $ 5,502,950
======= =========== ======= =========== ======== ============ ======= ============
(See accompanying notes to unaudited financial statements)
6
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
--------------------------
2001 2000
----------- ------------
Net cash provided by operating activities $ 82,881 $ 190,408
----------- ------------
Cash flows from investing activities:
Investment in property - (29,426)
Investment in joint venture (19,500) (121,507)
Net proceeds from sale of investment 3,592,395 10,649,149
Deferred disposition fees 42,548 351,750
----------- ------------
Net cash provided by (used in)
investing activities 3,615,443 (10,849,966)
----------- ------------
Cash flows from financing activity:
Distributions to partners (4,586,284) (11,432,865)
----------- ------------
Net decrease in cash
and cash equivalents (887,960) (392,491)
Cash and cash equivalents:
Beginning of period 2,215,637 4,169,397
----------- ------------
End of period $ 1,327,677 $ 3,776,906
=========== ============
(See accompanying notes to unaudited financial statements)
7
COPLEY PENSION PROPERTIES VII;
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 and the results of
its operations, and partners' capital for the three and six month periods 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 VII; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other entities intended to be exempt from federal
income tax. The Partnership commenced operations in March 1989 and has disposed
of all its real estate investments as of June 30, 2001. The Partnership intends
to liquidate and dissolve in 2002.
Note 2 - Real Estate Joint Ventures
On February 26, 2001, the Prentiss Copystar joint venture investment in
which the Partnership and an affiliate are entitled to 31% and 69%,
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 $1,418,250. The Partnership received its 31% share of the net proceeds,
$1,253,848 after closing costs, and recognized an initial gain on the sale of
$330,165, which, due to additional costs of sale, was decreased to $325,767
($7.66 per limited partnership unit). A disposition fee of $42,548 was accrued
but not paid to AEW Real Estate Advisors, Inc. ( the "Advisors"). In accordance
with the Partnership agreement, this fee was reversed during the second quarter
of 2001. On March 29, 2001, the Partnership made a capital distribution of
$1,178,128 ($28.00 per limited partnership unit) from the proceeds of the sale.
8
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
On May 31, 2000, the South Bay/Parkmoor Plaza joint venture, in which the
Partnership held a 75% interest, sold its property to an unaffiliated third
party for gross proceeds of $11,725,000. The Partnership received net proceeds
of $11,000,422 and recognized a gain of $2,501,169 ($58.85 per limited
partnership unit). A disposition fee of $351,750 was accrued but not paid to the
Advisor. In accordance with the Partnership agreement, this fee was reversed
during the second quarter of 2001. On June 28, 2000, the Partnership made a
capital distribution of $10,635,971 ($252.78 per limited partnership unit) from
the proceeds of the sale.
The following summarized financial information is presented for the
Prentiss Copystar joint venture:
Assets and Liabilities
----------------------
June 30, 2001 December 31, 2000
------------- -----------------
Assets
Real property, at cost less
accumulated depreciation of
$2,901,209 $ - $2,746,869
Other 171,018 73,107
-------- ----------
171,018 2,819,976
Liabilities - 106,201
-------- ----------
Net assets $171,018 $2,713,775
======== ==========
9
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
Results of Operations
Six Months Ended June 30,
2001 2000
------- --------
Revenue
Rental income $87,305 $718,989
------- --------
87,305 718,989
------- --------
Expenses
Operating expenses 51,177 235,196
Depreciation and amortization 12,151 154,795
------- --------
63,328 389,991
------- --------
Net income $23,977 $328,998
======= ========
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and (with respect to one joint venture) its affiliates on behalf of
their various financing arrangements with the joint ventures. The six months
ended June 30, 2000 includes net income from the South Bay/Parkmoor Plaza joint
ventures through its date of sale.
Note 3 - Property
On April 6, 2001, the Partnership sold its Drilex investment to an
unaffiliated third party for gross proceeds of $2,500,000. The Partnership
received net proceeds of $2,338,547 and a gain of $68,264 ($1.61 per limited
partnership unit) on the sale. On April 26, 2001, the Partnership made a
capital distribution of $2,272,104 ($54.00 per limited partnership unit) from
the proceeds of the sale.
10
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
The following is a summary of the Drilex investment in property:
June 30, 2001 December 31, 2000
------------- -----------------
Property held for disposition, net $ - $ 2,318,455
------------- --------------
$ - $ 2,318,455
============= ==============
During the year ended December 31, 2000, the Partnership recognized
$132,174 in net income from this investment.
Note 4 - Subsequent Event
On July 26, 2001, a distribution was made from operational cash previously
held in reserves in the amount of $529,138 ($12.45 per limited partnership
unit).
11
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial Condition
- -----------------------------------------------------------
and Results of Operations
- -------------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership's offering of units of limited partnership interest was
completed as of September 30, 1990. A total of 42,076 units were sold. The
Partnership received proceeds of $36,522,542, net of selling commissions and
other offering costs, which have been used for investment in real estate and the
payment of related acquisition costs, or retained as working capital reserves.
The Partnership made seven real estate investments, one of which was sold in
each of 1991, 1994, 1998, 1999 and 2000 and two of which were sold in 2001.
Through June 30, 2001, capital of $39,677,667 ($943.00 per limited partnership
unit) has been returned to the limited partners; $36,091,951 as a result of
sales, $336,608 in 1996 as a result of a discretionary reduction of cash
reserves and $3,249,108 as a result of distributions of original working
capital. As a result of sales and similar transactions, the adjusted capital
contribution has been reduced to $57.00.
At June 30, 2001, the Partnership had $1,327,677 in cash and cash equivalents,
of which $529,138 was used for a distribution from operational cash previously
held in reserves to partners on July 26, 2001. The remainder is being retained
as a reserve in connection with the liquidation of the Partnership. There were
no distributions of cash from operations for the first quarter of 2001 due to
the sale of Prentiss Copystar and insufficient cash flow from Drilex.
Distributions of cash from operations for the first quarter of 2000 were made at
an annualized rate of 6.5% on the adjusted capital contribution of $454.22.
Distributions of cash from operations for the second quarter of 2000 were made
at an annualized rate of 5% on the adjusted capital contribution of $454.22. The
rate decrease in the second quarter of 2000 was primarily due to a decrease in
cash available for distribution due to the sale of Parkmoor Plaza on May 31,
2000.
12
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
Results of Operations
- ---------------------
Form of Real Estate Investment
The Drilex investment is a wholly-owned property. Drilex was sold on April
6, 2001. 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, Drilex was sold on April 6, 2001 and the Partnership
recognized a gain of $68,264. At the time of sale, Drilex was 100% leased, as it
was at June 30, 2000.
As mentioned above, the Prentiss Copystar joint venture investment in which
the Partnership and an affiliate were entitled to 31% and 69% of the operating
activity, respectively, sold its property on February 26, 2001. The Partnership
recognized its 31% share of the gain of $325,767. At the time of the sale,
Prentiss Copystar was 100% leased.
As mentioned above, The Parkmoor Plaza investment was sold on May 31, 2000
and the Partnership recognized a gain $2,501,169. The property was 100% leased
at the time of sale.
Investment Results
Interest on cash equivalents for the three and six months ended June 30,
2001, was $30,901 and $63,725, respectively, compared to $56,372 and $107,498
for the comparable periods in 2000. The decreases of $25,471 and $43,773 for the
comparative three and six month periods are due to lower average investment
balances in 2001.
For the three and six months ended June 30, 2001, real estate operating
results were ($24,959) and $82,576, respectively, compared to $140,302 and
$414,448 for the comparable periods in 2000. The decreases of $165,261 and
$331,872 for the comparative three and six month periods are due to a decrease
in both joint venture earnings as well as property operations as a result of the
sale of Parkmoor Plaza in May 2000, the sale of Prentiss Copystar in February
2001 and the sale of Drilex in April 2001.
13
COPLEY PENSION PROPERTIES VII;
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
primarily consist of real estate appraisal, printing, legal, accounting and
investor servicing fees.
For the three and six months ended June 30, 2001, management fees were
$52,332 compared to $23,875 and $54,896 for the comparable periods in 2000. The
three month increase in management fees is due to the distribution of
operational cash flow previously held in reserves, while the comparative six
month management fee remained relatively stable.
General and administrative expenses for the three and the six months ended
June 30, 2001 were $36,631 and $76,622, respectively, compared to $47,085 and
$92,785 for the same periods in 2000. The decreases between the comparative
three and six month periods are due to a decrease in legal fees, appraisal fees
and lower taxes.
14
COPLEY PENSION PROPERTIES VII;
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: During the quarter ended June 30, 2001, one
Current Report on Form 8-K was filed on April 20, 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
April 6, 2001 sale of Drilex.
15
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 VII;
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, Seventh Copley Corp.
August 14, 2001
/s/ Jonathan Martin
--------------------------------
Jonathan Martin
Principal Financial and Accounting
Officer of Managing General Partner,
Seventh Copley Corp.
16