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
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For Quarter Ended March 31, 2002 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, 2002
PART I
FINANCIAL INFORMATION
2
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF NET ASSETS IN LIQUIDATION
March 31, 2002 December 31, 2001
(Unaudited) (Audited)
--------------- -----------------
Assets
Other assets $ 16,401 $ 41,979
Cash and cash equivalents 985,912 1,008,448
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$ 1,002,313 $ 1,050,427
=============== ==============
Liabilities and Partners' Capital
Accounts payable $ 31,059 $ 82,604
Accrued expenses for liquidation 110,672 115,425
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Total liabilities 141,731 198,029
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Net assets in liquidation:
Limited partners ($0 per unit; 160,000 units authorized
48,788 units issued and outstanding) 796,763 788,661
General partners 63,819 63,737
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Total partners' capital 860,582 852,398
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$ 1,002,313 $ 1,050,427
=============== ==============
(See accompanying notes to unaudited financial statements)
3
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CHANGES OF NET ASSETS IN LIQUIDATION
(Unaudited)
Three Months Ended
March 31, 2002
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Net Assets in liquidation at beginning of period $ 852,398
------------------
Increase during period:
Operating Activities
Interest Income 8,184
------------------
Net change in net assets in liquidation 8,184
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Net assets in liquidation at end of period $ 860,582
==================
(See accompanying notes to unaudited financial statements)
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COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended
March 31, 2001
------------------
INVESTMENT ACTIVITY
Property rentals $ 226,509
Property operating expenses (63,045)
Depreciation and amortization (48,078)
---------------
115,386
Joint venture earnings 16,673
---------------
Total real estate operations 132,059
Gain on sale of joint venture 972,678
---------------
Total real estate activity 1,104,737
Interest on cash equivalents 30,821
---------------
Total investment activity 1,135,558
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PORTFOLIO EXPENSES
General and administrative 36,138
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36,138
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Net income $ 1,099,420
===============
Net income per limited partnership unit $ 22.31
===============
Cash distributions per limited partnership unit $ 55.00
===============
Number of limited partnership units outstanding during
the period 48,788
===============
(See accompanying notes to unaudited financial statements)
5
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31, 2001
------------------
Net cash provided by operating activities $ 85,196
---------------
Cash flows from investing activities:
Deferred disposition fee 94,703
Investment in joint venture (43,405)
Net proceeds from sale 2,807,040
---------------
Net cash provided by investing activities 2,858,338
---------------
Cash flows from financing activity:
Distributions to partners (2,683,340)
---------------
Net cash used in financing activities (2,683,340)
---------------
Net increase in cash and cash equivalents 260,194
Cash and cash equivalents:
Beginning of period 2,053,663
---------------
End of period $ 2,313,857
===============
(See accompanying notes to unaudited financial statements)
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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, 2002 and December 31, 2001 and its changes of
net assets in liquidation and its operations for the three month periods ended
March 31, 2002 and 2001, respectively, and its cash flows for the three months
ended March 31, 2001. These adjustments are of a normal recurring nature.
See notes to financial statements included in the Partnership's 2001
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 had disposed
of all of its real estate investments as of December 31, 2001. The Partnership
sold its last remaining asset in August 2001. On December 31, 2001, the
Partnership adopted a plan of liquidation and intends to liquidate and dissolve
in 2002.
In connection with its adoption of a plan of liquidation on December
31, 2001, the Partnership also adopted the liquidation basis of accounting
which, among other things, requires that assets and liabilities be stated at
their estimated net realizable value and that estimated costs of liquidating the
Partnership be provided to the extent that they are reasonably determinable.
Note 2 - Investment in Joint Venture
- ------------------------------------
On February 26, 2001, the Prentiss Copystar joint venture investment
in which the Partnership and an affiliate were 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,
$3,049,698 after closing costs, and recognized a gain of $953,693 ($19.35 per
Limited Partnership Unit) on the sale. A disposition fee of $94,703 was accrued
but not paid to AEW Real Estate Advisors, Inc. In accordance with the
Partnership agreement, a portion of this previously accrued fee was reversed
during the third quarter of 2001, decreasing the fee to $44,826. 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.
7
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the Prentiss Copystar joint venture:
Assets and Liabilities
----------------------
March 31, 2002 December 31, 2001
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Assets
Other $ - $ 9,500
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- 9,500
Liabilities - 9,500
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Net assets $ - $ 0
=============== ==============
Results of Operations
---------------------
Three Months Ended March 31,
2002 2001
------------ -----------
Revenue:
Rental income $ - $ 87,305
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- 87,305
--------------- --------------
Expenses:
Operating expenses - 63,140
Depreciation and amortization - 12,151
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- 75,291
--------------- --------------
Net income (loss) $ - $ 12,014
=============== ==============
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.
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COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Note 3 - Property
- -----------------
On August 8, 2001, the Partnership sold it Wilmington Industrial
investment to an unaffiliated third party for gross proceeds of $8,217,781. The
Partnership received net proceeds of $7,914,742 and recognized a gain on the
sale of $3,702,297 ($75.13 per Unit). On September 28, 2001, the Partnership
made a capital distribution of $7,025,472 ($144.00 per Unit) from the proceeds
of the sale.
The following is the balance of Wilmington Industrial's net operating
assets, which consist of working capital:
March 31, 2002 December 31, 2001
--------------- -----------------
Net operating assets $ 16,401 $ 41,979
--------------- --------------
$ 16,401 $ 41,979
=============== ==============
Note 4 - Accrued expenses for liquidation
- -----------------------------------------
Accrued expenses for liquidation as of March 31, 2002 include
estimates of costs to be incurred in carrying out the dissolution and
liquidation of the Partnership. These costs include estimates of legal fees,
accounting fees, tax preparation and filing fees and other professional
services. During the three months ended March 31, 2002, the Partnership incurred
$4,753 of such expenses.
The actual costs could vary from the related provisions due to the
uncertainty related to the length of time required to complete the liquidation
and dissolution of the Partnership. The accrued expenses do not take into
consideration possible litigation arising from the customary representations and
warranties made as part of each sale. Such costs are unknown and are not
estimable at this time.
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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
- ---------------------
Accounting Policies
- -------------------
Revenue recognition
The Partnership recognizes rental revenue on a straight-line basis
over the lease terms.
The Partnership accounts for its investments in joint ventures using
the equity method of accounting. Under the equity method of accounting, the net
equity investment of the Partnership is reflected on the balance sheets, and the
Partnership's share of net income or loss from the joint ventures is included in
the statements of operations.
The Partnership records real estate sales at the time a sale is
consummated. A sale is consummated when the parties are bound by the terms of a
contract, all consideration has been exchanged, all conditions precedent to
closing have been met, and title has passed from seller to buyer.
Liquidation Basis of Accounting
The Partnership adopted a plan of liquidation on December 31, 2001,
and, as a result, the Partnership also adopted the liquidation basis of
accounting which, among other things, requires that assets and liabilities be
stated at their estimated net realizable value and that estimated costs of
liquidating the Partnership be provided to the extent that they are reasonably
determinable. Accrued expenses for liquidation as of December 31, 2001 include
estimates of costs to be incurred in carrying out the dissolution and
liquidation of the Partnership. These costs include estimates of legal fees,
accounting fees, tax preparation and filing fees and other professional
services. The actual costs could vary from the related provisions due to the
uncertainty related to the length of time required to complete the liquidation
and dissolution of the Partnership. The accrued expenses do not take into
consideration possible litigation arising from the customary representations and
warranties made as part of each sale. Such costs, if any, are unknown and are
not estimable at this time. Similarly, there can be no assurance as to the
timing of a distribution of the Partnership's assets or the amount of assets
that will be distributed to the Partnership's Unit holders.
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 and 1997 and two investments were sold both in 1998
and 2001. Through March 31, 2002, capital of $48,788,000 ($1,000 per limited
partnership unit) has been returned to the limited partners; $45,903,165 as a
result of sales and $2,884,835, as a result of a discretionary reduction of
original working capital previously held in reserves.
10
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
At March 31, 2002, the Partnership had $985,912 in cash and cash
equivalents, which is being retained primarily as a reserve in connection with
the liquidation of the Partnership. 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 and its subsequent sale in August 2001. However, a capital
distribution of original working capital previously held in reserves was made on
April 26, 2001 in the amount of $24.49 per Unit and a distribution of
operational cash previously held in reserves was made on July 26, 2001 in the
amount of $6.40 per Unit.
Results of Operations
- ---------------------
Form of Real Estate Investments
The Wilmington Industrial investment was a wholly-owned property and
was sold on August 8, 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, 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 $953,693. At the time of the
sale, Prentiss Copystar was 100% leased.
As mentioned above, the Wilmington Industrial property was sold on
August 8, 2001 and the Partnership recognized a gain of $3,702,297. At the time
of sale the property was 100% leased.
Investment Results
The investment results for the three month periods ended March 31, 2002
and 2001 are not comparable due to the sale of the Partnership's last two
remaining properties in 2001, as discussed above.
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. The Partnership did not incur
management fees during the three months ended March 31, 2002 and 2001,
respectively, due to the suspension of cash distributions since the fourth
quarter of 1999.
11
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
General and administrative expenses consist primarily of real estate
appraisal, printing, legal, accounting and investor servicing fees. General and
administrative expenses for the three month period ended March 31, 2001 were
$36,138.
Costs to dissolve and liquidate the Partnership include legal fees,
accounting fees, tax preparation fees, filing fees and other professional
services. During the three months ended March 31, 2002, the Partnership incurred
$4,753 of such expenses.
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COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2002
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 March 31, 2002.
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SIGNATURES
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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 10, 2002
/s/ Alison L. Husid
----------------------------------
Alison L. Husid
President, Chief Executive Officer
And Director of Managing General Partner,
Sixth Copley Corp.
May 10, 2002
/s/ Jonathan Martin
----------------------------------
Jonathan Martin
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.
14