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, 1995
Commission File No. 0-13323
_________________
NEW ENGLAND LIFE PENSION PROPERTIES II;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2803902
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
399 Boylston Street, 13th FL.
Boston, Massachusetts 02116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 578-1200
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
--------
New England Life Pension Properties II; A Real Estate Limited
Partnership (the "Partnership") was organized under the Uniform Limited
Partnership Act of the Commonwealth of Massachusetts on September 15, 1983, to
invest primarily in newly constructed and existing income-producing real
properties.
The Partnership was initially capitalized with contributions of $2,000
from Copley Properties Company II, Inc. (the "General Partner") and $10,000 from
NELRECO Troy, 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 September 21, 1983, with respect to a
public offering of 50,000 units of limited partnership interest at a purchase
price of $1,000 per unit (the "Units") with an option to sell up to an
additional 60,000 Units (an aggregate of $110,000,000). The Registration
Statement was declared effective on November 23, 1983.
The first sale of Units occurred on June 15, 1984, 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 of Units terminated on November 23, 1984, and the last group of initial
investors was admitted to the Partnership on November 30, 1984. As of November
30, 1984, a total of 39,917 Units had been sold, a total of 5,980 investors had
been admitted as limited partners (the "Limited Partners") and a total of
$39,654,700 had been contributed to the capital of the Partnership. The
remaining 70,083 units were de-registered on November 30, 1984.
The Partnership has no employees. Services are performed for the
Partnership by the General Partner and affiliates of the General Partner.
As of December 31, 1995, the Partnership had investments in the five
real property investments described below. In December 1993, it sold its sixth
investment, an apartment complex in Grand Rapids, Michigan, which resulted in a
capital distribution of $50.11 per unit. The Partnership and its affiliate, New
England Life Pension Properties has provided the ground lessee of one of the
Partnership's properties, the Willows Shopping Center in Concord, California,
with a $2.5 million leasehold mortgage loan for the purpose of completing the
renovation of the Center. New England Life Pension Properties II will fund
$1,875,000 of the loan, with the balance funded by New England Life Pension
Properties. The Partnership has no other current plan to renovate, improve or
further develop any of its real property.
In the opinion of the General Partner of the Partnership, the
properties are adequately covered by insurance.
A. Light Industrial Facilities in Elkridge, Maryland.
-------------------------------------------------
The Partnership continues to own two adjacent parcels of land
containing an aggregate of approximately five acres located in Elkridge,
Maryland, which are ground leased to Dorsey Associates. Situated on the land
are two light industrial buildings. The Partnership purchased the land in 1984
for $362,500. The Partnership is entitled to receive a base rent of $43,500 per
year, plus an annual percentage rent equal to 75% of gross revenues from the
rental of the buildings in excess of a base amount. The Partnership is entitled
to receive 75% of the net proceeds from the sale of the entire property after it
has recovered its investment in the land and the mortgage loan described below.
In 1984 the Partnership also made a $2,062,500 non-recourse mortgage
loan to Dorsey Associates that matured on June 29, 1994. The loan is secured by
a first mortgage of the buildings and of the leasehold interest in the land.
Interest only is payable monthly at the rate of 12% per annum. Although the
Partnership has not yet foreclosed on this loan, the mortgage loan has not been
extended as of March 1, 1996 as the Partnership is in the process of evaluating
various alternatives to extending the loan.
B. Industrial Building in Columbia, Maryland.
-----------------------------------------
The Partnership continues to own a ground leasehold interest in a 2.5
acre parcel of land located in Columbia, Maryland, which is subleased to
Columbia Warehouse Limited Partnership ("CWLP"). Situated on the land is a one-
story light industrial building. The Partnership purchased the ground leasehold
interest in 1984 for $137,500. The ground lease, as amended on June 1, 1989,
has an unexpired term of approximately 75 years. Annual rental under the ground
lease is approximately $3,420 and is adjusted at five-year intervals. The
Partnership receives an annual rent of $16,500 from the sublessee, plus an
annual percentage rent equal to 75% of gross revenues from the rental of the
building in excess of a base amount. The Partnership is entitled to receive 75%
of the net proceeds from the sale of the entire property after it has recovered
its investment in the land and the mortgage loan described below.
In 1984 the Partnership also made a $1,062,500 non-recourse mortgage
loan to CWLP that matured on June 29, 1994. The loan is secured by a first
mortgage of the buildings and of the leasehold interest in the land. Interest
only is payable monthly at the rate of 12% per annum. Although the Partnership
has not foreclosed on this loan, the mortgage loan has not been extended as of
March 1, 1996 as the Partnership is in the process of evaluating various
alternatives to extending the loan.
C. Shopping Center in Concord, California ("Willows Shopping
---------------------------------------------------------
Center")
- -------
On July 30, 1984, the Partnership and an affiliate of the Partnership
(the "Affiliate") jointly made land purchase-leaseback and leasehold mortgage
loan investments aggregating $15,719,317 in a 24.8 acre shopping center known as
The Willows Shopping Center in Concord, California. The Partnership's share of
these investments aggregated $11,789,488, giving the Partnership a 75% interest
in each component of the investment held in common with the Affiliate. The
investments entitled the Partnership and the Affiliate jointly to receive an
annual interest return of 13% on the $10,719,317 ten-year mortgage, together
with an annual fixed rental under the ground lease equal to a 12.2% return on
the $5,000,000 land purchase price plus an annual percentage rental equal to 50%
of the ground tenant's annual gross revenues in excess of specified base
amounts.
On August 15, 1985, the Partnership and the Affiliate consented to a
sale by the ground tenant, Willows Concord Venture ("Willows Concord"), of the
ground tenant's ownership interest in the buildings and leasehold interest in
the land to an affiliate of VMS Realty, Inc. In conjunction with the sale, the
ground lease was amended to provide that the Partnership and the Affiliate would
no longer participate in excess rental revenues from the Shopping Center or in
net appreciation from the sale of the property. The mortgage loan was also
amended to increase the principal amount by $3,880,683 to $14,600,000, to extend
the maturity date one year to August, 1995, and to lower the interest rate from
13% per annum to a stepped rate beginning at 9% per annum and increasing to 12%
over six years. Under the terms of the original ground lease, the joint ground
lessors were entitled to 50% of the net proceeds from a sale. The Partnership
received cash of $3,215,625 and an interest in the incremental mortgage loan
amount equal to $2,910,512, 50% of which was payable to the former ground lessee
upon full payment of the loan principal by the new mortgagor. The joint
mortgagees also entered into a Collection and Disbursement Agreement pursuant to
which Willows Concord was entitled to share in 50% of interest paid under the
new mortgage note in excess of the interest that would have been payable under
the original note.
The Partnership and the Affiliate had not received interest payments
currently on the mortgage loan since the payment due for March, 1990, and as a
result, the Partnership and the Affiliate began foreclosure proceedings to take
possession of the property. On October 4, 1990, Pacific First Bank, the second
leasehold mortgagee, filed an involuntary bankruptcy petition in the United
States Bankruptcy Court for the Northern District of California against the
ground lessee/debtor, to which filing the ground lessee/debtor subsequently
consented. The ground lessee/debtor later consented to relief from stay of
foreclosure proceedings. The Partnership and the Affiliate sold their interest
in the leasehold mortgage loan to Willows Concord on June 14, 1991. In return,
the Partnership and the Affiliate took back a note in the amount of $14,863,206.
Willows Concord foreclosed on the leasehold mortgage on June 18, 1991.
The Partnership, the Affiliate and Willows Concord entered into a replacement
promissory note in the same principal amount of $14,863,206, effective June 18,
1991. The new loan is secured by the leasehold interest, bears interest at the
rate of 9.323% per annum and provides for a reduction in principal if the note
is paid prior to maturity. The Partnership, the Affiliate and Willows Concord
also entered into a new ground lease which provides for annual rent in the
amount of $550,000 plus an annual percentage rent equal to 70% of the ground
lessee's annual gross revenues in excess of a specified amount. The Partnership
has a 75% share of such rent. To the extent that operating cash flow from the
shopping center is not sufficient to pay the ground rent, such rent may accrue
until June 1996 at which time Willows Concord is obligated to pay all unpaid
accrued rent and to pay all future ground rent on a current basis.
On January 1, 1995 the Partnership and the Affiliate committed to make
a $2.5 million construction loan to the ground lessee in order to fund the
completion of the renovation of the Center. The loan bears interest at 11% per
annum, provides for payments of principal and interest based on a 15-year
amortization schedule, and matures on December 31, 1997. In addition, the
ground lease was amended to provide the Partnership with the sole right to cause
a sale of the Center on or after January 1, 1996.
D. Research and Development Building in Los Angeles County,
-------------------------------------------------------
California ("Susana Corporate Center")
- -------------------------------------
The Partnership continues to own a 4.02 acre parcel of land in Los
Angeles County, California, which it acquired for $1,750,000 and leased back to
the seller. Situated on the land is a one-story, 63,164 square foot research
and development facility leased to a single tenant. The ground lease has a term
of 60 years and provides for a fixed annual rent of $214,375 plus additional
rent equal to 60% of gross revenues from the rental of the building in excess of
a base amount. The Partnership is entitled to receive 60% of the net proceeds
from the sale of the entire property after it has recovered its investment in
the land and the mortgage loan described below and after payment to the ground
lessee of an amount equal to the cost of any capital improvements made during
the lease term.
In 1985 the Partnership also made a $3,250,000 non-recourse mortgage
loan to the ground lessee. Interest only is payable monthly at the rate of
12.25% per annum. The entire principal amount is due and payable after ten
years and is not prepayable. The loan is secured by a first mortgage on the
building and the leasehold interest in the land.
During 1993, the Partnership agreed to a restructuring of the ground
lease and the mortgage loan. The ground lease now provides for annual rental in
an amount which is determined by the available cash flow after the interest
payments are made on the mortgage loan. The mortgage loan has been modified to
(1) increase the loan amount by $192,000 to a total of $3,442,000, (2) reduce
the interest rate on the initial $3,250,000 loan to 9.06% per annum, and (3)
extend the maturity date of the loan to December 31, 1999. Payments of
principal and interest with interest at the rate of 8% per annum, are due
monthly on the additional $192,000 loan. The increase was made to fund tenant
improvements.
E. Research and Development Facility in Columbia, Maryland ("Case
--------------------------------------------------------------
Communications Building")
- ------------------------
The Partnership continues to own a 19.2 acre parcel of land in
Columbia, Maryland, which it acquired for $2,570,379 and leased back to the
seller. A 160,000 square foot research and development building has been
constructed on the land. The ground lease has a term of 60 years and provides
for a fixed annual rent of $262,392 plus additional rent equal to 65.864% of
gross revenues from the rental of the building in excess of a base amount. The
Partnership is entitled to receive 60% of the net proceeds from the sale of the
entire property after it has recovered its investment in the land and the
mortgage loan described below:
The Partnership has also fully funded a $8,814,621 non-recourse
mortgage loan to the ground lessee. Interest only is payable monthly at the
rate of 11% per annum. The loan matured on May 1, 1995 and is secured by a
first mortgage of the building and the leasehold interest in the land. The
Partnership has also fully funded an additional $1,000,000 loan. This loan
bears interest at the rate of 14% per annum, is secured by a second mortgage on
the building and leasehold interest in the land and matured simultaneously with
the first mortgage loan described above. Although the Partnership has not
foreclosed on these loans, the first mortgage loan has not been extended as of
March 1, 1996 as the Partnership is in the process of evaluating various
alternatives to extending the loan.
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:
Estimated Number of Annual
1996 Tenants Contract
Annual with 10% Rent Line of Business
Realty or More Name(s) of Square Feet of per Lease Renewal of Principal
Property Taxes of GLA Tenant(s) Each Tenant Sq. Ft. Expiration Options Tenants
- ------------------------------------------------------------------------------------------------------------------------------------
Shopping Center in $327,958 2 Whole Earth Access 40,374 $ 7.80 4/1996* None Specialty Retail
Concord, CA REI 29,486 $ 5.50 5/2003 Two 5 Specialty Retail
year
options
Industrial Building in $ 43,375 1 Dynasplint 9,600 $ 6.50 10/1996 None Manufacturing
Elkridge, MD
Industrial Building in $ 26,872 2 Igene 8,480 $ 8.25 1/2001 None Pharmaceutical
Columbia, MD New Horizons 18,360 $ 7.20 6/1996 None Pharmaceutical
R&D Building in L.A. $ 40,000 1 National 63,164 $ 7.80 12/1999 None Insurance
County, CA American
Insurance
R&D Building in
Columbia, MD $187,110 1 US Government 160,000 $12.80 11/1996 None Defense Research
- ------------------------------------------------------------------------------------------------------------------------------------
* Tenant vacated upon expiration of lease
The following table sets forth for each of the last five years the gross
leasable area, occupancy rates, rental revenues and net effective rent for the
Partnership's properties:
- --------------------------------------------------------------------------------
Net
Gross Rental Effective
Leasable Year-End Revenue Rent
Property Area Occupancy Recognized ($/sf/yr)*
- --------------------------------------------------------------------------------
Shopping Center in
Concord, CA
- ------------------
1991 274,488 68% $3,131,840 $16.07
1992 274,488 70% $2,346,938 $12.39
1993 274,488 78% $2,612,770 $12.52
1994 251,531 91% $2,595,391 $12.39
1995 251,531 91% $3,099,701 $13.54
Industrial Buildings in
Elkridge, MD
- -----------------------
1991 84,630 57% $ 412,210 $10.25
1992 84,630 60% $ 273,543 $ 5.46
1993 84,630 55% $ 254,478 $ 5.35
1994 84,630 76% $ 300,981 $ 5.43
1995 84,630 43% $ 266,751 $ 7.33
Industrial Buildings in
Columbia, MD
- -----------------------
1991 38,840 100% $ 287,239 $ 7.76
1992 38,840 100% $ 325,425 $ 8.51
1993 38,840 82% $ 266,711 $ 7.55
1994 38,840 85% $ 291,556 $ 9.04
1995 38,840 91% $ 284,134 $ 8.04
R&D Building in L.A.
County, CA
- --------------------
1991 63,164 100% $ 710,412 $11.25
1992 63,164 100% $ 710,412 $11.25
1993 63,164 100% $ 620,246 $ 9.82
1994 63,164 100% $ 518,234 $ 8.20
1995 63,164 100% $ 514,621 $ 8.15
R&D Building in
Columbia, MD
- -------------------
1991 160,000 100% $1,825,333 $11.41
1992 160,000 100% $1,900,000 $11.88
1993 160,000 100% $2,300,000 $14.38
1994 160,000 100% $2,636,836 $16.48
1995 160,000 100% $2,283,934 $14.27
- --------------------------------------------------------------------------------
* Net effective rent calculation is based on average occupancy during the
respective year.
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, 1995:
- --------------------------------------------------------------------------------------------------------------------------
TENANT AGING REPORT
Percentage of
# of Lease Total Gross Annual
Property Expirations Square Feet Annual Rental Rental*
- --------------------------------------------------------------------------------------------------------------------------
Shopping Center in Concord, CA (1)
- ----------------------------------
1996 2 41,790 $314,917 12%
1997 3 11,130 $ 63,362 2%
1998 1 600 $ 18,948 1%
1999 3 23,650 $260,984 10%
2000 2 10,520 $128,746 5%
2001 1 7,088 $ 77,117 3%
2002 2 22,411 $222,615 9%
2003 4 44,779 $401,192 15%
2004 0 0 $ 0 0%
2005 6 49,457 $586,913 23%
Industrial Buildings in Elkridge, MD
- ------------------------------------
1996 1 9,600 $ 62,400 30%
1997 6 20,040 $102,319 49%
1998 1 4,800 $ 19,200 9%
1999 0 0 $ 0 0%
2000 1 6,360 $ 24,232 12%
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%
Industrial Building in Columbia, MD
- -----------------------------------
1996 2 20,760 $107,112 56%
1997 0 0 $ 0 0%
1998 2 4,800 $ 26,688 14%
1999 0 0 $ 0 0%
2000 0 0 $ 0 0%
2001 1 8,480 $ 57,240 30%
2002 0 0 $ 0 0%
2003 0 0 $ 0 0%
2004 0 0 $ 0 0%
2005 0 0 $ 0 0%
R&D Building in L.A. County, CA
- -------------------------------
1996 0 0 $ 0 0%
1997 0 0 $ 0 0%
1998 0 0 $ 0 0%
1999 1 63,164 $622,347 100%
2000 0 0 $ 0 0%
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%
- --------------------------------------------------------------------------------------------------------------------------
R&D Building in Columbia, MD
- ----------------------------
1995 0 0 $ 0 0%
1996 1 160,000 $2,228,000 100%
1997 0 0 $ 0 0%
1998 0 0 $ 0 0%
1999 0 0 $ 0 0%
2000 0 0 $ 0 0%
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%
- -------------------------------------------------------------------------------------------------------------------------------
(1) Remaining leases do not expire within 10 years.
* Does not include expenses paid by tenants.
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.
Research & Development Building in Los Angeles County, CA
- ---------------------------------------------------------
The South Bay office market is a relatively diverse market encompassing nearly
30 million square feet of existing space. It includes the communities of Long
Beach, Torrance, El Segundo and LAX. Overall vacancy in this area is 24%.
While this represents a decline from 26% reported in 1993, vacancy has remained
above 18% for more than seven years. The softness in this market is
attributable to the contraction of the aerospace and defense industries. As a
number of new government contracts continue to diminish, this area has increased
its reliance on foreign trade due to its proximity to the sea ports of Long
Beach and Los Angeles, as well as LAX.
Light Industrial Facilities and Industrial Building in Elkridge, MD
- -------------------------------------------------------------------
These buildings are typical 1970s vintage flex office/warehouse buildings for
the Baltimore/Washington Corridor market. The Corridor emerged in the early
1970s with the construction of I-95. The corridor industrial market is a
dynamic entity that generally extends from the Washington Beltway (I-495) on the
south to the Baltimore Beltway on the north (I-695) and from Columbia on the
west to I-97 on the east. The Corridor market is influenced by the presence of
such variables as the federal government, Fort Meade and the National Security
Agency and BWI Airport. The Department of Defense has been a large user of
space, both directly and indirectly through contacts in the past; however this
trend reached a plateau a few years ago given the cuts in defense spending. The
Corridor contains approximately 14,415,000 square feet and exhibited a vacancy
rate of 10% as of the end of 1995.
Research & Development Facility in Columbia, MD
- -----------------------------------------------
The Howard County R&D market contains approximately 3.2 million square feet and
exhibited a vacancy rate of 10% as of December 31, 1995. The 10% vacancy rate
is a strong improvement from the 1990-to-1993 period when the vacancy rate
hovered in the 22%-to-24% range.
Shopping Center in Concord, CA
- ------------------------------
This neighborhood shopping center lies within the Central Contra Costa County
market in which there is approximately 8.1 million square feet of retail
inventory. This market incorporates the cities along the I-680 corridor and
includes Walnut Creek, Concord, Pleasant Hill and Martinez. An average vacancy
rate of 5% was reported within the neighborhood centers, with retail strip
properties posting a slightly higher average vacancy of 7%. Since 1992, no new
retail projects have come on-line within the property's immediate neighborhood.
New construction is expected to be limited due to the lack of available land and
the still cautious attitude among the lending community.
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.
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, 1995, there were 6,184 holders of Units.
The Partnership's Amended and Restated Agreement of Limited
Partnership dated June 15, 1984, 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 are no restrictions on the Partnership's present or future ability to make
distributions of Distributable Cash. For the year ended December 31, 1995, cash
distributions paid in 1995 or distributed after year end with respect to 1995 to
the Limited Partners as a group totaled $2,486,032. For the year ended December
31, 1994, cash distributions paid in 1994 or distributed after year end with
respect to 1994 to the Limited Partners as a group totaled $4,384,484, of which
$2,000,241 was capital distributions.
Cash distributions exceeded net income in 1995 and, therefore,
resulted in a reduction of partners' capital. Distributions, however, were less
than cash provided by operating activities. Reference is made to the
Partnership's Statement of Changes in Partners' Capital and Statement of Cash
Flows in Item 8 herein.
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
12/31/95(3) 12/31/94(2) 12/31/93(1) 12/31/92 12/31/91
----------- ----------- ----------- ----------- -----------
Revenues $ 5,313,944 $ 5,061,123 $ 4,902,277 $ 4,856,666 $ 4,844,818
Net Income $ 1,710,797 $ 2,340,707 $ 1,376,686 $ 2,364,385 $ 3,442,669
Net Income
per Unit of
Limited
Partnership
Interest
Outstanding $ 42.43 $ 58.05 $ 34.14 $ 65.34 $ 85.38
Total Assets $39,074,700 $39,868,957 $41,816,002 $42,526,793 $42,361,375
----------- ----------- ----------- ----------- -----------
Total Cash
Distributions
per Limited
Partnership Unit,
including amounts
distributed after
year end with
respect to the
previous year $62.28 $109.84 $61.12 $61.12 $70.52
-----------------------------------------------
(1) The Partnership recorded a provision of $1,670,000 ($41.42 per Unit) for
impaired mortgage loans during 1993.
(2) The Partnership recorded a provision of $800,000 ($19.84 per Unit) for
impaired mortgage loans during 1994.
(3) The Partnership recorded a provision of $1,428,000 ($35.42 per Unit) for
impaired mortgage loans during 1995.
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 November 1984. A total of 39,917 units were sold. The
Partnership received proceeds of $36,296,995, net of selling commissions and
other offering costs, which were invested in real estate, used to pay related
acquisition costs, or retained as working capital reserves. The Partnership
made six real estate investments, one of which was sold in December 1993. The
remaining investments are described in Item 1 hereof. As a result of sales
and similar transactions, capital of $4,395,261 has been returned to the
limited partners through December 31, 1995. Two of the Partnership's mortgage
loan investments had a maturity date in 1994; another had a maturity in 1995.
The Partnership is evaluating various alternatives to extending these loans.
The capital distribution to limited partners of $2,000,241 ($50.11 per
limited partnership unit) on July 28, 1994 was from the proceeds from the sale
of the Oxford Place investment in December 1993. The adjusted capital
contribution after this distribution was reduced to $889.89 per unit.
At December 31, 1995, the Partnership had $5,257,856 in cash, cash
equivalents and short-term investments which were partially used for cash
distributions of $627,786 to partners on January 25, 1996; the remainder is
expected to be used to fund the renovation of the Willows Shopping Center or
retained as working capital reserves. The source of future liquidity and cash
distributions to partners will be cash generated by the Partnership's real
estate and short-term investments and proceeds from the sale of such
investments. Quarterly distributions of cash from operations relating to 1995
and 1994 were made at the annualized rates of 7% and 6.5%, respectively, on
the weighted average adjusted capital contribution during the period. The
cash distribution rate increased with the stabilization of property operations
and the attainment of appropriate reserve levels.
The carrying value of the Partnership's real estate investments in the
financial statements at December 31, 1995, other than impaired mortgage loans,
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, 1995, the carrying value of certain
investments exceeded their related appraised values by an aggregate of
approximately $1,150,000, and the appraised value of the remaining investments
exceeded their related carrying values by an aggregate of approximately
$210,000. The current appraised value of real estate investments has been
estimated by the general partner and is generally based on a combination of
traditional appraisal approaches performed by the Partnership's 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.
Results of Operations
---------------------
Form of Real Estate Investments
The Willows Shopping Center is structured as a ground lease/mortgage loan
investment. However, for financial reporting purposes it is accounted for as
a property which is jointly owned with an affiliate. The remainder of the
Partnership's investments are structured and accounted for as ground
lease/mortgage loan investments.
Operating Factors
At December 31, 1995, the Willows Shopping Center was 91% leased,
compared to approximately 91% and 78% at the end of 1994 and 1993,
respectively. The ground lessee/borrower has commenced the full
rehabilitation of this property including the complete renovation and
reconfiguration of the center to a mini power center. The general partner
determined that it is in the best interest of the Partnership to provide
funding for the rehabilitation costs in the form of a construction loan,
together with its affiliate which owns a share of the center. The
Partnership's share of the remaining estimated cost is approximately
$1,575,000 at December 31, 1995.
Occupancy at Elkridge decreased to 43% as of December, 31, 1995, compared
to 76% and 55% at the end of 1994 and 1993, respectively. Occupancy at the
R&D building is 73%. The Partnership has entered into a purchase and sale
agreement for the vacant warehouse building. However, the sale is contingent
on the buyer's obtaining necessary financing.
Susana Corporate Center has been 100% leased to a single-tenant over the
past three years. In May 1993, in connection with the restructuring of the
tenant's lease, the ground lease/mortgage loan agreements were modified by
reducing the interest rate and allowing for the deferral of ground rent if
cash flow was insufficient. The Partnership continues to market this property
for sale.
Occupancy at the Oakland property was 91% at December 31, 1995, up from
85% and 82% one and two years prior; however, leases for 53% of the currently
occupied space expire in 1996.
The Case Communications property has been fully occupied under a five
year lease with a government agency, which expires in November 1996.
Investment Results
The Partnership determined that the mortgage loans secured by Elkridge
and Susana Corporate Center were impaired and recognized a provision for
impaired mortgage loans of $1,670,000 which was charged to operations in 1993.
During 1994 and 1995, the estimated fair market value of the loan collateral
further declined, resulting in an increase to the valuation allowance of
$800,000 and $328,000, respectively. During the fourth quarter of 1995, the
Partnership determined that the mortgage loans secured by the Case
Communications Building were impaired, primarily due to the change in the
expected holding period for the property and a decrease in market rental
rates. This impairment resulted in an increase to the valuation allowance of
$1,100,000, which was charged to operations in 1995. Ground rent and interest
payments from Case Communications continue to be made in accordance with
contractual terms.
1995 Compared to 1994
Interest on cash equivalents and short-term investments increased
approximately 13% during 1995 compared to 1994, primarily due to an increase
in short-term interest rates.
Exclusive of the provision for impaired mortgage loans, real estate
results were $3,259,150 in 1995, a slight decrease compared to $3,287,302 in
1994. Operating income from the Case Communications Building related to
percentage rent decreased $120,000, and operating income from Susana Corporate
Center decreased by approximately $55,000. These decreases were partially
offset by an increase in net operating income from the Willows Shopping Center
of approximately $95,000, and by the Oakland property.
Operating cash flow, however increased $217,000, or 6%, between 1995 and
1994. This change in cash flow primarily stems from a reduction in
expenditures for deferred leasing costs at the Willows Shopping Center,
partially offset by the increase in non-cash working capital items. In
addition, cash flow in 1994 was reduced by $114,000 as a result of advance
rent receipts in the prior year.
1994 Compared to 1993
Interest on cash equivalents and short-term investments increased nearly
five-fold during 1994 as compared to 1993, due to an increase in short-term
interest rates and a higher average investment balance. The increase in the
average balance resulted from the Partnership's temporarily retaining the
sales proceeds from the Oxford Place Apartments.
Exclusive of the provision for impaired mortgage loans and the operations
from Oxford Place Apartments, real estate operating results were $3,287,302 in
1994, an 11% increase compared to $2,955,850 in 1993. Operating income in
1994 includes approximately $200,000 from the Case Communications Building
related to the final settlement of prior year percentage rent. Operating
income in 1993 includes $270,000 from the settlement of past due rents at
Willows Shopping Center in connection with an anchor tenant's lease revision.
Excluding that settlement, net operating income from the Willows Shopping
Center increased approximately $210,000. Income from the Elkridge investment
increased by approximately $120,000 due to an increase in average occupancy.
Finally, operating income from Susana Corporate Center increased slightly.
Operating cash flow, exclusive of $583,203 from Oxford Place Apartments
in 1993, increased by 1% between 1994 and 1993. The change in cash flow is
reflective of the change in operating results, offset by the cash settlement
in 1993 which resulted from the renegotiated lease term of an anchor tenant at
the Willows Shopping Center.
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 general partner. General and administrative expenses
primarily consist of real estate appraisal, printing, legal, accounting and
investor servicing fees.
1995 Compared to 1994
General and administrative expenses were relatively unchanged.
Management fee expense increased 4% due to an increase in distributable cash
flow.
1994 Compared to 1993
General and administrative expenses increased by 24% or $33,000 due to an
increase in appraisal, investor servicing and professional fees. Management
fee expense decreased 2% due to a decrease in distributable cash flow.
Inflation
By their nature, real estate investments tend not to be adversely
affected by inflation. Inflation may result in appreciation in the value of
the Partnership's real estate investments over time if rental rates and
replacement costs increase. Declines in real property values, during the
period of Partnership operations, due to market and economic conditions, have
overshadowed the positive effect inflation may have on the value of the
Partnership's investments.
Item 8. Financial Statements and Supplementary Data.
--------------------------------------------
See the Financial Statements of the Partnership included as a part of
this Annual Report on Form 10-K.
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 General Partner and the age and position held by
each of them as of December 31, 1995.
Name Position(s) with the General Partner Age
---- ------------------------------------ ---
Joseph W. O'Connor President, Chief Executive Officer and 49
Director
Daniel J. Coughlin Managing Director and Director 43
Peter P. Twining Managing Director, General Counsel and 49
Director
Wesley M. Gardiner, Jr. Vice President 37
Daniel C. Mackowiak Principal Financial and Accounting Officer 44
Mr. O'Connor and Mr. Coughlin have served in an executive capacity
since the organization of the General Partner on August 25, 1983. Mr.
Gardiner and Mr. Twining have served in their capacities since June 1994, and
Mr. Mackowiak has served in his capacity as of January 1, 1996. All of these
individuals will continue to serve in such capacities until their successors
are elected and qualify.
(c) Identification of Certain Significant Employees.
-----------------------------------------------
None.
(d) Family Relationships.
--------------------
None.
(e) Business Experience.
-------------------
The General Partner was incorporated in Massachusetts on August
25, 1983. The background and experience of the executive officers and
directors of the General Partner are as follows:
Joseph W. O'Connor has been President, Chief Executive Officer and a
Director of Copley Real Estate Advisors, Inc. ("Copley") since January, 1982.
He was a Principal of Copley from 1985 to 1987 and has been a Managing
Director of Copley since January 1, 1988. He has been active in real estate
for 27 years. From June, 1967, until December, 1981, he was employed by New
England Mutual Life Insurance Company ("The New England"), most recently as a
Vice President in which position he was responsible for The New England's real
estate portfolio. He received a B.A. from Holy Cross College and an M.B.A.
from Harvard Business School.
Daniel J. Coughlin was a Principal of Copley from 1985 to 1987 and has
been a Managing Director of Copley since January 1, 1988 and a Director of
Copley since July 1994. Mr. Coughlin has been active in financial management
and control for 21 years. From June, 1974 to December, 1981, he was Real
Estate Administration Officer in the Investment Real Estate Department at The
New England. Since January, 1982, he has been in charge of the asset
management division of Copley. Mr. Coughlin is a Certified Property Manager
and a licensed real estate broker. He received a B.A. from Stonehill College
and an M.B.A. from Boston University.
Peter P. Twining is a Managing Director and General Counsel of Copley.
As such, he is responsible for general legal oversight and policy with respect
to Copley and its investment portfolios. Before being promoted to this
position in January 1994, he was a Vice President/Principal and senior lawyer
responsible for assisting in the oversight and management of Copley's legal
operations. Before joining Copley in 1987, he was a senior member of the Law
Department at The New England and was associated with the Boston law firm,
Ropes and Gray. Mr. Twining is a graduate of Harvard College and received his
J.D. in 1979 from Northeastern University.
Wesley M. Gardiner, Jr. joined Copley in 1990 and has been a Vice
President at Copley since January, 1994. From 1982 to 1990, he was employed
by Metric Realty, a nationally-known real estate investment advisor and
syndication firm, as a portfolio manager responsible for several public and
private limited partnerships. His career at Copley has included asset
management responsibility for the company's Georgia and Texas holdings.
Presently, as a Vice President and Team Leader, Mr. Gardiner has overall
responsibility for all the partnerships advised by Copley whose securities are
registered under the Securities and Exchange Act of 1934. He received a B.A.
in Economics from the University of California at San Diego.
Daniel C. Mackowiak has been a Vice President of Copley since January
1989 and has been a Vice President and the Principal Financial and Accounting
Officer of the Managing General Partner since January 1996. Mr. Mackowiak
previously held the offices of Chief Accounting Officer of Copley from January
1989 through April 1994 and Vice President and Principal Financial and
Accounting Officer of the Managing General Partner between January 1989 and
May 1994. From 1975 until joining Copley, he was employed by the public
accounting firm of Price Waterhouse, most recently as a Senior Audit Manager.
He is a certified public accountant and has been active in the field of
accounting his entire business career. He received a B.S. from Nichols
College and an M.B.A. from Cornell University.
Mr. O'Connor is a director of Copley Properties, Inc., a Delaware
corporation organized as a real estate investment trust which is listed for
trading on the American Stock Exchange. None of the other directors of the
General Partner is a director of a company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934. All
of the directors and officers of the General Partner also serve as directors
and officers of one or more corporations which serve as general partners of
publicly-traded real estate limited partnerships which are affiliated with the
General Partner.
(f) Involvement in Certain Legal Proceedings.
None.
Item 11. Executive Compensation.
----------------------
Under the Partnership Agreement, the General Partner and its 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 cash
distributions and reimbursements for out-of-pocket expenses which the
Partnership paid to or accrued for the account of the General Partner and its
affiliates for the year ended December 31, 1995:
Amount of
Compensation
and
Receiving Entity Type of Compensation Reimbursement
- ---------------- -------------------- -------------
General Partner Share of Distributable Cash $ 25,112
Copley Real Estate Advisors, Inc. Management Fees and 248,355
Reimbursement of Expenses
New England Securities Corporation Servicing Fees and 7,973
Reimbursement of Expenses
-------------
TOTAL $ 281,440
=============
For the year ended December 31, 1995, the Partnership allocated $49,180
of taxable income to the General Partner.
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, 1995. 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 General
Partner.
(b) Security Ownership of Management.
An affiliate of the General Partner of the Partnership owned 699 Units at
December 31, 1995.
(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 Statement Schedules, 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 Schedules and Financial
Statement Index No. 2 are filed as part of this Annual Report.
(2) Financial Statement Schedules--The Financial Statement Schedules
listed on the accompanying Index to Financial Statements and Schedules are
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, 1995, the Partnership filed no Current Reports on Form 8-K.
New England Life
Pension Properties II;
A Real Estate Limited Partnership
Financial Statements
* * * * * * *
December 31, 1995
NEW ENGLAND LIFE PENSION PROPERTIES II;
--------------------------------------
A REAL ESTATE LIMITED PARTNERSHIP
---------------------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
-------------------------------------------
Page
Report of Independent Accountants.........................................
Financial Statements:
Balance Sheet - December 31, 1995 and 1994..........................
Statement of Operations - Years ended December 31, 1995, 1994
and 1993.........................................................
Statement of Changes in Partners' Capital - Years ended
December 31, 1995, 1994 and 1993.................................
Statement of Cash Flows - Years ended December 31, 1995, 1994
and 1993.........................................................
Notes to Financial Statements.......................................
Financial Statement Schedules:
Schedule III - Real Estate and Accumulated
Depreciation as of December 31, 1995.............................
Schedule IV - Mortgage Loans on Real Estate
as of December 31, 1995..........................................
Report of Independent Accountants
---------------------------------
To the Partners
New England Life Pension Properties II;
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 New
England Life Pension Properties II; A Real Estate Limited Partnership (the
"Partnership") at December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of Copley
Properties Company II, Inc., the General Partner of the Partnership; 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
generally accepted auditing standards 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 General Partner, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
-------------------------
Price Waterhouse LLP
Boston, Massachusetts
March 15, 1996
NEW ENGLAND LIFE PENSION PROPERTIES II;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEET
December 31,
------------------------
1995 1994
---------- ----------
Assets
Real estate investments:
Ground leases and mortgage loans, net $17,575,746 $19,014,308
Property, net 15,381,902 14,689,691
Deferred leasing costs and
other assets, net 528,022 591,963
----------- -----------
33,485,670 34,295,962
Cash and cash equivalents 2,731,930 4,101,201
Short-term investments 2,525,926 1,292,505
Interest and rent receivable 331,174 179,289
----------- -----------
$39,074,700 $39,868,957
=========== ===========
Liabilities and Partners' Capital
Accounts payable $ 505,813 $ 548,907
Accrued management fee 62,089 57,662
Deferred disposition fees 314,464 314,464
----------- -----------
Total liabilities 882,366 921,033
----------- -----------
Partners' capital:
Limited partners ($889.89 per
unit; 110,000 units authorized,
39,917 units issued and outstanding) 38,127,446 38,875,480
General partner 64,888 72,444
----------- -----------
Total partners' capital 38,192,334 38,947,924
----------- -----------
$39,074,700 $39,868,957
=========== ===========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES II;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
Year ended December 31,
--------------------------------------
1995 1994 1993
----------- ---------- -----------
Investment Activity
Property rentals $ 2,340,380 $1,976,622 $ 1,989,107
Property operating expenses (1,063,651) (902,099) (967,118)
Depreciation and amortization (670,852) (564,888) (450,520)
----------- ---------- -----------
605,877 509,635 571,469
Ground rentals and interest
on mortgage loans 2,679,916 2,825,292 2,857,154
Amortization (26,643) (47,625) (59,201)
Provision for impaired mortgage
loans (1,428,000) (800,000) (1,670,000)
----------- ---------- -----------
Total real estate operations 1,831,150 2,487,302 1,699,422
Interest on cash equivalents
and short-term investments 293,648 259,209 56,016
----------- ---------- -----------
Total investment activity 2,124,798 2,746,511 1,755,438
----------- ---------- -----------
Portfolio Expenses
Management fee 248,355 238,186 243,729
General and administrative 165,646 167,618 135,023
----------- ---------- -----------
414,001 405,804 378,752
----------- ---------- -----------
Net income $ 1,710,797 $2,340,707 $ 1,376,686
=========== ========== ===========
Net income per limited
partnership unit $42.43 $58.05 $34.14
=========== ========== ===========
Cash distributions per limited
partnership unit $61.17 $110.66 $61.12
=========== ========== ===========
Number of limited partnership units
outstanding during the year 39,917 39,917 39,917
=========== ========== ===========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES II;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
Year ended December 31,
------------------------------------------------------------------------
1995 1994 1993
---------------------- --------------------- ---------------------
General Limited General Limited General Limited
Partner Partners Partner Partners Partner Partners
-------- ----------- -------- ----------- -------- -----------
Balance at beginning
of year $ 72,444 $38,875,480 $ 73,449 $40,975,393 $ 84,326 $42,052,201
Cash distributions (24,664) (2,441,723) (24,412) (4,417,213) (24,644) (2,439,727)
Net income 17,108 1,693,689 23,407 2,317,300 13,767 1,362,919
-------- ----------- -------- ----------- -------- -----------
Balance at end
of year $ 64,888 $38,127,446 $ 72,444 $38,875,480 $ 73,449 $40,975,393
======== =========== ======== =========== ======== ===========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES II;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
Year ended December 31,
---------------------------------------
1995 1994 1993
----------- ----------- -----------
Cash flows from operating activities:
Net income $ 1,710,797 $ 2,340,707 $ 1,376,686
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 697,495 612,513 509,721
Provision for impaired mortgage loans 1,428,000 800,000 1,670,000
Increase in deferred leasing costs
and other assets (67,865) (376,568) (216,525)
Decrease (increase) in operating
receivables (178,617) 1,909 330,357
Increase (decrease) in unearned
revenue - (114,336) 114,336
Increase (decrease) in operating
liabilities (38,668) 69,829 90,133
----------- ----------- -----------
Net cash provided by operating
activities 3,551,142 3,334,054 3,874,708
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures on owned property (1,247,337) (1,482,163) (742,712)
Increase in mortgage loan - (171,007) (20,994)
Decrease (increase) in short-term
investments, net (1,206,689) (213,717) 46,102
Net proceeds from sale of investment - - 190,140
Repayment of mortgage loan - - 5,028,459
Increase in deferred disposition fees - - 172,425
----------- ----------- -----------
Net cash provided by (used in)
investing activities (2,454,026) (1,866,887) 4,673,420
----------- ----------- -----------
Cash flows from financing activity:
Distributions to partners (2,466,387) (4,441,625) (2,464,371)
----------- ----------- -----------
Net cash used in financing activity (2,466,387) (4,441,625) (2,464,371)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents (1,369,271) (2,974,458) 6,083,757
Cash and cash equivalents:
Beginning of year 4,101,201 7,075,659 991,902
----------- ----------- -----------
End of year $ 2,731,930 $ 4,101,201 $ 7,075,659
=========== =========== ===========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES II;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Business
- ----------------------------------
General
New England Life Pension Properties II; 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 June, 1984 and acquired
several real estate investments through 1986. It intends to dispose of its
investments within twelve years of their acquisition, and then liquidate;
however, the general partner could extend the investment period if it is in the
best interest of the limited partners.
The general partner of the Partnership is Copley Properties Company II, Inc.,
a wholly-owned subsidiary of Copley Real Estate Advisors, Inc. ("Copley").
Subject to the general partner's overall authority, the business of the
Partnership is managed by Copley pursuant to an advisory contract. Copley is a
wholly-owned subsidiary of New England Investment Companies, L.P. ("NEIC"), a
publicly traded limited partnership. New England Mutual Life Insurance Company
("The New England"), the parent of NEIC's predecessor, is NEIC's principal
unitholder. In August 1995, The New England announced an agreement to merge
(the "Merger") with Metropolitan Life Insurance Company ("Metropolitan Life"),
with Metropolitan Life to be the surviving entity. This merger, which is
subject to various policyholder and regulatory approvals, is expected to take
place in the first half of 1996. Metropolitan Life is the second largest life
insurance company in the United States in terms of total assets, having assets
of over $130 billion (and adjusted capital of over $8 billion) as of June 30,
1995.
At December 31, 1995, an affiliate of the general partner owned 699 units and
at December 31, 1994 the general partner owned 426 units of limited partnership
interest, which were repurchased from certain qualified plans, within specified
annual limitations provided for in the Partnership Agreement.
Management
Copley, as 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.
Acquisition fees were paid in an amount equal to 2% of the gross proceeds from
the offering. Disposition fees are generally 3% of the selling price of the
property, but are subject to the prior receipt by the limited partners of their
capital contributions plus a stipulated return thereon.
New England Securities Corporation, an indirect subsidiary of The New England,
is engaged by the Partnership to act as its unit holder servicing agent. Fees
and out-of-pocket expenses for such services totaled $7,973, $11,784 and $9,914
in 1995, 1994 and 1993, respectively.
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Accounting Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the 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.
Ground Leases and Mortgage Loans
While the related land and loan investments are legally separable, the
terms thereof have been negotiated jointly and the general partner evaluates
investment performance on a combined basis. They are, therefore, presented
together in the accompanying balance sheet and statement of operations.
Investments in land subject to ground leases are stated at cost, plus
accrued revenue. Investments in mortgage loans to the related ground lessees are
originally stated at cost, plus accrued interest. If the investment is subject
to ownership accounting (see below), cost is adjusted for the accumulated cost
recovery allowance. If the mortgage loan is impaired (see "Impaired Mortgage
Loans" below), the carrying amount is adjusted to the estimated market value of
the underlying collateral less anticipated costs of sale.
Accrual of contractual ground rent and loan interest is discontinued if the
total of the Partnership's invested cash and such accrual approximates the
appraised value of the investment. Under this condition, the Partnership
applies ownership accounting whereby revenue is recognized only to the extent of
net operating income generated by the underlying property, before depreciation,
to which the Partnership is entitled. In addition, the cost of the investment
related to depreciable property is subject to a recovery allowance similar to
depreciation, which is computed using the straight-line method based on
estimated useful lives. The Partnership, however, retains a priority claim to
all unrecognized contractual revenue. If a mortgage loan is determined to be
impaired, the Partnership recognizes revenue only to the extent of operating
cash flow generated by the collateral underlying the loan and no longer
recognizes a cost recovery allowance.
Impaired Mortgage Loans
The Partnership considers a loan to be impaired when it is probable that it
will be unable to collect all amounts due under the contractual terms of the
loan agreement. Factors that the Partnership considers in determining whether a
loan is impaired include its past due status, fair value of the underlying
collateral and economic prospects of the borrower. When a loan is impaired, its
carrying value is periodically adjusted, through a valuation allowance, to its
estimated market value which is based on the appraised value of the underlying
collateral less anticipated costs of sale. Changes in the valuation allowance
are reported in the Statement of Operations.
Property
The Partnership and an affiliate share common ownership of an investment.
The form of the investment is a combination ground lease and mortgage loan, as
described above; however, in this case (Willows Shopping Center), substantial
economic risks of property ownership rest with the Partnership and its
affiliate. Accordingly, the investment is accounted for as owned property,
although the Partnership and its affiliate have a priority claim to all
unrecognized contractual revenue. The Partnership's financial statements
include its proportionate ownership share (75%) of the individual assets,
liabilities, revenue and expenses related to the property. Land and buildings
and improvements (net of accumulated depreciation) are classified as property in
the balance sheet.
Leases provide for rental increases over the respective lease terms.
Rental revenue is being recognized on a straight-line basis over the lease
terms.
Capitalized Costs
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 ranging from 21 to 25 years. Leasing costs are also capitalized
and amortized over the related lease terms.
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 terms of the mortgage loans or the estimated
useful lives of the property.
Realizability of Real Estate Investments
The Partnership considers a real estate investment, other than a mortgage
loan, to be impaired when it determines the carrying value of the investment is
not recoverable through undiscounted cash flows generated from the operations
and disposal of the property. Effective January 1, 1995, with its adoption of
Statement of Financial Accounting Standards No.121 (SFAS 121) entitled, "
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," the Partnership measures the impairment loss based on the
excess of the investment's carrying value over its fair market value. For
investments being held for sale, the impairment loss is measured based on the
excess of the investment's carrying value over its estimated fair market value
less costs of sale. Property held for sale is not depreciated during the
holding period.
The carrying value of an investment may be more or less than its current
appraised value. At December 31, 1995 and 1994, the appraised value of certain
investments exceeded their related carrying values by an aggregate of $210,000
and $200,000, respectively, while the carrying value of the remaining
investments exceeded their appraised values by an aggregate of $1,150,000 and
$1,100,000 at the respective dates.
The current appraised value of real estate investments has been estimated
by the general partner and is generally based on a combination of traditional
appraisal approaches performed by Copley 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.
Cash Equivalents and Short-Term Investments
Cash equivalents are stated at cost, plus accrued interest. The Partnership
considers all highly liquid debt instruments purchased with a maturity of ninety
days or less to be cash equivalents; otherwise, they are classified as short-
term investments.
The Partnership has the positive intent and ability to hold all short-
term investments to maturity; therefore, short-term investments are carried at
cost, plus accrued interest, which approximates market value. At December 31,
1995 and 1994, all investments were in commercial paper with less than five
months and four months, respectively, remaining to maturity.
Deferred Disposition Fees
Disposition fees due to Copley related to sales or restructuring 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.
Note 3 - Investments in Ground Leases and Mortgage Loans
- --------------------------------------------------------
The following is a summary of the Partnership's investments in ground
leases and mortgage loans:
Fixed
Rental/
Investment/ Acquisition Interest December 31,
Location Date Rate 1995 1994
---------------------------------------------------------------------------------------------
Elkridge 1984 12% (L) $ 362,500 $ 362,500
Elkridge, MD 12% (M) 2,062,500 2,062,500
Oakland 1984 12% (G) 137,500 137,500
Columbia, MD 12% (M) 1,062,500 1,062,500
Susana Corporate
Center 1985 12.25% (L) 1,750,000 1,750,000
Los Angeles, CA 1993 8% (M) 192,000 192,000
*9.06% (M) 3,250,000 3,250,000
Case Communications
Columbia, MD 1985-1986 11% (L) 2,570,379 2,570,379
11% (M) 8,814,621 8,814,621
14% (M) 1,000,000 1,000,000
----------- -----------
$21,202,000 $21,202,000
=========== ===========
- -------------------------------------------------------------------------------------------------------------
(L) Ground lease (G) Ground leasehold interest
(M) Mortgage loan (*) 12.25% prior to May 1, 1993
December 31,
1995 1994
------------ ------------
Cash invested $21,202,000 $21,202,000
Unamortized
acquisition costs and fees, net 64,100 74,662
Accrued ground lease and
mortgage loan receivables 268,802 268,802
Cost recovery allowance (61,156) (61,156)
Valuation allowance for
impaired mortgage loans (3,898,000) (2,470,000)
----------- -----------
$17,575,746 $19,014,308
=========== ===========
Ground leases have terms of fifty-five to seventy-five years and
provide for additional rent equal to a percentage, ranging from 60% to 75%, of
gross revenues in excess of a base amount from the rental of the buildings
situated on the land. Percentage rent totaled $560,123, $647,229, and $519,246
in 1995, 1994, and 1993, respectively. The Partnership is also entitled to that
same percentage of the net proceeds from the sale of the entire property after
it has recovered its cash investment in the land and mortgage loan and, for
Susana Corporate Center and the Case Communications Building, after payment to
the ground lessee of an amount equal to its cost of any capital improvements
made during the lease term. The lease agreements require the lessee to pay all
operating expenses related to the subject land.
Generally, interest on the mortgage loans is payable monthly. The loans are
secured by first mortgages on the buildings, a second mortgage on the Case
Communications Building, and by the ground leasehold interests. Principal
balances are due after ten years. The Elkridge, Columbia and Case
Communications loans have matured, and the Partnership is evaluating various
alternatives to extending the loans.
Subsequent to December 31, 1995, a purchase and sale agreement was executed
on a portion of the Elkridge property at a price which approximated the
Partnership's carrying value. The sale is contingent on the buyer's obtaining
necessary financing.
Susana Corporate Center
The Partnership agreed to restructure the Susana Corporate Center mortgage
loan and ground lease investment effective May 1, 1993. The annual interest
rate on the $3,250,000 mortgage loan was reduced from 12.25% to 9.06%, and the
maturity date was extended to December 31, 1999. In addition, the Partnership
made an incremental loan of $192,000 to finance tenant improvement costs.
Finally, the payment of ground rent was limited to the extent of available cash
flow, with the balance accruing at the contractual rental rate.
Sale of Oxford Place
The Oxford Place apartment complex in Grand Rapids, Michigan was sold on
December 29, 1993 and the entire net proceeds were received by the Partnership
in full satisfaction of its ground lease and mortgage loan investment and
related accrued interest. The Partnership accrued a disposition fee payable to
the advisor of $172,425 in connection with the sale and made a capital
distribution of $2,000,241 ($50.11 per limited partnership unit) from sales
proceeds on July 28, 1994.
Revenue Recognition and Valuation
With the determination that Oxford Place, Elkridge and Susana Corporate
Center loans were impaired as of January 1, 1993, the Partnership has recognized
income to the extent of operating cash flow generated by the collateral
underlying the loans ($461,973 in 1995; $662,063 in 1994 and $898,202 in 1993).
In addition, a valuation allowance has been established to adjust the carrying
value of the loans to their estimated fair market value less anticipated costs
of sale. The activity in the valuation allowance
during 1994 and 1995, together with the related recorded and carrying values of
the impaired mortgage loans at the beginning and end of 1994 and 1995, are
summarized in the table below.
During the fourth quarter of 1995, the Partnership determined that the Case
Communications mortgage loan was impaired. Therefore, it is also included in
the following table. Ground rent and interest payments from the Case
Communications Building, however, continues to be made in accordance with
contractual terms.
Recorded Valuation Carrying
Value Allowance Value
----------- ------------ -----------
Balance at January 1, 1994 $ 5,541,140 $(1,670,000) $ 3,871,140
=========== =========== ===========
Decrease in fair market value
of collateral (800,000)
-----------
Balance at December 31, 1994 $ 5,787,874 $(2,470,000) $ 3,317,874
=========== =========== ===========
Decrease in fair market
value of collateral, net (328,000)
Additional impaired loan (1,100,000)
-----------
Balance at December 31, 1995 $15,619,235 $(3,898,000) $11,721,235
=========== =========== ===========
The valuation allowance at December 31, 1995 is attributable as follows:
Elkridge - $385,000; Susana Corporate Center - $2,413,000; Case Communications -
$1,100,000.
The average recorded value of the impaired mortgage loans did not differ
materially from the balances at the end of each period, except for the
determination of the Case Communications impairment in the fourth quarter of
1995.
Note 4 - Investments in Properties
- ----------------------------------
The Willows Shopping Center investment (the "Willows"), acquired in
1984, is owned jointly with an affiliate of the Partnership (the "Affiliate");
the Partnership has a 75% ownership share. The ground lessee/mortgagor stopped
paying interest on the mortgage loan as of March 1990. As a result, the
Partnership and its Affiliate began foreclosure proceedings to take possession
of the property. A protracted series of legal interactions ensued, including
the filing of an involuntary bankruptcy petition by the second leasehold
mortgagee. In June 1991, the Partnership and its Affiliate sold the mortgage
note to the original owner of the Willows, who in turn undertook and completed
the foreclosure action. The Partnership and its Affiliate received a new
mortgage note; the principal related to the Partnership's share is $11,147,406.
The note bears interest at 9.323% per annum, payable monthly, however it may
accrue with interest compounded at 11%. The loan matures on June 18, 2001. The
original owner also assumed the ground lease. The ground lease provides for
annual rental payments to the Partnership of $412,500. Rental payments may
accrue through June 1996, with interest compounding at 11%. The ground lease
also provides for participation rentals at 70% of gross revenues in excess of a
base amount to the Partnership and its Affiliate. Under this investment
arrangement, however, the Partnership and its Affiliate are bearing substantial
economic risks of ownership; accordingly, the investment is being accounted for
as a jointly owned property.
In connection with a major renovation of the property, on January 1, 1995,
the Partnership and its Affiliate committed to make a construction loan to the
ground lessee in the amount of $2,500,000. The Partnership's share is
$1,875,000, of which $301,862 has been funded as of December 31, 1995. Interest
accrues at 11% compounded monthly; debt service payments begin on January 1,
1996, including principal payments based upon a 15-year amortization schedule.
The note matures on December 31, 1997. In addition, the ground lease was
amended, whereby after January 1, 1996, the Partnership and the Affiliate may,
at their sole discretion, offer the entire property for sale.
At December 31, 1995 and 1994, the Partnership's proportionate share of the
carrying value of the property was comprised of land at $3,750,000, and building
and improvements of $11,641,902 and $10,939,691, respectively, (net of
accumulated depreciation of $2,270,683 and $1,715,555, respectively).
The Partnership's proportionate share of future minimum rentals under
noncancelable operating leases are: $1,751,250 in 1996; $1,773,750 in 1997;
$1,745,250 in 1998; $1,611,750 in 1999; $1,239,000 in 2000; and $4,339,500
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,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
Net income per financial
statements $1,710,797 $2,340,707 $1,376,686
Timing differences:
Expenses - - 7,386
Ground rent and mortgage
loan interest (1) 1,779,246 1,518,282 1,800,258
Valuation allowances 1,428,000 800,000 1,670,000
Loss on sale - - (13,487)
---------- ---------- ----------
Taxable income $4,918,043 $4,658,989 $4,840,843
========== ========== ==========
(1) Represents additional contractual revenue recognized for tax purposes
related to the Willows Shopping Center, Elkridge, Susana Corporate Center,
and Oxford Place in 1993.
Note 6 - Partners' Capital
- --------------------------
Allocations 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 partner. Cash distributions are made
quarterly.
Net sales 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 partner. The adjusted capital contribution per
limited partnership unit was reduced from $1,000 to $940 during 1985 and further
reduced to $889.89 during 1994 as a result of such transactions. Income from a
sale is allocated in proportion to the distribution of related proceeds,
provided that the general partner is allocated at least 1%. Income or losses
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 partner.
Note 7 - Subsequent Event
- -------------------------
Distributions of cash from operations relating to the quarter ended
December 31, 1995 were made on January 25, 1996 in the aggregate amount of
$627,786 ($15.57 per limited partnership unit).
NEW ENGLAND LIFE PENSION PROPERTIES II
A REAL ESTATE LIMITED PARTNERSHIP
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
Initial Costs to Costs Capitalized
Partnership to Aquisitions
------------ -----------------
Encum- Buildings &
Description brances Land Improvements Improvements
- ----------- ------- ---- ------------ ------------
Light Industrial Facilities
Elkridge, Maryland Note A $369,750 -- --
Industrial Building
Columbia, Maryland Note A 140,250 -- --
75% Interest in Shopping
Center
Concord, California Note A 3,750,000 9,841,798 4,060,785
Research and Development
Buildings
Los Angeles, California Note A 1,785,000 -- --
Research and Development
Buildings
Columbia, Maryland Note A 2,618,087 -- --
-------------------------------------------------------------------------------------
Total $8,663,087 $9,841,798 $4,060,785
=====================================================================================
Gross amount at which
Carried at Close of Period
--------------------------
Accumulated
Buildings & Depreciation Date Depreciable
Land Improvements Total & Amortization Acquired Life
---- ------------ ----- --------------- -------- -----------
Light Industrial Facilities
Elkridge, Maryland $369,750 -- $369,750 -- 06/29/84 --
Industrial Building
Columbia, Maryland 140,250 -- 140,250 -- 06/29/84 --
75% Interest in Shopping
Center
Concord, California 3,750,000 13,902,583 17,652,583 (2,270,683) 07/30/84 (L) 25 years
06/18/91 (B)
Research and Development
Buildings
Los Angeles, California 1,785,000 -- 1,785,000 -- 02/04/85 --
Research and Development
Buildings
Columbia, Maryland 2,618,087 -- 2,618,087 (28,609) 05/02/85 --
-------------------------------------------------------------------------------------------
Total
$8,663,087 $13,902,583 $22,565,670 ($2,299,292)
===========================================================================================
(L) Land
(B) Buidlings & Improvements
Notes:
(A) All senior mortgages on the properties are held by New England Life Pension
Properties II
(B) The Concord, California investment was accounted for as a jointly-owned
property effective June 1991
Reconciliation of real estate owned:
Balance at beginning of period $21,318,333
Acquisitions 1,247,337
-----------
Balance at end of period $22,565,670
===========
Accumulated depreciation
at beginning of year $1,740,992
Depreciation expense 1995 555,128
Amortization expense 1995 3,172
-----------
Accumulated depreciation at end of year: $2,299,292
===========
03/25/96 NEW ENGLAND LIFE PENSION PROPERTIES II
A REAL ESTATE LIMITED PARTNERSHIP
MORTGAGE LOANS ON REAL ESTATE SCHEDULE IV
AS OF DECEMBER 31, 1995
Final Periodic Cost
Interest Maturity Payment Prior Face Amount Recovery
Description Rate Date Terms Liens of Mortgage Allowance
- ----------- --------------- ----------- -------------- ------ --------------- ----------
Light Industrial
Facilities Interest
Elkridge, Maryland 12.00% 06/29/94 Monthly -- $2,062,500 $(28,324)
(See Note 3) Principal
at Maturity
Industrial Building Interest
Columbia, Maryland 12.00% 06/29/94 Monthly -- 1,062,500 --
(See Note 3) Principal
at Maturity
Research and Development
Buildings 9.06% 12/31/99 Interest 3,250,000 (32,832)
Los Angeles, California 8.00% 12/31/99 Monthly -- 192,000
(See Note 3) Principal
at Maturity
Research and Development
Buildings 11.00% Interest
Columbia, Maryland (See Note 3) 05/01/95 Monthly -- 8,814,621 --
Principal
at Maturity
14.00% Interest
(See Note 3) 05/01/95 Monthly -- 1,000,000 --
Principal
at Maturity
__________________________________________________________________________________
Total $16,381,621 ($61,156)
==================================================================================
Valuation
Allowance Accrued Deferred Carrying
for Impaired Interest Acquisition Amount of
Description Mortgage Loans Receivable Fee Mortgage
- ----------- ----------------- ----------- ---------- --------------
Light Industrial
Facilities
Elkridge, Maryland $(385,000) $235,625 -- $1,884,801
Industrial Building
Columbia, Maryland -- -- -- $1,062,500
Research and Development
Buildings (2,413,000) 33,177 -- $837,345
Los Angeles, California $192,000
Research and Development
Buildings
Columbia, Maryland (1,100,000) -- -- $7,714,621
-- -- -- $1,000,000
_____________________________________________________________
Total ($3,898,000) $268,802 $0 $12,691,267
=============================================================
Balance at beginning of period $14,126,658
Valuation allowance for impaired
mortgage loans (1,428,000)
Amortization (7,391)
--------------
Balance at end of period $12,691,267
==============
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
FINANCIAL REPORT
DECEMBER 31, 1995
FINANCIAL STATEMENTS
INDEX NO. 2
Auditor's Report and Financial Statements
of M.O.R. XXIX Associates Limited Partnership
Page #
Independent Auditor's Report of Wolpoff & Company..............
Balance Sheet - December 31, 1995 and 1994.....................
Statement of Income - For the Years Ended
December 31, 1995, 1994 and 1993.............................
Statement of Partners' Capital - For the Years Ended
December 31, 1995, 1994 and 1993.............................
Statement of Cash Flows - For the Years Ended
December 31, 1995, 1994 and 1993.............................
Notes to Financial Statements..................................
[LETTERHEAD OF WOLPOFF & COMPANY, LLP APPEARS HERE]
To the Partners
M.O.R. XXIX Associates Limited Partnership
Columbia, Maryland
We have reviewed the accompanying statement of assets, liabilities and partners'
capital - income tax basis of M.O.R. XXIX Associates Limited Partnership as of
December 31, 1995 and 1994, and the related statements of revenue and expenses -
income tax basis, changes in partners' capital - income tax basis, and cash
flows - income tax basis for the years ended December 31, 1995, 1994 and 1993,
in accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of M.O.R. XXIX Associates Limited Partnership.
A review consists principally of inquiries of Partnership personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
As described in Note 1, these financial statements were prepared on the basis of
accounting the Partnership uses for income tax purposes, which is a
comprehensive basis of accounting other than generally accepted accounting
principles.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with the basis of accounting described in Note 1.
/s/ WOLPOFF & COMPANY, LLP
WOLPOFF & COMPANY, LLP
Baltimore, Maryland
February 29, 1996
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL - INCOME TAX BASIS
-------------------------------------------------------------------------
ASSETS
------
December 31,
-------------------------------
1995 1994
--------------- --------------
PROPERTY, AT COST - Notes 1, 3 and 6
Building and Improvements $ 4,532,735 $ 4,532,735
Tenant Improvements 4,343,486 4,345,648
Deferred Costs 1,016,069 974,629
-------------- --------------
9,892,290 9,853,012
Less Accumulated Depreciation and Amortization 5,544,315 5,019,052
-------------- --------------
PROPERTY, NET 4,347,975 4,833,960
-------------- --------------
OTHER ASSETS
Cash and Cash Equivalents - Notes 1 and 7 133,515 208,161
Property Tax and Insurance Fund 1,264 40,350
Receivable, Affiliates - Note 4 497,162 376,546
Tenant Receivables 7,106 82,191
-------------- --------------
TOTAL OTHER ASSETS 639,047 707,248
-------------- --------------
$ 4,987,022 $ 5,541,208
============== ==============
__________
See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL - INCOME TAX BASIS
-------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
December 31,
-----------------------------
1995 1994
------------- -------------
LIABILITIES
Mortgages Payable - Note 2
First Mortgage $ 8,814,621 $ 8,814,621
Second Mortgage 1,000,000 1,000,000
Accrued Interest Payable 92,467 92,467
Payable to Tenant 50,064 20,784
Accounts Payable and Accrued Expenses 32,290 84,854
Accrued Ground Rent 1,318 42,824
Refundable Deposit - Note 5 299,963 299,963
------------- -------------
TOTAL LIABILITIES 10,290,723 10,355,513
COMMITMENTS AND CONTINGENCY - Notes 3 and 8
PARTNERS' CAPITAL (DEFICIT) (5,303,701) (4,814,305)
------------- -------------
$ 4,987,022 $ 5,541,208
============= =============
__________
See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
STATEMENT OF REVENUE AND EXPENSES - INCOME TAX BASIS
----------------------------------------------------
Year Ended December 31,
----------------------------------------------
1995 1994 1993
-------------- ------------- -------------
REVENUE - Note 5
Rental Income
Base Rent $ 1,940,000 $ 1,914,667 $ 1,870,667
Special Rent 160,000 160,000 160,000
Operating Expense Reimbursement 183,934 146,032 108,499
------------- ------------- -------------
2,283,934 2,220,699 2,139,166
Interest and Other Income 28,533 14,570 18,392
------------- ------------- -------------
TOTAL REVENUE 2,312,467 2,235,269 2,157,558
------------- ------------- -------------
OPERATING EXPENSES
Property Taxes 187,073 186,638 191,354
Management Fees - Note 4 83,164 27,100 23,013
Legal and Accounting 4,190 3,734 4,158
General and Administrative 4,038 2,781 1,806
------------- ------------- -------------
TOTAL OPERATING EXPENSES 278,465 220,253 220,331
------------- ------------- -------------
OPERATING INCOME 2,034,002 2,015,016 1,937,227
------------- ------------- -------------
MORTGAGE INTEREST AND GROUND RENT - Notes 2 and 3
Mortgages 1,109,608 1,109,608 1,109,608
Ground Rent 718,830 702,144 673,164
------------- ------------- -------------
1,828,438 1,811,752 1,782,772
------------- ------------- -------------
INCOME BEFORE DEPRECIATION AND AMORTIZATION 205,564 203,264 154,455
DEPRECIATION AND AMORTIZATION (525,263) (567,966) (567,956)
------------- ------------- -------------
NET LOSS $ (319,699) $ (364,702) $ (413,501)
============= ============= =============
__________
See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - INCOME TAX BASIS
------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------
1995 1994 1993
--------------- -------------- --------------
CAPITAL CONTRIBUTIONS $ 1,000 $ 1,000 $ 1,000
--------------- -------------- --------------
BASIS ADJUSTMENT - Note 6 259,800 259,800 259,800
--------------- -------------- --------------
DISTRIBUTIONS
Prior Years (744,927) (540,714) (431,766)
Current Year (169,697) (204,213) (108,948)
--------------- -------------- --------------
(914,624) (744,927) (540,714)
--------------- -------------- --------------
ACCUMULATED LOSSES
Prior Years (4,330,178) (3,965,476) (3,551,975)
Current Year (319,699) (364,702) (413,501)
--------------- -------------- --------------
(4,649,877) (4,330,178) (3,965,476)
--------------- -------------- --------------
TOTAL PARTNERS' CAPITAL (DEFICIT) $ (5,303,701) $ (4,814,305) $ (4,245,390)
=============== ============== ==============
__________
See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
STATEMENT OF CASH FLOWS - INCOME TAX BASIS
------------------------------------------
Year Ended December 31,
----------------------------------------------
1995 1994 1993
------------- -------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (319,699) $ ($364,702) $ (413,501)
------------- -------------- -------------
Adjustments to Reconcile Net Loss to
Net Cash Provided by Operating Activities
Depreciation and Amortization 525,263 567,966 567,956
Change in Tenant Receivables 75,085 (82,191) -0-
Change in Accounts Payable and Accrued Expenses (52,564) 64,924 (13,330)
Change in Payable to Tenant 29,280 (37,227) 58,011
Change in Accrued Interest Payable -0- 92,467 (92,467)
Change in Accrued Ground Rent (41,506) (177,477) 572
Change in Prepaid Expenses -0- 21,866 (21,866)
------------- -------------- -------------
Total Adjustments 535,558 450,328 498,876
------------- -------------- -------------
Net Cash Provided by Operating Activities 215,859 85,626 85,375
------------- -------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Tenant Improvements and Deferred Costs (39,278) (1,604) -0-
Change in Property Tax and Insurance Fund 39,086 1,523 (41,873)
Change in Receivable, Affiliates (120,616) 324,378 65,560
------------- -------------- -------------
Net Cash Provided (Used) by Investing Activities (120,808) 324,297 23,687
------------- -------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Partners (169,697) (204,213) (108,948)
------------- -------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (74,646) 205,710 114
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 208,161 2,451 2,337
------------- -------------- -------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 133,515 $ 208,161 $ 2,451
============= ============== =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid During the Year for Interest $ 1,109,608 $ 1,017,140 $ 1,202,075
============= ============== =============
__________
See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1995
-----------------
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
------------
M.O.R. XXIX Associates Limited Partnership was formed in November 1984
pursuant to an agreement under the Maryland Uniform Limited
Partnership Act.
Income Tax Basis
----------------
The Partnership follows the policy of preparing its financial
statements on the basis utilized for income tax reporting.
Consequently, the financial statements are not prepared in accordance
with generally accepted accounting principles.
Cash and Cash Equivalents
-------------------------
The Partnership considers all highly liquid debt instruments purchased
with a maturity of 3 months or less to be cash equivalents.
Property
--------
The Partnership owns and operates an office building in Howard County,
Maryland containing approximately 160,000 square feet of leasable
area. All property is recorded at cost. The building was placed into
service on March 1, 1986, and has been 100% occupied since that date
(see Note 5).
Interest Expense
----------------
Interest expense and real property taxes incurred during the
construction period were capitalized as a deferred cost and are being
amortized over a 10-year period.
Depreciation
------------
Building costs are being depreciated using the Accelerated Cost
Recovery System (19 years, straight-line) for costs incurred prior to
December 31, 1986, and the Modified Accelerated Cost Recovery System
(31.5 and 39 years, straight-line) for costs incurred after 1986.
Amortization
------------
Various deferred costs are being amortized as follows:
Amortization
Amount Period
-------------- ------------------
Construction Period
Interest and Taxes $ 485,129 10 Years
Leasing Commissions 415,960 10 Years
Permanent Mortgage Costs 114,980 Fully Amortized
--------------
$ 1,016,069
==============
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-----------------------------------------
DECEMBER 31, 1995
-----------------
Note 1 - Income Taxes
------------
(Cont.) Partnerships are not subject to income taxes. The individual partners
are required to report their respective shares of partnership income
or loss and other tax items on their individual income tax returns.
Note 2 - FINANCING
Permanent Mortgage
------------------
Permanent financing was provided by New England Life Pension
Properties II in the amount of $9,814,621, through 2 separate
nonrecourse mortgages. The first mortgage originated May 1, 1985, and
was fully funded as of December 31, 1986, in the amount of $8,814,621.
The second mortgage was fully funded during 1986 in the amount of
$1,000,000. Pertinent information regarding these mortgages is as
follows:
First Mortgage Second Mortgage
-------------- ---------------
Outstanding Balance, December 31, 1995 $8,814,621 $1,000,000
Interest Rate 11% 14%
Payment Constant Interest Only Interest Only
Term 10 Years 9 Years
Maturity Date May 1, 1995 May 1, 1995
Amount Due at Maturity $8,814,621 $1,000,000
Also see Notes 3 and 8.
Note 3 - LAND SALE AND LEASEBACK
In 1985 the Partnership sold its land to New England Life Pension
Properties II for $2,385,379 and entered into a land lease with a term
of 60 years. The annual base rent is $262,392. The lease provides for
supplemental rent equal to 65.864% of the gross receipts of the
property which are in excess of $1,247,000. For this purpose the
special rent amounting to $160,000 annually is not included. The
remaining minimum annual land lease payments total $13,119,608 for
1996 through 2045.
The total ground rent for 1995, 1994 and 1993 is as follows:
1995 1994 1993
------------- ------------- -------------
Basic Annual Rent $ 262,392 $ 262,392 $ 262,392
Supplemental Rent* 456,438 439,752 410,772
------------- ------------- -------------
$ 718,830 $ 702,144 $ 673,164
============= ============= =============
*See Schedule of Supplemental Ground Rent Calculation.
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-----------------------------------------
DECEMBER 31, 1995
-----------------
Note 4 - RELATED PARTY TRANSACTIONS
The Partnership has various contractual arrangements with Manekin
Corporation, an entity affiliated with certain partners.
Management Fees
---------------
The Partnership has entered into an agreement with Manekin Corporation
to act as management agent for the property. The management agreement
provided for management fees equal to 1% of rents and tenant expense
billings. On January 1, 1995, the management fee increased to 3%. For
1995, 1994 and 1993, management fees of $83,164, $27,100 and $23,013,
respectively, were incurred.
Receivable, Affiliates
----------------------
The Partnership participates in a central disbursing cash account with
various entities affiliated with the Partnership. As of December 31,
1995 and 1994, the Partnership's share of the cash account was
$493,094 and $376,546, respectively, and is reflected as receivable,
affiliates. The funds earn interest at the applicable federal rate. As
of December 31, 1995, other receivables from affiliates amounted to
$4,068.
The majority of the Partnership's cash is held in one commercial bank.
Periodically, during the year, the balance may have exceeded the FDIC
limitation.
Note 5 - LEASE
During 1989 the building was 100% leased to Case/Datatel, Inc., which
in December 1989 vacated the building and entered into a re-lease
agreement with the Partnership. As a condition to the re-lease,
Case/Datatel agreed to pay rent during the new tenant's (U.S.
Government) free-rent period and to make a deposit of $299,963 with
the Partnership. The deposit is refundable at the earlier of
termination of the U.S. Government's lease or February 29, 1996. In
addition, Case/Datatel is responsible for all the terms and
obligations of the lease should the U.S. Government cause its lease to
be terminated prior to February 29, 1996.
Effective January 1, 1990, the U.S. Government leased the entire
building for a base rent plus operating expenses and real estate
taxes. The base rent increases every March 1. Effective March 1, 1995,
the annual rent amount is $2,048,000. The lease automatically renews
annually until October 31, 1996. The U.S. Government has the option to
renew beyond October 31, 1996, for five 1-year periods at the
prevailing market rate. Included in the annual rent is $160,000 of
special rent associated with tenant improvements initially required by
Case/Datatel, Inc.
Note 6 - BASIS ADJUSTMENT
On December 18, 1986, the Partnership redeemed William H. Winstead's
partnership interest. Concurrently, the basis of the Partnership's
real property was adjusted pursuant to (S)734 of the Internal Revenue
Code. The increase in basis was $259,800.
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-----------------------------------------
DECEMBER 31, 1995
-----------------
Note 7 - CASH RESTRICTIONS
On December 30, 1991, the Manekin Organization and the partners of
M.O.R. XXIX Associates Limited Partnership entered into a restructure
and loan agreement with Mercantile-Safe Deposit & Trust Company
(Mercantile). As a result, the organization entered into a lockbox
arrangement with Mercantile whereby all rent payments are received
directly by the bank. These funds are held for payment of monthly
expenses including escrow amounts. Additionally, at its discretion,
Mercantile may apply the remaining available funds to reduce debt owed
to Mercantile which is guaranteed by the Partnership and the partners.
Note 8 - CONTINGENCY
The Partnership has not secured new financing or an extension of their
mortgages which matured on May 1, 1995. The Partnership's continuation
as a going concern is dependent upon its ability to obtain debt or
equity financing.
To the Partners
M.O.R. XXIX Associates Limited Partnership
Columbia, Maryland
ACCOUNTANT'S REPORT ON SUPPLEMENTARY INFORMATION
------------------------------------------------
The accompanying supplementary information contained on pages 12 and 13 is
presented for purposes of additional analysis. Such information has not been
subjected to the same inquiries and analytical procedures applied in the review
of the basic financial statements, but has been compiled from information that
is the representation of the management of M.O.R. XXIX Associates Limited
Partnership, without audit or review. Accordingly, we do not express an opinion
or any other form of assurance on such supplementary information.
/s/ WOLPOFF & COMPANY, LLP
WOLPOFF & COMPANY, LLP
Baltimore, Maryland
February 29, 1996
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
SCHEDULE OF SUPPLEMENTAL GROUND RENT CALCULATION
------------------------------------------------
Year Ended December 31,
----------------------------------------------------
1995 1994 1993
--------------- --------------- ---------------
GROSS RENT RECEIPTS $ 1,940,000 $ 1,914,667 $ 1,870,667
BASE 1,247,000 1,247,000 1,247,000
--------------- --------------- ---------------
GROSS RENT RECEIPTS IN EXCESS OF BASE 693,000 667,667 623,667
APPLICABLE PERCENTAGE 65.864% 65.864% 65.864%
--------------- --------------- ---------------
SUPPLEMENTAL GROUND RENT $ 456,438 $ 439,752 $ 410,772
=============== =============== ===============
__________
See Accountant's Report on Supplementary Information.
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------
SCHEDULE OF CHANGES IN PARTNERS' CAPITAL - INCOME TAX BASIS
-----------------------------------------------------------
YEAR ENDED DECEMBER 31, 1995
----------------------------
Partners' Partners'
Partners' Capital Current Year Capital
Ownership (Deficit) -------------------------------- (Deficit)
Percentage 12/31/94 Distributions Net Loss 12/31/95
----------- -------------- ---------------- -------------- -------------
GENERAL PARTNER
RA & DM, Inc. 1.00% $ (48,142) $ (1,697) $ (3,197) $ (53,036)
LIMITED PARTNER
MRU Limited Partnership 99.00% (4,766,163) (168,000) (316,502) (5,250,665)
----------- -------------- ---------------- -------------- -------------
100.00% $ (4,814,305) $ (169,697) $ (319,699) $ (5,303,701)
=========== ============== ================ ============== =============
__________
See Accountant's Report on Supplementary Information.
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.
NEW ENGLAND LIFE PENSION PROPERTIES II;
A REAL ESTATE LIMITED PARTNERSHIP
Date: March 15 , 1996 By: /s/ Joseph W. O'Connor
------ ----------------------
Joseph W. O'Connor
President of the
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
--------- ----- ----
President, Principal
Executive Officer and
Director of the
/s/ Joseph W. O'Connor General Partner March 15 , 1996
- ------------------------ ------
Joseph W. O'Connor
Principal Financial and
Accounting Officer of the
/s/ Daniel C. Mackowiak General Partner March 15 , 1996
- ------------------------- ------
Daniel C. Mackowiak
Director of the
/s/ Daniel J. Coughlin General Partner March 15 , 1996
- ------------------------ ------
Daniel J. Coughlin
Director of the
/s/ Peter P. Twining General Partner March 15 , 1996
- ---------------------- ------
Peter P. Twining
EXHIBIT INDEX
-------------
Exhibit Page
Number Exhibit Number
- ------- ------- ------
4. Amended and Restated Agreement of Limited *
Partnership of New England Life Pension
Properties II; A Real Estate Limited
Partnership (filed as Exhibit 28A to Form
8-K dated June 15, 1984, as filed with the
Commission on June 25, 1984).
10A. Form of Escrow Deposit Agreement among the *
Registrant, NEL Equity Services Corporation
and The Bank of Boston (filed as Exhibit 10A
to the Registrant's Registration Statement
on Form S-11, file no. 2-86659 [the
"Registration Statement"]).
10B. Form of Advisory Contract between the *
Registrant and Copley Real Estate Advisors,
Inc. (filed as Exhibit 10B to the
Registration Statement).
10C. Confirmatory Ground Sublease, dated as of *
June 29, 1984, between the Registrant, as
Lessor, and Columbia Warehouse Limited
Partnership ("Columbia"), as Lessee [filed
as Exhibit 10D to Post-Effective Amendment
No. 1 to the Registration Statement, dated
August 23, 1984 ("Post-Effective Amendment
No. 1")].
10D. Promissory Note, dated June 29, 1984, in *
the principal amount of $1,062,500 from
Columbia to the Registrant (filed as
Exhibit 10E to Post-Effective Amendment
No. 1).
10E. Deed of Trust, dated June 29, 1984, by and *
between Columbia and the Trustees named
therein (filed as Exhibit 10F to Post-
Effective Amendment No. 1.).
10F. Confirmatory Ground Lease, dated as of *
June 29, 1984 between the Registrant,
as Lessor, and Dorsey Associates
("Dorsey"), as Lessee (filed as Exhibit
10G to Post-Effective Amendment No. 1.).
10G. Promissory Note, dated June 29, 1984, in *
the principal amount of $2,062,500 from
Dorsey to the Registrant (filed as Exhibit
10H to Post Effective Amendment No. 1).
10H. Deed of Trust, dated June 29, 1984, by and *
between Dorsey and the Trustees named
therein (filed as Exhibit 10I to Post-
Effective Amendment No. 1).
10I. Deed of Trust and Security Agreement, *
dated as of July 30, 1984, among Willows
Concord Venture, as Grantor, El Camino
Title Company, as Trustee, and New England
Life Pension Properties; A Real Estate
Limited Partnership and the Registrant, as
Beneficiaries (filed as Exhibit 28.1 to
Form 8-K dated July 29, 1984, as filed with
the Commission on August 4, 1984).
10J. Ground Lease dated as of July 30, 1984, *
between Willows Concord Venture, as Lessee,
and New England Life Pension Properties; A
Real Estate Limited Partnership and the
Registrant, as Lessors (filed as Exhibit
28.2 to Form 8-K dated July 29, 1984, as
filed with the Commission on August 14, 1984).
Exhibit Page
Number Exhibit Number
- ------ ------- ------
10K. Ground Lease dated as of December 21, *
1984, between the Registrant, as Lessor,
and Susana Partners '82 ("Susana") as
Lessee (filed as Exhibit 10(i)a to Form
8-K dated February 4, 1985, as filed on
or about February 15, 1985, as amended).
10L. Deed of Trust and Security Agreement dated *
as of December 21, 1984, among the
Registrant, as Grantee, Susana, as Grantor,
and First American Title Insurance Company,
as Trustee (filed as Exhibit 10(i)b to Form
8-K dated February 15, 1985, as amended).
10N. Mortgage and Security Agreement, dated as of *
September 26, 1985, by and between Oxford
Place Apartments Limited Partnership,
Mortgagor, and the Registrant, Mortgagee, in
the amount of $4,250,000.
10O. Promissory Note, dated as of September 26, *
1985, in the principal amount of $4,250,000
from the Registrant to Oxford Place
Apartments Limited Partnership.
10P. Ground Lease dated as of September 26, 1985 *
between the Registrant, as Landlord and
Oxford Place Apartments Limited Partnership,
as Tenant.
10Q. Contract of Sale dated as of September 26, *
1985, by and between Oxford Apartments
Limited Partnership, Seller, and the
Registrant, Purchaser.
10R. Letter Agreement between New England Life *
Pension Properties; A Real Estate Limited
Partnership, the Registrant and Willows
Concord Venture dated June 14, 1991.
10S. Promissory Note dated July 14, 1991 in the *
principal amount of $14,863,206.38 from
Willows Concord Venture to New England
Life Pension Properties; A Real Estate
Limited Partnership and the Registrant.
10T. Assignment of Note and Liens Including Deed *
of Trust dated as of June 13, 1991 by New
England Life Pension Properties; A Real
Estate Limited Partnership and the
Registrant to Willows Concord Venture.
10U. Assignment of VMS Loan Documents dated *
June 14, 1991 by Willows Concord Venture
to New England Life Pension Properties;
A Real Estate Limited Partnership and the
Registrant.
10V. Deed of Trust and Security Agreement dated *
June 13, 1991 between Willows Concord
Venture, as Trustor; Chicago Title Company,
as Trustee; and New England Life Pension
Properties; A Real Estate Limited Partnership
and the Registrant, as Beneficiary.
10W. Assignment of Leases and Rents dated June 13, *
1991 by Willows Concord Venture to New
England Life Pension Properties; A Real
Estate Limited Partnership and the Registrant.
Exhibit Page
Number Exhibit Number
- ------ ------- ------
10X. Amended and Completely Restated Ground Lease *
dated effective as of June 18, 1991 between
Registrant, New England Life Pension
Properties II; A Real Estate Limited
Partnership and Willows Concord Venture.
10Y. Amended and Restated Secured Promissory Note *
effective as of June 14, 1991, in the
principal amount of $14,863,206.38 from
Willows Concord Venture to the Registrant and
New England Life Pension Properties II; A
Real Estate Limited Partnership.
10Z. Modification Agreement and First Amendment to *
Loan Documents dated August 13, 1991, by and
between Willows Concord Venture, the
Registrant and New England Life Pension
Properties II; A Real Estate Limited
Partnership.
10AA. Modification Agreement and Second Amendment to *
Loan Documents dated September 12, 1991, by
and between Willows Concord Venture, the
Registrant and New England Life Pension
Properties II; A Real Estate Limited
Partnership.
10BB. Modification Agreement and Third Amendment to *
Loan Documents dated October 15, 1991, by and
between Willows Concord Venture, the
Registrant and New England Life Pension
Properties II; A Real Estate Limited Partnership.
10CC. Fourth Amendment to Loan Documents dated *
December 17, 1992 by and between Willows
Concord Venture Registrant and New England
Life Pension Properties II; A Real Estate
Limited Partnership.
10DD. Special Warranty Deed by and between *
Registrant, Grantor, and Oxford Place
Apartments Limited Partnership, Grantee,
dated December, 1993.
10EE. Agreement to Cause Early Expiration of Term of *
Ground Lease by and between Oxford Place
Apartments Limited Partnership and Registrant
dated as of December 29, 1993.
10FF. Discharge of Mortgage and Security Agreement *
executed by Registrant, dated December, 1993.
10GG. Termination of Collateral Assignment of Lease *
or Leases executed by Registrant, dated
December, 1993.
10HH. Consent letter given by Registrant regarding *
sale of property dated December 29, 1993.
10II. Construction Loan Agreement dated January 1,
1995 by and between Willows Concord Venture,
A California Limited Partnership as Borrower,
and New England Life Pension Properties II;
A Real Estate Limited Partnership as Lender.
* Previously filed and incorporated herein by reference.