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. 0-15429
_________________
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2893298
(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 non-affiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
------
Item 1. Business.
--------
New England Life Pension Properties IV; A Real Estate Limited
Partnership (the "Partnership") was organized under the Uniform Limited
Partnership Act of the Commonwealth of Massachusetts on October 16, 1985, to
invest primarily in newly constructed and existing income-producing real
properties.
The Partnership was initially capitalized with contributions of $2,000
in the aggregate from Fourth Copley Corp. (the "Managing General Partner") and
CCOP Associates Limited Partnership (the "Associate General Partner")
(collectively, the "General Partners") and $10,000 from Copley Real Estate
Advisors, 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 November 12, 1985, with respect to a
public offering of 60,000 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 $120,000,000). The Registration
Statement was declared effective on January 3, 1986.
The first sale of Units occurred on May 29, 1986, 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 terminated and the last group of subscription agreements was accepted
by the Partnership on December 31, 1986. As of January 31, 1987, a total of
94,997 Units had been sold, a total of 17,207 investors had been admitted as
limited partners (the "Limited Partners") and a total of $94,348,550 had been
contributed to the capital of the Partnership. The remaining 25,003 Units were
de-registered on February 23, 1987.
As of December 31, 1995, the Partnership had investments in the six
real property investments described below. In December 1988, the Partnership
sold one of its investments and received sale proceeds of $10,577,476 which were
substantially reinvested. A second investment located in Atlanta, Georgia was
sold on August 6, 1993 that resulted in sale proceeds, after closing costs,
totaling $7,917,000. The sale proceeds were distributed to the Limited Partners
in October 1993, in the amount of $82.00 per Unit. A third investment located
in Rancho Cucamonga, California was sold on December 30, 1994, resulting in sale
proceeds, after closing costs, totaling $5,261,275. On January 26, 1995,
$5,224,835 ($55 per Unit) of the sale proceeds was distributed to the Limited
Partners.
The Partnership has no current plan to renovate, improve or further
develop any of its real property. In the opinion of the Managing General
Partner of the Partnership, the properties are adequately covered by insurance.
The Partnership has no employees. Services are performed for the Partnership by
the Managing General Partner and affiliates of the Managing General Partner.
A. Apartment Complex in Fort Myers, Florida ("Reflections").
---------------------------------------------------------
On August 1, 1986, the Partnership acquired a 60% interest in Lee
Partners (the "Joint Venture"), a joint venture formed with Lee-Oxford Limited
Partnership, a Maryland limited partnership ("Lee-Oxford"). As of December 31,
1995, the Partnership had contributed $8,190,145 to the capital of the Joint
Venture out of a maximum obligation of $8,685,000. The joint venture agreement
entitles the Partnership to receive 60% of all cash flow from operations,
refinancing proceeds and net sale proceeds.
The Partnership also committed to make a loan for investment in the
joint venture of up to $5,790,000 to Lee-Oxford, of which $5,460,097 had been
funded as of December 31, 1995. Interest only on the loan is payable monthly at
the rate of 10.5% per annum. The entire outstanding principal balance of the
loan matures in December, 1999 or will be due on the sale of all or
substantially all of the assets of the Joint Venture or the sale of Lee-Oxford's
interest in the Joint Venture. Lee-Oxford must apply any cash flow received from
operations of the Joint Venture to interest payments on the loan and must apply
proceeds of financings or sales received from the Joint Venture to payment of
the interest on and principal of the loan. The Partnership agreed, effective
January 1, 1988, that to the extent that Lee-Oxford's 40% share of the cash flow
is not sufficient to pay interest currently due, interest due on the loan shall
accrue and compound at a rate of 10.5%. The Partnership agreed, effective May
1, 1992, to extend the maturity date of the loan from August, 1996 to December,
1999, and the borrower agreed to pay interest, currently, at a minimum of 7%
with the remainder accruing at 10.5% per annum compounded monthly. The loan is
secured by Lee-Oxford's interest in the Joint Venture and by a guarantee of
Oxford Development Corporation, an affiliate of Lee-Oxford.
The joint venture owns approximately 12.63 acres of land located in
Fort Myers, Florida and has completed construction of a 282-unit apartment
complex consisting of 12 2- and 3-story buildings thereon. The complex was
approximately 96% occupied as of December 31, 1995.
B. Office/Industrial Buildings in Phoenix, Arizona ("Metro Business
----------------------------------------------------------------
Center").
------
On September 15, 1986, the Partnership acquired a 60% interest in
Copley/Hewson Northwest Associates, a joint venture formed with an affiliate of
The Hewson Company. Effective January 1, 1990, as a result of operating
deficits, the joint venture agreement was amended to reflect an increase of the
Partnership's interest in the joint venture to 80% and a decrease in The Hewson
Company's interest to 20%. As of December 31, 1995, the Partnership had
contributed $5,302,193 to the capital of the joint venture out of a maximum
obligation of $5,580,000.
The Partnership also committed to make a loan for investment in the
joint venture of up to $3,988,000 to an affiliate of The Hewson Company, of
which $3,534,796 had been funded as of December 31, 1995. Interest only on the
loan is payable monthly at the rate of 10.5% per annum. The loan has a ten-year
term and is not prepayable. The Hewson Company must apply any cash flow
received from operations of the joint venture to interest payments on the loan
and must apply proceeds of refinancings or sales received from the joint venture
to payments of interest on and principal of the loan. The loan is secured by
the borrower's interest in the joint venture.
On January 1, 1996 a letter agreement was executed which modified
certain terms of the Joint Venture Agreement. The letter agreement, which
constitutes an amendment to the Joint Venture Agreement, granted the Partnership
full control over management decisions, except that the Partnership does not
have the authority to offer the property for sale prior to July 1, 1996, unless
The Hewson Company approves. The joint venture agreement entitles the
Partnership to receive 80% of net cash flow, refinancing proceeds and sale
proceeds once the loan and accrued interest are repaid in full.
The joint venture owns approximately seven acres of land located in
Phoenix, Arizona, improved with four one-story warehouse buildings containing
approximately 109,930 square feet of space. The buildings were 91% leased as of
December 31, 1995.
C. Office, Industrial and Retail Buildings in Las Vegas, Nevada
------------------------------------------------------------
("Palms Business Centers").
--------------------------
On December 29, 1986, the Partnership acquired a 60% interest in
Rancho Road Associates, a joint venture formed with an affiliate of Commerce
Centre Partners. In the first quarter of 1990, the Partnership committed to
increase its maximum obligation from $13,400,000 to $15,300,000. On October 2,
1991, the Partnership committed to increase its maximum obligation from
$15,300,000 to $15,840,000. As of December 31, 1995, the Partnership had
contributed $15,840,000 of capital to the joint venture. The additional funds
were used to pay for higher than anticipated tenant finish costs and the costs
of re-leasing the space vacated by tenants when leases expired. The joint
venture agreement entitles the Partnership to receive a preferred cumulative
compounded return of 11% per annum on its capital contribution, of which 9.5%
per annum is due currently and up to 1.5% per annum may be accrued if sufficient
cash is not available therefor. The entire unpaid accrued preferred return is
due and payable at the end of the tenth year of the joint venture's operations.
The joint venture agreement also entitles the Partnership to receive 60% of net
cash flow and 60% of sale and refinancing proceeds following the return of the
Partnership's equity capital. As of January 1, 1995, the joint venture
agreement was amended and restated granting the Partnership control over
management and operating decisions. Additionally, the venture partner will
receive 40% of the excess cash flow above a specified level until its cash
investment of $360,000 is repaid in full.
The joint venture owns approximately 14.1 acres of land in Las Vegas,
Nevada improved with 15 one-story buildings suitable for office, industrial and
retail use and containing approximately 224,474 square feet of space. The first
phase, which was completed in the second quarter of 1988, and the second phase,
which was completed in the fourth quarter of 1988, were 93% and 99% leased,
respectively, as of December 31, 1995.
On November 16, 1990, the joint venture filed a complaint against a
tenant for failure to pay rent and fraud, totaling approximately $500,000. A
judgment in the amount of $911,200 was recorded in 1995. The Partnership has not
collected on or recognized the judgment as of December 31, 1995.
On October 26, 1994, the joint venture filed a complaint against Han
Lee, Inc. for failure to pay rent totaling $69,171, including late charges. In
August, 1995, a Judgment by Default in the amount of $83,856 was recorded. The
Partnership has not collected on or recognized the judgment as of December 31,
1995.
D. Office/Research and Development Buildings in Columbia, Maryland
---------------------------------------------------------------
("Columbia Gateway Corporate Park").
-----------------------------------
On December 21, 1987, the Partnership acquired a 17% interest in a
joint venture formed with an affiliate of the Partnership (the "Affiliate"),
which had a 33% interest, and M.O.R. Gateway 51 Associates Limited Partnership.
As of April 20, 1989, the joint venture agreement was amended and
restated reflecting an increase in the Partnership's interest in the joint
venture to 34.75% and a decrease in the Affiliate's interest in the joint
venture to 15.25%. In addition, the amended and restated joint venture
agreement increased the Partnership's maximum obligation to contribute capital
to the joint venture and reallocated the capital contributed to the joint
venture between the Partnership and the Affiliate. As of December 31, 1995, the
Partnership had contributed $14,086,147 to the capital of the joint venture out
of a maximum obligation of $14,598,000.
The joint venture agreement entitles the Partnership and the Affiliate
to receive a preferred return on the their respective invested capital at the
rate of 10.5% per annum. Such preferred return will be payable currently until
the Partnership and the Affiliate have received an aggregate of $8,865,000;
thereafter, if sufficient cash flow is not available therefore, the preferred
return will accrue and bear interest at the rate of 10.5% per annum, compounded
monthly. The joint venture agreement also entitles the Partnership to receive
34.75% of cash flow following payment of the preferred return and 34.75% of the
net proceeds of sales and refinancings following return of the Partnership's and
the Affiliate's equity.
The joint venture owns approximately 20.85 acres of land in the
Columbia Gateway Corporate Park in Columbia, Maryland. The intended development
plan for this land was for a two-stage development of seven office and research
and development buildings. The first phase of this development was completed by
1992 and included the construction of four, one-story buildings containing
142,545 square feet. The second phase of this development commenced in the
spring of 1994 in which two buildings totaling 46,000 square feet were
constructed and leased to a single tenant for a term of ten years. As of
December 31, 1995, the project was 92% leased.
E. Office/Research and Development Buildings in Frederick, Maryland
----------------------------------------------------------------
("270 Technology Center").
-------------------------
On December 22, 1987, the Partnership acquired a 50% interest in a
joint venture formed with MORF Associates VI Limited Partnership. As of
December 31, 1995, the Partnership had contributed $4,857,000 to the capital of
the joint venture out of a maximum obligation of $5,150,000. The joint venture
agreement entitles the Partnership to receive a preferred return on its invested
capital at the rate of 10% per annum. Such preferred return was payable
currently through September 30, 1988; presently, and until the termination of
the joint venture's operations, to the extent that sufficient cash flow is not
available therefor, the preferred return will accrue and bear interest at the
rate of 10% per annum, compounded monthly. The joint venture agreement entitles
the Partnership to receive 50% of the net proceeds of sales and financings after
return of its equity and preferred return.
As of July 3, 1990, the joint venture sold approximately 3.9 acres of
land to an unrelated third party. In return, the joint venture received
approximately $500,000 and a parcel of land consisting of approximately .4
acres. The joint venture currently owns approximately 8 acres of land in the
270 Technology Center in Frederick, Maryland, together with two one-story
research and development/office buildings, containing approximately 73,360
square feet of space, located thereon. As of December 31, 1995, the buildings
were approximately 98% leased.
F. Office Building in Decatur, Georgia ("Decatur TownCenter II").
-------------------------------------------------------------
On December 31, 1987, the Partnership acquired a 60% interest in a
joint venture formed with an affiliate of Pope and Land Enterprises. As of May
11, 1989, the Partnership increased its maximum obligation to the joint venture
from $11,180,000 to $11,600,000. As of December 31, 1995, the Partnership had
contributed $10,985,575 to the capital of the joint venture. The joint venture
agreement entitles the Partnership to receive a preferred return on its invested
capital at the rate of 10.5% per annum.
The preferred return on $7,826,000 of the Partnership's capital is
payable currently; until December 31, 1994, if sufficient cash flow was not
available to pay the preferred return on the balance of the Partnership's
capital, payment of the preferred return on $3,774,000 would accrue and bear
interest at the rate of 10.5% per annum, compounded monthly, and thereafter
would be payable currently. On January 1, 1995 the joint venture agreement was
amended to allow the $3,774,000 to accrue until December 31, 1996. The joint
venture was further amended to give the Partnership
the sole right to cause a sale on or after January 1, 1996. The joint venture
agreement also entitles the Partnership to receive 60% of the net proceeds of
sales and refinancings after return of its equity and 60% of cash flow remaining
after payment of the preferred return.
The joint venture owns approximately 2.5 acres of land in Decatur,
Georgia improved with a five-story steel frame office building containing
approximately 98,840 square feet of space. As of December 31, 1995, the
building was 98% leased.
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.
- -------------------------------------------------------------------------------------------------------------------
NUMBER
OF
ESTIMATED TENANTS SQUARE FEET
1996 WITH 10% NAME(S) OF
REALTY TAXES OR MORE OF OF EACH
PROPERTY GLA TENANT(S) TENANT
- -------------------------------------------------------------------------------------------------------------------
Apartment Complex in Fort Myers, FL $232,404 N/A N/A N/A
Office, Ind. & Retail Bldgs in Las Vegas, NV $109,034 0 N/A N/A
Office/R&D Buildings in Columbia, MD $213,284 4 Wiltel 23,760
EVI, Inc. 31,316
Columbia 45,951
National
Coram 25,932
Office/R&D Buildings in Frederick, MD $ 52,240 1 State Farm 13,918
Office/Industrial Buildings in Phoenix, AZ $ 85,000 1 FW Bell 19,259
Office Building in Decatur, GA $188,300 1 Egleston 46,661
- -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL
CONTRACT
RENT PER
SQUARE LEASE RENEWAL LINE OF BUSINESS
PROPERTY FOOT EXPIRATION OPTIONS OF PRINCIPAL TENANTS
- ------------------------------------------------------------------------------------------------------------------------------------
Apartment Complex in Fort Myers, FL N/A N/A N/A N/A
Office, Ind. & Retail Bldgs in Las Vegas, NV N/A N/A N/A N/A
Office/R&D Buildings in Columbia, MD $ 8.74 March, 1997 One for 5 Years Telecommunications
$ 9.00 March, 2005 One for 5 years Environmental/Testing
$ 8.95 June, 2004 Two for 5 Years Home Mortgages
$ 8.87 January, 1997 One for 5 Years Medical Services
Office/R&D Buildings in Frederick, MD $ 9.25 February, 1997 None Insurance
Office/Industrial Buildings in Phoenix, AZ $ 6.60 April, 1998 One for 5 Years Light
Assembly/Distribution
Office Building in Decatur, GA $16.00 April, 2005 None Hospital Services
- ------------------------------------------------------------------------------------------------------------------------------------
The following table sets forth for each of the last five years the
gross leasable area, occupancy rates, rental revenue and net effective rent for
the Partnership's properties:
- ---------------------------------------------------------------------------------------------------
NET
RENTAL EFFECTIVE
GROSS LEASABLE YEAR-END REVENUE RENT
PROPERTY AREA OCCUPANCY RECOGNIZED ($/SF/YR)*
- ---------------------------------------------------------------------------------------------------
Apartment Complex in Fort Myers, FL
-----------------------------------
1991 250,810 95% $1,762,501 $7.70
1992 250,810 89% $1,762,819 $7.64
1993 250,810 97% $1,714,144 $7.45
1994 250,810 96% $1,817,688 $7.51
1995 250,810 96% $1,867,298 $7.84
Office, Ind. & Retail Buildings in Las Vegas, NV
------------------------------------------------
1991 224,474 85% $1,769,283 $9.79
1992 224,474 89% $1,895,595 $9.88
1993 224,474 91% $1,515,310 $7.50
1994 224,474 96% $1,756,690 $8.37
1995 224,474 96% $1,938,417 $8.83
Office/R&D Buildings in Columbia, MD
------------------------------------
1991 107,310 57% $499,862 $9.13
1992 142,545 71% $1,225,076 $10.84
1993 142,545 73% $1,334,767 $13.01
1994 188,649 92% $1,496,175 $9.61
1995 188,649 92% $1,870,329 $10.78
Office/R&D Buildings in Frederick, MD
-------------------------------------
1991 73,360 67% $698,525 $12.49
1992 73,360 65% $648,623 $12.54
1993 73,360 65% $541,166 $12.94
1994 73,360 100% $617,457 $10.20
1995 73,360 98% $762,212 $10.66
Office Building in Decatur, GA
------------------------------
1991 98,846 95% $1,562,171 $16.72
1992 98,846 93% $1,286,782 $14.07
1993 98,846 93% $1,756,562 $19.21
1994 98,846 100% $1,752,563 $18.37
1995 98,846 98% $1,863,808 $19.14
Office/Industrial Buildings in Phoenix, AZ
------------------------------------------
1991 109,930 77% $675,372 $7.63
1992 109,930 88% $723,953 $8.31
1993 109,930 98% $899,266 $8.61
1994 109,930 100% $1,009,939 $9.28
1995 109,930 91% $1,000,638 $9.46
- ---------------------------------------------------------------------------------------------------
* 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
TOTAL OF
# OF TOTAL ANNUAL GROSS
LEASE SQUARE CONTRACT ANNUAL
PROPERTY EXPIRATIONS FEET RENT RENTAL*
- --------------------------------------------------------------------------------
Apartment Complex in Fort Myers, FL
-----------------------------------
1996 N/A N/A N/A N/A
1997 N/A N/A N/A N/A
1998 N/A N/A N/A N/A
1999 N/A N/A N/A N/A
2000 N/A N/A N/A N/A
2001 N/A N/A N/A N/A
2002 N/A N/A N/A N/A
2003 N/A N/A N/A N/A
2004 N/A N/A N/A N/A
2005 N/A N/A N/A N/A
Office/Industrial Buildings in Phoenix, AZ
------------------------------------------
1996 9 42,752 $368,758 46%
1997 6 24,106 $184,845 23%
1998 4 27,051 $203,739 26%
1999 1 5,616 $38,798 5%
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%
Office, Ind., & Retail Buildings in Las Vegas, NV
-------------------------------------------------
1996 24 71,067 $629,519 33%
1997 18 63,881 $540,803 28%
1998 17 68,768 $642,763 33%
1999 1 1,242 $8,496 0%
2000 3 10,073 $84,792 4%
2001 1 3,290 $30,540 2%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 0 0 $0 0%
Office/R&D Buildings in Columbia, MD
------------------------------------
1996 1 6,909 $56,447 3%
1997 3 53,008 $466,595 30%
1998 1 8,781 $93,079 6%
1999 2 32,570 $270,248 17%
2000 0 0 $0 0%
2001 0 0 $0 0%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 1 45,951 $411,261 26%
2005 1 31,316 $281,844 18%
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------
Office/R&D Buildings in Frederick, MD
-------------------------------------
1996 6 25,872 $212,640 33%
1997 3 39,006 $386,344 61%
1998 1 8,229 $40,800 6%
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%
Office Building in Decatur, GA
------------------------------
1996 3 6,410 $97,526 6%
1997 7 13,568 $236,266 16%
1998 3 9,935 $124,522 8%
1999 4 12,244 $217,454 14%
2000 0 0 $0 0%
2001 2 6,360 $118,520 8%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 2 48,616 $712,580 48%
- -------------------------------------------------------------------------
* Does not include expenses paid by tenants.
Note: N/A denotes that the disclosure is not applicable based on the nature of
the property.
The following table sets forth for each of the Partnership's
properties the: (i) federal tax basis, (ii) rate of depreciation, (iii) method
of depreciation, (iv) life claimed, and (v) accumulated depreciation, with
respect to each property or component thereof for purposes of depreciation:
- ------------------------------------------------------------------------------------------------------------------------------------
Rate of Life Accumulated
Entity / Property Tax Basis Depreciation Method in years Depreciation
- ------------------------------------------------------------------------------------------------------------------------------------
Office, Industrial and Retail Buildings, Las Vegas, NV
- ----------------------------------------------------------
Building & Improvements $ 9,920,072 3.18% SL 31.5 $ 2,256,053
Improvements 130,115 2.56% SL 39 6,593
--------- -------
Total Depreciable Assets $10,050,187 $ 2,262,646
Industrial Buildings, Phoenix, AZ
- ----------------------------------------------------------
Building & Improvements $ 4,819,444 3.18% SL 31.5 $ 1,041,700
Building Improvements 27,547 2.56% SL 39 1,258
--------- -------
Total Depreciable Assets $ 4,846,991 $ 1,042,958
Office/Research and Development Buildings, Frederick, MD
- ----------------------------------------------------------
Building $ 4,199,372 3.18% SL 31.5 $ 1,065,543
Land Improvements 202,710 2.56% SL 39 2,478
Land Improvements 100,000 10.00% SL 15 19,303
--------- -------
Total Depreciable Assets $ 4,502,082 $ 1,087,324
Apartment Complex, Fort Myers, FL
- ----------------------------------------------------------
Building $ 9,129,462 3.64% SL 27.5 $ 2,276,114
--------- ---------
Total Depreciable Assets $ 9,129,462 $ 2,276,114
Office Building, Decatur, GA
- ----------------------------------------------------------
Building & Improvements $ 8,566,308 2.50% SL 40 $ 1,385,244
Improvements 442,463 2.56% SL 39 7,915
Land Improvements 120,065 5.00% SL 20 39,992
--------- -------
Total Depreciable Assets $ 9,128,836 $ 1,433,151
Office/Research and Development Buildings, Columbia, MD
- ----------------------------------------------------------
Building $ 7,829,962 3.18% SL 31.5 $ 1,282,640
Land Improvements 3,092,260 2.56% SL 39 30,296
Land Improvements 94,022 10.00% 150%DB 15 28,050
--------- -------
Total Depreciable Assets $11,016,244 $ 1,340,986
Total Depreciable Assets $48,673,802 $ 9,443,179
=========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
SL= Straight Line
DB= Declining Balance
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.
Apartment Complex in Fort Myers, Florida
- ----------------------------------------
Reflections is located in the City of Fort Myers in Lee County. Reflections
competes directly with seven other apartment complexes comprising 2,547 units.
This sub market had occupancy of approximately 93%, a slight decrease from last
year.
Office/Industrial Buildings in Phoenix, Arizona
- -----------------------------------------------
This property is located in the metropolitan Phoenix market which includes an
inventory of approximately 142 million square feet of industrial space, of
which 6% was vacant as of year end 1995, compared to the 7% and 12% vacancy
rates as of December 31, 1994 and 1993, respectively. The office market,
consisting of 39 million square feet, was 11% vacant at year end 1995 compared
to 1993 and 1994 vacancies of 20% and 13%, respectively. Rental rates in the
Phoenix area continue to increase.
Office/Industrial/Retail Buildings in Las Vegas, Nevada
- -------------------------------------------------------
The healthy business climate of Las Vegas, fueled by the gaming and service
industries, is responsible for a strong industrial market, which exhibits a low
vacancy rate of approximately 2% on a base inventory of 38 million square feet.
Rental rates have increased over the past year and most free rent concessions
have been eliminated. Given the low vacancy level, new construction in all
product types and sizes is underway.
Office, Research and Development Buildings in Columbia, Maryland
- ----------------------------------------------------------------
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.
Office, Research and Development Buildings in Frederick, Maryland
- -----------------------------------------------------------------
The Frederick R&D market contains approximately 5.5 million square feet
of R&D/Industrial space with a vacancy rate of approximately 9%. This is a
strong improvement from 1994 when the vacancy rate stood at 16%. The
improvement is attributed to a lack of new construction and positive job
growth.
Office building in Decatur, Georgia.
- -----------------------------------
The metropolitan Atlanta class "A" office market comprises eight sub-markets
that total 47 million square feet of which approximately 16 million square feet
is located in the Central Business District area. The overall office vacancy
rate stands at 9.5%, which is a significant decline from 14.7% rate in 1993.
The Decatur office building is located in the Northlake sub-market, one of the
smallest markets with just 1.3 million square feet of space. This sub-market
has a reported vacancy of 5% which is down significantly from 10.9% in 1993.
Item 3.
Legal Proceedings
- -----------------
The Partnership is not a party to, nor are any of its properties subject to,
any material pending legal proceedings. A joint venture in which the
Partnership holds an interest has received judgments against two former tenants
for defaults under leases. See Item 1.C.
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 17,443 holders of Units.
The Partnership's Amended and Restated Agreement of Limited
Partnership dated May 29, 1986, 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 $5,711,220. 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 $ 10,021,234,
including $5,224,835 ($55 per Limited Partnership Unit) from the proceeds of a
property sale.
Cash distributions exceeded net income in 1995 and, therefore,
resulted in a reduction of partners' capital. Reference is made to the
Partnership's Statement of Changes in Partner's Capital (Deficit) and Statement
of Cash Flows in Item 8 hereof.
Item 6. Selected Financial Data.
-----------------------
For Year For Year For Year For Year For Year
Ended or Ended or Ended or Ended or Ended
as of as of as of as of or as of
12/31/95(1) 12/31/94(2) 12/31/93(3) 12/31/92 12/31/91
---------------------------------------------------------------------------------------
Revenues $ 5,906,735 $ 4,576,435 $ 3,784,731 $ 4,169,119 $ 4,529,439
Net Income (Loss) $ 3,912,897 $ 3,752,101 $ (378,545) $ 2,277,301 $ 2,731,447
Net Income (Loss)
per Unit of
Limited
Partnership
Interest
Outstanding $ 40.78 $ 39.10 $ (3.94) $ 23.73 $ 28.47
Total Assets $ 59,991,655 $ 67,145,010 $ 67,471,037 $ 79,547,070 $ 81,396,478
Total Cash
Distributions
per Unit of
Limited
Partnership
Interest,
including
amounts
distributed after
year end with
respect to the
previous year $ 60.12 $ 105.49 $ 126.22 $ 46.25 $ 40.00
(1) Cash distributions include $8.09 per Limited Partnership Unit that is
attributable to a discretionary reduction of cash reserves, which had been
previously accumulated through operating activities.
(2) Net income includes a gain on the sale of a joint venture investment of
$399,865. Cash distributions include a return of capital of $55.00 per Limited
Partnership Unit.
(3) The Partnership recorded investment valuation allowances totaling
$2,760,784 ($28.77 per Limited Partnership Unit) during 1993. Cash
distributions include a return capital of $82.00 per Limited Partnership Unit.
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 December 1986. A total of 94,997 units were sold. The Partnership
received proceeds of $85,677,259, net of selling commissions and other offering
costs, which have been invested in real estate, used to pay related acquisition
costs or retained as working capital reserves. The Partnership made nine real
estate investments; those currently owned are described in Item 1 hereof. Three
investments have been sold; one in 1988 and one each in 1993 and 1994. As a
result of the sales, capital of $13,014,589 has been returned to the Limited
Partners through December 31, 1995.
On December 30, 1994, the Rancho Cucamonga joint venture sold its property
and the Partnership received net sale proceeds of $5,261,275. On January 26,
1995, the Partnership made a capital distribution of $55 per limited partnership
unit ($5,224,835) from the proceeds of the sale. The adjusted capital
contribution after this distribution is $863 per unit.
At December 31, 1995, the Partnership had $7,416,538 in cash, cash
equivalents and short-term investments, which was partially used for cash
distributions of $1,242,638 to partners on January 25, 1996. The remainder will
primarily be used for 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. Distributions of cash from operations relating to the first quarter
of 1995 were made at the annualized rate of 6% on the weighted average adjusted
capital contribution. In addition, at this time, a special distribution totaling
$776,289 ($8.09 per limited partnership unit) was made which was attributable to
a discretionary reduction of cash reserves which had previously accumulated from
operating activities. Since the total quarterly distribution exceeded the rate
of 2%, previously deferred management fees to the advisor were paid in the
amount of $175,374 or 50% of the excess distribution. The Managing General
Partner will continue to evaluate reserve levels in the context of the
Partnership's investment objectives. Distributions of cash from operations
relating to the second, third and fourth quarters of 1995 were made at the
annualized rate of 6% on the adjusted capital contribution. Distributions of
cash from operations relating to the first, second, third and fourth quarters of
1994 were made at the annualized rates of 5%, 5.5%, 5.5%, and 6%, respectively,
on an adjusted capital contribution of $918 per unit. The increase in the
distribution rate results from the attainment of appropriate cash reserve levels
and the stabilization of property operations.
The carrying value of real estate investments in the financial statements
at December 31, 1995 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 appraised values of certain
investments exceeded the related carrying values by an aggregate of $9,400,000
and the appraised values of the remaining investments were less than the related
carrying values by an aggregate of $1,400,000. The current appraised value of
real estate investments has been estimated by the Managing General Partner and
is generally based on a combination of traditional appraisal approaches
performed by the Partnership's advisor and independent appraisers. Because of
the subjectivity inherent in the valuation process, the 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 investments currently in the portfolio are structured as joint ventures
with real estate development/management firms. However, effective January 1,
1995, the Palms Business Center joint venture was restructured to grant the
Partnership control over management decisions and the investment has been
accounted for as a wholly-owned property since that date. The Summit Vinings
apartment complex, which was sold in August 1993, was a wholly-owned property.
The Rancho Cucamonga property, which was sold in December 1994, was owned by a
joint venture.
OPERATING FACTORS
Overall occupancy at the Columbia Gateway Corporate Park remained at 92% at
December 31, 1995, where it was at the preceding year end. Construction of a
46,000 square foot build-to-suit facility was completed during the third quarter
of 1994 and the tenant assumed occupancy on September 1, 1994. Occupancy was at
73% at December 31, 1993.
Occupancy at Reflections Apartments ended 1995 at 96%; it ranged from 92%
to 96% during 1995. Occupancy during 1994 and 1993 was in this same range.
Although the Fort Myers apartment market remains competitive, rental rates have
improved during 1995.
Occupancy at Metro Business Center at December 31, 1995 was 91%, down from
100% a year ago, although it had been at 98% for the first three quarters of
1995. Occupancy was 98% at December 31, 1993. Rental rates are increasing as the
Phoenix market appears to have stabilized. However, this property faces
significant leasing exposure during 1996 as leases for approximately 46% of the
space expire.
Leasing at Decatur TownCenter II decreased to 98% during 1995, down from
100% a year ago, but up from 93% at December 31, 1993.
Occupancy at Palms Business Centers was 96% at December 31, 1995,
consistent with one year ago and up from 91% two years prior. The overall health
of the Las Vegas market has improved and there has been some upward movement in
rental rates.
Leasing at 270 Technology Center was 65% at December 31, 1993 and increased
to 100% during the third quarter of 1994, where it remained until the second
quarter of 1995. Leasing declined to 92% during the third quarter of 1995 and
ended the year at 98%. However, leases for one-third of the space expire in 1996
and for 60% of the space in 1997.
INVESTMENT RESULTS
On December 30, 1994, the Rancho Cucamonga joint venture sold its property
and the Partnership recognized a gain of $399,865. In August 1993, the
Partnership sold the Summit Vinings Apartments in Atlanta, Georgia at no gain or
loss. During the first and second quarters of 1993, however, its carrying value
had been reduced to the approximate selling price. The Managing General Partner
determined in 1993 that the carrying value of Columbia Gateway Corporate Park
should be reduced to its estimated net realizable value, which resulted in an
investment valuation allowance of $1,050,000.
1995 Compared to 1994
Interest on cash equivalents and short-term investments increased as a
result of larger invested balances, as well as an increase in interest rates.
Exclusive of the gain from the Rancho Cucamonga sale in 1994 and its 1994
operating results ($309,969), real estate operating activity was $4,402,974 for
1995 and $3,490,615 for 1994. This 26% increase was due to improved operating
results at all of the Partnership's investments. Improvement was most notable at
Columbia Gateway Corporate Park, from which results increased by approximately
$289,000 due to improvements in rental income. Improved occupancy and rental
rates also resulted in an increase of approximately $272,000 in net operating
income generated from Palms Business Center. Net operating income at Decatur
TownCenter II increased by approximately $203,000 as a result of a lease
termination fee.
Notwithstanding the improved operating results and excluding $488,772 in
cash flow from Rancho Cucamonga in 1994, cash flow from operations decreased
$24,657. The change primarily stems from discretionary adjustments to cash
reserve levels made by joint ventures. Both 270 Technology Park and Columbia
Gateway Corporate Park reduced cash reserves held at the property level in 1994
and, therefore, increased the Partnership's cash flow in 1994. Metro Business
Center
reduced cash reserves at the property level and increased Partnership cash flow
in 1995. Operating cash flow from the remainder of the Partnership's investments
was consistent with the change in operating results. The decrease in operating
cash flow was also due to the payment of previously accrued, but deferred
management fees to the advisor of $175,374.
1994 Compared to 1993
Interest on cash equivalents and short-term investments increased as a
result of larger invested balances, as well as an increase in interest rates.
Exclusive of the gain from the Rancho Cucamonga sale in 1994, investment
valuation allowances in 1993, and the operating results of Summit Vinings, real
estate investment results were $3,800,584 for 1994 and $2,720,859 for 1993. This
40% increase was primarily due to improved operating results at all of the
Partnership's investments, with the exception of Rancho Cucamonga, as described
below. Improvement was most notable at Palms Business Center and Columbia
Gateway Corporate Park, at which results increased by approximately $300,000 in
both cases; at Metro Business Center, at which results increased by
approximately $250,000; and at 270 Technology Center and Reflections Apartments
at which results increased by approximately $100,000 in both cases. Operating
income at Rancho Cucamonga declined during 1994 as a result of lower rental
revenue from the new tenant lease effective May 1, 1993.
Operating cash flow, exclusive of the results from Summit Vinings of
$336,532 in 1993, increased by $1,660,323 or 40% between 1993 and 1994. In
addition to the effect of improved operating results as previously described,
cash flow also increased during 1994 as a result of the timing of cash
distributions to the Partnership from certain joint ventures which previously
had been retaining additional working capital reserves. This reduction in
working capital reserves was most notable at 270 Technology Center ($575,000),
Rancho Cucamonga ($400,000) and Columbia Gateway Corporate Park ($325,000). Cash
distributions decreased from Decatur TownCenter II by approximately $350,000 due
to costs associated with re-leasing and from Metro Business Center by
approximately $210,000 due to timing.
PORTFOLIO EXPENSES
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the Managing General Partner. General and administrative expenses
primarily consist of real estate appraisal, printing, legal, accounting and
investor servicing fees.
1995 Compared to 1994
The Partnership management fee increased due to an increase in
distributable cash flow from operations. General and administrative expenses
increased approximately 10% or $32,000 primarily due to legal fees associated
with the various investment restructurings.
1994 Compared to 1993
The Partnership management fee increased due to an increase in
distributable cash flow from operations. General and administrative expenses
increased approximately 13% or $37,000 primarily due to increased professional
fees.
INFLATION
- ---------
By their nature, real estate investments tend not to be adversely affected
by inflation. Inflation may tend to 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 the
Partnership operations, due to market and economic conditions, have overshadowed
the overall 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 Managing General Partner and the age and position held
by each of them as of December 31, 1995.
Name Position(s) with the Managing General Partner Age
- ---- ---------------------------------------------- ---
Joseph W. O'Connor President, Chief Executive Officer and Director 49
Daniel J. Coughlin Managing Director and Director 43
Peter P. Twining Managing Director, General Counsel and Director 49
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 Managing General Partner on October 16, 1985. 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 qualified.
(c) Identification of Certain Significant Employees.
-----------------------------------------------
None.
(d) Family Relationships.
--------------------
None.
(e) Business Experience.
-------------------
The Managing General Partner was incorporated in Massachusetts on
October 16, 1985. The background and experience of the executive officers and
directors of the Managing 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 a 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
Managing 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 Managing 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 Managing General Partner.
(f) Involvement in Certain Legal Proceedings.
----------------------------------------
None.
Item 11. Executive Compensation.
----------------------
Under the Partnership Agreement, the General Partners and their
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 to Notes to Financial Statements.
The following table sets forth the amounts of the fees and cash
distributions and reimbursements of out-of-pocket expenses which the Partnership
paid to or accrued for the account of the General Partners and their affiliates
for the year ended December 31, 1995.
Amount of
Compensation
and
Receiving Entity Type of Compensation Reimbursement
- ---------------- -------------------- -------------
General Partners Share of Distributable Cash $ 57,689
Copley Real Estate Advisors, Inc. Management Fees and
Reimbursement of Expenses 584,425
New England Securities Corporation Servicing Fees and
Reimbursement of Expenses 21,543
-------------
TOTAL $ 663,657
=============
For the year ended December 31, 1995 the Partnership allocated
$50,454 of taxable income to the General Partners.
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 Managing
General Partner.
(b) Security Ownership of Management.
--------------------------------
An affiliate of the Managing General Partner of the Partnership owned
1,558 Units as of 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 Statements, 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 Schedule and Financial
Statement Index No. 2 are filed as part of this Annual Report.
(2) Financial Statement Schedule--The Financial Statement Schedule
listed on the accompanying Index to Financial Statements and Schedule
is 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 IV;
A Real Estate Limited Partnership
Financial Statements
*******
December 31, 1995
NEW ENGLAND LIFE PENSION PROPERTIES IV;
--------------------------------------
A REAL ESTATE LIMITED PARTNERSHIP
---------------------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
------------------------------------------
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 (Deficit) -
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 Schedule:
Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1995.......................................
Report of Independent Accountants
---------------------------------
To the Partners
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
In our opinion, based upon our audits and the reports of other auditors, the
financial statements listed in the accompanying index present fairly, in all
material respects, the financial position of New England Life Pension Properties
IV; 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 Fourth Copley Corp., the Managing General Partner of the
Partnership; our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of the
Partnership's Decatur TownCenter II joint venture investee for the year ended
December 31, 1995, which results of operations are recorded using the equity
method of accounting in the Partnership's financial statements. Equity in joint
venture income for this venture was $680,012 for the year ended December 31,
1995. We also did not audit the financial statements of the Partnership's
Columbia Gateway Corporate Park, 270 Technology Center and Reflections joint
venture investees for the years ended December 31, 1995, 1994 and 1993, which
results of operations are recorded using the equity method of accounting in the
Partnership's financial statements. Equity in joint venture income for these
ventures aggregated $2,022,381, $1,631,665 and $1,118,613 for the years ended
December 31, 1995, 1994 and 1993, respectively. We also did not audit the
financial statements of the Partnership's Metro Business Center joint venture
investee for the years ended December 31, 1995 and 1994, which results of
operations are recorded using the equity method of accounting in the
Partnership's financial statements. Equity in joint venture income for this
venture was $394,403 and $354,788 for the years ended December 31, 1995 and
1994. We also did not audit the financial statements of the Partnership's
investment in Palms Business Centers for the years ended December 31, 1995, 1994
and 1993. Operating income for this investment was $1,770,345 for the year ended
December 31, 1995, and equity in joint venture income was $1,053,707 and
$739,894 for the years ended December 31, 1994 and 1993. Those statements were
audited by other auditors whose reports thereon have been furnished to us, and
our opinion expressed herein, insofar as it relates to the amount included for
the equity in joint venture income for Decatur TownCenter II for the year ended
December 31, 1995, and for Columbia Gateway Corporate Park, 270 Technology
Center and Reflections for the years ended December 31, 1995, 1994 and 1993,
respectively, and for Metro Business Center for the years ended December 31,
1995 and 1994, respectively, and for the operating income and equity in joint
venture income for Palms Business Centers for the years ended December 31, 1995,
1994 and 1993 is based solely on the reports of the other auditors. 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 Managing
General Partner, and evaluating the overall financial statement presentation. We
believe that our audits and the reports of other auditors for the years ended
December 31, 1995, 1994 and 1993 provide a reasonable basis for the opinion
expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
March 11, 1996
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEET
December 31,
-------------------------
1995 1994
---------- -----------
ASSETS
Real estate investments:
Joint ventures $ 40,466,827 $ 53,837,786
Property, net 12,108,290 -
------------ -------------
52,575,117 53,837,786
Cash and cash equivalents 4,051,999 12,370,267
Short-term investments 3,364,539 922,981
Other receivables - 13,976
------------ -------------
$ 59,991,655 $ 67,145,010
============ =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 129,043 $ 127,950
Accrued management fee 61,449 65,340
Deferred management and disposition fees 2,806,904 2,797,930
------------ -------------
Total liabilities 2,997,396 2,991,220
------------ -------------
Partners' capital (deficit):
Limited partners ($863 and $918 per unit,
respectively; 120,000 units authorized,
94,997 units issued and outstanding) 57,148,961 64,289,145
General partners (154,702) (135,355)
------------ --------------
Total partners' capital 56,994,259 64,153,790
------------ --------------
$ 59,991,655 $ 67,145,010
============ =============
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
Year ended December 31,
--------------------------------------
1995 1994 1993
---------- ---------- -----------
INVESTMENT ACTIVITY
Property rentals $2,379,352 $ - $ 716,554
Property operating expenses (609,007) - (380,433)
Depreciation and amortization (444,790) - (293,874)
---------- ---------- -----------
1,325,555 - 42,247
Joint venture earnings 3,096,796 3,827,109 2,747,390
Investment valuation allowances - - (2,760,784)
Amortization (19,377) (26,525) (26,531)
---------- ---------- -----------
Total real estate operations 4,402,974 3,800,584 2,322
Gain on sale of property by joint venture - 399,865 -
---------- ---------- -----------
Total real estate activity 4,402,974 4,200,449 2,322
Interest on cash equivalents
and short-term investments 430,587 349,461 320,787
---------- ---------- -----------
Total investment activity 4,833,561 4,549,910 323,109
---------- ---------- -----------
PORTFOLIO EXPENSES
Management fee 570,551 479,161 419,766
General and administrative 350,113 318,648 281,888
---------- ---------- -----------
920,664 797,809 701,654
---------- ---------- -----------
NET INCOME (LOSS) $3,912,897 $3,752,101 $ (378,545)
========== ========== ===========
Net income (loss) per limited
partnership unit $ 40.78 $ 39.10 $ (3.94)
========== ========== ===========
Cash distributions per limited
partnership unit $ 115.94 $ 47.19 $ 127.00
========== ========== ===========
Number of limited partnership units
outstanding during the year 94,997 94,997 94,997
========== ========== ===========
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
Year ended December 31,
------------------------------------------------------------------------------
1995 1994 1993
----------------------- ------------------- ---------------------
General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners
--------- ------------ --------- ----------- --------- ------------
Balance at beginning
of year $(135,355) $ 64,289,145 $(127,594) $65,057,473 $ (80,629) $ 77,496,852
Cash distributions (58,476) (11,013,952) (45,282) (4,482,908) (43,180) (12,064,619)
Net income (loss) 39,129 3,873,768 37,521 3,714,580 (3,785) (374,760)
--------- ------------ --------- ----------- --------- ------------
Balance at end
of year $(154,702) $ 57,148,961 $(135,355) $64,289,145 $(127,594) $ 65,057,473
========= ============ ========= =========== ========= ============
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
Year ended December 31,
------------------------------------------
1995 1994 1993
------------- ------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,912,897 $ 3,752,101 $ (378,545)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 464,167 26,525 320,405
Investment valuation allowances - - 2,760,784
Equity in joint venture earnings (3,096,796) (3,827,109) (2,747,390)
Cash distributions from joint ventures 3,928,414 5,919,979 4,501,152
Gain on sale of property by joint venture - (399,865) -
Decrease (increase) in investment income
and other receivables (24,016) 95,390 (94,996)
Decrease in property working capital 148,652 - 411
Increase in operating liabilities 181,550 285,902 167,311
Payment of deferred management fee (175,374) - -
------------ ----------- ------------
Net cash provided by operating activities 5,339,494 5,852,923 4,529,132
------------ ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of property - 5,097,115 7,673,614
Deferred disposition fees - 164,160 243,000
Investment in joint ventures - (1,928,609) -
Payment of note payable to venture partner (130,000) - -
Investment in property (51,768) - -
Decrease (increase) in short-term
investments, net (2,403,566) 5,566,195 (2,809,728)
------------ ----------- ------------
Net cash provided by (used in) investing
activities (2,585,334) 8,898,861 5,106,886
------------ ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITY:
Distributions to partners (11,072,428) (4,528,190) (12,107,799)
------------ ----------- ------------
Net cash used in financing activity (11,072,428) (4,528,190) (12,107,799)
------------ ----------- ------------
Net increase (decrease) in cash
and cash equivalents (8,318,268) 10,223,594 (2,471,781)
Cash and cash equivalents:
Beginning of year 12,370,267 2,146,673 4,618,454
------------ ----------- ------------
End of year $ 4,051,999 $12,370,267 $ 2,146,673
============ =========== ============
NON-CASH TRANSACTION:
Effective January 1, 1995, the Partnership's joint venture investment in Palms
Business Center was converted to a wholly-owned property. The carrying value of
this investment at conversion was $12,519,964.
(See accompanying notes to financial statements)
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Business
- ----------------------------------
General
New England Life Pension Properties IV; A Real Estate Limited Partnership
(the "Partnership") is a Massachusetts limited partnership organized for the
purpose of investing primarily in newly constructed and existing income
producing real properties. It primarily serves as an investment for qualified
pension and profit sharing plans and other organizations intended to be exempt
from federal income tax. The Partnership commenced operations in May, 1986 and
acquired the six real estate investments it currently owns prior to the end of
1987. It intends to dispose of its investments within twelve years of their
acquisition, and then liquidate; however, the Managing General Partner could
extend the investment period if it is considered to be in the best interest of
the limited partners.
The Managing General Partner of the Partnership is Fourth Copley Corp., a
wholly-owned subsidiary of Copley Real Estate Advisors, Inc. ("Copley"). The
associate general partner is CCOP Associates Limited Partnership, a
Massachusetts limited partnership, the general partners of which are managing
directors of Copley and/or officers of the Managing General Partner. Subject to
the Managing General Partner's overall authority, the business of the
Partnership is managed by Copley pursuant to an advisory contract. Copley is an
indirect 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 Managing General Partner owned
1,558 units and at December 31, 1994 the Managing General Partner owned 1,300
units of limited partnership interest, which were repurchased from certain
qualified plans, within specified annual limitations as 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 flow from operations, as defined, before deducting such fees.
Payment of 50% of management fees incurred is deferred until cash distributions
to limited partners exceed a specified rate. Cash distributions for the first
quarter of 1995 exceeded the stipulated minimum, which resulted in a payment to
Copley of previously deferred management fees totaling $175,374. Deferred
management fees were $2,094,251 and $2,085,277 at December 31, 1995 and 1994,
respectively. Copley is also reimbursed for expenses incurred in connection with
administering the Partnership ($13,874 in 1995, $21,155 in 1994 and $15,490 in
1993). Acquisition fees paid were based on 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. Deferred disposition
fees were $712,653 at December 31, 1995 and 1994.
New England Securities Corporation, a direct 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 $21,543, $30,526, and
$25,358 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 Managing 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.
Real Estate Joint Ventures
Investments in joint ventures, including loans made to venture partners,
which are in substance real estate investments, are stated at cost plus (minus)
equity in undistributed joint venture income (losses). Allocations of joint
venture income (losses) were made to the Partnership's venture partners as long
as they had substantial economic equity in the project. Economic equity is
measured by the excess of the appraised value of the property over the
Partnership's total cash investment plus accrued preferential returns and
interest thereon. Currently, the Partnership records an amount equal to 100% of
the operating results of each joint venture, after the elimination of all inter-
entity transactions, except for the one venture jointly owned by an affiliate of
the Partnership, which has substantial economic equity in the project.
Property
Property includes land and buildings and improvements, which are stated at
cost less accumulated depreciation, plus other operating net assets
(liabilities). The Partnership's initial carrying value of a property previously
owned by a joint venture equals the Partnership's carrying value of the
predecessor investment on the conversion date.
Certain tenant leases at the property 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. 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 estimated useful lives of the underlying property.
Realizability of Real Estate Investments
The Partnership considers a real estate investment 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 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 estimated 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 estimated costs of sale.
Property held for sale is not depreciated during the holding period. Prior to
the adoption of SFAS 121, the impairment loss was measured based on the excess
of the investment's carrying value over its net realizable value. During 1993,
the Managing General Partner determined that the carrying value of the Columbia
Gateway Corporate Park and Summit Vinings investments should be reduced to net
realizable value. (See Notes 3 and 4.)
The carrying value of an investment may be more or less than its current
appraised value. At December 31, 1995 and 1994, the appraised values of certain
investments exceeded the related carrying values by an aggregate of $9,400,000
and $6,700,000, respectively; and the appraised values of the remaining
investments were less than the related carrying values by an aggregate of
$1,400,000 and $2,000,000, respectively.
The current appraised value of real estate investments has been estimated
by the Managing General Partner and is generally based on a combination of
traditional appraisal approaches performed by the advisor and independent
appraisers. Because of the subjectivity inherent in the valuation process, the
estimated current appraised value may differ significantly from that which could
be realized if the real estate were actually offered for sale in the
marketplace.
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 seven months and
one month, respectively, remaining to maturity.
Deferred Disposition Fees
Disposition fees due to Copley related to sales 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 - Real Estate Joint Ventures
-----------------------------------
The Partnership has investments in six real estate joint ventures which are
organized as general partnerships with real estate management/development firms.
(A seventh investment was sold in December 1994). It made capital contributions
to the ventures, which are generally subject to preferential cash distributions
at a specified rate and to priority distributions with respect to sale or
refinancing proceeds. The Partnership also made loans to certain of its venture
partners who, in turn, contributed the proceeds to the capital of the venture.
The loans bear interest at a specified rate. The loans are in substance real
estate investments and are accounted for accordingly. The joint venture
agreements provide for the funding of cash flow deficits by the venture partners
in proportion to their ownership interests.
The Partnership's venture partners are responsible for day-to-day
development and operating activities, although overall authority and
responsibility for the business is shared by the venturers. The respective real
estate development/management firms or their affiliates also provide various
services to the joint ventures for a fee.
The following is a summary of cash invested in joint ventures, net of
returns of capital and excluding acquisition fees:
Preferential December 31,
Investment/ Rate of Ownership ------------------------------------
Location Return Interest 1995 1994
- ----------------- ------------ ---------- ------------ ------------
Reflections 10.5% 60% $13,650,242 $13,650,242
FT. Myers, Florida
Metro Business Center
Phoenix, Arizona 10.5% 80% $ 8,836,989 $ 8,836,989
Palms Business Centers
Las Vegas, Nevada 11.0% 60% $ - $15,840,000
Columbia Gateway Corp. Park
Columbia, Maryland 10.5% 34.75% $12,580,704 $12,580,704
270 Technology Center
Frederick, Maryland 10.0% 50% $ 4,886,902 $ 4,886,902
Decatur TownCenter II
Decatur, Georgia 10.5% 60% $10,985,575 $10,985,575
Reflections
On August 1, 1986, the Partnership entered into a joint venture with an
affiliate of Oxford Development Corporation to construct and operate a multi-
family apartment complex. The Partnership's commitment is for a total cash
investment of $14,475,000, $5,790,000 of which is a loan to the venture partner.
In May 1992, the Partnership agreed to extend the maturity of the loan from
August, 1996 to December, 1999 and the venture partner agreed to pay interest at
a minimum of 7% per annum with the unpaid amount subject to compounding at
10.5%. The loan is secured by the venture partner's interest in the joint
venture, as well as a guarantee from an affiliate of the venture partner.
Metro Business Center
On September 15, 1986, the Partnership entered into a joint venture with an
affiliate of Hewson Properties, Inc., to construct and operate four multi-tenant
office/warehouse buildings. The Partnership committed to make a maximum cash
investment of $9,568,000, $3,988,000 of which is a loan to the venture partner.
The loan matures in October 1996 and is secured by the venture partner's
interest in the joint venture. Subsequent to December 31, 1995, and effective
January 1, 1996, the joint venture agreement was amended to grant the
Partnership full control over management decisions, except that it does not have
the authority to unilaterally offer the property for sale prior to July 1, 1996.
The minimum future rentals due to the venture under non-cancelable operating
leases are: $506,391 in 1996, $288,080 in 1997, $98,065 in 1998 and $3,500 in
1999.
Palms Business Centers
On December 29, 1986, the Partnership entered into a joint venture with an
affiliate of Commerce Centre Partners to construct and operate fifteen one-story
office/industrial buildings. The Partnership committed to make a capital
contribution of $15,840,000.
Effective January 1, 1995, this investment was converted to a wholly-owned
property for financial reporting purposes, pursuant to an amendment to the joint
venture agreement granting the Partnership control over management decisions
(see Note 4).
Columbia Gateway Corporate Park
On December 21, 1987, the Partnership entered into a joint venture with an
affiliate of the Partnership and with an affiliate of the Manekin Corporation to
construct and operate seven research and development/office buildings, of which
six have been constructed to date. The Partnership committed to make a
$14,598,000 capital contribution. The Partnership and its affiliate collectively
have a 50% interest in the joint venture. The minimum future rentals due to the
venture under non-cancelable operating leases are: $1,316,589 in 1996,
$1,176,845 in 1997, $1,116,297 in 1998, $1,038,834 in 1999, $411,261 in 2000 and
$1,507,959 thereafter.
In 1993, the Managing General Partner determined that the carrying value of
this investment should be reduced to its estimated net realizable value, which
resulted in an investment valuation allowance of $1,050,000.
270 Technology Center
On December 22, 1987, the Partnership entered into a joint venture with an
affiliate of the Manekin Corporation to construct and operate two research and
development/office buildings. The Partnership committed to make a $5,150,000
capital contribution. The minimum future rentals due to the venture under non-
cancelable operating leases are: $387,579 in 1996 and $147,418 in 1997.
Decatur TownCenter II
On December 31, 1987, the Partnership entered into a joint venture with an
affiliate of Pope & Land Enterprises to construct and operate an office
building. The Partnership committed to make an $11,600,000 capital contribution.
To the extent that up to $7,826,000 of the Partnership's contribution is
returned within ten years, the joint venture agreement provides for a prepayment
premium to the Partnership. The minimum future rentals due to the venture under
non-cancelable operating leases are: $1,431,662 in 1996, $1,212,866 in 1997,
$1,186,138 in 1998, $941,181 in 1999, $861,897 in 2000 and $3,725,478
thereafter. A portion of the land on which the building was constructed consists
of a leasehold interest assigned to the venture. The lease terminates in 2073
and requires annual ground rental payments of $32,349. These payments are
adjusted for inflation every five years.
During 1995, the joint venture agreement was amended to allow the
Partnership the sole right to cause a sale on or after January 1, 1996.
Sale of Rancho Cucamonga
On September 4, 1986, the Partnership entered into a joint venture with an
affiliate of Vance Charles Mape III to construct and operate a warehouse
facility. The Partnership made a contribution of $5,273,545. On December 30,
1994, the joint venture sold the property for a total sales price of
$5,472,000. After closing costs, the Partnership received its share of the
proceeds of $5,261,275 and recognized a gain on the sale of $399,865 ($4.17 per
limited partnership unit). A disposition fee of $164,160 was accrued but not
paid to Copley. A capital distribution to the limited partners was made on
January 26, 1995 in the aggregate amount of $5,224,835 ($55.00 per limited
partnership unit).
Summarized Financial Information
--------------------------------
The following summarized financial information is presented in the
aggregate for the joint ventures:
Assets and Liabilities
----------------------
December 31,
------------------------
1995 1994
----------- -----------
Assets
Real property, at cost less
accumulated depreciation
of $10,623,335 and
$12,483,694, respectively $41,201,074 $52,351,990
Other 1,224,883 1,881,118
----------- -----------
42,425,957 54,233,108
Liabilities 314,534 644,808
----------- -----------
Net assets $42,111,423 $53,588,300
=========== ===========
Results of Operations
---------------------
Year ended December 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
Revenue
Rental income $7,364,285 $9,306,359 $8,680,294
Other income 173,436 291,152 171,064
---------- ---------- ----------
7,537,721 9,597,511 8,851,358
---------- ---------- ----------
Expenses
Operating expenses 2,491,930 3,139,433 3,128,730
Depreciation and amortization 1,583,687 2,430,786 2,833,234
---------- ---------- ----------
4,075,617 5,570,219 5,961,964
---------- ---------- ----------
Net income $3,462,104 $4,027,292 $2,889,394
========== ========== ==========
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and (with respect to one joint venture) its affiliate on behalf of
their various financing arrangements with the joint ventures.
The Rancho Cucamonga investment was sold on December 30, 1994. The above
amounts include the results of operations through that date. The Palms Business
Center investment was converted to a wholly-owned property on January 1, 1995.
The above amounts exclude its results of operations for 1995.
Note 4 - Property
- -----------------
Palms Business Center
Effective January 1, 1995, the Palms Business Center joint venture was
restructured, giving the Partnership control over management decisions. Since
that date, the investment is being accounted for as a wholly-owned property. The
carrying value of the joint venture investment at conversion was allocated to
land, building and improvements, amount payable to venture partner and other net
operating liabilities. The venture partner will receive 40% of the excess cash
flow above a specified level until the initial obligation of $360,000 is repaid
in full.
The following is a summary of the Partnership's investment at December 31,
1995:
Land $ 3,072,333
Buildings and improvements
and other capitalized costs 9,780,823
Accumulated depreciation and amortization (444,790)
Payable to venture partner (230,000)
Net operating liabilities (70,076)
-----------
$12,108,290
===========
The buildings and improvements are being depreciated over 25 years,
beginning January 1, 1995.
The minimum future rentals under non-cancelable operating leases are:
$1,579,802 in 1996, $1,066,615 in 1997, $344,574 in 1998, $87,837 in 1999 and
$35,844 in 2000.
Summit Vinings
On August 6, 1993, the Partnership sold the Summit Vinings apartment
complex located in Atlanta, Georgia. The total sales price was $8,100,000. After
closing costs, the Partnership received proceeds of $7,916,614. In anticipation
of the sale, the carrying value of the investment had been reduced in the first
and second quarters of 1993 to approximate the selling price through the
recognition of an investment valuation allowance of $1,710,784. A disposition
fee of $243,000 was accrued but not paid to Copley. On October 28, 1993, the
Partnership made a capital distribution to the limited partners in the aggregate
amount of $7,789,754 ($82 per limited partnership unit.)
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 (loss) per
financial statements $3,912,897 $3,752,101 $ (378,545)
Timing differences:
Joint venture earnings 978,808 1,092,778 1,113,243
Depreciation and amortization 125,347 26,525 161,062
Expenses 28,383 244,047 231,192
Valuation allowance - - 1,050,000
Gain on sale - 756,363 2,845,864
---------- ---------- ----------
Taxable income $5,045,435 $5,871,814 $5,022,816
========== ========== ==========
Note 6 - Partners' Capital
- --------------------------
Allocation 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 partners. Cash distributions are made
quarterly.
Net sale 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 partners. The adjusted capital contribution per
limited partnership unit was reduced from $1,000 to $918 in 1993 and to $863 in
1995 as a result of the capital distribution from the Summit Vinings and Rancho
Cucamonga sales, respectively. No capital distributions have been made to the
general partners. Income from a sale is allocated in proportion to the
distribution of related proceeds, provided that the general partners are
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 partners.
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
$1,242,638 ($12.95 per limited partnership unit).
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION
AT DECEMBER 31, 1995
Initial Cost to Costs Subsequent
the Partnership to Acquisition
---------------------------------------------------- --------------------------
Change in
Buildings & Incidental Working
Description Land Improvements Working Capital Improvements Capital
---------------- ------------ --------------- ------------ ----------
60% interest in
Lee Parnters. Owners of
an apartment complex of
twelve, two and three _____________________________________ See Note A __________________________
story buildings in Fort
Myers, Florida.
80% interest in
Copley/Hewson Northwest
Associates Joint Venture.
Owners of four one story _____________________________________ See Note A __________________________
office/industrial buildings in
Phoenix, Arizona.
50% interest in
Morf VI Venture.
Owners of two single story
office/research and _____________________________________ See Note A __________________________
development buildings in
Frederick, Maryland.
60% interest in
Decatur TownCenter II
Associates. The Partnership
owns land in Decatur, Georgia _____________________________________ See Note A __________________________
and has constructed a five
story office building.
34.75% interest in
Gateway 51 Partnership.
The Partnership has constructed
six office and research and _____________________________________ See Note A __________________________
development buildings, and owns
land in Columbia, Maryland.
-------------------------------------------------------------------------------
Sub-total
===============================================================================
Gross amount at which
Carried at Close of Period
----------------------------------------------------
Buildings & Incidental
Description Land Improvements Working Capital Total
- ----------- ---------------- ------------ --------------- -------------
60% interest in
Lee Parnters. Owners of
an apartment complex of
twelve, two and three ____________________________________________________ $10,659,267
story buildings in Fort
Myers, Florida.
80% interest in
Copley/Hewson Northwest
Associates Joint Venture.
Owners of four one story ____________________________________________________ $5,832,584
office/industrial buildings in
Phoenix, Arizona.
50% interest in
Morf VI Venture.
Owners of two single story
office/research and ____________________________________________________ $4,691,768
development buildings in
Frederick, Maryland.
60% interest in
Decatur TownCenter II
Associates. The Partnership
owns land in Decatur, Georgia ____________________________________________________ $8,325,253
and has constructed a five
story office building.
34.75% interest in
Gateway 51 Partnership.
The Partnership has constructed
six office and research and ____________________________________________________ $10,957,955
development buildings, and owns
land in Columbia, Maryland.
--------------------------------------------------------------------
Sub-total $40,466,827
====================================================================
Accumulated Date of Date Depreciable
Description Depreciation Construction Acquired Life
- ----------- ------------ ------------ -------- -----------
60% interest in
Lee Parnters. Owners of
an apartment complex of
twelve, two and three N/A 1987 8/01/86 40 Years
story buildings in Fort
Myers, Florida.
80% interest in
Copley/Hewson Northwest
Associates Joint Venture.
Owners of four one story N/A 1987 9/15/86 30 Years
office/industrial buildings in
Phoenix, Arizona.
50% interest in
Morf VI Venture.
Owners of two single story
office/research and N/A 1987 12/22/87 50 Years
development buildings in
Frederick, Maryland.
60% interest in
Decatur TownCenter II
Associates. The Partnership
owns land in Decatur, Georgia N/A 1989 12/31/87 20 years
and has constructed a five
story office building.
34.75% interest in
Gateway 51 Partnership.
The Partnership has constructed
six office and research and N/A 1992 12/21/87 50 years
development buildings, and owns
land in Columbia, Maryland.
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION
AT DECEMBER 31, 1995 (Continued)
Initial Cost to Costs Subsequent
the Partnership to Acquisition
-------------------------------------------------------------------------------------------------
Change in
Buildings & Other Net Improvements Working
Description Land Improvements Operating Liabilities Capital Land
- ------------------------- ----------- --------------- --------------------- ------------ ------- -------
Las Vegas, NV
-Rancho Road Associates 3,072,333 9,729,055 (281,424) 51,768 (18,652) 3,072,333
---------------------------------------------------------------------------------------------
Sub-total 3,072,333 9,729,055 (281,424) 51,768 (18,652) 3,072,333
---------------------------------------------------------------------------------------------
Total Real Estate and Joint Ventures
=============================================================================================
Gross amount at which
Carried at Close of Period
--------------------------------------------------------
Building & Other Net Accumulated
Description Improvements Operating Liabilities Total Depreciation
- ------------------------- ------------- ------------------------ ------------- --------------
Las Vegas, NV
-Rancho Road Associates 9,780,823 (300,076) 12,553,080 (444,790)
---------------------------------------------------------------------------
Sub-total 9,780,823 (300,076) 12,553,080 (444,790)
---------------------------------------------------------------------------
Total Real Estate and Joint Ventures 53,019,907 (444,790)
=================================================================
Date of Date Depreciable
Description Construction Acquired Life
- ------------------------- ------------ -------------- -----------
Las Vegas, NV
-Rancho Road Associates 1988 12/29/86 25 Years
Converted to
wholly-owned
1/1/95
Sub-total
Total Real Estate and Joint Ventures
Reconciliation of Real Estate Owned:
Beginning balance, January 1, 1995 $0
Conversion to Wholly-Owned 12,519,964
Additions to property 51,768
Decrease in working capital (18,652)
-----------------
Ending balance, December 31, 1995 $12,553,080
=================
Accumulated Depreciation- January 1, 1995 $0
Depreciation Expense - 1995 (444,790)
-----------------
Accumulated Depreciation - December 31, 1995 ($444,790)
=================
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Schedule III NOTE A
JOINT VENTURES SUMMARY
AT DECEMBER 31, 1995
CASH
PERCENT BALANCE INVESTMENT EQUITY IN 1995 AMORTIZATION DISTRIBUTION
OF AS OF IN JOINT INCOME/ OF DEFERRED FROM
DESCRIPTION OWNERSHIP 12/31/94 VENTURES (LOSS) ACQUISITION FEES JOINT VENTURE
- --------------------------------- --------- -------------- ----------- --------------- ---------------- ----------------
Lee Partners 60% $10,957,237 $0 $650,904 ($6,201) ($942,673)
Copley/Hewson 80% 6,265,191 0 394,403 (4,010) (823,000)
Northwest Associates
Rancho Road Associates 60% 12,519,964 0 0 0 0
MORF VI Venture 50% 4,749,674 0 523,836 (1,840) (579,902)
Decatur TownCenter II Associates 60% 8,399,498 0 680,012 (5,418) (748,839)
Gateway 51 Partnership 34.75% 10,946,222 0 847,641 (1,908) (834,000)
-------------- ----------- --------------- ----------------- -----------------
$53,837,786 $0 $3,096,796 ($19,377) ($3,928,414)
============== =========== =============== ================= =================
CONVERSION TO BALANCE
WHOLLY-OWNED AS OF
DESCRIPTION PROPERTY 12/31/95
- --------------------------------- ---------------------- -----------------------
Lee Partners $0 $10,659,267
Copley/Hewson 0 5,832,584
Northwest Associates
Rancho Road Associates (12,519,964) 0
MORF VI Venture 0 4,691,768
Decatur TownCenter II Associates 0 8,325,253
Gateway 51 Partnership 10,957,955
---------------------- --------------------
($12,519,964) $40,466,827
====================== ====================
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
FINANCIAL REPORT
DECEMBER 31, 1995
FINANCIAL STATEMENTS
INDEX NO. 2
AUDITOR'S REPORT AND FINANCIAL STATEMENTS
OF GATEWAY 51 PARTNERSHIP
PAGE #
Independent Auditor's Report of Wolpoff & Company, LLP.................
Balance Sheet - December 31, 1995 and 1994.............................
Statement of Income - For the Years ended
December 31, 1995, 1994 and 1993......................................
Statement of Changes on 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]
To the Partners
Gateway 51 Partnership (A Maryland General Partnership)
Columbia, Maryland
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
----------------------------------------------------
We have audited the balance sheet of Gateway 51 Partnership (A Maryland General
Partnership) as of December 31, 1995 and 1994, and the related statements of
income, partners' capital and cash flows for each of the three years in the
period ended December 31, 1995, 1994 and 1993. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gateway 51 Partnership (A
Maryland General Partnership) as of 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, 1994 and 1993, in conformity with generally accepted
accounting principles.
/S/ WOLPOFF & COMPANY, LLP
WOLPOFF & COMPANY, LLP
Baltimore, Maryland
January 22, 1996
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
BALANCE SHEET
-------------
ASSETS
------
December 31,
-----------------------------
1995 1994
------------- -------------
PROPERTY, AT COST-Notes 1 and 4
Land $ 4,966,738 $ 4,960,338
Building and Improvements 11,124,907 10,944,239
Preliminary Development Costs 42,247 42,247
Deferred Costs 1,050,284 924,454
------------- -------------
17,184,176 16,871,278
Less Accumulated Depreciation and Amortization 1,619,148 1,330,252
------------- -------------
PROPERTY, NET 15,565,028 15,541,026
------------- -------------
OTHER ASSETS
Cash and Cash Equivalents - Note 1 156,930 67,917
------------- -------------
Receivables from Tenants
Rents and Expense Billings -0- 58,674
Tenant Improvement Loans - Note 3 32,745 106,616
Deferred Rent Receivable - Note 1 41,080 54,888
Allowance for Doubtful Accounts -0- (19,260)
------------- -------------
73,825 200,918
------------- -------------
Prepaid Expenses 36,270 20,936
------------- -------------
TOTAL OTHER ASSETS 267,025 289,771
------------- -------------
$15,832,053 $15,830,797
============= =============
_______________
The notes to financial statements are an integral part of this statement.
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
BALANCE SHEET
-------------
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
December 31,
----------------------------
1995 1994
------------- -------------
LIABILITIES
Accounts Payable and Accrued Expenses $ 24,585 $ 5,185
Tenant Security Deposits 2,409 9,180
------------- -------------
TOTAL LIABILITIES 26,994 14,365
PARTNERS' CAPITAL - Notes 1 and 2 15,805,059 15,816,432
------------- -------------
$15,832,053 $15,830,797
============= =============
____________
The notes to financial statements are an integral part of this statement.
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
STATEMENT OF INCOME
-------------------
Year Ended December 31,
---------------------------------------------------
1995 1994 1993
--------------- --------------- ---------------
REVENUE - Notes 1 and 6
Gross Rent Potential $1,676,953 $ 1,485,628 $ 1,385,031
Less Vacancies 133,073 314,307 298,115
--------------- --------------- ---------------
Net Rental Income 1,543,880 1,171,321 1,086,916
Expense Reimbursements from Tenants 326,449 324,854 247,851
Interest and Other Income 23,511 10,929 9,209
--------------- --------------- ---------------
TOTAL REVENUE 1,893,840 1,507,104 1,343,976
--------------- --------------- ---------------
OPERATING EXPENSES
Real Property and CPRA Taxes 191,439 188,523 134,121
Building and Grounds Maintenance 121,868 113,127 107,828
Management Fees - Note 4 57,915 49,122 49,470
General and Administrative 13,558 32,896 19,659
Utilities 21,545 24,660 21,857
Bad Debts -0- 11,929 33,515
Insurance 9,992 5,291 4,934
--------------- --------------- ---------------
TOTAL OPERATING EXPENSES 416,317 425,548 371,384
--------------- --------------- ---------------
OPERATING INCOME 1,477,523 1,081,556 972,592
--------------- --------------- ---------------
DEPRECIATION AND AMORTIZATION 288,896 308,697 572,179
--------------- --------------- ---------------
NET INCOME - Note 5 $1,188,627 $ 772,859 $ 400,413
=============== =============== ===============
_______________
The notes to financial statements are an integral part of this statement.
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
STATEMENT OF PARTNERS' CAPITAL
------------------------------
Year Ended December 31,
---------------------------------------------------
1995 1994 1993
--------------- --------------- ---------------
CAPITAL CONTRIBUTIONS - Note 2
Prior Years $20,267,826 $17,744,733 $17,744,733
Current Year -0- 2,523,093 -0-
--------------- --------------- ---------------
20,267,826 20,267,826 17,744,733
--------------- --------------- ---------------
CAPITAL PLACEMENT
Prior Years (202,678) (177,447) (177,447)
Current Year -0- (25,231) -0-
--------------- --------------- ---------------
(202,678) (202,678) (177,447)
--------------- --------------- ---------------
DISTRIBUTIONS
Prior Years (5,748,893) (4,543,893) (4,233,893)
Current Year (1,200,000) (1,205,000) (310,000)
--------------- --------------- ---------------
(6,948,893) (5,748,893) (4,543,893)
--------------- --------------- ---------------
ACCUMULATED INCOME
Prior Years 1,500,177 727,318 326,905
Current Year 1,188,627 772,859 400,413
--------------- --------------- ---------------
2,688,804 1,500,177 727,318
--------------- --------------- ---------------
TOTAL PARTNERS' CAPITAL $15,805,059 $15,816,432 $13,750,711
=============== ============== ===============
_______________
The notes to financial statements are an integral part of this statement.
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
STATEMENT OF CASH FLOWS
-----------------------
Year Ended December 31,
---------------------------------------------------
1995 1994 1993
--------------- --------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,188,627 $ 772,859 $ 400,413
--------------- --------------- ---------------
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Depreciation and Amortization 288,896 308,697 572,179
Change in Receivables from Tenants, Net of Allowance 53,222 (61,280) 26,452
Change in Accounts Payable and Accrued Expenses 19,400 3,807 (4,021)
Change in Prepaid Expenses (15,334) 3,764 (12,400)
--------------- --------------- ---------------
Total Adjustments 346,184 254,988 582,210
--------------- --------------- ---------------
Net Cash Provided by Operating Activities 1,534,811 1,027,847 982,623
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Building and Improvement Additions (180,668) (2,776,353) (111,122)
Land Costs (6,400) (15,516) (31,313)
Deferred Costs (125,830) (119,483) (7,514)
Decrease in Tenant Security Deposits (6,771) -0- (3,135)
Change in Tenant Improvement Loans 73,871 (18,972) (1,306)
Construction in Progress -0- -0- (29,733)
--------------- --------------- ---------------
Net Cash Used by Investing Activities (245,798) (2,930,324) (184,123)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributions -0- 2,523,093 -0-
Capital Placement Fee -0- (25,231) -0-
Distributions to Partners (1,200,000) (1,205,000) (310,000)
--------------- --------------- ---------------
Net Cash Provided (Used)
by Financing Activities (1,200,000) 1,292,862 (310,000)
--------------- --------------- ---------------
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS 89,013 (609,615) 488,500
CASH AND CASH
EQUIVALENTS, BEGINNING 67,917 677,532 189,032
--------------- --------------- ---------------
CASH AND CASH
EQUIVALENTS, ENDING $ 156,930 $ 67,917 $ 677,532
=============== =============== ===============
_______________
The notes to financial statements are an integral part of this statement.
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1995
-----------------
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
------------
Gateway 51 Partnership (A Maryland General Partnership) was formed on
December 21, 1987, under the Maryland Uniform Partnership Act. The
agreement was amended and restated in 1989 to reflect changes in
partner ownership percentages.
Property
--------
The Partnership owns 21 acres of land in Howard County, Maryland. The
property has been developed with six office/research type buildings,
with two placed into service in August 1994. Plans call for a seventh
building with approximately 15,000 square feet of space.
All property is recorded at cost. Information regarding the buildings
is as follows:
Occupancy
--------------------------------
Square Date Placed
Building Footage into Service Tenants 12/31/95 12/31/94 12/31/93
- ---------- --------- -------------- ----------------- ---------- ---------- ----------
A 46,840 3/1/91 Multiple 92% 73% 71%
B 21,991 9/1/90 AVNET 100% 100% 0%
C 38,182 7/15/91 Multiple 76% 100% 100%
F 35,532 2/1/92 Multiple 82% 92% 92%
D-E 45,951 8/8/94 Columbia National 100% 100% --
--------- ---------- ---------- ----------
188,496 90% 91% 73%
========= ========== ========== ==========
Carrying costs, operating expenses and depreciation begin as a charge
against operations on the date the buildings are placed into service.
Initial Rental Operations
-------------------------
As buildings became substantially complete, the Partnership
recognized related revenues and expenses (including depreciation and
interest) pertaining to that space. Buildings were considered
substantially complete upon the earlier of the completion of
substantial tenant improvements or 1 year from the completion of the
building shell. Incidental rental revenue and expenses incurred prior
to substantial completion were included in building costs.
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-----------------------------------------
DECEMBER 31, 1995
-----------------
Note 1 - Cash and Cash Equivalents
-------------------------
(Cont.) The Partnership considers all highly liquid debt instruments purchased
with a maturity of 3 months or less to be cash equivalents.
The majority of the Partnership's cash is held in financial
institutions with insurance provided by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. Periodically during the year, the
balance may have exceeded the FDIC limitation.
Depreciation
------------
Building costs and tenant improvements are being depreciated using the
straight-line method over the estimated useful lives of 50 years.
Rental Income
-------------
Rental income for major leases is being recognized on a straight-line
basis over the terms of the leases. The excess of the rental income
recognized over the amount stipulated in the lease is shown as deferred
rent receivable.
Amortization
------------
Deferred costs are amortized as follows:
Amortization
Amount Period
------------- --------------
Organization Costs $ 13,555 Complete
Leasing Costs and Commissions 1,036,729 Lease Terms
--------------
$1,050,284
==============
Income Taxes
------------
Partnerships, as such, 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 (see Note 5).
Capital Placement Fee
---------------------
Costs incurred for arranging the Partnership's equity have been treated
as a reduction of partners' capital (see Note 2).
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-----------------------------------------
DECEMBER 31, 1995
-----------------
Note 2 - PARTNERS' CAPITAL
Capital Investment
------------------
New England Life Pension Properties IV (NELPP IV) and New England
Pension Properties V (NEPP V) have agreed to provide equity of
$14,598,000 and $6,402,000, respectively, totaling $21,000,000. During
1994, NELPP IV and NEPP V made capital contributions of $1,753,550 and
$769,543, respectively, to fund the construction and completion of
Buildings D and E. As of December 31, 1995, 1994 and 1993, total
capital contributions amounted to $20,267,826, $20,267,826 and
$17,744,733, respectively.
Cumulative Priority Return
--------------------------
NELPP IV and NEPP V are entitled to cumulative priority returns of
10.5%, compounded monthly on capital invested. The Partnership paid
priority returns totaling $1,200,000, $1,205,000 and $310,000 during
1995, 1994 and 1993, respectively. As of December 31, 1995, 1994 and
1993, unpaid priority returns amounted to $5,427,949, $3,832,711 and
$2,993,149, respectively.
Capital Placement Fee
---------------------
The Partnership incurred fees of $202,678 with Paine Webber Mortgage
Finance, Inc. with respect to capital raised by the Partnership. This
amount has been charged against partners' capital.
Note 3 - TENANT IMPROVEMENT LOANS RECEIVABLE
The Partnership has made several tenant improvement loans to tenants.
These loans require monthly principal and interest payments. Pertinent
terms are as follows:
Balance
Due
----------------------
Original Interest
Tenant Loan Amount Rate Due Date 12/31/95 12/31/94
-------------- ------------- ---------- ---------- ----------- -----------
HMSS $ 28,741 10.78% 7/1/01 $18,917 $ 21,455
Bohdan 24,124 11.00% --- -0- 19,724
Pediatric Care 16,580 12.00% 3/31/97 5,114 8,689
HMSS 12,310 10.78% 10/1/01 8,714 9,731
Columbia National 47,107 15.00% --- -0- 47,017
------------- ----------- -----------
$ 128,862 $32,745 $106,616
============= =========== ===========
GATEWAY 51 PARTNERSHIP
----------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-----------------------------------------
DECEMBER 31, 1995
-----------------
Note 4 - RELATED PARTY TRANSACTIONS
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 a management fee equal to 3.5% of rent and tenant expense
billings during 1994 and 1993. The agreement was modified to adjust the
fee to 3%, effective January 1, 1995.
Development Fees
----------------
The Partnership has entered into a development agreement with Manekin
Corporation. A fee of $138,611 was incurred in 1992 and is included in
building costs.
Note 5 - TAX ACCOUNTING
Tax accounting differs from financial accounting as follows:
Current Year Prior Years Total
-------------- ------------- ------------
Financial Income $1,188,627 $1,500,177 $2,688,804
Additional Depreciation (110,994) (418,056) (529,050)
Lease-Up Period Items
Capitalized for GAAP -0- 4,264 4,264
Deferred Rent 13,808 (54,888) (41,080)
Bad Debt Allowance (19,260) 19,260 -0-
Prepaid Property Taxes (12,280) (13,450) (25,730)
-------------- ------------- ------------
Taxable Income $1,059,901 $1,037,307 $2,097,208
============== ============= ============
Note 6 - LEASES
The following is a schedule of future minimum lease payments to be
received under noncancelable operating leases at December 31, 1995:
Year Ending December 31, 1996 $ 1,316,589
1997 1,176,845
1998 1,116,297
1999 1,038,834
2000 411,261
Thereafter 1,507,959
-----------
$ 6,567,785
===========
To the Partners
Gateway 51 Partnership (A Maryland General Partnership)
Columbia, Maryland
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION
---------------------------------------------------------
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information contained on pages 12 and 13 is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has not been subjected to the auditing procedures applied in the
audits of the basic financial statements, and accordingly, we express no opinion
on it.
/s/ WOLPOFF & COMPANY, LLP
WOLPOFF & COMPANY, LLP
Baltimore, Maryland
January 22, 1996
GATE 51 PARTNERSHIP
-------------------
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
SCHEDULE OF PARTNERS' CAPITAL
-----------------------------
DECEMBER 31, 1995
-----------------
M.O.R. 51
New England New England Gateway
Life Pension Pension Limited
Properties IV Properties V Partnership Total
--------------- --------------- ------------- ---------------
OWNERSHIP PERCENTAGE 34.75% 15.25% 50.00% 100.00%
=============== =============== ============= ===============
CAPITAL CONTRIBUTIONS
Prior Years $14,086,139 $6,181,687 $ -0- $20,267,826
Current Year -0- -0- -0- -0-
--------------- --------------- ------------- ---------------
14,086,139 6,181,687 -0- 20,267,826
--------------- --------------- ------------- ---------------
CAPITAL PLACEMENT FEE
Prior Years (106,427) (96,251) -0- (202,678)
Current Year -0- -0- -0- -0-
--------------- --------------- ------------- ---------------
(106,427) (96,251) -0- (202,678)
--------------- --------------- ------------- ---------------
DISTRIBUTIONS - Note 2
Prior Years (3,851,455) (1,897,438) -0- (5,748,893)
Current Year (834,000) (366,000) -0- (1,200,000)
--------------- --------------- ------------- ---------------
(4,685,455) (2,263,438) -0- (6,948,893)
--------------- --------------- ------------- ---------------
ACCUMULATED INCOME
Prior Years 1,042,625 457,552 -0- 1,500,177
Current Year 826,096 362,531 -0- 1,188,627
--------------- --------------- ------------- ---------------
1,868,721 820,083 -0- 2,688,804
--------------- --------------- ------------- ---------------
PARTNERS' CAPITAL, 12/31/95 $11,162,978 $4,642,081 $ -0- $15,805,059
=============== =============== ============= ===============
_______________
See Independent Auditor's Report on Supplementary Information.
GATEWAY 51 PARTNERSHIP
(A MARYLAND GENERAL PARTNERSHIP)
--------------------------------
SCHEDULE OF CHANGES IN PARTNERS' CAPITAL - INCOME TAX BASIS
-----------------------------------------------------------
DECEMBER 31, 1995
-----------------
M.O.R. 51
New England New England Gateway
Life Pension Pension Limited
Properties IV Properties V Partnership Total
--------------- --------------- ------------- ---------------
OWNERSHIP PERCENTAGE 34.75% 15.25% 50.00% 100.00%
=============== =============== ============= ===============
CAPITAL CONTRIBUTIONS
Prior Years $14,086,139 $6,181,687 $ -0- $20,267,826
Current Year -0- -0- -0- -0-
--------------- --------------- ------------- ---------------
14,086,139 6,181,687 -0- 20,267,826
--------------- --------------- ------------- ---------------
CAPITAL PLACEMENT FEE
Prior Years (106,427) (96,251) -0- (202,678)
Current Year -0- -0- -0- -0-
--------------- --------------- ------------- ---------------
(106,427) (96,251) -0- (202,678)
--------------- --------------- ------------- ---------------
DISTRIBUTIONS - Note 2
Prior Years (3,851,455) (1,897,438) -0- (5,748,893)
Current Year (834,000) (366,000) -0- (1,200,000)
--------------- --------------- ------------- ---------------
(4,685,455) (2,263,438) -0- (6,948,893)
--------------- --------------- ------------- ---------------
ACCUMULATED INCOME
Prior Years 723,100 314,207 -0- 1,037,307
Current Year 736,631 323,270 -0- 1,059,901
--------------- --------------- ------------- ---------------
1,459,731 637,477 -0- 2,097,208
--------------- --------------- ------------- ---------------
PARTNERS' CAPITAL, 12/31/95 $10,753,988 $4,459,475 $ -0- $15,213,463
=============== =============== ============= ===============
______________
See Independent Auditor'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 IV;
A REAL ESTATE LIMITED PARTNERSHIP
Date: March 11 , 1996 By: /s/ Joseph W. O'Connor
------ ----------------------
Joseph W. O'Connor
President of the
Managing 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 Managing General Partner March 11 , 1996
- --------------------------- ------
Joseph W. O'Connor
Principal Financial and
Accounting Officer of the
/s/ Daniel C. Mackowiak Managing General Partner March 11 , 1996
- --------------------------- ------
Daniel C. Mackowiak
Director of the
/s/ Daniel J. Coughlin Managing General Partner March 11 , 1996
- -------------------------- ------
Daniel J. Coughlin
Director of the
/s/ Peter P. Twining Managing General Partner March 11 , 1996
- -------------------------- ------
Peter P. Twining
EXHIBIT INDEX
-------------
EXHIBIT PAGE
- -------
NUMBER NUMBER
------
10A. Agreement of Limited Partnership of Lee Partners, a *
Maryland Partnership, dated August 12, 1986, by and
among the Registrant and Lee-Oxford Limited Partnership,
as amended October 7, 1986.
10B. Term Loan Agreement dated August 1, 1986 between *
Lee-Oxford Limited Partnership and The Registrant,
as amended October 7, 1986.
10C. Promissory Note in the amount of $5,790,000 dated *
August 15, 1986 given by Lee-Oxford Limited Partnership
to the Registrant, and Allonge to Promissory Note dated
October 7, 1986
10D. General Partnership Interest Pledge and Security *
Agreement, dated August 1, 1986, by and between
Lee-Oxford Limited Partnership and The Registrant,
as amended October 7, 1986.
10E. Rancho Cucamonga No. 1 Associates Joint Venture *
Agreement dated as of December 1986 by and between
The Registrant and Vance Charles Mape III.
10F. Rancho Road Associates Joint Venture Agreement dated *
as of December 29, 1986 by and between The Registrant
and Commerce Centre Partners.
10G. General Warranty Deed as of December 23, 1986 between *
Calibre Log Cabin, Ltd., and the Registrant.
10H. Ground Lease by and between the Registrant, as Landlord *
and Calibre Log Cabin, Ltd., and the Registrant.
10I. Promissory Note dated December 22, 1986 in the amount *
of $8,862,500 from Calibre Log Cabin, Ltd. to the
Registrant.
10J. Deed to Secure Debt and Security Agreement, dated as of *
December 23, 1986 by and between Calibre Log Cabin, Ltd.,
as Borrower, and the Registrant, as Lender, in the amount
of $8,862,500.
10K. Hewson/Copley Northwest Associates Joint Venture *
Agreement by and between Hewson Properties, Inc. and
The Registrant dated as of September 15, 1986.
10L. Term Loan Agreement between Hewson Properties, Inc., *
Borrower, and the Registrant, as Lender, dated as of
September 15, 1986.
10M. Promissory Note dated September 15, 1986 in the amount *
of $3,720,000 from Hewson Properties, Inc. to the Registrant.
EXHIBIT INDEX
-------------
EXHIBIT PAGE
- -------
NUMBER NUMBER
------
10N. Ground Lease, dated December 16, 1987, between the *
Partnership and Rouse and Associates - 101 Brandywine
Limited Partnership ("Rouse-101").
10O. Promissory Note, dated December 17, 1987, from *
Rouse-101 to the Partnership.
10P. Leasehold Mortgage and Security Agreement, dated as of *
December 16, 1987, between Rouse-101 and the Partnership.
10Q. Ground Lease, dated December 16, 1987, between the *
Partnership and Rouse and Associates - 201-301 Brandywine
Limited Partnership ("Rouse - 201-301").
10R. Promissory Note, dated December 17, 1987, from Rouse *
-201-301 to the Partnership.
10S. Leasehold Mortgage and Security Agreement, dated as of *
December 16, 1987, between Rouse-201-301 and the
Partnership.
10T. General Partnership Agreement of Gateway 51 Partnership, *
dated as of December 21, 1987, between M.O.R. Gateway
51 Associates Limited Partnership and the Partnership.
10U. General Partnership Agreement of MORF 6 Venture, dated *
as of December 18, 1987, between M.O.R.F. 6 Associates
Limited Partnership and the Partnership.
10V. Decatur Town Center II Associates Joint Venture Agreement, *
dated as of December 31, 1987, between Decatur Town Center
Associates, Ltd. and the Partnership.
10W. First Amendment to Ground Lease dated as of July 1, 1988 *
by and between New England Mutual Life Insurance Company
and Calibre Briar Oaks, Ltd.
10X. First Amendment to Ground Lease dated as of July 1, 1988 *
by and between the Registrant and Calibre Log Cabin Ltd.
10Y. Second Priority Leasehold Deed To Secure Debt dated as *
of July 1, 1988 between the Registrant and Calibre Log
Cabin, Ltd.
10Z. Amended and Restated General Partnership Agreement *
Gateway 51 Partnership dated as of April 20, 1989,
between M.O.R. Gateway 51 Associates Limited Partnership,
New England Life Pension Properties IV; a Real Estate
Limited Partnership and New England Pension Properties
V; a Real Estate Limited Partnership.
EXHIBIT INDEX
-------------
EXHIBIT PAGE
- -------
NUMBER NUMBER
------
10AA. First Amendment to Decatur TownCenter II Associates *
Joint Venture Agreement dated as of September 15, 1989
by and between Decatur TownCenter Associates, Ltd. and
New England Life Pension Properties IV; a Real Estate
Limited Partnership.
10BB. Pledge and Security Agreement dated as of March 7, *
1988 by and between Commerce Centre Partners, a California
general partnership, and the Registrant.
10CC. First Amendment to Pledge and Security Agreement dated as *
of November 1, 1989 by and between Commerce Centre Partners and
the Registrant.
10DD. First Amendment to Rancho Road Associates Joint Venture *
Agreement dated as of November 1, 1989 by and between the
Registrant and Commerce Centre Partners.
10EE. First Amendment to Promissory Note and Joint Venture Interest *
Pledge and Security Agreement dated and effective as of
January 1, 1990 by and between Hewson Properties, Inc. and
the Registrant.
10FF. First Amendment to Hewson/Copley Northwest Associates *
Amended and Restated Joint Venture Agreement dated and
effective as of January 1, 1990 by and between the
Registrant and Hewson Properties, Inc.
10GG. Second Allonge to Promissory Note dated March 30, 1990 *
by and between Lee-Oxford Limited Partnership and the
Registrant.
10HH. Letter Agreement dated as of March 30, 1990 by and between *
the Registrant and Lee-Oxford Limited Partnership.
10II. Like-Kind Exchange Contract entered into as of July 3, 1990 *
by and between Crown American Corporation and M.O.R.F. 6
Venture.
10JJ. Agreement for Purchase and Sale made and entered into as *
of February 1, 1990 by and between Calibre Log Cabin, Ltd.
and the Registrant.
10KK. Assignment of Ground Lease and Limited Warranty Deed made *
by and entered into as of February 1, 1990 by and between
Calibre Log Cabin, Ltd. and the Registrant.
10LL. Warranty Bill of Sale and Assignment made by and entered *
into as of February 1, 1990 by and between Calibre Log
Cabin, Ltd. and the Registrant.
10MM. Assignment of Rents and Leases made and entered into as *
of February 1, 1990 by and between Calibre Log Cabin,
Ltd. and the Registrant.
EXHIBIT INDEX
----------------
EXHIBIT PAGE
- -------
NUMBER NUMBER
------
10NN. Allonge to Promissory Note dated May 1, 1992, by and between Lee-
Oxford Partnership and the Registrant. *
10OO. Purchase and Sale Agreement and Escrow Instructions by and between
Rancho Cucamonga No. 1 Associates, a California general partnership *
and APT- Cabot California, Inc., a Delaware corporation dated as of
November 30, 1994.
10PP. Amended and Restated Joint Venture Agreement of Rancho Road
Associates between New England Life Pension Properties IV,
a Real Estate Limited Partnership and Commerce Centre Partners
dated January 1, 1995.
10QQ. Fourth Amendment to Decatur TownCenter II Associates Joint Venture
Agreement dated as of August 15, 1995 between Decatur TownCenter
Associates LTD., and the Registrant.
____________________________________________________________________
* Previously filed and incorporated herein by reference