SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------
For Quarter Ended June 30, 1997 Commission File Number 0-17807
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2988542
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
225 Franklin Street, 25th Fl.
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1997
PART I
FINANCIAL INFORMATION
BALANCE SHEETS
(Unaudited)
June 30, 1997 December 31, 1996
------------- -----------------
ASSETS
Real estate investments:
Joint ventures $15,240,872 $15,479,056
Property, net 8,278,828 8,350,231
----------- -----------
23,519,700 23,829,287
Cash and cash equivalents 3,927,409 3,076,103
Short-term investments 1,260,485 2,194,290
----------- -----------
$28,707,594 $29,099,680
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 87,161 $ 86,347
Accrued management fee 51,517 51,517
Deferred disposition fees 582,677 582,677
----------- -----------
Total liabilities 721,355 720,541
----------- -----------
Partners' capital (deficit):
Limited partners ($768.98
per unit; 160,000 units authorized,
48,788 units issued and outstanding) 28,026,332 28,415,303
General partners (40,093) (36,164)
----------- -----------
Total partners' capital 27,986,239 28,379,139
----------- -----------
$28,707,594 $29,099,680
=========== ===========
(See accompanying notes to financial statements)
STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1997 June 30, 1997 June 30, 1996 June 30, 1996
------------- ---------------- ------------- ----------------
INVESTMENT ACTIVITY
Property rentals $ 195,744 $ 415,032 $ 172,195 $ 389,842
Property operating expenses (94,679) (197,502) (94,740) (212,256)
Depreciation and amortization (75,763) (151,494) (71,634) (142,971)
---------- ---------- ---------- -----------
25,302 66,036 5,821 34,615
Joint venture earnings 303,545 657,539 245,138 514,949
---------- ---------- ---------- -----------
Total real estate activity 328,847 723,575 250,959 549,564
---------- ---------- ---------- -----------
Interest on cash equivalents
and short-term investments 68,581 134,633 65,058 132,768
---------- ---------- ---------- -----------
Total investment activity 397,428 858,208 316,017 682,332
---------- ---------- ---------- -----------
PORTFOLIO EXPENSES
Management fee 51,517 103,034 51,518 103,035
General and administrative 57,395 106,278 56,528 107,799
---------- ---------- ---------- -----------
108,912 209,312 108,046 210,834
---------- ---------- ---------- -----------
Net income $ 288,516 $ 648,896 $ 207,971 471,498
========== ========== ========== ===========
Net income per limited
partnership unit $ 5.86 $ 13.17 $ 4.22 $ 9.57
========== ========== ========== ===========
STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1997 June 30, 1997 June 30, 1996 June 30, 1996
------------- ---------------- ------------- ----------------
Cash distributions per limited
partnership unit $ 10.57 $ 21.14 $ 10.57 $ 23.07
========== ========== ========== ===========
Number of limited partnership units
outstanding during the period 48,788 48,788 48,788 48,788
========== ========== ========== ===========
(See accompanying notes to financial statements)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1997 June 30, 1997 June 30, 1996 June 30, 1996
------------------------ ------------------------ ----------------------- -------------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
--------- ------------ --------- ------------ --------- ------------ ---------- ------------
Balance at beginning
of period $ (37,769) $ 28,256,390 $ (36,164) $ 28,415,303 $ (29,763) $ 29,048,990 $ (26,238) $ 29,397,948
Cash distributions (5,209) (515,689) (10,418) (1,031,378) (5,209) (515,689) (11,369) (1,125,539)
Net income 2,885 285,631 6,489 642,407 2,080 205,891 4,715 466,783
--------- ------------ --------- ------------ --------- ------------ ---------- ------------
Balance at end
of period $ (40,093) $ 28,026,332 $ (40,093) $ 28,026,332 $ (32,892) $ 28,739,192 $ (32,892) $ 28,739,192
========= ============ ========= ============ ========= ============ ========== ============
(See accompanying notes to financial statements)
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
1997 1996
----------- -----------
Net cash provided by operating activities $ 976,073 $ 889,048
----------- -----------
Cash flows from investing activities:
Investment in property - (127,703)
Decrease in short-term
investments, net 917,029 716,250
----------- -----------
Net cash provided by
investing activities 917,029 588,547
----------- -----------
Cash flows from financing activity:
Distributions to partners (1,041,796) (1,136,908)
----------- -----------
Net increase in cash
and cash equivalents 851,306 340,687
Cash and cash equivalents:
Beginning of period 3,076,103 2,997,934
----------- -----------
End of period $ 3,927,409 $ 3,338,621
=========== ===========
(See accompanying notes to financial statements)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of June 30, 1997 and December 31, 1996 and its operations,
its cash flows and partners' capital (deficit) for the interim periods ended
June 30, 1997 and 1996. These adjustments are of a normal recurring nature.
See notes to financial statements included in the Partnership's 1996 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
Note 1 - Organization and Business
- ----------------------------------
Copley Pension Properties VI; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other organizations intended to be exempt from federal
income tax. The Partnership commenced operations in July 1988, and acquired the
five real estate investments it currently owns prior to the end of 1991. It
intends to dispose of its investments within eight to twelve years of their
acquisition, and then liquidate.
Note 2 - Investments in Joint Ventures
- --------------------------------------
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the Partnership's joint ventures:
Assets and Liabilities
------------------------
June 30, 1997 December 31, 1996
------------- -----------------
Assets
Real property, at cost less
accumulated depreciation
of $6,533,729 and $6,158,575
respectively $ 16,818,750 $ 17,199,404
Other 740,402 739,700
------------ ------------
17,559,152 17,939,104
Liabilities 161,652 235,655
------------ ------------
Net assets $ 17,397,500 $ 17,703,449
============ ============
Results of Operations
---------------------
Six Months Ended June 30,
1997 1996
----------- ------------
Revenue:
Rental income $1,908,905 $1,826,539
Other income 2,701 2,976
---------- ----------
1,911,606 1,829,515
---------- ----------
Expenses:
Operating expenses 682,834 721,110
Depreciation and amortization 382,923 447,288
---------- ----------
1,065,757 1,168,398
---------- ----------
Net income $ 845,849 $ 661,117
========== ==========
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and (with respect to two investments) its affiliates on behalf of
their various financing arrangements with the joint ventures.
Note 3 - Property
- -----------------
The following is a summary of the Partnership's two wholly-owned properties:
June 30, 1997 December 31, 1996
-------------- ------------------
Land $ 3,408,203 $ 3,408,203
Buildings, improvements and
other capitalized costs 8,869,989 8,869,433
Investment valuation allowance (1,500,000) (1,500,000)
Accumulated depreciation and
amortization (2,475,170) (2,330,843)
Net operating liabilities (24,194) (96,562)
----------- -----------
$ 8,278,828 $ 8,350,231
=========== ===========
During the second quarter of 1995, as a result of a revision to long-term
rental assumptions, the managing general partner determined that the carrying
value of the Wilmington Industrial property would not be recovered through
expected future undiscounted cash flows. Accordingly, the carrying value was
reduced to estimated net fair market value through the recognition of an
investment valuation allowance of $1,500,000.
Note 4 - Subsequent Event
- -------------------------
Distributions of cash from operations relating to the quarter ended June 30,
1997 were made on July 24, 1997 in the aggregate amount of $520,898 ($10.57 per
limited partnership unit).
A purchase and sale agreement was executed for the sale of Stemmons Industrial
for an amount in excess of the current carrying value. The transaction is
expected to be completed during the third quarter of 1997.
Management's Discussion and Analysis of Financial Condition and
- ---------------------------------------------------------------
Results of Operations
- ---------------------
Liquidity and Capital Resources
The Partnership completed its offering of units of limited partnership
interest on December 31, 1988. A total of 48,788 units were sold. The
Partnership received proceeds of $43,472,858, net of selling commissions and
other offering costs, which have been used for investment in real estate and for
the payment of related acquisition costs, or retained as working capital
reserves. The Partnership made seven real estate investments; one was sold in
1990, and another in 1994. As a result of these sales, capital of $11,271,004
($231.02 per limited partnership unit) has been returned to the limited
partners.
At June 30, 1997, the Partnership had $5,187,894 in cash, cash equivalents and
short-term investments, of which $520,898 was used for cash distributions to
partners on July 24, 1997; the remainder is being retained as working capital
reserves. The source of future liquidity and cash distributions to partners will
primarily be cash generated by the Partnership's short-term and real estate
investments, and proceeds from the sale of such investments. Based on an
adjusted capital contribution of $768.98 per limited partnership unit,
distributions of cash from operations relating to the first and second quarters
of 1997 and 1996 were made at the annualized rate of 5.5%.
The carrying value of real estate investments in the financial statements is
at depreciated cost, or if the investment's carrying value is determined not to
be recoverable through expected undiscounted future cash flows, the carrying
value is reduced to estimated fair market value. The fair market value of such
investments is further reduced by the estimated cost of sale for properties held
for sale. Carrying value may be greater or less than current appraised value. At
June 30, 1997, the carrying value of one investment exceeded its appraised value
by approximately $250,000. The appraised value of each of the other investments
exceeded their related carrying values by an aggregate of approximately
$6,026,000. The current appraised value of real estate investments has been
estimated by the managing general partner and is generally based on a
correlation of traditional appraisal approaches performed by the Partnership's
advisor and independent appraisers. Because of the subjectivity inherent in the
valuation process, the estimated current appraised value may differ
significantly from that which could be realized if the real estate were actually
offered for sale in the marketplace.
Results of Operations
Form of Real Estate Investments
The Wilmington Industrial and Stemmons Industrial investments are
wholly-owned properties. The other three real estate investments in the
portfolio are joint ventures.
Operating Factors
Three of the Partnership's four industrial properties (Prentiss
Copystar, Wilmington and White Phonic) were 100% leased at June 30, 1997. The
Wilmington property was 73% leased at June 30, 1996.
Stemmons Industrial has been vacant since February 1996, with the
expiration of a short-term lease for 82% of the space. The Partnership has
entered into a purchase and sale agreement and the sale is expected to close in
the third quarter.
Occupancy at Waterford Apartments, the Partnership's multi-family
residential property, remained in the mid 90% range during the first six months
of 1997, which is consistent with the prior year.
Investment Results
Interest income on cash equivalents and short-term investments was
relatively unchanged between the first six months of 1996 and 1997.
Total real estate activity for the first six months of 1997 was
$723,575, an increase from $549,564 for the comparable period of 1996.
Operating income at Wilmington increased $25,000 due to improved occupancy.
Operating results at Waterford Apartments increased by $86,000 primarily due to
higher rental rates. In addition, operating results at Prentiss improved
approximately $30,000 due to lower operating expenses for landscaping and common
area improvements combined with a decrease in amortization expense related to
leasing commissions that became fully amortized.
Cash flow from operations increased by approximately $87,000 between
the first six months of 1996 and 1997. This increase is due to the increase in
operating results at Wilmington and changes in working capital, offset by the
timing of distributions from joint ventures.
Portfolio Expenses
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the managing general partner. General and administrative expenses
consist primarily of real estate appraisal, printing, legal, accounting and
investor servicing fees.
The Partnership management fee was unchanged between the first six
months of 1996 and 1997. General and administrative expenses were relatively
consistent with the prior year comparative six month period.
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1997
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: None.
b. Reports on Form 8-K: No Current Reports on Form 8-K
were filed during the quarter ended June 30, 1997.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
August 12, 1997
/s/ James J. Finnegan
-------------------------------
James J. Finnegan
Managing Director and General Counsel
of Managing General Partner,
Sixth Copley Corp.
August 12, 1997
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.