SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For Quarter Ended March 31, 1998 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
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Former name, former address and former fiscal year if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1998
PART I
FINANCIAL INFORMATION
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
March 31, 1998 December 31, 1997
-------------- -----------------
Assets
Real estate investments:
Joint ventures $ 14,891,065 $ 14,966,370
Property, net 4,174,953 4,201,553
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19,066,018 19,167,923
Cash and cash equivalents 3,518,975 2,105,728
Short-term investments -- 1,432,651
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$ 22,584,993 $ 22,706,302
============= =============
Liabilities and Partners' Capital
Accounts payable $ 69,286 $ 92,737
Accrued management fee 50,299 53,028
Deferred disposition fees 717,677 717,677
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Total liabilities 837,262 863,442
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Partners' capital (deficit):
Limited partners ($660.29
per unit; 160,000 units authorized;
48,788 units issued and outstanding) 21,797,183 21,891,360
General partners (49,452) (48,500)
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Total partners' capital 21,747,731 21,842,860
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$ 22,584,993 $ 22,706,302
============= =============
(See accompanying notes to financial statements)
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended March 31,
1998 1997
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INVESTMENT ACTIVITY
Property rentals $ 178,520 $ 219,288
Property operating expenses (45,934) (102,823)
Depreciation and amortization (36,910) (75,731)
--------- ---------
95,676 40,734
Joint venture earnings 406,957 353,994
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Total real estate activity 502,633 394,728
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Interest on cash equivalents
and short-term investments 46,132 66,052
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Total investment activity 548,765 460,780
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PORTFOLIO EXPENSES
Management fee 50,299 51,517
General and administrative 57,420 48,883
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107,719 100,400
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Net income $ 441,046 $ 360,380
========= =========
Net income per limited
partnership unit $ 8.95 $ 7.31
========= =========
Cash distributions per limited
partnership unit $ 10.88 $ 10.57
========= =========
Number of limited partnership units
outstanding during the period 48,788 48,788
========= =========
(See accompanying notes to financial statements)
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Quarter Ended March 31,
1998 1997
------------------------ ------------------------
General Limited General Limited
Partners Partners Partners Partners
--------- ------------ --------- ------------
Balance at beginning $(48,500) $21,891,360 $(36,164) $28,415,303
of period
Cash distributions (5,362) (530,813) (5,209) (515,689)
Net income 4,410 436,636 3,604 356,776
-------- ----------- -------- -----------
Balance at end
of period $(49,452) $21,797,183 $(37,769) $28,256,390
========= ============ ========= ===========
(See accompanying notes to financial statements)
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Quarter Ended March 31,
1998 1997
----------- -----------
Net cash provided by operating activities $ 543,803 $ 453,271
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Cash flows from investing activities:
Decrease in short-term
investments, net 1,405,619 765,371
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Net cash provided by
investing activities 1,405,619 765,371
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Cash flows from financing activity:
Distributions to partners (536,175) (520,898)
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Net increase in cash
and cash equivalents 1,413,247 697,744
Cash and cash equivalents:
Beginning of period 2,105,728 3,076,103
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End of period $3,518,975 $3,773,847
========== ==========
(See accompanying notes to financial statements)
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of March 31, 1998 and December 31, 1997 and its
operations, its cash flows and partners' capital (deficit) for the interim
periods ended March 31, 1998 and 1997. These adjustments are of a normal
recurring nature.
See notes to financial statements included in the Partnership's 1997 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
four 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; 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 Partnership has engaged AEW Real Estate Advisors, Inc.
(the "Advisor") to provide asset management services.
Note 2 - Investments in Joint Ventures
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the Partnership's three joint ventures:
Assets and Liabilities
----------------------
March 31, 1998 December 31, 1997
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Assets
Real property, at cost less
accumulated depreciation
of $7,080,674 and $6,910,873,
respectively $ 16,292,094 $ 16,461,895
Other 889,054 1,029,387
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17,181,148 17,491,282
Liabilities 365,978 379,809
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Net assets $ 16,815,170 $ 17,111,473
============== ==============
Results of Operations
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Quarter Ended March 31,
1998 1997
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Revenue:
Rental income $992,604 $965,607
Interest and other income 1,805 963
-------- --------
994,409 966,570
-------- --------
Expenses:
Operating expenses 298,627 317,890
Depreciation and amortization 175,164 191,517
-------- --------
473,791 509,407
-------- --------
Net income $520,618 $457,163
======== ========
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 one wholly-owned property:
March 31, 1998 December 31, 1997
--------------- ------------------
Land $ 2,770,056 $ 2,770,056
Buildings, improvements and
other capitalized costs 4,894,641 4,894,641
Investment valuation allowance (1,500,000) (1,500,000)
Accumulated depreciation and
amortization (1,952,280) (1,918,953)
Net operating liabilities (37,464) (44,191)
-------------- --------------
$ 4,174,953 $ 4,201,553
============== ==============
Note 4 - Subsequent Event
Distributions of cash from operations relating to the quarter ended March
31, 1998 were made on April 29, 1998 in the aggregate amount of $508,578 ($10.32
per limited partnership unit).
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 investment was
sold in each of 1990, 1994 and 1997. Through March 31, 1998, capital of
$16,573,771 ($339.71 per limited partnership unit) has been returned to the
limited partners; $15,605,329 as a result of sales and $968,442 in 1997, as a
result of a discretionary reduction of original working capital previously held
in reserves.
At March 31, 1998, the Partnership had $3,518,975 in cash and cash
equivalents, of which $508,578 was used for cash distributions to partners on
April 29, 1998; 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 invested cash and cash equivalents and real
estate investments, and proceeds from the sale of such investments. Based on an
adjusted capital contribution of $660.29 per limited partnership unit,
distributions of cash from operations relating to the first quarter of 1998 were
made at the annualized rate of 6.25% while distributions of cash from operations
relating to the first quarter of 1997 were made at the annualized rate of 5.5%
on an adjusted capital contribution of $768.98.
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
March 31, 1998, the aggregate appraised value of each real estate investment
exceeded their carrying value by approximately $9,600,000. 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 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 investment is a wholly-owned property. Effective
July 1, 1994, the Stemmons Industrial joint venture was converted to a wholly-
owned property and subsequently sold in September 1997. The other three real
estate investments in the portfolio are structured as joint ventures.
Operating Factors
Three of the Partnership's four industrial properties (Prentiss Copystar,
Wilmington and White Phonic) were 100% leased at March 31, 1998 and March 31,
1997
As discussed above, the Partnership sold its Stemmons Industrial investment
on September 29, 1997, and recognized a gain of $248,172. Stemmons Industrial
was vacant at the time of sale, as it had been since February 1996, with the
expiration of a short term lease for 82% of the space.
Occupancy at Waterford Apartments, the Partnership's multi-family
residential property, remained in the mid-90% range during the first quarter of
1998, which is consistent with the prior year.
Investment Results
Interest income on cash equivalents and short-term investments decreased
approximately $20,000 or 30% between the first quarter of 1997 and 1998
primarily due to lower short-term investment balances.
Exclusive of net losses from operations from Stemmons Industrial of
approximately $36,000 in 1997, total real estate activity for the first quarter
of 1998 and 1997 was $502,633 and $430,728, respectively. This increase of
approximately $72,000 is primarily due to improved operating results at
Waterford Apartments of approximately $46,000 due to higher rental rates and
lower operating expenses for advertising and salaries. In addition, operating
results at Wilmington Industrial increased approximately $20,000 primarily due
to lower operating expenses for repairs and maintenance and legal expenses
compared to the same period in 1997. Operating results from the remainder of the
Partnership's investments were relatively unchanged between the respective
periods.
Cash flow from operations increased by approximately $91,000 between the
first three months of 1997 and 1998. This increase is primarily attributable to
the increased operating results discussed above, increases in cash flow from
Waterford Apartments and changes in working capital.
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 decreased approximately $1,200 between the first
quarter of 1997 and 1998 due to a decrease in the distributable cash flow.
General and administrative expenses increased approximately $8,500 due primarily
to an increase in legal fees.
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1998
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: (27) Financial Data Schedule
b. Reports on Form 8-K: No Current Reports on Form 8-K
were filed during the quarter ended March 31, 1998.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
May 15, 1998
/s/ Wesley M. Gardiner, Jr.
-------------------------------
Wesley M. Gardiner, Jr.
President, Chief Executive Officer
And Director of Managing General
Partner, Sixth Copley Corp.
May 15, 1998
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.