-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KYxxzE+KZrP9zHxNqlxefsClMM5vIykxCJ58vqaoRjbS8EzXcH0b37Ih8J1ZOtC2 B9Fm2jpV2sTghofSdeUT3Q== 0000728525-95-000001.txt : 19950530 0000728525-95-000001.hdr.sgml : 19950530 ACCESSION NUMBER: 0000728525-95-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND LIFE PENSION PROPERTIES II CENTRAL INDEX KEY: 0000728525 STANDARD INDUSTRIAL CLASSIFICATION: 6500 IRS NUMBER: 042803902 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13323 FILM NUMBER: 95538998 BUSINESS ADDRESS: STREET 1: 399 BOYLSTON ST 13TH FL CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6175781200 10-Q 1 10-Q 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 MARCH 31, 1995 COMMISSION FILE NUMBER 0-13323 NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2803902 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 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 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 ___ NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED MARCH 31, 1995 PART I FINANCIAL INFORMATION Page(s) Item 1. Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP BALANCE SHEET (Unaudited) March 31, 1995 December 31, 1994 -------------- ----------------- ASSETS Real estate investments: Ground leases and mortgage loans, net $ 19,008,227 $ 19,014,308 Property, net 14,769,228 14,689,691 Deferred leasing costs and other assets, net 601,407 591,963 ------------- ------------- 34,378,862 34,295,962 Cash and cash equivalents 2,789,070 4,101,201 Short-term investments 2,400,387 1,292,505 Interest and rent receivable 220,791 179,289 ------------- ------------- $ 39,789,110 $ 39,868,957 ============= ============= LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 224,815 $ 548,907 Accrued management fee 62,089 57,662 Deferred disposition fees 314,464 314,464 ------------- ------------- Total liabilities 601,368 921,033 ------------- ------------- Partners' capital: Limited partners ($889.89 per unit; 110,000 units authorized, 39,917 units issued and outstanding) 39,112,900 38,875,480 General partner 74,842 72,444 ------------- ------------ Total partners' capital 39,187,742 38,947,924 ------------- ------------ $ 39,789,110 $ 39,868,957 ============= ============ (See accompanying notes to financial statements) NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP STATEMENT OF OPERATIONS (Unaudited) Quarter ended March 31, ----------------------- 1995 1994 ---- ---- INVESTMENT ACTIVITY Property rentals $ 582,329 $ 457,777 Property operations (213,747) (233,132) Depreciation and amortization (145,491) (130,262) ---------- ---------- 223,091 94,383 Ground rentals and interest on mortgage loans 630,715 793,677 ---------- ---------- Total real estate activity 853,806 888,060 Interest on cash equivalents and short-term investments 74,881 56,179 ---------- ---------- Total investment activity 928,687 944,239 ---------- ---------- PORTFOLIO EXPENSES Management fee 62,089 60,932 General and administrative 43,750 38,459 ---------- ------------ 105,839 99,391 ---------- ------------ NET INCOME $ 822,848 $ 844,848 ========== ============ Net income per limited partnership unit $ 20.41 $ 20.95 ========== ============ Cash distributions per limited partnership unit $ 14.46 $ 15.28 ========== ============ Number of limited partnership units outstanding during the period 39,917 39,917 ========== =========== (See accompanying notes to financial statements) NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited) Quarter ended March 31, ----------------------- 1995 1994 ---- ----- General Limited General Limited Partner Partners Partner Partners ------- -------- ------- -------- Balance at beginning of period $ 72,444 $38,875,480 $ 74,199 $ 41,049,643 Cash distributions (5,830) (577,200) (6,161) (609,932) Net income 8,228 814,620 8,448 836,400 -------- ----------- ----------- ------------ Balance at end of period $ 74,842 $39,112,900 $ 76,486 $41,276,111 ======== =========== ========== ============ (See accompanying notes to financial statements) NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP SUMMARIZED STATEMENT OF CASH FLOWS (Unaudited) Quarter Ended March 31, ----------------------- 1995 1994 ----- ----- Net cash provided by operating activities $ 774,225 $ 835,912 ---------- ------------ Cash flows from investing activities: Investment in mortgage loan - (110,253) Capital expenditures on owned property (402,108) (150,080) (Increase) decrease in short-term investments, net (1,101,218) 375,932 ----------- ------------ Net cash used in investing activities (1,503,326) 115,599 ----------- ------------ Cash flows from financing activity: Distributions to partners (583,030) (616,093) ---------- ------------ Net increase (decrease) in cash and cash equivalents (1,312,131) 335,418 Cash and cash equivalents: Beginning of period 4,101,201 7,075,659 ---------- ------------ End of period $ 2,789,070 $ 7,411,077 ========== ============= (See accompanying notes to financial statements) NEW ENGLAND LIFE PENSION PROPERTIES II; 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, 1995 and December 31, 1994 and the results of its operations and its cash flows for the interim periods ended March 31, 1995 and 1994. These adjustments are of a normal recurring nature. See notes to financial statements included in the Partnership's 1994 Annual Report on Form 10-K, as amended by Form 10-K/A for additional information relating to the Partnership's financial statements. NOTE 1 - ORGANIZATION AND BUSINESS - - - - - ---------------------------------- New England Life Pension Properties II; A Real Estate Limited Partnership (the "Partnership") is a Massachusetts limited partnership organized for the purpose of investing primarily in newly constructed and existing income producing real properties. The Partnership commenced operations in June 1984 and acquired several properties through 1986. It intends to dispose of its investments within twelve years of their acquisition, and then liquidate; however, the general partner could extend the investment period if it is in the best interest of the limited partners. NOTE 2 - INVESTMENTS IN GROUND LEASES AND MORTGAGE LOANS - - - - - -------------------------------------------------------- In accordance with Statement of Financial Accounting Standards No. 114, the mortgage loans on Elkridge and Susana Corporate Center are impaired. Accordingly, a valuation allowance has been established to adjust the carrying value of the loans to their estimated fair market value less anticipated costs of sale. The aggregate recorded and carrying values of the impaired mortgage loans at the beginning and end of the respective periods are as follows: Recorded Valuation Carrying Value Allowance Value --------- ---------- ---------- Balance at December 31, 1993 $5,271,140 $(1,325,000) $3,946,140 ========== =========== ========== Balance at March 31, 1994 $5,378,206 $(1,325,000) $4,053,206 ========== =========== ========== Balance at December 31, 1994 $5,517,874 $(2,200,000) $3,317,874 ========== =========== ========== Balance at March 31, 1995 $5,520,250 $(2,200,000) $3,320,250 ========== =========== ========== During the second and fourth quarters of 1994 the valuation allowance was increased by $875,000. NOTE 3 - SUBSEQUENT EVENT - - - - - ------------------------- Distributions of cash from operations relating to the quarter ended March 31, 1995 were made on April 27, 1995 in the aggregate amount of $627,786 ($15.57 per limited partnership unit. NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF - - - - - -------------------------------------------------------------------------- OPERATIONS - - - - - ---------- LIQUIDITY AND CAPITAL RESOURCES - - - - - ------------------------------- The Partnership completed its offering of units of limited partnership interest in November 1984. A total of 39,917 units were sold. The Partnership received proceeds of $36,296,995, net of selling commissions and other offering costs, which were invested in real estate, used to pay related acquisition costs, or retained as working capital reserves. Capital of $4,395,261 has been returned to the limited partners through March 31, 1995. Two of the Partnership's mortgage loan investments had a maturity date in 1994; another matured in early 1995. The Partnership is in the process of evaluating various alternatives to renewing these loans. At March 31, 1995, the Partnership had $5,189,457 in cash, cash equivalents and short-term investments, of which $627,786 was used for cash distributions to partners on April 27, 1995; the remainder will be used to fund the rehabilitation of the Willows Shopping Center or retained as working capital reserves. The source of future liquidity and cash distributions to partners is expected to be cash generated by the Partnership's investments and proceeds from the sale of such investments. Distributions of cash from operations for the first quarter of 1995 were made at the annualized rate of 7% on an adjusted capital contribution while the cash distribution rate for the comparative prior year quarter was 6.5%. The cash distribution rate increased with the stabilization of property operations and the attainment of appropriate reserve levels. The adjusted capital contribution was reduced from $940 per unit to $889.89 per unit due to the distribution of the Oxford Place sale proceeds (sold in December 1993) during July 1994. The carrying value of the Partnership's real estate investments in the financial statements, other than impaired mortgage loans, is reduced to its lower net realizable value if the investment's carrying value is determined not to be recoverable through expected undiscounted future cash flows. At March 31, 1995, the carrying value of Willows Shopping Center exceeded its appraised value by approximately $930,000, and the carrying values of the remainder of the investments exceeded their appraised values by an aggregate of approximately $100,000. The current appraised value of real estate investments has been estimated by the advisor and is generally based on a combination of traditional appraisal approaches performed by the Partnership's advisor and independent appraisers. Because of the subjectivity inherent in the valuation process, the estimated current appraised value may differ significantly from that which could be realized if the real estate were actually offered for sale in the marketplace. RESULTS OF OPERATIONS - - - - - --------------------- OPERATING FACTORS Leasing at the Willows Shopping Center remained at 91% during the first quarter of 1995. The center was 78% leased at March 31, 1994 and December 31, 1993. This property is undergoing a full rehabilitation, including the complete renovation and reconfiguration of the center. The general partner has determined that it is in the best interest of the Partnership to provide funding for the rehabilitation costs together with its affiliate. The Partnership's share of the estimated rehabilitation cost is approximately $2,250,000. Two new tenants (totaling 3,200 square feet) have signed leases this quarter and are scheduled to occupy the space beginning in the second quarter. The two remaining anchor spaces continue to be actively marketed. Occupancy at Elkridge decreased from 76% to 40% during the first quarter of 1995 (occupancy was 55% a year ago). The decrease is due to the departure of the sole tenant in the warehouse building in January 1995, which is currently being marketed for sale. This departure was partially offset by a lease expansion at the R & D building which brings its occupancy up to 68% at March 31, 1995. The Susana Corporate Center remained 100% leased to a single tenant at March 31, 1995. During the first quarter, this property was listed for sale at a price which approximates the Partnership's carrying value. INVESTMENT RESULTS Real estate investment results decreased $33,254 or 4% for the first quarter of 1995 as compared to the same period in 1994, primarily due to a decrease in income of approximately $160,000 from Case Communications. Income in the first quarter of 1994 included the settlement of prior year percentage rent approximating $200,000. There decreases were partially offset by an increase in net operating income from the Willows Shopping Center of $129,000, due to an increase in occupancy. Short-term interest income increased between the respective quarters due to an increase in the average investment balance and an increase in short-term investment rates. The decrease in operating cash flow for the first quarter ended March 31, 1995 compared to the prior year period is generally consistent with the change in the Partnership's investment results. Notwithstanding the change in real estate operations between the comparative periods, the change is also due to the change 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 general partner. General and administrative expenses primarily consist of real estate appraisal, printing, legal, accounting, investor servicing fees and state filing and tax fees. General and administrative expenses increased by $5,291 or 14% for the quarter ended March 31, 1995 compared to the same period of the prior year primarily due to an increase in professional fees. INFLATION - - - - - --------- By their nature, real estate investments tend not to be adversely affected by inflation. Inflation may result in appreciation in the value of the Partnership's real estate investments over time, if rental rates and replacement costs increase. Recently, declines in property values, due to market and economic conditions, have overshadowed the positive effect inflation may have on the value of the Partnership's investments. NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED MARCH 31, 1995 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits: NONE -------- b. Reports on Form 8-K: No reports on Form 8-K were ------------------- filed during the quarter ended March 31, 1995. 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. NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP (Registrant) May 15, 1995 Peter P. Twining Managing Director and General Counsel of Managing General Partner, Copley Properties Company II, Inc. May 15, 1995 Marie A. Welch Investment Officer and Chief Accounting Officer of Managing General Partner, Copley Properties Company II, Inc. EX-27 2
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