-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ChzOXhDkKxtWm+w9x30BqPdlFcDZa1ep3tSnSazNldzQ5Ghy6FqwBePH4lpTDNk+ Dp8dhTkWn9PsjmoS70DNCw== 0000728525-96-000001.txt : 19960513 0000728525-96-000001.hdr.sgml : 19960513 ACCESSION NUMBER: 0000728525-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND LIFE PENSION PROPERTIES II CENTRAL INDEX KEY: 0000728525 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [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: 96559218 BUSINESS ADDRESS: STREET 1: 399 BOYLSTON ST 13TH FL CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6175781200 10-Q 1 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, 1996 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, 1996 PART I FINANCIAL INFORMATION ---------------------- BALANCE SHEET (Unaudited)
March 31, 1996 December 31, 1995 -------------- ---------------- ASSETS Real estate investments: Ground leases and mortgage loans, net $17,574,953 $17,575,746 Property, net 15,259,908 15,381,902 Deferred leasing costs and other assets, net 550,454 528,022 ------------- ------------ 33,385,315 33,485,670 Cash and cash equivalents 2,067,874 2,731,930 Short-term investments 3,395,031 2,525,926 Interest and rent receivable 92,595 331,174 ------------- ------------ $38,940,815 $39,074,700 ============= ============ LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 256,640 $ 505,813 Accrued management fee 62,089 62,089 Deferred disposition fees 314,464 314,464 ------------- ------------ Total liabilities 633,193 882,366 ------------- ------------ Partners' capital: Limited partners ($889.89 per unit; 110,000 units authorized, 39,917 units issued and outstanding) 38,241,581 38,127,446 General partner 66,041 64,888 ------------- ------------ Total partners' capital 38,307,622 38,192,334 ------------- ------------ $38,940,815 $39,074,700 ============= ============ (See accompanying notes to financial statements)
STATEMENT OF OPERATIONS (Unaudited)
Quarter Ended March 31, 1996 1995 ------------- ------------- INVESTMENT ACTIVITY Property rentals $ 574,073 $ 582,329 Property operating expenses (258,011) (213,747) Depreciation and amortization (157,144) (145,491) ------------- ------------- 158,918 223,091 Ground rentals and interest on mortgage loans 632,483 630,715 ------------- ------------- Total real estate activity 791,401 853,806 Interest on cash equivalents and short term investments 63,970 74,881 ------------- ------------- Total investment activity 855,371 928,687 ------------- ------------- Portfolio Expenses Management fee 62,089 62,089 General and administrative 50,208 43,750 ------------- ------------- 112,297 105,839 ------------- ------------- Net Income $ 743,074 $ 822,848 ============= ============= Net income per limited partnership unit $ 18.43 $ 20.41 ============= ============= Cash distributions per limited partnership unit $ 15.57 $ 14.46 ============= ============= Number of limited partnership units outstanding during the period 39,917 39,917 ============= ============= (See accompanying notes to financial statements)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited)
Quarter Ended March 31, 1996 1995 ------------------- ------------------- General Limited General Limited Partner Partners Partner Partners ------- -------- ------- -------- Balance at beginning of period $ 64,888 $38,127,446 $ 72,444 $38,875,480 Cash distributions (6,278) (621,508) (5,830) (577,200) Net income 7,431 735,643 8,228 814,620 --------- ----------- --------- ----------- Balance at end of period $ 66,041 $38,241,581 $ 74,842 $39,112,900 ========= =========== ========= ============ (See accompanying notes to financial statements)
SUMMARIZED STATEMENT OF CASH FLOWS (Unaudited)
Quarter Ended March 31, ------------------------------ 1996 1995 ------------- ----------- Net cash provided by operating activities $ 849,623 $ 774,225 ----------- ------------ Cash flows from investing activities: Capital expenditures on owned property (16,788) (402,108) Increase in short-term investments, net (869,105) (1,101,218) ----------- ------------ Net cash used in investing activities (885,893) (1,503,326) ----------- ------------ Cash flows from financing activity: Distributions to partners (627,786) (583,030) ----------- ------------ Net decrease in cash and cash equivalents (664,056) (1,312,131) Cash and cash equivalents: Beginning of period 2,731,930 4,101,201 ----------- ------------ End of period $2,067,874 $ 2,789,070 =========== ============ (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 March 31, 1996 and December 31, 1995 and the results of its operations, its cash flows and changes in partners' capital for the interim periods ended March 31, 1996 and 1995. These adjustments are of a normal recurring nature. See notes to financial statements included in the Partnership's 1995 Annual Report on Form 10-K 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. It primarily serves as an investment for qualified pension and profit sharing plans and other entities intended to be exempt from Federal income tax. The Partnership commenced operations in June, 1984 and acquired several 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 - -------------------------------------------------------- The mortgage loans on Elkridge, Susana Corporate Center and Case Communications are impaired. Accordingly, a valuation allowance has been established to adjust the carrying value of each loan to its estimated fair market value less anticipated costs of sale. The activity in the valuation allowance during 1995 and 1996, together with the related 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 January 1, 1995 $ 5,787,874 $(2,470,000) $ 3,317,874 ========== ========== ========== Balance at March 31, 1995 $ 5,790,250 $(2,470,000) $ 3,320,250 =========== =========== ========== Decrease in estimated fair market value of collateral, net $ (328,000) Additional impaired loan $(1,100,000) ----------- Balance at January 1, 1996 $15,619,235 $(3,898,000) $ 11,721,235 =========== ============ =========== Balance at March 31, 1996 $15,619,235 $(3,898,000) $ 11,721,235 =========== ============ ===========
During the fourth quarter of 1995, the Partnership determined that the Case Communications mortgage loan was impaired. Therefore, it is also included in the above table. The average recorded value of the impaired mortgage loans did not differ materially from the balances at the end of the period. NOTE 3 - SUBSEQUENT EVENTS - -------------------------- Distributions of cash from operations relating to the quarter ended March 31, 1996 were made on April 25, 1996 in the aggregate amount of $627,786 ($15.57 per limited partnership unit). One of the two buildings included in the Elkridge investment is under agreement for sale for a price which approximates the Partnership's carrying value. The transaction is expected to be completed in the second quarter of 1996. 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, 1996 as a result of sales and similar transactions. Two of the Partnership's mortgage loan investments had a maturity date in 1994; another matured in 1995. The Partnership is evaluating various alternatives to extending these loans. At March 31, 1996, the Partnership had $5,462,905 in cash, cash equivalents and short-term investments, of which $627,786 was used for cash distributions to partners on April 25, 1996; 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 real estate investments and proceeds from the sale of such investments. Distributions of cash from operations for the first quarter of 1996 and 1995 were made at the annualized rate of 7% on the adjusted capital contribution. The carrying value of real estate investments in the financial statements, other than impaired mortgage loans, is at depreciated cost or, if the investment's carrying value is determined not to be recoverable through expected undiscounted future cash flows, the carrying value is reduced to estimated fair market value. The fair market value of such investments is further reduced by the estimated cost of sale for properties held for sale. Carrying value may be greater or less than current appraised value. At March 31, 1996, the carrying value of certain investments exceeded their related appraised values by an aggregate of approximately $1,390,000 and the appraised value of the remaining investments exceeded their related carrying values by an aggregate of approximately $212,000. The current appraised value of real estate investments has been estimated by the general partner and is generally based on a combination of traditional appraisal approaches performed by the Partnership's advisor and independent appraisers. Because of the subjectivity inherent in the valuation process, the estimated current appraised value may differ significantly from that which could be realized if the real estate were actually offered for sale in the marketplace. Results of Operations - --------------------- Operating Factors The Willows Shopping Center has remained 91% leased since the end of 1994. The ground lessee/borrower is rehabilitating this property, including the complete renovation and reconfiguration of the Center. The general partner determined that it is in the best interest of the Partnership, together with its affiliate which owns a share of the Center, to provide funding for the rehabilitation costs. The Partnership's share of the remaining estimated rehabilitation cost is approximately $1,800,000 at March 31, 1996. The Partnership has entered into a purchase and sale agreement for the vacant warehouse building which is part of the Elkridge investment. The sale is scheduled to close in the second quarter. Occupancy at the R&D building is 81% at the end of the first quarter. The Susana Corporate Center is 100% leased to a single tenant. The Partnership is currently negotiating the sale of the property to the ground lessee. An agreement is contingent on the buyer's obtaining suitable financing. Occupancy at the Oakland property remained at 91% during the first quarter of 1996; however, leases for 47% of the currently occupied space expire later in 1996. The Case Communications property is fully occupied by a government agency; however, the current lease expires in November 1996. Investment Results Real estate investment results were $791,401 and $853,806 for the quarters ended March 31, 1996 and 1995, respectively. This decrease of $62,405, or 7%, is due to the decrease in net operating income generated by Willows Shopping Center, primarily as a result of higher operating expenses. Interest on cash equivalents and short-term investments decreased by $10,911, or 15%, due primarily to lower average investment balances and lower average yields. The increase in operating cash flow of $75,398 in the first quarter of 1996 as compared to the prior year period is primarily due to the timing of payments from Susana Corporate Center and Case Communications. Portfolio Expenses The Partnership management fee is 9% of distributable cash flow from operations after any increase or decrease in working capital reserves as determined by the general partner. General and administrative expenses primarily consist of real estate appraisal, printing, legal, accounting and investor servicing fees and state filing and tax fees. General and administrative expenses for the first quarter of 1996 increased as compared to the respective period of the prior year primarily due to an increase in professional fees. NEW ENGLAND PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED MARCH 31, 1996 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 March 31, 1996. 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 10, 1996 /s/ Peter P. Twining ------------------------------- Peter P. Twining Managing Director and General Counsel of General Partner, Copley Properties Company II, Inc. May 10, 1996 /s/ Daniel C. Mackowiak -------------------------------- Daniel C. Mackowiak Principal Financial and Accounting Officer of General Partner, Copley Properties Company II, Inc. EX-27 2
5 3-MOS DEC-31-1996 MAR-31-1996 2,067,874 3,395,031 92,595 0 0 5,555,500 32,834,861 0 38,940,815 318,729 314,464 0 0 0 38,307,622 38,940,815 1,206,556 1,270,526 258,011 258,011 269,441 0 0 743,074 0 743,074 0 0 0 743,074 18.43 18.43
-----END PRIVACY-ENHANCED MESSAGE-----