-----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, Ehuld8/X1o2jXOG3lsFt95o7n9JaiPIBa4/Mq9qwiwLzFWfVevQ1cY77cl8Ej6DV 5DFwsvrwRhSp7QfhSYq1fQ== 0000927016-98-003053.txt : 19980813 0000927016-98-003053.hdr.sgml : 19980813 ACCESSION NUMBER: 0000927016-98-003053 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 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: SEC FILE NUMBER: 000-13323 FILM NUMBER: 98683158 BUSINESS ADDRESS: STREET 1: 225 FRANKLIN ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6172619000 10-Q 1 FORM 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 June 30, 1998 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) 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 NEW ENGLAND LIFE PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED JUNE 30, 1998 PART I FINANCIAL INFORMATION ---------------------- BALANCE SHEETS (Unaudited)
June 30, 1998 December 31, 1997 ------------- ----------------- ASSETS Real estate investments: Property, net 11,649,067 11,660,486 ----------- ----------- 11,649,067 11,660,486 Cash and cash equivalents 3,967,597 2,111,776 Short-term investments -- 1,844,431 Interest and rent receivable 15,949 31,341 ----------- ----------- $15,632,613 $15,648,034 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 39,070 $ 65,476 Accrued management fee 185,708 36,169 Deferred disposition fees 1,172,249 1,172,249 ----------- ----------- Total liabilities 1,397,027 1,273,894 ----------- ----------- Partners' capital: Limited partners ($172.58 per unit, respectively; 110,000 units authorized, 39,917 units issued and outstanding) 14,123,936 14,261,105 General partner 111,650 113,035 ----------- ----------- Total partners' capital 14,235,586 14,374,140 ----------- ----------- $15,632,613 $15,648,034 =========== ===========
(See accompanying notes to financial statements) STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997 ------------- ---------------- ------------- ---------------- INVESTMENT ACTIVITY Property rentals $ 684,954 $1,386,068 $ 823,238 $1,544,865 Property operating expenses (182,067) (372,554) (197,235) (415,235) Depreciation and amortization (86,909) (173,818) (189,847) (379,693) --------- ---------- ---------- ---------- 415,978 839,696 436,156 749,937 Ground rentals and interest on mortgage loans -- -- 525,266 1,007,766 --------- ---------- ---------- ---------- Total real estate activity 415,978 839,696 961,422 1,757,703 Interest on cash equivalents and short term investments 50,710 101,367 57,672 131,934 --------- ---------- ---------- ---------- Total investment activity 466,688 941,063 1,019,094 1,889,637 --------- ---------- ---------- ---------- PORTFOLIO EXPENSES Management fee 185,708 226,981 53,475 109,702 General and administrative 31,494 69,618 39,205 78,816 --------- ---------- ---------- ---------- 217,202 296,599 92,680 188,518 --------- ---------- ---------- ---------- Net Income $ 249,486 $ 644,464 $ 926,414 $1,701,119 ========= ========== ========== ========== Net income per limited partnership unit $ 6.19 $ 15.98 $ 22.98 $ 42.19 ========= ========== ========== ========== Cash distributions per limited partnership unit $ 10.35 $ 19.42 $ 14.10 $ 153.52 ========= ========== ========== ========== Number of limited partnership units outstanding during the period 39,917 39,917 39,917 39,917 ========= ========== ========== ==========
(See accompanying notes to financial statements) STATEMENTS OF PARTNERS' CAPITAL (Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997 -------------------------- --------------------- -------------------- ----------------------- General Limited General Limited General Limited General Limited Partner Partners Partner Partners Partner Partners Partner Partners ------------- ----------- -------- ----------- -------- ----------- ---------- ---------- Balance at beginning of period $113,328 $14,290,086 $113,035 $14,261,105 $72,332 $33,920,732 $ 70,863 $38,719,002 Cash distributions (4,173) (413,141) (7,830) (775,188) (5,685) (562,830) (11,963) (6,128,058) Net income 2,495 246,991 6,445 638,019 9,264 917,150 17,011 1,684,108 -------- ----------- -------- ----------- ------- ----------- -------- ----------- Balance at end of period $111,650 $14,123,936 $111,650 $14,123,936 $75,911 $34,275,052 $ 75,911 $34,275,052 ======== =========== ======== =========== ======= =========== ======== ===========
(See accompanying notes to financial statements) SUMMARIZED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, -------------------------- 1998 1997 ------------- ---------- Net cash provided by operating activities $ 794,408 $ 1,885,210 ---------- ----------- Cash flows from investing activities: Capital expenditures on owned property -- (13,428) Decrease in short-term investments, net 1,844,431 333,488 ---------- ----------- Net cash provided by investing activities 1,844,431 320,060 ---------- ----------- Cash flows from financing activity: Distributions to partners (783,018) (6,140,021) ---------- ----------- Net increase (decrease) in cash and cash equivalents 1,855,821 (3,934,751) Cash and cash equivalents: Beginning of period 2,111,776 7,877,668 ---------- ----------- End of period $3,967,597 $ 3,942,917 ========== ===========
(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, 1998 and December 31, 1997 and the results of its operations, its cash flows and partners' capital for the interim periods ended June 30, 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 - ---------------------------------- 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 six real estate investments through 1986, five of which have been sold as of June 30, 1998. 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. The Partnership has engaged AEW Real Estate Advisors, Inc. the ("Advisor") to provide asset management services. NOTE 2 - INVESTMENT IN PROPERTY - -------------------------------- As previously described in the Partnership's 1997 Annual Report on Form 10- K, the Partnership originally held the Case Communications Building investment as a combination ground lease/mortgage loan. As a result of the restructuring of this investment in October 1997, the Partnership acquired virtually the same risks and potential rewards as ownership of the property would entail. Accordingly, in October 1997, the Partnership commenced accounting for this investment as an owned property. The following is a summary of the Partnership's wholly-owned investments.
June 30, 1998 December 31, 1997 ------------- ----------------- Land $ 2,581,367 $ 2,581,367 Building and Other Assets, net 9,067,700 9,079,119 ----------- ----------- Total Property $11,649,067 $11,660,486 =========== ===========
The buildings and improvements are being depreciated over 30 years using the straight-line method. NOTE 3 - SUBSEQUENT EVENTS - -------------------------- Distributions of cash from operations relating to the quarter ended June 30, 1998 were made on July 30, 1998 in the aggregate amount of $417,314 ($10.35 per limited partnership unit). In addition, a special distribution was made on July 30, 1998 in the aggregate amount of $1,460,398 ($36.22 per limited partnership unit). This special distribution was funded from Partnership reserves. 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 have been used for investment in real estate and the payment of related acquisition costs, or retained as working capital reserves. The Partnership made six real estate investments; five investments have been sold, one in 1993, two in 1996 and two in 1997. Capital of $33,028,124 ($827.42 per limited partnership unit) has been returned to the limited partners as a result of sales and similar transactions. At June 30, 1998 the adjusted capital contribution was $172.58 per Unit. At June 30, 1998, the Partnership had $3,967,597 in cash and cash equivalents, of which $1,877,712 was used for cash distributions to partners on July 30, 1998; the remainder is primarily being 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 remaining real estate investment, and proceeds from the sale of such investment. Distributions of cash from operations for the second quarter of 1998 were made at the annualized rate of 24% on the adjusted capital contribution, compared to the 1997 second quarter distribution which was made at the annualized rate of 7% on the adjusted capital contribution. 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, 1998, the appraised value of the Partnership's investment exceeded its related carrying value by approximately $4,690,000. The current appraised value of the real estate investment has been estimated by the 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 Operating Factors At June 30, 1997, the Willows Shopping Center was 94% leased. The Willows Shopping Center was sold on September 18, 1997, and the Partnership recognized a gain of $3,322,455. At the time of sale, the Willows Shopping Center was 94% leased. Occupancy at Columbia Warehouse declined slightly to 88% during the first quarter of 1997 where it remained until the time of sale. On October 27, 1997, the Partnership sold this property and recognized a gain of $400,826. The Case Communications property continues to be fully occupied by a government agency. A five-year lease extension through the year 2003 has been finalized. Case Communications is currently being marketed for sale. Sale of the property is expected to occur in 1998 but there is no assurance that this sale will occur. Investment Results Operating results from real estate activity were $839,696 and $1,757,703 for the six months ended June 30, 1998 and 1997, respectively. This decrease of $918,007 is primarily due to both a reduction in ground rentals and mortgage loans as a result of the Columbia Warehouse sale and a reduction in operations as a result of the Willows Shopping Center sale. Both sales occurred in 1997. Interest on cash equivalents and short-term investments decreased by approximately $30,600, or 23%, due primarily to lower investment balances in 1998 as a result of the 1997 sales mentioned above. The decrease in operating cash flow of approximately $1,090,802 between the second quarters of 1997 and 1998 is primarily due to a decrease in real estate activity as a result of the sales of the Columbia Warehouse and the Willows Shopping Center in 1997, as mentioned above. 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. Management fees increased between the second quarter of 1997 and 1998 due to a special distribution of operational reserves. General and administrative expenses for the first six months of 1998 decreased approximately 12% compared to the first six months of 1997 primarily due to lower legal and accounting fees. NEW ENGLAND PENSION PROPERTIES II; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED JUNE 30, 1998 PART II OTHER INFORMATION ------------------- Item 1-5 Not Applicable 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 June 30, 1998. 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) August 12, 1998 /s/ Wesley M. Gardiner, Jr. ------------------------------- Wesley M. Gardiner, Jr. President, Chief Executive Officer and Director of General Partner, Copley Properties Company II, Inc. August 12, 1998 /s/ Karin J. Lagerlund -------------------------------- Karin J. Lagerlund Principal Financial and Accounting Officer of General Partner, Copley Properties Company II, Inc. EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1998 JUN-30-1998 3,967,597 0 15,949 0 0 3,983,546 11,649,067 0 15,632,613 224,778 1,172,249 0 0 0 14,235,586 15,632,613 1,386,068 1,487,435 372,554 372,554 173,818 0 0 644,464 0 644,464 0 0 0 644,464 15.98 15.98
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