-----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, DeNbfKHKygG7VSo9tJi50xIJiBG0PQRK7lO3CNJqnbPaDJBkDzIR5opYrkP86nn/ SUg+yEJt9PYboQ2GCIJX7g== 0000927016-98-002016.txt : 19980514 0000927016-98-002016.hdr.sgml : 19980514 ACCESSION NUMBER: 0000927016-98-002016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND LIFE PENSION PROPERTIES IV CENTRAL INDEX KEY: 0000779742 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042893298 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15429 FILM NUMBER: 98617650 BUSINESS ADDRESS: STREET 1: 225 FRANKLIN ST 25TH FL CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6172619000 10-Q 1 QUARTERLY REPORT 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, 1998 Commission File Number 0-15429 NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Massachusetts 04-2893298 (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 IV; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED MARCH 31, 1998 PART I FINANCIAL INFORMATION ---------------------- BALANCE SHEETS (Unaudited)
March 31, 1998 December 31, 1997 -------------- ----------------- ASSETS Real estate investments: Joint ventures $ 15,952,380 $ 15,879,130 Property, net 14,822,790 15,139,147 -------------- -------------- 30,775,170 31,018,277 Cash and cash equivalents 6,871,612 4,017,473 Short-term investments -- 2,889,753 -------------- -------------- $ 37,646,782 $ 37,925,503 ============== ============== LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 126,522 $ 152,095 Accrued management fee 34,212 39,859 Deferred management and disposition fees 4,240,202 4,205,989 -------------- -------------- Total liabilities 4,400,936 4,397,943 -------------- -------------- Partners' capital (deficit): Limited partners ($524 per unit; 120,000 units authorized, 94,997 units issued and outstanding) 33,315,991 33,594,888 General partners (70,145) (67,328) ------------ -------------- Total partners' capital 33,245,846 33,527,560 ------------ -------------- $37,646,782 $ 37,925,503 ============ ==============
(See accompanying notes to financial statements) STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended March 31, -------------------------- 1998 1997 ---------- -------- INVESTMENT ACTIVITY Property rentals $ 818,302 $ 1,368,832 Property operating expenses (373,781) (494,471) Depreciation and amortization (153,408) (253,704) ------------- ------------ 291,113 620,657 Joint venture earnings 303,979 307,036 Amortization (1,327) (1,327) ---------- ------------ Total real estate operations 593,765 926,366 Interest on cash equivalents and short term investments 87,112 90,380 ----------- ------------ Total investment activity 680,877 1,016,746 ----------- ------------ PORTFOLIO EXPENSES MANAGEMENT FEE 68,424 90,916 GENERAL AND ADMINISTRATIVE 88,133 89,063 ----------- ------------ 156,557 179,979 ----------- ------------ NET INCOME $ 524,320 $ 836,767 =========== ============ NET INCOME PER LIMITED PARTNERSHIP UNIT $ 5.46 $ 8.72 =========== ============ CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 8.40 $ 11.86 =========== ============ NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING DURING THE PERIOD 94,997 94,997 =========== ============
(SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS) STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) (UNAUDITED)
Quarter Ended March 31, --------------------------------------- 1998 1997 -------- ---------- General Limited General Limited Partners Partners Partners Partners ---------- ---------- ---------- ---------- Balance at beginning of period $ (67,328) $ 33,594,888 $ (160,481) $ 47,361,993 Cash distributions (8,060) (797,974) (11,380) (1,126,665) Net income 5,243 519,077 8,368 829,399 --------- ----------- --------- --------- Balance at end of period $ (70,145) $33,315,991 $(163,493) $47,064,727 ============ ============ ========== ============
(SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS) SUMMARIZED STATEMENTS OF CASH FLOWS (Unaudited)
Quarter Ended March 31, ------------------------ 1998 1997 --------- -------- Net cash provided by operating activities $ 703,870 $ 910,335 -------------- ------------- Cash flows from investing activities: Investment in property (18,845) (85,606) Decrease in short-term investments, net 2,838,711 637,168 Loan Repayment by joint venture partner 136,437 -- ------------ ----------- Net cash provided by investing activities 2,956,303 551,562 ------------ ----------- Cash flows from financing activity: Distributions to partners (806,034) (1,138,045) ------------ ----------- Net increase in cash and cash equivalents 2,854,139 323,852 Cash and cash equivalents: Beginning of period 4,017,473 5,045,964 ------------ ----------- End of period $ 6,871,612 $ 5,369,816 =========== ============
(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, 1998 and December 31, 1997 and the results of 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 - ---------------------------------- New England Life Pension Properties IV; 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 May, 1986 and acquired the four real estate investments it currently owns prior to the end of 1987. It intends to dispose of the investments within 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 - REAL ESTATE JOINT VENTURES - ----------------------------------- Ownership of the Columbia Gateway Corporate Park joint venture has been restructured whereby the Partnership and its affiliate obtained full control over the business of the joint venture effective January 1, 1998. The following summarized financial information is presented in the aggregate for the Partnership's two joint ventures: Assets and Liabilities ----------------------
March 31, 1998 December 31, 1997 -------------- ----------------- Assets Real property, at cost less accumulated depreciation of $2,385,548 and $2,321,074, respectively $ 20,094,101 $ 19,858,721 Other 924,853 958,432 ------------ ------------ 21,018,954 20,817,153 Liabilities 415,592 240,284 ------------ ------------ Net Assets $ 20,603,362 $ 20,576,869 ============ ============ Results of Operations Quarter ended March 31, ----------------------- 1998 1997 ---- ---- Revenue Rental income $ 640,710 $ 603,450 Other income 2,937 3,119 ------------ ---------- 643,647 606,569 ------------ ---------- Expenses Operating expenses 159,637 120,653 Depreciation and amortization 93,659 93,659 ------------ ---------- 253,296 214,312 ------------ ---------- Net income $ 390,351 $ 392,257 ============ ==========
Liabilities and expenses exclude amounts owed and attributable to the Partnership and (with respect to one joint venture) its affiliate on behalf of their various financing arrangements with the joint ventures. NOTE 3 - PROPERTY - ----------------- Effective April 1, 1996, the Reflections joint venture was restructured, whereby the Partnership's venture partner became an indirect limited partner. Accordingly, the investment has been accounted for as a wholly-owned property since that date. The carrying value of the joint venture investment at conversion was allocated to land, building and improvements and other net operating assets. In connection with the ownership restructuring, the Partnership agreed to release the affiliate of the venture partner from its guarantee upon payment to the Partnership of $650,000. The Partnership received $250,000 at the time the agreement was executed. During the third quarter of 1996, the Partnership received an additional $263,563. The final payment of $136,437 was received during the first quarter of 1998. The first payment was accounted for as a reduction of previously accrued investment income. The second and third payments were accounted for as a reduction of the Partnership's investment in the property. Effective January 1, 1996, the Metro Business Center joint venture agreement was amended to grant the Partnership full control over management decisions, beginning July 1, 1996. Since that date, the investment has been accounted for as a wholly-owned property. The carrying value of the joint venture investment at conversion was allocated to land, buildings and improvements, and other net operating assets. Effective December 30, 1996, the property owned by the joint venture was distributed to the venture partners as tenants-in-common. The Partnership, however, retained its overall decision- making authority. On February 28, 1998, the Partnership executed a purchase and sale agreement to purchase the tenancy-in-common interest of the Developer with regards to Metro Business Center. The Partnership expects to close on the acquisition by the third quarter of 1998. The purchase price is $6,927,000 and will be payable by the Partnership as follows: (i) A portion of the purchase price will be paid through the discharge of all outstanding amounts, including but not limited to accrued but unpaid interest, owed by the Developer to the Partnership under the loan made by the Partnership to the Developer in connection with the original acquisition of the property and (ii) the Partnership will pay the remainder of the purchase price in cash. The Partnership expects the cash payment to be nominal. The following is a summary of the Partnership's two wholly-owned investments:
March 31, 1998 December 31, 1997 -------------- ------------------ Land $ 3,451,272 $ 3,451,272 Buildings and improvements and other capitalized costs 12,530,826 12,648,418 Accumulated depreciation and amortization (1,032,433) (886,418) Net operating liabilities (126,875) (74,125) ------------- --------------- $ 14,822,790 $ 15,139,147 ============= ===============
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 $691,847 ($7.21 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 in December, 1986. A total of 94,997 units were sold. The Partnership received proceeds of $85,677,259, net of selling commissions and other offering costs, which have been invested in real estate, used to pay related acquisition costs, or retained as working capital reserves. The Partnership made nine real estate investments. Five investments have been sold; one each in 1988, 1993, 1994, 1996 and 1997. As a result of the sales, capital of $45,218,572 ($476 per limited partnership unit) has been returned to the limited partners through March 31, 1998. At March 31, 1998, the Partnership had $6,871,612 in cash and cash equivalents, of which $691,847 was used for cash distributions to partners on April 29, 1998; the remainder will primarily be used for working capital reserves. The source of future liquidity and cash distributions to partners will be cash generated by the Partnership's real estate and invested cash and cash equivalents. Distributions of cash from operations for the first quarter of 1998 were at the annualized rate of 5.5% on the adjusted capital contribution. Distributions of cash from operations relating to the first quarter of 1997 were made at the annualized rate of 5% on the adjusted capital contribution. The distribution rate was lower in 1997 in anticipation of cash requirements related to lease rollovers. 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, appraised values exceeded the related carrying values by an aggregate of $7,800,000. The current appraised value of real estate investments has been estimated by the managing general partner and is generally based on a combination 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 - --------------------- At March 31, 1998, two of the investments in the portfolio are structured as joint ventures with real estate development/management firms, and in one case, with an affiliate of the Partnership. The Reflections Apartments and Metro Business Center investments are wholly-owned properties. Operating Factors Overall occupancy at Columbia Gateway Corporate Park increased to 100% during the first quarter of 1998 compared to 95% at March 31, 1997. Ownership of the Columbia Gateway Corporate Park joint venture has been restructured whereby the Partnership and its affiliate have obtained full control over the business of the joint venture. This restructuring was effective January 1, 1998. One lease is due to expire in October, 1998 but an existing tenant has expressed an interest in exercising their right of first refusal and expand into this space upon the lease expiration. Occupancy at Reflections Apartments ended the first quarter of 1998 at 96%, up from 92% at December 31, 1997 and consistent with the quarter ended March 31, 1997. Current rental rates are at the high end of the market range. Occupancy at Metro Business Center at March 31, 1998 was at 100%, up from 87% at March 31, 1997. With low vacancies and steady interest, Metro Business is expected to command higher rates while retaining a 100% occupancy level. Occupancy at 270 Technology Center was at 70% at March 31, 1998, compared to 97% at March 31, 1997. This decrease in occupancy is primarily due to the expiration of a lease whose tenant occupied 30% of the space. This space is currently being marketed. Occupancy at Palms Business Center was 98% at March 31, 1997. This property was sold on October 24, 1997, and the Partnership recognized a gain of $10,482,458. At the time of sale, the property was 86% leased. Investment Activity Interest on cash equivalents and short-term investments decreased by approximately $3,300 or 4% between the first quarter of 1997 and 1998 due to lower investment balances. Real estate operating activity for the first quarter of 1998 was $593,765 compared to $926,366 for the prior year quarter. The decrease is primarily due to the sale of Rancho Road in October, 1997, partially offset by increases in operating performance by Reflections and Metro Business Center due to higher market rates. Operating cash flow decreased $206,465 between the first quarter of 1997 and 1998, primarily due to the sale of Rancho Road in 1997. 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 primarily consist of real estate appraisal, printing, legal, accounting and investor servicing fees. The management fee decreased between the quarters ended March 31, 1997 and 1998 due to a decrease in distributable cash flow from operations. General and administrative expenses did not change significantly between the respective quarters. NEW ENGLAND LIFE PENSION PROPERTIES IV; 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 ---------- 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 IV; A REAL ESTATE LIMITED PARTNERSHIP (Registrant) May 13, 1998 /s/ Wesley M. Gardiner, Jr. ------------------------------- Wesley M. Gardiner, Jr. President, Chief Executive Officer and Director of the Managing General Partner, Fourth Copley Corp. May 13, 1998 /s/ Karin J. Lagerlund -------------------------------- Karin J. Lagerlund Principal Financial and Accounting Officer of Managing General Partner, Fourth Copley Corp. EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1998 MAR-31-1998 6,871,612 0 0 0 0 6,871,612 30,775,170 0 37,646,782 160,734 4,240,202 0 0 0 33,245,846 37,646,782 1,122,281 1,209,393 373,781 373,781 311,292 0 0 524,320 0 524,320 0 0 0 524,320 5.46 5.46
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