-----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, IXdmDxya1PnX6JJB0A5copmRNW4mcrh0E7wD2Dp6z2HuhMAvOB50k68gsQehltLA 2Dgm9cOkM3XRs7VkZOsc3g== 0000927016-99-001966.txt : 19990514 0000927016-99-001966.hdr.sgml : 19990514 ACCESSION NUMBER: 0000927016-99-001966 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 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: 99619304 BUSINESS ADDRESS: STREET 1: 225 FRANKLIN ST 25TH FL 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 March 31, 1999 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, 1999 PART I FINANCIAL INFORMATION --------------------- BALANCE SHEETS
March 31, 1999 December 31, 1998 (Unaudited) (Audited) ----------- ----------- ASSETS Real estate investments: Joint ventures $15,613,233 $15,666,643 Property, net 8,949,523 9,106,457 ----------- ----------- 24,562,756 24,773,100 Cash and cash equivalents 6,022,258 5,932,931 ----------- ----------- $30,585,014 $30,706,031 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 146,392 $ 145,103 Accrued management fee 28,803 32,314 Deferred management and disposition fees 4,258,200 4,229,398 ----------- ----------- Total liabilities 4,433,395 4,406,815 ----------- ----------- Partners' capital (deficit): Limited partners ($422 per unit; 120,000 units authorized, 94,997 units issued and outstanding) 26,195,808 26,341,929 General partners (44,189) (42,713) ----------- ----------- Total partners' capital (deficit) 26,151,619 26,299,216 ----------- ----------- $30,585,014 $30,706,031 =========== ===========
(See accompanying notes to financial statements)
STATEMENTS OF OPERATIONS (Unaudited) Quarter Ended March 31, ------------------------ 1999 1998 ------------------------ INVESTMENT ACTIVITY Property rentals $ 526,106 $ 818,302 Property operating expenses (262,886) (373,781) Depreciation and amortization (83,830) (153,408) --------- --------- 179,390 291,113 Joint venture earnings 376,437 303,979 Amortization (1,327) (1,327) --------- --------- Total real estate operations 554,500 593,765 Interest on cash equivalents and short term investments 69,115 87,112 --------- --------- Total investment activity 623,615 680,877 --------- --------- PORTFOLIO EXPENSES Management fee 57,606 68,424 General and administrative 60,141 88,133 --------- --------- 117,747 156,557 --------- --------- Net Income $ 505,868 $ 524,320 ========= ========= Net income per limited partnership unit $5.27 $5.46 ========= ========= Cash distributions per limited partnership unit $6.81 $8.40 ========= ========= 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, ------------------------------------ 1999 1998 --------- --------- General Limited General Limited Partners Partners Partners Partners --------- ----------- --------- ----------- Balance at beginning of period $(42,713) $26,341,929 $(67,328) $33,594,888 Cash distributions (6,535) (646,930) (8,060) (797,974) NET INCOME 5,059 500,809 5,243 519,077 --------- ----------- --------- ----------- Balance at end of period $(44,189) $26,195,808 $(70,145) $33,315,991 ========= =========== ========= ===========
(See accompanying notes to financial statements) SUMMARIZED STATEMENTS OF CASH FLOWS (Unaudited)
Quarter Ended March 31, ----------------------- 1999 1998 ----------- ---------- Net cash provided by operating activities $ 742,792 $ 703,870 ---------- ---------- Cash flows from investing activities: Investment in property - (18,845) Decrease in short-term investments, net - 2,838,711 Loan Repayment by joint venture partner - 136,437 ---------- ---------- Net cash provided by investing activities - 2,956,303 ---------- ---------- Cash flows from financing activity: Distributions to partners (653,465) (806,034) ---------- ---------- Net increase in cash and cash equivalents 89,327 2,854,139 Cash and cash equivalents: Beginning of period 5,932,931 4,017,473 ---------- ---------- End of period $6,022,258 $6,871,612 ========== ==========
(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, 1999 and December 31, 1998 and the results of its operations, its cash flows and partners' capital (deficit) for the interim periods ended March 31, 1999 and 1998. These adjustments are of a normal recurring nature. See notes to financial statements included in the Partnership's 1998 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 three 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 advisory services. NOTE 2 - REAL ESTATE JOINT VENTURES - ----------------------------------- The following summarized financial information is presented in the aggregate for the Partnership's two joint ventures: Assets and Liabilities ----------------------
March 31, 1999 December 31, 1998 -------------- ----------------- Assets Real property, at cost less accumulated depreciation of $2,837,335 and $2,743,676, respectively $19,804,930 $19,830,637 Other 786,280 888,075 ----------- ----------- 20,591,210 20,718,712 Liabilities 331,001 339,188 ----------- ----------- Net Assets $20,260,209 $20,379,524 =========== ===========
Results of Operations
Quarter ended March 31, ----------------------- 1999 1998 ----------- ---------- Revenue Rental income $637,815 $640,710 Other income 128,049 2,937 -------- -------- 765,864 643,647 -------- -------- Expenses Operating expenses 195,519 159,637 Depreciation and amortization 93,659 93,659 -------- -------- 289,178 253,296 -------- -------- Net income $476,686 $390,351 ======== ========
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 of the Reflections investment, 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 its former venture partner in the Metor Business Center. The Partnership finalized the acquisition on July 17, 1998. The purchase price was $7,113,255 and was paid by the Partnership as follows: (i) a portion of the purchase price was paid through the discharge of all outstanding amounts, including but not limited to accrued but unpaid interest, owed by the former venture partner to the Partnership under the loan made by the Partnership to the former venture partner in connection with the original acquisition of the property and (ii) the Partnership paid the remainder of the purchase price in cash in the amount of $2,210. On September 23, 1998, the Metro Business Center was sold to an institutional buyer which was unaffiliated with the Partnership. The gross sale price was $9,900,000. The Partnership received net proceeds totaling $9,680,132, after closing costs and recognized a gain of $3,706,950 ($38.63 per limited partnership unit). A disposition fee of $297,000 was accrued but not paid to the Advisor. On October 29, 1998, the Partnership made a capital distribution of $9,689,694 ($102 per limited partnership unit) from the proceeds of the sale. The following is a summary of the Partnership's wholly-owned investment:
March 31, 1999 December 31, 1998 --------------- ------------------ Land $ 1,538,883 $1,538,883 Buildings and improvements and other capitalized costs 8,383,001 8,383,001 Accumulated depreciation and amortization (1,015,837) (932,007) Net operating liabilities 43,476 116,580 ----------- ---------- $ 8,949,523 $9,106,457 =========== ==========
NOTE 4 - SUBSEQUENT EVENT - ------------------------- Distributions of cash from operations relating to the quarter ended March 31, 1999 were made on April 29, 1999 in the aggregate amount of $582,456 ($6.07 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. Six investments have been sold; one each in 1988, 1993, 1994, 1996, 1997 and 1998. As a result of the sale, and similar transactions, capital of $54,908,266 ($578 per limited partnership unit) has been returned to the limited partners through March 31, 1999. At March 31, 1999, the Partnership had $6,022,258 in cash and cash equivalents, of which $582,456 was used for cash distributions to partners on April 29, 1999; 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 1999 were made at the annualized rate of 5.75% on the adjusted capital contribution of $422 per limited partnership unit. Distributions of cash from operations relating to the first quarter of 1998 were made at the annualized rate of 5.5% on the adjusted capital contribution of $524 per limited partnership unit. 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, 1999, appraised values exceeded the related carrying values by an aggregate of approximately $5,800,000. 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. Year 2000 Readiness Disclosure - ------------------------------ The Year 2000 Issue is a result of computer programs being written using two digits rather than four to define the applicable year. Computer programs that have date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions or engage in normal business operations. The Partnership relies on AEW Capital Management L.P. ("AEW Capital Management"), the parent of AEW Real Estate Advisors, Inc., to generate financial information and to provide other services which are dependent on the use of computers. The Partnership has obtained assurances from AEW Capital Management that: . AEW Capital Management has developed a Year 2000 Plan (the "Plan") consisting of five phases: inventory, assessment, testing, remediation/repair and certification. . As of September 30, 1998, AEW Capital Management had completed the inventory and assessment phases of this Plan and had commenced the testing and remediation/repair of internal systems. . AEW Capital Management expects to conclude the internal testing, remediation/repair and certifications of its Plan no later than June 30, 1999. The Partnership also relies on joint venture partners and/or property managers to supply financial and other data with respect to its real properties. The Partnership is in the process of surveying these third party providers and assessing their compliance with Year 2000 requirements. To date, the Partnership is not aware of any problems that would materially impact its results of operations, liquidity or capital resources. However, the Partnership has not yet obtained written assurances that these providers would be Year 2000 compliant. The Partnership currently does not have a contingency plan in the event of a particular provider or system not being Year 2000 compliant. Such a plan will be developed if it becomes clear that a provider (including AEW Capital Management) is not going to achieve its scheduled compliance objectives by June 30, 1999. The inability of one of these providers to complete its Year 2000 resolution process could materially impact the Partnership. In addition, the Partnership is also subject to external forces that might generally affect industry and commerce, such as utility or transportation company Year 2000 compliance failures and related service interruptions. Given the nature of its operations, the Partnership will not incur any costs associated with Year 2000 compliance. All such costs are borne by AEW Capital Management and the property managers. Results of Operations - --------------------- At March 31, 1999, 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 investment is a wholly-owned property. Operating Factors Columbia Gateway Corporate Park was 100% occupied at March 31, 1999 and March 31, 1998. 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. Occupancy at Reflections Apartments ended the first quarter of 1999 at 97%, which is consistent with the quarter ended March 31, 1998. As discussed, Metro Business Center was sold on September 23, 1998 and the Partnership recognized a gain of $3,706,950. At the time of sale the property was 100% leased. Occupancy at 270 Technology Center was 96% at March 31, 1999, up from 70% at March 31, 1998. Investment Activity Interest on cash equivalents and short-term investments decreased by approximately $18,000 or 21% between the first quarter of 1998 and 1999. The decrease is primarily due to lower average invested balances as a result of the sale of Metro Business Center in 1998. Real estate operating activity for the period ended March 31, 1999 was $554,500 compared to $593,765 for the comparable period in 1998. The decrease is primarily due to the sale of Metro Business Center in September, 1998. This is partially offset by increases in operating performance by Columbia Gateway due to fewer rent concessions in 1999 and lower vacancy at 270 Technology Center. Operating cash flow increased $38,922 between the first quarter of 1998 and 1999, primarily due to increases in distributions from joint ventures 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 primarily consist of real estate appraisal, printing, legal, accounting and investor servicing fees. The Partnership management fee decreased approximately $11,000 between the first quarter of 1998 and 1999 due to a decrease in distributions as a result of the sale of Metro Business Center in 1998. General and administrative expenses decreased approximately $28,000 or 32% due primarily to a reduction in legal fees and investor servicing fees between the first quarter of 1998 and 1999. NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED MARCH 31, 1999 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, 1999 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, 1999 /s/ J. Christopher Meyer III ------------------------------- J. Christopher Meyer III President, Chief Executive Officer and Director of the Managing General Partner, Fourth Copley Corp. May 13, 1999 /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-31-1999 MAR-31-1999 6,022,258 0 0 0 0 6,022,258 24,562,756 0 30,585,014 175,195 4,258,200 0 0 0 26,151,619 30,585,014 902,543 971,658 262,886 262,886 202,904 0 0 505,868 0 505,868 0 0 0 505,868 5.27 5.27
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