-----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, Wanuc845qlGio1gN0sgm90V2UGcJnkWkCvogYDuewwoMBImJ9115EBA/1j7H3BwP x/dybLESbksZ3nS1/utofg== 0000927016-00-001039.txt : 20000411 0000927016-00-001039.hdr.sgml : 20000411 ACCESSION NUMBER: 0000927016-00-001039 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000329 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-K SEC ACT: SEC FILE NUMBER: 000-15429 FILM NUMBER: 583031 BUSINESS ADDRESS: STREET 1: 225 FRANKLIN ST 25TH FL CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6172619000 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 Commission File No. 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 incorporation or organization) Identification No.) 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 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest (Title of Class) 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 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 |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X| No voting stock is held by non-affiliates of the Registrant. DOCUMENTS INCORPORATED BY REFERENCE None 1 PART I Item 1. Business. New England Life Pension Properties IV; A Real Estate Limited Partnership (the "Partnership") was organized under the Uniform Limited Partnership Act of the Commonwealth of Massachusetts on October 16, 1985, to invest primarily in newly constructed and existing income-producing real properties. The Partnership was initially capitalized with contributions of $2,000 in the aggregate from Fourth Copley Corp. (the "Managing General Partner") and CCOP Associates Limited Partnership (the "Associate General Partner") (collectively, the "General Partners") and $10,000 from Copley Real Estate Advisors, Inc. (the "Initial Limited Partner"). The Partnership filed a Registration Statement on Form S-11 (the "Registration Statement") with the Securities and Exchange Commission on November 12, 1985, with respect to a public offering of 60,000 units of limited partnership interest at a purchase price of $1,000 per unit (the "Units") with an option to sell up to an additional 60,000 Units (an aggregate of $120,000,000). The Registration Statement was declared effective on January 3, 1986. The first sale of Units occurred on May 29, 1986, at which time the Initial Limited Partner withdrew its contribution from the Partnership. Investors were admitted to the Partnership thereafter at monthly closings; the offering terminated and the last group of subscription agreements was accepted by the Partnership on December 31, 1986. As of January 31, 1987, a total of 94,997 Units had been sold, a total of 17,207 investors had been admitted as limited partners (the "Limited Partners") and a total of $94,348,550 had been contributed to the capital of the Partnership. The remaining 25,003 Units were de-registered on February 23, 1987. As of December 31, 1999, the Partnership had an investment in the real property described in E. below. In December 1988, the Partnership sold another one of its investments and received sale proceeds of $10,577,476 which were substantially reinvested. Seven other investments have been sold. One investment in Atlanta, Georgia was sold on August 6, 1993, resulting in sale proceeds of $7,917,000. Capital was distributed to the Limited Partners in October 1993, in the amount of $82 per Unit . A second investment in Rancho Cucamonga, California was sold on December 30, 1994, resulting in sale proceeds of $5,261,275. On January 26, 1995, capital of $5,224,835 ($55 per Unit) was distributed to the Limited Partners. A third investment located in Decatur, Georgia was sold on October 10, 1996, resulting in sale proceeds of $9,333,325. On October 24, 1996, capital of $9,214,709 ($97 per unit) was distributed to the Limited Partners. A fourth investment located in Las Vegas, Nevada was sold on October 24, 1997, resulting in sale proceeds of $22,983,007. On November 25, 1997, the Partnership made a capital distribution of $22,989,274 ($242 per Limited Partnership Unit) from the proceeds of the sale and prior sales proceeds previously held in reserves. A fifth investment located in Phoenix, Arizona was sold on September 23, 1998, resulting in net sale proceeds of $9,680,132. 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 and prior sales proceeds previously held in reserves. A sixth investment located in Fort Myers, Florida was sold on September 23, 1999, resulting in net proceeds of $12,773,052. On October 28, 1999, the Partnership made a capital distribution of $12,522,505 ($131.82 per Limited Partnership Unit) from the proceeds of the sale. A seventh investment located in Columbia, Maryland was sold on December 20, 1999 resulting in net proceeds of $13,423,827. On January 27, 2000 the Partnership made a capital distribution of $13,204,583 ($139.00 per Limited Partnership Unit) from the proceeds of the sale. The Partnership has no current plan to renovate, improve or further develop any of its real property. In the opinion of the Managing General Partner, the properties are adequately covered by insurance. The Partnership has no employees. Services are performed for the Partnership by the Managing General Partner and affiliates of the Managing General Partner. A. Apartment Complex in Fort Myers, Florida (" Reflections"). On August 1, 1986, the Partnership acquired a 60% interest in Lee Partners (the "Joint Venture"), a joint venture formed with Lee-Oxford Limited Partnership, a Maryland limited partnership ("Lee-Oxford"). As of December 31, 1998, the Partnership had contributed $8,190,145 to the capital of the Joint Venture out of a maximum commitment of $8,685,000. The joint venture agreement entitled the Partnership to receive 60% of all cash flow from operations, refinancing proceeds and net sale proceeds. The Partnership also committed to make a loan for investment in the joint venture of up to $5,790,000 to Lee-Oxford, of which $5,460,097 had been funded as of December 31, 1998. Interest only on the loan was payable monthly at the rate of 10.5% per annum. The entire outstanding principal balance of the loan was to mature in December, 1999 or would be due on the sale of all or substantially all of the assets of the Joint Venture or the sale of 2 Lee-Oxford's interest in the Joint Venture. Lee-Oxford would apply any cash flow received from operations of the Joint Venture to interest payments on the loan and would apply proceeds of financings or sales received from the Joint Venture to payment of the interest on and principal of the loan. The Partnership agreed, effective January 1, 1988, that to the extent that Lee-Oxford's 40% share of the cash flow was not sufficient to pay interest currently due, interest due on the loan would accrue and compound at a rate of 10.5% per annum. The Partnership agreed, effective May 1, 1992, to extend the maturity date of the loan from August, 1996 to December, 1999, and the borrower agreed to pay interest, currently, at a minimum of 7% with the remainder accruing at 10.5% per annum compounded monthly. The loan was secured by Lee-Oxford's interest in the Joint Venture and by a guarantee of Oxford Development Corporation, an affiliate of Lee-Oxford. The joint venture was restructured in the second quarter of 1996;the Partnership thereby obtained control over management and operating decisions. The ownership restructuring was accomplished with the establishment of a new partnership entity in which the Partnership is the general partner and Lee-Oxford is the limited partner. The new entity held a 42% interest in the Joint Venture, representing all of Lee-Oxford's prior direct ownership interest and 2% of the Partnership's prior direct interest. The Partnership also agreed to release the guarantee from Oxford Development Corporation upon payment to the Partnership of a total of $650,000, of which the final payment of $136,437 was paid during the first quarter of 1998. The Joint Venture owned approximately 12.63 acres of land located in Fort Myers, Florida and had constructed a 282-unit apartment complex, consisting of 12 2- and 3-story buildings, thereon. The complex was approximately 94% occupied at the time of sale, discussed below. On August 21, 1998 the Partnership sold a parcel of land to the City of Fort Myers. The Partnership received net proceeds totaling $67,881 and recognized a gain of $35,591. The Joint Venture sold the Reflections Apartments on September 23, 1999, and the Partnership recognized a gain of $3,474,005 ($36.20 per Limited Partnership Unit). A disposition fee of $393,000 was accrued but not paid to AEW Real Estate Advisors, Inc.. On October 28, 1999, the Partnership made a capital distribution of $12,522,505 ($131.82 per Limited Partnership Unit) from the proceeds of the sale. B. Office/Industrial Buildings in Phoenix, Arizona ("Metro Business Center"). On September 15, 1986, the Partnership acquired a 60% interest in Copley/Hewson Northwest Associates, a joint venture formed with an affiliate of The Hewson Company (the "Developer"). Effective January 1, 1990, as a result of operating deficits, the joint venture agreement was amended to reflect an increase of the Partnership's interest in the joint venture to 80% and a decrease in the Developer's interest to 20%. As of December 31, 1997, the Partnership had contributed $5,302,193 to the capital of the joint venture out of a maximum obligation of $5,580,000. The Partnership also committed to make a loan for investment in the joint venture of up to $3,988,000 to the Developer, of which $3,534,796 had been funded as of December 31, 1997. Interest only on the loan was payable monthly at the rate of 10.5% per annum. The loan had a ten-year term and was not prepayable. The Developer was required to apply any cash flow received from operations of the joint venture to interest payments on the loan and to apply proceeds of refinancings or sales received from the joint venture to payments of interest on and principal of the loan. The loan was secured by the borrower's interest in the joint venture. The joint venture agreement entitled the Partnership to receive 80% of net cash flow, refinancing proceeds and sale proceeds once the loan and accrued interest were repaid in full. On January 1, 1996, a letter agreement was executed which modified certain terms of the Joint Venture Agreement. The letter agreement, which constituted an amendment to the Joint Venture Agreement, granted the Partnership full control over management decisions. The Partnership's control over any decision to sell the property, however, became effective on July 1, 1996. 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. The property interest distributed to the Developer was encumbered by the aforementioned loan. The note was amended to mature on February 1, 1997 and was secured by a recorded deed of trust. The note was subsequently amended to mature on March 31, 1998. In connection with the transaction, the Partnership obtained the option to purchase the tenancy-in-common interest of the Hewson affiliate at its fair market value beginning February 1, 1997. 3 On February 28, 1998, the Partnership executed a purchase and sale agreement to purchase the tenancy-in-common interest of the Developer. 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 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 paid the remainder of the purchase price in cash in the amount of $2,210. On September 23, 1998, the Partnership sold the Metro Business Center. The Partnership received net proceeds totaling $9,680,132. 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. C. Office, Industrial and Retail Buildings in Las Vegas, Nevada ("Palms Business Center"). On December 29, 1986, the Partnership acquired a 60% interest in Rancho Road Associates, a joint venture formed with an affiliate of Commerce Centre Partners. In the first quarter of 1990, the Partnership committed to increase its maximum commitment from $13,400,000 to $15,300,000. On October 2, 1991, the Partnership committed to increase its maximum commitment from $15,300,000 to $15,840,000. As of the date of sale, discussed below, the Partnership had contributed all of its commitment of capital to the joint venture. The additional funds were used to pay for higher than anticipated tenant finish costs and the costs of re-leasing the space vacated by tenants when leases expired. The joint venture agreement entitled the Partnership to receive a preferred cumulative compounded return of 11% per annum on its capital contribution, of which 9.5% per annum was due currently and up to 1.5% per annum could be accrued if sufficient cash was not available therefor. The entire unpaid accrued preferred return was due and payable at the end of the tenth year of the joint venture's operations. The joint venture agreement also entitled the Partnership to receive 60% of net cash flow and 60% of sale and refinancing proceeds following the return of the Partnership's equity capital. As of January 1, 1995, the joint venture agreement was amended and restated granting the Partnership control over management and operating decisions. Additionally, the venture partner become entitled to receive 40% of the excess cash flow above a specified level until its cash investment of $360,000 was repaid in full, after which the Partnership would become entitled to all cash flow. Unpaid preferred returns of $2,936,919 were added to the Partnership's capital account. Future preferred return payments were to be made monthly in the amount of $121,125. to the extent operating revenues or extraordinary cash flows were available. To the extent such payments could not be made from such sources when due, payments could accrue at a rate of 9.5% per annum, compounded monthly, until paid. The joint venture owned approximately 14.1 acres of land in Las Vegas, Nevada improved with 15 one-story buildings suitable for office, industrial and retail use and containing approximately 224,474 square feet of space. At the time of sale, approximately 86% of the available leasable area was leased. On November 16, 1990, the joint venture filed a complaint against a tenant for failure to pay rent and fraud, totaling approximately $500,000. A judgment in the amount of $911,200 was recorded in 1995. The Joint Venture had not collected on or recognized the judgment as of the date of sale. On October 26, 1994, the joint venture filed a complaint against Han Lee, Inc. for failure to pay rent totaling $69,171, including late charges. In August, 1995, a Judgment by Default in the amount of $83,856 was legally recorded. The Partnership has determined that the claim was not collectible at the time of sale. On October 24, 1997, the Palms Business Center was sold. The Partnership received proceeds of $22,983,007. On November 25, 1997, the Partnership made a distribution to the Limited Partners of $22,989,274 ($242 per Unit) from the proceeds of this sale and from reserves established with the proceeds of prior sales. D. Office/Research and Development Buildings in Columbia, Maryland ("Columbia Gateway Corporate Park"). On December 21, 1987, the Partnership acquired a 17% interest in a joint venture formed with an affiliate of the Partnership (the "Affiliate"), which had a 33% interest, and M.O.R. Gateway 51 Associates Limited Partnership. As of April 20, 1989, the joint venture agreement was amended and restated reflecting an increase in the Partnership's interest in the joint venture to 34.75% and a decrease in the Affiliate's interest in the joint venture to 15.25%. In addition, the amended and restated joint venture agreement increased the Partnership's maximum commitment to contribute capital to the joint venture and reallocated the capital contributed to the joint venture 4 between the Partnership and the Affiliate. As of December 31, 1998, the Partnership had contributed $14,086,147 to the capital of the joint venture out of a maximum commitment of $14,598,000. The joint venture agreement entitled the Partnership and the Affiliate to receive a preferred return on the their respective invested capital at the rate of 10.5% per annum. Such preferred return would be payable currently until the Partnership and the Affiliate had received an aggregate of $8,865,000; thereafter, if sufficient cash flow was not available therefore, the preferred return would accrue and bear interest at the rate of 10.5% per annum, compounded monthly. The joint venture agreement also entitled the Partnership to receive 34.75% of cash flow following payment of the preferred return and 34.75% of the net proceeds of sales and refinancings following return of the Partnership's and the Affiliate's equity. Ownership of the joint venture had been restructured whereby the Partnership and the Affiliate obtained full control over the business of the joint venture. The restructuring was effective January 1, 1998. The joint venture owned approximately 20.85 acres of land in the Columbia Gateway Corporate Park in Columbia, Maryland. The intended development plan for this land was for a two-stage development of seven office and research and development buildings. The first phase of this development was completed by 1992 and included the construction of four, one-story buildings containing 142,545 square feet. The second phase of this development commenced in the spring of 1994 in which a building totaling 46,000 square feet was constructed and leased to a single tenant for a term of ten years. At the time of sale, the project was 100% leased. On December 20, 1999, the Joint Venture sold its property. The Partnership received its 69.5% share of the net proceeds totaling $13,423,827. On January 27, 2000 the Partnership made a capital distribution of $13,204,583 ($139.00 per Limited Partnership Unit) from the proceeds of the sale. E. Office/Research and Development Buildings in Frederick, Maryland ("270 Technology Center"). On December 22, 1987, the Partnership acquired a 50% interest in a joint venture formed with MORF Associates VI Limited Partnership. As of December 31, 1998, the Partnership had contributed $4,857,000 to the capital of the joint venture out of a maximum commitment of $5,150,000. The joint venture agreement entitles the Partnership to receive a preferred return on its invested capital at the rate of 10% per annum. Such preferred return was payable currently through September 30, 1988; presently, and until the termination of the joint venture's operations, to the extent that sufficient cash flow is not available therefor, the preferred return will accrue and bear interest at the rate of 10% per annum, compounded monthly. The joint venture agreement entitles the Partnership to receive 50% of the net proceeds of sales and financings after return of its equity and preferred return. As of July 3, 1990, the joint venture sold approximately 3.9 acres of land to an unrelated third party. In return, the joint venture received approximately $500,000 and a parcel of land consisting of approximately .4 acres. The joint venture currently owns approximately 8 acres of land in the 270 Technology Center in Frederick, Maryland, together with two one-story research and development/office buildings, containing approximately 73,360 square feet of space, located thereon. As of December 31, 1999, the buildings were approximately 100% leased. 5 Item 2. Properties. The following table sets forth the annual realty taxes for the Partnership's last remaining property and information regarding tenants who occupy 10% or more of gross leasable area (GLA) in the Partnership's last remaining property.
- ------------------------------------------------------------------------------------------------------------------------------------ Number of Square Annual Estimated Tenants Feet Contract 2000 with 10% Name(s) of Rent Per Realty or more of Each Square Lease Renewal Line of Business Property Taxes of GLA Tenant(s) Tenant Foot Expiration Options of Principal Tenants - ------------------------------------------------------------------------------------------------------------------------------------ Office/R&D Buildings in Frederick, MD $57,455 3 Great West 16,143 $12.79 February, 2002 None Insurance Life Annuity Science 10,996 $12.25 August, 2002 None Technology Applications Bechtel 22,059 $10.76 April, 2001 None Engineering - ------------------------------------------------------------------------------------------------------------------------------------
6 The following table sets forth for each of the last five years the gross leasable area, occupancy rates, rental revenue and net effective rent for the Partnership's last remaining property: - -------------------------------------------------------------------------------- Net Rental Effective Gross Leasable Year-End Revenue Rent Property Area Occupancy Recognized ($/sf/yr)* - -------------------------------------------------------------------------------- Office/R&D Buildings in Frederick, MD 1995 73,360 98% $762,212 $10.66 1996 73,360 89% $769,262 $11.43 1997 73,360 70% $728,065 $11.99 1998 73,360 100% $827,808 $12.20 1999 73,360 100% $965,459 $13.16 - -------------------------------------------------------------------------------- * Net Effective Rent calculation is based on average occupancy during the respective year. 7 Following is a schedule of lease expirations for each of the next ten years for the Partnership's last remaining property based on the annual contract rent in effect at December 31, 1999: - -------------------------------------------------------------------------------- TENANT AGING REPORT Percentage Total of # of Total Annual Gross Lease Square Contract Annual Property Expirations Feet Rent Rental - -------------------------------------------------------------------------------- Office/R&D Buildings in Frederick, MD 2000 0 0 $0 0% 2001 2 26,660 $290,634 41% 2002 3 31,195 $384,532 54% 2003 0 0 $0 0% 2004 1 3,105 $35,708 5% 2005 0 0 $0 0% 2006 0 0 $0 0% 2007 0 0 $0 0% 2008 0 0 $0 0% 2009 0 0 $0 0% - -------------------------------------------------------------------------------- 8 The following table sets forth for the Partnership's last remaining property the: (i) federal tax basis, (ii) rate of depreciation, (iii) method of depreciation, (iv) life claimed, and (v) accumulated depreciation, with respect to each property or component thereof for purposes of depreciation:
- -------------------------------------------------------------------------------------------------------------------- Rate of Life Accumulated Entity / Property Tax Basis Depreciation Method in years Depreciation ==================================================================================================================== Office/Research and Development Buildings, Frederick, MD Building $3,534,881 3.18% SL 31.5 $1,450,934 Land Improvements 794,171 2.56% SL 39 52,725 Land Improvements 100,000 6.66% SL 15 32,635 ---------- ---------- Total Depreciable Assets $4,429,052 $1,536,294 ========== ========== ====================================================================================================================
SL= Straight Line DB= Declining Balance 9 Following is information regarding the competitive market conditions for the Partnership's last remaining property. This information has been gathered from sources deemed reliable. However, the Partnership has not independently verified the information and, as such, cannot guarantee its accuracy or completeness. R&D/Office Buildings in Frederick, MD The Frederick R&D market contains approximately 5 million square feet of office and r&d space with a vacancy hovering around 9%. The more competitive and narrower submarket for 270 Technology Park includes approximately 40 buildings in 2.3 million square feet with a reported vacancy of 11%. Current market rents range from $9.50 to $11.25 per square foot NNN for R&D and $10.00 to $13.30 per square foot NNN for office deals. This represents a 5-7% increase over levels one year ago primarily due to the strong absorption of space and land for build to suit project. By far the project which has had the most significant impact on our asset is the Bechtel 400-500,000 square feet build to suit, as Bechtel vacated over 35,000 square feet in MORF III & MORF VI. Other build to suit projects under development include MCI (50,000 square feet at 270 Technology Park) and First Nationwide (35,000 square feet at MIE). Item 3. Legal Proceedings The Partnership is not a party to, nor are any of its properties subject to, any material pending legal proceedings. A joint venture in which the Partnership holds an interest has received judgements against two former tenants for defaults under leases. See Item 1.C. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. There is no active market for the Units. Trading in the Units is sporadic and occurs solely through private transactions. As of December 31, 1999, there were 16,276 holders of Units. The Partnership's Amended and Restated Agreement of Limited Partnership dated May 29, 1986, as amended to date (the "Partnership Agreement"), requires that any Distributable Cash (as defined therein) be distributed quarterly to the Partners in specified proportions and priorities. There are no restrictions on the Partnership's present or future ability to make distributions of Distributable Cash. For the year ended December 31, 1999, cash distributions paid in 1999 or distributed after year end with respect to 1999 to the Limited Partners as a group totaled $30,184,347, including $9,689,694 ($102 per Limited Partnership Unit) from the proceeds of property sales. For the year ended December 31, 1998, cash distributions paid in 1998 or distributed after year end with respect to 1998 to the Limited Partners as a group totaled $13,030,738, including $9,689,694 ($102 per Limited Partnership Unit) from the proceeds of a property sale. Cash distributions exceeded net income in 1999 and 1998 and, therefore, resulted in a reduction of partners' capital. Reference is made to the Partnership's Statement of Partner's Capital (Deficit) and Statement of Cash Flows in Item 8 hereof. 10 Item 6. Selected Financial Data.
For Year For Year For Year For Year For Year Ended or Ended or Ended or Ended or Ended or as of: as of: as of: as of: as of: 12/31/99(1) 12/31/98(2) 12/31/97(3) 12/31/96(4) 12/31/95(5) ----------- ----------- ----------- ----------- ----------- Revenues $ 8,913,259 $ 8,561,528 $16,837,755 $ 7,582,119 $ 5,906,735 Net Income $ 7,256,381 $ 5,988,711 $13,211,159 $ 4,392,513 $ 3,912,897 Net Income per Unit of Limited Partnership Interest $ 75.62 $ 62.41 $ 137.68 $ 45.78 $ 40.78 Total Assets $22,303,963 $30,706,031 $37,925,503 $50,710,887 $59,991,655 Total Cash Distributions per Unit of Limited Partnership Interest, including amounts distributed after year end with respect to such year $ 317.74 $ 137.17 $ 279.14 $ 147.71 $ 60.12
(1) Net income includes a gain on the sales of properties of $7,510,818. Cash distributions include a return of capital of $285.00 per Limited Partnership Unit. (2) Net income includes a gain on the sale of property of $3,742,541. Cash distributions include a return of capital of $102.00 per Limited Partnership Unit. (3) Net income includes a gain on the sale of property of $10,482,458. Cash distributions include a return of capital of $242.00 per Limited Partnership Unit. (4) Net income includes a gain on the sale of a joint venture investment of $1,055,591. Cash distributions include a return of capital of $97.00 per Limited Partnership Unit. (5) Cash distributions include $8.09 per Limited Partnership Unit that is attributable to a discretionary reduction of cash reserves, which had been previously accumulated through operating activities. 11 Item 7 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. Eight investments have been sold: one each in 1988, 1993, 1994, 1996, 1997, 1998 and two in 1999. Capital of $67,430,770 ($709.82 per Limited Partnership Unit) has been returned to the limited partners through December 31, 1999. On October 24, 1997, the Palms Business Center property was sold to an institutional buyer, which is unaffiliated with the Partnership for $23,200,000. The Partnership received net proceeds of $22,983,007, after closing costs and repayment of a loan from the venture partner. The Partnership recognized a gain of $10,482,458 ($109.24 per Limited Partnership Unit). A disposition fee of $696,000 was accrued but not paid to AEW Real Estate Advisors Inc. ("AEW"). On November 25, 1997, the Partnership made a capital distribution of $22,989,274 ($242 per Limited Partnership Unit) from the proceeds of the sale and prior sales proceeds held in reserves. This distribution reduced the adjusted capital contribution to $524 per Limited Partnership Unit. On August 21, 1998, the Reflections joint venture sold a parcel of land to the City of Fort Myers. The Partnership received net proceeds totaling $67,881 and recognized a gain of $35,591. On September 23, 1998, the Metro Business Center in Phoenix Arizona was sold to an institutional buyer which is 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 AEW. 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 and prior sales proceeds held in reserves. This distribution reduced the adjusted capital contribution to $422 per Limited Partnership Unit. On September 23, 1999, the Reflections Apartments in Fort Myers, Florida was sold to a third party which is unaffiliated with the Partnership. The gross sale price was $13,100,000. The Partnership received net proceeds totaling $12,773,052, after closing costs and recognized a gain of $3,474,005 ($36.20 per Limited Partnership Unit). A disposition fee of $393,000 was accrued but not paid to AEW Real Estate Advisors, Inc. On October 28, 1999, the Partnership made a capital distribution of $12,522,505 ($131.82 per Limited Partnership Unit) from the proceeds of the sale. This distribution reduced the adjusted capital contribution to $290.18 per Limited Partnership Unit. On December 20, 1999, the Columbia Gateway Corporate Park joint venture in which the Partnership and an affiliate own a 69.5% and 30.5% interest, respectively, sold its property to an unaffiliated third party for gross proceeds of $19,850,000, of which the Partnership's share was $13,795,750. The Partnership received its 69.5% share of the net proceeds, $13,423,827 after closing costs, and recognized a gain of $1,927,893 ($20.09 per Limited Partnership Unit) on the sale. A disposition fee of $413,872 was accrued but not paid to AEW Real Estate Advisors, Inc.. On January 27, 2000 the Partnership made a capital distribution of $13,204,583 ($139.00 per Limited Partnership Unit) from the proceeds of the sale. At December 31, 1999, the Partnership had $ 17,597,405 in cash and cash equivalents, of which $15,044,857 was used for cash distributions to partners on January 27, 1999; the remainder will primarily be used for working capital reserves. The source of future liquidity and cash distributions to partners will be cash distributions from the Partnership's joint venture and invested cash and cash equivalents. Distributions of cash from operations for the first and second quarters 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 for the third and fourth quarter of 1999 were made at the annualized rate of 6.25% on the adjusted capital contribution of $422 per Limited Partnership Unit and the weighted average adjusted capital contribution of $328.87 per Limited Partnership Unit, respectively. Distributions of cash from operations relating to the first and second quarters of 1998 were made at the annualized rate of 5.5% on the adjusted capital contribution of $524 per Limited 12 Partnership Unit. Distributions of cash from operations for the third and fourth quarter of 1998 were made at the annualized rate of 6% on the adjusted capital contribution of $524 per Limited Partnership Unit and the weighted average adjusted capital contribution of $453.73 per Limited Partnership Unit, respectively. The fluctuation in distribution rates are a result of both the sales of the Partnership's real estate investments and the timing of cash flow from the Partnership's real estate investments held at the time of the distributions. The carrying value of real estate investments in the financial statements at December 31, 1999 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 December 31, 1999, the appraised value of the remaining investment exceeded the related carrying value by an aggregate of approximately $1,400,000. 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 AEW 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 Form of Real Estate Investments At December 31, 1999, the remaining investment in the portfolio is structured as a joint venture with a real estate development/management firm. The Palms Business Center, Reflections Apartments and Metro Business Center investments were originally structured as joint ventures. However, effective January 1, 1995, April 1, 1996 and July 1, 1996, respectively, the Partnership was granted full control over management decisions and the investments had been accounted for as wholly-owned properties since those dates. As previously stated, the Palms Business Center, the Metro Business Center and Reflections Apartments were sold on October 24, 1997, September 23, 1998 and September 23, 1999, respectively. Operating Factors The Palms Business Center was sold on October 24, 1997 and the Partnership recognized a gain of $10,482,458. At the time of the sale the Palms Business Center was 86% leased. As mentioned above, the Columbia Gateway Corporate Park joint venture, in which the Partnership and an affiliate own a 69.5% and 30.5% interest, respectively, sold its property on December 20,1999. The Partnership recognized its share of the gain of $1,927,893. The property was 100% leased at the time of sale, consistent with December 31, 1998. At December 31, 1997 the property was 98% leased. As discussed above, the Reflections Apartments investment was sold on September 23, 1999, and the Partnership recognized a gain of $3,474,005. At the time of the sale, occupancy at Reflections Apartments was 94%, consistent with occupancy at December 31, 1998 and December 31, 1997. As discussed above, 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 consistent with December 31, 1997. Occupancy at 270 Technology Center was 100% at December 31, 1999 and 1998, up from 70% at December31, 1997. Investment Activity 1999 Compared to 1998 Interest on cash equivalents and short-term investments decreased by approximately $34,000 or 8% compared to 1998, primarily due to lower average investment balances as a result of sales in both 1999 and 1998. 13 Total real estate operations were $2,108,920 and $2,509,656 for the twelve months ended December 31, 1999 and 1998, respectively. The decrease of $400,736 is primarily due to a decrease in operating income from wholly owned properties of $547,746, primarily due to the sales of Metro Business Center in 1998 and Reflections Apartments in 1999. These decreases are partially offset by an increase in operating performance at Columbia Gateway Corporate Park attributable to decreases in rent concessions and the recovery of the prior year write off of bad debt. Operating performance at 270 Technology Center improved as well due to fewer rent concessions in 1999 and higher average occupancy for 1999. The decrease in operating cash flow of approximately $1,188,000 between 1998 and 1999 is primarily due to the sales of Columbia Gateway Corporate Park and Reflections Apartments in 1999 and a decrease in operating liabilities. 1998 Compared to 1997 Interest on cash equivalents and short-term investments decreased by approximately $78,000 or 16% compared to 1997, primarily due to lower average investment balances as a result of sales in both 1998 and 1997. Total real estate operations were $2,509,656 and $2,925,862 for the twelve months ended December 31, 1998 and 1997, respectively. The decrease of $416,206 is primarily due to a decrease in operating income from wholly -owned properties of $1,031,189, primarily due to the sale of Metro Business Center, offset by an increase of $614,983 in joint venture earnings, primarily due to improved performance at Columbia Gateway Corporate Park and 270 Technology Park The decrease in operating cash flow of approximately $972,000 between 1997 and 1998 is primarily due to the sale of Rancho Road in October 1997 and a decrease in operating liabilities. 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. 1999 Compared to 1998 General and administrative expenses decreased approximately $20,000 or 6% primarily due to decreases in legal, printing and appraisal fees. Management fees decreased in 1999 compared to 1998 by approximately $23,000 due to a decrease in distributable cash flow and a corresponding decrease in operating distributions to partners as a result of the sale of investments. 1998 Compared to 1997 General and administrative expenses increased approximately $7,400 or 2%, primarily due to an increase in legal fees for 1998 which was the result of fees incurred with the potential sale of Reflections Apartments. Offsetting this is a reduction in investor servicing fees. Management fees decreased in 1998 compared to 1997 by approximately $19,000 due to a decrease in distributable cash flow and a corresponding decrease in operating distributions to partners as a result of the sale of investments. Inflation By their nature, real estate investments tend not to be adversely affected by inflation. Inflation may tend to result in appreciation in the value of the real estate investments over time if rental rates and replacement costs increase. Declines in real property values during the period of the Partnership operations, due to market and economic conditions, have overshadowed the overall positive effect inflation may have on the value of the Partnership's investments. Item 7A. Quantitative and Qualitative Disclosures about Market Risk 14 The Partnership was not party to derivative financial instruments or derivative commodity instruments at or during the year ended December 31, 1999. The Partnership's only other financial instruments (as defined by Financial Accounting Standards Board Statement No. 107) are its cash and cash equivalents for which cost approximates market value. Item 8. Financial Statements and Supplementary Data. The independent auditor's reports, financial statements and financial statement schedule listed in the accompanying index are filed as part of this report. See Index to the Financial Statements and Financial Statement Schedules on page 20. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. The Partnership has had no disagreements with its accountants on any matters of accounting principles or practices or financial statement disclosure. 15 PART III Item 10. Directors and Executive Officers of the Registrant. (a) and (b) Identification of Directors and Executive Officers. The following table sets forth the names of the directors and executive officers of the General Partner and the age and position held by each of them as of December 31, 1999
Name Position(s) with the Managing General Partner Age - ---- --------------------------------------------- --- Alison Husid Cutler President, Chief Executive Officer and Director 37 Pamela J. Herbst Vice President and Director 44 J. Grant Monahon Vice President and Director 54 James J. Finnegan Vice President 39 Karin J. Lagerlund Treasurer and Principal Financial and Accounting Officer 35
(c) Identification of Certain Significant Employees. None. (d) Family Relationships. None. (e) Business Experience. The Managing General Partner was incorporated in Massachusetts on October 16, 1985. The background and experience of the executive officers and directors of the Managing General Partner are as follows: Alison Husid Cutler is a Portfolio Manager in AEW Institutional Real Estate Services, with responsibility for several real estate equity portfolios representing approximately $800 million in client capital. She has over 12 years of experience in real estate finance and investment management. Ms. Cutler joined the predecessor of AEW Capital Management, L.P. ("AEW Capital Management") in 1987 as Controller for a portfolio management team responsible for the acquisition, management, restructuring and disposition of client assets in New England and the western U.S. She later served as Asset Manager for a portfolio of assets in Arizona and the West Coast. Prior to joining AEW, Ms. Cutler worked for several years as a Senior Auditor with Peat Marwick, Main & Co. She is a Certified Public Accountant and a graduate of the University of Massachusetts (B.A.). Pamela J. Herbst directs AEW Capital Management L.P.'s ("AEW Capital Management") Institutional Real Estate Services, with oversight responsibility for direct equity investing and the asset and portfolio management of existing core and core-plus commingled funds and separate accounts.. Ms. Herbst is a member of AEW Capital Management's Investment Policy Group and Operating Committee. She came to AEW Capital Management in December 1996 as a result of the firm's merger with Copley Real Estate Advisors, Inc., where she held various senior level positions in asset and portfolio management, acquisitions, and corporate operations since 1982. Ms. Herbst is a graduate of the University of Massachusetts (B.A.) and Boston University (M.B.A.). J. Grant Monahon is AEW Capital Management's Chief Operating Officer and a member of the firm's Management Committee and Investment Policy Group. He has over 25 years of experience in real estate law and investments. Prior to joining the predecessor of AEW Capital Management in 1987, Mr. Monahon was a partner with a major Boston law firm. As the head of that firm's real estate finance department, he represented a wide variety of institutional clients, both domestic and international, in complex equity and debt transactions. He is the former Chairman of the General Counsel section of the National Association of Real Estate Investment Managers. Mr. Monahon is a graduate of Dartmouth College (B.A.) and Georgetown University Law Center (J.D.). James J. Finnegan is the General Counsel of AEW Capital Management. Mr. Finnegan served as Vice President and Assistant General Counsel of Aldrich, Eastman & Waltch, L.P., a predecessor to AEW Capital 16 Management. Mr. Finnegan has over ten years of experience in real estate law, including seven years of experience in private practice with major New York City and Boston law firms. Mr. Finnegan also serves as AEW's securities and regulatory compliance officer. Mr. Finnegan is a graduate of the University of Vermont (B.A.) and Fordham University School of Law (J.D.). Karin J. Lagerlund directs the Institutional Real Estate Services Portfolio Accounting Group at AEW Capital Management, overseeing portfolio accounting, performance measurement and client financial reporting for AEW's private equity investment portfolios. Ms. Lagerlund is a Certified Public Accountant and has over ten years experience in real estate consulting and accounting. Prior to joining AEW Capital Management in 1994, she was an Audit Manager at EY/Kenneth Leventhal LLP. Ms. Lagerlund is a graduate of Washington State University (B.A.). (f) Involvement in Certain Legal Proceedings. None. Item 11. Executive Compensation. Under the Partnership Agreement, the General Partners and their affiliates are entitled to receive various fees, commissions, cash distributions, allocations of taxable income or loss and expense reimbursements from the Partnership. See Notes 1, 2 and 6 to Notes to Financial Statements. The following table sets forth the amounts of the fees and cash distributions and reimbursements of out-of-pocket expenses which the Partnership paid to or accrued for the account of the General Partners and their affiliates for the year ended December 31, 1999. Amount of Compensation and Receiving Entity Type of Compensation Reimbursement - ---------------- -------------------- ------------- General Partners Share of Distributable Cash $ 33,020 AEW Real Estate Advisors, Inc. Management Fees and (formerly known as Copley Real Reimbursement of Expenses 325,709 Estate Advisors, Inc.) New England Securities Servicing Fees and Corporation Reimbursement of Expenses 29,089 -------- TOTAL $387,818 ======== For the year ended December 31, 1999 the Partnership allocated $(6,429) of taxable loss to the General Partners. 17 Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) Security Ownership of Certain Beneficial Owners No person or group is known by the Partnership to be the beneficial owner of more than 5% of the outstanding Units at December 31, 1999. Under the Partnership Agreement, the voting rights of the Limited Partners are limited and, in some circumstances, are subject to the prior receipt of certain opinions of counsel or judicial decisions. Except as expressly provided in the Partnership Agreement, the right to manage the business of the Partnership is vested exclusively in the Managing General Partner. (b) Security Ownership of Management. An affiliate of the General Partners of the Partnership owned 1,648 Units as of December 31, 1999. (c) Changes in Control. There exists no arrangement known to the Partnership the operation of which may at a subsequent date result in a change in control of the Partnership. Item 13. Certain Relationships and Related Transactions. The Partnership has no relationships or transactions to report other than as reported in Item 11 above. PART IV Item 14. Exhibits, Financial Statements, and Reports on Form 8-K. (a) The following documents are filed as part of this report: (1) Financial Statements--The Financial Statements listed on the accompanying Index to Financial Statements and Schedule, Financial Statement Index No. 2 and Financial Statement Index No. 3 are filed as part of this Annual Report. (2) Financial Statement Schedule--The Financial Statement Schedule listed on the accompanying Index to Financial Statements and Schedule is filed as part of this Annual Report. (3) Exhibits--The Exhibits listed in the accompanying Exhibit Index are filed as a part of this Annual Report and incorporated in this Annual Report as set forth in said Index. (b) Reports on Form 8-K. During the last quarter of the year ended December 31, 1999, the Partnership filed one Current Report on Form 8-K dated October 7, 1999 reporting on Item No. 2 (Acquisition or Disposition of Assets) and Item No. 7 (Financial Statements and Exhibits), relating in both cases to the September 23, 1999 sale of Reflections Apartments. (c) Reports on Form 8-K/A. The partnership filed one Current Report on Form 8-K/A dated December 7, 1999 reporting on Items No. 2 (Acquisition or Disposition of Assets) and No. 7 (Financial Statements and Exhibits), relating in both cases to the September 23, 1999 sale of Reflections Apartments. 18 New England Life Pension Properties IV; A Real Estate Limited Partnership Financial Statements * * * * * * * December 31, 1999 19 NEW ENGLAND LIFE PENSION PROPERTIES IV A REAL ESTATE LIMITED PARTNERSHIP INDEX TO FINANCIAL STATEMENTS AND SCHEDULE Report of Independent Accountants Financial Statements: Balance Sheets - December 31, 1999 and 1998 Statements of Operations - Years ended December 31, 1999, 1998 and 1997 Statements of Partners' Capital (Deficit) - Years ended December 31, 1999, 1998 and 1997 Statements of Cash Flows - Years ended December 31, 1999, 1998 and 1997 Notes to Financial Statements Financial Statement Schedule: Schedule III - Real Estate and Accumulated Depreciation at December 31, 1999 All other schedules are omitted because they are not applicable. 20 Report of Independent Accountants To the Partners of New England Life Pension Properties IV; A Real Estate Limited Partnership: In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the financial position of New England Life Pension Properties IV; A Real Estate Limited Partnership (the "Partnership") at December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. These financial statements and the financial statement schedule are the responsibility of Fourth Copley Corp., the Managing General Partner of the Partnership (the "Managing General Partner"); our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the Managing General Partner, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts March 21, 2000 21 NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP BALANCE SHEETS December 31, ---------------------------- 1999 1998 ------------ ------------ Assets Real estate investments: Joint ventures $ 4,608,955 $ 15,666,643 Property, net -- 9,106,457 ------------ ------------ 4,608,955 24,773,100 Cash and cash equivalents 17,597,405 5,932,931 Other net assets 97,603 -- ------------ ------------ $ 22,303,963 $ 30,706,031 ============ ============ Liabilities and Partners' Capital Accounts payable $ 112,183 $ 145,103 Accrued management fee 24,390 32,314 Deferred management and disposition fees 4,436,165 4,229,398 ------------ ------------ Total liabilities 4,572,738 4,406,815 ------------ ------------ Partners' capital (deficit): Limited partners ($290.18 and $422 per unit, respectively; 120,000 units authorized, 94,997 units issued and outstanding) 17,734,394 26,341,929 General partners (3,169) (42,713) ------------ ------------ Total partners' capital 17,731,225 26,299,216 ------------ ------------ $ 22,303,963 $ 30,706,031 ============ ============ (See accompanying notes to financial statements) 22 NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS Year ended December 31, ------------------------------------------ 1999 1998 1997 ------------ ------------ ------------ Investment Activity Property rentals $ 1,487,638 $ 2,907,757 $ 4,981,451 Property operating expenses (951,623) (1,358,566) (2,028,830) Depreciation and amortization (83,830) (549,260) (921,501) ------------ ------------ ------------ 452,185 999,931 2,031,120 Joint venture earnings 1,661,176 1,515,033 900,050 Amortization (4,441) (5,308) (5,308) ------------ ------------ ------------ Total real estate operations 2,108,920 2,509,656 2,925,862 Gain on sale of joint venture 1,927,893 -- -- Gain on sales of property 3,474,005 3,742,541 10,482,458 ------------ ------------ ------------ Total real estate activity 7,510,818 6,252,197 13,408,320 Interest on cash equivalents and short-term investments 362,547 396,197 473,796 ------------ ------------ ------------ Total investment activity 7,873,365 6,648,394 13,882,116 ------------ ------------ ------------ Portfolio Expenses Management fee 310,709 333,771 352,468 General and administrative 306,275 325,912 318,489 ------------ ------------ ------------ 616,984 659,683 670,957 ------------ ------------ ------------ Net Income $ 7,256,381 $ 5,988,711 $ 13,211,159 ============ ============ ============ Net income per limited partnership unit $ 75.62 $ 62.41 $ 137.68 ============ ============ ============ Cash distributions per limited partnership unit $ 166.23 $ 138.76 $ 282.60 ============ ============ ============ Number of limited partnership units outstanding during the year 94,997 94,997 94,997 ============ ============ ============ (See accompanying notes to financial statements) 23 NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS
Year ended December 31, ------------ ------------ ------------ 1999 1998 1997 ------------ ------------ ------------ Cash flows from operating activities: Net income $ 7,256,381 $ 5,988,711 $ 13,211,159 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 88,271 554,568 926,809 Equity in joint venture earnings (1,661,176) (1,515,033) (900,050) Cash distributions from joint ventures 1,632,361 1,722,212 749,133 Gain on sales of property (3,474,005) (3,742,541) (10,482,458) Gain on sale of joint ventures (1,927,893) -- -- Decrease (increase) in investment income and other receivables -- 51,042 (22,023) Increase in property deferred leasing costs -- (35,241) (79,163) Decrease (increase) in property working capital 18,977 (256,107) (144,177) Increase (decrease) in operating liabilities (640,949) (288,128) 192,568 ------------ ------------ ------------ Net cash provided by operating activities 1,291,967 2,479,483 3,451,798 ------------ ------------ ------------ Cash flows from investing activities: Net proceeds from sales of property 12,380,052 9,451,013 22,287,007 Net proceeds from sale of joint venture 13,009,955 -- -- Deferred disposition fees 806,872 297,000 696,000 Loan to venture partner -- -- (130,000) Investment in property -- (70,131) (306,987) Decrease (increase) in short-term investments, net -- 2,838,711 (141,198) Loan repayment by joint venture partner -- 136,437 -- ------------ ------------ ------------ Net cash provided by investing activities 26,196,879 12,653,030 22,404,822 ------------ ------------ ------------ Cash flows from financing activity: Distributions to partners (15,824,372) (13,217,055) (26,885,111) ------------ ------------ ------------ Net cash used in financing activity (15,824,372) (13,217,055) (26,885,111) ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents 11,664,474 1,915,458 (1,028,491) Cash and cash equivalents: Beginning of year 5,932,931 4,017,473 5,045,964 ------------ ------------ ------------ End of year $ 17,597,405 $ 5,932,931 $ 4,017,473 ============ ============ ============
(See accompanying notes to financial statements) 24 NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
Year ended December 31, --------------------------------------------------------------------------------- 1999 1998 1997 ---------------------- --------------------- ---------------------- General Limited General Limited General Limited Partners Partners Partners Partners Partners Partners -------- -------- -------- -------- -------- -------- Balance at beginning of year $(42,713) $ 26,341,929 $(67,328) $ 33,594,888 $(160,481) $ 47,361,993 Cash distributions (33,020) (15,791,352) (35,272) (13,181,783) (38,959) (26,846,152) Net income 72,564 7,183,817 59,887 5,928,824 132,112 13,079,047 -------- ------------ -------- ------------ --------- ------------ Balance at end of year $ (3,169) $ 17,734,394 $(42,713) $ 26,341,929 $ (67,328) $ 33,594,888 ======== ============ ======== ============ ========= ============
(See accompanying notes to financial statements) 25 NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and Business General 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 one real estate investment it currently owns prior to the end of 1987. The Partnership intended to dispose of its investments within twelve years of their acquisition, and then liquidate; however, the Managing General Partner extended the holding period, having determined it to be in the best interest of the limited partners. The Managing General Partner of the Partnership is Fourth Copley Corp., a wholly-owned subsidiary of AEW Real Estate Advisors, Inc. ("AEW"), formerly known as Copley Real Estate Advisors, Inc. ("Copley"). The associate general partner is CCOP Associates Limited Partnership, a Massachusetts limited partnership. Subject to the Managing General Partner's overall authority, the business of the Partnership is managed by AEW pursuant to an advisory contract. On December 10, 1996, Copley's parent, New England Investment Companies, Limited Partnership ("NEIC"), a publicly traded master limited partnership, acquired certain assets subject to then existing liabilities from Aldrich Eastman & Waltch, Inc. and its affiliates and principals (collectively, "the AEW operations"). Simultaneously, a new entity, AEW Capital Management, L.P., was formed into which NEIC contributed its interest in Copley and its affiliates. As a result, the AEW operations were combined with Copley to form the business operations of AEW Capital Management, L.P. At the end of 1997, NEIC completed a restructuring plan under which it contributed all of its operations to a newly formed private partnership, NEIC Operating Partnership, L.P., in exchange for a general partnership interest in the newly formed entity. Accordingly, at December 31, 1998, AEW Capital Management, L.P. was wholly owned by NEIC Operating Partnership, L.P.. AEW is a subsidiary of AEW Capital Management, L.P. Effective April 1, 1998, NEIC changed its name to Nvest, L.P. and NEIC Operating Partnership, L.P. changed its name to Nvest Companies, L.P. Prior to August 30, 1996, New England Mutual Life Insurance Company ("The New England") was NEIC's principal unit holder and owner of all of the outstanding stock of NEIC's general partner. On August 30, 1996, The New England merged with and into Metropolitan Life Insurance Company ("Met Life"). Met Life is the surviving entity and, therefore, through a wholly-owned subsidiary, became the owner of the units of partnership interest previously owned by The New England and of the stock of NEIC' s general partner. At December 31, 1999 and 1998, an affiliate of the Managing General Partner owned 1,648 units of limited partnership interest, which were repurchased from certain qualified plans, within specified annual limitations provided for in the Partnership Agreement. Management AEW, as advisor, is entitled to receive stipulated fees from the Partnership in consideration of services performed in connection with the management of the Partnership and the acquisition and disposition of Partnership investments in real property. Partnership management fees are 9% of distributable cash flow from operations, as defined, before deducting such fees. Payment of 50% of management fees incurred is deferred until cash distributions to limited partners exceed a specified rate. Deferred management fees were $1,637,414 and $2,237,519 at December 31, 1999 and 1998, respectively. During 1999, the Partnership paid $918,738 of current and deferred management fees. AEW is also reimbursed for expenses incurred in connection with administering the Partnership 26 ($15,000 in 1999, $15,000 in 1998 and $15,000 in 1997). Acquisition fees paid were based on 2% of the gross proceeds from the offering. Disposition fees are limited to the lesser of 3% of the selling price of the property, or 50% of the standard real estate commission customarily charged by an independent real estate broker. Payments of disposition fees are subject to the prior receipt by the limited partners of their capital contributions plus a stipulated return thereon. Deferred disposition fees were $2,798,751 and $1,991,879 at December 31, 1999 and 1998, respectively. New England Securities Corporation, an indirect subsidiary of Met Life, is engaged by the Partnership to act as its unit holder servicing agent. Fees and out-of-pocket expenses for such services totaled $29,089, $37,823, and $25,155 in 1999, 1998 and 1997, respectively. Note 2 - Summary of Significant Accounting Policies Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the Managing General Partner to make estimates affecting the reported amounts of assets and liabilities, and of revenues and expenses. In the Partnership's business, certain estimates require an assessment of factors not within management's control, such as the ability of tenants to perform under long-term leases and the ability of the properties to sustain their occupancies in changing markets. Actual results, therefore, could differ from those estimates. Real Estate Joint Ventures Investments in joint ventures, including loans made to venture partners, which are in substance real estate investments, are stated at cost plus (minus) equity in undistributed joint venture income (losses). Allocations of joint venture income (losses) were made to the Partnership's venture partners as long as they had substantial economic equity in the project. Economic equity is measured by the excess of the appraised value of the property over the Partnership's total cash investment plus accrued preferential returns thereon. Currently, the Partnership records an amount equal to 100% of the operating results of each joint venture, after the elimination of all inter-entity transactions, except for the one venture jointly owned by an affiliate of the Partnership, which has substantial economic equity in the project. Joint ventures are consolidated with the accounts of the Partnership if, and when, the venture partner no longer shares in the control of the business. Property Property includes land and buildings and improvements, which are stated at cost less accumulated depreciation, plus other operating net assets (liabilities). The Partnership's initial carrying value of a property previously owned by a joint venture equals the Partnership's carrying value of the predecessor investment on the conversion date. Capitalized Costs, Depreciation and Amortization Maintenance and repair costs are expensed as incurred. Significant improvements and renewals are capitalized. Depreciation is computed using the straight-line method based on estimated useful lives of the buildings and improvements. Leasing costs are also capitalized and amortized over the related lease terms. Acquisition fees have been capitalized as part of the cost of real estate investments. Amounts not related to land are being amortized using the straight-line method over the estimated useful lives of the underlying property. Certain tenant leases provide for rental increases over the respective lease terms. Rental revenue is being recognized on a straight-line basis over the lease terms. 27 Realizability of Real Estate Investments The Partnership considers a real estate investment to be impaired when it determines the carrying value of the investment is not recoverable through expected undiscounted cash flows generated from the operations and disposal of the property. The impairment loss is based on the excess of the investment's carrying value over its estimated fair market value. For investments held for sale, the impairment loss also includes estimated costs of sale. Property held for sale is not depreciated during the holding period. Investments are considered to be held for disposition at the time management commits the Partnership to a plan to dispose of the investment. Cash Equivalents Cash equivalents are stated at cost plus accrued interest. The Partnership considers all highly liquid investments purchased with a maturity of ninety days or less to be cash equivalents; otherwise, they are classified as short-term investments. Deferred Disposition Fees Disposition fees due to AEW related to sales of investments are included in the determination of gains or losses resulting from such transactions. According to the terms of the advisory contract, payment of such fees has been deferred until the limited partners first receive their capital contributions, plus stipulated returns thereon. Income Taxes A partnership is not liable for income taxes and, therefore, no provision for income taxes is made in the financial statements of the Partnership. A proportionate share of the Partnership's income is reportable on each partner's tax return. Per Unit Computations Per unit computations are based on the number of units of limited partnership interest outstanding during the year. The actual per unit amount will vary by partner depending on the date of admission to, or withdrawal from, the Partnership. Segment Data Effective January 1, 1998, the Partnership adopted Financial Accounting Standards Board Statement No. 131, "Disclosure about Segments on an Enterprise and Related Information" (FAS 131). Based on the criteria established in FAS 131, the Managing General Partner has determined that the Partnership operates in one operating segment: investing in real estate properties which are domiciled in the United States of America. Note 3 - Real Estate Joint Ventures The Partnership had invested in seven real estate joint ventures, organized as general partnerships with a real estate management/development firm, and in one case, with an affiliate of the Partnership. One joint venture sold its property in 1994; another sold its property 1996. One joint venture investment was restructured into a wholly-owned property in 1995; and two joint venture investments were restructured into wholly-owned properties in 1996. The Partnership made capital contributions to the ventures, which are generally subject to preferential cash distributions at a specified rate and to priority distributions with respect to sale or refinancing proceeds. The Partnership also made loans to certain of its venture partners who, in turn, contributed the proceeds to the capital of the venture. The loans bear interest at a specified rate. The loans are in substance real estate investments and are accounted for accordingly. The joint venture agreements provide for the funding of cash flow deficits by the venture partners in proportion to their ownership interests, and for the dilution of their ownership share in the event a venture partner does not contribute proportionately. 28 The respective real estate management/development firms are responsible for day-to-day development and operating activities, although overall authority and responsibility for the business is shared by the venturers. The real estate development/management firms or their affiliates also provide various services to the respective joint ventures for a fee. The following is a summary of cash invested in joint ventures, net of returns of capital and excluding acquisition fees: Preferential December 31 Investment/ Rate of Ownership -------------------- Location Return Interest 1999 1998 -------- ------ -------- ---- ---- Columbia Gateway Corp. Park Columbia, Maryland 10.5% 68.11% $ -- $12,580,704 270 Technology Center Frederick, Maryland 10.0% 50% $ 4,857,000 $ 4,857,000 Columbia Gateway Corporate Park On December 21, 1987, the Partnership entered into a joint venture with an affiliate of the Partnership and with an affiliate of the Manekin Corporation to construct and operate seven research and development/office buildings, of which six have been constructed to date. The Partnership committed to make a $14,598,000 capital contribution. The Partnership and New England Pension Properties V (the "Affiliate") collectively had a 50% interest in the joint venture. Ownership of the Columbia Gateway Corporate Park joint venture was restructured to give the Partnership and its Affiliate obtained additional voting rights in the joint venture effective January 1, 1998, and are entitled to 69.5% and 30.5%, respectively of the operating activity of the joint venture. On December 20, 1999, the Columbia Gateway Corporate Park joint venture investment in which the Partnership and an affiliate own a 68.11% and 29.89% interest, respectively, sold its property to an unaffiliated third party for gross proceeds of $19,850,000, of which the Partnership's share was $13,795,750. The Partnership received its 69.5% share of the net proceeds, $13,423,827 after closing costs, and recognized a gain of $1,927,893 ($20.09 per Limited Partnership Unit) on the sale. A disposition fee of $413,872 was accrued but not paid to AEW Real Estate Advisors Inc.. On January 27, 2000 the Partnership made a capital distribution of $13,204,583 ($139.00 per Limited Partnership Unit) from the proceeds of the sale. 270 Technology Center On December 22, 1987, the Partnership entered into a joint venture with an affiliate of the Manekin Corporation to construct and operate two research and development/office buildings. The Partnership committed to make a $5,150,000 capital contribution. The Partnership has a 50% interest in the joint venture. The minimum future rentals due to the venture under non-cancelable operating leases are: $716,204 in 2000, $553,154 in 2001, $211,774 in 2002, $37,928 in 2003 and $15,965 in 2004. Reflections On August 1, 1986, the Partnership entered into a joint venture with an affiliate of Oxford Development Corporation to construct and operate a multi-family apartment complex. The Partnership's commitment is for a total cash investment of $14,475,000, $5,790,000 of which is a loan to the venture partner. In May 1992, the Partnership agreed to extend the maturity of the loan from August, 1996 to December, 1999 and the venture partner agreed to pay interest at a minimum of 7% per annum with the unpaid amount subject to compounding at 10.5% per annum. The loan was secured by the venture partner's interest in the joint venture, as well as a guarantee from an affiliate of the venture partner. In the second quarter of 1996, the joint venture agreement was amended, whereby the Partnership's venture partner became an indirect limited partner. Accordingly, this investment has been accounted for as a wholly-owned property since April 1, 1996. (See Note 4.) 29 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. (See Note 4.) Metro Business Center On September 15, 1986, the Partnership entered into a joint venture with an affiliate of Hewson Properties, Inc. (the "Developer"), to construct and operate four multi-tenant office/warehouse buildings. The Partnership committed to make a maximum cash investment of $9,568,000, $3,988,000 of which is a loan to the venture partner. The loan was to mature in October 1996 and was secured by the venture partner's interest in the joint venture. Effective January 1, 1996, the joint venture agreement was amended to grant the Partnership full control over management decisions, beginning July 1, 1996. As full control over the operation of this investment was not transferred until July 1, 1996, the Partnership accounted for this investment as a joint venture until that date. 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. The property interest distributed to the Developer was encumbered by the aforementioned loan. The note was amended to mature on February 1, 1997 and was secured by a recorded deed-of-trust which provided that the note would be due upon the sale of the collateral. The note was subsequently amended to mature on March 31, 1998. In connection with this transaction, the Partnership obtained the option to purchase the tenancy-in-common interest of the Hewson affiliate at its fair market value beginning February 1, 1997. On February 28, 1998, the Partnership executed a purchase and sale agreement to purchase the tenancy-in-common interest of the Developer. 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 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 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 is 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 AEW. 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. 30 Summarized Financial Information The following summarized financial information is presented in the aggregate for the joint ventures: Assets and Liabilities ---------------------- December 31, ------------------------------ 1999 1998 ----------- ----------- Assets Real property, at cost less accumulated depreciation of $1,039,331 and $2,743,676, respectively $ 3,939,825 $19,830,637 Other 634,949 888,075 ----------- ----------- $ 4,574,774 20,718,712 Liabilities 136,869 339,188 ----------- ----------- Net assets $ 4,437,905 $20,379,524 =========== =========== Results of Operations --------------------- Year ended December 31, ---------------------------------------- 1999 1998 1997 ---------- ---------- ---------- Revenue Rental income $2,959,645 $3,047,719 $2,691,155 Other income 118,802 119,729 3,233 ---------- ---------- ---------- 3,078,447 3,167,448 2,694,388 ---------- ---------- ---------- Expenses Operating expenses 662,137 723,908 596,471 Depreciation and amortization 318,707 488,068 854,025 ---------- ---------- ---------- 980,844 1,211,976 1,450,496 ---------- ---------- ---------- Net income $2,097,603 $1,955,472 $1,243,892 ========== ========== ========== 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 4 - Property Palms Business Center Effective January 1, 1995, the Palms Business Center joint venture was restructured, giving the Partnership control over management decisions. Since that date, the investment was accounted for as a wholly-owned property. The carrying value of the joint venture investment at conversion ($12,519,961) was allocated to land, building and improvements, amount payable to venture partner and other net operating liabilities. The venture partner was entitled to received 40% of the excess cash 31 flow above a specified level until the initial obligation of $360,000 was repaid in full. The obligation was paid in full as of the date of sale (see discussion below). The buildings and improvements (fifteen office/industrial buildings in Las Vegas, Nevada) were being depreciated over 25 years, beginning January 1, 1995. The Palms Business Center was sold on October 24, 1997 to an institutional buyer, which is unaffiliated with the Partnership for $23,200,000. The Partnership received net proceeds of $22,983,007, after closing costs and payoff of the remaining initial obligation due to the venture partner, and recognized a gain of $10,482,458 ($109.24 per Limited Partnership Unit). A disposition fee of $696,000 was accrued but not paid to AEW Real Estate Advisors, Inc.. On November 25, 1997, the Partnership made a distribution to the limited partners in the aggregate amount of $22,989,274 ($242 per Limited Partnership Unit) with proceeds from this sale and partially from reserves established from the proceeds of previous sales. Reflections 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 ($10,469,511) was allocated to land, building and improvements and other net operating assets. On August 21, 1998 the Partnership sold a parcel of land to the City of Fort Myers. The gross sale price was $74,731. The Partnership received net proceeds totaling $67,881 and recognized a gain of $35,591. The buildings and improvements (a multi-family apartment complex in Fort Meyers, Florida) were being depreciated over 25 years, beginning April 1, 1996. On September 23, 1999, the Reflections Apartments was sold to a third party which is unaffiliated with the Partnership. The gross sale price was $13,100,000. The Partnership received net proceeds totaling $12,773,052, after closing costs, and recognized a gain of $3,474,005 ($36.20 per Limited Partnership Unit). A disposition fee of $393,000 was accrued but not paid to AEW Real Estate Advisors, Inc. On October 28, 1999, the Partnership made a capital distribution of $12,522,505 ($131.82 per Limited Partnership Unit) from the proceeds of the sale. Metro Business Center Effective July 1, 1996, the Partnership obtained control over all management decisions related to the properties owned by the Metro Business Center joint venture (and subsequently by the tenants-in common). (See Note 3.) Since that date, the investment has been accounted for as a wholly-owned property. The carrying value of the joint venture investment at conversion ($5,889,261) was allocated to land, buildings and improvements, and other net operating assets. As described above the Partnership sold the Metro Business Center on September 23, 1998 and recognized a gain of $3,706,950. The buildings and improvements (four office/warehouse buildings in Phoenix, Arizona) were being depreciated over 25 years, beginning July 1, 1996. The following is a summary of the Partnership's investment in property: 32 Assets and Liabilities ---------------------- December 31, --------------------------- 1999 1998 ----------- ----------- Land $ -- $ 1,538,883 Buildings and improvements and other capitalized costs -- 8,383,001 Accumulated depreciation and Amortization -- (932,007) Net operating liabilities -- 116,580 ----------- ----------- -- $ 9,106,457 =========== =========== Note 5 - Income Taxes The Partnership's income for federal income tax purposes differs from that reported in the accompanying statement of operations as follows: Year ended December 31, ----------------------------------------- 1999 1998 1997 ----------- ----------- ----------- Net income per financial statements $ 7,256,381 $ 5,988,712 $13,211,159 Timing differences: Joint venture earnings 169,210 775,991 335,601 Depreciation and amortization (53,730) 549,260 926,809 Expenses (282,938) (244,327) 176,233 Gain (loss) on sale (4,722,636) (4,687,593) 1,008,333 ----------- ----------- ----------- Taxable income $ 2,366,287 $ 2,382,043 $15,658,135 =========== =========== =========== Note 6 - Partners' Capital Allocation of net income (losses) from operations and distributions of distributable cash from operations, as defined, are in the ratio of 99% to the limited partners and 1% to the general partners. Cash distributions are made quarterly. Net sale proceeds and financing proceeds are allocated first to limited partners to the extent of their contributed capital plus a stipulated return thereon, as defined, second to pay disposition fees, and then 85% to the limited partners and 15% to the general partners. As a result of returns of capital from sales transactions, the adjusted capital contribution per limited partnership unit was reduced from $1,000 to $918 in 1993, to $863 in 1995, to $766 in 1996 to $524 in 1997 to $422 in 1998 and to $290.18 in 1999. No capital distributions have been made to the general partners. Income from a sale is allocated in proportion to the distribution of related proceeds, provided that the general partners are allocated at least 1%. Income or losses from a sale, if there are no residual proceeds after the repayment of the related debt, will be allocated 99% to the limited partners and 1% to the general partners. Note 7 - Subsequent Event Distributions of cash from operations relating to the quarter ended December 31, 1999 were made on January 27, 2000 in the aggregate amount of $493,217 ($5.14 per Limited Partnership Unit). In addition, a special capital distribution was made on January 27, 2000 funded from original working capital totaling $1,347,057 ($14.18 per Limited Partnership Unit). As discussed above, the Partnership also made a capital distribution of $13,204,583 ($139.00 per Limited Partnership Unit) from the proceeds of the Columbia Gateway Corporate Park sale. 33 NEW ENGLAND PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP REAL ESTATE AND ACCUMULATED DEPRECIATION Schedule III AT DECEMBER 31, 1999
Initial Cost to Costs Subsequent the Partnership to Acquisition ------------------------------------------------------------------------- Change in Buildings & Other Net Working Description Land Improvements Operating Liabilities Improvements Capital - ----------- ---- ------------ --------------------- ------------ ------- 50% Interest in Morf VI Venture. Owner of two single story See Note B office/research and -------------------------------------------------------------------------- development buildings in Frederick, Maryland. 68.11% interest in Gateway 51 Partnership See Note B which has constructed -------------------------------------------------------------------------- six office and research and development buildings, and owns land in Columbia, Maryland -------------------------------------------------------------------------- Total Joint Ventures ========================================================================== Las Vegas, NV -Rancho Road Associates $3,072,333 $9,729,055 ($281,424) $51,768 $472,376 Fort Myers, FL -Lee Partners 1,571,173 8,653,313 245,029 129,689 (547,424) Phoeniz, AZ -Copley/Hewson Northwest 1,880,099 3,879,241 129,921 319,870 16,558 --------------------------------------------------------------------------- Total Wholly-Owned Properties $6,523,605 $22,261,609 $93,526 $501,327 ($58,490) --------------------------------------------------------------------------- Gross amount at which Carried at Close of Period ----------------------------------------------- Buildings & Other Net Disposal Accumulated Description Land Improvements Operating Liabilities of Asset Total Depreciation - ----------- ---- ------------ --------------------- -------- ----- ------------ 50% Interest in Morf VI Venture. Owner of two single story $4,261,455 N/A office/research and ------------------------------------------------- development buildings in Frederick, Maryland. 68.11% interest in Gateway 51 Partnership $347,500 N/A which has constructed ------------------------------------------------- six office and research and development buildings, and owns land in Columbia, Maryland ----------------------------------------------------------------- ----------- Total Joint Ventures $4,608,955 ================================================================= =========== Las Vegas, NV -Rancho Road Associates $3,072,333 $9,780,823 $190,952 ($13,044,108) $0 $0 Fort Myers, FL -Lee Partners 1,571,173 8,783,022 (302,399) (9,954,173) 97,603 0 Phoeniz, AZ -Copley/Hewson Northwest 1,880,099 4,199,111 146,479 (6,255,689) 0 0 -------------------------------------------------------------------------------------------- Total Wholly-Owned Properties $6,523,605 $22,762,936 $35,032 ($29,223,970) $97,603 $0 -------------------------------------------------------------------------------------------- Date of Date Depreciable Description Construction Acquired Life - ----------- ------------ -------- ---- 50% Interest in Morf VI Venture. Owner of two single story 1987 12/22/87 50 Years office/research and development buildings in Frederick, Maryland. 68.11% interest in Gateway 51 Partnership 1992 12/21/87 50 years which has constructed six office and research and development buildings, and owns land in Columbia, Maryland Total Joint Ventures Las Vegas, NV -Rancho Road Associates 1988 12/29/1986 25 Years Converted to wholly-owned 1/1/95 Fort Myers, FL 08/01/1986 25 Years -Lee Partners 1987 Converted to wholly-owned 4/1/96 Phoeniz, AZ -Copley/Hewson Northwest 1987 09/15/1986 25 Years Converted to wholly-owned 7/1/96 Total Wholly-Owned Properties
34 NEW ENGLAND PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP REAL ESTATE AND ACCUMULATED DEPRECIATION-WHOLLY OWNED PROPERTY SCHEDULE III NOTE A AT DECEMBER 31, 1999
Balance Conversion to Additions to Change in as of Wholly-Owned Lease Additions to Write Down Property Working Description 12/31/1996 Property Commissions Property of Property Capital - ----------------------------------------------------------------------------------------------------------------------------- Fort Myers, FL -Lee Partners $9,906,024 $0 $0 $71,286 $0 $30,687 Las Vegas, NV. -Rancho Road Associates 12,761,488 0 41,347 0 0 253,109 Phoenix, AZ -Copley/Hewson Northwest 5,787,671 0 37,816 235,701 0 (9,620) ----------------------------------------------------------------------------------------------- Total Wholly-Owned Property $28,455,183 $0 $79,163 $306,987 $0 $274,176 =============================================================================================== 12/31/1996 1997 12/31/1996 Balance Accumulated Depreciation Accumulated Disposal of as of Depreciation and and Amortization Dep/Amort Description Asset 12/31/1997 Amortization Expense Subtotal - -------------------------------------------------------------------------------------------------------------- Fort Myers, FL -Lee Partners $0 $10,007,997 $257,265 ($339,699) $596,964 Las Vegas, NV. -Rancho Road Associates (13,044,108) $11,836 894,659 (344,900) $1,239,559 Phoenix, AZ -Copley/Hewson Northwest 0 $6,051,568 98,388 (236,902) $335,290 -------------------------------------------------------------------------------- Total Wholly-Owned Property ($13,044,108) $16,071,401 $1,250,312 ($921,501) $2,171,813 ================================================================================ 12/31/1996 1997 Accumulated Disposal of Depreciation and Description Asset Amortization - ------------------------------------------------------------- Fort Myers, FL -Lee Partners $0 $596,964 Las Vegas, NV. -Rancho Road Associates (1,239,559) $0 Phoenix, AZ -Copley/Hewson Northwest $335,290 ------------------------------- Total Wholly-Owned Property ($1,239,559) $932,254 ===============================
Balance Conversion to Additions to Change in as of Wholly-Owned Lease Additions to Write Down Property Working Description 12/31/1997 Property Commissions Property of Property Capital - ---------------------------------------------------------------------------------------------------------------------------- Fort Myers, FL -Lee Partners $10,007,997 $0 $0 $15,812 ($136,437) $167,941 Las Vegas, NV. -Rancho Road Associates 11,836 0 0 0 0 (11,836) Phoinix, AZ -Copley/Hewson Northwest 6,051,568 0 35,241 54,319 0 100,002 ---------------------------------------------------------------------------------------------- Total Wholly-Owned Property $16,071,401 $0 $35,241 $70,131 ($136,437) $256,107 ============================================================================================== 12/31/1997 1998 12/31/1998 Balance Accumulated Depreciation Accumulated Disposal of as of Depreciation and and Amortization Dep/Amort Description Asset 12/31/1998 Amortization Expense Subtotal - ------------------------------------------------------------------------------------------------------------- Fort Myers, FL -Lee Partners ($32,290) $10,023,023 $596,964 ($335,043) $932,007 Las Vegas, NV. -Rancho Road Associates 0 $0 0 0 $0 Phoinix, AZ -Copley/Hewson Northwest (6,225,689) $15,441 335,290 (214,217) $549,507 -------------------------------------------------------------------------------- Total Wholly-Owned Property ($6,257,979) $10,038,464 $932,254 ($549,260) $1,481,514 ================================================================================ 12/31/1998 1998 Accumulated Disposal of Depreciation and Description Asset Amortization - ---------------------------------------------------------- Fort Myers, FL -Lee Partners $0 $932,007 Las Vegas, NV. -Rancho Road Associates 0 $0 Phoinix, AZ -Copley/Hewson Northwest (549,507) $0 ----------------------------- Total Wholly-Owned Property ($549,507) $932,007 =============================
Balance Conversion to Additions to Change in as of Wholly-Owned Lease Additions to Write Down Property Working Description 12/31/1998 Property Commissions Property of Property Capital - ----------------------------------------------------------------------------------------------------------------------------- Fort Myers, FL -Lee Partners $10,023,023 $0 $0 $0 $0 ($3,537) Phoenix, AZ -Copley/Hewson Northwest 15,441 0 0 0 0 (15,441) ----------------------------------------------------------------------------------------------- Total Wholly-Owned Property $10,038,464 $0 $0 $0 $0 ($18,978) =============================================================================================== 12/31/1998 1999 12/31/1999 Balance Accumulated Depreciation Accumulated Disposal of as of Depreciation and and Amortization Dep/Amort Description Asset 12/31/1999 Amortization Expense Subtotal - ------------------------------------------------------------------------------------------------------------- Fort Myers, FL -Lee Partners ($9,921,884) $97,602 $932,007 ($83,830) $1,015,837 Phoenix, AZ -Copley/Hewson Northwest 0 $0 0 0 $0 -------------------------------------------------------------------------------- Total Wholly-Owned Property ($9,921,884) $97,602 $932,007 ($83,830) $1,015,837 ================================================================================ 12/31/1999 1999 Accumulated Disposal of Depreciation and Description Asset Amortization - -------------------------------------------------------------- Fort Myers, FL -Lee Partners ($1,015,837) $0 Phoenix, AZ -Copley/Hewson Northwest 0 $0 --------------------------------- Total Wholly-Owned Property ($1,015,837) $0 =================================
35 NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP SCHEDULE III NOTE B REAL ESTATE AND ACCUMULATED DEPRECIATION-JOINT VENTURES AT DECEMBER 31,1999
CASH CASH PERCENT BALANCE INVESTMENT EQUITY IN 1997 AMORTIZATION DISTRIBUTION OF AS OF IN JOINT INCOME/ OF DEFERRED FROM DESCRIPTION OWNERSHIP 12/31/96 VENTURES (LOSS) ACQUISITION FEES JOINT VENTURE ---------------------- --------- ------------ ---------- ---------- ---------------- ------------- MORF VI Venture 50% $4,722,717 $0 $107,157 ($1,840) ($220,000) Gateway 51 Partnership 34.75% 11,010,803 0 783,507 (3,468) (519,746) ------------ ---------- ---------- --------------- ------------ $15,733,520 $0 $890,664 ($5,308) ($739,746) ============ ========== ========== =============== ============ PERCENT BALANCE INVESTMENT EQUITY IN 1998 AMORTIZATION DISTRIBUTION OF AS OF IN JOINT INCOME/ OF DEFERRED FROM DESCRIPTION OWNERSHIP 12/31/97 VENTURES (LOSS) ACQUISITION FEES JOINT VENTURE ---------------------- --------- ------------ ---------- ---------- ---------------- ------------- MORF VI Venture 50% $4,608,034 $0 $511,405 ($1,840) ($741,000) Gateway 51 Partnership 34.75% 11,271,096 0 1,003,628 (3,468) (981,212) ------------ ---------- ---------- --------------- ------------ $15,879,130 $0 $1,515,033 ($5,308) ($1,722,212) ============ ========== ========== =============== ============ PERCENT BALANCE INVESTMENT EQUITY IN 1999 AMORTIZATION DISTRIBUTION OF AS OF IN JOINT INCOME/ OF DEFERRED FROM DESCRIPTION OWNERSHIP 12/31/98 VENTURES (LOSS) ACQUISITION FEES JOINT VENTURE ---------------------- --------- ------------ ---------- ---------- ---------------- ------------- MORF VI Venture 50% $4,376,599 $0 $666,696 ($1,840) ($780,000) Gateway 51 Partnership 68.11% 11,290,044 0 994,480 (2,601) (934,080) ------------ ---------- ---------- --------------- ------------ $15,666,643 $0 $1,661,176 ($4,441) ($1,714,080) ============ ========== ========== =============== ============ CONVERSION TO BALANCE WHOLLY-OWNED 1997 AS OF DESCRIPTION PROPERTY DISPOSALS 12/31/97 ---------------------- ------------- ------------ ----------- MORF VI Venture $0 $0 $4,608,034 Gateway 51 Partnership 0 0 11,271,096 ------------- ------------ ----------- $0 $0 $15,879,130 ============= ============ =========== CONVERSION TO BALANCE WHOLLY-OWNED 1998 AS OF DESCRIPTION PROPERTY DISPOSALS 12/31/98 ---------------------- ------------- ------------ ----------- MORF VI Venture $0 $0 $4,376,599 Gateway 51 Partnership 0 0 11,290,044 ------------- ------------ ----------- $0 $0 $15,666,643 ============= ============ =========== CONVERSION TO BALANCE WHOLLY-OWNED 1999 AS OF DESCRIPTION PROPERTY DISPOSALS 12/31/99 ---------------------- ------------- ------------ ----------- MORF VI Venture $0 $0 $4,261,455 Gateway 51 Partnership 0 (11,000,343) 347,500 ------------- ------------ ----------- $0 ($11,000,343) $4,608,955 ============= ============ ===========
36 FINANCIAL STATEMENTS INDEX NO. 2 Auditor's Report and Financial Statements of Morf 6 Venture Independent Auditor's Report of Wolpoff and Company, LLP Balance Sheet - December 31, 1999 and 1998 Statement of Income - For the Years ended December 31, 1999, 1998 and 1997 Statement of Partners' Capital - For the Years ended December 31, 1999, 1998 and 1997 Statement of Cash Flows - For the Years ended December 31, 1999, 1998 and 1997 Notes to Financial Statements 37 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) FINANCIAL REPORT DECEMBER 31, 1999 WALPERT & WOLPOFF, LLP Certified Public Accountants ---------------------------- 38 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) CONTENTS DECEMBER 31, 1999 INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS FINANCIAL STATEMENTS Balance Sheet Statement of Income Statement of Partners' Capital Statement of Cash Flows Notes to Financial Statements INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION SUPPLEMENTARY INFORMATION Schedule of Partners' Capital Schedule of Changes in Partners' Capital - Income Tax Basis 39 [LETTERHEAD OF WALPERT & WOLPOFF, LLP] To the Partners MORF 6 Venture (A Maryland General Partnership) Columbia, Maryland INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS We have audited the balance sheet of MORF 6 Venture (A Maryland General Partnership) as of December 31, 1999 and 1998, and the related statements of income, partners' capital, and cash flows for each of the three years ended December 31, 1999, 1998, and 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits, We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MORF 6 Venture (A Maryland General Partnership) as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years ended December 31, 1999, 1998, and 1997, in conformity with generally accepted accounting principles. /s/ Walpert & Wolpoff, LLP WALPERT & WOLPOFF, LLP Baltimore, Maryland January 12, 2000 40 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) BALANCE SHEET ASSETS December 31, -------------------------- 1999 1998 ----------- ----------- PROPERTY, AT COST - Note 1 Buildings and Improvements $ 4,155,969 $ 4,088,945 Land and Land Improvements 630,335 630,335 Deferred Costs - Note 3 192,852 143,782 ----------- ----------- 4,979,156 4,863,062 Less Accumulated Depreciation and Amortization (1,039,331) (914,049) ----------- ----------- PROPERTY, NET 3,939,825 3,949,013 ----------- ----------- OTHER ASSETS Cash and Cash Equivalents - Note 1 64,047 113,865 ----------- ----------- Receivable From Tenants 24,307 24,973 Allowance for Doubtful Accounts (22,740) (22,870) ----------- ----------- 1,567 2,103 ----------- ----------- Prepaid Expenses 29,367 29,294 ----------- ----------- TOTAL OTHER ASSETS 94,981 145,262 ----------- ----------- $ 4,034,806 $ 4,094,275 =========== =========== LIABILITIES AND PARTNERS' CAPITAL LIABILITIES Accounts Payable and Accrued Expenses $ 89,598 $ 40,088 Tenant Security Deposits 25,638 22,445 Rents Received in Advance 13,208 12,076 ----------- ----------- TOTAL LIABILITIES 128,444 74,609 PARTNERS' CAPITAL - Note 2 3,906,362 4,019,666 ----------- ----------- $ 4,034,806 $ 4,094,275 =========== =========== - ---------- The notes to financial statements are an integral part of this statement. 41 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) STATEMENT OF INCOME
Year Ended December 31, ----------------------------------- 1999 1998 1997 --------- --------- --------- REVENUE Gross Rent Potential - Notes 1 and 5 $ 808,690 $ 801,491 $ 784,015 Less Vacancies 9,502 66,464 132,236 --------- --------- --------- Net Rental Income 799,188 735,027 651,779 Expense Reimbursements From Tenants 166,271 92,781 76,286 Interest and Other Income 2,854 11,139 3,213 --------- --------- --------- TOTAL REVENUE 968,313 838,947 731,278 --------- --------- --------- OPERATING EXPENSES Real Property Tax 56,695 55,967 41,093 Building and Grounds Maintenance 48,135 31,584 32,009 Management Fees - Note 3 29,100 24,585 22,507 General and Administrative 24,688 15,720 21,836 Utilities 14,059 11,434 17,246 Bad Debts 3,658 23,789 -0- --------- --------- --------- TOTAL OPERATING EXPENSES 176,335 163,079 134,691 --------- --------- --------- OPERATING INCOME 791,978 675,868 596,587 --------- --------- --------- OTHER EXPENSES Depreciation and Amortization (125,282) (111,321) (116,945) Abandonment of Tenant Improvements - Note 1 -0- (53,142) (372,485) --------- --------- --------- TOTAL OTHER EXPENSES (125,282) (164,463) (489,430) --------- --------- --------- NET INCOME - Note 4 $ 666,696 $ 511,405 $ 107,157 ========= ========= =========
- ---------- The notes to financial statements are an integral part of this statement. 42 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) STATEMENT OF PARTNERS' CAPITAL Year Ended December 31, --------------------------------------- 1999 1998 1997 ----------- ----------- ----------- CAPITAL CONTRIBUTIONS - Note 2 Prior Years $ 4,857,000 $ 4,857,000 $ 4,857,000 ----------- ----------- ----------- CAPITAL PLACEMENT FEE - Notes 1 and 2 (38,250) (38,250) (38,250) ----------- ----------- ----------- DISTRIBUTIONS - Note 2 Prior Years (5,308,931) (4,567,931) (4,347,931) Current Year (780,000) (741,000) (220,000) ----------- ----------- ----------- (6,088,931) (5,308,931) (4,567,931) ----------- ----------- ----------- ACCUMULATED INCOME Prior Years 4,509,847 3,998,442 3,891,285 Current Year 666,696 511,405 107,157 ----------- ----------- ----------- 5,176,543 4,509,847 3,998,442 ----------- ----------- ----------- TOTAL PARTNERS' CAPITAL $ 3,906,362 $ 4,019,666 $ 4,249,261 =========== =========== =========== - ---------- The notes to financial statements are an integral part of this statement. 43 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) STATEMENT OF CASH FLOWS
Year Ended December 31, --------------------------------- 1999 1998 1997 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 666,696 $ 511,405 $ 107,157 --------- --------- --------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and Amortization 125,282 111,321 116,945 Abandonment of Tenant Improvements -0- 53,142 372,485 Decrease in Tenant Receivables, Net of Allowance 536 13,014 5,455 Increase in Prepaid Expenses (73) (491) (13,647) Accounts Payable and Accrued Expenses 49,510 15,065 12,946 Increase in Rents Received in Advance 1,133 4,250 -0- --------- --------- --------- Total Adjustments 176,388 196,301 494,184 --------- --------- --------- Net Cash Provided by Operating Activities 843,084 707,706 601,341 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Property Improvements (67,024) -0- (262,947) Leasing Commissions (49,071) (36,154) (54,802) Security Deposits 3,193 -0- 2,017 --------- --------- --------- Net Cash Used by Investing Activities (112,902) (36,154) (315,732) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to Partner (780,000) (741,000) (220,000) --------- --------- --------- Net Cash Used by Financing Activities (780,000) (741,000) (220,000) --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (49,818) (69,448) 65,609 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 113,865 183,313 117,704 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 64,047 $ 113,865 $ 183,313 ========= ========= =========
- ---------- The notes to financial statements are an integral part of this statement. 44 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization MORF 6 Venture (A Maryland General Partnership) (the Partnership) was formed on December 22, 1987, under the Maryland Uniform Partnership Act. The Partnership purchased all of the land and buildings from M.O.R.F. 6 Associates Limited Partnership, a general partner. The buildings were in service and partially leased upon date of purchase. Cash and Cash Equivalents The Partnership considers all highly liquid debt instruments purchased with a maturity of 3 months or less to be cash equivalents. The Partnership's cash is held in financial institutions with insurance provided by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. Periodically during the year, the balance exceeded the FDIC insurance limitation. Property The Partnership owns and operates two office buildings in Frederick, Maryland, containing approximately 73,000 square feet of leasable area. All property is recorded at cost. Information regarding the buildings is as follows: Occupancy Square ---------------------------- Building Feet Tenants 12/31/99 12/31/98 12/31/97 -------- ---- ------- -------- -------- -------- 1 45,000 Multiple 100% 100% 51% 2 28,000 Multiple 100% 100% 100% ------ 73,000 100% 100% 70% ====== === === === During 1998 and 1997, tenant improvements completed in prior years were demolished in order to build out the space for new tenants. The loss on abandonment of tenant improvements is calculated as follows: 1999 1998 1997 -------- -------- --------- Cost $ -0- $ 65,466 $ 480,157 Accumulated Depreciation -0- (12,324) (107,672) -------- -------- --------- Abandonment of Tenant Improvements $ -0- $ 53,142 $ 372,485 ======== ======== ========= 45 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1999 Note 1 - Depreciation (Cont.) Building costs are being depreciated using the straight-line method over the estimated useful lives of 50 years. Beginning in January 1998, the Partnership changed depreciation methods for tenant improvements. Tenant improvements are being depreciated using the straight-line method over the life of the tenants' lease; in prior years the improvements were depreciated over 50 years. Amortization Various deferred costs are being amortized as follows: Amortization 1999 1998 Period -------- -------- ------------ Leasing Commissions $185,134 $136,064 1 - 5 Years Organization Costs 7,718 7,718 Complete -------- -------- $192,852 $143,782 ======== ======== Rental Income Rental income for major leases is being recognized on a straight-line basis over the term of the lease. The excess of the rental income recognized over the amount stipulated in the lease is shown as deferred rent receivable. Income Taxes Partnerships, as such, are not subject to income taxes. The individual partners are required to report their respective shares of partnership income and other tax items on their respective income tax returns. Capital Placement Fee The cost incurred for arranging the Partnership's equity has been treated as a reduction of partners' capital (see Note 2). Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Note 2 - PARTNERS' CAPITAL Capital Investment New England Life Pension Properties IV (NELPP IV) has agreed to provide equity up to an amount of $5,150,000 to the Partnership. Of this amount, $5,004,841 was contributed, and in 1991, $293,000 was returned from proceeds of a 1990 land sale. An additional $175,060 was contributed in 1994, and in 1995, capital contributions of $29,901 were returned. Contributed capital totaled $4,857,000, at December 31, 1999, 1998, and 1997. 46 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1999 Note 2 - (Cont.) NELPP IV is entitled to a cumulative priority return of 10%, compounded monthly, on invested capital. During 1999, 1998, and 1997, NELPP IV was paid $780,000, $741,000, and $220,000, respectively, under this agreement. As of December 31, 1999, 1998, and 1997, the unpaid priority return was $-0-, $-0-, and $228,089, respectively. Capital Placement Fee The Partnership incurred fees of $38,250 with Paine Webber Mortgage Finance, Inc. with respect to capital raised by the Partnership. This amount has been charged against capital. Note 3 - RELATED PARTY TRANSACTIONS Management Fees The Partnership has entered into an agreement with Manekin, LLC, an affiliated entity, to act as management agent for the property. The management agreement provides for fees equal to 3% of rent and tenant expense billings. For the years ended December 31, 1999, 1998, and 1997, management fees of $29,100, $24,585, and $22,507, respectively, were incurred. Leasing Commissions Leasing commissions of $16,667, $20,583, and $54,802, were paid to related parties during 1999, 1998, and 1997, respectively. Note 4 - TAX ACCOUNTING Tax accounting differs from financial accounting as follows: Current Prior Year Years Total --------- ---------- ---------- Financial Income $ 666,696 $4,509,847 $5,176,543 Additional Depreciation (49,590) (591,163) (640,753) Real Property Taxes Expensed for Tax -0- (28,347) (28,347) Prepaid Tenant Reimbursements 52,673 31,211 83,884 Rents Received in Advance (7,788) 12,076 4,288 Additional Gain on Sale of Land Recognized for Tax -0- 30,594 30,594 Allowance for Doubtful Accounts (130) 22,870 22,740 --------- ---------- ---------- Taxable Income $ 661,861 $3,987,088 $4,648,949 ========= ========== ========== 47 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1999 Note 5 - FUTURE MINIMUM LEASE PAYMENTS The following is a schedule of future minimum lease payments to be received under noncancelable operating leases at December 31, 1999: Year Ending December 31, 2000 $ 716,204 2001 553,154 2002 211,774 2003 37,928 2004 15,965 ---------- Total $1,535,025 ========== 48 [LETTERHEAD OF WALPERT & WOLPOFF, LLP] To the Partners MORF 6 Venture (A Maryland General Partnership) Columbia, Maryland INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information contained on pages 11 and 12 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the basic financial statements, and accordingly, we express no opinion on it. /s/ Walpert & Wolpoff, LLP WALPERT & WOLPOFF, LLP Baltimore, Maryland January 12, 2000 49 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) SCHEDULE OF PARTNERS' CAPITAL YEAR ENDED DECEMBER 31, 1999 M.O.R.F. 6 New England Associates Life Pension Limited Properties IV Partnership Total ------------- ----------- ----- OWNERSHIP PERCENTAGE 50% 50% 100% =========== ===== =========== CAPITAL CONTRIBUTIONS - Note 2 Prior Years $ 4,857,000 $ -0- $ 4,857,000 ----------- ----- ----------- CAPITAL PLACEMENT FEE - Notes 1 and 2 (38,250) -0- (38,250) ----------- ----- ----------- DISTRIBUTIONS - Note 2 Prior Years (5,308,931) -0- (5,308,931) Current Year (780,000) -0- (780,000) ----------- ----- ----------- (6,088,931) -0- (6,088,931) ----------- ----- ----------- ACCUMULATED INCOME Prior Years 4,509,847 -0- 4,509,847 Current Year 666,696 -0- 666,696 ----------- ----- ----------- 5,176,543 -0- 5,176,543 ----------- ----- ----------- TOTAL PARTNERS' CAPITAL $ 3,906,362 $ -0- $ 3,906,362 =========== ===== =========== - ---------- See Independent Auditor's Report on Supplementary Information. 50 MORF 6 VENTURE (A MARYLAND GENERAL PARTNERSHIP) SCHEDULE OF CHANGES IN PARTNERS' CAPITAL - INCOME TAX BASIS YEAR ENDED DECEMBER 31, 1999 M.O.R.F. 6 New England Associates Life Pension Limited Properties IV Partnership Total ------------- ----------- ----- OWNERSHIP PERCENTAGE 50% 50% 100% =========== ===== =========== CAPITAL CONTRIBUTIONS - Note 2 Prior Years $ 4,857,000 $ -0- $ 4,857,000 ----------- ----- ----------- CAPITAL PLACEMENT FEE - Notes 1 and 2 (38,250) -0- (38,250) ----------- ----- ----------- DISTRIBUTIONS - Note 2 Prior Years (5,308,931) -0- (5,308,931) Current Year (780,000) -0- (780,000) ----------- ----- ----------- (6,088,931) -0- (6,088,931) ----------- ----- ----------- ACCUMULATED INCOME - Note 4 Prior Years 3,987,088 -0- 3,987,088 Current Year 661,861 -0- 661,861 ----------- ----- ----------- 4,648,949 -0- 4,648,949 ----------- ----- ----------- TOTAL PARTNERS' CAPITAL $ 3,378,768 $ -0- $ 3,378,768 =========== ===== =========== - ---------- See Independent Auditor's Report on Supplementary Information. 51 FINANCIAL STATEMENTS INDEX NO. 3 Auditor's Report and Financial Statements of Gateway 51 Partnership Independent Auditor's Report of Wolpoff and Company, LLP Balance Sheet - December 31, 1998 and 1997 Statement of Income - For the Years ended December 31, 1998, 1997 and 1996 Statement of Partners' Capital - For the Years ended December 31, 1998, 1997 and 1996 Statement of Cash Flows - For the Years ended December 31, 1998, 1997 and 1996 Notes to Financial Statements 52 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) FINANCIAL REPORT DECEMBER 31, 1998 53 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) CONTENTS DECEMBER 31, 1998 INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS FINANCIAL STATEMENTS Balance Sheet Statement of Income Statement of Partners' Capital Statement of Cash Flows Notes to Financial Statements INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION SUPPLEMENTARY INFORMATION Schedule of Partners' Capital Schedule of Changes in Partners' Capital - Income Tax Basis 54 [LETTERHEAD OF WOLPOFF & COMPANY, LLP] To the Partners Gateway 51 Partnership (A Maryland General Partnership) Columbia, Maryland INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS We have audited the balance sheet of Gateway 51 Partnership (A Maryland General Partnership) as of December 31, 1998 and 1997, and the related statements of income, partners' capital, and cash flows for each of the three years in the period ended December 31, 1998, 1997, and 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gateway 51 Partnership (A Maryland General Partnership) as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, 1997, and 1996, in conformity with generally accepted accounting principles. /s/ Wolpoff & Company, LLP WOLPOFF & COMPANY, LLP Baltimore, Maryland January 13, 1999 55 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) BALANCE SHEET ASSETS December 31, -------------------------- 1998 1997 ------------ ----------- PROPERTY, AT COST - Note 1 Land $ 4,966,738 $ 4,966,738 Building and Improvements 11,892,943 11,614,717 Preliminary Development Costs 42,247 42,247 Deferred Costs - Note 3 809,323 663,719 ------------ ----------- 17,711,251 17,287,421 Less Accumulated Depreciation and Amortization 1,984,627 1,630,022 ------------ ----------- PROPERTY, NET 15,726,624 15,657,399 ------------ ----------- OTHER ASSETS Cash and Cash Equivalents - Note 1 421,833 558,136 ------------ ----------- Receivables From Tenants Rents and Expense Billings 106,282 -0- Deferred Rent Receivable - Note 1 202,228 73,447 Allowance for Doubtful Accounts (95,174) -0- ------------ ----------- 213,336 73,447 ------------ ----------- Prepaid Expenses 107,644 107,442 ------------ ----------- TOTAL OTHER ASSETS 742,813 739,025 ------------ ----------- $ 16,469,437 $16,396,424 ============ =========== - ---------- The notes to financial statements are an integral part of this statement. 56 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) BALANCE SHEET LIABILITIES AND PARTNERS' CAPITAL December 31, -------------------------- 1998 1997 ----------- ----------- LIABILITIES Accounts Payable and Accrued Expenses $ 67,398 $ 34,935 Tenant Security Deposits 150,000 15,193 Prepaid Tenant Reimbursements 47,181 142,688 ----------- ----------- TOTAL LIABILITIES 264,579 192,816 PARTNERS' CAPITAL - Notes 1 and 2 16,204,858 16,203,608 ----------- ----------- $16,469,437 $16,396,424 =========== =========== - ---------- The notes to financial statements are an integral part of this statement. 57 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) STATEMENT OF INCOME
Year Ended December 31, --------------------------------------- 1998 1997 1996 ----------- ----------- ----------- REVENUE - Notes 1 and 5 Gross Rent Potential $ 1,943,734 $ 1,775,359 $ 1,684,997 Less Vacancies and Free Rent 72,135 80,444 108,412 ----------- ----------- ----------- Net Rental Income 1,871,599 1,694,915 1,576,585 Expense Reimbursements From Tenants 441,093 258,789 364,873 Other Income 15,809 20 18,163 ----------- ----------- ----------- TOTAL REVENUE 2,328,501 1,953,724 1,959,621 ----------- ----------- ----------- OPERATING EXPENSES Real Property Taxes 211,009 211,967 207,855 Building and Grounds Maintenance 144,004 142,678 157,314 Bad Debts 95,174 -0- -0- Management Fees - Note 3 62,338 61,036 57,542 Utilities 26,165 27,297 24,890 General and Administrative 17,966 12,229 25,856 Insurance 4,173 6,573 9,292 ----------- ----------- ----------- TOTAL OPERATING EXPENSES 560,829 461,780 482,749 ----------- ----------- ----------- OPERATING INCOME 1,767,672 1,491,944 1,476,872 ----------- ----------- ----------- ADJUSTMENTS TO ARRIVE AT NET INCOME Depreciation and Amortization (354,605) (315,417) (302,585) Abandonment of Tenant Improvements - Note 1 -0- (80,178) (24,256) ----------- ----------- ----------- (354,605) (395,595) (326,841) ----------- ----------- ----------- NET INCOME-Note 4 $ 1,413,067 $ 1,096,349 $ 1,150,031 =========== =========== ===========
The notes to financial statements are an integral part of this statement. 58 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) STATEMENT OF PARTNERS' CAPITAL Year Ended December 31, 1998 1997 1996 ------------ ------------ ------------ CAPITAL CONTRIBUTIONS - Note 2 Prior Years $ 20,267,826 $ 20,267,826 $ 20,267,826 ------------ ------------ ------------ CAPITAL PLACEMENT FEE - Notes 1 and 2 Prior Years (202,678) (202,678) (202,678) ------------ ------------ ------------ DISTRIBUTIONS Prior Years (8,796,724) (8,048,893) (6,948,893) Current Year (1,411,817) (747,831) (1,100,000) ------------ ------------ ------------ (10,208,541) (8,796,724) (8,048,893) ------------ ------------ ------------ ACCUMULATED INCOME Prior Years 4,935,184 3,838,835 2,688,804 Current Year 1,413,067 1,096,349 1,150,031 ------------ ------------ ------------ 6,348,251 4,935,184 3,838,835 ------------ ------------ ------------ TOTAL PARTNERS' CAPITAL $ 16,204,858 $ 16,203,608 $ 15,855,090 ============ ============ ============ - ---------- The notes to financial statements are an integral part of this statement. 59 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) STATEMENT OF CASH FLOWS
Year Ended December 31, 1998 1997 1996 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 1,413,067 $ 1,096,349 $ 1,150,031 ----------- ----------- ----------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and Amortization 354,605 315,417 302,585 Abandonment of Tenant Improvements -0- 80,178 24,256 Change in Receivables From Tenants (139,889) 8,667 (41,033) Increase in Prepaid Expenses (202) (64,870) (6,302) Change in Accounts Payable and Accrued Expenses 32,463 (6,176) 16,526 Change in Prepaid Tenant Reimbursements (95,507) 142,688 -0- ----------- ----------- ----------- Total Adjustments 151,470 475,904 296,032 ----------- ----------- ----------- Net Cash Provided by Operating Activities 1,564,537 1,572,253 1,446,063 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Building and Improvement Costs (278,227) (359,189) (258,309) Leasing Costs (145,603) (116,524) (80,786) Increase in Tenant Security Deposits 134,807 12,784 -0- Decrease in Tenant Improvement Loans -0- 688 32,057 ----------- ----------- ----------- Net Cash Used by Investing Activities (289,023) (462,241) (307,038) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to Partners (1,411,817) (747,831) (1,100,000) ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (136,303) 362,181 39,025 CASH AND CASH EQUIVALENTS, BEGINNING 558,136 195,955 156,930 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, ENDING $ 421,833 $ 558,136 $ 195,955 =========== =========== ===========
- ---------- The notes to financial statements are an integral part of this statement. 60 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Gateway 51 Partnership (A Maryland General Partnership) (the Partnership) was formed on December 21, 1987, under the Maryland Uniform Partnership Act. The agreement was amended and restated in 1989 to reflect changes in partner ownership percentages. The partnership agreement was amended and restated effective January 1, 1998, whereby M.O.R. Gateway 51, Limited Partnership (M.O.R.) transferred 34.055% and 14.945% to New England Life Pension Properties IV (NELPP IV) and New England Pension Properties V (NEPP V), respectively. Subsequently, NELPP IV transferred a 0.695% partnership interest, NEPP V transferred a 0.305% partnership interest, and M.O.R. transferred a 1% partnership interest to NE/Gateway 51 Limited Partnership (NE/Gateway), bringing the ownership as of January 1, 1998, to the following: NELPP IV 68.11% NEPP V 29.89% NE/Gateway 2.00% Property The Partnership owns 21 acres of land in Howard County, Maryland. The property has been developed with six office/research buildings. Plans call for a seventh building with approximately 15,000 square feet of space. All property is recorded at cost. Information regarding the buildings is as follows: Occupancy Square Date Placed ---------------------------- Building Footage Into Service Tenants 12/31/98 12/31/97 12/31/96 - -------- ------- ------------ ------- -------- -------- -------- A 46,840 3/1/91 Multiple 100% 92% 92% B 21,991 9/1/90 AVNET 100% 100% 100% C 38,225 7/15/91 EVI, Inc. 100% 100% 100% F 35,812 2/1/92 Multiple 100% 100% 82% D-E 45,951 8/8/94 Columbia National 100% 100% 100% ------- 188,819 100% 98% 94% ======= Carrying costs, operating expenses, and depreciation begin as a charge against operations on the date the buildings were placed into service. 61 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1998 Note 1 - (Cont.) During 1997, tenant improvements completed in prior years were demolished in order to build out the space for new tenants. The loss on abandonment of tenant improvements is calculated as follows: Cost $ 127,688 Accumulated Depreciation (47,510) --------- Abandonment of Tenant Improvements $ 80,178 ========= Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Cash and Cash Equivalents The Partnership considers all highly liquid debt instruments purchased with a maturity of 3 months or less to be cash equivalents. The majority of the Partnership's cash is held in financial institutions with insurance provided by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. Periodically during the year, the balance may have exceeded the FDIC insurance limitation. Depreciation Building costs are being depreciated using the straight-line method over the estimated useful lives of 50 years. Beginning in January 1998, the Partnership changed depreciation methods for tenant improvements. Tenant improvements are being depreciated using the straight-line method over the life of the tenants' lease; in prior years, the improvements were depreciated over 50 years. Rental Income Rental income for major leases is being recognized on a straight-line basis over the terms of the leases. The excess of the rental income recognized over the amount stipulated in the lease is shown as deferred rent receivable. Amortization Deferred costs are amortized as follows: Amortization Amount Period -------- ------------- Organization Costs $ 13,555 Complete Leasing Costs and Commissions 795,767 Lease Terms -------- $809,322 ======== 62 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1998 Note 1 - (Cont.) Income Taxes Partnerships, as such, are not subject to income taxes. The partners are required to report their respective shares of partnership income and other tax items on their income tax returns (see Note 4). Capital Placement Fee Costs incurred for arranging the Partnership's equity have been treated as a reduction of partners capital (see Note 2). Note 2 - PARTNERS' CAPITAL Capital Investment NELPP IV and NEPP V have agreed to provide equity of $14,598,000 and $6,402,000, respectively, totaling $21,000,000. As of December 31, 1998, 1997, and 1996, total capital contributions amounted to $20,267,826. Cumulative Priority Return NELPP IV and NEPP V are entitled to cumulative priority returns of 10.5%, compounded monthly on capital invested. The Partnership paid priority returns totaling $1,411,817, $747,831, and $1,100,000 during 1998, 1997, and 1996, respectively. As of December 31, 1998, 1997, and 1996, unpaid priority returns amounted to $10,855,114, $9,127,936, and $6,888,115, respectively. Capital Placement Fee The Partnership incurred fees of $202,678 with Paine Webber Mortgage Finance, Inc. with respect to capital raised by the Partnership. This amount has been charged against partners' capital. Note 3 - RELATED PARTY TRANSACTIONS Management Fees The Partnership has entered into an agreement with Manekin Corporation, a related entity, to act as management agent for the property. The management agreement provides for a management fee equal to 3% of rent and tenant expense billings. Leasing Commissions Leasing commissions in the amount of $145,603, $105,387, and $80,786 were paid to related parties during 1998, 1997, and 1996, respectively. 63 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1998 Note 4 - TAX ACCOUNTING Tax accounting differs from financial accounting as follows: Current Year Prior Years Total ------------ ----------- ----------- Financial Income $ 1,413,067 $ 4,935,184 $ 6,348,251 Additional Depreciation (87,820) (757,466) (845,286) Lease-Up Period Items Capitalized for GAAP -0- 4,264 4,264 Allowance for Doubtful Accounts 95,174 -0- 95,174 Deferred Rent Receivable (128,781) (73,447) (202,228) Prepaid Property Taxes (956) (105,026) (105,982) Prepaid Tenant Reimbursements (95,507) 142,688 47,181 ----------- ----------- ----------- Taxable Income $ 1,195,177 $ 4,146,197 $ 5,341,374 =========== =========== =========== Note 5 - LEASES The following is a schedule of future minimum lease payments to be received under noncancelable operating leases at December 31, 1998: Year Ending December 31, 1999 $1,524,603 2000 827,454 2001 726,557 2002 736,016 2003 745,758 ---------- $3,814,630 ========== 64 To the Partners Gateway 51 Partnership (A Maryland General Partnership) Columbia, Maryland INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information contained on pages 12 and 13 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the basic financial statements, and accordingly, we express no opinion on it. /s/ Wolpoff & Company, LLP WOLPOFF & COMPANY, LLP Baltimore, Maryland January 13, 1999 65 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) SCHEDULE OF PARTNERS' CAPITAL YEAR ENDED DECEMBER 31, 1998
NE/ M.O.R. 51 New England New England Gateway 51 Gateway Life Pension Pension Limited Limited Properties IV Properties V Partnership Partnership Total ------------- ------------ ----------- ----------- ----- OWNERSHIP PERCENTAGE Through December 31, 1997 34.75% 15.25% 0.00% 50.00% 100.00% ============ =========== ======= ======= ============ As of January 1, 1998 68.11% 29.89% 2.00% 0.00% 100.00% ============ =========== ======= ======= ============ CAPITAL CONTRIBUTIONS Prior Years $ 14,086,139 $ 6,181,687 $ -0- $ -0- $ 20,267,826 ------------ ----------- ------- ------- ------------ CAPITAL PLACEMENT FEE Prior Years (106,427) (96,251) -0- -0- (202,678) ------------ ----------- ------- ------- ------------ DISTRIBUTIONS - Note 2 Prior Years (5,969,698) (2,827,026) -0- -0- (8,796,724) Current Year (981,211) (430,606) -0- -0- (1,411,817) ------------ ----------- ------- ------- ------------ (6,950,909) (3,257,632) -0- -0- (10,208,541) ------------ ----------- ------- ------- ------------ ACCUMULATED INCOME Prior Years 3,429,956 1,505,228 -0- -0- 4,935,184 Current Year 982,082 430,985 -0- -0- 1,413,067 ------------ ----------- ------- ------- ------------ 4,412,038 1,936,213 -0- -0- 6,348,251 ------------ ----------- ------- ------- ------------ PARTNERS' CAPITAL, 12/31/98 $ 11,440,841 $ 4,764,017 $ -0- $ -0- $ 16,204,858 ============ =========== ======= ======= ============
- ---------- See Independent Auditor's Report on Supplementary Information. 66 GATEWAY 51 PARTNERSHIP (A MARYLAND GENERAL PARTNERSHIP) SCHEDULE OF CHANGES IN PARTNERS' CAPITAL - INCOME TAX BASIS YEAR ENDED DECEMBER 31, 1998
NE/ M.O.R. 51 New England New England Gateway 51 Gateway Life Pension Pension Limited Limited Properties IV Properties V Partnership Partnership Total ------------- ------------ ----------- ----------- ----- OWNERSHIP PERCENTAGE Through December 31, 1997 34.75% 15.25% 0.00% 50.00% 100.00% ============ =========== ======= ======= ============ As of January 1, 1998 68.11% 29.89% 2.00% 0.00% 100.00% ============ =========== ======= ======= ============ CAPITAL CONTRIBUTIONS Prior Years $ 14,086,139 $ 6,181,687 $ -0- $ -0- $ 20,267,826 ------------ ----------- ------- ------- ------------ CAPITAL PLACEMENT FEE Prior Years (106,427) (96,251) -0- -0- (202,678) ------------ ----------- ------- ------- ------------ DISTRIBUTIONS - Note 2 Prior Years (5,969,698) (2,827,026) -0- -0- (8,796,724) Current Year (981,211) (430,606) -0- -0- (1,411,817) ------------ ----------- ------- ------- ------------ (6,950,909) (3,257,632) -0- -0- (10,208,541) ------------ ----------- ------- ------- ------------ ACCUMULATED INCOME Prior Years 2,883,779 1,262,418 -0- -0- 4,146,197 Current Year 830,648 364,529 -0- -0- 1,195,177 ------------ ----------- ------- ------- ------------ 3,714,427 1,626,947 -0- -0- 5,341,374 ------------ ----------- ------- ------- ------------ PARTNERS' CAPITAL, 12/31/98 $ 10,743,230 $ 4,454,751 $ -0- $ -0- $ 15,197,981 ============ =========== ======= ======= ============
- ---------- See Independent Auditor's Report on Supplementary Information. 67 EXHIBIT INDEX Exhibit Page Number Number - ------ ------ 10M. Promissory Note dated September 15, 1986 in the amount * of $3,720,000 from Hewson Properties, Inc. to the Registrant. 10U. General Partnership Agreement of MORF 6 Venture, dated * as of December 18, 1987, between M.O.R.F. 6 Associates Limited Partnership and the Partnership. 10MM. Assignment of Rents and Leases made and entered into as * of February 1, 1990 by and between Calibre Log Cabin, Ltd. and the Registrant. 10SS. Amended and Restated Pooling Agreement dated as of December * 1, 1995 by and among the Registrant, Montgomery-Oxford Associates Limited Partnership, Waters Landing-Oxford Associates Limited Partnership and related documents dated as of December 1, 1995 and May 14, 1996. 27. Financial Data Schedule - -------- *Previously filed and incorporated herein by reference 68 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 Date: March 29, 2000 By: /s/ Alison Husid Cutler ---------------------------- Alison Husid Cutler President of the Managing General Partner Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- President, Chief /s/ Alison Husid Cutler Executive Officer and - --------------------------- Director of the March 29, 2000 Alison Husid Cutler Managing General Partner /s/ Pamela J. Herbst Vice President and - --------------------------- Director of the March 29, 2000 Pamela J. Herbst Managing General Partner /s/ J. Grant Monahon Vice President and - --------------------------- Director of the March 29, 2000 J. Grant Monahon Managing General Partner /s/ James J. Finnegan - --------------------------- Vice President of the March 29, 2000 James J. Finnegan Managing General Partner /s/ Karin J. Lagerlund Treasurer and Principal - --------------------------- Financial and Accounting Karin J. Lagerlund Officer of the March 29, 2000 Managing General Partner 69 EX-27 2 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1999 DEC-31-1999 17,597,405 0 97,603 0 0 17,695,008 4,608,955 0 22,303,963 136,573 4,436,165 0 0 0 17,731,225 22,303,963 3,148,814 8,913,259 951,623 951,623 705,255 0 0 7,256,381 0 7,256,381 0 0 0 7,256,381 75.62 75.62
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