-----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, DcoIo8p/wkqhFrzmDcMhOIr0wd+PM0/no1hqjIThsmDpwosR90oe/Vmkps5niw+W SRLYHWhm0AR/5MfU/WgSeg== 0000927016-97-002277.txt : 19970813 0000927016-97-002277.hdr.sgml : 19970813 ACCESSION NUMBER: 0000927016-97-002277 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND LIFE PENSION PROPERTIES IV CENTRAL INDEX KEY: 0000779742 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042893298 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15429 FILM NUMBER: 97656677 BUSINESS ADDRESS: STREET 1: 399 BOYLSTON ST 13TH FL CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6175781200 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------------------------------------------------------------------- For Quarter Ended June 30, 1997 Commission File Number 0-15429 NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Massachusetts 04-2893298 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 225 Franklin Street, 25th Fl. Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 261-9000 - ---------------------------------------------------------------------------- Former name, former address and former fiscal year if changed since last report Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED JUNE 30, 1997 PART I FINANCIAL INFORMATION ----------------------- BALANCE SHEETS (Unaudited)
June 30, 1997 December 31, 1996 ------------- ----------------- ASSETS Real estate investments: Joint ventures $ 16,093,720 $ 15,733,520 Property, net 26,954,700 27,204,871 ----------- ----------- 43,048,420 42,938,391 Cash and cash equivalents 6,570,779 5,045,964 Short-term investments 828,267 2,726,532 ----------- ----------- $ 50,447,466 $ 50,710,887 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 139,418 $ 119,344 Accrued management fee 45,458 56,277 Deferred management and disposition fees 3,424,672 3,333,754 ----------- ----------- Total liabilities 3,609,548 3,509,375 ----------- ----------- Partners' capital (deficit): Limited partners ($766 per unit; 120,000 units authorized, 94,997 units issued and outstanding) 47,002,035 47,361,993 General partners (164,117) (160,481) ----------- ----------- Total partners' capital 46,837,918 47,201,512 ----------- ----------- $ 50,447,466 $ 50,710,887 =========== ===========
(See accompanying notes to financial statements) STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended June 30, 1997 June 30, 1997 June 30, 1996 June 30, 1996 ------------- ---------------- ------------- ---------------- INVESTMENT ACTIVITY Property rentals $ 1,405,293 $ 2,774,125 $ 1,087,901 $ 1,664,832 Property operating expenses (563,781) (1,058,252) (398,418) (533,439) Depreciation and amortization (251,533) (505,237) (211,296) (334,957) ---------- ----------- ---------- ---------- 589,979 1,210,636 478,187 796,436 Joint venture earnings 355,692 662,728 534,164 1,286,767 Amortization (1,327) (2,654) (3,294) (8,138) ---------- ----------- ---------- ---------- Total real estate operations 944,344 1,870,710 1,009,057 2,075,065 Interest on cash equivalents and short term investments 90,811 181,191 85,749 171,040 ---------- ----------- ---------- ---------- Total investment activity 1,035,155 2,051,901 1,094,806 2,246,105 ---------- ----------- ---------- ---------- Portfolio Expenses Management fee 90,918 181,834 122,898 245,796 General and administrative 87,289 176,352 86,799 175,406 ---------- ----------- ---------- ---------- 178,207 358,186 209,697 421,202 ---------- ----------- ---------- ---------- Net Income $ 856,948 $ 1,693,715 $ 885,109 $ 1,824,903 ========== =========== ========== ========== Net income per limited partnership unit $ 8.93 $ 17.65 $ 9.23 $ 19.02 ========== =========== ========== ========== Cash distributions per limited partnership unit $ 9.58 $ 21.44 $ 12.95 $ 25.90 ========== =========== ========== ==========
Number of limited partnership units outstanding during the period 94,997 94,997 94,997 94,997 ========== =========== ========== ==========
(See accompanying notes to financial statements) STATEMENT OF PARTNERS' CAPITAL (DEFICIT) (Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended June 30, 1997 June 30, 1997 June 30, 1996 June 30, 1996 ----------------------- ----------------------- ------------------------ ----------------------- General Limited General Limited General Limited General Limited Partners Partners Partners Partners Partners Partners Partners Partners -------- -------- -------- -------- -------- -------- -------- -------- Balance at beginning of period $ (163,493) $ 47,063,727 $ (160,481) $ 47,361,993 $ (157,730) $ 56,849,146 $ (154,702) $ 57,148,961 Cash distributions (9,193) (910,071) (20,573) (2,036,736) (12,426) (1,230,211) (24,852) (2,460,422) Net income 8,569 848,379 16,937 1,676,778 8,851 876,258 18,249 1,806,654 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Balance at end of period $ (164,117) $ 47,002,035 $ (164,117) $ 47,002,035 $ (161,305) $ 56,495,193 $ (161,305) $ 56,495,193 ========== ============ ========== ============ ========== ============ ========== ============
(See accompanying notes to financial statements) SUMMARIZED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, ------------------------- 1997 1996 --------- -------- Net cash provided by operating activities $ 1,908,912 $ 2,380,583 ----------- ----------- Cash flows from investing activities: Payment of note payable to venture partner (64,000) - Investment in property (150,977) - Decrease in short-term investments, net 1,888,189 410,578 ----------- ----------- Net cash provided by investing activities 1,673,212 410,578 ----------- ----------- Cash flows from financing activity: Distributions to partners (2,057,309) (2,485,274) ----------- ----------- Net increase in cash and cash equivalents 1,524,815 305,887 Cash and cash equivalents: Beginning of period 5,045,964 4,051,999 ----------- ----------- End of period $ 6,570,779 $ 4,357,886 =========== ===========
Non-cash transactions: Effective April 1, 1996, the Partnership's joint venture investment in Reflections Apartments was converted to a wholly-owned property. The carrying value of this investment at conversion was $10,469,514. (See accompanying notes to financial statements) NOTES TO FINANCIAL STATEMENTS (Unaudited) In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Partnership's financial position as of June 30, 1997 and December 31, 1996 and the results of its operations, its cash flows and partners' capital (deficit) for the interim periods ended June 30, 1997 and 1996. These adjustments are of a normal recurring nature. See notes to financial statements included in the Partnership's 1996 Annual Report on Form 10-K for additional information relating to the Partnership's financial statements. NOTE 1 - ORGANIZATION AND BUSINESS - ---------------------------------- New England Life Pension Properties IV; A Real Estate Limited Partnership (the "Partnership") is a Massachusetts limited partnership organized for the purpose of investing primarily in newly constructed and existing income producing real properties. It primarily serves as an investment for qualified pension and profit sharing plans and other organizations intended to be exempt from federal income tax. The Partnership commenced operations in May, 1986 and acquired the five real estate investments it currently owns prior to the end of 1987. It intends to dispose of the investments within twelve years of their acquisition, and then liquidate; however, the managing general partner could extend the investment period if it is considered to be in the best interest of the limited partners. NOTE 2 - REAL ESTATE JOINT VENTURES - ----------------------------------- The Reflections Apartments joint venture was restructured to a wholly-owned property for financial reporting purposes effective April 1, 1996. The Metro Business Center joint venture was restructured to a wholly-owned property for financial statement purposes effective July 1, 1996. The Decatur TownCenter II joint venture was sold on October 10, 1996. Ownership of the Columbia Gateway Corporate Park joint venture is being restructured whereby the Partnership and its affiliate will obtain full control over the business of the joint venture. Although there can be no assurance that this restructuring will occur, the restructuring is expected to be completed during the third quarter. The following summarized financial information is presented in the aggregate for the Partnership's joint ventures (two as of June 30, 1997 and December 31, 1996; four as of June 30, 1996): Assets and Liabilities ----------------------
June 30, 1997 December 31, 1996 ------------- ----------------- Assets Real property, at cost less accumulated depreciation of $2,994,749 and $2,820,980, respectively $20,434,703 $19,919,292 Other 570,353 466,934 ----------- ----------- 21,005,056 20,386,226 Liabilities 271,276 76,032 ----------- ----------- Net Assets $20,733,780 $20,310,194 =========== ===========
Results of Operations
Six Months ended June 30, ------------------------- 1997 1996 ---- ---- Revenue Rental income $1,318,227 $3,181,622 Other income 8,296 27,411 ---------- ---------- 1,326,523 3,209,033 ---------- ---------- Expenses Operating expenses 301,690 1,157,832 Depreciation and amortization 187,318 584,122 ---------- ---------- 489,008 1,741,954 ---------- ---------- Net income $ 837,515 $1,467,079 ========== ==========
Liabilities and expenses exclude amounts owed and attributable to the Partnership and (with respect to one joint venture) its affiliate on behalf of their various financing arrangements with the joint ventures. NOTE 3 - PROPERTY - ----------------- Effective April 1, 1996, the Reflections joint venture was restructured, whereby the Partnership's venture partner became an indirect limited partner. Accordingly, the investment has been accounted for as a wholly-owned property since that date. The carrying value of the joint venture investment at conversion was allocated to land, building and improvements and other net operating assets. Effective January 1, 1996, the Metro Business Center joint venture agreement was amended to grant the Partnership full control over management decisions, beginning July 1, 1996. Since that date, the investment has been accounted for as a wholly-owned property. The carrying value of the joint venture investment at conversion was allocated to land, buildings and improvements, and other net operating assets. Effective December 30, 1996, the property owned by the joint venture was distributed to the venture partners as tenants-in-common. The Partnership, however, retained its overall decision- making authority. In connection with the restructuring of the Palms Business Center joint venture, effective January 1, 1995, the venture partner is entitled to 40% of the excess cash flow above a specified level up to $360,000. As of June 30, 1997, $66,000 of the initial obligation remains unpaid. The following is a summary of the Partnership's three wholly-owned investments:
June 30, 1997 December 31, 1996 ------------- ----------------- Land $ 6,523,605 $ 6,523,605 Buildings and improvements and other capitalized costs 22,273,231 22,122,254 Accumulated depreciation and amortization (1,629,497) (1,171,576) Payable to venture partner (66,000) (130,000) Net operating assets (liabilities) (146,639) (139,412) ----------- ----------- $26,954,700 $27,204,871 =========== ===========
NOTE 4 - SUBSEQUENT EVENT - ------------------------- Distributions of cash from operations relating to the quarter ended June 30, 1997 were made on July 24, 1997 in the aggregate amount of $919,264 ($9.58 per limited partnership unit). Management's Discussion and Analysis of Financial Condition and - --------------------------------------------------------------- Results of Operations - --------------------- Liquidity and Capital Resources - ------------------------------- The Partnership completed its offering of units of limited partnership interest in December, 1986. A total of 94,997 units were sold. The Partnership received proceeds of $85,677,259, net of selling commissions and other offering costs, which have been invested in real estate, used to pay related acquisition costs, or retained as working capital reserves. The Partnership made nine real estate investments. Four investments have been sold; one each in 1988, 1993, 1994 and 1996. As a result of the sales, capital of $22,229,298 has been returned to the limited partners through June 30, 1997. At June 30, 1997, the Partnership had $7,399,046 in cash, cash equivalents and short-term investments, of which $919,264 was used for cash distributions to partners on July 24, 1997; the remainder will primarily be used for working capital reserves. The source of future liquidity and cash distributions to partners will be cash generated by the Partnership's real estate and short-term investments. On October 24, 1996, the Partnership made a capital distribution of $97 per limited partnership unit from the proceeds of the Decatur TownCenter II sale, which reduced the adjusted capital contribution from $863 to $766 per unit. Distributions of cash from operations for the first and second quarters of 1997 were at the annualized rate of 5% on the adjusted capital contribution. Distributions of cash from operations relating to the first and second quarters of 1996 were made at the annualized rate of 6% on the adjusted capital contribution. The distribution rate was reduced for 1997 in anticipation of cash requirements related to lease rollovers. The carrying value of real estate investments in the financial statements is at depreciated cost, or if the investment's carrying value is determined not to be recoverable through expected undiscounted future cash flows, the carrying value is reduced to estimated fair market value. The fair market value of such investments is further reduced by the estimated cost of sale for properties held for sale. Carrying value may be greater or less than current appraised value. At June 30, 1997, certain appraised values exceeded the related carrying values by an aggregate of $10,600,000 and certain appraised values were less than their related carrying values by an aggregate of $800,000. The current appraised value of real estate investments has been estimated by the managing general partner and is generally based on a combination of traditional appraisal approaches performed by the Partnership's advisor and independent appraisers. Because of the subjectivity inherent in the valuation process, the estimated current appraised value may differ significantly from that which could be realized if the real estate were actually offered for sale in the marketplace. Results of Operations - --------------------- At June 30, 1997, two of the investments in the portfolio are structured as joint ventures with real estate development/management firms, and in one case, with an affiliate of the Partnership. The Decatur TownCenter II property, which was sold in October 1996, was owned by a joint venture. The Palms Business Center, Reflections Apartments and Metro Business Center investments were 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 have been accounted for as wholly-owned properties since those dates. Operating Factors Overall occupancy at Columbia Gateway Corporate Park remained at 95% during the second quarter of 1997, consistent with March 31, 1997 and up from 92% at June 30, 1996. No leases are due to expire until December 1997. Ownership of the Columbia Gateway Corporate Park joint venture is being restructured whereby the Partnership and its affiliate will obtain full control over the business of the joint venture. Although there can be no assurance that this restructuring will occur, the restructuring is expected to be completed during the third quarter. Occupancy at Reflections Apartments ended the second quarter of 1997 at 93%, down from 96% at March 31, 1997 and consistent with June 30, 1996. Current rental rates are at the high end of the market range. Occupancy at Metro Business Center at June 30, 1997 was at 87%, down from 91% at June 30, 1996 and consistent with March 31, 1997. Rents at this property are higher than the average for comparable property types in the surrounding area. Occupancy at Palms Business Center was 99% at June 30, 1997, up from 98% at March 31, 1997 and 97% at June 30, 1996. However, leases for approximately 20% of the space are due to expire over the remainder of 1997. Rental rates in Las Vegas have increased over the past twelve months. Leasing at 270 Technology Center was 97% at June 30, 1997, consistent with March 31, 1997 and up from 90% at June 30, 1996. During the remainder of 1997, one lease for approximately 30% of the space is due to expire and the tenant is not expected to renew. Investment Activity Interest on cash equivalents and short-term investments increased by 6% between the first six-month periods of 1996 and 1997 due to higher yields. Real estate operating activity for the first six months of 1997 was $1,870,710 and $2,075,065 for the comparable six months of 1996. The 1996 amount includes $90,000 of income which was received by 270 Technology Center from a former tenant in bankruptcy and income of $200,000 from Decatur TownCenter II, a property that was sold during the fourth quarter of 1996. These decreases in operating activity were partially offset by improved operating results at Metro Business Center of $81,000 due to lower maintenance expenses and higher rents. Income from the remainder of the properties was relatively unchanged. Operating cash flow in 1996 includes $250,000 received pursuant to a loan guarantee from one of the Partnership's joint venture partners, relating to previously accrued investment income. Exclusive of this item, operating cash flow decreased $221,671 between the first six-month periods of 1997 and 1996. The change primarily stems from the change in Partnership operating results discussed above. Portfolio Expenses The Partnership management fee is 9% of distributable cash flow from operations after any increase or decrease in working capital reserves as determined by the managing general partner. General and administrative expenses primarily consist of real estate appraisal, printing, legal, accounting and investor servicing fees. The management fee decreased between the first six-month periods of 1997 and 1996 due to a decrease in distributable cash flow from operations. General and administrative expenses did not change significantly between the respective six-month periods. NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED JUNE 30, 1997 PART II OTHER INFORMATION ------------------- Item 6. Exhibits and Reports on Form 8-K a. Exhibits: None. b. Reports on Form 8-K: No Current Reports on Form 8-K were filed during the quarter ended June 30, 1997. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEW ENGLAND LIFE PENSION PROPERTIES IV; A REAL ESTATE LIMITED PARTNERSHIP (Registrant) August 12, 1997 /s/ James J. Finnegan ------------------------------------ James J. Finnegan Managing Director and General Counsel of Managing General Partner, Fourth Copley Corp. August 12, 1997 /s/ Karin J. Lagerlund ------------------------------------ Karin J. Lagerlund Principal Financial and Accounting Officer of Managing General Partner, Fourth Copley Corp. EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1997 JUN-30-1997 6,570,779 828,267 0 0 0 7,399,046 43,048,420 0 50,447,466 184,876 3,424,672 0 0 0 46,837,918 50,446,466 3,436,853 3,618,044 1,058,252 1,058,252 866,077 0 0 1,693,715 0 1,693,715 0 0 0 1,693,715 17.65 17.65
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