<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------------------------------------------------------------
For Quarter Ended June 30, 1998 Commission File Number 0-11884
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2774875
(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 [_]
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1998
PART I
FINANCIAL INFORMATION
----------------------
<PAGE>
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
ASSETS
Real estate investments:
Property, held for disposition $ - $5,161,213
---------- ----------
- 5,161,213
Cash and cash equivalents 8,769,598 1,309,837
Short-term investments - 1,543,736
Interest, rent and other receivables 5,316 10,447
---------- ----------
$8,774,914 $8,025,233
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 19,528 $ 44,957
Accrued managment fee - 17,705
Deferred disposition fees 964,480 868,855
---------- ----------
Total liabilities 984,008 931,517
---------- ----------
Partners' capital:
Limited partners ($115.37 per
unit; 30,000 units authorized,
issued and outstanding) 7,717,922 7,027,704
General partner 72,984 66,012
---------- ----------
Total partners' capital 7,790,906 7,093,716
---------- ----------
$8,774,914 $8,025,233
========== ==========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY
Property rentals $ 15,394 $153,809 $274,413 $ 514,956
Property operating expenses (1,415) (68,653) (65,745) (138,412)
Depreciation and amortization - - (63,018) (126,036)
-------- -------- -------- ---------
Total real estate operations 13,979 85,156 145,650 250,508
Gain on sale of investment - 655,710 - -
-------- -------- -------- ---------
Total real estate activity 13,979 740,866 145,650 250,508
Interest on cash equivalents
and short term investments 118,034 178,702 36,718 70,675
-------- -------- -------- ---------
Total investment activity 132,013 919,568 182,368 321,183
-------- -------- -------- ---------
PORTFOLIO EXPENSES
General and administrative 18,921 43,287 29,155 56,980
-------- -------- -------- ---------
18,921 43,287 29,155 56,980
-------- -------- -------- ---------
Net income $113,092 $876,281 $153,213 $ 264,203
======== ======== ======== =========
Net income per limited partnership
unit $ 3.73 $ 28.92 $ 5.06 $ 8.72
======== ======== ======== =========
Cash distributions per
limited partnership unit $ - $ 5.91 $ - $ -
======== ======== ======== =========
Number of limited partnership
units outstanding during the
period 30,000 30,000 30,000 30,000
======== ======== ======== =========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
STATEMENTS OF PARTNERS' CAPITAL
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
---------------- ---------------- ---------------- ----------------
General Limited General Limited General Limited General Limited
Partner Partners Partner Partners Partner Partners Partner Partners
------- -------- ------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
period $71,853 $7,605,961 $66,012 $7,027,704 $46,194 $12,404,591 $45,084 $12,294,711
Cash
distributions - - (1,791) (177,300) - - - -
Net income 1,131 111,961 8,763 867,518 1,532 151,681 2,642 261,561
------- ---------- ------- ---------- ------- ----------- ------- -----------
Balance at
end of period $72,984 $7,717,922 $72,984 $7,717,922 $47,726 $12,556,272 $47,726 $12,556,272
======= ========== ======= ========== ======= =========== ======= ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------
1998 1997
---------- --------------
<S> <C> <C>
Net cash provided by operating activities $ 204,431 $ 326,526
---------- ----------
Cash flows from investing activities:
Capital expenditures on owned property - (4,476)
Net proceeds from sale of property 5,795,060 -
Deferred disposition fees 95,625 -
(Increase) decrease in short-term
investments, net 1,543,736 (484,184)
---------- ----------
Net cash (used in) provided by
investing activities 7,434,421 (488,660)
---------- ----------
Cash flows from financing activity:
Distributions to partners (179,091) -
---------- ----------
Net increase (decrease) in
cash and cash equivalents 7,459,761 (162,134)
Cash and cash equivalents:
Beginning of period 1,309,837 2,300,885
---------- ----------
End of period $8,769,598 $2,138,751
========== ==========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of June 30, 1998 and December 31, 1997 and the results of
its operations, its cash flows and partners' capital for the interim periods
ended June 30, 1998 and 1997. These adjustments are of a normal recurring
nature.
See notes to financial statements included in the Partnership's 1997 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
NOTE 1 - ORGANIZATION AND BUSINESS
- ----------------------------------
New England Life Pension Properties; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other entities intended to be exempt from Federal
income tax. The Partnership commenced operations in June, 1983 and acquired six
real estate investments prior to the end of 1985. The Partnership sold its
remaining investment in March 1998 and therefore intends to liquidate and
dissolve in 1999.
NOTE 2 - INVESTMENTS IN PROPERTY
- --------------------------------
On March 4, 1998, the Rivers Corporate Park property, located in Columbia,
Maryland, was sold to an unaffiliated third party. The selling price was
determined by arm's length negotiations between the Partnership and the buyer.
The gross sales price was $6,375,000. The Partnership received net proceeds of
$5,890,685 after closing costs and recognized a gain of $655,710 ($21.64 per
limited partnership unit). A disposition fee of $95,625 was accrued but not paid
to AEW Real Estate Advisors, Inc. (the "Advisor").
<PAGE>
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 June, 1983. A total of 30,000 units were sold. The Partnership
received proceeds of $27,253,251, net of selling commissions and other offering
costs, which were invested in real estate and the payment of related acquisition
costs, or retained as working capital reserves. The Partnership made six real
estate investments, all of which have been sold: one in each of 1985, 1991,
1994, 1996, 1997 and 1998. As a result of these sales and similar transactions,
capital of $26,538,900 ($884.63 per limited partnership unit) has been returned
to the limited partners.
On March 4, 1998, the Rivers Corporate Park property was sold to an
unaffiliated third party. The Partnership received net proceeds of $5,890,685
after closing costs and recognized a gain of $655,710 ($21.64 per limited
partnership unit). A disposition fee of $95,625 was accrued but not paid to the
Advisor.
At June 30, 1998, the Partnership had $8,769,598 in cash and cash
equivalents, which is primarily being retained as working capital reserves. Due
to the sale of the Partnership's last investment, discussed above, the general
partner has elected not to make any further distributions until all Partnership
expenses have been settled. The Partnership intends to liquidate and dissolve
in early 1999. Distributions for the first two quarters of 1997 had also been
suspended due to the bankruptcy of the sole tenant at Rivers Corporate Park.
Results of Operations
Operating Factors
At June 30, 1997, the Willows Shopping Center was 94% leased. The Willows
Shopping Center was sold on September 18, 1997 and the Partnership recognized a
gain of $1,117,467. At the time of sale, the Willows Shopping Center was 94%
leased.
As previously discussed, the Rivers Corporate Park was sold on March 4,
1998, and the Partnership recognized a gain of $655,710. At the time of sale,
this property was 29% leased.
Investment Results
Total real estate operations were $85,156 and $250,508 for the first six
months ended June 30, 1998 and 1997, respectively. Operations in 1998 were
solely from Rivers Corporate Park. (There were no operating results from Rivers
Corporate Park in the first two quarters of 1997 due to the bankruptcy of its
sole tenant.) Operations in 1997 were solely from the Willows Shopping Center,
which was sold in September, 1997.
Interest on cash equivalents and short-term investments increased
substantially between the first six months of 1997 and 1998 due primarily to
higher invested balances caused by the receipt of sale proceeds from the Rivers
Corporate Park in early March 1998.
Operating cash flow decreased $122,095 between the first six months of 1998
and 1997. This decrease is consistent with the decrease in real estate
operations as mentioned above.
<PAGE>
Portfolio Expenses
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the general partner. General and administrative expenses
primarily consist of real estate appraisal, printing, legal, accounting and
investor servicing fees.
No Partnership management fees were incurred for the first six months of
1998 and 1997 due to the suspension of cash distributions for such quarters.
General and administrative expenses decreased 24% between the first six months
of 1997 and 1998. This decrease is primarily due to lower overall expenses as a
result of sales of the Partnership's assets.
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1998
PART II
OTHER INFORMATION
-------------------
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: (27) Financial Data Schedule
b. Reports on Form 8-K: No Current Reports on
Form 8-K were filed during the quarter ended
June 30, 1998.
<PAGE>
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;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
August 12, 1998
/s/ Wesley M. Gardiner, Jr.
-------------------------------
Wesley M. Gardiner, Jr.
President, Chief Executive Officer
and Director of General Partner
Copley Properties Company, Inc.
August 12, 1998
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of General Partner,
Copley Properties Company, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 8,769,598
<SECURITIES> 0
<RECEIVABLES> 5,316
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,774,914
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,774,914
<CURRENT-LIABILITIES> 19,528
<BONDS> 964,480
0
0
<COMMON> 0
<OTHER-SE> 7,790,906
<TOTAL-LIABILITY-AND-EQUITY> 8,774,914
<SALES> 153,809
<TOTAL-REVENUES> 988,221
<CGS> 68,653
<TOTAL-COSTS> 68,653
<OTHER-EXPENSES> 43,287
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 876,281
<INCOME-TAX> 0
<INCOME-CONTINUING> 876,281
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 876,281
<EPS-PRIMARY> 28.92
<EPS-DILUTED> 28.92
</TABLE>
