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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 September 30, 2000 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)
World Trade Center East
Two Seaport Lane, 16/th/ Fl.
Boston, Massachusetts 02210
(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
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 2000
PART I
FINANCIAL INFORMATION
-----------------------
2
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
September 30, 2000 December 31, 1999
(Unaudited) (Audited)
------------------- ------------------
ASSETS
Real estate investments:
Joint venture $ - $ 4,608,955
Joint venture held for
disposition, net 4,402,615 -
---------- -----------
4,402,615 4,608,955
Cash and cash equivalents 2,621,784 17,597,405
Other net assets, net 30,123 97,603
---------- -----------
$7,054,522 $22,303,963
========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 97,935 $ 112,183
Accrued management fee - 24,390
Deferred management and
disposition fees 4,467,341 4,436,165
---------- -----------
Total liabilities 4,565,276 4,572,738
---------- -----------
Partners' capital (deficit):
Limited partners ($137 and
$290.18 per unit, respectively;
120,000 units authorized, 94,997
units issued and outstanding) 2,499,319 17,734,394
General partners (10,073) (3,169)
---------- -----------
Total partners' capital 2,489,246 17,731,225
---------- -----------
$7,054,522 $22,303,963
========== ===========
(See accompanying notes to unaudited financial statements)
3
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, 2000 September 30, 2000 September 30, 1999 September 30, 1999
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY
Property rentals $ - $ - $ 453,427 $1,480,349
Property operating expenses - - (336,881) (889,448)
Depreciation and amortization - - - (83,830)
-------- -------- ---------- ----------
- - 116,546 507,071
Joint venture earnings 191,487 537,540 610,712 1,430,398
Amortization (460) (1,380) (1,327) (3,981)
-------- -------- ---------- ----------
Total real estate operations 191,027 536,160 725,931 1,933,488
Gain on sale of Property - - 3,474,005 3,474,005
-------- -------- ---------- ----------
Total real estate activity 191,027 536,160 4,199,936 5,407,493
Interest on cash equivalents 42,572 191,151 80,065 220,374
-------- -------- ---------- ----------
Total investment activity 233,599 727,311 4,280,001 5,627,867
-------- -------- ---------- ----------
Portfolio Expenses
Management fee - 62,350 146,719 261,930
General and administrative 56,802 231,648 72,468 219,092
-------- -------- ---------- ----------
56,802 293,998 219,187 481,022
-------- -------- ---------- ----------
Net Income $176,797 $433,313 $4,060,814 $5,146,845
======== ======== ========== ==========
</TABLE>
4
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Net income per limited partnership
unit $ 1.84 $ 4.52 $ 42.32 $ 53.64
======= ======= ======= =======
Cash distributions per
limited partnership unit $ 0.69 $164.89 $ 6.07 $ 18.95
======= ======= ======= =======
Number of limited partnership
units outstanding during the period 94,997 94,997 94,997 94,997
======= ======= ======= =======
(See accompanying notes to unaudited financial statements)
5
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (Deficit)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, 2000 September 30, 2000 September 30, 1999 September 30, 1999
------------------ ------------------ ------------------ ------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
period $(11,178) $2,389,838 $ (3,169) $17,734,394 $ (44,213) $26,193,538 $(42,713) $26,341,929
Cash
distributions (663) (65,548) (11,237) (15,664,055) (5,825) (576,632) (18,185) (1,800,194)
Net income 1,768 175,029 4,333 428,980 40,608 4,020,206 51,468 5,095,377
-------- ---------- -------- ----------- --------- ----------- -------- -----------
Balance at
end of period $(10,073) $2,499,319 $(10,073) $ 2,499,319 $ (9,430) $29,637,112 $ (9,430) $29,637,112
======== ========== ======== =========== ========= =========== ======== ===========
</TABLE>
(See accompanying notes to unaudited financial statements)
6
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
-------------------------------
2000 1999
-------------------------------
Net cash provided by operating activities $ 699,671 $ 1,768,650
------------ -----------
Cash flows from investing activities:
Net proceeds from sale of investment - 12,380,052
Deferred disposition fee - 393,000
------------ -----------
Net cash provided by
investing activities - 12,773,052
------------ -----------
Cash flows from financing activity:
Distributions to partners (15,675,292) (1,818,379)
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Net (decrease)increase in
cash and cash equivalents (14,975,621) 12,723,323
Cash and cash equivalents:
Beginning of period 17,597,405 5,932,931
------------ -----------
End of period $ 2,621,784 $18,656,254
============ ===========
(See accompanying notes to unaudited financial statements)
7
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO UNAUDITED 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 September 30, 2000 and December 31, 1999, the results
of its operations and partners' capital (deficit) for the three and nine months
ended September 30, 2000 and 1999, and its cash flows for the nine months ended
September 30, 2000 and 1999. These adjustments are of a normal recurring
nature.
See notes to unaudited financial statements included in the Partnership's
1999 Annual Report on Form 10-K for additional information relating to the
Partnership's financial statements. We prepared the unaudited financial
statements following the requirements of the SEC for interim reporting. As
permitted under those rules, certain footnotes or other financial information
that are normally required by generally accepted accounting principles can be
condensed or omitted.
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 its real estate investments prior to the end of 1987. It intended to
dispose of the 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
Partnership has engaged AEW Real Estate Advisors, Inc. (the "Advisor") to
provide asset management advisory services.
NOTE 2 - REAL ESTATE JOINT VENTURES
-----------------------------------
On December 20, 1999, the Columbia Gateway Corporate Park joint venture
investment in which the Partnership and an affiliate were entitled to 69.5% and
30.5%, respectively, of the operating activity, 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 the Advisor. On January 27, 2000, the
Partnership made a capital distribution of $13,204,583 ($139 per limited
partnership unit) from the proceeds of the sale. At December 31, 1999, $500,000
remained in the joint venture, of which the Partnership's 69.5% share, $347,500,
was distributed to the Partnership in February 2000.
The following summarized financial information is presented in the
aggregate for the Partnership's joint ventures (one at September 30, 2000 and
December 31, 1999, two at September 30, 1999):
8
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Assets and Liabilities
----------------------
September 30, 2000 December 31, 1999
------------------ -----------------
Assets
Real property, at cost less
accumulated depreciation
of $1,039,331 $ - $3,939,825
Other - 634,949
Property held for
disposition, net 3,967,464 -
------------ ----------
3,967,464 4,574,774
Liabilities - 136,869
------------ ----------
Net Assets $ 3,967,464 $4,437,905
============ ==========
Results of Operations
Nine Months ended September 30,
-------------------------------
2000 1999
---- ----
Revenue
Rental income $ 741,289 $2,558,706
Other income - 74,655
------------ ----------
741,289 2,633,361
------------ ----------
Expenses
Operating expenses 145,381 518,458
Depreciation and amortization 58,368 280,977
------------ ----------
203,749 799,435
------------ ----------
Net income $ 537,540 $1,833,926
============ ==========
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.
9
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
On June 30, 2000, the Partnership executed a Purchase and Sale Agreement to
sell the 270 Technology Park investment. This investment is classified as Joint
Venture Held for Disposition, net, on the Balance Sheet ended September 30,
2000. The investment was sold on October 31, 2000 at a gain of approximately
$800,000. During the nine months ended September 30, 2000 and 1999, the
Partnership recognized $537,540 and $510,884 in net income from the 270
Technology Park investment, respectively.
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 was 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.
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
the Advisor. 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.
NOTE 4 - SUBSEQUENT EVENT
-------------------------
A capital distribution was made on October 26, 2000 from unallocated
original working capital previously held in reserves in the amount of $664,979
($7.00 per limited partnership unit).
See note 2 for discussion of investment sale on October 31, 2000.
10
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
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 and 1998 and two in 1999. As a result of the sales and returns
of working capital reserves, capital of $81,982,411 ($863 per limited
partnership unit) has been returned to the limited partners through September
30, 2000.
At September 30, 2000, the Partnership had $2,621,784 in cash and cash
equivalents, of which $664,979 was used for capital distributions to partners on
October 26, 2000; the remainder will be retained as working capital reserves.
The source of future liquidity and cash distributions to partners will be cash
generated by the Partnership's real estate and invested cash and cash
equivalents. Distributions of cash from operations for the first quarter of 2000
were made at the annualized rate of 13% on the weighted average adjusted capital
contribution of $180.77 per limited partnership unit. Distributions of cash
from operations for the second quarter of 2000 were made at the annualized rate
of 2% on the adjusted capital contribution of $137.00 per limited partnership
unit. The first quarter 2000 distribution rate was higher than the second
quarter of 2000 as a result of greater cash available for distribution due to
final receipts of operating cash flow from previously sold properties. Due to
the sale of the last remaining asset in October, 2000, distributions were
suspended for the third quarter of 2000 to enable the Partnership to meet its
fund level obligations for the remainder of its life cycle. Distributions of
cash from operations relating to 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 related to the
third quarter of 1999 were made at the annualized rate of 6.25% on the adjusted
capital contribution of $422 per limited partnership unit.
The carrying value of real estate investments in the financial statements
is at depreciated cost, or if the investment's carrying value is determined not
to be recoverable through expected undiscounted future cash flows, the carrying
value is reduced to the 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 September 30, 2000, the appraised value of the last remaining real
estate investment exceeded its related carrying value by approximately
$1,400,000. The current appraised value of real estate investments has been
estimated by the managing general partner and is based on the amounts negotiated
in the Purchase and Sale Agreement for this investment executed on June 30, 2000
less anticipated closing costs.
11
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Results of Operations
---------------------
At September 30, 2000, the remaining investment in the portfolio is
structured as a joint venture with a real estate development/management firm.
The Columbia Gateway Corporate Park, a joint venture with an affiliate of the
Partnership, was sold in December 1999. The Reflections Apartments investment,
a wholly-owned property, was sold in September 1999.
Operating Factors
As discussed above, the Columbia Gateway Corporate Park joint venture, in
which the Partnership and an affiliate were entitled to 69.5% and 30.5% of the
operating activity, respectively, sold its property on December 20, 1999. The
Partnership recognized its 69.5% share of the gain of $1,927,893. The property
was 100% leased at the time of sale.
As discussed above, the Reflections Apartments investment was sold on
September 23, 1999, and the Partnership recognized a gain in the amount of
$3,474,005. At the time of the sale, occupancy at Reflections Apartments was
94%.
Occupancy at 270 Technology Center was 100% at September 30, 2000 and
September 30, 1999.
Investment Activity
Interest on cash equivalents for the three and nine months ended September
30, 2000, was $42,572 and $191,151, respectively, compared to $80,065 and
$220,374 for the same periods in 1999. The comparative three and nine month
decreases of approximately $37,493 and $29,223, respectively, are primarily due
to lower average investment balances in 2000 as a result of the sales of
Reflections Apartments and Columbia Gateway Corporate Park in September and
December 1999, respectively.
For the three and nine months ended September 30, 2000, real estate
operations were $191,027 and $536,160, respectively, compared to $725,931 and
$1,933,488 for the comparable periods in 1999. The decreases of $534,904 and
$1,397,328 for the comparative three and nine month periods are primarily due to
the sales of Reflections Apartments and Columbia Gateway Corporate Park in
September and December 1999, respectively.
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.
12
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
For the three and nine months ended September 30, 2000, management fees
were $0 and $62,350, respectively, compared to $146,719 and $261,930 for the
comparable periods in 1999. The decreases in management fees for the respective
three and nine month periods are due to lower operational cash distributions as
a result of the sales of Reflections Apartments and Columbia Gateway Corporate
Park in September and December 1999, respectively.
General and administrative expenses for the three and nine months ended
September 30, 2000 were $56,802 and $231,648, respectively, compared to $72,468
and $219,092 for the same periods in 1999. The decrease of $15,666 for the
comparable three month period is primarily due to a decrease in investor
servicing fees and out of pocket expenses. The increase of $12,556 for the
comparable nine month period is primarily due to an increase in investor
servicing fees as well as an increase in legal fees and state taxes.
13
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NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 2000
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
September 30, 2000.
14
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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)
November 13, 2000
/s/ Alison L. Husid
-------------------------------
Alison L. Husid
President, Chief Executive Officer
and Director of the Managing General Partner,
Fourth Copley Corp.
November 13, 2000
/s/ Jem A. Hudgins
--------------------------------
Jem A. Hudgins
Principal Financial and Accounting
Officer of Managing General Partner,
Fourth Copley Corp.
15
