<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 March 31, 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)
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 IV;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2000
PART I
FINANCIAL INFORMATION
---------------------
2
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
March 31, 2000 December 31, 1999
(Unaudited) (Audited)
--------------- ------------------
ASSETS
Real estate investments:
Joint venture $ 4,237,723 $ 4,608,955
----------- -------------
4,237,723 4,608,955
Cash and cash equivalents 3,161,637 17,597,405
Other net assets 30,123 97,603
----------- -------------
$ 7,429,483 $ 22,303,963
=========== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 117,193 $ 112,183
Accrued management fee 27,901 24,390
Deferred management and
disposition fees 4,464,067 4,436,165
----------- -------------
Total liabilities 4,609,161 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) 2,827,083 17,734,394
General partners (6,761) (3,169)
----------- -------------
Total partners' capital 2,820,322 17,731,225
----------- -------------
$ 7,429,483 $ 22,303,963
=========== =============
(See accompanying notes to unaudited financial statements)
3
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
---------------------------
2000 1999
-------- -------
INVESTMENT ACTIVITY
Property rentals $ -- $ 526,106
Property operating expenses -- (262,886)
Depreciation and amortization -- (83,830)
-------- ---------
-- 179,390
Joint venture earnings 171,728 376,437
Amortization (460) (1,327)
-------- ---------
Total real estate operations 171,268 554,500
Interest on cash equivalents 103,934 69,115
-------- ---------
Total investment activity 275,202 623,615
-------- ---------
PORTFOLIO EXPENSES
Management fee 55,802 57,606
General and administrative 85,446 60,141
-------- ---------
141,248 117,747
-------- ---------
Net Income $133,954 $ 505,868
======== =========
Net income per limited
partnership unit $1.40 $ 5.27
======== =========
Cash distributions per
limited partnership unit $ 158.32 $ 6.81
======== =========
Number of limited partnership
units outstanding during
the period 94,997 94,997
======== =========
(See accompanying notes to unaudited financial statements.)
4
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Three Months Ended March 31,
----------------------------------------
2000 1999
-------- --------
General Limited General Limited
Partners Partners Partners Partners
-------- -------- -------- --------
Balance at
beginning of
period $ (3,169) $ 17,734,394 $(42,713) $26,341,929
Cash
distributions (4,932) (15,039,925) (6,535) (646,930)
Net income 1,340 132,614 5,059 500,809
--------- ------------ -------- -----------
Balance at
end of period $ (6,761) $ 2,827,083 $(44,189) $26,195,808
======== ============ ======== ===========
(See accompanying notes to unaudited financial statements)
5
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
---------------------------
2000 1999
-------- --------
Net cash provided by operating activities $ 609,089 $ 742,792
----------- -----------
Cash flows from financing activity:
Distributions to partners (15,044,857) (653,465)
----------- ----------
Net increase (decrease) in
cash and cash equivalents (14,435,768) 89,327
Cash and cash equivalents:
Beginning of period 17,597,405 5,932,931
----------- ----------
End of period $ 3,161,637 $ 6,022,258
=========== ===========
(See accompanying notes to unaudited financial statements)
6
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of March 31, 2000 and December 31, 1999 and the results of
its operations, its cash flows and partners' capital (deficit) for the three
month periods ended March 31, 2000 and 1999. These adjustments are of a normal
recurring nature.
See notes to financial statements included in the Partnership's 1999 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 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 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 are 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.
7
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
The following summarized financial information is presented in the
aggregate for the Partnership's joint ventures: (one at December 31, 1999 and
March 31, 2000, two at March 31, 1999)
Assets and Liabilities
----------------------
March 31, 2000 December 31, 1999
-------------- -----------------
Assets
Real property, at cost less
accumulated depreciation
of $1,068,515 and
$1,039,331, respectively $ 3,954,392 $ 3,939,825
Other 44,767 634,949
-------------- ----------------
3,999,159 4,574,774
Liabilities 116,068 136,869
-------------- ----------------
Net Assets $ 3,883,091 $ 4,437,905
============== ================
Results of Operations
Three Months ended March 31,
---------------------------------
2000 1999
-------- --------
Revenue
Rental income $ 241,537 $ 637,815
Other income -- 128,049
------------- ----------------
241,537 765,864
------------- ----------------
Operating expenses 40,625 195,519
Depreciation and amortization 29,184 93,659
------------- ----------------
69,809 289,178
------------- ----------------
Net income $ 171,728 $ 476,686
============= ================
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.
8
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
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.
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
- -------------------------
Distributions of cash from operations relating to the quarter ended March
31, 2000 were made on April 27, 2000 in the aggregate amount of $564,225 ($5.88
per limited partnership unit).
9
<PAGE>
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
similar transactions, capital of $81,982,411 ($863 per limited partnership unit)
has been returned to the limited partners through March 31, 2000.
At March 31, 2000, the Partnership had $3,161,637 in cash and cash
equivalents, of which $564,225 was used for cash distributions to partners on
April 27, 2000; the remainder will primarily be used for working capital
reserves. The source of future liquidity and cash distributions to partners
will be cash generated by the Partnership's real estate and invested cash and
cash equivalents. Distributions of cash from operations for the first quarter
of 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 first quarter of 1999 were made at
the annualized rate of 5.75% on the adjusted capital contribution of $422 per
limited partnership unit. The distribution rate increased between the first
quarter of 1999 and 2000 due to the increase in operational cash flow as a
result of the final cash distributions received from the Columbia Gateway
Corporate Park joint venture.
The carrying value of real estate investments in the financial statements
is at depreciated cost, or if the investment's carrying value is determined not
to be recoverable through expected undiscounted future cash flows, the carrying
value is reduced to estimated fair market value. The fair market value of such
investments is further reduced by the estimated cost of sale for properties held
for sale. Carrying value may be greater or less than current appraised value.
At March 31, 2000, appraised value exceeded the related carrying value
approximately by $1,600,000. The current appraised value of the real estate
investment has been estimated by the managing general partner and is generally
based on a combination of traditional appraisal approaches performed by the
Advisor and independent appraisers. Because of the subjectivity inherent in the
valuation process, the estimated current appraised value may differ
significantly from that which could be realized if the real estate were actually
offered for sale in the marketplace.
10
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
Results of Operations
- ---------------------
At March 31, 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, which was sold in December 1999, was a joint venture
with an affiliate of the Partnership. The Reflections Apartments investment, a
wholly-owned property, was sold in September 1999.
Operating Factors
As mentioned 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, consistent with March 31, 1999.
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%, down from 97% at March 31, 1999.
Occupancy at 270 Technology Center was 100% at March 31, 2000, up from 96%
at March 31, 1999.
Investment Activity
Interest on cash equivalents and short-term investments increased by
approximately $35,000 or 50% between the comparable first three months of 1999
and 2000. The increase is primarily due to higher average invested balances as
a result of the temporary investment of the Columbia Gateway Corporate Park sale
proceeds prior to distribution.
Real estate operating activity for the period ended March 31, 2000 was
$171,268 compared to $554,500 for the comparable period in 1999. The decrease
of $383,232 is primarily due to the sales of Reflections Apartments in September
1999 and Columbia Gateway Corporate Park in December 1999. This is partially
offset by increases in operating performance at 270 Technology Center due to
lower vacancy and lower operating and professional expenses.
Operating cash flow decreased $133,703 between the comparable three month
periods of 1999 and 2000, primarily due to the sales 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 Partnership management fee was relatively unchanged between the
comparable three month periods of 1999 and 2000. General and administrative
expenses increased approximately $25,000 or 42% for the comparable three month
periods of 1999 and 2000. This is primarily due to an increase in investor
servicing fees as well as an increase in legal fees and state taxes.
11
<PAGE>
NEW ENGLAND LIFE PENSION PROPERTIES IV;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2000
PART II
OTHER INFORMATION
-------------------
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: (27) Financial Data Schedule
b. Reports on Form 8-K: No Current Reports on Form 8-K
were filed during the quarter ended March 31, 2000.
12
<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 IV;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
May 12, 2000
/s/ Alison Husid Cutler
-------------------------------
Alison Husid Cutler
President, Chief Executive Officer
and Director of the Managing General Partner,
Fourth Copley Corp.
May 12, 2000
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Fourth Copley Corp.
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,161,637
<SECURITIES> 0
<RECEIVABLES> 30,123
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,191,760
<PP&E> 4,237,723
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,429,483
<CURRENT-LIABILITIES> 145,094
<BONDS> 4,464,067
0
0
<COMMON> 0
<OTHER-SE> 2,820,322
<TOTAL-LIABILITY-AND-EQUITY> 7,429,483
<SALES> 171,728
<TOTAL-REVENUES> 275,662
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 141,708
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 133,954
<INCOME-TAX> 0
<INCOME-CONTINUING> 133,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 133,954
<EPS-BASIC> 1.40
<EPS-DILUTED> 1.40
</TABLE>
