<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For Quarter Ended June 30, 1998 Commission File Number 0-15430
COPLEY REALTY INCOME PARTNERS 1;
A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2893293
(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
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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>
COPLEY REALTY INCOME PARTNERS 1;
A 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
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<S> <C> <C>
ASSETS
Cash and cash equivalents $5,540,031 $5,259,413
Short-term investments - 299,629
---------- ----------
$5,540,031 $5,559,042
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 30,775 $ 56,260
Accrued management fee - 9,017
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Total liabilities 30,775 65,277
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Partners' capital (deficit):
Limited partners ($522 per
unit; 100,000 units
authorized, 34,581
units issued and
outstanding) 5,595,002 5,579,666
General partners (85,746) (85,901)
---------- ----------
Total partners' capital 5,509,256 5,493,765
---------- ----------
$5,540,031 $5,559,042
========== ==========
</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 $ - $ - $132,162 $265,740
Property operating expenses - - (32,088) (63,374)
Depreciation and amortization - - (29,783) (61,979)
------- -------- -------- --------
- - 70,291 140,387
Joint venture earnings - - 22,231 76,596
Gain on sale of property - - 507,980 507,980
------- -------- -------- --------
Total real estate operations - - 600,502 724,963
Interest on cash equivalents
and short term investments 74,752 148,982 35,308 52,271
------- -------- -------- --------
Total investment activity 74,752 148,982 635,810 777,234
------- -------- -------- --------
PORTFOLIO EXPENSES
Management fee - - 46,707 58,349
General and administrative 24,210 42,323 23,111 51,416
------- -------- -------- --------
24,210 42,323 69,818 109,765
------- -------- -------- --------
Net income $50,542 $106,659 $565,992 $667,469
======= ======== ======== ========
Net income per
limited partnership unit $ 1.45 $ 3.05 $ 16.20 $ 19.11
======= ======== ======== ========
Cash distributions per
limited partnership unit $ - $ 2.61 $ 154.37 $ 161.10
======= ======== ======== ========
Number of limited partnership
units outstanding during
the period 34,581 34,581 34,581 34,581
======= ======== ======== ========
</TABLE>
(SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS)
<PAGE>
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(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
Partners Partners Partners Partners Partners Partners Partners Partners
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
period $(86,252) $5,544,966 $(85,901) $5,579,666 $(101,636) $9,243,577 $(100,300) $9,375,845
Cash
distributions - - (912) (90,256) (1,177) (5,338,269) (3,528) (5,570,999)
Net income 506 50,036 1,067 105,592 5,660 560,332 6,675 660,794
-------- ---------- -------- ---------- -------- ---------- --------- ----------
Balance at
end of period $(85,746) $5,595,002 $(85,746) $5,595,002 $(97,153) $4,465,640 $ (97,153) $4,465,640
======== ========== ======== ========== ======== ========== ========= ==========
</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 $ 79,848 $ 297,707
---------- -----------
Cash flows from investing activities:
Net proceeds from sale of property - 5,086,239
Increase in deferred disposition fees - 160,740
Investment in property - (36,385)
Decrease in short-term
investments, net 291,938 49,300
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Net cash provided by
investing activities 291,938 5,259,894
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Cash flows from financing activity:
Distributions to partners (91,168) (5,574,527)
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Net increase (decrease) in cash
and cash equivalents 280,618 (16,926)
Cash and cash equivalents:
Beginning of period 5,259,413 1,166,590
---------- -----------
End of period $5,540,031 $ 1,149,664
========== ===========
</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 (deficit) 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
- ----------------------------------
Copley Realty Income Partners 1; A 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.
The Partnership commenced operations in August 1986, and acquired five real
estate investments prior to the end of 1987. The Partnership sold its remaining
investment in October 1997 and therefore intends to liquidate and dissolve in
1998.
NOTE 2 -PROPERTY
- ----------------
Effective January 1, 1996, the East Anaheim Distribution Center joint
venture was dissolved and ownership of the venture's net assets was assigned to
the Partnership. Accordingly, as of that date, the investment was accounted for
as a wholly-owned property. The carrying value of the joint venture investment
at conversion ($3,763,820) was allocated to land, building and improvements, and
other net operating assets. The property was sold on October 24, 1997 for gross
consideration of $4,700,000. The Partnership received net proceeds of
$4,677,970, after closing costs, and recognized a gain of $929,847 ($26.89 per
limited partnership unit) on the sale.
NOTE 3 - REAL ESTATE JOINT VENTURES
- -----------------------------------
On May 2, 1997, the Medlock Oaks buildings, which were owned by the
Partnership (57%) and an affiliate (43%), were sold for a total sales price of
$9,402,779. The Partnership received net proceeds of $5,246,979, after closing
costs, and recognized an adjusted gain of $678,548 ($19.43 per limited
partnership unit) at December 31, 1997 on the sale. On May 29, 1997, the
Partnership made a capital distribution of $5,221,731 ($151 per limited
partnership unit) from the proceeds of the sale.
<PAGE>
The following Results of Operations relate to the Medlock Oaks joint
venture:
Results of Operations
<TABLE>
<CAPTION>
Period From
Six Months Ended January 1, 1997
June 30, 1998 Through May 2, 1997
---------------- -------------------
<S> <C> <C>
Revenue
Rental income $ - $400,861
Other - 735
--------- --------
- 401,596
--------- --------
Expenses
Depreciation and amortization - 156,940
Operating expenses - 112,258
--------- --------
- 269,198
--------- --------
Net income $ - $132,398
========= ========
</TABLE>
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliate on behalf of their various financing arrangements
with the joint venture.
NOTE 4 - SUBSEQUENT EVENT
- -------------------------
On July 30, 1998, the Partnership made a partial liquidating distribution
of $5,256,312 ($152 per limited partnership unit).
<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 April 1987, and a total of 34,581 units were sold. The Partnership
received proceeds of $30,812,718, 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. In connection with two sales in
1996 and one sale in 1997, capital of $16,529,718 has been returned to the
limited partners. On April 25, 1996, the Partnership made a capital
distribution of $177 per limited partnership unit, which reduced the adjusted
capital contribution to $823 per unit. On August 29, 1996, the Partnership made
a capital distribution of $150 per limited partnership unit, which reduced the
adjusted capital contribution to $673 per unit. On May 29, 1997, the
Partnership made a capital distribution of $151 per limited partnership unit,
which reduced the adjusted capital contribution to $522 per unit.
At June 30, 1998, the Partnership had $5,540,031 in cash and cash
equivalents which includes net proceeds of $4,677,970 from the sale of the
Partnership's remaining property, East Anaheim, which was sold in October 1997.
The Partnership intends to liquidate and dissolve in early 1999. The
Partnership made a partial liquidating distribution of capital of $5,256,312
($152 per limited partnership unit) on July 30, 1998. This distribution reduced
the adjusted capital contribution to $370 per unit. The source of future
liquidity will be cash generated by the Partnership's invested cash and cash
equivalents. Distributions of cash from operations were made at an annualized
rate of 2.0% for the first two quarters of 1997; the first quarter 1997
distribution was based on the adjusted capital contribution of $673 per unit;
the second quarter 1997 distribution was based on the weighted average adjusted
capital contribution of $619.31. Operating cash distributions were discontinued
effective the first quarter of 1998, as a result of the cash flow decrease
resulting from the sale of the Partnership's remaining investment during the
fourth quarter of 1997.
Results of Operations
As discussed above, the Partnership's last real estate investment was sold
in October 1997. Therefore, no comparative real estate investment results for
the periods ended June 30, 1997 and 1998 are presented.
Interest on cash equivalents and short-term investments increased by
approximately $97,000 between the two six-month periods due to higher invested
balances in 1998 as a result of the retention of East Anaheim sale proceeds, as
mentioned above.
General and administrative expenses primarily consist of real estate
appraisal, legal, accounting, printing and servicing agent fees. These expenses
decreased approximately $9,100, or 18%, for the first six months of 1998 as
compared to the same period in 1997, primarily due to a decrease in accounting
fees, consistent with the impending dissolution of the Partnership during 1998.
<PAGE>
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. Management fees decreased between
the two six-month periods concurrent with the discontinuance of operating cash
distributions discussed above.
<PAGE>
COPLEY REALTY INCOME PARTNERS 1;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1998
PART II
OTHER INFORMATION
-------------------
ITEMS 1-5 Not Applicable
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
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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.
COPLEY REALTY INCOME PARTNERS 1;
A LIMITED PARTNERSHIP
(Registrant)
AUGUST 12, 1998
/S/ Wesley M. Gardiner, Jr.
-------------------------------
Wesley M. Gardiner, Jr.
President, Chief Executive Officer and Director
of Managing General Partner,
First Income Corp.
AUGUST 12, 1998
/S/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Treasurer and Principal Financial and Accounting
Officer of Managing General Partner, First Income
Corp.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,540,031
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,540,031
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,540,031
<CURRENT-LIABILITIES> 30,775
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,509,256
<TOTAL-LIABILITY-AND-EQUITY> 5,540,031
<SALES> 0
<TOTAL-REVENUES> 148,982
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 42,323
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 106,659
<INCOME-TAX> 0
<INCOME-CONTINUING> 106,659
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106,659
<EPS-PRIMARY> 3.05
<EPS-DILUTED> 3.05
</TABLE>
