<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission File No. 0-17810
_________________
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2961376
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 Franklin Street, 25th Floor
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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 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 ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
No voting stock is held by nonaffiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
None
1
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PART I
------
Item 1. Business.
--------
Copley Realty Income Partners 2; A Limited Partnership (the "Partnership")
was organized under the Uniform Limited Partnership Act of the Commonwealth of
Massachusetts on January 16, 1987, to invest primarily in newly constructed and
existing income-producing real properties.
The Partnership was initially capitalized with contributions of $2,000 in
the aggregate from Second Income Corp. (the "Managing General Partner") and ECOP
Associates Limited Partnership (the "Associate General Partner") (collectively,
the "General Partners") and $10,000 from Copley Real Estate Advisors, Inc. (the
"Initial Limited Partner"). The Partnership filed a Registration Statement on
Form S-11 (the "Registration Statement") with the Securities and Exchange
Commission on January 26, 1987, with respect to a public offering of 40,000
units of limited partnership interest at a purchase price of $1,000 per unit
(the "Units") with an option to sell up to an additional 60,000 Units (an
aggregate of $100,000,000). The Registration Statement was declared effective
on April 13, 1987.
The first sale of Units occurred on October 15, 1987, at which time the
Initial Limited Partner withdrew its contribution from the Partnership.
Investors were admitted to the Partnership thereafter at monthly closings; the
offering terminated, and the last group of initial investors was admitted to the
Partnership on April 26, 1988. As of April 26, 1988, a total of 32,997 Units
had been sold, a total of 2,206 investors had been admitted as limited partners
(the "Limited Partners") and a total of $32,756,650 had been contributed to the
capital of the Partnership. The remaining 67,003 Units were de-registered on
June 30, 1988.
As of December 31, 1999, the Partnership had disposed of all of its real
estate investments. The Partnership plans to liquidate and dissolve in 2000
after settling its remaining liabilities. The Partnership sold its last
remaining real asset in 1999. The Partnership had sold two other real estate
investments in 1997, and a fourth investment was transferred by a deed in lieu
of foreclosure in 1994. In function regarding the sales of the Partnership's
investments is set forth in the following table:
<TABLE>
<CAPTION>
INVESTMENT MONTH/YEAR OF SALE NET SALE PROCEEDS DISTRIBUTION/UNIT DISTRIBUTION
MONTH/YEAR
<S> <C> <C> <C> <C>
Investment One 2/99 $6,938,468 $199.00 4/99
Investment Two 5/97 $3,958,248 $120.00 5/97
Investment Three 12/97 $3,260,761 $ 99.00 12/97
</TABLE>
The Partnership has no employees. Services are performed for the Partnership
by the Managing General Partner and affiliates of the Managing General Partner.
A. Research and Development Building in La Mirada, California ("La
---------------------------------------------------------------
Mirada") and Research and Development Building in Rancho Dominguez,
-------------------------------------------------------------------
California ("Rancho Dominguez").
On November 12, 1987, the Partnership acquired a 70% interest in a joint
venture formed with an affiliate of The Muller Company (the "Developer"). On
November 2, 1988, the Partnership increased its maximum commitment from
$15,850,000 to $20,465,000, all of which the Partnership had contributed to the
capital of the joint venture. As of January 1, 1991, because of the Developer's
inability to fund its share of capital contributions, the Partnership assumed
100% ownership of the joint venture's assets.
As successor in interest to the joint venture, the Partnership owned
approximately 7.02 acres of land in La Mirada, California and a 135,269 square
foot research and development building located thereon. Genisco Technology
Corporation ("Genisco") had initially leased the entire building for a term of
ten years. In the third quarter of 1990, after Genisco had abandoned the
property and ceased making lease payments, the joint venture
2
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terminated the lease. The entire building was leased to Babcock Engineering,
which executed a lease for 74% of the building in June 1994. The lease was
amended in January 1995 to include the entire facility.
On February 26, 1999, the La Mirada buildings were sold for $7,150,000.
The Partnership received net proceeds of $6,938,468, after closing costs, and
recognized a gain of $590,563 ($17.84 per limited partnership unit). On April
29, 1999, the Partnership made a capital distribution of $6,519,322 ($198.96 per
limited partnership unit) from the proceeds. The distribution reduced the
adjusted capital contribution to $582.04 per unit.
As successor in interest to the joint venture, the Partnership also owned
approximately 6.06 acres of land in Rancho Dominguez, California and a research
and development facility located thereon containing approximately 100,325 square
feet, which the joint venture acquired from Genisco. The entire building was
leased by Engineered Magnetics, Inc. In 1995, the lease was amended to include
a deferral of rent in exchange for a two-year extension of the term through
April 2004. In the second quarter of 1996, the Partnership further amended the
lease by shortening the term to eighteen months, through November 1997, at a
reduced rental rate. The Partnership had the option to terminate the lease with
a ninety day notice. In consideration of the lease amendment, the tenant agreed
to pay the Partnership a total of $1,600,000, all of which was paid prior to
December 31, 1997.
As stated above, the Partnership sold the Rancho Dominguez building on
December 15, 1997.
Item 2. Properties:
-----------
The Partnership has disposed of all its real property investments.
Item 3. Legal Proceedings.
-----------------
The Partnership is not a party to, nor are any of its properties subject
to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Annual Report on Form 10-K.
PART II
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Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
---------------------------------------------------------------------
There is no active market for the Units. Trading in the Units is sporadic
and occurs solely through private transactions.
As of December 31, 1999, there were 2,190 holders of Units.
The Partnership's Amended and Restated Agreement of Limited Partnership
dated October 15, 1987, as amended to date (the "Partnership Agreement"),
requires that any Distributable Cash (as defined therein) be distributed
quarterly to the Partners in specified proportions and priorities. There are no
restrictions on the Partnership's present or future ability to make
distributions of Distributable Cash. Cash distributions paid in 1999, or
distributed after year-end with respect to 1999, to the Limited Partners as a
group totaled $6,779,492 including a special operating cash distribution in the
amount of $148,107 and $6,519,322 ($199 per limited partnership unit)
representing proceeds from the sale of the Partnership's last remaining real
estate investment on April 29, 1999. Cash distributions paid in 1998, or
distributed after year-end with respect to 1998, to the Limited Partners as
a group totaled $1,427,314, including a special operating cash distribution in
the amount of $913,544 on October 28, 1998. Cash distributions paid in 1997, or
distributed after year-end with respect to 1997, to the Limited Partners as
3
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a group totaled $12,244,369, including $7,182,093 ($219 per limited partnership
unit) representing proceeds from the sales of two properties.
Largely due to the capital distributions mentioned above, total cash
distributions exceeded net income in 1999 and reduced partners' capital
accordingly. Regular cash distributions from operations were slightly higher
than cash provided by operations in 1999. Reference is made to the Partnership's
Statement of Partners' Capital (Deficit) and Statement of Cash Flows in Item 7
hereof.
4
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Item 6. Selected Financial Data.
-----------------------
<TABLE>
<CAPTION>
For Year For Year For Year For Year For Year
Ended or Ended or Ended or Ended or Ended or
As of : As of : As of : As of : As of :
12/31/99(1) 12/31/98 12/31/97 (2) 12/31/96 (3) 12/31/95
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues 203,120 $ 916,698 $ 1,741,986 $ 3,571,724 $ 2,265,542
Net Income 599,446 $ 396,766 $ 1,042,339 $ (911,331) $ 1,309,989
(Loss)
Net Income
(Loss) per
weighted
average
Limited $ 18.11 $ 11.99 $ 31.46 $ (27.47) $ 39.48
Partnership
Unit
Total Assets $ 470,554 $6,743,112 $ 8,202,897 $19,387,293 $21,124,057
Total Cash
Distributions
per Limited
Partnership
Unit, including
amounts
distributed
after year end
with respect
to such year. $ 206.90 $ 48.41 $ 373.38 $ 37.50 $ 0.00
year. ----------- ----------- ----------- ----------- -----------
</TABLE>
(1) Net Income in 1999 includes a gain from the sale of the last remaining
property totaling $590,563. Cash distributions include a return of capital
totaling $199.00 per Limited Partnership Unit.
(2) Net Income in 1997 includes gains from the sales of two properties totaling
$517,693. Cash distributions include returns of capital totaling $219.00
per Limited Partnership Unit.
(3) Net Loss in 1996 includes investment valuation allowances totaling
$3,350,000 and a lease termination fee of $1,600,000.
5
<PAGE>
Item 7.
- -------
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 1988, and a total of 32,997 Units were sold. The Partnership
received proceeds of $29,379,522, 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.
On May 2, 1997, the Medlock Oaks buildings, which were owned by the
Partnership (43%) and an affiliate (57%), were sold for a total sales price of
$9,402,779. The Partnership received its 43% share of the net proceeds in the
amount of $3,958,248, after closing costs. On May 29, 1997, the Partnership
made a capital distribution of $3,938,160 ($120 per Limited Partnership Unit)
from the proceeds of the sale. The distribution reduced the adjusted capital
contribution to $880 per unit.
On December 15, 1997, the Partnership sold the Rancho Dominguez building
for $3,486,000. The Partnership received net proceeds of $3,260,761, after
closing costs. On December 30, 1997, the Partnership made a capital distribution
of $3,243,933 ($99 per Limited Partnership Unit) from the proceeds. The
distribution reduced the adjusted capital contribution to $781 per Unit.
On February 26, 1999, the Partnership sold the La Mirada buildings for
$7,150,000. The Partnership received net proceeds of $6,938,468, after closing
costs. On April 29, 1999, the Partnership made a capital distribution of
$6,519,322 ($198.96 per Limited Partnership Unit) from the proceeds. The
distribution reduced the adjusted capital contribution to $582.04 per Unit.
At December 31, 1999, the Partnership had $470,554 in cash and cash
equivalents. The balance is being retained pending dissolution and liquidation
of the Partnership later in 2000, and for working capital reserves. The
annualized distribution rate relating to all four quarters of 1998 was 2.0% on
the adjusted capital contribution of $781 per Unit. Also, the Partnership made
a special distribution of operating cash in the fourth quarter of 1998 in the
amount of $922,772. Distributions of cash from operations related to the first
quarter of 1999 were made at an annualized rate of 1.75% on the adjusted capital
contribution of $781 per Unit. At the time of the first quarter distribution, a
special distribution of $4.52 per Limited Partnership Unit from operating
reserves. There were no distributions made in the second, third or fourth
quarters of 1999 due to the sale of the Partnership's remaining investment in
February 1999.
The Partnership maintained a fund for the purpose of repurchasing limited
partnership units. Two percent of cash flow, as defined, was designated for
this fund which had a balance of $78,985 and $73,208 at April 1, 1999 and
December 31, 1998, respectively. In accordance with the terms of the
Partnership Agreement, any amounts in this fund after April 1, 1999 were placed
in Partnership reserves. Through April 1, 1999, the Partnership had repurchased
and retired 230 Limited Partnership Units for an aggregate cost of $177,945.
Results of Operations
- ---------------------
Form of Real Estate Investments
The La Mirada investment, which was sold on February 26, 1999, was wholly-
owned by the Partnership. The Rancho Dominguez investment, which was sold on
December 15, 1997, was also a wholly-owned property. The Medlock Oaks
investment, which was sold on May 2, 1997, was structured as a joint venture
with an affiliate of the Partnership.
6
<PAGE>
Operating Factors
As mentioned above, the Partnership and its affiliate sold the Medlock Oaks
buildings on May 2, 1997 for a total sales price of $9,402,779. The Partnership
received its 43% share of the net proceeds in the amount of $3,958,248 and
recognized a gain of $509,250 ($15.37 per Limited Partnership Unit).
On December 15, 1997, the Rancho Dominguez building was sold for
$3,486,000, and the Partnership received net proceeds of $3,260,761, after
closing costs, and recognized a gain of $129,703 ($3.96 per Limited Partnership
Unit) on the sale.
On February 26, 1999, the La Mirada buildings were sold for $7,150,000.
The Partnership received net proceeds of $6,938,468, after closing costs, and
recognized a gain of $590,563 ($17.84 per Limited Partnership Unit).
Investment Results
Excluding the impact of the valuation allowances and the lease termination
fee, investment income was $756,776, $630,229, and $1,647,366, for the years
ended December 31, 1999, 1998 and 1997, respectively. The changes in investment
income are primarily due to assets sold in 1997 and 1999.
Real estate operations for La Mirada were $89,949 in 1999 compared to
$335,307 in 1998. The decreased real estate activity in 1999 stems primarily
from the sale of property in the first quarter. Real estate operations for La
Mirada were $335,307 in 1998 compared to $301,489 in 1997. Results of real
estate activity in 1998 include the reversal of $225,840 of previously accrued
deferred disposition fees which the Managing General Partner determined would
not be paid. Joint venture earnings in 1997 were solely from the Medlock Oaks
investment.
Interest on cash equivalents and short-term investments increased
approximately $7,000 in 1999 as compared to 1998 as a result of an increase in
the average investment balance due to the temporary investment of La Mirada's
sale proceeds. Interest on cash equivalents and short-term investments
decreased approximately $198,000 in 1998 as compared to 1997 as a result of a
substantial decrease in the average investment balance due to the temporary
investment of sale proceeds, in 1997, prior to distribution.
Portfolio Expenses
General and administrative expenses primarily consist of real estate
appraisal, legal, accounting, printing and investor servicing agent fees. These
expenses decreased approximately $15,000, or 16% between 1998 and 1999,
primarily due to decreases in printing fees and out-of-pocket expenses due to
the sale of the remaining investment in the first quarter of 1999. General and
administrative expenses decreased approximately $8,000, or 8% between 1997 and
1998, primarily due to decreases in appraisal and accounting fees and partially
offset by an increase to out-of-pocket 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.
Inflation
- ---------
By their nature, real estate investments tend not to be adversely affected
by inflation. Inflation may result in appreciation in the value of real estate
investments over time, if rental rates and replacement costs increase. Declines
in real property values during the period of Partnership operations, due to
market and economic conditions, have overshadowed the overall positive effect
inflation may have had on the value of the Partnership's investments.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk:
-----------------------------------------------------------
The Partnership was not party to derivative financial instruments or
derivative commodity instruments at or during the year ended December 31, 1999.
The Partnership's only other financial instruments (as defined by Financial
Accounting Standards Board Statement No. 107) are its cash and cash equivalents,
for which cost approximates market value.
7
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Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The independent auditor's reports and financial statements listed in the
accompanying index are filed as part of this report. See Index to the Financial
Statements on page 13.
Item 9. Disagreements on Accounting and Financial Disclosure.
----------------------------------------------------
The Partnership has had no disagreements with its accountants on any
matters of accounting principles or practices or financial statement disclosure.
8
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PART III
--------
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
(a) and (b) Identification of Directors and Executive Officers.
--------------------------------------------------
The following table sets forth the names of the directors and
executive officers of the Managing General Partner and the age and position held
by each of them as of December 31, 1999.
<TABLE>
<CAPTION>
Name Position(s) with the Managing General Partner Age
- ------------------------- ------------------------------------------------------------ ---------
<S> <C> <C>
Alison Husid Cutler President, Chief Executive Officer and Director 37
Pamela J. Herbst Vice President and Director 44
J. Grant Monahon Vice President and Director 54
James J. Finnegan Vice President 39
Karin J. Lagerlund Treasurer and Principal Financial and Accounting Officer 35
</TABLE>
(c) Identification of Certain Significant Employees.
-----------------------------------------------
None.
(d) Family Relationships.
--------------------
None.
(e) Business Experience.
-------------------
The Managing General Partner was incorporated in Massachusetts on
January 16, 1987. The background and experience of the executive officers and
directors of the Managing General Partner are as follows:
Alison Husid Cutler is a Portfolio Manager in AEW Institutional Real
Estate Services, with responsibility for several real estate equity portfolios
representing approximately $800 million in client capital. She has over 12
years of experience in real estate finance and investment management. Ms.
Cutler joined the predecessor of AEW Capital Management, L.P. ("AEW Capital
Management) in 1987 as Controller for a portfolio management team responsible
for the acquisition, management, restructuring and disposition of client assets
in New England and the western U.S. She later served as Asset Manager for a
portfolio of assets in Arizona and the West Coast. Prior to joining AEW, Ms.
Cutler worked for several years as a Senior Auditor with Peat Marwick, Main &
Co. She is a Certified Public Accountant and a graduate of the University of
Massachusetts (B.A.).
Pamela J. Herbst directs AEW Capital Management, L.P.'s ("AEW Capital
Management) Institutional Real Estate Services, with oversight responsibility
for the direct equity and investing and asset and portfolio management of
existing core and core-plus commingled funds and separate accounts. Ms. Herbst
is a member of AEW Capital Management's Investment Policy Group and Operating
Committee. She came to AEW Capital Management in December 1996 as a result of
the firm's merger with Copley Real Estate Advisors, Inc., where she held various
senior level positions in asset and portfolio management, acquisitions, and
corporate operations since 1982. Ms. Herbst is a graduate of the University of
Massachusetts (B.A.) and Boston University (M.B.A.).
J. Grant Monahon is AEW Capital Management's Chief Operating Officer and
a member of the firm's Management Committee and Investment Policy Group. He has
over 25 years of experience in real estate law and
9
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investments. Prior to joining the predecessor of AEW Capital Management in 1987,
Mr. Monahon was a partner with a major Boston law firm. As the head of that
firm's real estate finance department, he represented a wide variety of
institutional clients, both domestic and international, in complex equity and
debt transactions. He is the former Chairman of the General Counsel section of
the National Association of Real Estate Investment Managers. Mr. Monahon is a
graduate of Dartmouth College (B.A.) and Georgetown University Law Center
(J.D.).
James J. Finnegan is the General Counsel of AEW Capital Management. Mr.
Finnegan served as Vice President and Assistant General Counsel of Aldrich,
Eastman & Waltch, L.P., a predecessor to AEW Capital Management. Mr. Finnegan
has over ten years of experience in real estate law, including seven years of
experience in private practice with major New York City and Boston law firms.
Mr. Finnegan also serves as AEW's securities and regulatory compliance officer.
Mr. Finnegan is a graduate of the University of Vermont (B.A.) and Fordham
University School of Law (J.D.).
Karin J. Lagerlund directs the Institutional Real Estate Services
Portfolio Accounting Group at AEW Capital Management, overseeing portfolio
accounting, performance measurement and client financial reporting for AEW's
private equity investment portfolios. Ms. Lagerlund is a Certified Public
Accountant and has over ten years experience in real estate consulting and
accounting. Prior to joining AEW Capital Management in 1994, she was an Audit
Manager at EY/Kenneth Leventhal LLP. Ms. Lagerlund is a graduate of Washington
State University (B.A.).
(f) Involvement in Certain Legal Proceedings.
----------------------------------------
None.
Item 11. Executive Compensation.
----------------------
Under the Partnership Agreement, the General Partners and their affiliates
are entitled to receive various fees, commissions, cash distributions,
allocations of taxable income or loss and expense reimbursements from the
Partnership. See Notes 1 and 6 of Notes to the Financial Statements.
The following table sets forth the amounts of the fees and reimbursements
of out-of-pocket expenses which the Partnership paid to or accrued for the
account of the General Partners and their affiliates for the year ended December
31, 1999. Cash distributions to General Partners include amounts distributed
after year-end with respect to 1999.
Amount of
Compensation and
Receiving Entity Type of Compensation Reimbursement
- ---------------- -------------------- -------------
AEW Real Estate Advisors, Inc. Management Fees and
Reimbursement of Expenses $ 42,991
General Partners Share of Distributable Cash 2,628
New England Securities Corporation Servicing Fee and
Reimbursement of
Expenses 4,274
--------
TOTAL $ 49,893
========
10
<PAGE>
For the year ended December 31, 1999, the Partnership allocated
$111,821 of taxable income to the General Partners. See Note 1 of Notes to
Financial Statements for additional information about transactions between the
Partnership and the General Partners and their affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
No person or group is known by the Partnership to be the beneficial
owner of more than 5% of the outstanding Units at December 31, 1999. Under the
Partnership Agreement, the voting rights of the Limited Partners are limited
and, in some circumstances, are subject to the prior receipt of certain opinions
of counsel or judicial decisions.
Except as expressly provided in the Partnership Agreement, the right
to manage the business of the Partnership is vested exclusively in the Managing
General Partner.
(b) Security Ownership of Management.
--------------------------------
The General Partners of the Partnership owned no Units at December
31, 1999.
(c) Changes in Control.
------------------
There exists no arrangement known to the Partnership the operation of which
may at a subsequent date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
The Partnership has no relationships or transactions to report other than
as reported in Item 11, above.
PART IV
-------
Item 14. Exhibits, Financial Statements, and Reports on Form 8-K.
-------------------------------------------------------
(a) The following documents are filed as part of this report:
(1) Financial Statements--The Financial Statements listed on the
accompanying Index to Financial Statements are filed as part of
this Annual Report.
(2) Financial Statement Schedule--The Financial Statement Schedule
listed on the accompanying Index to Financial Statements and
Schedule is filed as part of this Annual Report.
(3) Exhibits--The Exhibits listed in the accompanying Exhibit Index
are filed as a part of this Annual Report and incorporated in
this Annual Report as set forth in said Index.
(b) Reports on Form 8-K. During the last quarter of the year ended
December 31, 1999, the Partnership filed no Current Report on
Form 8-K.
11
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Copley Realty Income Partners 2;
A Limited Partnership
Financial Statements
* * * * * * *
December 31, 1999
12
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants
Financial Statements (in liquidation as of December 31, 1999):
Balance Sheets - December 31, 1999 and 1998
Statements of Operations - For the Years Ended December 31, 1999, 1998 and
1997
Statements of Partners' Capital (Deficit) - For the Years Ended December 31,
1999, 1998 and 1997
Statements of Cash Flows - For the Years Ended December 31, 1999, 1998 and
1997
Notes to Financial Statements
All schedules are omitted because they are not applicable
13
<PAGE>
Report of Independent Accountants
---------------------------------
To the Partners of Copley Realty Income Partners 2; A Limited Partnership:
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Copley
Realty Income Partners 2; A Limited Partnership (the "Partnership") at December
31, 1999 and 1998, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of Second Income Corp., the Managing General
Partner of the Partnership (the "Managing General Partner"); our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by the Managing General Partner, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As described in Note 1 to the financial statements, the Partnership adopted a
plan of liquidation on December 31, 1999 and as a result changed its basis of
accounting for periods subsequent to December 31, 1999 from the going concern
basis to the liquidation basis of accounting.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
Boston, Massachusetts
March 21, 2000
14
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
BALANCE SHEETS
(in liquidation as of December 31, 1999)
December 31,
----------------------
1999 1998
--------- ----------
ASSETS
Property held for disposition, net $6,225,018
Cash and cash equivalents $ 470,554 518,094
--------- ----------
$ 470,554 $6,743,112
========= ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 38,922 $ 41,594
Accrued management fee - 12,799
Accrued expenses for liquidation 55,000 -
--------- ----------
Total liabilities 93,922 54,393
--------- ----------
Partners' capital (deficit):
Limited partners ($582.04 and $781 per unit,
respectively; 100,000 units authorized;
32,767 units, issued and
outstanding) $ 525,878 $6,840,037
General partners (149,246) (151,318)
--------- ----------
Total partners' capital 376,632 6,688,719
--------- ----------
$ 470,554 $6,743,112
========= ==========
(See accompanying notes to financial statements)
15
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(in liquidation as of December 31, 1999)
Year ended December 31,
---------------------------------
1999 1998 1997
-------- --------- ----------
Investment Activity
Property rentals $126,856 $ 847,616 $1,419,767
Depreciation and amortization - (392,579) (415,746)
Property operating expenses (36,907) (119,730) (196,567)
-------- --------- ----------
89,949 335,307 807,454
Joint venture earnings - - 54,694
-------- --------- ----------
Total real estate operations 89,949 335,307 862,148
Gain on sales of property 590,563 - 517,693
Reversal of deferred disposition fee - 225,840 -
-------- --------- ----------
Total real estate activity 680,512 561,147 1,379,841
Interest on cash equivalents
and short-term investments 76,264 69,082 267,525
-------- --------- ----------
Total investment activity 756,776 630,229 1,647,366
-------- --------- ----------
PORTFOLIO EXPENSES
General and administrative 76,339 91,003 99,305
Management fee 25,991 142,460 505,722
Estimated liquidation period expenses 55,000 - -
-------- --------- ----------
157,330 233,463 605,027
-------- --------- ----------
NET INCOME $599,446 $ 396,766 $1,042,339
======== ========= ==========
Net income per weighted
average limited partnership unit $ 18.11 $ 11.99 $ 31.46
======== ========= ==========
Cash distributions per limited
partnership unit outstanding for the
entire year $ 210.81 $ 48.41 $ 377.08
======== ========= ==========
Weighted average number of limited
partnership units outstanding during
the year 32,767 32,767 32,806
======== ========= ==========
(See accompanying notes to financial statements)
16
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(in liquidation as of December 31, 1999)
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------------------
1999 1998 1997
------------------------ ------------------------ -------------------------
General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year $(151,318) $ 6,840,037 $(139,263) $ 8,033,516 $ (97,317) $ 19,392,367
Cash distributions (3,922) (6,907,611) (16,023) (1,586,277) (52,369) (12,366,593)
Repurchase of limited
partnership units - - - - - (24,174)
Net income 5,994 593,452 3,968 392,798 10,423 1,031,916
--------- ----------- --------- ----------- --------- ------------
Balance at end of year $(149,246) $ 525,878 $(151,318) $ 6,840,037 $(139,263) $ 8,033,516
========= =========== ========= =========== ========= ============
</TABLE>
(See accompanying notes to financial statements)
17
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(in liquidation as of December 31, 1999)
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1999 1998 1997
---------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 599,446 $ 396,766 $ 1,042,339
Adjustments to reconcile net income
to net cash provided
by operating activities:
Depreciation and amortization - 392,579 415,746
Equity in joint venture net income - - (54,694)
Cash distributions from joint ventures - - 152,012
Gain on sales of property (590,563) - (517,693)
Decrease in investment income
receivable - 9,445 14,383
Decrease in accrued lease termination fee - - 350,000
Increase in deferred lease commission fee (24,061) - -
Increase (decrease) in operating liabilities 39,529 (28,411) (9,439)
Increase in property working capital (98,826) (94,854) (96,341)
----------- ----------- ------------
Net cash provided by (used in) operating activities (74,475) 675,525 1,296,313
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in short-term investments,
net - 586,822 1,451,663
Net proceeds from sales of property 6,938,468 - 6,993,169
Provision for (reversal of)
deferred disposition fee - (225,840) 225,840
----------- ----------- ------------
Net cash provided by investing activities 6,938,468 360,982 8,670,672
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (6,911,533) (1,602,300) (12,418,962)
Repurchase of limited partnership units - - (24,174)
----------- ----------- ------------
Net cash used in financing activities (6,911,533) (1,602,300) (12,443,136)
----------- ----------- ------------
Net decrease in cash and cash equivalents (47,540) (565,793) (2,476,151)
Cash and cash equivalents:
Beginning of year 518,094 1,083,887 3,560,038
----------- ----------- ------------
End of year $ 470,554 $ 518,094 $ 1,083,887
=========== =========== ============
</TABLE>
(See accompanying notes to financial statements)
18
<PAGE>
COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS
- ----------------------------------
General
- -------
Copley Realty Income Partners 2; 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 October 1987, and intended
to dispose of its investments within nine years of their acquisition, and then
liquidate; however, the Managing General Partner extended the investment period
into 1999, having determined it to be in the best interest of the limited
partners. As discussed below, the Partnership sold its remaining real estate
investment in February, 1999. On December 31, 1999, the Partnership adopted a
plan of liquidation.
The Managing General Partner of the Partnership is Second Income
Corp., a wholly-owned subsidiary of AEW Real Estate Advisors, Inc. ("AEW"),
formerly known as Copley Real Estate Advisors, Inc. ("Copley"). The associate
general partner is ECOP Associates Limited Partnership, a Massachusetts limited
partnership, the general partners of which are managing directors of AEW and/or
officers of the Managing General Partner. Subject to the Managing General
Partner's overall authority, the business of the Partnership is managed by AEW
pursuant to an advisory contract.
On December 10, 1996, Copley's parent, New England Investment
Companies, L. P. ("NEIC"), a publicly traded master limited partnership,
acquired certain assets subject to then existing liabilities from Aldrich
Eastman & Waltch, Inc. and its affiliates and principals (collectively, "the AEW
operations"). Simultaneously, a new entity, AEW Capital Management, L.P., was
formed into which NEIC contributed its interest in Copley and its affiliates.
As a result, the AEW operations were combined with Copley to form the business
operations of AEW Capital Management, L.P. At year end 1997, NEIC completed a
restructuring plan under which it contributed all of its operations to a newly
formed private partnership, NEIC Operating Partnership, L.P., in exchange for a
general partnership interest in the newly formed entity. Accordingly, at
December 31, 1997, AEW Capital Management, L.P. is wholly owned by Nvest
Companies, L.P., the successor to NEIC Operating Partnership, L.P.
Prior to August 30, 1996, New England Mutual Life Insurance Company
("The New England") was NEIC's principal unit holder and owner of all of the
outstanding stock of NEIC's general partner. On August 30, 1996, The New
England merged with and into Metropolitan Life Insurance Company ("Met Life").
Met Life is the surviving entity and, therefore, through a wholly-owned
subsidiary, became the owner of the units of partnership interest previously
owned by The New England and of the stock of NEIC's general partner. Effective
April 1, 1998, NEIC changed its name to Nvest, L.P. and NEIC Operating
Partnership, L.P. changed its name to Nvest Companies, L.P.
Management
- ----------
AEW, as advisor, is entitled to receive stipulated fees from the
Partnership in consideration of services performed in connection with the
management of the Partnership and acquisition and disposition of Partnership
investments in real property. Partnership management fees are 9% of
distributable cash from operations, as defined, before deducting such fees. AEW
is also reimbursed for expenses incurred in connection with administering the
Partnership ($17,000 in 1999, $17,000 in 1998, and $19,638 in 1997).
Acquisition fees were based on 3% of the gross proceeds from the offering and
were paid at the time commitments were initially funded. Disposition fees are
limited to the lesser of 3% of the selling price of the property, or 50% of the
standard real estate commission customarily charged by an independent real
estate broker. Payments of disposition fees are subject to the prior receipt by
the limited partners of their capital contributions plus a stipulated return
thereon. Based on the Partnership's returns to date and the sale of the
Partnership's sole remaining real estate investment in February, 1999 (as
discussed in Note 3), the Managing General Partner determined that previously
accrued deferred disposition fees of $225,840 would not be paid and,
accordingly, reversed such fees in 1998.
New England Securities Corporation, an indirect subsidiary of Met
Life, is engaged by the Partnership to act as its unit holder servicing agent.
Fees and out-of-pocket expenses for such services totaled $4,274, $3,932 and
$3,696 in 1999, 1998 and 1997, respectively.
19
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Liquidation Basis of Accounting
- -------------------------------
In connection with its adoption of a plan of liquidation on December
31, 1999, the Partnership also adopted the liquidation basis of accounting
which, among other things, requires that assets and liabilities be stated at
their estimated net realizable value and that estimated costs of liquidating the
Partnership be provided to the extent that they are reasonably determinable.
Accounting Estimates
- --------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Managing General Partner to make
estimates affecting the reported amounts of assets and liabilities, and of
revenues and expenses. In the Partnership's business, certain estimates require
an assessment of factors not within management's control, such as the ability of
tenants to perform under long-term leases and the ability of the properties to
sustain their occupancies in changing markets. Actual results, therefore, could
differ from those estimates.
Real Estate Joint Ventures
- --------------------------
Investments in joint ventures, including loans made to joint ventures,
which are in substance real estate investments, were stated at cost plus (minus)
equity in undistributed joint venture income (losses). Allocations of joint
venture income (losses) were made to the Partnership's venture partners as long
as they had substantial economic equity in the project. Economic equity is
measured by the excess of the appraised value of the property over the
Partnership's total cash investment plus accrued preferential returns and
interest thereon. For its former joint venture investment, the Partnership
recorded its ownership share of the operating results, after the elimination of
all inter-entity transactions, since its venture partner, an affiliate of the
Partnership, had substantial economic equity in the project. Joint ventures are
consolidated with the accounts of the Partnership if, and when, the venture
partner no longer shares in the control of the business.
Property
- --------
Property includes land, buildings and improvements, which are stated
at cost less accumulated depreciation, plus other operating net assets. The
Partnership's initial carrying value of a property previously owned by a joint
venture equals the Partnership's carrying value of the predecessor investment on
the conversion date.
Capitalized Costs, Depreciation and Amortization
- ------------------------------------------------
Maintenance and repair costs are expensed as incurred; significant
improvements and renewals are capitalized. Depreciation is computed using the
straight-line method based on the estimated useful lives of the buildings and
improvements.
Acquisition fees have been capitalized as part of the cost of real
estate investments. Amounts not related to land are being amortized using the
straight-line method over the estimated useful lives of the underlying real
property.
Leases
- ------
Leases are accounted for as operating leases. Leasing commissions are
amortized over the terms of the respective leases. Rental income is recognized
on a straight-line basis over the terms of the respective leases.
Realizability of Real Estate Investments
- ----------------------------------------
The Partnership considers a real estate investment to be impaired when
it determines the carrying value of the investment is not recoverable through
expected undiscounted cash flows from the operations and disposition of the
property. The impairment loss is based on the excess of the investment's
carrying value over its estimated fair market value. For investments being held
for sale, the impairment loss also includes estimated costs of sale. Property
held for sale is not depreciated during the holding period. Investments are
considered to be held for disposition at the time management commits the
Partnership to a plan to dispose of the investment.
Cash Equivalents
- ----------------
Cash equivalents are stated at cost plus accrued interest. The
Partnership considers all highly liquid investments purchased with a maturity of
ninety days or less to be cash equivalents; otherwise, they are classified as
short-term investments.
20
<PAGE>
Deferred Disposition Fees
- -------------------------
According to the terms of the advisory contract, AEW is entitled to disposition
fees related to sales of real estate investments. Payment of the fees, however,
is contingent upon the limited partners' first receiving their capital, plus a
stipulated return thereon. After the execution of a Purchase and Sale Agreement
to dispose of the Partnership's sole remaining real property asset during the
first quarter of 1999, the Managing General Partner determined that the
stipulated return of the limited partners' original invested capital would not
occur. As a result, previously accrued disposition fees payable to AEW totaling
$225,840 ($6.89 per limited partnership unit) were recognized as other income in
1998.
Income Taxes
- ------------
A partnership is not liable for income taxes and, therefore, no
provision for income taxes is made in the financial statements of the
Partnership. A proportionate share of the Partnership's income is reportable on
each partner's tax return.
Per Unit Computations
- ---------------------
Per unit computations are based on the weighted average number of
units of limited partnership interest outstanding during the year. The actual
per unit amount will vary by partner depending on the date of admission to, or
withdrawal from, the Partnership.
Segment Data
- ------------
Effective January 1, 1998, the Partnership adopted Financial Accounting
Standards Board Statement No. 131. "Disclosures about Segments on an Enterprise
and Related Information" (FAS 131). Based on the criteria established in FAS
131, the Managing General Partner has determined that the Partnership operates
in one operating segment: investing in real estate properties which are
domiciled in the United States of America.
NOTE 3 - INVESTMENT IN PROPERTY
- -------------------------------
The following is a summary of the Partnership's investment in property
which is classified as "Held for Disposition" on the Balance Sheet:
December 31,
-------------------
1999 1998
----- ------------
Land $ - $ 4,711,859
Buildings and improvements - 7,855,152
Accumulated depreciation - (2,757,345)
Investment valuation allowance - (4,200,000)
----- -----------
5,609,666
Other net assets - 615,352
----- -----------
$ - $ 6,225,018
===== ===========
During 1998, the Partnership recognized $335,307 in net income from
this investment.
On November 12, 1987, the Partnership entered into a joint venture
agreement with an affiliate of The Muller Company. The venture acquired an
industrial building (Rancho Dominguez, California) and a research and
development building (La Mirada, California). As discussed below, the La Mirada
building was sold in February 1999 and the Rancho Dominguez building was sold in
1997. The Partnership contributed $20,465,000 to the venture. Effective June
30, 1991, the investment was restructured as a wholly-owned property as a result
of the venture partner's inability to proportionately fund cash deficits.
The buildings were being depreciated over 30 years. Tenant
improvements were being depreciated over the life of the underlying leases.
On December 15, 1997, the Rancho Dominguez building was sold for
$3,486,000. The Partnership received net proceeds of $3,260,761, after closing
costs, and recognized a gain of $129,703 ($3.96 per limited partnership unit).
A disposition fee of
21
<PAGE>
$104,580 was accrued but not paid to AEW. On December 30, 1997, the Partnership
made a capital distribution of $3,243,933 ($99 per limited partnership unit)
from the proceeds of the sale.
On February 26, 1999, the La Mirada property was sold for $7,150,000. The
Partnership received net proceeds of $6,938,468, after closing costs, and
recognized a gain of $590,563 ($17.84 per limited partnership unit). On April
29, 1999, the Partnership made a capital distribution of $6,519,322 ($198.96 per
limited partnership unit) from the proceeds.
NOTE 4 - REAL ESTATE JOINT VENTURES
- -----------------------------------
The Partnership had invested in two real estate joint ventures,
organized as general partnerships with a real estate management/development firm
and, in one case, with an affiliate of the Partnership. Capital contributions to
the ventures, were subject to preferential cash distributions at a specified
rate and to priority distributions with respect to sale or refinancing proceeds.
The Partnership also made loans to these ventures, which have been accounted for
as real estate investments due to the attendant risks of ownership. The joint
venture agreements provided for the funding of cash flow deficits by the venture
partners in proportion to ownership interests, and for the dilution of ownership
share in the event a venture partner did not contribute proportionately.
The respective real estate management/development firms were
responsible for day-to-day development and operating activities, although
overall authority and responsibility for the business was shared by the
venturers. The real estate management/development firms, or their affiliates,
also provided various services to the joint ventures for a fee.
Medlock Oaks
- ------------
On May 2, 1997, the Medlock Oaks buildings were sold to an
institutional buyer, which is unaffiliated with the Partnership, for a total
sales price of $9,402,779. The Partnership received its 43% share of the net
proceeds in the amount of $3,958,248, after closing costs, and recognized a gain
of $387,990 ($11.70 per limited partnership unit) on the sale. A disposition
fee of $121,260 was accrued but not paid to AEW. On May 29, 1997, the
Partnership made a capital distribution of $3,938,160 ($120 per limited
partnership unit) from the proceeds of the sale.
Summarized Financial Information
- --------------------------------
The following summarized financial information is presented in
the aggregate for the Medlock Oaks joint venture.
Results of Operations
- --------------------------------
Year ended December 31,
------------------------------
1999 1998 1997
-------- -------- --------
Revenue
Rental income $ - $ - $358,009
Other - - 36,653
-------- -------- --------
- - 394,662
-------- -------- --------
Expenses
Depreciation and amortization - - 156,941
Operating expenses - - 129,254
-------- -------- --------
- - 286,195
-------- -------- --------
Net income $ - $ $108,467
======== ======== ========
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.
22
<PAGE>
NOTE 5 - INCOME TAXES
- ---------------------
The Partnership's income (loss) for federal income tax purposes
differs from that reported in the accompanying statement of operations as
follows:
Year ended December 31,
------------------------------------
1999 1998 1997
------------ --------- ----------
Net income per
financial statements $ 599,446 $ 396,766 $1,042,339
Timing differences:
Joint venture earnings - - (95,036)
Rental revenue 9,622 (261,165) 251,204
Expenses 72,435 - 385
Depreciation and amortization (24,126) 103,220 (137,824)
Loss on sale of investments (2,926,197) -
------------ --------- ----------
Taxable income $(2,268,820) $ 238,821 $1,061,068
============ ========= ==========
NOTE 6 - PARTNERS' CAPITAL
- --------------------------
The Partnership maintained a repurchase fund for the purpose of
repurchasing limited partnership units, pursuant to the terms and conditions set
forth in the Partnership Agreement. Two percent of cash flow, as defined, was
designated for the repurchase fund, which had a balance of approximately $78,985
and $73,208 at April 1, 1999 and December 31, 1998, respectively. In
accordance with the terms of the Partnership Agreement, any amounts in this fund
after April 1, 1999 were placed in Partnership reserves. Through April 1, 1999,
the Partnership had repurchased and retired 230 limited partnership units for an
aggregate cost of $177,945.
Allocation of net income (losses) from operations and distributions of
distributable cash from operations, as defined, are in the ratio of 99% to the
limited partners and 1% to the general partners. Cash distributions to partners
were suspended as of the second quarter of 1994. Since their reinstatement as
of the second quarter of 1996, cash distributions were made quarterly up through
the sale of the Partnership's remaining investment in the first quarter of 1999.
Net sale proceeds and financing proceeds are allocated first to the
limited partners to the extent of their contributed capital plus a stipulated
return thereon, as defined, second to pay disposition fees, and then 85% to the
limited partners and 15% to the general partners. Income from sales is
allocated in proportion to the distribution of related proceeds, provided that
the general partners are allocated at least 1%. Income or losses from sales, if
there are no residual proceeds after the repayment of the related debt, will be
allocated 99% to the limited partners and 1% to the general partners.
23
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- -------- ------
<S> <C> <C>
10A. MCV III Associates ("MCV") General Partnership Agreement *
dated as of November 12, 1987 between Tri-Partners, the
Partnership.
10B. Lease agreement dated as of September 28, 1987 and Addendum *
dated as of October 12, 1987 by which MCV agrees to lease
to Genisco Technology Corporation ("Genisco") 7.02 acres
of land and a research and development building located thereon
in La Mirada, California.
10C. Lease Agreement dated as of November 12, 1987 by which MCV *
agrees to lease an industrial building located in Rancho
Dominguez, California to Engineering Magnetics.
10D. Agreement regarding Assignment and Assumption of Lease by and *
between MCV and Genisco dated as of November 12, 1987.
10E. Medlock Oaks Associates ("Medlock Oaks") Joint Venture *
Agreement dated as of December 4, 1987 by and between the
Partnership and Copley Realty Income Partners 1, a Limited
Partnership (collectively, the "Affiliates") and Hill Limited
#10, a Georgia limited partnership ("Hill").
10F. Promissory Note dated December 4, 1987 from Medlock Oaks to *
the Affiliates.
10G. Deed to Secure Debt and Security Agreement dated as of *
December 4, 1987 between Medlock Oaks and the Affiliates.
10H. Loan Agreement dated as of December 4, 1987 between Medlock *
Oaks and Affiliates.
10I. Assignment of Lease Agreements dated as of December 4, 1987 by *
between Hill and Medlock Oaks.
10J. Joint Venture Agreement of Sammis Horn Road Associates dated *
as of February 17, 1988 by and between the Registrant and
Sammis Rancho Cordova Associates.
10K. Construction Loan Agreement dated as of May 11, 1988 by and *
between Sammis Horn Road Associates, Borrower, and The First
National Bank of Chicago, Lender.
10L. Secured Promissory Note dated May 11, 1988 in the principal *
amount of $4,600,000 by Sammis Horn Road Associates to The
First National Bank of Chicago.
10M. Deed of Trust and Assignment of Rents dated as of May 11, 1988 *
by and among Sammis Horn Road Associates (Trustor), Stewart
Title Guaranty Company (Trustee), and The First National Bank
of Chicago (Beneficiary).
</TABLE>
24
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- --------- ------
<S> <C> <C>
10N. Assignment of Rents, Leases, Income and Profits dated as of *
May 11, 1988 by Sammis Horn Road Associates (Assignor) to
The First National Bank of Chicago (Assignee).
10P. Second Amendment to General Partnership Agreement of MCV III *
Associates by and between the Registrant and Tri-Partners.
10Q. Second Amendment to Joint Venture Agreement of Medlock Oaks *
Associates ("Medlock Oaks"), dated as of January 1, 1990, by and
among the Registrant, Copley Realty Income Partners 1, A Limited
Partnership (collectively, the "Affiliates") and Hill Limited #10,
a Georgia limited partnership ("Hill").
10R. Amended and Restated Promissory Note dated as of January 1, *
1990, from Medlock Oaks to the Affiliates.
10S. First Amendment to Deed to Secure Debt and Security Agreement *
dated as of January 1, 1990 between Medlock Oaks and the Affiliates.
10T. First Amendment to Loan Agreement dated as of January 1, 1990 *
between Medlock Oaks and the Affiliates.
10U. Second Amendment to Joint Venture Agreement of Sammis Horn *
Road Associates effective as of April 1, 1989 by and between the
Registrant and Sammis Rancho Cordova Associates.
10V. Agreement for Dissolution, Distribution and Winding-Up of MCV *
III Associates dated May 31, 1991 by and between TRI-Partners,
a California general partnership and the Registrant.
10W. Transfer and Assignment of Joint Venture Interest in Medlock *
Oaks Associates made and entered into as of September 3, 1991
by and between Hill Limited #10, a Georgia limited partnership,
and Copley Realty Income Partners 1; A Limited Partnership, a
Massachusetts limited partnership and the Registrant.
10X. Incentive Property Management Agreement effective as of May 31, *
1991 by and between TRI-Partners, a California general partnership,
and the Registrant.
10Y. Agreement of Purchase and Sale and Joint Escrow Instructions made *
and entered into as of May 17, 1991 by and between Sammis Horn
Road Associates, a California general partnership ("Seller"), and
Rico's Draperies, Inc. ("Buyer").
10Z. Second Amendment to Loan Documents dated as of August 1, 1992 *
by and between Sammis Horn Road Associates and The First
National Bank of Chicago.
</TABLE>
25
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- --------- ------
<S> <C> <C>
10AA. Second Amendment to Deed of Trust, Assignment of Rents and *
Other Security Documents dated as of August 1, 1992 by and
between Sammis Horn Road Associates, as Trustor, and
The First National Bank of Chicago, as Beneficiary.
10BB. Repayment Guaranty dated August 1, 1992 by the Registrant *
(the "Guarantor") The First National Bank of Chicago (the "Holder").
10CC. Completion Guaranty dated August 1, 1992 by the Registrant and *
CRIP2 Pool (collectively, the "Guarantors") in favor of The First
National Bank of Chicago (the "Holder").
10DD. First Amended and Completely Restated Joint Venture Agreement *
of Sammis Horn Road Associates, effective as of July 31, 1992
by and among the Registrant, CRIP 2 Pool, and Sammis Rancho
Cordova Associates.
10EE. Settlement Agreement dated October 24, 1994 by and between *
Sammis Horn Road Associates, the Registrant,
CRIP 2 Pool, Lee C. Sammis, Samuel G. Lindsay, John S. Hagestad,
Carl F. Willgeroth, "Guarantors", and The First National Bank of
Chicago and SCI Properties, "Transferee".
10FF. Lease dated February, 1994 by and between *
the Registrant, "Lessor", and Babcock, Inc., "Lessee".
10GG. First Amendment of Lease dated March 22, 1994 by and between *
the Registrant, "Lessor", and Babcock, Inc., "Lessee".
10HH. Second Amendment of Lease dated December 30, 1994 by and between *
the Registrant, "Lessor", and Babcock, Inc., "Lessee".
10II Third Amendment of Lease dated January 17, 1995 by and between *
the Registrant, "Lessor", and Babcock, Inc., "Lessee".
27. Financial Data Schedule
</TABLE>
_______________________________________________
* Previously filed and incorporated herein by reference.
26
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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 2;
A LIMITED PARTNERSHIP
Date: March 28, 2000 By: /s/ Alison Husid Cutler
-----------------------
Alison Husid Cutler
President of the
Managing General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
President, Chief
/s/ Alison Husid Cutler Executive Officer and
- ------------------------- Director of the Managing March 28, 2000
Alison Husid Cutler General Partner
/s/ Pamela J. Herbst Vice President and
- ------------------------- Director of the Managing March 28, 2000
Pamela J. Herbst General Partner
/s/ J. Grant Monahon Vice President and
- ------------------------- Director of the Managing March 28, 2000
J. Grant Monahon General Partner
/s/ James J. Finnegan Vice President of the
- ------------------------- Managing General Partner March 28, 2000
James J. Finnegan
/s/ Karin J. Lagerlund Treasurer and Principal
- ------------------------- Financial and Accounting March 28, 2000
Karin J. Lagerlund Officer of the Managing
General Partner
27
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 470,554
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 470,554
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 470,554
<CURRENT-LIABILITIES> 93,922
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 376,632
<TOTAL-LIABILITY-AND-EQUITY> 470,554
<SALES> 126,856
<TOTAL-REVENUES> 793,683
<CGS> 36,907
<TOTAL-COSTS> 36,907
<OTHER-EXPENSES> 157,330
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 599,446
<INCOME-TAX> 0
<INCOME-CONTINUING> 599,446
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 599,446
<EPS-BASIC> 18.11
<EPS-DILUTED> 18.11
</TABLE>
