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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000 Commission File Number 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 Identification No.)
incorporation or organization)
World Trade Center East
Two Seaport Lane, 16th Fl.
Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
Former name, former address and former fiscal year if changed since last report:
225 Franklin Street, 25th Fl.
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No ___
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2000
PART I
FINANCIAL INFORMATION
2
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF NET ASSETS IN LIQUIDATION
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
(Unaudited) (Audited)
-------------- ------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 425,208 $ 470,554
--------- ---------
$ 425,208 $ 470,554
========= =========
Liabilities and net assets in liquidation
Accounts payable $ - $ 38,922
Accrued expenses for liquidation 45,000 55,000
--------- ---------
Total liabilities 45,000 93,922
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Net assets in liquidation:
Limited partners ($582.04 per unit;
100,000 units authorized, 32,767
units issued and outstanding) 529,418 525,878
General partners (149,210) (149,246)
--------- ---------
Total partners' capital 380,208 376,632
--------- ---------
$ 425,208 $ 470,554
========= =========
</TABLE>
(See accompanying notes to unaudited financial statements)
3
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF CHANGES OF NET ASSETS IN LIQUIDATION
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000
------------------- -----------------
<S> <C> <C>
Net assets in liquidation at
beginning of period $376,632 $376,632
-------- --------
Increase (decrease) during period:
Operating activities
Interest income 6,848 16,365
-------- --------
6,848 16,365
Liquidating activities
Change in provision for
liquidation expenses (3,272) (12,789)
-------- --------
(3,272) (12,789)
-------- --------
Net change in net assets
in liquidation $ 3,576 $ 3,576
-------- --------
Net assets in liquidation at
end of period $380,208 $380,208
======== ========
</TABLE>
(See accompanying notes to unaudited financial statements)
4
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30,1999 June 30,1999
------------------ ----------------
<S> <C> <C>
INVESTMENT ACTIVITY
Property rentals $ 134 $126,573
Property operating expenses (16,913) (47,413)
-------- --------
(16,779) 79,160
Gain (loss) on sale of investment (9,092) 590,563
-------- --------
Total real estate operations (25,871) 669,723
Interest on cash equivalents 33,352 64,217
-------- --------
Total investment activity 7,481 733,940
-------- --------
PORTFOLIO EXPENSES
General and administrative 13,912 38,482
Management fee - 25,991
-------- --------
13,912 64,473
-------- --------
Net Income (Loss) $ (6,431) $669,467
======== ========
Net income (loss) per
limited partnership unit $ (0.19) $ 20.23
======== ========
Cash distributions per
limited partnership unit $ 206.90 $ 210.81
======== ========
Number of limited partnership
units outstanding during the period 32,767 32,767
======== ========
</TABLE>
(See accompanying notes to unaudited financial statements)
5
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999
----------------
<S> <C>
Net cash provided by operating
activities $ 40,810
-----------
Cash flows from investing activities:
Net proceeds from sale of property 6,938,468
-----------
Net cash provided by investing activities 6,938,468
-----------
Cash flows from financing activity:
Distributions to partners (6,911,533)
-----------
Net increase in cash and cash
equivalents 67,745
Cash and cash equivalents:
Beginning of period 518,094
-----------
End of period $ 585,839
===========
</TABLE>
(See accompanying notes to unaudited financial statements)
6
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COPLEY REALTY INCOME PARTNERS 2;
A 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 June 30, 2000 and December 31, 1999 and the changes of
net assets in liquidation and the results of its operations for the three and
six month periods ended June 30, 2000 and 1999, respectively, and its cash flows
for the six month periods ended June 30, 1999. These adjustments are of a normal
recurring nature.
Certain reclassifications have been made to conform to the current period
presentation.
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
----------------------------------
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 acquired four real
estate investments prior to the end of 1987. The Partnership intended to dispose
of its investments within six to nine 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 sold its remaining investment in February 1999. On December 31,
1999, the Partnership adopted a plan of liquidation and intends to dissolve in
2000.
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.
NOTE 2 - PROPERTY
-----------------
On February 26, 1999, the La Mirada buildings were sold for a gross sale
price of $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 the sale. On April 29, 1999 the Partnership made a capital
distribution of $6,519,322 ($198.96 per limited partnership unit) from the
proceeds of the sale.
Note 3 - ACCRUED EXPENSES FOR LIQUIDATION
-----------------------------------------
Accrued expenses for liquidation as of June 30, 2000 include estimates of
costs to be incurred in carrying out the dissolution and liquidation of the
Partnership. These costs include estimates of legal fees, accounting fees, tax
preparation and filing fees and other professional services.
7
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
During the six months ended June 30, 2000 the Partnership incurred $22,789
of such expenses and the General Partner re-evaluated the estimated costs to
dissolve the Partnership. The provision for liquidation expenses was accordingly
increased by an additional $12,789 to reflect the revised estimates.
The actual costs could vary significantly from the related provisions due
to the uncertainty related to the length of time required to complete the
liquidation and dissolution of the Partnership. The accrued expenses do not take
into consideration possible litigation arising from the customary
representations and warranties made as part of each sale. Such costs are unknown
and are not estimable at this time.
8
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COPLEY REALTY INCOME PARTNERS 2;
A 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 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 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 unit) from the proceeds.
In connection with two sales in May and December of 1997, respectively, and
the sale in February of 1999, capital of $13,701,415 ($417.96 per limited
partnership unit) has been returned to the limited partners, reducing the
adjusted capital contribution to $582.04 per unit.
At June 30, 2000, the Partnership had $425,208 in cash and cash equivalents
which is being retained primarily as a reserve in connection with the
liquidation of the Partnership. 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 this
distribution, the Partnership also made a special distribution of $4.52 per
limited partnership unit from operational cash previously held in reserves.
There have been no distributions from operations since that time due to the sale
of the Partnership's remaining investment in February 1999. When all Partnership
expenses have been settled, a distribution of the remaining cash reserves will
be made.
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 at April 1, 1999. In accordance with the
terms of the Partnership Agreement, any amounts remaining 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.
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
Results of Operations
---------------------
Investment Results
As discussed above, the La Mirada buildings were sold on February 26, 1999.
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). The
buildings were 100% leased at the time of sale.
There are no real estate comparative operating results for the six month
periods ended June 30, 2000 and 1999, due to the sale of the Partnership's last
remaining property in February 1999, as discussed above.
For the comparable three and six month periods of 1999 and 2000, interest
on cash and cash equivalents decreased $26,504 and $47,852, respectively. These
decreases are due to the sale of the Partnership's last remaining property,
discussed above.
Cash flow from operations decreased by approximately $86,000 between the
respective six month periods. The decrease is primarily due to the sale of the
remaining property 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. General and administrative expenses for the three and
six month periods ended June 30, 1999 were $13,912 and $38,482, respectively.
There was no management fee incurred during the first and second quarters
of 2000 due to the discontinuance of operating cash distributions as a result of
the sale of the Partnership's last remaining property in 1999, discussed above.
Costs to dissolve and liquidate the Partnership include legal fees,
accounting fees, tax preparation fees, filing fees and other professional
services. During the six months ended June 30, 2000, the Partnership incurred
$22,789 of such expenses and the General Partner re-evaluated the estimated
costs to dissolve the Partnership. The provision for liquidation expenses was
accordingly increased by $12,789 to reflect the revised estimates.
10
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COPLEY REALTY INCOME PARTNERS 2;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 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 June 30, 2000.
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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 2;
A LIMITED PARTNERSHIP
(Registrant)
August 11, 2000
/s/ Alison L. Husid
----------------------------------------
Alison L. Husid
President, Chief Executive Officer and
Director of Managing General Partner,
Second Income Corp.
August 11, 2000
/s/ Karin J. Lagerlund
----------------------------------------
Karin J. Lagerlund
Treasurer and Principal Financial and
Accounting Officer of Managing General
Partner, Second Income Corp.
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