<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------
For Quarter Ended September 30, 1997 Commission File Number 0-17807
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2988542
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
225 Franklin Street, 25th Fl.
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1997
PART I
FINANCIAL INFORMATION
2
<PAGE>
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Assets
Real estate investments:
Joint ventures $15,154,452 $15,479,056
Property, net 4,250,888 8,350,231
----------- -----------
19,405,340 23,829,287
Cash and cash equivalents 8,061,884 3,076,103
Short-term investments 1,466,372 2,194,290
----------- -----------
$28,933,596 $29,099,680
=========== ===========
Liabilities and Partners' Capital
Accounts payable $ 90,313 $ 86,347
Accrued management fee 124,530 51,517
Deferred disposition fees 717,677 582,677
----------- -----------
Total liabilities 932,520 720,541
----------- -----------
Partners' capital (deficit):
Limited partners ($768.98
per unit; 160,000 units
authorized; 48,788 units
issued and outstanding) 28,041,021 28,415,303
General partners (39,945) (36,164)
----------- -----------
Total partners' capital 28,001,076 28,379,139
----------- -----------
$28,933,596 $29,099,680
=========== ===========
</TABLE>
(See accompanying notes to financial statements)
3
<PAGE>
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended Quarter Ended Nine Months Ended
September 30, 1997 September 30, 1997 September 30, 1996 September 30, 1996
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Investment Activity
Property rentals $205,847 $ 620,879 $187,566 $ 577,408
Property operating expenses (87,410) (284,912) (99,985) (312,241)
Depreciation and amortization (75,761) (227,255) (71,958) (214,929)
-------- ---------- -------- ----------
42,676 108,712 15,623 50,238
Joint venture earnings 342,905 1,000,444 314,860 829,809
-------- ---------- -------- ----------
Total real estate operations 385,581 1,109,156 330,483 880,047
Gain on sale of investment 248,172 248,172 - -
-------- ---------- -------- ----------
Total real estate activity 633,753 1,357,328 330,483 880,047
Interest on cash equivalents
and short-term investments 71,515 206,148 67,339 200,107
-------- ---------- -------- ----------
Total investment activity 705,268 1,563,476 397,822 1,080,154
-------- ---------- -------- ----------
Portfolio Expenses
Management fee 124,530 227,564 51,517 154,552
General and administrative 45,003 151,281 47,248 155,047
-------- ---------- -------- ----------
169,533 378,845 98,765 309,599
-------- ---------- -------- ----------
Net income $535,735 $1,184,631 $299,057 $ 770,555
======== ========== ======== ==========
Net income per limited
partnership unit $ 10.87 $ 24.04 $ 6.07 $ 15.64
======== ========== ======== ==========
Cash distributions per limited
partnership unit $ 10.57 $ 31.71 $ 10.57 $ 33.64
======== ========== ======== ==========
Number of limited partnership units
outstanding during the period 48,788 48,788 48,788 48,788
======== ========== ======== ==========
</TABLE>
(See accompanying notes to financial statements)
4
<PAGE>
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended Quarter Ended Nine Months Ended
September 30, 1997 September 30, 1997 September 30, 1996 September 30, 1996
----------------------- ----------------------- ----------------------- -----------------------
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 $(40,093) $28,026,332 $(36,164) $28,415,303 $(32,892) $28,739,192 $(26,238) $29,397,948
Cash distributions (5,209) (515,689) (15,627) (1,547,067) (5,209) (515,689) (16,578) (1,641,228)
Net income 5,357 530,378 11,846 1,172,785 2,991 296,066 7,706 762,849
-------- ----------- -------- ----------- -------- ----------- -------- -----------
Balance at end
of period $(39,945) $28,041,021 $(39,945) $28,041,021 $(35,110) $28,519,569 $(35,110) $28,519,569
======== =========== ======== =========== ======== =========== ======== ===========
</TABLE>
(See accompanying notes to financial statements)
5
<PAGE>
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1997 1996
---------------- ---------------
<S> <C> <C>
Net cash provided by operating activities $ 1,502,628 $ 1,444,001
----------- -----------
Cash flows from investing activities:
Net proceeds from sale of investment 4,199,193 -
Deferred disposition fees 135,000 -
Investment in property - (134,203)
Decrease in short-term
investments, net 711,654 692,626
----------- -----------
Net cash provided by
investing activities 5,045,847 558,423
----------- -----------
Cash flows from financing activity:
Distributions to partners (1,562,694) (1,657,806)
----------- -----------
Net increase in cash
and cash equivalents 4,985,781 344,618
Cash and cash equivalents:
Beginning of period 3,076,103 2,997,934
----------- -----------
End of period $ 8,061,884 $ 3,342,552
=========== ===========
</TABLE>
(See accompanying notes to financial statements)
6
<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 September 30, 1997 and December 31, 1996 and its
operations, its cash flows and partners' capital (deficit) for the interim
periods ended September 30, 1997 and 1996. These adjustments are of a normal
recurring nature.
See notes to financial statements included in the Partnership's 1996 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
Note 1 - Organization and Business
- ----------------------------------
Copley Pension Properties VI; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other organizations intended to be exempt from federal
income tax. The Partnership commenced operations in July 1988, and acquired the
four real estate investments it currently owns prior to the end of 1991. It
intends to dispose of its investments within eight to twelve years of their
acquisition, and then liquidate. The Partnership has engaged AEW Real Estate
Advisors, Inc. (the "Advisor") to provide asset management services.
Note 2 - Investments in Joint Ventures
- --------------------------------------
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the Partnership's joint ventures:
<TABLE>
<CAPTION>
Assets and Liabilities
----------------------
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation
of $6,721,363 and $6,158,575,
respectively $16,631,115 $17,199,404
Other 806,190 739,700
----------- -----------
17,437,305 17,939,104
Liabilities 146,851 235,655
----------- -----------
Net assets $17,290,454 $17,703,449
=========== ===========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Results of Operations
---------------------
Nine Months Ended September 30,
1997 1996
--------------- --------------
<S> <C> <C>
Revenue:
Rental income $2,892,117 $2,749,886
Other income 5,203 3,891
---------- ----------
2,897,320 2,753,777
---------- ----------
Expenses:
Operating expenses 1,035,934 1,020,926
Depreciation and amortization 574,550 670,932
---------- ----------
1,610,484 1,691,858
---------- ----------
Net income $1,286,836 $1,061,919
========== ==========
</TABLE>
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and (with respect to two joint ventures) its affiliates on behalf of
their various financing arrangements with the joint ventures.
Note 3 - Property
- -----------------
On September 29, 1997, Stemmons Industrial located in Farmers Branch, Texas
was sold. The total sales price was $4,500,000. The Partnership received net
proceeds of $4,334,193, after closing costs, and recognized a gain of $248,172
($5.04 per limited partnership unit). A disposition fee of $135,000 was accrued
but not paid to the Advisor. On October 30, 1997, the Partnership made a
capital distribution of $4,334,326 ($88.84 per limited partnership unit) from
the proceeds of the sale.
The following is a summary of the Partnership's wholly-owned properties
(one in 1997 and two in 1996):
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------- ------------------
<S> <C> <C>
Land $ 2,770,056 $ 3,408,203
Buildings, improvements and
other capitalized costs 4,894,641 8,869,433
Investment valuation allowance (1,500,000) (1,500,000)
Accumulated depreciation and
amortization (1,884,877) (2,330,843)
Net operating liabilities (28,932) (96,562)
----------- -----------
$ 4,250,888 $ 8,350,231
=========== ===========
</TABLE>
8
<PAGE>
During the second quarter of 1995, as a result of a revision to long-term
rental assumptions, the managing general partner determined that the carrying
value of the Wilmington Industrial property would not be recovered through
expected future undiscounted cash flows. Accordingly, the carrying value was
reduced to the estimated net fair market value through the recognition of an
investment valuation allowance of $1,500,000.
Note 4 - Subsequent Event
- -------------------------
Distributions of cash from operations relating to the quarter ended
September 30, 1997 were made on October 30, 1997 in the aggregate amount of
$520,898 ($10.57 per limited partnership unit). An additional distribution of
cash from operations was made in the aggregate amount of $738,227 ($14.98 per
limited partnership unit), representing excess operating cash previously
retained in working capital reserves.
Additionally, the Partnership made two capital distributions, $4,334,326
($88.84 per limited partnership unit) was made from proceeds from the sale of
Stemmons Industrial and $968,442 ($19.85 per limited partnership unit) was made
from accumulated cash reserves.
9
<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 on December 31, 1988. A total of 48,788 units were sold. The
Partnership received proceeds of $43,472,858, net of selling commissions and
other offering costs, which have been used for investment in real estate and for
the payment of related acquisition costs, or retained as working capital
reserves. The Partnership made seven real estate investments; one was sold in
each of 1990, 1994, and 1997. As a result of these sales, capital of
$11,271,004 has been returned to the limited partners ($231.02 per limited
partnership unit) through September 30, 1997. On October 30, 1997, the
Partnership distributed total capital of $5,302,768 ($108.69 per limited
partnership unit) which represents proceeds from the sale of Stemmons Industrial
and a reduction of accumulated cash reserves. This capital distribution reduces
the adjusted capital contribution to $660.29 per unit.
On September 29, 1997, Stemmons Industrial located in Farmers Branch, Texas
was sold. The total sales price was $4,500,000. The Partnership received net
proceeds of $4,334,193, after closing costs, and recognized a gain of $248,172
($5.04 per limited partnership unit). A disposition fee of $135,000 was accrued
but not paid to the Advisor.
At September 30, 1997, the Partnership had $9,528,256 in cash, cash
equivalents and short-term investments, of which $1,259,125 was used for
operating cash distributions, and $5,302,768 for capital distributions to
partners on October 30, 1997; the remainder is being retained as working capital
reserves. The source of future liquidity and cash distributions to partners will
primarily be cash flow generated by the Partnership's short-term and real estate
investments and proceeds from the sale of such investments. Based on an adjusted
capital contribution of $768.98 per limited partnership unit, distributions of
cash from operations relating to the first, second and third quarters of 1997
and 1996 were made at the annualized rate of 5.5%.
The carrying value of real estate investments in the financial statements
is at depreciated cost, or if the investment's carrying value is determined not
to be recoverable through expected undiscounted future cash flows, the carrying
value is reduced to estimated fair market value. The fair market value of such
investments is further reduced by the estimated cost of sale for properties held
for sale. Carrying value may be greater or less than current appraised value. At
September 30, 1997, the appraised value of each of the Partnership's investments
exceeded its related carrying value by an aggregate of $6,400,000. The current
appraised value of real estate investments has been estimated by the managing
general partner and is generally based on a correlation of traditional appraisal
approaches performed by the Partnership's Advisor and independent appraisers.
Because of the subjectivity inherent in the valuation process, the estimated
current appraised value may differ significantly from that which could be
realized if the real estate were actually offered for sale in the marketplace.
10
<PAGE>
Results of Operations
- ---------------------
Form of Real Estate Investments
The Wilmington Industrial investment is a wholly-owned property. The
Stemmons Industrial investment, which was sold in September 1997, was also a
wholly-owned property. The other three real estate investments in the portfolio
are joint ventures.
Operating Factors
The Partnership's three industrial properties (Prentiss Copystar,
Wilmington and White Phonic) were 100% leased at September 30, 1997, as they
were at September 30, 1996. Wilmington was 73% leased at June 30, 1996.
As discussed above, the Partnership sold its Stemmons Industrial
investment on September 29, 1997, and recognized a gain of $248,172. Stemmons
Industrial was vacant at the time of sale, as it had been since February 1996,
with the expiration of a short term lease for 82% of the space.
Occupancy at Waterford Apartments, the Partnership's multi-family
residential property, remained in the mid 90% range during the first nine months
of 1997, which is consistent with the prior year.
Investment Results
- ------------------
Interest income on cash equivalents and short-term investments increased
slightly between the first nine months of 1996 and 1997, due primarily to higher
average investment balances.
Exclusive of the results from Stemmons Industrial of $(158,557) in 1997 and
$(192,983) in 1996, as well as the gain on sale in 1997, total real estate
activity for the first nine months of 1997 was $1,267,713, an increase from
$1,073,030 for the comparable period of 1996. Operating results at Waterford
Apartments increased by $114,000 primarily due to higher rental rates combined
with a decrease in depreciation expense related to personal property that became
fully depreciated. Operating results at Prentiss also improved, by approximately
$36,000, due to a reduction in real estate taxes combined with a decrease in
amortization expense related to leasing commissions that became fully amortized.
In addition, operating income at Wilmington improved $24,000 primarily due to
higher average occupancy during the first nine months of 1997 as compared to
1996.
Cash flow from operations increased by approximately $59,000 between the
first nine months of 1996 and 1997. This increase is primarily attributable to
changes in working capital offset by the timing of distributions from White
Phonic.
11
<PAGE>
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
consist primarily of real estate appraisal, printing, legal, accounting and
investor servicing fees.
The Partnership management fee increased between the first nine months of
1996 and 1997 due to an increase in the distributable cash flow. General and
administrative expenses were relatively unchanged during the comparative nine
month periods.
12
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1997
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 September 30, 1997.
13
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
November 12, 1997
/s/ James J. Finnegan
-------------------------------
James J. Finnegan
Vice President
of Managing General Partner,
Sixth Copley Corp.
November 12, 1997
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,061,884
<SECURITIES> 1,466,372
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,528,256
<PP&E> 19,405,340
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,933,596
<CURRENT-LIABILITIES> 214,843
<BONDS> 717,677
0
0
<COMMON> 0
<OTHER-SE> 28,001,076
<TOTAL-LIABILITY-AND-EQUITY> 28,933,596
<SALES> 1,621,323
<TOTAL-REVENUES> 2,075,643
<CGS> 284,912
<TOTAL-COSTS> 284,912
<OTHER-EXPENSES> 606,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,184,631
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,184,631
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,184,631
<EPS-PRIMARY> 24.04
<EPS-DILUTED> 24.04
</TABLE>
