<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 June 30, 1998 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 JUNE 30, 1998
PART I
FINANCIAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
(Unaudited)
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
ASSETS
Real estate investments:
joint ventures $ 1,685,836 $14,966,370
property, net 4,166,835 4,201,553
----------- -----------
5,852,671 19,167,923
Joint ventures held for disposition 13,040,440 -
Cash and cash equivalents 3,575,853 2,105,728
Short-term investments - 1,432,651
----------- -----------
$22,468,964 $22,706,302
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 66,940 $ 92,737
Accrued management fee 50,299 53,028
Deferred disposition fees 717,677 717,677
----------- -----------
Total liabilities 834,916 863,442
----------- -----------
Partners' capital (deficit):
Limited partners ($660.29
per unit; 160,000 units authorized,
48,788 units issued and outstanding) 21,684,637 21,891,360
General partners (50,589) (48,500)
----------- -----------
Total partners' capital 21,634,048 21,842,860
----------- -----------
$22,468,964 $22,706,302
=========== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY
Property rentals $173,530 $ 352,050 $195,744 $ 415,032
Property operating expenses (62,206) (108,140) (94,679) (197,502)
Depreciation and amortization (36,327) (73,237) (75,763) (151,494)
-------- ---------- -------- ---------
74,997 170,673 25,302 66,036
Joint venture earnings 373,036 779,993 303,545 657,539
-------- ---------- -------- ---------
Total real estate activity 448,033 950,666 328,847 723,575
-------- ---------- -------- ---------
Interest on cash equivalents
and short-term investments 45,465 91,597 68,581 134,633
-------- ---------- -------- ---------
Total investment activity 493,498 1,042,263 397,428 858,208
-------- ---------- -------- ---------
PORTFOLIO EXPENSES
Management fee 50,299 100,598 51,517 103,034
General and administrative 48,304 105,724 57,395 106,278
-------- ---------- -------- ---------
98,603 206,322 108,912 209,312
-------- ---------- -------- ---------
Net income $394,895 $ 835,941 $288,516 $ 648,896
======== ========== ======== =========
Net income per limited
partnership unit $ 8.01 $ 16.96 $ 5.86 $ 13.17
======== ========== ======== =========
Cash distributions per limited
partnership unit $ 10.32 $ 21.20 $ 10.57 $ 21.14
======== ========== ======== =========
Number of limited partnership units
outstanding during the period 48,788 48,788 48,788 48,788
======== ========== ======== =========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
----------------------- ----------------------- ---------------------------- -----------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
--------- ------------ --------- ------------ -------------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning
of period $(49,452) $21,797,183 $(48,500) $21,891,360 $(37,769) $28,256,390 $(36,164) $28,415,303
Cash distributions (5,086) (503,492) (10,448) (1,034,305) (5,209) (515,689) (10,418) (1,031,378)
Net income 3,949 390,946 8,359 827,582 2,885 285,631 6,489 642,407
-------- ----------- -------- ----------- ------------- ----------- -------- -----------
Balance at end
of period $(50,589) $21,684,637 $(50,589) $21,684,637 $(40,093) $28,026,332 $(40,093) $28,026,332
======== =========== ======== =========== ============= =========== ======== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
------------- ------------
<S> <C> <C>
Net cash provided by operating activities $1,109,259 $ 976,073
---------- ----------
Cash flows from investing activities:
Decrease in short-term
investments, net 1,405,619 917,029
---------- ----------
Cash flows from financing activity:
Distributions to partners (1,044,753) (1,041,796)
---------- -----------
Net increase in cash
and cash equivalents 1,470,125 851,306
Cash and cash equivalents:
Beginning of period 2,105,728 3,076,103
---------- -----------
End of period $3,575,853 $ 3,927,409
========== ============
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the Partnership's financial
position as of June 30, 1998 and December 31, 1997 and its operations, its cash
flows and partners' capital (deficit) for the interim periods ended June 30,
1998 and 1997. These adjustments are of a normal recurring nature.
See notes to financial statements included in the Partnership's 1997 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
Note 1 - Organization and Business
- ----------------------------------
Copley 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; however, the managing general partner could
extend the investment period if it is considered to be in the best interest of
the limited partners. The Partnership has engaged AEW Real Estate Advisors,
Inc. (the "Advisor") to provide asset management services.
Note 2 - Investments in Joint Ventures
- --------------------------------------
Summarized Financial Information
The White Phonic and Waterford Apartments joint ventures were sold on July 14,
1998 and August 7, 1998, respectively (see Note 4). Therefore, these joint
ventures have been reclassed as "Joint ventures held for disposition".
The following summarized financial information is presented in the aggregate
for the Partnership's joint ventures:
<PAGE>
Assets and Liabilities
----------------------
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation
of $798,029 and $6,910,873
respectively $ 2,455,354 $16,461,895
Joint ventures held for disposition 14,133,866 --
Other 46,318 1,029,387
----------- -----------
16,635,538 17,491,282
Liabilities 92,368 379,809
----------- -----------
Net assets $16,543,170 $17,111,473
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Results of Operations
---------------------
Six Months Ended June 30,
1998 1997
------------ -----------
<S> <C> <C>
Revenue:
Rental income $2,003,484 $1,908,905
Other income 5,078 2,701
---------- ----------
2,008,562 1,911,606
---------- ----------
Expenses:
Operating expenses 649,508 682,834
Depreciation and amortization 350,328 382,923
---------- ----------
999,836 1,065,757
---------- ----------
Net income $1,008,726 $ 845,849
========== ==========
</TABLE>
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and (with respect to two investments) its affiliates on behalf of
their various financing arrangements with the joint ventures.
<PAGE>
Note 3 - Property
- -----------------
The following is a summary of the Partnership's remaining wholly-owned
property:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
-------------- ------------------
<S> <C> <C>
Land $ 2,770,056 $ 2,770,056
Buildings, improvements and
other capitalized costs 4,894,641 4,894,641
Investment valuation allowance (1,500,000) (1,500,000)
Accumulated depreciation and
amortization (1,985,023) (1,918,953)
Net operating liabilities (12,840) (44,191)
----------- -----------
$ 4,166,834 $ 4,201,553
=========== ===========
</TABLE>
Note 4 - Subsequent Events
- -------------------------
Distributions of cash from operations relating to the quarter ended
June 30, 1998 were made on July 30, 1998 in the aggregate amount of $508,578
($10.32 per limited partnership unit).
On July 14, 1998, the White Phonic property located in Petaluma,
California, was sold for a gross sale price of $5,380,000. The Partnership
received net proceeds of approximately $4,280,000 representing a return of
capital and accrued interest plus its participation in net sales proceeds of
approximately $966,000.
In addition, on July 30, 1998, the Partnership made a capital distribution
of $4,279,683 ($87.72 per limited partnership unit) from the sale proceeds of
White Phonic discussed above.
On August 7, 1998, Waterford Apartments, located in Frederick, Maryland,
was sold for a gross sale price of $21,800,000. The Partnership received its
75% share of the proceeds in the amount of approximately $15,252,000.
<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 investment
was sold in each of 1990, 1994 and 1997. Through June 30, 1998, capital of
$16,573,771 ($339.71 per limited partnership unit) has been returned to the
limited partners; $15,605,329 as a result of sales and $968,442 in 1997, as a
result of a discretionary reduction of original working capital previously held
in reserves.
At June 30, 1998, the Partnership had $3,575,853 in cash and cash
equivalents, of which $508,578 was used for cash distributions to partners on
July 30, 1998; the remainder is being retained as working capital reserves. The
source of future liquidity and cash distributions to partners will primarily be
cash generated by the Partnership's invested cash and cash equivalents and real
estate investments, and proceeds from the sale of such investments. Based on an
adjusted capital contribution of $660.29 per limited partnership unit,
distributions of cash from operations relating to the first and second quarters
of 1998 were made at the annualized rate of 6.25% while distributions of cash
from operations relating to the first and second quarters of 1997 were made at
the annualized rate of 5.5% on an adjusted capital contribution of $768.98.
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 June 30, 1998, the aggregate appraised value of the real estate investments
exceeded their carrying value by approximately $9,756,000. 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 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.
<PAGE>
Results of Operations
Form of Real Estate Investments
The Wilmington Industrial investment is a wholly-owned property. Effective
July 1, 1994, the Stemmons Industrial joint venture was converted to a wholly-
owned property and subsequently sold in September 1997. The other three real
estate investments in the portfolio are structured as joint ventures.
Operating Factors
Three of the Partnership's four industrial properties (Prentiss Copystar,
Wilmington and White Phonic) were 100% leased at June 30, 1998 and June 30,
1997.
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 six months
of 1998, where it has been for the past several years.
Investment Results
Interest income on cash equivalents and short-term investments decreased
approximately $43,000 or 32% between the first two quarters of 1997 and 1998
primarily due to lower investment balances.
Exclusive of net losses from operations from Stemmons Industrial of
approximately $97,000 in 1997, total real estate activity for the first six
months of 1998 and 1997 was $950,666 and $820,936, respectively. This increase
of approximately $130,000 or 16% is primarily due to improved operating results
at Waterford Apartments of approximately $133,000 as a result of higher rental
rates associated with improved market conditions and lower operating expenses
for advertising and salaries. Operating results from the remainder of the
Partnership's investments were relatively unchanged between the respective
periods.
Cash flow from operations increased by approximately $133,000 between the
first six months of 1997 and 1998. This increase is primarily attributable to
the increased operating results 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
consist primarily of real estate appraisal, printing, legal, accounting and
investor servicing fees.
The Partnership management fee decreased between the first two quarters of
1997 and 1998 due to a decrease in distributable cash flow. General and
administrative expenses for the first six months of 1998 remained relatively
unchanged compared to the same period in 1997.
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1998
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, 1998.
<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)
August 14, 1998
/s/ Wesley M. Gardiner, Jr.
-------------------------------
Wesley M. Gardiner, Jr.
President, Chief Executive Officer
And Director of Managing General Partner,
Sixth Copley Corp.
August 14, 1998
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,575,853
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,575,853
<PP&E> 18,893,111
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,468,964
<CURRENT-LIABILITIES> 117,239
<BONDS> 717,677
0
0
<COMMON> 0
<OTHER-SE> 21,634,048
<TOTAL-LIABILITY-AND-EQUITY> 22,468,964
<SALES> 1,132,043
<TOTAL-REVENUES> 1,223,640
<CGS> 108,140
<TOTAL-COSTS> 108,140
<OTHER-EXPENSES> 279,559
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 835,941
<INCOME-TAX> 0
<INCOME-CONTINUING> 835,941
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 835,941
<EPS-PRIMARY> 16.96
<EPS-DILUTED> 16.96
</TABLE>
