<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, 1999 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, 1999
PART I
FINANCIAL INFORMATION
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
(Unaudited) (Audited)
-------------- ------------------
<S> <C> <C>
ASSETS
Real estate investments:
Joint ventures $1,626,262 $1,649,433
Property, net 4,237,430 4,242,783
---------- ----------
5,863,692 5,892,216
Cash and cash equivalents 2,530,757 2,605,486
---------- ----------
$8,394,449 $8,497,702
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 72,514 $ 115,195
Accrued management fee 15,304 17,595
Deferred disposition fees 1,369,577 1,369,577
---------- ----------
Total liabilities 1,457,395 1,502,367
---------- ----------
Partners' capital:
Limited partners ($228.20
per unit; 160,000 units authorized,
48,788 units issued and outstanding) 6,923,804 6,981,503
General partners 13,250 13,832
---------- ----------
Total partners' capital 6,937,054 6,995,335
---------- ----------
$8,394,449 $8,497,702
========== ==========
</TABLE>
(See accompanying notes to unaudited financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999 June 30, 1998 June 30, 1998
------------------ ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY
Property rentals $188,760 $372,015 $173,530 $ 352,050
Property operating expenses (44,682) (99,133) (62,206) (108,140)
Depreciation and amortization (15,201) (48,052) (36,327) (73,237)
-------- -------- -------- ----------
128,877 224,830 74,997 170,673
Joint venture earnings 48,097 99,635 373,036 779,993
-------- -------- -------- ----------
Total real estate activity 176,974 324,465 448,033 950,666
-------- -------- -------- ----------
Interest on cash equivalents
and short-term investments 31,314 73,463 45,465 91,597
-------- -------- -------- ----------
Total investment activity 208,288 397,928 493,498 1,042,263
-------- -------- -------- ----------
PORTFOLIO EXPENSES
Management fee 15,304 30,608 50,299 100,598
General and administrative 38,316 92,956 48,304 105,724
-------- -------- -------- ----------
53,620 123,564 98,603 206,322
-------- -------- -------- ----------
Net income $154,668 $274,364 $394,895 $ 835,941
======== ======== ======== ==========
Net income per limited
partnership unit $ 3.14 $ 5.57 $ 8.01 $ 16.96
======== ======== ======== ==========
Cash distributions per limited
partnership unit $ 3.14 $ 6.75 $ 10.32 $ 21.20
======== ======== ======== ==========
Number of limited partnership units
outstanding during the period 48,788 48,788 48,788 48,788
======== ======== ======== ==========
</TABLE>
(See accompanying notes to unaudited financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999 June 30, 1998 June 30, 1998
---------------------- --------------------------- ---------------------------- -----------------------
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 $13,250 $6,923,877 $13,832 $6,981,503 $(49,452) $21,797,183 $(48,500) $21,891,360
Cash distributions (1,547) (153,194) (3,326) (329,319) (5,086) (503,492) (10,448) (1,034,305)
Net income 1,547 153,121 2,744 271,620 3,949 390,946 8,359 827,582
-------- ---------- ------------- ---------- ------------- ----------- -------- -----------
Balance at end
of period $13,250 $6,923,804 $13,250 $6,923,804 $(50,589) $21,684,637 $(50,589) $21,684,637
======== ========== ============= ========== ============= =========== ======== ===========
</TABLE>
(See accompanying notes to unaudited financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 1998
----------- ------------
<S> <C> <C>
Net cash provided by operating activities $257,916 $1,109,259
----------- ------------
Cash flows from investing activities:
Decrease in short-term
investments, net -- 1,405,619
----------- ------------
Cash flows from financing activity:
Distributions to partners (332,645) (1,044,753)
----------- ------------
Net increase (decrease) in cash
and cash equivalents (74,729) 1,470,125
Cash and cash equivalents:
Beginning of period 2,605,486 2,105,728
----------- ------------
End of period $2,530,757 $3,575,853
=========== ============
</TABLE>
(See accompanying notes to unaudited financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE 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, 1999 and December 31, 1998 and its operations,
its cash flows and partners' capital (deficit) for the three and six months
ended June 30, 1999 and 1998. These adjustments are of a normal recurring
nature.
See notes to financial statements included in the Partnership's 1998 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
two 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 advisory services.
Note 2 - Investments in Joint Ventures
- --------------------------------------
Summarized Financial Information
The following summarized financial information is presented for the
Partnership's remaining joint venture:
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
Assets and Liabilities
----------------------
June 30, 1999 December 31, 1998
------------- -----------------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation
of $866,875 and $832,160,
respectively $2,386,509 $2,421,223
Other 32,468 30,891
---------- ----------
2,418,977 2,452,114
Liabilities 53,022 88,618
---------- ----------
Net assets $2,365,955 $2,363,496
========== ==========
<CAPTION>
Results of Operations
---------------------
Six Months Ended June 30,
1999 1998
----------- ------------
<S> <C> <C>
Revenue:
Rental income $243,948 $2,003,484
Other income -- 5,078
-------- ----------
243,948 2,008,562
-------- ----------
Expenses:
Operating expenses 59,293 649,508
Depreciation and amortization 34,715 350,328
-------- ----------
94,008 999,836
-------- ----------
Net income $149,940 $1,008,726
======== ==========
</TABLE>
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliates on behalf of financing arrangements with the
joint venture.
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Note 3 - Property
- -----------------
The following is a summary of the Partnership's remaining wholly-owned
property:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
-------------- ------------------
<S> <C> <C>
Land $ 2,770,056 $ 2,770,056
Buildings, improvements and
other capitalized costs 4,908,078 4,903,218
Investment valuation allowance (1,500,000) (1,500,000)
Accumulated depreciation and
amortization (2,096,750) (2,048,698)
Net operating liabilities 156,046 118,207
----------- -----------
$ 4,237,430 $ 4,242,783
=========== ===========
</TABLE>
Note 4 - Subsequent Events
- -------------------------
Distributions of cash from operations relating to the quarter ended June
30, 1999 were made on July 29, 1999 in the aggregate amount of $154,742 ($3.14
per limited partnership unit).
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE 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 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, 1997 and two investments were sold in 1998. Through
June 30, 1999, capital of $37,654,578 ($771.80 per limited partnership unit) has
been returned to the limited partners; $36,194,353 as a result of sales and
$1,460,225, as a result of a discretionary reduction of original working capital
previously held in reserves.
At June 30, 1999, the Partnership had $2,530,757 in cash and cash
equivalents, of which $154,742 was used for cash distributions to partners on
July 29, 1999; 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 $228.20 per limited partnership unit,
distributions of cash from operations relating to the first and second quarters
of 1999 were made at the annualized rate of 5.5% while distributions of cash
from operations relating to the first and second quarters of 1998 were made at
the annualized rate of 6.25% on an adjusted capital contribution of $660.29.
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, 1999, the aggregate appraised value of the real estate investments
exceeded their carrying value by approximately $2,200,000. 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>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Year 2000 Readiness Disclosure
- ------------------------------
The Year 2000 Issue is a result of computer programs being written using
two digits rather than four to define the applicable year. Computer programs
that have date-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions or engage in normal
business operations.
The Partnership relies on AEW Capital Management L.P. ("AEW Capital
Management"), the parent of AEW Real Estate Advisors, Inc., to generate
financial information and to provide other services, which are dependent on the
use of computers. The Partnership has obtained assurances from AEW Capital
Management that:
. AEW Capital Management has developed a Year 2000 Plan (the "Plan")
consisting of five phases: inventory, assessment, testing,
remediation/repair and certification.
. As of September 30, 1998, AEW Capital Management had completed the
inventory and assessment phases of this Plan and had commenced the
testing and remediation/repair of internal systems.
. AEW Capital Management concluded the internal testing,
remediation/repair and certifications of its Plan in June 1999.
The Partnership also relies on joint venture partners and/or property
managers to supply financial and other data with respect to its real properties.
The Partnership is in the process of surveying these third party providers and
assessing their compliance with Year 2000 requirements. To date, the Partnership
is not aware of any problems that would materially impact its results of
operations, liquidity or capital resources. However, the Partnership has not yet
obtained written assurances that these providers would be Year 2000 compliant.
The Partnership is developing a contingency plan in the event of a
particular provider or system not being Year 2000 compliant. The inability of
one of these providers to complete its Year 2000 resolution process could
materially impact the Partnership. In addition, the Partnership is also subject
to external forces that might generally affect industry and commerce, such as
utility or transportation company Year 2000 compliance failures and related
service interruptions. Given the nature of its operations, the Partnership will
not incur any costs associated with Year 2000 compliance. All such costs are
borne by AEW Capital Management and the property managers.
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
Results of Operations
Operating Factors
The Partnership's two industrial properties (Prentiss Copystar and
Wilmington) were 100% leased at June 30, 1999 and June 30, 1998.
Investment Results
For the three and six months ended June 30, 1999, operating results from
real estate operations were $176,974 and $324,465, respectively, compared to
$448,033 and $950,666 for the comparable periods in 1998. The decreases of
$271,059 and $626,201 for the comparative three and six month periods are
primarily due to a decrease in joint venture earnings as a result of the sale of
White Phonic on July 14, 1998 and the sale of Waterford Apartments on August 7,
1998. This is partially offset by an increase in operating performance at
Wilmington Industrial due to an increase in market rates and lower professional
fees.
Interest on cash equivalents and short-term investments for the three and
six months ended June 30, 1999, was $31,314 and $73,463, respectively, compared
to $45,465 and $91,597 for the same periods in 1998. The decreases of
approximately $14,000 and $18,000 for the comparative three and six month
periods are primarily due to lower average investment balances in 1999, as a
result of the sales of White Phonic and Waterford Apartments in July and August
1998, respectively.
Operating cash flow decreased $851,343 between the six months ended June
30, 1998 and June 30, 1999, which is consistent with the decrease in operating
activity 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.
For the three and six months ended June 30, 1999, management fees were
$15,304 and $30,608, respectively, compared to $50,299 and $100,598 for the
comparable periods in 1998. The decreases in management fees for the respective
three and six month periods are due to lower operational distributions as a
result of the sales of White Phonic and Waterford Apartments.
General and administrative expenses for the three and six months ended June
30, 1999 were $38,316 and $92,956, respectively, compared to $48,304 and
$105,724 for the same periods in 1998. The decreases of approximately $10,000 is
primarily to a decrease in legal and printing fees. This decrease is partially
offset by an increase in state taxes.
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1999
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, 1999.
<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 13, 1999
/s/ Alison Husid Cutler
-------------------------------
Alison Husid Cutler
President, Chief Executive Officer
And Director of Managing General Partner, Sixth
Copley Corp.
August 13, 1999
/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-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,530,757
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,530,757
<PP&E> 5,863,692
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,394,449
<CURRENT-LIABILITIES> 87,818
<BONDS> 1,369,577
0
0
<COMMON> 0
<OTHER-SE> 6,937,054
<TOTAL-LIABILITY-AND-EQUITY> 8,394,449
<SALES> 471,650
<TOTAL-REVENUES> 545,113
<CGS> 99,133
<TOTAL-COSTS> 99,133
<OTHER-EXPENSES> 171,616
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 274,364
<INCOME-TAX> 0
<INCOME-CONTINUING> 274,364
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 274,364
<EPS-BASIC> 5.57
<EPS-DILUTED> 5.57
</TABLE>
