<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 March 31, 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 MARCH 31, 1999
PART I
FINANCIAL INFORMATION
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
March 31, 1999 December 31, 1998
(Unaudited) (Audited)
--------------- -----------------
Assets
Real estate investments:
Joint ventures $ 1,639,568 $ 1,649,433
Property, net 4,230,520 4,242,783
--------------- --------------
5,870,088 5,892,216
Cash and cash equivalents 2,578,880 2,605,486
--------------- --------------
$ 8,448,968 $ 8,497,702
=============== ==============
Liabilities and Partners' Capital
Accounts payable $ 126,960 $ 115,195
Accrued management fee 15,304 17,595
Deferred disposition fees 1,369,577 1,369,577
--------------- --------------
Total liabilities 1,511,841 1,502,367
--------------- --------------
Partners' capital:
Limited partners ($228.20
per unit; 160,000 units authorized;
48,788 units issued and outstanding) 6,923,877 6,981,503
General partners 13,250 13,832
--------------- --------------
Total partners' capital 6,937,127 6,995,335
--------------- --------------
$ 8,448,968 $ 8,497,702
=============== ==============
(See accompanying notes to financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended March 31,
1999 1998
------------ ----------
INVESTMENT ACTIVITY
Property rentals $ 183,255 $ 178,520
Property operating expenses (54,451) (45,934)
Depreciation and amortization (32,851) (36,910)
--------------- --------------
95,953 95,676
Joint venture earnings 51,538 406,957
--------------- --------------
Total real estate activity 147,491 502,633
--------------- --------------
Interest on cash equivalents
and short-term investments 42,149 46,132
--------------- --------------
Total investment activity 189,640 548,765
--------------- --------------
PORTFOLIO EXPENSES
Management fee 15,304 50,299
General and administrative 54,640 57,420
--------------- --------------
69,944 107,719
--------------- --------------
Net income $ 119,696 $ 441,046
=============== ==============
Net income per limited
partnership unit $ 2.43 $ 8.95
=============== ==============
Cash distributions per limited
partnership unit $ 3.61 $ 10.88
=============== ==============
Number of limited partnership units
outstanding during the period 48,788 48,788
=============== ==============
(See accompanying notes to financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31,
1999 1998
------------------------- -------------------------
General Limited General Limited
Partners Partners Partners Partners
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Balance at beginning
$ 13,832 $ 6,981,503 $ (48,500) $ 21,891,360
of period
Cash distributions (1,779) (176,125) (5,362) (530,813)
Net income 1,197 118,499 4,410 436,636
------------ ------------ ----------- -------------
Balance at end
of period $ 13,250 $ 6,923,877 $ (49,452) $ 21,797,183
============ ============ =========== =============
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
Quarter Ended March 31,
1999 1998
----------- ----------
Net cash provided by operating activities $ 151,298 $ 543,803
----------- -----------
Cash flows from investing activities:
Decrease in short-term
investments, net -- 1,405,619
----------- -----------
Net cash provided by
investing activities -- 1,405,619
----------- -----------
Cash flows from financing activity:
Distributions to partners (177,904) (536,175)
----------- -----------
Net increase (decrease) in cash
and cash equivalents (26,606) 1,413,247
Cash and cash equivalents:
Beginning of period 2,605,486 2,105,728
----------- -----------
End of period $ 2,578,880 $ 3,518,975
=========== ===========
(See accompanying notes to 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 March 31, 1999 and December 31, 1998 and its
operations, its cash flows and partners' capital (deficit) for the interim
periods ended March 31, 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
On July 14, 1998 a joint venture, in which the Partnership held a 50%
interest, sold the White Phonic property in Petaluma, Cafifornia, to an
unaffiliated third party for a gross sale price of $5,380,000. The Partnership
received its share of the proceeds after closing costs of $4,279,751,
representing a return of capital and accrued interest plus a participation in
residual proceeds of $965,671, and recognized a gain of $1,335,808 ($27.11 per
limited partnership unit). A disposition fee of $161,400 was accrued but not
paid to the Advisor. On July 30, 1998, the Partnership made a capital
distribution of $4,279,683 ($87.72 per limited partnership unit) from the
proceeds of the sale.
On August 7, 1998, a joint venture, in which the Partnership held a 75%
interest, sold the Waterford Apartments to an institutional buyer which was
unaffiliated with the Partnership. The gross sale price was $21,800,000. The
Partnership received its share of net proceeds after closing costs totaling
$16,338,750, and recognized a gain of $6,227,526 ($126.37 per limited
partnership unit). A disposition fee of $490,500 was accrued but not paid to
AEW. On August 26, 1998, the Partnership made a capital distribution of
$16,309,341 ($334.29 per limited partnership unit) from the proceeds of the
sale.
7
<PAGE>
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the Partnership's remaining joint venture:
Assets and Liabilities
------------------------
March 31, 1999 December 31, 1998
-------------- -----------------
Assets
Real property, at cost less
accumulated depreciation
of $849,518 and $832,160,
respectively $ 2,403,866 $ 2,421,223
Other 50,766 30,891
------------- ------------
2,454,632 2,452,114
Liabilities 105,245 88,618
------------- ------------
Net assets $ 2,349,387 $ 2,363,496
============= ============
Results of Operations
----------------------
Quarter Ended March 31,
1999 1998
-------- --------
Revenue:
Rental income $ 121,601 $ 992,604
Interest and other income -- 1,805
---------- ----------
121,601 994,409
---------- ----------
Expenses:
Operating expenses 26,780 298,627
Depreciation and amortization 17,357 175,164
---------- ----------
44,137 473,791
---------- ----------
Net income $ 77,464 $ 520,618
========== ==========
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and its affiliates on behalf of their various financing arrangements
with the joint ventures.
Due to the sales noted above, the results of operations for the quarter
ended March 31, 1998 include the Partnership's investment in three joint
8
<PAGE>
ventures while the results of operations for the quarter ended March 31, 1999
includes only one investment in joint venture.
9
<PAGE>
Note 3 - Property
The following is a summary of the Partnership's one wholly-owned property:
March 31, 1999 December 31, 1998
-------------- -----------------
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 (2,081,549) (2,048,698)
Net operating liabilities 133,935 118,207
------------- --------------
$ 4,230,520 $ 4,242,783
============= ==============
Note 4 - Subsequent Event
Distributions of cash from operations relating to the quarter ended March
31, 1999 were made on April 29, 1999 in the aggregate amount of $154,742 ($3.14
per limited partnership unit).
10
<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 and two investments were sold in 1998.
Through March 31, 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 March 31, 1999, the Partnership had $2,578,880 in cash and cash
equivalents, of which $154,742 was used for cash distributions to partners on
April 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 quarter of 1999 were
made at the annualized rate of 5.5% while distributions of cash from operations
relating to the first quarter of 1998 were made at the annualized rate of 6.25%
on an adjusted capital contribution of $660.29. The distribution rate was lower
in 1999 primarily due to the sale of investments in 1998.
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
March 31, 1999, the appraised value of each real estate investment exceeded its
carrying value; the aggregate of such excess was approximately $2,556,000. 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.
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
11
<PAGE>
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 expects to conclude the internal testing,
remediation/repair and certifications of its Plan no later than June
30, 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 currently does not have a contingency plan in the event of
a particular provider or system not being Year 2000 compliant. Such a plan will
be developed if it becomes clear that a provider (including AEW Capital
Management) is not going to achieve its scheduled compliance objectives by June
30, 1999. 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 born by AEW Capital Management and the property
managers.
12
<PAGE>
Results of Operations
- ---------------------
Form of Real Estate Investments
The Wilmington Industrial investment is a wholly-owned property. The
Prentiss Copystar real estate investment is structured as a joint venture.
Operating Factors
The Partnership's two industrial properties (Prentiss Copystar and
Wilmington) were 100% leased at March 31, 1999 and March 31, 1998.
As discussed above, the White Phonic industrial property was sold on July
14, 1998, and the Partnership recognized a gain of $1,335,808. At the time of
the sale, White Phonic was 100% leased to a single tenant, as it had been since
September 30, 1997.
In addition, the Waterford Apartments was sold on August 7, 1998, and the
Partnership recognized a gain of $6,227,526. At the time of the sale, the
Waterford Apartments was 96% leased.
Investment Results
Interest income on cash equivalents and short-term investments remained
relatively unchanged between the first quarter of 1998 and 1999.
Real estate operating results were $147,491 for the first three months of
1999, and $502,633 for the comparable period of 1998. The decrease of $355,142
is 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. Operating results from the remainder of the Partnership's investments
were relatively unchanged between the respective periods.
Cash flow from operations decreased by approximately $393,000 between the
first three months of 1998 and 1999. The decrease is primarily due to the
decrease in distributions from joint ventures as a result of sales discussed
above and a decrease in property working capital.
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 approximately $35,000 between the
first quarter of 1998 and 1999 due to a decrease in distributions as a result of
the sales of White Phonic and Waterford Apartments in 1998. General and
administrative expenses remained relatively unchanged between the first quarter
of 1998 and 1999.
13
<PAGE>
COPLEY PENSION PROPERTIES VI;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 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 March 31, 1999.
14
<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)
May 10, 1999
/s/ J. Christopher Meyer III
-------------------------------
J. Christopher Meyer III.
President, Chief Executive Officer
And Director of Managing General
Partner, Sixth Copley Corp.
May 10, 1999
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Principal Financial and Accounting
Officer of Managing General Partner,
Sixth Copley Corp.
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,578,880
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,578,880
<PP&E> 5,870,088
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,448,968
<CURRENT-LIABILITIES> 142,264
<BONDS> 1,369,577
0
0
<COMMON> 0
<OTHER-SE> 6,937,127
<TOTAL-LIABILITY-AND-EQUITY> 8,448,968
<SALES> 234,793
<TOTAL-REVENUES> 276,942
<CGS> 54,451
<TOTAL-COSTS> 54,451
<OTHER-EXPENSES> 102,795
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 119,696
<INCOME-TAX> 0
<INCOME-CONTINUING> 119,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119,696
<EPS-PRIMARY> 2.43
<EPS-DILUTED> 2.43
</TABLE>
