<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, 1996 Commission File Number 0-20126
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-3035851
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
399 Boylston Street, 13th Fl.
Boston, Massachusetts 02116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 578-1200
- -----------------------------------------------------------------------
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 VII;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1996
PART I
FINANCIAL INFORMATION
<PAGE>
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
-------------- -----------------
Assets
<S> <C> <C>
Real estate investments:
Joint ventures $ 13,269,294 $ 13,489,028
Property, net 11,410,329 11,574,071
----------- -----------
24,679,623 25,063,099
Cash and cash equivalents 3,145,595 3,194,992
Short-term investments 1,564,804 1,524,276
----------- -----------
$ 29,390,022 $ 29,782,367
=========== ===========
Liabilities and Partners' Capital
Accounts payable $ 48,398 $ 86,646
Accrued management fee 60,950 57,713
Deferred disposition fees 478,108 478,108
----------- ----------
Total liabilities 587,456 622,467
----------- ----------
Partners' capital (deficit):
Limited partners ($892 per unit;
160,000 units authorized, 42,076
units issued and outstanding) 28,832,254 29,186,014
General partners (29,688) (26,114)
----------- -----------
Total partners' capital 28,802,566 29,159,900
----------- -----------
$ 29,390,022 $ 29,782,367
=========== ===========
<FN>
(See accompanying notes to financial statements)
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995
------------- --------------- ------------- ---------------
Investment Activity
<S> <C> <C> <C> <C>
Property rentals $ 425,534 $ 856,245 $ 354,195 $ 421,358
Property operating expenses (167,751) (343,505) (109,812) (114,968)
Depreciation and amortization (87,743) (175,486) (77,205) (99,616)
--------- ---------- ---------- -----------
170,040 337,254 167,178 206,774
Joint venture earnings 308,058 601,650 263,983 546,742
---------- ----------- ----------- -----------
Total real estate operations 478,098 938,904 431,161 753,516
Gain on sale of property by
joint venture - - 13,321 195,295
---------- ----------- ----------- -----------
Total real estate activity 478,098 938,904 444,482 948,811
Interest on cash equivalents
and short-term investments 59,557 118,431 136,933 405,575
---------- ----------- ----------- ----------
Total investment activity 537,655 1,057,335 581,415 1,354,386
---------- ----------- ----------- ----------
Portfolio Expenses
Management fees 60,949 121,899 56,199 112,777
General and administrative 44,472 92,967 67,848 118,954
----------- ------------ ------------- ----------
105,421 214,866 124,047 231,731
----------- ------------ ------------- ----------
Net Income $ 432,234 $ 842,469 $ 457,368 $ 1,122,655
========== =========== =========== ==========
Net income per limited partnership
unit $ 10.17 $ 19.82 $ 10.76 $ 26.41
========== =========== =========== ==========
Cash distributions per limited
partnership unit $ 14.50 $ 28.23 $ 13.46 $ 51.16
========== =========== =========== ==========
Number of limited partnership units
outstanding during the period 42,076 42,076 42,076 42,076
========== =========== =========== ==========
<FN>
(See accompanying notes to financial statements)
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Deficit)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended Quarter Ended Six Months Ended
June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995
------------------- ------------------- --------------------- ----------------------
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 $(27,847) $29,014,444 $ (26,114) $29,186,014 $ (22,465) $32,913,380 $(23,295) $ 33,841,011
of period
Cash
distributions (6,163) (610,102) (11,998) (1,187,805) (5,721) (566,343) (11,544) (2,152,608)
Net income 4,322 427,912 8,424 834,045 4,574 452,794 11,227 1,111,428
--------- ----------- --------- ---------- --------- ----------- --------- -----------
Balance at end
of period $(29,688) $28,832,254 $ (29,688) $28,832,254 $ (23,612) $32,799,831 $(23,612) $ 32,799,831
========= =========== ========= =========== ========== =========== ========= ==========
<FN>
(See accompanying notes to financial statements)
</TABLE>
<PAGE>
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net cash provided by operating activities $ 1,143,091 $ 1,138,391
----------- -----------
Cash flows from investing activities:
Investment in property 32,744 (9,733,113)
Decrease (increase) in short-term
investments, net (25,429) 2,288,085
Investment in joint venture - (79,190)
Net proceeds from sale of investment - 195,295
---------- -----------
Net cash provided by (used in)
investing activities 7,315 (7,328,923)
----------- -----------
Cash flows from financing activity:
Distributions to partners (1,199,803) (2,164,152)
----------- -----------
Net decrease in cash
and cash equivalents (49,397) (8,354,684)
Cash and cash equivalents:
Beginning of period 3,194,992 13,419,447
----------- -----------
End of period $ 3,145,595 $ 5,064,763
=========== ===========
<FN>
(See accompanying notes to financial statements)
</TABLE>
<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, 1996 and December 31, 1995
and the results of its operations, its cash flows and changes in partners'
capital (deficit) for the interim periods ended June 30, 1996 and 1995.
These adjustments are of a normal recurring nature.
See notes to financial statements included in the Partnership's 1995
Annual Report on Form 10-K for additional information relating to the
Partnership's financial statements.
Note 1 - Organization and Business
Copley Pension Properties VII; 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 entities intended to
be exempt from federal income tax. The Partnership commenced operations
in March 1989. It acquired four of the five real estate investments it
currently owns prior to 1991, and a fifth property in 1995. The
Partnership intends to dispose of its investments within eight to twelve
years of their acquisition, and then liquidate.
<PAGE>
Note 2 - Real Estate Joint Ventures
The following summarized financial information is presented in the
aggregate for the Partnership's joint ventures:
<TABLE>
<CAPTION>
Assets and Liabilities
-----------------------
June 30, 1996 December 31, 1995
--------------- ------------------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation of
$6,974,813 and $6,395,506,
respectively $ 22,802,054 $ 23,455,289
Other 1,361,352 1,421,726
------------ ------------
24,163,406 24,877,015
Liabilities 260,954 358,871
------------ ------------
Net assets $ 23,902,452 $ 24,518,144
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Results of Operations
---------------------
Six Months Ended June 30,
1996 1995
----------- -----------
Revenue
<S> <C> <C>
Rental income $2,342,968 $ 2,206,032
Other 2,695 48,020
----------- -----------
2,345,663 2,254,052
----------- -----------
Expenses
Operating expenses 800,817 719,826
Depreciation and amortization 549,459 550,338
----------- -----------
1,350,276 1,270,164
----------- -----------
Net income $ 995,387 $ 983,888
=========== ===========
</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 April 14, 1995, the Partnership acquired a 174-unit apartment complex
in Sherman Oaks, California, known as Regency Court Apartments, for a
total price of $9,605,021. The purchase and sale agreement requires the
seller to supplement the monthly rental income generated from the property
to the extent such income is less than $125,000 per month during the one
year period ended April 13, 1996, but not to exceed $300,000 in total.
The total shortfall was $108,994, of which $101,399 has been credited
against the purchase price; the remainder will be so credited upon
receipt.
<PAGE>
The following is a summary of the Partnership's property investments:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Land $ 2,190,969 $ 2,190,969
Buildings and improvements 9,793,547 9,826,291
Accumulated depreciation (541,310) (371,106)
Other net liabilities (32,877) (72,083)
----------- ------------
$11,410,329 $ 11,574,071
=========== ============
</TABLE>
In February, 1995, the Partnership entered into a purchase and sale
agreement for the purchase of a research and development facility located
in Tempe, Arizona. After completing its due diligence review and further
negotiating with the seller, a final agreement could not be reached and
the Partnership abandoned the transaction in the second quarter.
Note 4 - Subsequent Event
Distributions of cash from operations relating to the quarter ended June
30, 1996 were made on July 25, 1996 in the aggregate amount of $616,265
($14.50 per limited partnership unit).
<PAGE>
Management's Discussion and Analysis of Financial Condition
- -----------------------------------------------------------
and Results of Operations
- -------------------------
Liquidity and Capital Resources
The Partnership's offering of units of limited partnership interest
was completed as of September 30, 1990. A total of 42,076 units were
sold. The Partnership received proceeds of $36,522,542, net of selling
commissions and other offering costs, which have been used for investment
in real estate, the payment of related acquisition costs, and for working
capital reserves. The Partnership made seven real estate investments, one
of which was sold in 1991 and another in 1994. Through June 30, 1996,
capital of $4,544,208 has been returned to the limited partners as a
result of these sales.
At June 30, 1996, the Partnership had $4,710,399 in cash, cash
equivalents and short-term investments, of which $616,265 was used for
operating cash distributions to partners on July 25, 1996. 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. The adjusted capital
contribution was reduced from $996 to $972 per limited partnership unit
during the first quarter of 1995, and then to $892 during the fourth
quarter of 1995, with the distribution of proceeds from the sale of
Kachina Apartments in 1994. The sales transaction also resulted in the
payment of previously accrued, but deferred, management fees of $203,452
to the advisor. Distributions of cash from operations relating to the
first and second quarters of 1996 were made at an annualized rate of 6.5%
on the adjusted capital contribution. Distributions of cash from
operations relating to the first and second quarters of 1995 were made at
an annualized rate of 5.5% on the weighted average adjusted capital
contribution. The increase in the distribution rate results from the
attainment of appropriate cash reserve levels.
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 estimated
cost of sale for properties held for sale. Carrying value may be greater
or less than current appraised value. At June 30, 1996, the appraised
value of each real estate investment exceeded its carrying value; the
aggregate excess was approximately $4,100,000. The current appraised
value of real estate investments has been estimated by the managing
general partner and is generally based on a combination 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 Investment
Three of the investments in the portfolio are structured as joint
ventures; Drilex and Regency Court Apartments are wholly-owned properties.
The Kachina Apartments investment, which was sold in 1994, was a joint
venture.
Operating Factors
The Partnership's two industrial properties, Drilex and Prentiss
Copystar, were 100% leased, each by a single tenant, at June 30, 1996, as
they were at December 31, 1995 and June 30, 1995.
The Partnership's two multi-family residential properties, Waterford
Apartments and Regency Court Apartments, ended the second quarter of 1996
with an occupancy level of 96% and 91%, respectively. Occupancy at
Waterford Apartments remained in the mid 90% range during the first six
months of 1996, which is consistent with the prior year. Occupancy at
Regency Court declined from the mid 90% range earlier in the year, due to
increased competition.
Occupancy at Parkmoor Plaza was 100% at June 30, 1996 where it has
remained since the second quarter of 1995.
Investment Results
Interest on short-term investments and cash equivalents decreased
significantly between the first six months of 1995 and the first six
months of 1996 due to a decrease in the average investment balance as a
result of the distribution of sale proceeds from the Kachina sale and the
investment in Regency Court Apartments in 1995.
During the first six months of 1995, the Partnership received an
additional $195,295 in final settlement of the Kachina joint venture
activities, which was recognized as a gain on sale of property by joint
venture in the accompanying statement of operations.
Exclusive of the results from Regency Court Apartments in 1996
($248,904) and 1995 ($127,550), real estate operations for the first six
months of 1996 and 1995 were $690,000 and $625,966, respectively. This
increase is primarily due to improved operating results at Parkmoor Plaza
as a result of an increase in rental revenue. Operating results from the
remainder of the Partnership's investments were relatively unchanged
between the respective quarterly periods.
Exclusive of the payment of deferred management fees of $203,452 in
1995, cash flow from operations decreased by approximately $199,000
between the respective six month periods. This change was primarily due
to the reduction in short-term investment interest and changes in property
working capital, partially offset by the addition of cash flow from
Regency Court and the timing of cash distributions from joint ventures.
<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 primarily consist of real estate appraisal, printing, legal,
accounting and investor servicing fees.
The Partnership management fee increased between the first six months
of 1996 and 1995 due to an increase in distributable cash flow. General
and administrative expenses decreased between the respective six month
periods due to professional fees incurred in 1995 related to due diligence
performed in connection with an abandoned property acquisition.
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1996
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: None.
b. Reports on Form 8-K: No Current Reports on Form 8-K
were filed during the quarter ended June 30, 1996.
<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 VII;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
August 9, 1996
/s/ Peter P. Twining
-------------------------------
Peter P. Twining
Managing Director and General Counsel
of Managing General Partner,
Seventh Copley Corp.
August 9, 1996
/s/ Daniel C. Mackowiak
--------------------------------
Daniel C. Mackowiak
Principal Financial and Accounting
Officer of Managing General Partner,
Seventh Copley Corp.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3145595
<SECURITIES> 1564804
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4710399
<PP&E> 24679623
<DEPRECIATION> 0
<TOTAL-ASSETS> 29390022
<CURRENT-LIABILITIES> 109348
<BONDS> 478108
0
0
<COMMON> 0
<OTHER-SE> 28802566
<TOTAL-LIABILITY-AND-EQUITY> 29390022
<SALES> 1457895
<TOTAL-REVENUES> 1576326
<CGS> 343505
<TOTAL-COSTS> 343505
<OTHER-EXPENSES> 390352
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 842469
<INCOME-TAX> 0
<INCOME-CONTINUING> 842469
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 842469
<EPS-PRIMARY> 19.82
<EPS-DILUTED> 19.82
</TABLE>
