<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
COMMISSION FILE NO. 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
incorporation or organization) Identification No.)
225 Franklin Street, 25th Floor
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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 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 ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
No voting stock is held by nonaffiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
None
Page 1 of pages ______ (including exhibits). Exhibit Index on Page ____.
<PAGE>
PART I
Item 1. Business.
--------
Copley Pension Properties VII; A Real Estate Limited Partnership (the
"Partnership") was organized under the Uniform Limited Partnership Act of the
Commonwealth of Massachusetts on October 3, 1988, to invest primarily in
to-be-developed, newly constructed and existing income-producing real
properties.
The Partnership was initially capitalized with contributions of $2,000
in the aggregate from Seventh Copley Corp. (the "Managing General Partner") and
ICOP Associates Limited Partnership (the "Associate General Partner")
(collectively, the "General Partners") and $10,000 from Copley Real Estate
Advisors, Inc. (the "Initial Limited Partner"). The Partnership filed a
Registration Statement on Form S-11 (the "Registration Statement") with the
Securities and Exchange Commission on October 17, 1988, with respect to a public
offering of 80,000 units of limited partnership interest at a price of $1,000
per unit (the "Units") with an option to sell up to an additional 80,000 Units
(an aggregate of $160,000,000). The Registration Statement was declared
effective on January 9, 1989.
The first sale of Units occurred on April 27, 1989, at which time the
Initial Limited Partner withdrew its contribution from the Partnership.
Investors were admitted to the Partnership thereafter at monthly closings; the
offering terminated on September 30, 1990 and the last group of initial
investors was admitted to the Partnership on October 10, 1990. As of December
31, 1990, a total of 42,076 Units had been sold, a total of 5,965 investors had
been admitted as limited partners (the "Limited Partners") and a total of
$41,956,740 net of discounts had been contributed to the capital of the
Partnership. The remaining 117,924 units were deregistered on February 20, 1991.
As of December 31, 1996, the Partnership had five real property
investments, one of which was acquired in 1995. Two additional investments were
sold: a research and development facility in 1991 and an apartment complex in
1994. Sales proceeds have been distributed in the amount of $108 per Unit as a
result of these sales. In addition, capital of $8 per Unit has been distributed
as a result of a discretionary reduction in cash reserves. The Partnership has
no current plan to renovate, improve, or further develop any of its existing
real property. In the opinion of the Managing General Partner of the
Partnership, the properties are adequately covered by insurance.
The Partnership has no employees. Services are performed for the
Partnership by the Managing General Partner and affiliates of the Managing
General Partner.
A. Apartment Complex in Frederick, Maryland ("Waterford Apartments").
------------------------------------------------------------------
On March 20, 1989, the Partnership acquired a 16.25% interest in a
joint venture formed with Copley Pension Properties VI; A Real Estate Limited
Partnership, an affiliate of the Partnership (the "Affiliate") with a 48.75%
interest, and Frederick Bozzuto Limited Partnership. On October 23, 1990 the
Partnership agreed to increase its maximum commitment from $3,000,000 to
$4,700,000 of which $3,525,000 is considered Senior Capital and $1,175,000 is
considered Junior Capital. As of December 31, 1996, the Partnership had
contributed $4,699,993 to the capital of the joint venture. The joint venture
agreement entitles the Partnership and the Affiliate to receive a preferred
return on their respective invested capital at the rate of 10.09% per annum.
Such preferred return will be payable currently until the Partnership and the
Affiliate have received an aggregate of $687,471; thereafter, the preferred
return on the Senior Capital will be payable currently and the preferred return
on the Junior Capital will accrue and bear interest at the rate of 10.09% per
annum, compounded monthly, if sufficient cash flow is not available therefor. In
the event of a sale or refinancing prior to the tenth anniversary of the joint
venture agreement, the Partnership would be entitled to have 25% of its
contribution repaid without premium and to have 75% repaid subject to a premium
designed to preserve the stipulated rate of return through the ninth anniversary
of the joint venture agreement. The joint venture agreement also entitles the
Partnership to receive 16.25% of remaining cash flow and 16.25% of sale and
refinancing proceeds following the return of the Partnership's and the
Affiliate's investments.
<PAGE>
The joint venture owns approximately 16.35 acres of land improved with
an approximately 295,074 square foot, 314-unit apartment complex, which was
developed in two phases between 1989 and 1991. As of December 31, 1996, this
complex was approximately 97% leased.
B. Retail Center in San Jose, California ("Parkmoor Plaza").
---------------------------------------------------------
On September 20, 1989, the Partnership acquired a 75% interest in a joint
venture formed with SBC & D Co., Inc. As of December 31, 1996, the Partnership
had contributed $9,786,330 to the capital of the joint venture out of a maximum
commitment of $10,000,000. The joint venture agreement entitles the Partnership
to receive a preferred return on its invested capital at the rate of 10% per
annum. During the first 120 months following the date of the joint venture
agreement, to the extent sufficient cash flow is not available therefor, up to
1% of such preferred return may accrue and bear interest at the rate of 10% per
annum, compounded monthly. The balance of the preferred return will be payable
monthly on a current basis. Commencing with the 121st month following the date
of the joint venture agreement, the full amount of the preferred return will be
payable monthly on a current basis. The joint venture agreement also entitles
the Partnership to receive 75% of remaining cash flow and 75% of sale and
refinancing proceeds following the return of the Partnership's investment.
The joint venture owns a leasehold interest pursuant to a ground lease in
13.791 acres of land and a fee interest in three retail buildings totaling
approximately 149,825 square feet in San Jose, California. The ground lease
terminates on November 12, 2014 and provides for an annual rental of $73,230
payable in equal monthly installments. The joint venture has the option to
extend the lease for an additional 25 years. The rent for the extended term will
be determined in accordance with provisions set forth in the lease. The joint
venture also has the option to purchase the land upon notice from the owner of
its intention to sell to an unrelated third party and its acceptance of a bona
fide offer. The property has been fully converted from industrial to retail use.
As of December 31, 1996, this retail center was 100% leased.
C. Office/Warehouse Building in Houston, Texas ("Drilex").
-------------------------------------------------------
On December 18, 1990, the Partnership acquired a 75% interest in a joint
venture formed with an affiliate of The Trammell Crow Company ("Trammel Crow").
The Partnership had contributed $2,294,713 to the capital of the joint venture.
The joint venture agreement entitled the Partnership to receive a preferred
return on its invested capital at the rate of 11% per annum, which was payable
currently until the Partnership had received an aggregate of $56,115. Upon
completion of construction the preferred return would accrue, if sufficient cash
flow was not available therefor. In addition, upon rental of the building, the
joint venture was also obligated to pay to the Partnership the amount of $2,755
on a monthly basis. This amount represented full amortization over a ten year
period of the cost of special tenant improvements and was applied against both
the contributed capital and the preferred return. The joint venture agreement
also entitled the Partnership to receive 50% of the net proceeds of sales after
return of its capital if the building was sold within one year of the tenant's
occupancy for a cash price of greater than $2,800,000. Under any other
circumstances, the Partnership's share of sale proceeds was 75%. As of January
1, 1993, the Partnership acquired Trammell Crow's equity interest in the joint
venture for $70,000.
The Partnership owns approximately 3.4 acres of land in Houston, Texas,
improved with an approximately 53,750 square foot single story office/warehouse
building constructed in 1991. As of December 31, 1996, the building was 100%
occupied by a single tenant under a long-term lease that expires in August 2001.
D. Industrial Building in Itasca, Illinois ("Prentiss Copystar").
--------------------------------------------------------------
On May 23, 1991, the Partnership acquired a 23.25% interest in a joint
venture formed with Copley Pension Properties VI; A Real Estate Limited
Partnership, an affiliate of the Partnership (the "Affiliate") with a 51.75%
interest, and with an affiliate of Prentiss Properties, Ltd. As of December 31,
1996, the Partnership had contributed $1,027,386 to the capital of the joint
venture out of a maximum commitment of $1,029,084, of which $690,224 is
characterized as Senior Capital and $308,725 is
<PAGE>
characterized as Junior Capital. The joint venture agreement entitles the
Partnership to receive a preferred return, compounded monthly, of 11% per annum
of which the return on Senior Capital will be payable currently and the return
on Junior Capital may accrue and compound monthly if sufficient cash flow is not
available therefor. If the Senior Capital is repaid prior to the termination of
the joint venture, the Partnership would be entitled to receive a return on the
Senior Capital at the lesser of 11% per annum or the treasury rate for treasury
bonds having a maturity date coinciding with the termination of the joint
venture, plus 75 basis points. The joint venture agreement also entitles the
Partnership to receive 23.25% of the net proceeds of sales and financings after
return of its capital and 23.25% of cash flow remaining after payment of the
preferred return.
The joint venture owns approximately 3.75 acres of land in Itasca, Illinois
and during 1991 completed construction thereon of an approximately 70,535 square
foot single-story industrial building. As of December 31, 1996, the building was
100% leased to a single tenant for a term which expires in 1999. The tenant has
an option that commenced in September, 1995 to purchase the facility at fair
market value. As of December 31, 1996, the tenant has not expressed any interest
in exercising the option.
E. Apartment Complex in Sherman Oaks, California ("Regency Court
-------------------------------------------------------------
Apartments")
------------
On April 14, 1995, Regency Court Associates, L.P., a California limited
partnership (the "Acquisition Partnership"), acquired a 174-unit apartment
complex located in Sherman Oaks, California for $9,605,021. The sole limited
partner of the Acquisition Partnership is the Partnership, and the sole general
partner of the Acquisition Partnership is Copp VII Holding Corp., a
Massachusetts corporation which is a wholly-owned subsidiary of the Partnership
(the "Subsidiary"). As of December 31, 1996, the Partnership had contributed
$9,700,000 to the capital of the Acquisition Partnership. The partnership
agreement of the Acquisition Partnership entitles the Partnership to receive 99%
of cash flow and 99% of sale and financing proceeds. The Subsidiary has a 1%
interest in cash flow and sale and financing proceeds. The Subsidiary has been
capitalized with a $1,000,000 demand promissory note from the Partnership.
The Acquisition Partnership owns a 174-unit apartment complex known as
Regency Court located on approximately 1.64 acres of land. As of December 31,
1996, the apartment complex was approximately 98% leased.
The seller of Regency Court was obligated to supplement the monthly rental
income from the Apartment Complex to the extent such income was less than
$125,000 per month during the one-year period ended April 13, 1996 (the
"Supplement Period"), prorated for any partial month at the beginning or
expiration of such Supplement Period. To secure this obligation, the seller
deposited $300,000 in an interest-bearing account with First American Title
Insurance Company. The seller's total liability for its obligation to supplement
rental income was limited to the $300,000 deposit plus any interest earned
thereon. The total supplemental rental income required to be paid by the seller
was $115,323.
<PAGE>
Item 2. Properties
----------
The following table sets forth the annual realty taxes for the
Partnership's properties and information regarding tenants who occupy 10% or
more of gross leasable area (GLA) in the Partnership's properties:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Estimated Number of
1997 Tenants
Annual with 10% or Square Feet
Realty more of Name(s) of of Contract Lease
Property Taxes GLA Tenant(s) Each Tenant Rent Expiration
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Retail Center in San Jose, CA $ 85,975 4 Baby's Super 25,000 $ 7.80 3/2008
Discount
Food 4 Less 54,600 $10.95 9/2007
U.S. Post Office 22,000 $4.16 2/2001
Family Fitness 30,000 $ 7.96 1/2014
Center
Office/Warehouse Building in $ 0 (1) 1 Drilex Systems 53,750 $ 5.67 8/2001
Houston, TX
Apartment Complex in $117,000 N/A N/A N/A N/A N/A
Sherman Oaks, CA
Apartment Complex in $274,380 N/A N/A N/A N/A N/A
Frederick, MD
Industrial Building, Itasca, IL $ 72,925 1 Mita Copystar 70,535 $ 5.00 9/1999
of
America, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Line of
Business
Renewal Principal
Property Options Tenants
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail Center in San Jose, CA Two 10 year Baby retailer
options
Six 5 year Food Retailer
options
One 5 year U.S. Post
option Office
Two 5 year Fitness Center
options
Office/Warehouse Building in One 5 year Drill
Houston, TX option Manufacturer
Apartment Complex in N/A N/A
Sherman Oaks, CA
Apartment Complex in N/A N/A
Frederick, MD
Industrial Building, None Photocopier
Itasca, IL Distributor
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Tenant responsible for real property taxes.
<PAGE>
The following table sets forth for each of the last five years the gross
leasable area, occupancy rates, rental revenue, and net effective rent for the
Partnership's properties:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
RENTAL
GROSS LEASABLE YEAR-END REVENUE NET EFFECTIVE
PROPERTY AREA OCCUPANCY RECOGNIZED RENT ($/SF/YR)*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail Center in San Jose, CA
------------------------------
1992 149,825 64% $ 501,797 $ 5.23
1993 149,825 93% $1,203,654 $ 9.13
1994 149,825 93% $1,384,330 $ 9.94
1995 149,825 100% $1,433,239 $ 9.74
1996 149,825 100% $1,529,230 $10.21
Office/Warehouse Building in Houston, TX
----------------------------------------
1992 53,750 100% $ 282,300 $ 5.25
1993 53,750 100% $ 284,988 $ 5.30
1994 53,750 100% $ 264,960 $ 4.93
1995 53,750 100% $ 283,886 $ 5.28
1996 53,750 100% $ 302,304 $ 5.62
Apartment Complex in Frederick, MD
----------------------------------
1992 295,074 93% $2,283,698 $ 9.21
1993 295,074 91% $2,487,886 $ 9.16
1994 295,074 96% $2,551,410 $ 9.25
1995 295,074 94% $2,661,022 $ 9.57
1996 295,074 97% $2,726,498 $ 9.70
Industrial Building, Itasca, IL
-------------------------------
1992 70,535 100% $ 477,000 $ 6.76
1993 70,535 100% $ 467,000 $ 6.62
1994 70,535 100% $ 475,000 $ 6.73
1995 70,535 100% $ 479,000 $ 6.79
1996 70,535 100% $ 492,000 $ 6.98
Apartment Complex, Sherman Oaks, CA(1)
--------------------------------------
1992 N/A N/A N/A N/A
1993 N/A N/A N/A N/A
1994 N/A N/A N/A N/A
1995 111,540 95% $1,001,293 $12.73
1996 111,540 98% $1,411,825 $13.36
- -------------------------------------------------------------------------------------------------------
</TABLE>
*Net effective rent calculation is based on average occupancy during the
respective year.
(1) Property acquired April 14, 1995.
Note: N/A denotes that the property was not in operation.
<PAGE>
Following is a schedule of lease expirations for each of the next ten
years for the Partnership's properties based on the annual contract rent in
effect at December 31, 1996:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
TENANT AGING REPORT
PROPERTY # OF LEASE TOTAL TOTAL PERCENTAGE OF
EXPIRATIONS SQUARE FEET ANNUAL CONTRACT GROSS ANNUAL
RENT RENTAL*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail Center in San Jose, CA(1)
- --------------------------------
1997 0 0 $0 0%
1998 0 0 $0 0%
1999 2 13,000 $137,760 11%
2000 0 0 $0 0%
2001 1 22,000 $ 91,440 7%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 1 4,800 $ 49,644 4%
2006 0 0 $0 0%
Office/Warehouse Building in Houston, TX
- -----------------------------------------
1997 0 0 $0 0%
1998 0 0 $0 0%
1999 0 0 $0 0%
2000 0 0 $0 0%
2001 1 53,750 $304,762 100%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 0 0 $0 0%
2006 0 0 $0 0%
Apartment Complex in Frederick, MD
- ----------------------------------
1997 N/A N/A N/A N/A
1998 N/A N/A N/A N/A
1999 N/A N/A N/A N/A
2000 N/A N/A N/A N/A
2001 N/A N/A N/A N/A
2002 N/A N/A N/A N/A
2003 N/A N/A N/A N/A
2004 N/A N/A N/A N/A
2005 N/A N/A N/A N/A
2006 N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Industrial Building, Itasca, IL
- -------------------------------
1997 0 0 $0 0%
1998 0 0 $0 0%
1999 1 70,535 $352,675 100%
2000 0 0 $0 0%
2001 0 0 $0 0%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 0 0 $0 0%
2006 0 0 $0 0%
Apartment Complex in Sherman Oaks, CA
- -------------------------------------
1997 N/A N/A N/A N/A
1998 N/A N/A N/A N/A
1999 N/A N/A N/A N/A
2000 N/A N/A N/A N/A
2001 N/A N/A N/A N/A
2002 N/A N/A N/A N/A
2003 N/A N/A N/A N/A
2004 N/A N/A N/A N/A
2005 N/A N/A N/A N/A
2006 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Does not include expenses paid by tenants.
(1) Remaining leases do not expire within 10 years.
Note: N/A denotes that disclosure does not apply based on the nature of the
property.
<PAGE>
The following table sets forth for each of the Partnership's
properties the: (i) federal tax basis, (ii) rate of depreciation, (iii) method
of depreciation, (iv) life claimed, and (v) accumulated depreciation, with
respect to each property or component thereof for purposes of depreciation:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Rate of Life Accumulated
Entity / Property Tax Basis Depreciation Method in years Depreciation
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Apartment Complex, Frederick, MD
- ----------------------------------------
Building & Improvements $ 2,666,994 N/A 150% DB 15 $1,278,656
Building & Improvements 10,239,068 3.64% SL 27.5 2,296,416
----------- ----------
Total Depreciable Assets $12,906,062 $3,575,072
Retail Center, San Jose, CA
- ----------------------------------------
Building & Improvements $ 7,848,233 3.18% SL 31.5 $1,411,732
Building & Improvements 540,633 2.56% SL 39 41,389
Land Improvements 768,437 6.67% SL 15 208,569
Land Improvements 13,000 5% SL 20 81
----------- ----------
Total Depreciable Assets $ 9,170,303 $1,661,771
Office/Warehouse Building, Houston, TX
- ----------------------------------------
Building & Improvements $ 2,045,494 2.50% SL 40 $ 299,217
----------- ----------
Total Depreciable Assets $ 2,045,494 $ 299,217
Industrial Building, Itasca Illinois
- ----------------------------------------
Building & Improvements $ 2,121,478 2.50% SL 40 $ 280,047
----------- ----------
Total Depreciable Assets $ 2,121,478 $ 280,047
Apartment Complex, Sherman Oaks, CA
- ----------------------------------------
Building & Improvements $ 7,729,434 3.64% SL 27.5 $ 480,732
----------- ----------
Total Depreciable Assets $ 7,729,434 $ 480,732
Total Depreciable Assets $33,972,771 $6,296,839
=========== ==========
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
SL = Straight Line
DB = Declining Balance
<PAGE>
Following is information regarding the competitive market conditions
for each of the Partnership's properties. This information has been gathered
from sources deemed reliable. However, the Partnership has not independently
verified the information and, as such, cannot guarantee its accuracy or
completeness:
Industrial Building, Itasca, Illinois.
-------------------------------------
This industrial building is located in the Metropolitan Chicago
industrial market. As of September 30, 1996, the overall market had a total
inventory of approximately 925 million square feet, approximately 63.7 million
square feet, or 6.9% of which, was vacant. This availability represents an
increase of roughly 8.3 million square feet from the period ending 12 months
earlier, which is due, in part, to new speculative construction delivered to the
market with limited pre-leasing activity. The Northeast Dupage submarket has
currently 5.9 million square feet of available space, up 13% from 12 months ago
but down 47% from 1993 levels.
Apartment Complex in Sherman Oaks, CA.
-------------------------------------
Sherman Oaks is located in the San Fernando Valley Apartment market
(Burbank, Studio City and North Hollywood) which has recently experienced growth
in higher paying, rapidly expanding non-defense industries. There are over 700
apartment buildings in the Sherman Oaks area but most are in the 5 to 25 unit
range. Of the 700, only 129 buildings are over 25 units; these buildings contain
a total of 5,226 units. Only six buildings, including the Partnership's, are in
excess of 100 units. At December 31, 1996, occupancy of the five other class "A"
apartment complexes ranged from a low of 93% to a high of 98% and averaged 96%.
This is up just slightly from year end 1995, at which time average occupancy was
approximately 95%.
Apartment Complex in Frederick, Maryland.
----------------------------------------
This apartment complex is located in the southwestern section of the
City of Frederick, Maryland, which is approximately 50 miles from both
Washington, D.C. and Baltimore, Maryland. As of December, 1996, S.C. Back
Associates, Inc. surveyed eight competitive apartment properties within the
Frederick market that compete with the apartment complex. Overall occupancy in
the market in December 1996 was 96.3%, which is up slightly from 95% a year
earlier. The market is relatively healthy as 204 new apartment units were
absorbed in 1995 with a relatively small impact on overall occupancy. Average
asking rental rates have also increased slightly.
Retail Center in San Jose, CA.
-----------------------------
This retail center is located in San Jose. The center was originally
constructed in 1975, but remodeled in 1989. The property is located on Parkmoor
Avenue which is a frontage road to Interstate 280. The property is located in a
pocket retail district within an older, established neighborhood of San Jose.
The most recent new construction in the neighborhood is a Safeway superstore
located at a former Sears site. The new Safeway replaces a much smaller store
located nearby. Although no firms perform formal market studies, local brokers
indicate that overall vacancy is in the 5% to 10% range for established retail
centers in strong locations.
<PAGE>
Office/Warehouse Building in Houston, TX.
----------------------------------------
This property is located in the Metropolitan Houston industrial market
which contains approximately 194 million square feet of space. As of October
1996, the overall vacancy was 10.1%, down slightly from the year-end 1995 level
of 11.6%. Drilex is located in the Northwest industrial market which has a total
inventory of approximately 50.2 million square feet or 26% of the total Houston
inventory. Vacancy within the Northwest submarket was approximately 7%, up
slightly from the year end 1995 vacancy level of 6.5%. New construction activity
totaled approximately 1.8 million square feet. Build-to-suit activity accounted
for 1.2 million square feet of new construction; the balance was built on a
speculative basis. The most active speculative development is occurring in the
Northwest market.
Item 3. Legal Proceedings.
-----------------
The Partnership is not a party to, nor are any of its properties
subject to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Annual Report on Form 10-K.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
---------------------------------------------------------------------
There is no active market for the Units. Trading in the Units is
sporadic and occurs solely through private transactions.
As of December 31, 1996, there were 6,023 holders of Units.
The Partnership's Amended and Restated Agreement of Limited
Partnership dated April 27, 1989, as amended to date (the "Partnership
Agreement"), requires that any Distributable Cash (as defined therein) be
distributed quarterly to the Partners in specified proportions and priorities.
There are no restrictions on the Partnership's present or future ability to make
distributions of Distributable Cash. For the year ended December 31, 1996, cash
distributions paid in 1996 or distributed after year end with respect to 1996 to
the Limited Partners totaled $2,772,808, including $336,608 representing a
return of capital as a result of a discretionary reduction of cash reserves. For
the year ended December 31, 1995, cash distributions paid in 1995 or distributed
after year end with respect to 1995 to the Limited Partners totaled $5,686,151,
including $3,366,080 representing a return of capital from the proceeds of
property sales.
Cash distributions exceeded net income in 1996 and 1995, and
therefore, resulted in a reduction of partners' capital. However, distributions
of operating cash flow were less than cash generated by operating activities.
Reference is made to the Partnership's Statement of Changes in Partner's Capital
(Deficit) and Statement of Cash Flows in Item 8 hereof.
<PAGE>
Item 6. Selected Financial Data.
-----------------------
<TABLE>
<CAPTION>
For Year For Year For Year For Year For Year
Ended or Ended or Ended or Ended or Ended or
As of: As of: As of: As of: As of:
<S> <C> <C> <C> <C> <C>
12/31/96 (1) 12/31/95(2) 12/31/94(3) 12/31/93 12/31/92
----------- ---------- ---------- -------- --------
Revenues $3,250,812 $3,235,068 $4,228,813 $1,984,489 $1,795,358
Net Income $1,751,136 $2,060,318 $3,705,107 $1,554,364 $1,361,939
Net Income per
Unit of Limited
Partnership
Interest
Outstanding $ 41.20 $ 48.48 $ 87.18 $ 36.57 $ 32.04
Total Assets $28,758,619 $29,782,367 $34,628,130 $32,918,12 $35,352,479
Total Cash
Distributions
per Limited
Partnership
Unit
Outstanding
for the entire
period,
including amounts
distributed after
year end with
respect to the
previous year $ 65.90 $ 135.14 $ 78.80 $ 84.67 $ 89.64
</TABLE>
(1) 1996 Cash distributions include a return of capital of $8.00.
(2) 1995 Net Income includes a gain on sale of investment of $228,086. Cash
distributions include a return of capital of $80.00.
(3) 1994 Net Income includes a gain on sale of investment of $1,870,749. Cash
distributions include a return of capital of $24.00.
12
<PAGE>
ITEM 7.
- -------
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 in September, 1990 and 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 and the
payment of related acquisition costs, and for working capital reserves. The
Partnership made the five investments described in Item 1 hereof, and two
additional investments which were sold in 1991 and 1994, respectively. Through
December 31, 1996, capital of $4,880,816 ($116 per limited partnership unit) has
been returned to the limited partners; $4,544,208 as a result of sales, and
$336,608 in 1996 as a result of a discretionary reduction of cash reserves.
On August 17, 1994, the Kachina Apartments joint venture sold its property.
A portion of the sales proceeds received by the Partnership was used to make a
capital distribution of $24 per limited partnership unit on January 26, 1995.
On October 26, 1995 an additional capital distribution of $80 per limited
partnership unit was paid. These capital distributions reduced the adjusted
capital contribution to $892 per unit. The sales transaction also resulted in
the payment of previously accrued, but deferred, management fees of $203,452 to
the advisor.
On April 14, 1995, the Partnership acquired a 174-unit apartment complex in
Sherman Oaks, California, known as Regency Court Apartments, for the total price
of $9,605,021. Cash for the purchase was provided by a portion of the Kachina
sale proceeds and from the Partnership's cash reserves.
After the return of capital of $8 per limited partnership unit in October
1996, the adjusted capital contribution was reduced to $884 per unit.
At December 31, 1996, the Partnership had $4,461,102 in cash, cash
equivalents and short-term investments which was partially used for cash
distributions of $612,015 to partners on January 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. Quarterly distributions of cash from operations relating to
1996 were made at an annualized rate of 6.5% on the weighted average adjusted
capital contribution. Distributions of cash from operations relating to 1995
were made at the annualized rates of 5.5% for the first two quarters, and 6% for
the last two quarters, based on the weighted average adjusted capital
contribution. The increases in the distribution rate resulted from the
attainment of appropriate cash reserves.
13
<PAGE>
The carrying value of real estate investments in the financial statements
at December 31, 1996 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 December 31, 1996, the appraised value of each real
estate investment exceeded its carrying value; the aggregate excess was
approximately $4,900,000. 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 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.
RESULTS OF OPERATIONS
- ---------------------
FORM OF REAL ESTATE INVESTMENTS
The Drilex and Regency Court Apartments investments are wholly-owned
properties. The remaining real estate investments in the portfolio are
structured as joint ventures, including the Kachina investment which was sold in
August 1994.
OPERATING FACTORS
The Partnership's two industrial properties, Drilex and Prentiss Copystar,
were 100% leased at December 31, 1996, as they have been for the last four
years.
The Partnership's two multi-family residential properties, Waterford
Apartments and Regency Court Apartments, ended 1996 with an occupancy of 97% and
98%, respectively. Occupancy at Waterford Apartments has been consistently in
the mid-90% over the last three years. Occupancy at Regency Court Apartments
increased during 1996; it was 95% at December 31, 1995.
Occupancy at Parkmoor Plaza was 100% at December 31, 1996, where it has
remained since the second quarter of 1995. Occupancy in early 1995 and 1994 was
at 93%.
INVESTMENT RESULTS
Interest on short-term investments and cash equivalents decreased
significantly in 1996 as compared to 1995, due to a decrease in average
investment balances as a result of the distribution of the sale proceeds from
the Kachina sale in the first and fourth quarters of 1995, and the investment in
the Regency Court Apartments in the second quarter of 1995. Conversely, interest
on short-term investments and cash equivalents increased between 1994 and 1995
due to higher average investment balances.
14
<PAGE>
A gain of $1,870,749 was recognized on the sale of Kachina property in
1994. During 1995, the Partnership received an additional $228,086 in
connection with the final settlement of the Kachina joint venture activities,
which was also recognized as a gain.
1996 Compared to 1995
Total real estate operations for 1996 were $1,931,881 as compared to
$1,680,429 in 1995. Approximately $74,000 of the increase stems from Regency
Court Apartments which was owned for a full year in 1996. In addition, operating
results improved at Parkmoor Plaza, by $150,000 as a result of an increase in
rental revenue. Operating results from the remainder of the Partnership's
investments were relatively unchanged.
Exclusive of the payment of deferred management fees of $203,452 in 1995,
cash flow from operations decreased approximately $94,000 between the respective
years. This change is primarily due to a reduction in short-term interest and
changes in working capital, partially offset by additional cash flow from
Parkmoor Plaza and Regency Court.
1995 Compared to 1994
Exclusive of the operating results from Regency Court Apartments in 1995
($401,083) and Kachina Apartments in 1994 ($468,980), total real estate
operations for 1995 were $1,279,346 as compared to $1,217,704 in 1994. Operating
income from Waterford Apartments increased approximately $47,000 as a result of
improved occupancy and rental rates. Operating results from the remainder of the
Partnership's investments were relatively unchanged.
Exclusive of the operating cash flow from Regency Court Apartments in 1995
($697,185) and Kachina Apartments in 1994 ($652,938), cash flow from operations
decreased approximately $118,000 or 7% between the respective years. This
decrease differs from the improvement in investment results described above,
primarily due to the payment of deferred management fees to the advisor of
$203,452 in 1995.
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. A portion of the cash distribution
for the third quarter of 1996 was attributable to a discretionary reduction of
cash reserves. To the extent the distributed reserves had not been generated
from operations, no management fee was payable. General and administrative
expenses primarily consist of real estate appraisal, printing, legal, accounting
and investor servicing fees.
15
<PAGE>
1996 Compared to 1995
The Partnership management fee increased between 1996 and 1995 due to an
increase in distributable cash flow. General and administrative expenses
decreased $33,000 between the respective periods primarily due to professional
fees incurred in 1995 related to due diligence performed in connection with an
abandoned property acquisition.
1995 Compared to 1994
The Partnership management fee did not change significantly. The increase
in general and administrative expenses is primarily related to due diligence
costs performed in connection with an abandoned property acquisition.
INFLATION
- ---------
By their nature, real estate investments tend not to be adversely affected
by inflation. Inflation may result in appreciation in the value of the
Partnership's real estate investments over time, if rental rates and replacement
costs increase. Declines in property values during the period of Partnership
operations, due to market and economic conditions, have overshadowed the
positive affect inflation may have on the value of the Partnership's
investments.
16
<PAGE>
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
See the Financial Statements of the Partnership included as a part of
this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
--------------------
The Partnership has had no disagreements with its accountants on any
matters of accounting principles or practices or financial statement disclosure.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant.
--------------------------------------------------
(a) and (b) Identification of Directors and Executive Officers.
--------------------------------------------------
The following table sets forth the names of the directors and
executive officers of the Managing General Partner and the age and position held
by each of them as of December 31, 1996, as well as subsequent changes through
January 24, 1997.
<TABLE>
<CAPTION>
Name Position(s) with the Managing General Partner Age
- ---- --------------------------------------------- ---
<S> <C> <C>
Joseph W. O'Connor President, Chief Executive Officer and Director 50
Daniel J. Coughlin Managing Director and Director 44
Peter P. Twining (1) Managing Director, General Counsel and Director (1) 50
Wesley M. Gardiner, Jr. Vice President 38
Daniel C. Mackowiak Principal Financial and Accounting Officer 45
James J. Finnegan (2) Managing Director, General Counsel and Director (2) 36
</TABLE>
(1) Through January 24, 1997 only.
(2) As of January 25, 1997.
Mr. O'Connor and Mr. Coughlin have served in an executive capacity since
the organization of the Managing General Partner on October 3, 1988. Mr.
Gardiner and Mr. Twining have served in their capacities since June 1994, and
Mr. Mackowiak has served in his capacity since January 1, 1996. All of these
individuals will continue to serve in such capacities until their successors are
elected and qualified.
(c) Identification of Certain Significant Employees.
-----------------------------------------------
None.
(d) Family Relationships.
--------------------
None.
(e) Business Experience.
-------------------
The Managing General Partner was incorporated in Massachusetts on
October 3, 1988. The background and experience of the executive officers and
directors of the Managing General Partner are as follows:
17
<PAGE>
Joseph W. O'Connor has been President, Chief Executive Officer and a
Director of AEW Real Estate Advisors, Inc. ("AEW"), formerly Copley Real Estate
Advisors, Inc. since January, 1982. He was a Principal of AEW from 1985 to 1987
and has been a Managing Director of AEW since January 1, 1988. He has been
active in real estate for 28 years. From June, 1967, until December, 1981, he
was employed by New England Mutual Life Insurance Company ("The New England"),
which has been merged with and into Metropolitan Life Insurance Company, most
recently as a Vice President in which position he was responsible for The New
England's real estate portfolio. He received a B.A. from Holy Cross College and
an M.B.A. from Harvard Business School.
Daniel J. Coughlin was a Principal of AEW from 1985 to 1987 and has been a
Managing Director of AEW since January 1, 1988 and a Director of AEW since July
1994. Mr. Coughlin has been active in financial management and control for 22
years. From June, 1974 to December, 1981, he was a Real Estate Administration
Officer in the Investment Real Estate Department at The New England. Since
January, 1982, he has been in charge of the asset management division of AEW.
Mr. Coughlin is a Certified Property Manager and a licensed real estate broker.
He received a B.A. from Stonehill College and an M.B.A. from Boston University.
Peter P. Twining was a Managing Director and General Counsel of AEW until
January 24, 1997 when he resigned from all offices and directorships. As such,
he was responsible for general legal oversight and policy with respect to AEW
and its investment portfolios. Before being promoted to this position in January
1994, he was a Vice President/Principal and senior lawyer responsible for
assisting in the oversight and management of AEW's legal operations. Before
joining AEW in 1987, he was a senior member of the Law Department at The New
England and was associated with the Boston law firm, Ropes and Gray. Mr. Twining
is a graduate of Harvard College and received his J.D. in 1979 from Northeastern
University.
Wesley M. Gardiner, Jr. joined AEW in 1990 and has been a Vice President at
AEW since January, 1994. From 1982 to 1990, he was employed by Metric Realty, a
nationally-known real estate investment advisor and syndication firm, as a
portfolio manager responsible for several public and private limited
partnerships. His career at AEW has included asset management responsibility for
the company's Georgia and Texas holdings. Presently, as a Vice President and
Team Leader, Mr. Gardiner has overall responsibility for all the partnerships
advised by AEW whose securities are registered under the Securities and Exchange
Act of 1934. He received a B.A. in Economics from the University of California
at San Diego.
Daniel C. Mackowiak has been a Vice President of AEW since January 1989 and
has been a Vice President and the Principal Financial and Accounting Officer of
the Managing General Partner since January 1996. Mr. Mackowiak previously held
the offices of Chief Accounting Officer of AEW from January 1989 through April
1994 and Vice President and Principal Financial and Accounting Officer of the
Managing General Partner between January 1989 and May 1994. From 1975 until
joining AEW, he was employed by the public accounting firm of Price Waterhouse,
most recently as a Senior Audit Manager. He is a certified public accountant and
has been active in the field of accounting his entire business career. He
received a B.S. from Nichols College and an M.B.A. from Cornell University.
James J. Finnegan is the Assistant General Counsel of AEW Capital
Management, L.P. ("AEW Capital Management") and has succeeded Peter Twining as
Managing Director, General Counsel and Director of AEW, a subsidiary of AEW
Capital Management. Mr. Finnegan served as Vice President and Assistant General
counsel of Aldrich, Eastman & Waltch, L.P., a predecessor to AEW Capital
Management. Mr. Finnegan has over ten years of experience in real estate law,
including seven years of experience in private practice with major New York City
and Boston law firms. Mr. Finnegan also serves as the AEW's securities and
regulatory compliance officer. Mr. Finnegan is a graduate of the University of
Vermont (B.A.) and Fordham University School of law (J.D.).
18
<PAGE>
Mr. O'Connor is a director of Evans Withycombe Residential, Inc., a
Maryland corporation organized as a real estate investment trust which is listed
for trading on the New York Stock Exchange. None of the other directors of the
Managing General Partner is a director of a company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934. All of
the directors and officers of the Managing General Partner also serve as
directors and officers of one or more corporations which serve as general
partners of publicly-traded real estate limited partnerships which are
affiliated with the Managing General Partner.
(f) Involvement in Certain Legal Proceedings.
----------------------------------------
None.
Item 11. Executive Compensation.
-----------------------
Under the Partnership Agreement, the General Partners and their
affiliates are entitled to receive various fees, commissions, cash
distributions, allocations of taxable income or loss and expense reimbursements
from the Partnership. See Notes 1, 2 and 6 of Notes to Financial Statements.
The following table sets forth the amounts of the fees and cash
distributions and reimbursements for out-of-pocket expenses which the
Partnership paid to or accrued for the account of the General Partners and their
affiliates for the year ended December 31, 1996. Cash distributions to General
Partners include amounts paid after year end with respect to 1996.
<TABLE>
<CAPTION>
Amount of Compensation
Receiving Entity Type of Compensation and Reimbursement
- ---------------- -------------------- -----------------
<S> <C> <C>
General Partners Share of Distributable Cash $ 24,609
AEW Real Estate Management Fees
Advisors, Inc.
(formerly known as Copley and Expense
Real Estate Advisors, Inc.) Reimbursements 255,377
New England Securities Servicing Fees and out
Corporation of pocket reimbursements 8,000
Back Bay Advisors, L.P. Servicing Fees 4,424
--------
TOTAL $292,410
========
</TABLE>
For the year ended December 31, 1996 the Partnership allocated $16,155 of
taxable income to the General Partners.
19
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
-----------------------------------------------
No person or group is known by the Partnership to be the
beneficial owner of more than 5% of the outstanding Units at December 31, 1996.
Under the Partnership Agreement, the voting rights of the Limited Partners are
limited and, in some circumstances, are subject to the prior receipt of certain
opinions of counsel or judicial decisions.
Except as expressly provided in the Partnership Agreement, the
right to manage the business of the Partnership is vested exclusively in the
Managing General Partner.
(b) Security Ownership of Management.
---------------------------------
The General Partners of the Partnership owned no Units at December 31,
1996.
(c) Changes in Control.
-------------------
There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
The Partnership has no relationships or transactions to report other
than as reported in Item 11, above.
20
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements, and Reports on Form 8-K.
-------------------------------------------------------
(a) The following documents are filed as part of this report:
(1) Financial Statements--The Financial Statements listed on the
accompanying Index to Financial Statements and Schedule and Financial Statement
Index No. 2 are filed as part of this Annual Report.
(2) Financial Statement Schedule--The Financial Statement
Schedule listed on the accompanying Index to Financial Statements and Schedule
is filed as part of this Annual Report.
(3) Exhibits--The Exhibits listed in the accompanying Exhibit
Index are filed as a part of this Annual Report and incorporated in this Annual
Report as set forth in said Index.
(b) Reports on Form 8-K. During the last quarter of the year ending
December 31, 1996, the Partnership filed no Current Report on Form 8-K.
21
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
* * * * * * *
DECEMBER 31, 1996
<PAGE>
COPLEY PENSION PROPERTIES VII;
-----------------------------
A REAL ESTATE LIMITED PARTNERSHIP
---------------------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
------------------------------------------
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Accountants.....................................
Financial Statements:
Balance Sheet - December 31, 1996 and 1995........................
Statement of Operations - Years ended December 31, 1996, 1995
and 1994........................................................
Statement of Changes in Partners' Capital (Deficit) - Years
ended December 31, 1996, 1995 and 1994..........................
Statement of Cash Flows - Years ended December 31, 1996, 1995
and 1994........................................................
Notes to Financial Statements.....................................
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1996...............................................
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Partners
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
In our opinion, based upon our audits and the reports of other auditors for the
years ended December 31, 1996, 1995 and 1994, the financial statements listed in
the accompanying index present fairly, in all material respects, the financial
position of Copley Pension Properties VII; A Real Estate Limited Partnership
(the "Partnership") at December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of Seventh Copley Corp., the
Managing General Partner of the Partnership; our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of the Partnership's South Bay Associates joint venture
investee for the years ended December 31, 1996 and 1995, which results of
operations are recorded using the equity method of accounting in the
Partnership's financial statements. Equity in joint venture income for South
Bay Associates was $940,867 and $790,479 for the years ended December 31, 1996
and 1995. We also did not audit the financial statements of the Partnership's
Waterford Apartments joint venture investee for the years ended December 31,
1996, 1995 and 1994, which results of operations are recorded using the equity
method of accounting in the Partnership's financial statements. Equity in joint
venture income for Waterford Apartments was $237,080, $250,172 and $202,176 for
the years ended December 31, 1996, 1995 and 1994, respectively. We also did not
audit the financial statements of the Partnership's investment in Regency Court
Apartments for the year ended December 31, 1996 or for the period April 10, 1995
(Acquisition Date) to December 31, 1995. Net income for Regency Court
Apartments was $475,408 for the year ended December 31, 1996 and $401,083 for
the period April 10, 1995 (Acquisition Date) through December 31, 1995. Those
statements were audited by other auditors whose reports thereon have been
furnished to us, and our opinion expressed herein, insofar as it relates to the
amounts included for the equity in joint venture income for South Bay Associates
for the years ended December 31, 1996, and 1995 for the equity in joint venture
income for Waterford Apartments for the years ended December 31, 1996, 1995 and
1994, and for net income for Regency Court Apartments for the year ended
December 31, 1996 and for the period April 10, 1995 (Acquisition Date) to
December 31, 1995, is based solely on the reports of the other auditors. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by the Managing
General Partner, and evaluating the overall financial statement presentation. We
believe that our audits and the reports of other auditors for the years ended
December 31, 1996, 1995 and 1994 provide a reasonable basis for the opinion
expressed above.
/s/ Price Waterhouse LLP
- -------------------------
Boston, Massachusetts
March 13, 1997
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Real estate investments:
Joint ventures $13,073,326 $13,489,028
Property, net 11,224,191 11,574,071
----------- -----------
24,297,517 25,063,099
Cash and cash equivalents 3,030,587 3,194,992
Short-term investments 1,430,515 1,524,276
----------- -----------
$28,758,619 $29,782,367
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 77,888 $ 86,646
Accrued management fee 60,529 57,713
Deferred disposition fees 478,108 478,108
----------- -----------
Total liabilities 616,525 622,467
----------- -----------
Partners' capital (deficit):
Limited partners ($884 and $892 per unit,
respectively; 160,000 units authorized,
42,076 units issued and outstanding) 28,175,021 29,186,014
General partners (32,927) (26,114)
----------- -----------
Total partners' capital 28,142,094 29,159,900
----------- -----------
$28,758,619 $29,782,367
=========== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1996 1995 1994
------------ ------------- ------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY
Property rentals $1,759,993 $1,308,372 $ 267,148
Property operating expenses (711,552) (450,731) (21,102)
Depreciation and amortization (367,187) (282,155) (92,866)
------------ ------------- ------------
681,254 575,486 153,180
Joint venture earnings 1,250,627 1,104,943 1,533,504
------------ ------------- ------------
Total real estate operations 1,931,881 1,680,429 1,686,684
Gain on sale of property by joint venture - 228,086 1,870,749
------------ ------------- ------------
Total real estate activity 1,931,881 1,908,515 3,557,433
Interest on cash equivalents
and short-term investments 240,192 593,667 557,412
------------ ------------- ------------
Total investment activity 2,172,073 2,502,182 4,114,845
------------ ------------- ------------
PORTFOLIO EXPENSES
Management fee 243,377 231,775 230,346
General and administrative 177,560 210,089 179,392
------------ ------------- ------------
420,937 441,864 409,738
------------ ------------- ------------
NET INCOME $1,751,136 $2,060,318 $3,705,107
============ ============== ============
Net income per limited
partnership unit $41.20 $48.48 $87.18
============ ============== ============
Cash distributions per limited
partnership unit $65.23 $159.11 $54.80
============ ============== ============
Number of limited partnership units
outstanding during the year 42,076 42,076 42,076
============ ============== ============
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------
1996 1995 1994
------------------------ ----------------------- ------------------------
General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning
of year $(26,114) $29,186,014 $(23,295) $33,841,011 $(37,054) $32,478,719
Cash distributions (24,324) (2,744,618) (23,422) (6,694,712) (23,292) (2,305,764)
Net income 17,511 1,733,625 20,603 2,039,715 37,051 3,668,056
--------- ----------- --------- ----------- --------- ----------
Balance at end
of year $(32,927) $28,175,021 $(26,114) $29,186,014 $(23,295) $33,841,011
========= =========== ========= =========== ========= ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1996 1995 1994
------------ ------------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,751,136 $ 2,060,318 $ 3,705,107
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 367,187 282,155 92,866
Equity in joint venture earnings (1,250,627) (1,104,943) (1,533,504)
Cash distributions from joint ventures 1,655,764 1,397,182 2,028,323
Gain on sale of investment by joint venture - (228,086) (1,870,749)
(Increase) decrease in investment income
receivable (9,615) 60,258 24,905
(Increase) decrease in property working capital (21,351) 98,354 (7,025)
Payment of deferred management fee - (203,452) -
(Decrease) increase in operating liabilities (5,942) 15,505 11,449
----------- ------------ -----------
Net cash provided by operating activities 2,486,552 2,377,291 2,451,372
----------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint ventures - (79,190) (65,000)
Investment in property, net of seller
guarantee payments 14,609 (9,795,937) -
Net proceeds from sale of investment - 228,086 9,356,823
Deferred disposition fee - - 322,468
Decrease in short-term investments, net 103,376 3,763,429 745,287
----------- ------------ -----------
Net cash provided by (used in) investing
activities 117,985 (5,883,612) 10,359,578
----------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITY:
Distributions to partners (2,768,942) (6,718,134) (2,329,056)
----------- ------------ -----------
Net cash used in financing activity (2,768,942) (6,718,134) (2,329,056)
----------- ------------ -----------
Net (decrease) increase in cash and cash
equivalents (164,405) (10,224,455) 10,481,894
Cash and cash equivalents:
Beginning of year 3,194,992 13,419,447 2,937,553
----------- ------------ -----------
End of year $ 3,030,587 $ 3,194,992 $13,419,447
=========== ============ ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Business
- ----------------------------------
General
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, acquired four
of the five real estate investments it currently owns prior to the end of 1991,
and acquired the fifth property in 1995. The Partnership intends to dispose of
its investments within eight to twelve years of their acquisition, and then
liquidate.
The Managing General Partner of the Partnership is Seventh Copley Corp., a
wholly-owned subsidiary of AEW Real Estate Advisors, Inc. ("AEW"), formerly
known as Copley Real Estate Advisors, Inc. ("Copley"). The associate general
partner is ICOP Associates Limited Partnership, a Massachusetts limited
partnership, the general partners of which are managing directors of AEW and/or
officers of the Managing General Partner. Subject to the Managing General
Partner's overall authority, the business of the Partnership is managed by AEW
pursuant to an advisory contract.
On December 10, 1996, Copley's parent, New England Investment Companies,
Limited Partnership ("NEIC"), a publicly traded master limited partnership,
acquired certain assets subject to then existing liabilities from Aldrich
Eastman & Waltch, Inc. and its affiliates and principals (collectively, "the AEW
operations"). Simultaneously, a new entity, AEW Capital Management L.P., was
formed into which NEIC contributed its interest in Copley and its affiliates.
As a result, the AEW operations were combined with Copley to form the business
operations of AEW Capital Management, L.P. This transaction is not
expected to have a material effect on the operations of the Partnership.
Prior to August 30, 1996, New England Mutual Life Insurance Company ("The
New England") was NEIC's principal unit holder and owner of all of the
outstanding stock of NEIC's general partner. On August 30, 1996, The New
England merged with and into Metropolitan Life Insurance Company ("Met Life").
Met Life is the surviving entity and, therefore, through a wholly-owned
subsidiary, became the owner of the units of partnership interest previously
owned by The New England and of the stock of NEIC's general partner. This
transaction is not expected to have a material effect on the operations of the
Partnership.
Management
AEW, as advisor, is entitled to receive stipulated fees from the
Partnership in consideration of services performed in connection with the
management of the Partnership and the acquisition and disposition of Partnership
investments in real property. Partnership management fees are 9% of
distributable cash from operations, as defined, before deducting such fees.
Payment of a portion of the management fees incurred through 1991 had been
deferred in accordance with the advisory agreement; however, during 1995, these
deferred fees totaling $203,452 were paid to AEW in connection with the
distribution of sale proceeds (See Note 3). AEW is also reimbursed for expenses
incurred in connection with administering the Partnership ($12,000, $14,506 and
$11,000 in 1996, 1995, and 1994, respectively). Acquisition fees were paid at
the time commitments were initially funded in an amount equal to 2% of the gross
proceeds from the offering. Disposition fees are generally 3% of the selling
price of the property, but are subject to the prior receipt by the limited
partners of their capital contributions plus a stipulated return thereon.
<PAGE>
New England Securities Corporation ("NESC"), an indirect subsidiary of Met
Life, is engaged by the Partnership to act as its unitholder servicing agent.
Fees and out-of-pocket expenses for such services totaled $8,000 in 1996, $7,168
in 1995, and $11,787 in 1994. Fees to Back Bay Advisors, L.P., a wholly-owned
subsidiary of NEIC, for short-term investment advisory services totaled $4,424,
$8,984, and $11,073 for the same annual periods.
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Managing General Partner to make
estimates affecting the reported amounts of assets and liabilities, and of
revenues and expenses. In the Partnership's business, certain estimates require
an assessment of factors not within management's control, such as the ability of
tenants to perform under long-term leases and the ability of the properties to
sustain their occupancies in changing markets. Actual results, therefore, could
differ from those estimates.
Real Estate Joint Ventures
Investments in joint ventures are stated at cost plus (minus) equity in
undistributed joint venture income (losses). Allocations of joint venture
income (losses) were made to the Partnership's venture partners as long as they
had substantial economic equity in the project. Economic equity is measured by
the excess of the appraised value of the property over the Partnership's total
cash investment plus accrued preferential returns thereon. Currently, the
Partnership records an amount equal to 100% of the operating results of each
joint venture, after the elimination of all inter-entity transactions, except
for the two ventures which include an affiliate of the Partnership, which has
substantial economic equity in the respective projects. Joint ventures are
consolidated with the accounts of the Partnership if, and when, the venture
partner no longer shares in the control of the business.
Property
Property includes land and buildings, which are stated at cost less
accumulated depreciation, plus other operating net assets (liabilities). The
Partnership's initial carrying value of a property previously owned by a joint
venture equals the Partnership's carrying value of the prior investment on the
conversion date.
Capitalized Costs, Depreciation and Amortization
Maintenance and repair costs are expensed as incurred. Significant
improvements and renewals are capitalized. Depreciation is computed using the
straight-line method based on estimated useful lives of the buildings and
improvements. Leasing costs are also capitalized and amortized over the related
lease term.
Acquisition fees have been capitalized as part of the cost of real estate
investments. Amounts not related to land are amortized using the straight-line
method over the estimated useful lives of the underlying property.
Certain tenant leases provide for rental increases over the respective
lease terms. Rental revenue is being recognized on a straight-line basis over
the lease terms.
<PAGE>
Realizability of Real Estate Investments
The Partnership considers a real estate investment to be impaired when it
determines the carrying value of the investment is not recoverable through
undiscounted cash flows generated from the operations and disposition of the
property. The impairment loss is based on the excess of the investment's
carrying value over its estimated fair market value. For investments being held
for sale, the impairment loss also includes estimated costs of sale. Property
held for sale is not depreciated during the holding period.
Carrying value may be greater or less than current appraised value. The
appraised values of all of the Partnership's investments exceeded their carrying
values by a total of approximately $4,900,000 and $3,800,000 at December 31,
1996 and 1995, respectively. 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
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.
Cash Equivalents and Short-Term Investments
Cash equivalents are stated at cost, plus accrued interest. The
Partnership considers all highly liquid debt instruments purchased with a
maturity of ninety days or less to be cash equivalents; otherwise, they are
classified as short-term investments.
The Partnership has the positive intent and ability to hold all short-term
investments to maturity; therefore, short-term investments are carried at cost,
plus accrued interest, which approximates market value. At December 31, 1996
and December 31, 1995, all investments were in commercial paper with less than
three and eight months, respectively, remaining to maturity.
Organization Costs
Costs incurred in connection with organizing the Partnership were
capitalized and have been amortized using the straight-line method over five
years.
Deferred Disposition Fees
Disposition fees due to AEW related to sales of investments are included in
the determination of gains or losses resulting from such transactions.
According to the terms of the advisory contract, payment of such fees has been
deferred until the limited partners first receive their capital contributions,
plus stipulated returns thereon.
Income Taxes
A partnership is not liable for income taxes and, therefore, no provision
for income taxes is made in the financial statements of the Partnership. A
proportionate share of the Partnership's income is reportable on each partner's
tax return.
Per Unit Computations
Per unit computations are based on the number of units of limited
partnership interest outstanding during the year. The actual per unit amount
will vary by partner depending on the date of admission to, or withdrawal from,
the Partnership.
<PAGE>
Note 3 - Real Estate Joint Ventures
- -----------------------------------
The Partnership invested in six real estate joint ventures, organized as
general partnerships with different real estate management/development firms,
and in two cases, with an affiliate of the Partnership. One investment was sold
in 1991 and another in 1994. The Drilex investment was converted to a wholly-
owned property in 1993. The Partnership has committed to make capital
contributions to the ventures, which are subject to preferential cash
distributions at a specified rate and to priority distributions with respect to
sale or refinancing proceeds. The joint venture agreements provide for the
funding of cash flow deficits by the venture partners in proportion to ownership
interests, and for the dilution of ownership share in the event a venture
partner does not contribute proportionately.
The respective real estate management/development firm is responsible for
day-to-day development and operating activities, although overall authority and
responsibility for the business is shared by the venturers. The real estate
management/development firm, or its affiliates, also provides various services
to the respective joint ventures for a fee.
The following is a summary of cash invested in joint ventures, net of
returns of capital and acquisition fees:
<TABLE>
<CAPTION>
Preferential
Investment/ Rate of Ownership December 31,
Location Return Interest 1996 1995
-------- ------ -------- ---------- ----------
<S> <C> <C> <C> <C>
Waterford Apartments
Frederick, Maryland 10.09% 16.25% $4,699,993 $4,699,993
Parkmoor Plaza
San Jose, California 10% 75% $9,786,330 $9,786,330
Prentiss Copystar
Itasca, Illinois 11% 23.25% $1,027,386 $1,027,386
</TABLE>
Waterford Apartments
On March 20, 1989, the Partnership entered into a joint venture with an
affiliate of Bozzuto and Associates, and with an affiliate of the Partnership,
to develop and operate a garden-style apartment complex. The Partnership and
its affiliate collectively have a 65% ownership interest in the joint venture.
The Partnership committed to contribute up to $4,700,000 to the capital of the
joint venture. The preferential return related to $1,175,000 is payable
currently only to the extent of available cash flow. In the event of a sale or
refinancing prior to the tenth anniversary of the joint venture agreement, 25%
of the Partnership's contribution would first be repaid unconditionally. The
remaining 75% would be repaid subject to a premium designed to preserve the
stipulated rate of return through the ninth anniversary of the joint venture
agreement.
Parkmoor Plaza
On September 20, 1989, the Partnership entered into a joint venture with
South Bay Construction and Development Company, Inc. to acquire a leasehold
interest in three industrial/service center buildings and to renovate and
operate these buildings. The Partnership is committed to make a maximum capital
contribution of $10,000,000. The payment of up to 1% per annum of the
preferential return is deferrable during the first ten years if sufficient
operating cash flow is not available. The joint venture is required to return
all cash contributions made by the Partnership by the tenth anniversary of its
initial funding. The non-cancelable ground lease has an initial expiration date
of November 12, 2014 and requires annual ground rental payments by the venture
of $73,230. The joint venture also has an option to extend the term of the
ground lease for
<PAGE>
an additional 25 years. Future minimum rental payments due to the venture under
non-cancelable operating leases are: $1,299,451 in 1997; $1,384,918 in 1998;
$1,327,861 in 1999; $1,259,438 in 2000; $1,186,169 in 2001; and $8,697,936
thereafter.
Prentiss Copystar
On May 23, 1991, the Partnership entered into a joint venture with an
affiliate of Prentiss Properties, Ltd., and an affiliate of the Partnership, to
develop and operate an industrial facility. The Partnership and its affiliate
collectively have a 75% interest in the joint venture. The Partnership
committed to make a maximum capital contribution of $1,029,084. The
preferential return related to $308,725 is payable currently only to the extent
of available cash flow. If $720,359, or any portion thereof, is returned to the
Partnership between the second and tenth anniversary of the joint venture
agreement, the return will be increased by an amount sufficient to preserve the
stipulated rate of return through the tenth anniversary. The minimum future
rental payments due to the venture under a non-cancelable operating lease are:
$355,000 in 1997; $366,000 in 1998; and $281,000 in 1999.
Sale of Kachina Apartments
On May 25, 1990, the Partnership entered into a joint venture with an
affiliate of Evans Withycombe, Inc., to develop and operate an apartment
complex. The Partnership contributed a total of $7,956,422 to the capital of
the venture. On August 17, 1994 the joint venture sold its property. After
closing costs, the payment of preferential returns to the Partnership and the
allocation to the venture partner, the Partnership received sale proceeds of
$9,679,291 which resulted in a gain of $1,870,749 ($44.02 per limited
partnership unit). A disposition fee of $322,468 was accrued but not paid to
the advisor. During 1995, the Partnership received an additional $228,086 in
connection with the final settlement of the venture's activities, which was also
recognized as a gain. The Partnership made two capital distributions in
connection with the sale: one on January 26, 1995 for $1,009,824 ($24.00 per
limited partnership unit) and another on October 26, 1995 for $3,366,080 ($80
per limited partnership unit).
Summarized Financial Information
The following summarized financial information is presented in the
aggregate for the joint ventures:
Assets and Liabilities
----------------------
<TABLE>
<CAPTION>
December 31,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation
of $7,454,395 and $6,395,506,
respectively $22,409,515 $23,455,289
Other 1,359,304 1,421,726
----------- -----------
23,768,819 24,877,015
Liabilities 242,965 358,871
----------- -----------
Net assets $23,525,854 $24,518,144
=========== ===========
</TABLE>
<PAGE>
Results of Operations
---------------------
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenue
Rental income $4,747,319 $4,573,261 $5,204,545
Other 7,243 6,733 45,946
---------- ---------- ----------
4,754,562 4,579,994 5,250,491
---------- ---------- ----------
Expenses
Operating expenses 1,557,688 1,511,063 1,744,804
Depreciation and amortization 1,083,033 1,082,690 1,223,997
---------- ---------- ----------
2,640,721 2,593,753 2,968,801
---------- ---------- ----------
Net income $2,113,841 $1,986,241 $2,281,690
========== ========== ==========
</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 4 - Property
- -----------------
Regency Court Apartments
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 required the seller to
supplement the monthly rental income generated from the property to the extent
such income was less than $125,000 per month during the one-year period ended
April 13, 1996, with such supplement not to exceed $300,000 in total. The
supplemental rental was $115,323, which has been applied to reduce the purchase
price in 1995 and 1996.
The buildings and improvements are being depreciated over 30 years using
the straight-line method.
Drilex
On December 18, 1990, the Partnership entered into a joint venture with an
affiliate of The Trammell Crow Company to develop and own a build-to-suit
industrial building for the Drilex Corporation, Inc. The Partnership
contributed $2,294,713 to the capital of the venture. Pursuant to the payment
of $70,000 to acquire the venture partner's remaining ownership share, the
investment became a wholly-owned property of the Partnership as of September 30,
1993.
The building and improvements are being depreciated over 25 years. The
building is leased to a single tenant under an agreement which continues through
July 2001. The lease provides for annual rents of $264,960 for the first five
years and $305,016 thereafter.
<PAGE>
The following is a summary of the Partnership's property investments:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Land $ 2,190,969 $ 2,190,969
Buildings and improvements 9,811,682 9,826,291
Accumulated depreciation (727,728) (371,106)
Other net liabilities (50,732) (72,083)
----------- -----------
$11,224,191 $11,574,071
=========== ===========
</TABLE>
Note 5 - Income Taxes
- ---------------------
The Partnership's income for federal income tax purposes differs from that
reported in the accompanying statement of operations as follows:
<TABLE>
<CAPTION>
Year ended December 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net income per financial
statements $1,751,136 $2,060,318 $3,705,107
Timing differences:
Property operations (43,545) (12,182) 18,330
Joint venture earnings (103,944) (85,334) (271,686)
Gain on sale - - 238,143
Expenses 11,827 10,565 -
Depreciation - 62,052 13,136
---------- ---------- ----------
Taxable income $1,615,474 $2,035,419 $3,703,030
========== ========== ==========
</TABLE>
Note 6 - Partners' Capital
- --------------------------
Allocation of net income (losses) from operations and distributions of
distributable cash from operations, as defined, are in the ratio of 99% to the
limited partners and 1% to the general partners. Cash distributions are made
quarterly.
Net sale proceeds and refinancing proceeds are allocated first to limited
partners to the extent of their contributed capital plus a stipulated return
thereon, as defined, second to pay disposition fees, and then 85% to the limited
partners and 15% to the general partners. The adjusted capital contribution per
limited partnership unit was reduced from $1,000 to $996 during 1991, and from
$996 to $892 in 1995, as a result of capital returned from sale transactions.
The adjusted capital contribution was further reduced to $884 in 1996, as a
result of capital returned from a discretionary reduction of cash reserves. No
capital distributions have been made to the general partners. Income from a
sale is allocated in proportion to the distribution of related proceeds,
provided that the general partners are allocated at least 1%. Income or losses
from a sale, if there are no residual proceeds after the repayment of the
related debt, will be allocated 99% to the limited partners and 1% to the
general partners.
Note 7 - Subsequent Event
- -------------------------
Distributions of cash from operations relating to the quarter ended
December 31, 1996 were made on January 30, 1997 in the aggregate amount of
$612,015 ($14.40 per limited partnership unit).
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Schedule III
<TABLE>
<CAPTION>
Initial Cost to Costs Capitalized
the Partnership Subsequent to Acquisitions
------------------------------------------------ ----------------------------
Change in
Buildings & Other Net Other
Description Land Improvements Assets/(Liabilities) Improvements Net Assets
- -------------------------------------- --------- -------------- --------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Houston, TX 244,346 1,976,977 23,788 0 36,998
- - Drilex Office/Warehouse (see Note A)
Sherman Oaks, CA 1,946,623 7,786,490 0 48,215 (111,518)
- - Regency Court Apartments (see Note A)
--------- -------------- --------------------- ------------- -------------
Total wholly-owned property 2,190,969 9,763,467 23,788 48,215 (74,520)
========= ============== ===================== ============= =============
<CAPTION>
Gross amount at which
Carried at Close of Period
--------------------------
Buildings & Other Accumulated
Description Land Improvements Net Assets Total Depreciation
- -------------------------------------- --------- --------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
Houston, TX 244,346 1,976,977 60,786 2,282,109 (257,676)
- - Drilex Office/Warehouse (see Note A)
Sherman Oaks, CA 1,946,623 7,834,705 (111,518) 9,669,810 (470,052)
- - Regency Court Apartments (see Note A)
--------- --------------- ------------ ----------- ---------------
Total wholly-owned property 2,190,969 9,811,682 (50,732) 11,951,919 (727,728)
========= =============== ============ =========== ===============
<CAPTION>
Status of Date Depreciable
Description Construction Acquired Life
- -------------------------------------- ----------------- ---------------- ------------------
<S> <C> <C> <C>
Houston, TX Completed 09/30/93 25 Years
- - Drilex Office/Warehouse (see Note A)
Sherman Oaks, CA Completed 4/14/95 30 Years
- - Regency Court Apartments (see Note A)
Total wholly-owned property
<CAPTION>
<S> <C>
(A) Reconciliation of Real Estate owned:
Beginning balance, January 1, 1996 $ 11,945,177
Additions to Property (14,609)
Change in working capital 21,351
------------
Ending balance, December 31, 1996 $ 11,951,919
============
Accumulated Depreciation, January 1, 1996 $ 371,106
Depreciation Expense - 1996 356,622
------------
Accumulated Depreciation, December 31, 1996 $ 727,728
============
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
16.25% interest in
Waterford Apartments.
Owners of a 314-unit
apartment complex in ------- See Note B ------- $ 3,525,185 NA Completed 03/20/89 27.5 Years
Frederick, Maryland.
75% interest in Parkmoor
Plaza. Leasehold interest
in land & fee interest in ------- See Note B --------- $ 8,644,498 NA Completed 09/20/89 40 Years
3 retail buildings
in San Jose, California.
23.25% interest in Prentiss Copystar.
Owners of land and an industrial ------- See Note B --------- $ 903,643 NA Completed 05/23/91 35 Years
Facility in Itasca, Illinois.
-------------------------------------------
Total joint venture investments $ 13,073,326
===========================================
</TABLE>
<PAGE>
COPLEY PENSION PROPERTIES VII
-----------------------------
NOTE B TO SCHEDULE III
<TABLE>
<CAPTION>
CASH AMORTIZATION
BALANCE CASH EQUITY IN RECEIVED OF NET BALANCE
PERCENT OF AT BEGINNING INVESTMENTS IN INCOME/ FROM ACQUISITION AT END
DESCRIPTION OWNERSHIP OF YEAR JOINT VENTURES (LOSS) JOINT VENTURES FEES OF YEAR
- ------------------------- ------------- -------------- ----------------- ------------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Waterford Apartments 16.25% $ 3,709,838 $0 $ 237,079 ($418,108) ($3,624) $ 3,525,185
Parkmoor Plaza 75% 8,835,601 0 940,867 (1,127,770) (4,200) $ 8,644,498
Prentiss Copystar 23.25% 943,589 0 72,681 (109,886) (2,741) $ 903,643
------------- ------------------- ----------- ------------ ---------- -------------
$13,489,028 $0 $1,250,627 ($1,655,764) ($10,565) $13,073,326
============= =================== ============ ============ ========== =============
</TABLE>
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
FINANCIAL STATEMENTS
WITH
INDEPENDENT AUDITORS' REPORT
FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995
<PAGE>
FINANCIAL STATEMENTS
INDEX NO. 2
AUDITOR'S REPORT AND FINANCIAL STATEMENTS
OF SOUTH BAY/COPLEY VII ASSOCIATES
(REFERRED TO ELSEWHERE AS PARKMOOR PLAZA)
Page #
Independent Auditors' Report of Soren, McAdam and Bartells....................
Balance Sheet - December 31, 1996 and 1995....................................
Statement of Operations - For the Years Ended
December 31, 1996, 1995 and 1994..........................................
Statement of Changes in Partners' Equity - For the Years Ended
December 31, 1996, 1995 and 1994..........................................
Statement of Cash Flows - For the Years Ended
December 31, 1996, 1995 and 1994..........................................
Notes to Financial Statements.................................................
<PAGE>
[LETTER HEAD OF SMB APPEARS HERE]
INDEPENDENT AUDITORS' REPORT
To the Partners
South Bay/Copley VII Associates
Campbell, California
We have audited the accompanying balance sheets of South Bay/Copley VII
Associates (a California General Partnership) as of December 31, 1996 and 1995
and the related statements of operations, partners' equity and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of South Bay/Copley VII Associates
(a California General Partnership) as of December 31, 1996 and 1995, and the
results of its operations and cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
SOREN . McADAM . BARTELLS
Certified Public Accountants, Inc.
Redlands, California /s/ Douglas R. McAdam
January 17, 1997 By: Douglas R. McAdam, CPA
-1-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Income-producing property $7,290,094 $7,540,179
Cash 3,912 6,165
Rents receivable, net of allowance for doubtful accounts
of $76,758 and $76,758 662,544 557,099
Other assets 281,891 303,212
----------------------
Total assets $8,238,441 $8,406,655
======================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accounts payable $ 8,377 $ 6,462
Accrued Priority Return 355,902 456,268
Security deposits 32,540 31,807
Unearned revenue 1,041
----------------------
Total liabilities 397,860 494,537
PARTNERS' EQUITY 7,840,581 7,912,118
----------------------
Total liabilities and partners' equity $8,238,441 $8,406,655
======================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-2-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
Building rentals $1,370,411 $1,299,888 $1,239,366
Other rental reimbursements 158,819 133,351 144,964
Interest 90 535 153
------------------------------------
Total revenue 1,529,320 1,433,774 1,384,483
------------------------------------
EXPENSES
Interest 1,012,404 1,009,533 984,545
Depreciation 263,085 259,383 254,721
Land rent 73,230 73,230 73,230
Property taxes 84,702 77,650 75,909
Property operations 156,755 216,520 170,246
General and administrative 10,681 16,512 16,074
------------------------------------
Total expenses 1,600,857 1,652,828 1,574,725
------------------------------------
Net loss $ (71,537) $ (219,054) $ (190,242)
====================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-3-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
COPLEY PENSION SBC&D
PROPERTIES VII CO., INC. TOTAL
-----------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1993 $8,177,223 $1 $8,177,224
Contributions of capital 65,000 65,000
Net loss (190,242) (190,242)
-------------------------------------
Balance, December 31, 1994 8,051,981 1 8,051,982
Contributions of capital 79,190 79,190
Net loss (219,054) (219,054)
-------------------------------------
Balance, December 31, 1995 7,912,117 1 7,912,118
Net loss (71,537) (71,537)
-------------------------------------
Balance, December 31, 1996 $7,840,580 $1 $7,840,581
====================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (71,537) $(219,054) $(190,242)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization 287,775 281,948 288,753
Loss on disposal of asset 16,917
Increase in:
Rents receivable (105,445) (119,931) (214,586)
Other assets (3,369) (10,223) (52,869)
Increase (decrease) in:
Accounts payable 1,915 (1,101) 3,291
Accrued Priority Return (100,366) 97,346 107,497
Security deposits 733 7,700
Unearned revenue 1,041 (1,050) (18,150)
----------------------------------
Net cash provided by (used in) operating activities 10,747 52,552 (76,306)
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to properties (13,000) (139,709) (10,101)
----------------------------------
Net cash used in investing activities (13,000) (139,709) (10,101)
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from partner contributions 79,190 65,000
----------------------------------
Net cash provided by financing activities - 79,190 65,000
----------------------------------
Net decrease in cash (2,253) (7,967) (21,407)
Cash, beginning of year 6,165 14,132 35,539
----------------------------------
Cash, end of year $ 3,912 $ 6,165 $ 14,132
==================================
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest $1,112,770 $ 913,533 $ 876,560
========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Partnership was formed for the purpose of developing and leasing
approximately 13.8 acres in the City of San Jose, California. The project
includes the developing, leasing and management of the buildings. The partners
are: Copley Pension Properties VII (a Massachusetts Limited Partnership) and
SBC&D Co., Inc. (a California corporation).
The preparation of these financial statements requires management to make
estimates and assumptions. Those estimates and assumptions affect the reported
amounts of assets, liabilities, revenues and expenses, as well as the disclosure
of contingent assets and liabilities. Actual results could differ from those
estimates. Management also determines the accounting principles to be used in
the preparation of financial statements. A description of the significant
accounting policies employed in the preparation of these financial statements
follows:
RECLASSIFICATIONS
Certain amounts in the 1994 financial statements have been reclassified to
conform with the 1995 presentation.
RENTAL REVENUE
Revenue from leases is recognized on a straight-line basis over the lease term,
irrespective of when payments are due.
PROPERTIES
Properties consisting of buildings, site improvements and construction in
progress are reported at cost less accumulated depreciation and include
improvements that significantly add to utility or extend useful lives.
Maintenance and repairs are charged to expense as incurred. When items of
property are sold or retired, the related cost and accumulated depreciation are
removed from the accounts and any gain or loss is included in the results of
operations.
Depreciation is provided using the straight-line method over the estimated
useful lives of the buildings and improvements, 40 years and 20 years,
respectively. These useful lives do not exceed the term of the land lease,
including the option period. Certain building improvements related to specific
tenants are depreciated over the respective lease term, which is generally 15
years.
INCOME TAXES
Income or loss of the Partnership is allocated to the partners in accordance
with the Partnership Agreement. No income tax provision has been included in
the financial statements since all taxable items of the Partnership are required
to be reported by the respective partners on their income tax returns.
-6-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Additionally, the tax returns and the amount of distributable Partnership income
or loss are subject to examination by federal and state taxing authorities. If
the Partnership's taxable income or loss is ultimately changed by the taxing
authorities, the tax liability of the partners could be changed accordingly.
The income or loss reported for tax purposes may differ from the amount of the
income or loss on these financial statements due to differences in rental income
recognition for federal income tax reporting purposes and financial accounting
purposes. In addition, in accordance with federal tax requirements and certain
provisions of the Partnership Agreement, the allocation of income or loss for
tax purposes may differ from these financial statements.
2. INCOME-PRODUCING PROPERTIES
Income-producing properties consisted of the following:
<TABLE>
<CAPTION>
December 31,
1996 1995
--------------------------
<S> <C> <C>
Buildings $ 7,281,939 $ 7,281,939
Building improvements 899,407 899,407
Site improvements 781,437 768,437
------------------------
8,962,783 8,949,783
Less accumulated depreciation (1,672,689) (1,409,604)
------------------------
$ 7,290,094 $ 7,540,179
========================
</TABLE>
Depreciation charged to operations during the years ended December 31, 1996,
1995 and 1994 was $263,085, $259,383 and $254,721, respectively.
3. RENTS RECEIVABLE
Building rental revenue includes rents recognized in excess of amounts due
currently under the terms of the leases. Included in rents receivable at
December 31, 1996 and 1995 is $662,544 and $557,099, respectively, of rents in
excess of amounts due currently under the leases. During the years ended
December 31, 1996, 1995 and 1994, building rental revenue recognized exceeds the
amounts due under the terms of the leases in the amounts of $104,952, $119,931
and $221,543, respectively.
-7-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
4. OTHER ASSETS
Other assets consisted of the following:
<TABLE>
<CAPTION>
December 31,
1996 1995
----------------------
<S> <C> <C>
Capitalized leasing costs $367,551 $364,197
Less accumulated amortization (88,285) (63,595)
---------------------
279,266 300,602
Prepaid insurance 2,625 2,610
---------------------
$281,891 $303,212
=====================
</TABLE>
Capitalized leasing costs represent initial direct costs incurred to acquire
leases and are amortized over the life of the related lease. Amortization of
capitalized leasing costs charged to property operations for the years ended
December 31, 1996, 1995 and 1994 was $24,690, $22,565 and $21,408, respectively.
5. RELATED PARTY TRANSACTIONS
Copley Pension Properties VII
Copley Pension Properties VII is entitled to receive a monthly Priority Return
at the rate of ten percent per annum on the balance of its Invested Capital.
The Partnership is permitted to defer payment of the Priority Return equal to
one percent per annum for the first 120 months from the date of the Partnership
Agreement. Any amounts deferred also bear interest at ten percent. Copley
Pension Properties VII has committed to a maximum Invested Capital of
$10,000,000 which, at December 31, 1996, was $9,786,330. All unpaid Invested
Capital and accrued Priority Return are required to be paid in full no later
than September 30, 2000. The following is a summary of information relative to
the Priority Return:
<TABLE>
<CAPTION>
For the Years Ended December 31,
1996 1995 1994
-----------------------------------
<S> <C> <C> <C>
Amount charged to operations $1,012,404 $1,009,533 $984,545
Amount capitalized to construction of property 1,939
---------------------------------
Total amount incurred $1,012,404 $1,011,472 $984,545
=================================
Cash payments $1,112,770 $ 913,533 $876,560
=================================
</TABLE>
-8-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
5. RELATED PARTY TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
December 31,
1996 1995
------------------
<S> <C> <C>
Accrued amount currently payable $ 73,397 $ 73,397
Cumulative deferred payments 282,505 382,871
------------------
Total $355,902 $456,268
==================
</TABLE>
SBC&D Co., Inc.
SBC&D Co., Inc. is the general contractor for improvements and repairs to
Partnership properties. The Partnership has also entered into a Property
Management Agreement with SBC&D Co., Inc. for management of the property, in
which SBC&D Co., Inc. is to receive three percent of gross rents plus lease
commissions equal to one-third of the then prevailing market rate for each new
lease, lease renewal or lease extension.
Charges related to these transactions were as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
1996 1995 1994
----------------------------------
<S> <C> <C> <C>
Improvements to properties $122,417 $10,101
Repairs and maintenance $14,407 76,485 30,602
Management fees 37,945 35,374 30,517
Lease commissions 3,353 10,261
----------------------------------
$55,705 $244,537 $71,220
==================================
</TABLE>
At December 31, 1996 and 1995, the Partnership had accounts payable to SBC&D
Co., Inc. of $3,185 and $3,157, respectively.
SBC&D Co., Inc. has pledged certain rights in the Partnership to secure certain
funding obligations to Metropolitan Life Insurance Company, a New York
corporation, as successor by merger to New England Mutual Life Insurance Company
("Pledgee"), an affiliate of Copley Pension Properties VII. In the pledge
agreement, SBC&D Co., Inc. granted to Pledgee, as collateral, a security
interest in a 60 percent undivided interest in all rights to receive
distributions of cash or other property which SBC&D Co., Inc. becomes entitled
to receive under the Partnership Agreement.
-9-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
6. RENTAL REVENUE
Portions of the project's buildings are rented under noncancellable leases with
initial lease terms of up to twenty years. The following is a schedule by years
of minimum future rentals on these leases as of December 31, 1996:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1997 $ 1,299,451
1998 1,384,918
1999 1,327,861
2000 1,259,438
2001 1,186,169
Thereafter 8,697,936
----------
Total $15,155,773
==========
</TABLE>
The above schedule includes minimum future rentals of three significant tenants
that represent greater than 90 percent of the minimum future rentals.
Certain lease agreements provide that rental amounts can be increased in
accordance with the Consumer Price Index for all wage earners and clerical
workers, San Francisco/Oakland metropolitan area, published by the United States
Department of Labor, Bureau of Labor Statistics. Under certain of the lease
agreements, the lessees are required to pay their proportionate shares of
property taxes, insurance and common area maintenance charges.
7. LAND RENTAL
The Partnership leases the land under a noncancellable operating lease which has
an initial expiration date of November 12, 2014 and an option to extend the
lease for an additional 25 years.
The following is a schedule by years of minimum future rentals as of December
31, 1996:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1997 $ 73,230
1998 73,230
1999 73,230
2000 73,230
2001 73,230
Thereafter 946,132
---------
Total $1,312,282
=========
</TABLE>
The total rental expense under this operating lease was $73,230 for each of the
years ended December 31, 1996, 1995 and 1994.
-10-
<PAGE>
SOUTH BAY/COPLEY VII ASSOCIATES
(A CALIFORNIA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
8. INFORMATION ABOUT FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Partnership to
concentrations of credit risk consist principally of cash and rents receivable.
The Partnership has concentrations of credit risk for cash because it maintains
substantially all of its deposits in a single financial institution, and the
amount of those deposits often exceeds federally insured limits. However, the
Partnership does not believe that this results in a significant risk. Credit
risk for rents receivable is concentrated as well because all the balances are
due from businesses located within the same geographic region.
The fair value of the Partnership's financial instruments related to its lease
contracts (rents receivable and security deposits) are not required to be
disclosed. Cash and accounts payable are settled so close to the balance sheet
date that fair value does not differ significantly from the stated amounts. The
Partnership's liability for the Accrued Priority Return, arising from the terms
of the Partnership Agreement, is discussed in Note 5. Because there is no known
trading activity for these types of financial instruments, it is not practicable
to estimate the fair value.
-11-
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NUMBER PAGE NUMBER
- -------------- -----------
10A. Frederick Partners General Partnership *
Agreement dated as of March 20, 1989
between Frederick Bozzuto Limited
Partnership, Copley Pension Properties
VI; A Real Estate Limited Partnership and
the Registrant.
10B. General Partnership Agreement of South Bay/ *
Copley VII Associates dated as of September 20,
1989 between SBC & D Co., Inc. and
Copley Pension Properties VII, A Real Estate
Limited Partnership.
10C. Purchase Agreement and Escrow Instructions *
dated March 7, 1989, as amended, between
Scottsdale Unified School District No. 48 of
Maricopa County, Arizona and Evans Withycombe
Construction, Inc.
10D. Letter Agreement dated November 30, 1989, *
between the Registrant and EW Kachina
Limited Partnership for the formation of
Kachina Associates.
10E. Loan Agreement dated as of November 30, 1989 *
between the Registrant and EW Funding Corp., Inc.
10F. Multiple Advance Note dated November 30, *
1989, in the Principal amount of $2,600,000
from EW Funding Corp., Inc., to the Registrant.
10G. Deed of Trust and Assignment of Rents dated *
as of November 30, 1989 between EW Funding
Corp., Inc., as Trustor, Ticor Title
Insurance Company of California, as Trustee,
and the Registrant, as Beneficiary.
10H. Ground Lease dated as of October 14, 1976, *
between Park West Associates, as Landlord
and Carl N. Swenson Co., Inc., as Tenant.
10I. Assignment of Ground Lease and Grant of Real *
Property dated as of September 20, 1989 by
and between Property Resources Fund III, as
Assignor and the Registrant as Assignee.
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NUMBER PAGE NUMBER
- -------------- -----------
10J. General Partnership Agreement of Kachina *
Associates, an Arizona general partnership
dated as of May 25, 1990 between EW
Kachina Limited Partnership, an Arizona
Limited Partnership and the Registrant.
10K. First Amendment to General Partnership Agreement *
of Kachina Associates dated as of May 25, 1990
by and among EW Kachina Limited Partnership
and the Registrant.
10L. Frederick Partners Amended and Restated *
General Partnership Agreement dated as of
October 23, 1990 between Frederick Bozzuto
Limited Partnership, Copley Pension Properties
VI; a Real Estate Limited Partnership and the
Registrant.
10M. Barrett Associates Joint Venture General Partnership *
Agreement dated as of December 1, 1990
between Barrett A & S Partners, L.P. and the
Registrant.
10N. Crow Copley Houston Associates General *
Partnership Agreement dated as of December 18,
1990 between CH 1990 IACT Limited Partnership
and the Registrant.
10O. Agreement for Purchase and Sale by and between *
Barrett Associates Joint Venture, a Georgia
general partnership, composed of Barrett
A & S Partners, L.P., a Georgia limited
partnership, and the Registrant, and Germania
of America, Inc. dated February 7, 1991.
10P. First Amendment to Agreement for Purchase *
and Sale dated as of April 15, 1991 by and
between Barrett Associates Joint Venture
and Germania of America, Inc.
10Q. Second Amendment to Agreement for Purchase *
and Sale dated as of April 15, 1991 by
and between Barrett Associates Joint Venture
and Germania of America, Inc.
10R. Third Amendment to Agreement for Purchase *
and Sale dated as of August 27, 1991 by
and between Barrett Associates Joint Venture
and Germania of America, Inc.
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NUMBER PAGE NUMBER
- -------------- -----------
10S. Prentiss/Copley Itasca Associates General *
Partnership Agreement dated as of May 20,
1991 between Prentiss Properties Itasca
L.P., a Texas limited partnership, and Copley
Pension Properties VI; A Real Estate Limited
Partnership and Registrant.
10T. Assignment Agreement made as of January 1, 1994 *
by and between Registrant and CH 1990 IACT
Limited Partnership and Eighth Copley Corp.
10U. Asset Contribution Agreement by and among Evans *
Withycombe Residential, Inc., a Maryland Corporation,
and Evans Withycombe Residential, L.P., a Delaware
Limited Partnership, as Purchasers and Kachina
Associates, as Seller dated as of June 9, 1994.
_______________________________________________
* Previously filed and incorporated herein by reference.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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
Date: March 28, 1997 By: /s/ Joseph W. O'Connor
----------------------
Joseph W. O'Connor
President of the
Managing General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
President, Principal
Executive Officer and
Director of the
/s/ Joseph W. O'Connor Managing General Partner March 28, 1997
- -----------------------
Joseph W. O'Connor
Principal Financial and
Accounting Officer of the
/s/ Daniel C. Mackowiak Managing General Partner March 28, 1997
- ------------------------
Daniel C. Mackowiak
Director of the
/s/ Daniel J. Coughlin Managing General Partner March 28, 1997
- -----------------------
Daniel J. Coughlin
Director of the
/s/ James J. Finnegan Managing General Partner March 28, 1997
- ----------------------
James J. Finnegan
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,030,587
<SECURITIES> 1,430,515
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,461,102
<PP&E> 24,297,517
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,758,619
<CURRENT-LIABILITIES> 138,417
<BONDS> 478,108
0
0
<COMMON> 0
<OTHER-SE> 28,142,094
<TOTAL-LIABILITY-AND-EQUITY> 28,758,619
<SALES> 3,010,620
<TOTAL-REVENUES> 3,250,812
<CGS> 711,552
<TOTAL-COSTS> 711,552
<OTHER-EXPENSES> 788,124
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,751,136
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,751,136
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,751,136
<EPS-PRIMARY> 41.20
<EPS-DILUTED> 41.20
</TABLE>
