<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997 Commission File Number 0-20126
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-3035851
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
225 Franklin Street, 25th Fl.
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
================================================================================
Former name, former address and former fiscal year if changed since last report
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve (12) months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1997
PART I
FINANCIAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEET
(Unaudited)
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Assets
Real estate investments:
Joint ventures $ 12,989,854 $ 13,073,326
Property, net 11,128,178 11,224,191
----------- -----------
24,118,032 24,297,517
Cash and cash equivalents 3,289,690 3,030,587
Short-term investments 1,200,688 1,430,515
----------- -----------
$ 28,608,410 $ 28,758,619
=========== ===========
Liabilities and Partners' Capital
Accounts payable $ 67,215 $ 77,888
Accrued management fee 65,027 60,529
Deferred disposition fees 478,108 478,108
----------- ----------
Total liabilities 610,350 616,525
----------- ----------
Partners' capital (deficit):
Limited partners ($884 per unit;
160,000 units authorized, 42,076
units issued and outstanding) 28,032,427 28,175,021
General partners (34,367) (32,927)
----------- -----------
Total partners' capital 27,998,060 28,142,094
----------- -----------
$ 28,608,410 $ 28,758,619
=========== ===========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(Unaudited)
Quarter Ended March 31,
------------------------
1997 1996
------- -------
INVESTMENT ACTIVITY
<S> <C> <C>
Property rentals $ 461,443 $ 430,711
Property operating expenses (179,235) (175,754)
Depreciation and amortization (87,700) (87,743)
---------- ----------
194,508 167,214
Joint venture earnings 327,920 293,592
---------- ----------
Total real estate activity 522,428 460,806
Interest on cash equivalents
and short-term investments 56,258 58,874
---------- ----------
Total investment activity 578,686 519,680
---------- ----------
PORTFOLIO EXPENSES
Management fees 65,027 60,950
General and administrative 45,679 48,495
---------- ----------
110,706 109,445
----------- ----------
Net Income $ 467,980 $ 410,235
============ ==========
Net income per limited partnership
unit $ 11.01 $ 9.65
============ ==========
Cash distributions per limited
partnership unit $ 14.40 $ 13.73
============ ==========
Number of limited partnership units
outstanding during the period 42,076 42,076
============ ==========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Deficit)
(Unaudited)
Quarter ended March 31,
--------------------------------------------------------
1997 1996
---------------------- --------------------------
General Limited General Limited
Partners Partners Partners Partners
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Balance at beginning $ (32,927) $ 28,175,021 $ (26,114) $ 29,186,014
of period
Cash distributions (6,120) (605,894) (5,835) (577,703)
Net income 4,680 463,300 4,102 406,133
---------- --------------- ------------ -----------------
Balance at end
of period $ (34,367) $ 28,032,427 $ (27,847) $ 29,014,444
========== ============== =========== ================
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
<TABLE>
<CAPTION>
SUMMARIZED STATEMENT OF CASH FLOWS
(Unaudited)
Quarter ended March 31,
-------------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net cash provided by operating activities $ 647,231 $ 558,042
----------- ----------
Cash flows from investing activities:
Investment in property - (2,714)
Decrease (increase) in short-term
investments, net 223,886 (34,532)
----------- ----------
Net cash provided by (used in)
investing activities 223,886 (37,246)
----------- ----------
Cash flows from financing activity:
Distributions to partners (612,014) (583,538)
----------- ----------
Net increase (decrease) in cash
and cash equivalents 259,103 (62,742)
Cash and cash equivalents:
Beginning of period 3,030,587 3,194,992
---------- ----------
End of period $ 3,289,690 $ 3,132,250
=========== ==========
</TABLE>
(See accompanying notes to financial statements)
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the Partnership's financial
position as of March 31, 1997 and December 31, 1996 and the results of its
operations, its cash flows and changes in partners' capital (deficit) for the
interim periods ended March 31, 1997 and 1996. These adjustments are of a normal
recurring nature.
See notes to financial statements included in the Partnership's 1996 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
Note 1 - Organization and Business
Copley Pension Properties VII; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties. It primarily serves as an investment for qualified pension and
profit sharing plans and other entities intended to be exempt from federal
income tax. The Partnership commenced operations in March 1989. It acquired four
of the five real estate investments it currently owns prior to 1991, and a fifth
property in 1995. The Partnership intends to dispose of its investments within
eight to twelve years of their acquisition, and then liquidate.
Note 2 - Real Estate Joint Ventures
The following summarized financial information is presented in the aggregate for
the Partnership's three joint ventures:
<TABLE>
<CAPTION>
Assets and Liabilities
-----------------------
March 31, 1997 December 31, 1996
--------------- -----------------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation of
$7,691,531 and $7,454,395,
respectively $ 22,172,482 $ 22,409,515
Other 1,403,428 1,359,304
------------- -------------
23,575,910 23,768,819
Liabilities 211,726 242,965
------------- -------------
Net assets $ 23,364,184 $ 23,525,854
============= =============
</TABLE>
<PAGE>
Results of Operations
<TABLE>
<CAPTION>
Quarter ended March 31,
1997 1996
-------- ----------
Revenue
<S> <C> <C>
Rental income $ 1,214,229 $ 1,165,487
Other 806 565
------------ ------------
1,215,035 1,166,052
------------ ------------
Expenses
Operating expenses 360,907 399,230
Depreciation and amortization 243,365 274,618
------------ ------------
604,272 673,848
------------ ------------
Net income $ 610,763 $ 492,204
============ ============
</TABLE>
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and (with respect to two joint ventures) its affiliates on behalf of
their various financing arrangements with the joint ventures.
Note 3 - Property
The following is a summary of the Partnership's two wholly-owned properties:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
--------------- ------------------
<S> <C> <C>
Land $ 2,190,969 $ 2,190,969
Buildings and improvements 9,811,682 9,811,682
Accumulated depreciation (812,787) (727,728)
Other net liabilities (61,686) (50,732)
----------- ------------
$ 11,128,178 $ 11,224,191
=========== ============
</TABLE>
Note 4 - Subsequent Event
Distributions of cash from operations relating to the quarter ended March 31,
1997 were made on April 24, 1997 in the aggregate amount of $657,491 ($15.47 per
limited partnership unit).
<PAGE>
Management's Discussion and Analysis of Financial Condition
- -----------------------------------------------------------
and Results of Operations
- -------------------------
Liquidity and Capital Resources
The Partnership's offering of units of limited partnership interest
was completed as of September 30, 1990. A total of 42,076 units were sold. The
Partnership received proceeds of $36,522,542, net of selling commissions and
other offering costs, which have been used for investment in real estate and the
payment of related acquisition costs, or retained as working capital reserves.
The Partnership made seven real estate investments, one of which was sold in
1991 and another in 1994. Capital of $4,880,816 ($116 per limited partnership
unit) has been returned to the limited partners as a result of sales and the
reduction of cash reserves.
At March 31, 1997, the Partnership had $4,490,378 in cash, cash
equivalents and short-term investments, of which $657,491 was used for operating
cash distributions to partners on April 24, 1997; the remainder is being
retained as working capital reserves. The source of future liquidity and cash
distributions to partners will primarily be cash generated by the Partnership's
short-term and real estate investments, and proceeds from the sale of such
investments. The adjusted capital contribution was reduced from $892 to $884 per
limited partnership unit during the fourth quarter of 1996 with a distribution
of a portion of cash reserves. Distributions of cash from operations relating to
the first quarter of 1997 were made at an annualized rate of 7% on the adjusted
capital contribution. Distributions of cash from operations relating to the
first quarter of 1996 were made at an annualized rate of 6.5% on the adjusted
capital contribution. The increase in the distribution rate results from the
attainment of appropriate cash reserve levels and the improvement in cash flow
from operations.
The carrying value of real estate investments in the financial
statements is at depreciated cost, or if the investment's carrying value is
determined not to be recoverable through expected undiscounted future cash
flows, the carrying value is reduced to estimated fair market value. The fair
market value of such investments is further reduced by estimated cost of sale
for properties held for sale. Carrying value may be greater or less than current
appraised value. At March 31, 1997, the appraised value of each real estate
investment exceeded its carrying value; the aggregate excess was approximately
$5,000,000. The current appraised value of real estate investments has been
estimated by the managing general partner and is generally based on a
correlation of traditional appraisal approaches performed by the 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.
<PAGE>
Results of Operations
Form of Real Estate Investment
The Drilex and Regency Court investments are wholly-owned properties.
The other three real estate investments in the portfolio are structured as joint
ventures.
Operating Factors
The Partnership's two industrial properties, Drilex and Prentiss
Copystar, were 100% leased at March 31, 1997, as they were at December 31, 1996
and March 31, 1996.
The Partnership's two multi-family residential properties, Waterford
Apartments and Regency Court Apartments, ended the first quarter of 1997 with an
occupancy level of 97% and 99%, respectively. Occupancy at Waterford Apartments
has consistently been in the mid-90% range. Occupancy at Regency Court increased
from 95% at March 31, 1996.
Occupancy at Parkmoor Plaza was 100% at March 31, 1997, which it has
been since the second quarter of 1995.
Investment Results
Interest on short-term investments and cash equivalents decreased
slightly between the first quarter of 1996 and 1997, due to lower average
investment balances and lower average yields.
Total real estate activity for the first quarter of 1997 and 1996 was
$522,428 and $460,806, respectively. This increase is primarily due to improved
operating results at Waterford Apartments of approximately $22,000 due to higher
rental rates and lower operating expenses for repairs and maintenance. In
addition, operating income at Regency Court increased due to improved occupancy.
Operating results from the remainder of the Partnership's investments were
relatively unchanged between the respective quarterly periods.
Cash flow from operations increased by approximately $89,000 between
the respective first quarters. This increase was due to the operating results at
Regency Court, combined with changes in property working capital.
Portfolio Expenses
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the managing general partner. General and administrative expenses
primarily consist of real estate appraisal, printing, legal, accounting and
investor servicing fees.
The Partnership management fee increased between the first quarter of
1996 and 1997 due to an increase in distributable cash flow. General and
administrative expenses decreased approximately $2,800 between the respective
quarters, due to a decrease in professional fees.
<PAGE>
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1997
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: None.
b. Reports on Form 8-K: No Current Reports on Form 8-K were
filed during the quarter ended March 31, 1997.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COPLEY PENSION PROPERTIES VII;
A REAL ESTATE LIMITED PARTNERSHIP
(Registrant)
May 12, 1997
/s/ James J. Finnegan
-------------------------------
James J. Finnegan
Managing Director and General Counsel
of Managing General Partner,
Seventh Copley Corp.
May 12, 1997
/s/ Daniel C. Mackowiak
--------------------------------
Daniel C. Mackowiak
Principal Financial and Accounting
Officer of Managing General Partner,
Seventh Copley Corp.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,289,690
<SECURITIES> 1,200,688
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,490,378
<PP&E> 24,118,032
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,608,410
<CURRENT-LIABILITIES> 132,242
<BONDS> 478,108
0
0
<COMMON> 0
<OTHER-SE> 27,998,060
<TOTAL-LIABILITY-AND-EQUITY> 28,608,410
<SALES> 789,363
<TOTAL-REVENUES> 845,621
<CGS> 179,235
<TOTAL-COSTS> 179,235
<OTHER-EXPENSES> 198,406
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 467,980
<INCOME-TAX> 0
<INCOME-CONTINUING> 467,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 467,980
<EPS-PRIMARY> 11.01
<EPS-DILUTED> 11.01
</TABLE>
