<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For Quarter Ended September 30, 1999 Commission File Number 0-18735
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-3058134
(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 REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1999
PART I
FINANCIAL INFORMATION
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
(Unaudited) (Audited)
------------------ -----------------
<S> <C> <C>
Assets
Real estate joint venture $ - $ 3,478,418
Cash and cash equivalents 1,410,169 1,498,022
----------- -----------
$ 1,410,169 $ 4,976,440
=========== ===========
Liabilities and Partners' Capital
Accounts payable $ 34,734 $ 40,674
Accrued management fee 10,798 11,705
Deferred disposition fees - 197,700
----------- -----------
Total liabilities 45,532 250,079
----------- -----------
Partners' capital:
Limited partners ($117 and $561 per
unit, respectively; 100,000 units
authorized, 11,931 units issued
and outstanding) 1,342,518 4,723,600
General partners 22,119 2,761
----------- -----------
Total partners' capital 1,364,637 4,726,361
----------- -----------
$ 1,410,169 $ 4,976,440
=========== ===========
</TABLE>
(See accompanying notes to unaudited financial statements)
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, 1999 September 30, 1999 September 30, 1998 September 30, 1998
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Investment Activity
Joint venture earnings $ 42,898 $ 205,813 $66,145 $198,769
Interest on cash equivalents
and short-term investments 19,785 51,755 20,211 59,959
Reversal of accrued disposition fees 197,700 197,700 - -
Gain on sale of joint venture 1,974,170 1,974,170 - -
---------- ---------- ------- --------
2,234,553 2,429,438 86,356 258,728
---------- ---------- ------- --------
Portfolio Expenses
General and administrative 12,578 46,829 14,904 50,368
Management fee 10,798 39,190 11,705 35,114
Amortization - 2,366 1,183 3,549
---------- ---------- ------- --------
23,376 88,385 27,792 89,031
---------- ---------- ------- --------
Net Income $2,211,177 $2,341,053 $58,564 $169,697
========== ========== ======= ========
Net income per limited partnership unit $ 183.47 $ 194.25 $ 4.86 $ 14.08
========== ========== ======= ========
Cash distributions per limited
partnership unit $ 451.71 $ 477.64 $ 9.82 $ 30.39
========== ========== ======= ========
</TABLE>
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Number of limited partnership units
outstanding during the period 11,931 11,931 11,931 11,931
======== ======== ======== ========
</TABLE>
(See accompanying notes to unaudited financial statements)
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, 1999 September 30, 1999 September 30, 1998 September 30, 1998
------------------ ------------------ ------------------ ------------------
General Limited General Limited General Limited General Limited
Partners Partners Partners Partners Partners Partners Partners Partners
----------- ------------ ------------ ------------ -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
period $ 936 $ 4,542,805 $ 2,761 $ 4,723,600 $ 4,034 $ 4,849,775 $ 5,403 $ 4,985,173
Cash
distributions (929) (5,389,352) (4,053) (5,698,724) (1,184) (117,162) (3,664) (362,582)
Net income 22,112 2,189,065 23,411 2,317,642 586 57,978 1,697 168,000
----------- ------------ ------------ ------------ -------- ----------- --------- -----------
Balance at
end of period $ 22,119 $ 1,342,518 $ 22,119 $ 1,342,518 $ 3,436 $ 4,790,591 $ 3,436 $ 4,790,591
=========== ============ ============ ============ ======== =========== ========= ===========
</TABLE>
(See accompanying notes to unaudited financial statements)
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net cash provided by operating activities $ 408,103 $ 350,770
----------- -----------
Cash flows from investing activities:
Net proceeds from sale of property 5,404,521 -
Reversal of deferred disposition fees (197,700) -
Decrease in short-term
investments, net - 461,102
----------- -----------
Net cash provided by investing
activities 5,206,821 461,102
----------- -----------
Cash flows from financing activity:
Distributions to partners (5,702,777) (366,246)
----------- -----------
Net (decrease)increase in cash
and cash equivalents (87,853) 445,626
Cash and cash equivalents:
Beginning of period 1,498,022 1,081,267
----------- -----------
End of period $ 1,410,169 $ 1,526,893
=========== ===========
</TABLE>
(See accompanying notes to unaudited financial statements)
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of September 30, 1999 and December 31, 1998 and the
results of its operations, its cash flows and partners' capital for the three
and nine month periods ended September 30, 1999 and 1998. These adjustments are
of a normal recurring nature.
See notes to financial statements included in the Partnership's 1998 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.
NOTE 1 - ORGANIZATION AND BUSINESS
- ----------------------------------
Copley Realty Income Partners 4; A 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.
The Partnership commenced operations in September 1989, and acquired its real
estate investments prior to 1991. The Partnership sold its last remaining real
estate investment in August 1999 and, therefore, intends to liquidate and
dissolve in 2000.
NOTE 2 - REAL ESTATE JOINT VENTURES
- -----------------------------------
On August 27, 1999, the Shasta Way joint venture, in which the Partnership
and an affiliate own a 42% and 58% interest, respectively, sold its property to
an unaffiliated third party for gross proceeds of $13,057,000, of which the
Partnership's share was $5,483,940. The Partnership received its 42% share of
the net proceeds, $5,404,521 after closing costs, and recognized a gain of
$1,974,170 ($163.81 per limited partnership unit) on the sale. On September 22,
1999 the Partnership made a capital distribution of $5,297,364 ($444.00 per
limited partnership unit) from the proceeds of the sale.
Assets and Liabilities
------------------------
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
<S> <C> <C>
Assets
Real property, at cost less
accumulated depreciation of
$1,084,004 $ - $7,146,195
Other - 153,318
---------- ----------
- 7,299,513
Liabilities - 70,400
---------- ----------
Net assets $ - $7,229,113
========== ==========
</TABLE>
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
Results of Operations
---------------------
<TABLE>
<CAPTION>
Nine Months
January 1, 1999 Ended
through September 30,
August 27, 1999 1998
--------------- -------------
<S> <C> <C>
Revenue
Rental income $ 997,110 $ 944,650
Other income 3,335 -
---------- ----------
1,000,445 944,650
---------- ----------
Expenses
Operating expenses 219,783 124,319
Depreciation and amortization 308,955 345,588
---------- ----------
528,738 469,907
---------- ----------
Net income $ 471,707 $ 474,743
========== ==========
</TABLE>
NOTE 3 - SUBSEQUENT EVENT
- -------------------------
Distributions of cash from operations relating to the quarter ended
September 30, 1999 were made on October 28, 1999 in the aggregate amount of
$109,187 ($9.06 per limited partnership unit).
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial Condition
- -----------------------------------------------------------
and Results of Operations
- -------------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership completed its offering of units of limited partnership
interest in December 1990 and a total of 11,931 units were sold. The Partnership
received proceeds of $10,097,962, net of selling commissions and other offering
costs, which have been used for investment in real estate and to pay related
acquisition costs, or retained as working capital reserves.
In July 1995, the Partnership reduced its working capital reserves by
making a capital distribution of $441,447 ($37 per limited partnership unit).
After the distribution, the Partnership's adjusted capital contribution was $963
per unit.
On May 29, 1997, the Partnership made a capital distribution of $2,791,854
($234 per limited partnership unit) from the sale proceeds of Hohokam, which
reduced the adjusted capital contribution to $729 per unit. On November 24,
1997, the Partnership made a capital distribution of $2,004,408 ($168 per
limited partnership unit) from the sale proceeds of Fairmont, which reduced the
adjusted capital contribution to $561 per unit.
On September 22, 1999 the Partnership made a capital distribution of
$5,297,364 ($444 per limited partnership unit) from the sale proceeds of Shasta
Way, which reduced the adjusted capital contribution to $117 per unit.
At September 30, 1999, the Partnership had $1,410,169 in cash and cash
equivalents, of which $109,187 was used for cash distributions to the partners
on October 28, 1999; the remainder is being retained primarily as a reserve in
the event of any claims for breach of representations or warranties in
connection with the sale of the Shasta Way property on August 27, 1999 and as an
additional reserve in connection with the liquidation of the Partnership.
Distributions of cash from operations related to the first three quarters of
1998 were made at the annualized rate of 7.0% on the adjusted capital
contribution of $561 per unit. Cash distributions from operations related to the
first two quarters of 1999 were made at the annualized rate of 5.5% on the
adjusted capital contribution of $561 per unit. Cash distributions related to
the third quarter of 1999 were made at the annualized rate of 7% on the weighted
average capital contribution of $517.57 per unit. The increase in the
distribution rate was due to higher cash receipts from the Shasta Way joint
venture due to a later than anticipated sale date.
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
Year 2000 Readiness Disclosure
- ------------------------------
The Year 2000 Issue is a result of computer programs being written using
two digits rather than four to define the applicable year. Computer programs
that have date-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions or engage in normal
business operations.
The Partnership relies on AEW Capital Management L.P. ("AEW Capital
Management"), the parent of AEW Real Estate Advisors, Inc., to generate
financial information and to provide other services which are dependent on the
use of computers. The Partnership has obtained assurances from AEW Capital
Management that:
. AEW Capital Management has developed a Year 2000 Plan (the "Plan")
consisting of five phases: inventory, assessment, testing,
remediation/repair and certification.
. As of September 30, 1998, AEW Capital Management had completed the
inventory and assessment phases of this Plan and had commenced the
testing and remediation/repair of internal systems.
. AEW Capital Management concluded the internal testing,
remediation/repair and certifications of its Plan in June 1999.
. AEW Capital Management successfully participated in industry-wide
testing in August 1999.
. AEW Capital Management believes it is ready for Year 2000. AEW Capital
Management has advised the Partnership that being ready means that AEW
Capital Management has tested its internal mission critical systems
and software applications, and based upon testing conducted, AEW
Capital Management believes that such systems and applications are
prepared to process dates correctly through the Year 2000.
Based upon these assurances, the Partnership has determined that it is not
necessary for it to develop a Year 2000 contingency plan.
Because the Partnership has sold all of its real property investments, the
Partnership no longer relies on joint venture partners and/or property managers
to supply financial and other data with respect to its real properties with the
exception of year-end audited statements. Consequently, the Partnership does not
have any material provider of data other than AEW Capital Management.
The Partnership is subject to external forces that might generally affect
industry and commerce, such as utility or transportation company Year 2000
compliance failures and related service interruptions. Given the nature of its
operations, the Partnership will not incur any costs associated with Year 2000
compliance. All such costs are borne by AEW Capital Management.
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
Results of Operations
- ---------------------
Investment Results
Joint venture earnings from Shasta Way were $42,898 and $205,813 for
the three and nine-month periods ended September 30, 1999, respectively,
compared to $66,145 and $198,769 for the comparable periods ended September 30,
1998. The three month decrease of $23,247 is due to the sale of Shasta Way in
August 1999. The overall nine month increase of $7,044 is a result of a rental
increase effective June 30, 1998.
Interest on cash and cash equivalents decreased by approximately $400
and $8,200 between the three and nine month periods ended September 30, 1999,
compared with the same periods in 1998. The decrease is primarily due to lower
average investment balances in 1999 due to the sale of the Shasta Way property.
Portfolio Expenses
General and administrative expenses primarily consist of real estate
appraisal, legal, accounting, printing and servicing agent fees. These expenses
did not change significantly during the comparable three and nine month periods
ended September 30, 1999, and 1998, respectively.
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. Management fees decreased by $907
and increased by $4,076, respectively, between the comparable three and nine
month periods ending September 30, 1999 and 1998. The three month decrease is a
result of lower cash distributions. The overall nine month increase is due to
management fees incurred related to the special distribution from the operating
reserve made in April 1999.
<PAGE>
COPLEY REALTY INCOME PARTNERS 4;
A LIMITED PARTNERSHIP
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1999
PART II
OTHER INFORMATION
Items 1-5 Not Applicable
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: (27) Financial Data Schedule
b. Reports on Form 8-K: During the quarter ended September 30, 1999
a current report on Form 8-K was filed on September 10, 1999
reporting on Item No. 2 (Acquisition or Disposition of Assets)
and Item No. 7 (Financial Statements and Exhibits), relating in
both cases to the August 27, 1999 sale of real property by Hewson
Shasta Way Associates.
<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 REALTY INCOME PARTNERS 4; A LIMITED
PARTNERSHIP
(Registrant)
November 11, 1999
/s/ Alison Husid Cutler
-------------------------------
Alison Husid Cutler
President, Chief Executive Officer and
Director of Managing General Partner,
Fourth Income Corp.
November 11, 1999
/s/ Karin J. Lagerlund
--------------------------------
Karin J. Lagerlund
Treasurer and Principal Financial and
Accounting Officer of Managing General Partner,
Fourth Income Corp.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,410,169
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,410,169
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,410,169
<CURRENT-LIABILITIES> 45,532
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,364,637
<TOTAL-LIABILITY-AND-EQUITY> 1,410,169
<SALES> 205,813
<TOTAL-REVENUES> 2,429,438
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 88,385
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,341,053
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,341,053
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,341,053
<EPS-BASIC> 194.25
<EPS-DILUTED> 194.25
</TABLE>
