10-Q 1 d10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ----------------------------------------- For Quarter Ended June 30, 2001 Commission File Number 0-17807 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Massachusetts 04-2988542 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) World Trade Center East Two Seaport Lane, 16th Floor Boston, Massachusetts 02210 (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 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED JUNE 30, 2001 PART I FINANCIAL INFORMATION 2 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP BALANCE SHEETS June 30, 2001 December 31, 2000 (Unaudited) (Audited) -------------- ------------------ Assets Real estate investments: Property, net $ - $4,284,794 Property held for disposition 4,293,582 - Joint Venture held for disposition - 1,864,405 Other assets 90,121 - Cash and cash equivalents 1,178,645 2,053,663 ---------- ---------- $5,562,348 $8,202,862 ========== ========== Liabilities and Partners' Capital Accounts payable $ 54,055 $ 98,555 Accrued management fees 31,193 - Deferred disposition fees 1,464,280 1,369,577 ---------- ---------- Total liabilities 1,549,528 1,468,132 ---------- ---------- Partners' capital: Limited partners ($144.00 and $168.49, respectively, per unit; 160,000 units authorized, 48,788 units issued and outstanding) 3,987,734 6,721,206 General partners 25,086 13,524 ---------- ---------- Total partners' capital 4,012,820 6,734,730 ---------- ---------- $5,562,348 $8,202,862 ========== ========== (See accompanying notes to unaudited financial statements) 3 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS (Unaudited)

4 COPLEY PENSION PROPERTIES VI A REAL ESTATE LIMITED PARTNERSHIP;

(See accompanying notes to unaudited financial statements)COPLEY PENSION 5 PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' CAPITAL (Unaudited)

(See accompanying notes to unaudited financial statements) 6 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP SUMMARIZED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2001 2000 ----------- ---------- Net cash provided by operating activities $ 146,392 $ 127,135 ----------- ---------- Cash flows from investing activities: Deferred disposition fee 94,703 - Investment in property - (297,673) Investment in joint venture (44,995) (120,061) Net proceeds from sale 2,807,040 - ----------- ---------- Net cash provided by (used in) investing activities 2,856,748 (417,734) ----------- ---------- Cash flows from financing activity: Distributions to partners (3,878,158) (138,479) ----------- ---------- Net cash used in financing activities (3,878,158) (138,479) ----------- ---------- Net decrease in cash and cash equivalents (875,018) (429,078) Cash and cash equivalents: Beginning of period 2,053,663 2,305,383 ----------- ---------- End of period $ 1,178,645 $1,876,305 =========== ========== (See accompanying notes to unaudited financial statements) 7 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Partnership's financial position as of June 30, 2001 and December 31, 2000, its results of operations, and partners' capital for the three and six months ended June 30, 2001 and 2000 and its cash flows for the six month periods ended June 30, 2001 and 2000. These adjustments are of a normal recurring nature. See notes to financial statements included in the Partnership's 2000 Annual Report on Form 10-K for additional information relating to the Partnership's financial statements. Note 1 - Organization and Business Copley Pension Properties VI; A Real Estate Limited Partnership (the "Partnership") is a Massachusetts limited partnership organized for the purpose of investing primarily in newly constructed and existing income producing real properties. It primarily serves as an investment for qualified pension and profit sharing plans and other organizations intended to be exempt from federal income tax. The Partnership commenced operations in July 1988, and acquired the real estate investment it currently owns prior to the end of 1991. It intends to dispose of its investments within eight to twelve years of their acquisition, and then liquidate; however, the managing general partner could extend the investment period if it is considered to be in the best interest of the limited partners. The Partnership has engaged AEW Real Estate Advisors, Inc. (the "Advisor") to provide asset management advisory services. Note 2 - Investment in Joint Venture On February 26, 2001, the Prentiss Copystar joint venture investment in which the Partnership and an affiliate are entitled to 69% and 31%, respectively, of the operating activity, sold its property to an unaffiliated third party for gross proceeds of $4,575,000, of which the Partnership's share was $3,156,750. The Partnership received its 69% share of the net proceeds, $2,901,743 after closing costs, and recognized an initial gain on the sale of $972,678, which, due to additional costs of sale, was decreased to $962,890 ($19.54 per Limited Partnership Unit). A disposition fee of $94,703 was accrued but not paid to the Advisor. On March 29, 2001, the Partnership made a capital distribution of $2,683,340 ($55.00 per Limited Partnership Unit) from the proceeds of the sale. Summarized Financial Information The following summarized financial information is presented for the Prentiss Copystar joint venture: 8 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP Assets and Liabilities ---------------------- June 30, 2001 December 31, 2000 ------------- ----------------- Assets Real property, at cost less accumulated depreciation of $496,142 $ - $2,746,869 Other 171,018 73,107 -------- ---------- 171,018 2,819,976 Liabilities - 106,201 -------- ---------- Net assets $171,018 $2,713,775 ======== ========== Results of Operations --------------------- Six Months Ended June 30, 2001 2000 ------- -------- Revenue: Rental income $87,305 $ - ------- -------- 87,305 - ------- -------- Expenses: Operating expenses 51,177 72,208 Depreciation and amortization 12,151 25,631 ------- -------- 63,328 97,839 ------- -------- Net income (loss) $23,977 $(97,839) ======= ======== Liabilities and expenses exclude amounts owed and attributable to the Partnership and its affiliate on behalf of their various financing arrangements with the joint venture. 9 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP Note 3 - Property In July 2001, the Partnership executed a Purchase and Sale Agreement to sell the Wilmington Industrial investment. On August 8, 2001, this investment was sold and the Partnership recognized a gain of approximately $3,700,000. This investment is classified as Property held for disposition on the balance sheet at June 30, 2001. During the year ended December 31, 2000, the Partnership recognized $384,858 in net income from this investment. The following is a summary of the Partnership's remaining wholly-owned property (Wilmington Industrial): June 30, 2001 December 31, 2000 ------------- ------------------ Land $ - $ 2,770,056 Buildings, improvements and other capitalized costs - 5,336,205 Investment valuation allowance - (1,500,000) Accumulated depreciation and amortization - (2,350,377) Net operating assets - 28,910 Property held for disposition, net 4,293,582 - ---------- ----------- $4,293,582 $ 4,284,794 ========== =========== Note 4 - Subsequent Event On July 26, 2001, a distribution was made from operational cash previously held in reserves in the amount of $315,397 ($6.40 per Limited Partnership Unit). See Note 3 for discussion of investment sale on August 8, 2001. 10 COPLEY PENSION PROPERTIES VI; A REAL ESTATE 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 on December 31, 1988. A total of 48,788 units were sold. The Partnership received proceeds of $43,472,858, net of selling commissions and other offering costs, which have been used for investment in real estate and for the payment of related acquisition costs, or retained as working capital reserves. The Partnership made seven real estate investments; one investment was sold in each of 1990, 1994, 1997 and 2001 and two investments were sold in 1998. Through June 30, 2001, capital of $41,762,527 ($856 per limited partnership unit) has been returned to the limited partners; $38,877,693 as a result of sales and $2,884,834, as a result of a discretionary reduction of original working capital previously held in reserves. At June 30, 2001, the Partnership had $1,178,645 in cash and cash equivalents, of which $315,397 was used for a distribution from operational cash previously held in reserves to partners on July 26, 2001, the remainder is being retained as working capital reserves. The source of future liquidity and cash distributions to partners will primarily be cash generated by the Partnership's invested cash and cash equivalents and its remaining real estate investment, and proceeds from the sale of such investment. With the exception of the operational cash distribution of reserves discussed above, there have been no operating cash distributions made since the fourth quarter of 1999 due to Prentiss Copystar's vacancy from September 1999 through August 2000 and its subsequent sale in February 2001 as well as insufficient cash flow from Wilmington Industrial as a result of property level obligations which reduced its cash flow to the Partnership. The carrying value of real estate investments in the financial statements is at depreciated cost, or if the investment's carrying value is determined not to be recoverable through expected undiscounted future cash flows, the carrying value is reduced to estimated fair market value. The fair market value of such investments is further reduced by the estimated cost of sale for properties held for sale. Carrying value may be greater or less than current appraised value. At June 30, 2001, the appraised value of the Partnership's remaining investment exceeded its carrying value by approximately $3,900,000. The current appraised value of the real estate investment has been estimated by the managing general partner and is based on the amount negotiated in the Purchase and Sale Agreement executed on July 5, 2001. 11 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP Results of Operations Form of Real Estate Investments The Wilmington Industrial investment is a wholly-owned property. The Prentiss Copystar real estate investment was structured as a joint venture. Prentiss Copystar was sold on February 26, 2001. Operating Factors As mentioned above, the Prentiss Copystar joint venture investment in which the Partnership and an affiliate were entitled to 69% and 31% of the operating activity, respectively, sold its property on February 26, 2001. The Partnership recognized its 69% share of the gain of $962,890. At the time of the sale, Prentiss Copystar was 100% leased. The Partnership's remaining property, Wilmington Industrial, was 100% leased at June 30, 2001 compared to 77% leased at June 30, 2000. Investment Results Interest income on cash equivalents for the three and six months ended June 30, 2001, was $26,466 and $57,287, respectively, compared to $30,910 and $63,154 for the same periods in 2000. The decreases of approximately $4,000 and $6,000 for the comparative three and six month periods are primarily due to lower average investment balances. For the three and six month periods ended June 30, 2001, real estate operating results were $111,581 and $243,640, respectively, compared to $9,729 and $80,483 for the same periods in 2000. The increases of approximately $102,000 and $163,000 for the comparative three and six month periods are primarily due to an increase in joint venture earnings in 2001 as compared to joint venture losses in 2000 due to Prentiss Copystar's vacancy in the second quarter of 2000. Operating results from Wilmington Industrial have increased between the comparative three and six month periods of 2001 and 2000 due to the decrease in vacancy in 2001. 12 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP Portfolio Expenses The Partnership management fee is 9% of distributable cash flow from operations after any increase or decrease in working capital reserves as determined by the managing general partner. General and administrative expenses consist primarily of real estate appraisal, printing, legal, accounting and investor servicing fees. The Partnership management fee increase during the three and six month periods ended June 30, 2001, is due to the distribution of operational cash flow previously held in reserves. During the respective three and six month periods of 2000 and 2001, general administrative expenses remained relatively stable. 13 COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP FORM 10-Q FOR QUARTER ENDED JUNE 30, 2001 PART II OTHER INFORMATION Item 6. Reports on Form 8-K Reports on Form 8-K: No current reports on form 8-K were filed during the quarter ended June 30, 2001. 14 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COPLEY PENSION PROPERTIES VI; A REAL ESTATE LIMITED PARTNERSHIP (Registrant) August 14, 2001 /s/ Alison L. Husid ------------------------------- Alison L. Husid President, Chief Executive Officer And Director of Managing General Partner, Sixth Copley Corp. August 14, 2001 /s/ Jonathan Martin -------------------------------- Jonathan Martin Principal Financial and Accounting Officer of Managing General Partner, Sixth Copley Corp. 15

COPLEY PENSION PROPERTIES VI 10-Q