SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1995 Commission File Number 0-16848
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
Virginia 54-1350850
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
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_________
<PAGE>
PART I - FINANCIAL INFORMATION
STATEMENTS OF OPERATIONS
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Income
Rental $ 987,522 $ 928,250 $ 2,937,126 $ 2,691,356
Interest income 6,115 1,319 13,325 3,358
Other income 53,689 54,176 158,844 148,347
----------- ----------- ----------- -----------
1,047,326 983,745 3,109,295 2,843,061
----------- ----------- ----------- -----------
Expenses
Leasing 26,998 58,030 80,676 125,366
General and administrative 64,489 61,529 196,243 271,281
Management fees 52,373 55,350 179,646 183,946
Utilities 88,356 78,902 267,448 251,364
Repairs and maintenance 213,545 224,166 577,335 625,846
Insurance 45,296 44,394 133,713 122,627
Taxes 74,364 71,284 225,892 246,099
----------- ----------- ----------- -----------
Total Operating Expenses 565,421 593,655 1,660,953 1,718,528
Other Expenses
Partnership expenses 17,611 11,665 45,032 69,066
Interest expense 193,719 194,834 582,017 585,285
Depreciation and amortization 205,930 199,986 620,840 599,956
----------- ----------- ----------- ----------
Total Expenses 982,681 1,000,140 2,908,812 2,972,835
----------- ----------- ----------- ----------
Net income (loss) $ 64,645 $ (16,395) $ 200,483 $ (129,774)
=========== ============ ============ ===========
Net income (loss) allocated to
General Partner $ 645 $ (164) $ 2,006 $ (1,298)
============= ============= ============= ============
Net income (loss) allocated to
Limited Partner Unit Holders $ 54,948 $ (16,231) $ 170,410 $ 465,916
============ ============ ============ ===========
Net income allocated to Special
Limited Partner $ 9,050 $ 0 $ 28,067 $ 0
============ ============= ============= ==============
Net income (loss) allocated to each
unit L.P. $ 1.10 $ (0.32) $ 3.41 $ (9.32)
============= ============ ============== =============
</TABLE>
See notes to Financial Statements.
<PAGE>
<TABLE>
BALANCE SHEETS
September 30, December 31,
1995 1994
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Investment in rental property
Land $ 1,817,096 $ 1,817,097
Buildings and building improvements 18,678,458 18,559,530
Personal property 3,522,401 3,433,316
------------ ------------
24,017,955 23,809,943
Less accumulated depreciation 9,939,359 9,351,107
------------ ------------
14,078,596 14,458,836
------------ ------------
Cash 507,862 248,928
Tenant security deposits 138,884 131,230
Loan costs, net of accumulated amortization
of $246,035 and $213,447 58,112 90,700
Other assets 691,609 545,147
------------ ------------
1,396,467 1,016,005
------------ ------------
$ 15,475,063 $ 15,474,841
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities applicable to investment in rental property
Mortgages payable $ 8,082,294 $ 8,118,227
Other liabilities
Accounts payable 48,014 54,712
Accrued interest payable 66,020 66,020
Rents received in advance 13,682 18,222
Tenant security deposits 132,772 146,769
Other liabilities 207,767 195,345
----------- -----------
Total liabilities 8,550,549 8,599,295
Partners' Capital
Limited Partners unit holders' 50,000 Units
authorized and outstanding 7,432,885 7,412,475
Special Limited Partner (471,354) (497,906)
General Partner (37,017) (39,023)
----------- -----------
Total Partners' Capital 6,924,514 6,875,546
----------- -----------
Total liabilities and partners' capital $15,475,063 $15,474,841
=========== ===========
</TABLE>
See notes to Financial Statements.
<PAGE>
STATEMENTS OF CASH FLOWS
<TABLE>
For the Nine Months Ended
September 30, 1995 and 1994 (Unaudited) 1995 1994
Cash flow from operating activities:
<S> <C> <C>
Net income (loss) $ 200,483 $ (129,774)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization 620,840 599,956
Changes in assets and liabilities:
Increase in security deposits cash (7,654) (55,290)
Increase in other assets (146,462) (30,040)
Decrease in accounts payable (6,698) (139,646)
Decrease in prepaid rent (4,540) -
(Decrease) increase in tenant security deposits (13,997) 24,022
Increase in other liabilities 12,422 18,296
---------- ----------
Net cash provided by operating activities 654,394 267,516
---------- ----------
Cash flow from investing activities:
Additions to buildings and improvements (208,012) (267,516)
---------- ----------
Net cash used in investing activities (208,012) (267,516)
---------- ----------
Cash flow from financing activities:
Principal payments on mortgage note (35,933) (32,665)
Cash distributions paid to partners (151,515) -
---------- -------
Net cash used in financing activities (187,448) (32,665)
---------- ----------
Net increase (decrease) in cash 258,934 (12,657)
Cash, beginning of period 248,928 163,869
---------- ----------
Cash, end of period $ 507,862 $ 151,212
========== ==========
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ 582,017 $ 585,285
========== ==========
</TABLE>
See notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
Units of
For the Nine Months Ended Limited Special Limited
September 30, 1995 and 1994 Partnership General Limited Partner/
(Unaudited) Interest Partner Partner Unitholder Total
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 50,000 $ (39,023) $ (497,906) $ 7,412,475 $ 6,875,546
Net income - 2,006 28,067 170,410 200,483
Distributions - - (1,515) (150,000) (151,515)
-------- ---------- ----------- ----------- -----------
Balance, September 30, 1995 50,000 $ (37,017) $ (471,354) $ 7,432,885 $ 6,924,514
======== ========== =========== =========== ===========
Balance, December 31, 1993 50,000 $ (38,592) $ (491,870) $ 7,449,127 $ 6,918,665
Net loss - (1,298) - (128,476) (129,774)
-------- --------- ----------- ----------- -----------
Balance, September 30, 1994 50,000 $ (39,890) $ (491,870) $ 7,320,651 $ 6,788,891
======== ========= =========== =========== ===========
</TABLE>
See notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
1. ORGANIZATION
Southeastern Income Properties Limited Partnership (the "Partnership")
was organized under the Virginia Uniform Limited Partnership Act on November 21,
1985 for the purpose of acquiring, owning, operating, and ultimately selling
residential apartment complexes located primarily in the southeastern United
States. The original general partner of the Partnership was K-A Southeastern
Income Properties Limited Partnership, a Virginia Limited Partnership (the
"Original General Partner"). The general partners of the Original General
Partner are Glade M. Knight, Ben T. Austin, III and Southeast Real Properties
Corporation.
On February 12, 1992, Winthrop Southeast Limited Partnership, a Delaware
limited partnership ("WSLP") was admitted as the general partner of the
Partnership, while the Original General Partner's interest in the Partnership
was converted to a special limited partnership interest. The general partner of
WSLP is Eight Winthrop Properties, Inc. ("Eight Winthrop"), a Delaware
corporation, which is wholly-owned by First Winthrop Corporation, a Delaware
corporation, which in turn is wholly-owned by Winthrop Financial Associates, A
Limited Partnership, a Maryland limited partnership ("WFA").
The Partnership was initially capitalized with contributions of $100
from the Original General Partner and $100 from SIP Assignor Corporation, a
Virginia corporation (the "Assignor Limited Partner"). On September 26, 1986,
the Partnership filed a Registration Statement on Form S-11 (Registration No.
33-9085, the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") with respect to the public offering of assignee
units of limited partnership interest ("Units") in the Partnership. The
Registration Statement, covering the offering of 50,000 Units at a purchase
price of $500 per Unit (an aggregate of $25,000,000) was declared effective on
January 7, 1987. The offering concluded on September 29, 1987, at which time all
50,000 Units had been sold to investor limited partners (the "Limited
Partners").
The Partnership's only business is acquiring, owning, operating and
ultimately selling residential apartment complexes. The Partnership's investment
objectives and policies are described on Pages 31-38 under the caption
"Investment Objective and Policies" of the Registrant's Prospectus dated January
7, 1987 as filed pursuant to Rule 424(b) on January 12, 1987 (the "Prospectus"),
which description is incorporated herein by this reference. Although WSLP does
not intend to change the business or the investment objectives of the
Partnership, based upon such factors as market conditions, the level of
refinancing debt in place with respect to the properties and the cost of the
capital improvements and maintenance necessary to keep the properties
competitive in their markets, WSLP may conclude that the interests of the
Limited Partners would be best served by holding the properties for a longer
term than was initially anticipated. If the liquidation of the Partnership is
delayed, the Limited Partners will not have the opportunity to receive the
return of their investment at the time they may have originally anticipated.
The Partnership invested $20,593,101 of the original offering proceeds
(net of sales commissions and sales and organization costs, but including
acquisition fees and expenses) in four residential properties. All four
properties were acquired by the Partnership directly. Two of the properties were
acquired prior to the completion of the public offering of the Units, while the
other two were acquired subsequent to the offering.
2. ACCOUNTING AND FINANCIAL REPORT POLICIES
The condensed consolidated financial statements included herein have
been prepared by the Registrant, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The Registrant's
accounting and financial reporting policies are in conformity with generally
accepted accounting principles and include adjustments in interim periods
considered necessary for a fair presentation of the results of operations.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these consolidated financial statements be
read in conjunction with the consolidated financial statements and notes thereto
included in the Registrant's latest annual report on Form 10-K.
<PAGE>
2. ACCOUNTING AND FINANCIAL REPORT POLICIES - Continued
The accompanying consolidated financial statements reflect the
Partnership's results of operations for an interim period and are not
necessarily indicative of the results of operations for the year ending December
31, 1995.
3. TAXABLE INCOME
The Partnership's results of operations on a tax basis are expected to
differ from the net income for financial reporting purposes primarily due to the
accounting differences in the recognition of depreciation and amortization.
4. RELATED PARTY TRANSACTIONS
Property management fees paid or accrued by the Partnership to Winthrop
Management, an affiliate of the General Partners, totalled $52,373 during the
three months ended September 30, 1995.
5. Certain reclassifications of the 1994 statement of operations have
been made to conform to the presentation in 1995.
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Partnership generated net income of $64,645 for the quarter ended September
30, 1995 versus a loss of $16,395 for the comparable period in 1994. For the
nine months ended September 30, 1995, the Partnership generated net income of
$200,483 compared to a net loss of $129,774 for the nine months ended September
30, 1994. As a result of the Partnership's improved operating results, the
Partnership resumed making cash distributions to limited partners in April 1995.
The cash distributions amounted to $150,000 in the aggregate, or $3.00 per
investment unit through September 30, 1995.
The Partnership's revenue increased by 6.5% for the third quarter of 1995
compared to the third quarter of 1994 and increased 9.4% for the nine months
ended September 30, 1995 compared to the same period in 1994. The increase for
the year-to-date period is primarily attributable to a 9.1% increase in rental
income. On an aggregate basis, average rents at the Partnership's four
properties have increased by 4.7% relative to the same period in 1994. In
addition, overall average occupancy has increased from 90% to 94%. The most
significant improvement in occupancy occurred at Forestbrook Apartments, where
occupancy averaged 94% in the first nine months of 1995 compared to 85% during
the same period last year.
Total operating expenses of the Partnership's properties declined by 3.4% for
the first nine months of 1995, primarily as a result of a decrease in repair and
maintenance expenses and lower real estate taxes at Pelham Ridge and
Forestbrook. The Partnership's other expenses, including interest expense,
depreciation and amortization remained relatively constant.
The markets in which the properties are located are currently stable. The
Partnership continues to make capital improvements to the properties to enhance
their competitiveness within their local markets. The Partnership spent $208,012
on capital improvements during the first nine months of 1995 compared to
$267,516 in the first nine months in 1994. Improvements included exterior
painting and roof replacements at Forestbrook and Pelham Ridge, pool repairs at
Seasons Chase and Sterlingwood and carpet and appliance replacement at all four
properties. At two of the properties (Forestbrook and Sterlingwood), a portion
of the capital improvements is funded by replacement reserves held by the
mortgage lenders, with the balance being funded from operations. The aggregate
balance of these replacement reserves was $428,834 at September 30, 1995.
Capital improvements from the other two properties are funded entirely from
operations.
The results of operations in future quarters may differ from the results of
operations for the quarter ended September 30, 1995, due to inflation and
changing economic conditions which could affect occupancy levels, rental rates
and operating expenses.
<PAGE>
PART II - OTHER INFORMATION
All items are inapplicable.
SIGNATURE
Pursuant to 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.
SOUTHEASTERN INCOME PROPERTIES
LIMITED PARTNERSHIP
By: Winthrop Southeastern Limited Partnership
Its General Partner
By: Eight Winthrop Properties, Inc.
Its General Partner
Date: November 11, 1995 By: /s/ Anthony R. Page
Anthony R. Page
Chief Financial Officer
Date: November 11, 1995 By: /s/ Richard J. McCready
Richard J. McCready
Chief Operating Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from unaudited financial statements for the
nine month period ending September 30, 1995 and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000802969
<NAME> Southeastern Income Properties L
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1.00000
<CASH> 507,862
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 888,605
<PP&E> 24,017,955
<DEPRECIATION> 9,939,359
<TOTAL-ASSETS> 15,475,063
<CURRENT-LIABILITIES> 468,255
<BONDS> 8,082,294
<COMMON> 0
0
0
<OTHER-SE> 6,924,514
<TOTAL-LIABILITY-AND-EQUITY> 15,475,063
<SALES> 0
<TOTAL-REVENUES> 3,109,295
<CGS> 0
<TOTAL-COSTS> 1,660,953
<OTHER-EXPENSES> 665,843
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 582,017
<INCOME-PRETAX> 200,482
<INCOME-TAX> 0
<INCOME-CONTINUING> 200,482
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 200,482
<EPS-PRIMARY> 3.41
<EPS-DILUTED> 0.00
</TABLE>
