SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of Securities Exchange Act of 1934
Commission File
For the fiscal year ended December 31, 1995 Number 0-16848
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Virginia 54-1350850
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One International Place, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8600
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
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 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 market exists for the limited partnership interests of the Registrant and
therefore, a market value for such interests cannot be determined.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Document
In Which Document is
Incorporated
Parts I and IV Prospectus of the
Registrant dated January 7,
1987, filed with the
Commission pursuant to Rule
424(b), (the "Prospectus").
The Information Statement
Furnished in Connection with
Solicitation of Consents,
dated November 22, 1991,
filed with the Commission on
October 17, 1991, (the "1991
Solicitation of Consents").
Part II Pages 14-18 of the 1991
Solicitation of Consents.
Part III Pages 18-19 of the 1991
Solicitation of Consents.
<PAGE>
PART I
Item 1. Business.
Southeastern Income Properties Limited Partnership (the "Registrant")
was organized under the Virginia Uniform Limited Partnership Act on November 21,
1985 for the purpose of acquiring, owning, operating, and ultimately selling
existing residential apartment complexes located primarily in the southeastern
United States. The general partner of the Registrant is Winthrop Southeast
Limited Partnership, a Delaware limited partnership ("WSLP" or the "Managing
General Partner"), whose general partner is Eight Winthrop Properties, Inc., a
Delaware corporation ("Eight Winthrop") (See "Item 1, Business Change in
Control.")
The Registrant 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 Registrant 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 Registrant. 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 June 29, 1987, at which time all
50,000 Units had been sold to limited partners (the "Limited Partners").
The Registrant's only business is acquiring, owning, operating and
ultimately selling residential apartment complexes. The Registrant'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. WSLP does not intend
to change the business or the investment objectives of the Registrant.
The Registrant invested $20,593,101 of the original offering proceeds
(net of sales commissions and sales and organizational costs, but including
acquisition fees and expenses) in four
<PAGE>
residential properties. All four properties were acquired by the
Registrant directly.
The following tables set forth certain information regarding the
properties which the Registrant acquired. For a further description of the
properties, see pages 14 through 18 of the 1991 Solicitation of Consents, which
is incorporated herein by reference.
<TABLE>
No. Partnership 12/31/95
of Acquisition Acquisition Mortgage Interest Maturity Nature
Property Name Location Units Date Cost Balance Rate Date of Title
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sterlingwood Roanoke, VA 162 11/27/85 $ 4,732,194 $2,505,688 9.75% 4/01/97 Fee
Apts. Simple
Forestbrook Charlotte, NC 262 8/28/86 $ 6,745,050 $5,564,046 9.5% 1/01/97 Fee
Apts. Simple
Seasons Chase Greensboro, NC 225 8/18/87 $ 4,860,904 - - - Fee
Apts. Simple
Pelham Ridge Greenville, SC 184 8/22/88 $ 4,254,953 - - - Fee
Apts. Simple
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 833 $20,593,101 $8,069,734
====================================================================================================================================
</TABLE>
See "Item 8, Financial Statements and Supplementary Data Note C" for
further information concerning the mortgages encumbering the properties.
<TABLE>
Sterlingwood Forestbrook Seasons Chase Pelham Ridge
Average Average Average Average
Year Occupancy Rent/Unit Occupancy Rent/Unit Occupancy Rent/Unit Occupancy Rent/Unit
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1991 85.0% $385/mo 80.1% $426/mo 80.1% $388/mo 87.9% $378/mo
1992 91.0% $388/mo 81.8% $431/mo 79.5% $395/mo 89.1% $386/mo
1993 90.0% $400/mo 77.5% $445/mo 84.3% $406/mo 91.9% $402/mo
1994 92.2% $409/mo 87.3% $453/mo 92.1% $414/mo 94.7% $418/mo
1995 91.5% $423/mo 93.4% $472/mo 96.1% $421/mo 94.5% $449/mo
</TABLE>
The Registrant maintains property and liability insurance on it
properties which the Registrant believes to be adequate.
Employees
The Registrant does not have any employees.
Until March 18, 1996, management services were performed for the
Registrant at its properties by on-site personnel all of whom were employees of
Winthrop Management, an affiliate of the Managing General Partner, which
directly managed the Registrant's
<PAGE>
properties. All payroll and associated expenses of such on-site personnel were
fully reimbursed by the Registrant to Winthrop Management. Pursuant to a
management agreement, Winthrop Management provided certain property management
services to the Registrant in addition to providing on-site management. Winthrop
Management is a Massachusetts general partnership whose managing general partner
is First Winthrop Corporation, the parent of Eight Winthrop.
On March 18, 1996, Registrant appointed an unaffiliated management
company to assume management of its properties. (See "Item 3, Legal
Proceedings.") The provisions of the new management agreement are substantially
similar to those of the Winthrop Management agreement. The term is for one year,
renewable annually.
Competition
The real estate business is highly competitive and the Registrant's
properties have active competition from similar properties in the vicinity
including, in certain instances, properties owned by affiliates of the
Registrant. Furthermore, various limited partnerships controlled by the Managing
General Partner and/or its affiliates are also engaged in business which may be
competitive with the Registrant. The Registrant is also competing for potential
buyers with respect to the ultimate sale of its properties. See "Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operation."
Change in Control
The original general partner of the Registrant was K-A Southeastern Income
Properties Limited Partnership, a Virginia Limited Partnership (the "Original
General Partner"). The general partners of the Original General Partner were
Glade M. Knight, Ben T. Austin, III and Southeast Real Properties Corporation.
On February 12, 1992, WSLP was admitted as the general partner of the
Registrant, while the Original General Partner's interest in the Registrant was
converted to a special limited partnership interest. The substitution of WSLP as
the general partner, and the conversion of the status of the Original General
Partner to that of a limited partner, was previously approved by the limited
partners of Registrant pursuant to the 1991
<PAGE>
Solicitation of Consents. The general partner of WSLP is Eight Winthrop, 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").
Until December 22, 1994, Arthur J. Halleran, Jr. was the sole general
partner of Linnaeus Associates Limited Partnership ("Linnaeus"), the general
partner of WFA. On December 22, 1994, pursuant to an Investment Agreement
entered into among Nomura Asset Capital Corporation ("NACC"), Mr. Halleran and
certain other individuals who comprised the senior management of WFA, the
general partnership interest in Linnaeus was transferred to W.L. Realty, L.P.
("W.L. Realty"). W.L. Realty is a Delaware limited partnership, the general
partner of which was, until July 18, 1995, A.I. Realty Company, LLC
("Realtyco"). The equity securities of Realtyco were held by certain employees
of NACC.
On July 18, 1995 Londonderry Acquisition II Limited Partnership, a
Delaware limited partnership ("Londonderry II"), an affiliate of Apollo Real
Estate Advisors, L.P. ("Apollo"), acquired, among other things, Realtyco's
general partner interest in W.L. Realty and a sixty four percent (64%) limited
partnership interest in W.L. Realty. WFA owns the remaining thirty-five percent
(35%) limited partnership interest.
As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty which is the sole general partner of Linnaeus,
which in turn is the sole general partner of WFA. As a result of the foregoing,
effective July 18, 1995, Londonderry II became the controlling entity of the
Managing General Partner. In connection with the transfer of control, the
officers and directors of WFA resigned and Londonderry II appointed new officers
and directors. See "Item 10, Directors and Executive Officers of the
Registrant."
Item 2. Properties.
For a discussion of the Registrant's properties, see "Item
1, Business."
<PAGE>
Item 3. Legal Proceedings.
Except as disclosed below, the Registrant is not a party, nor are any
of its properties subject, to any material pending legal proceedings.
RTC Commercial Loan Trust 1995 - NP1A, a Delaware business trust,
Plaintiff v. Winthrop Management, a Massachusetts general partnership,
Defendant, United States District Court for the Eastern District of Virginia;
Case No. 3:96CV177.
This action arises in connection with the transfer of the general
partnership interest in 1992 from the Original General Partner to WSLP at which
time WLSP entered into certain agreements with Investors Savings Bank, F.S.B.
("ISB"), including the delivery of a promissory note to ISB, which was secured
by an assignment of rights of Winthrop Management in the management agreements
for the Registrant's properties, and the partnership interests acquired by WSLP.
(See the 1991 Solicitation of Consents which is incorporated by reference
herein.) The RTC Commercial Loan Trust 1995-NP1A (the "RTC Loan Trust") has
succeeded to the rights of ISB. In February 1996, the RTC Loan Trust filed an
action against Winthrop Management, alleging Winthrop Management was in default
under its obligations set forth in the security agreement, and sought to have a
receiver appointed to control Winthrop Management's management of the
properties. On March 15, 1996, the Registrant terminated Winthrop Management as
the managing agent for its properties effective March 18, 1996, and appointed an
unaffiliated managing agent to assume management of the properties. On March 20,
1996, the court appointed a receiver to assume the rights of Winthrop Management
under the management agreements, including the right to pursue the Registrant
for breach of contract. On March 21, 1996, the court stayed its own order
appointing the receiver pending a motion to dismiss for lack of jurisdiction.
The Managing General Partner believes that any claim, if brought by the
receiver, is without merit, and will vigorously defend any action.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period
covered by this report.
<PAGE>
PART II
Item 5. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters.
The Registrant is a partnership and thus has no common stock. There is
currently no established public market in which the Units are traded, nor is it
anticipated that a public market will develop. Trading in the Units is sporadic
and occurs solely through private transactions.
As of March 15, 1996 there were 2,656 holders of Units.
No cash distributions were made to the holders of Units during the
years ended December 31, 1994 and 1993. Cash distributions to holders of Units
amounted to approximately $300,000 in the aggregate, or $6.00 per Unit through
December 1995. An additional cash distribution of $150,000, or $3.00 per Unit,
was made in January 1996. See "Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations," for information relating to the
Registrant's future distributions.
<PAGE>
Item 6. Selected Financial Data.
The following represents selected financial data for the Registrant for
the years ended December 31, 1995, 1994, 1993, 1992 and 1991. The data should be
read in conjunction with the financial statements included elsewhere herein.
This data is not covered by the independent auditors' report.
<TABLE>
For the Year Ended December 31,
1995 1994 1993 1992(1) 1991
<S> <C> <C> <C> <C> <C>
Operating results:
Income.................... $ 4,208,409 $ 3,863,083 $ 3,471,062 $ 3,268,085 $ 3,479,620
Expenses................. 3,940,731 3,906,202 6,187,595 3,956,388 4,035,351
Net loss.................. $ 267,678 $ (43,119) (2,716,533) $ (688,303) $ (555,731)
Net loss allocable
to each unit.............. $ 4.55 $ (0.73) $ (53.70) $ (13.61) $ (9.45)
Cash distributions
per unit.................. $ 6.00 $ 0.00 $ 0.00 $ 3.03 $ 8.93
At year end:
Total assets................. $15,609,384 $15,474,841 $15,747,839 $18,358,342 $19,090,350
Mortgage loan payable........ $ 8,069,734 $ 8,118,227 $ 8,162,310 $ 8,202,366 $ 8,242,756
Partners' Equity (deficit):
General Partner........... $ 36,377 $ (39,023) $ (38,592) $ (7,004) $ --
Special Limited Partner $ 463,460 $ (497,906) $ (491,870) $ (491,870) $ (490,608)
Limited Partner/
Unit Holders........... $ 7,340,048 $ 7,412,475 $ 7,449,127 $10,134,072 $10,965,841
</TABLE>
(1) The 1992 numbers in this year's financial statements have been revised
from prior years' presentation to provide a more consistent presentation
from year to year. Specifically, bad debt and rental concessions are now
reflected as an offset to revenue rather than as an expense. There was no
effect on 1991.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
The Registrant receives rental income from its properties and is
responsible for operating expenses, administrative expenses, capital
improvements and debt service payments. The Registrant's properties are leased
to tenants who are subject to leases of up to one year.
During the year ended December 31, 1995, rental revenue and other
income from the properties, along with interest income from the Registrant's
short-term investments, was sufficient to cover: (i) all operating expenses and
debt service of the properties and all administrative expenses of the
Registrant; as well as (ii) all capital improvements made to the properties
during 1995. As of December 31, 1995 the Registrant's unrestricted cash balance
had increased to $575,510 from $248,928 at the end of 1994.
The Registrant budgeted approximately $1.5 to $2.0 million to be spent
on capital improvements between 1992 and 1995. In that time period,
approximately $1,885,000 has been spent on capital improvements, of which
approximately $571,000 was expended in 1995. A considerable amount of capital
work was performed at each property during 1995. At Season's Chase, capital
improvements consisted of landscaping, balcony repairs, kitchen upgrades
including new appliances and renovation of the club house. A fire occurred at
Season's Chase, damaging the rental office and 16 apartment units. Restoration
of the office and apartment units is nearly complete with the majority of the
costs associated with the restoration and lost revenue to be covered by the
property's insurance. At Sterlingwood, 1995 improvements consisted mainly of
roof replacements. Capital improvements completed at Pelham Ridge and
Forestbrook in 1995 included exterior repairs and painting and roof replacement.
Forestbrook also underwent paving repairs in 1995. While the renovation program
has been substantially completed (with the exception of Forestbrook), additional
capital improvements have been identified, along with recurring capital
improvements, which will be performed in 1996. Implementation of Forestbrook's
capital improvement program was delayed because management did not believe the
improvements would sufficiently impact revenue due to a weak local economy.
Since the local economy has
<PAGE>
improved, improvements have begun at the property. In 1996, the Registrant plans
to spend an additional $750,000 on capital improvements, which would include
additional exterior painting and repairs at Forestbrook, exterior painting and
repairs at Sterlingwood, balcony and exterior siding repairs at Seasons Chase,
and paving repairs and carpet and appliance replacement at all four properties.
It is expected that future rental revenue and other income from the
Registrant's properties will continue to be sufficient to cover all
administrative expenses of the Registrant and all operating expenses and debt
service of the properties, as well as the capital improvement program described
on pages 14-18 in the 1991 Solicitation of Consents, which description is
incorporated herein by reference. As a result of the Registrant's improved
operating results, the Registrant resumed making cash distributions to limited
partners in April 1995. The cash distributions amounted to approximately
$300,000 in the aggregate, or $6.00 per investment Unit through December 31,
1995. The Registrant intends to continue to limit cash distributions to fund the
capital improvement program. However, the performance of the Registrant's
properties and its distribution policy will continue to be reviewed on a
quarterly basis.
In addition, the ability of the Registrant's properties to improve
operations may affect the liquidity of the Registrant. Inflation and changing
economic conditions in the future could affect vacancy levels, rental payment
defaults and operating expenses of the Registrant's properties, and thus, could
affect the Registrant's revenue, net income and liquidity.
As of December 31, 1995 the Registrant has $575,510 in unrestricted
cash. The Registrant has invested, and expects to continue to invest, such
amounts in money market instruments until required for partnership purposes. In
addition, the Registrant has replacement reserves of $460,161 held by the
mortgage lenders for Forestbrook and Sterlingwood Apartments. These funds are
restricted under the terms of the mortgage loans for those two properties. The
Registrant's total cash balance, both restricted and unrestricted, as of
December 31, 1995, was therefore $1,035,671, which is expected to be sufficient
to satisfy working capital requirements set forth in the Registrant's
partnership agreement. The Registrant's partnership
<PAGE>
agreement requires the Registrant to retain reserves in an amount equal to at
least 1% of capital contributions of unit holders.
Results of Operations
1995 Compared to 1994: The Registrant's total revenue increased by 8.9%
in 1995 to $4,208,409 from $3,863,083 in 1994, due primarily to an 8.9% increase
in rental income to $3,958,054. Revenue increased at all four of the
Registrant's properties, reflecting continued stabilization of the local
apartment markets and the positive effects of the capital improvement programs.
Average rental rates and occupancy were stable or higher at all properties.
Overall, average rents for the Registrant's properties increased by 4.2%, to
$444 in 1995 from $426 in 1994 and average occupancy increased to 94.0% in 1995
from 91.2% in 1994. The most significant increase in revenue occurred at
Forestbrook, where average rents increased to $472 in 1995 from $453 in 1994 and
average occupancy rose to 93.4% in 1995 from 87.3% in 1994.
The Registrant's operating expenses decreased by 4.1% in 1995, to
$2,170,951 in 1995 from $2,264,757 in 1994, due primarily to a decrease in
repairs and maintenance expense as well as leasing expenses. Other expenses of
the Registrant (including depreciation and amortization expense, interest
expenses and partnership administrative expenses) increased 7.8% in 1995 to
$1,769,780 from $1,641,445 in 1994 due to a 19.6% increase depreciation expense,
reflecting the Registrant's on-going investment in capital improvements. The
Registrant's interest expense remained relatively constant from 1994 to 1995.
1994 Compared to 1993: The Registrant's total revenue increased by
11.3% in 1994 compared to 1993, primarily due to a 12.0% increase in rental
income to $3,633,607. Revenue at all four of the Registrant's properties
increased reflecting the stabilization of the local apartment markets and the
effects of the Registrant's renovation programs. Average rental rates and
occupancies were higher at each property. Overall, average rents for the
Registrant's properties increased by 2.4%, from $416 to $426, and average
occupancy increased from 84.9% in 1993 to 91.2%. The most notable improvement
occurred at Forestbrook, where average rents increased from $445 per apartment
unit to $453, and average occupancy improved from 77.5% in 1993 to 87.3% in
1994. Interest and other income (including revenues from laundry, vending, late
fees and corporate units) increased by 1.3% to $229,476.
The Registrant's expenses declined significantly (by 36.9%) in 1994 as
a result of the investment property writedown taken in 1993. Excluding the
writedown, the Registrant's expenses were 3.3% lower in 1994. Direct operating
expenses increased by 4.3% to $2,264,757 as a result of a further increase in
repair and maintenance costs as well as an increase in utilities and insurance.
The Registrant's interest expense remained relatively constant, while
depreciation and amortization expense declined by 24.3%, reflecting the
writedown of the Registrant's assets taken in 1993.
As a result of higher income and lower expenses, the Registrant's net
loss decreased significantly to $43,119.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
SFAS No. 121 is effective for financial statements issued for fiscal years
beginning after December 15, 1995, with earlier application permitted. SFAS No.
21 addresses the intangibles to be held and used by an entity to be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Registrant's will adopt
SFAS No. 121 on January 1, 1996, as required. Adopting SFAS No. 121 is not
expected to have a significant effect on the Registrant's consolidated financial
statements.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
See the Financial Statements of the Partnership, listed in the
Index on page 28, included as part of the Annual Report on Form
10-K.
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
For the years ended December 31, 1995, 1994 and 1993
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORTS
FINANCIAL STATEMENTS
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF PARTNERS' CAPITAL
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Partners and Unit Holders of
Southeastern Income Properties Limited Partnership
We have audited the accompanying balance sheets of Southeastern Income
Properties Limited Partnership as of December 31, 1995 and 1994, and the related
statements of operations, partners' capital, and cash flows for the years then
ended. 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. The financial statements of Southeastern Income
Properties Limited Partnership for the year ended December 31, 1993 were audited
by other auditors whose report, dated February 4, 1994, expressed an unqualified
opinion on those statements.
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 Southeastern Income
Properties Limited Partnership as of December 31, 1995 and 1994, and the results
of its operations and its cash flows for the years then ended, in conformity
with generally accepted accounting principles.
/s/ REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
January 19, 1996
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners and Unit Holders of Southeastern Income
Properties Limited Partnership:
We have audited the statements of operations and cash flows for the year
ended December 31, 1993 Southeastern Income Properties Limited Partnership (the
"Partnership"). 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 audit.
We conducted our audit 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 results of operations and cash flows of the
Partnership for the year ended December 31, 1993 in conformity with generally
accepted accounting principles.
/s/ COOPERS & LYBRAND L. L. P.
Boston, Massachusetts
February 4, 1994
<PAGE>
Southeastern Income Properties Limited Partnership
BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
1995 1994
-------------- ---------
ASSETS
<S> <C> <C>
Investment in rental property
Land $ 1,817,097 $ 1,817,097
Buildings and building improvements 18,561,107 18,559,530
Personal property 4,002,496 3,433,316
----------- -----------
24,380,700 23,809,943
Less accumulated depreciation 10,242,795 9,351,107
---------- -----------
14,137,905 14,458,836
---------- ----------
Cash and cash equivalents 575,510 248,928
Tenant security deposits 149,198 131,230
Loan costs, net of accumulated amortization
of $256,897 and $213,447 47,250 90,700
Other assets 699,521 545,147
------------ ------------
1,471,479 1,016,005
----------- -----------
$15,609,384 $15,474,841
========== ==========
</TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<S> <C> <C>
Liabilities applicable to investment in
rental property
Mortgages payable $ 8,069,734 $ 8,118,227
Other liabilities
Accounts payable 257,410 54,712
Accrued interest payable 66,020 66,020
Rents received in advance 18,339 18,222
Tenant security deposits 135,350 146,769
Other liabilities 222,320 195,345
------------ ------------
Total liabilities 8,769,173 8,599,295
Partners' Capital
Limited partners' unit holders'
50,000 Units authorized and outstanding at
December 31, 1995 and 1994 7,340,048 7,412,475
Special Limited Partner (463,460) (497,906)
General Partner (36,377) (39,023)
------------- -------------
Total Partners' capital 6,840,211 6,875,546
----------- -----------
Total liabilities and partners' capital $15,609,384 $15,474,841
========== ==========
</TABLE>
See notes to Financial Statements.
<PAGE>
Southeastern Income Properties Limited Partnership
STATEMENTS OF OPERATIONS
Years ended December 31, 1995, 1994 and 1993
<TABLE>
1995 1994 1993
------------- ------------- ---------
<S> <C> <C> <C>
Income
Rental $3,958,054 $3,633,607 $ 3,244,583
Interest income 37,152 31,325 6,922
Other income 213,203 198,151 219,557
---------- ---------- -----------
4,208,409 3,863,083 3,471,062
--------- --------- ----------
Expenses
Leasing 100,488 157,249 179,339
General and administrative 253,936 240,056 268,116
Management Fees 239,654 222,248 204,496
Utilities 357,664 343,377 318,754
Repairs & Maintenance 737,434 829,596 737,977
Insurance 182,122 166,966 133,033
Taxes 299,653 305,265 329,247
---------- ---------- -----------
Total operating expenses 2,170,951 2,264,757 2,170,962
Other expenses
Partnership expenses 59,202 79,545 50,213
Interest expense 775,440 779,850 783,877
Depreciation and amortization 935,138 782,050 1,032,543
Provision for investment
property writedown - - 2,150,000
Total expenses 3,940,731 3,906,202 6,187,595
--------- ---------- -----------
Net income (loss) $ 267,678 $ (43,119) $(2,716,533)
========== =========== ==========
Net income (loss) allocated to General Partner $ 2,676 $ (431) $ (31,588)
============= ============= ============
Net income (loss) allocated to Limited Partners'
unit holders' $ 227,526 $ (36,652) $(2,684,945)
=========== =========== ==========
Net income (loss) allocated to Special Limited
Partner $ 37,476 $ (6,036)$ -
============ ============ ===================
Net income (loss) allocated to each unit $ 4.55 $ (.73) $ (53.70)
============== ============== ========
Weighted average number of units
outstanding - Limited Partners 50,000 50,000 50,000
============ ============ ==============
</TABLE>
See notes to Financial Statements.
5
<PAGE>
Southeastern Income Properties Limited Partnership
STATEMENTS OF PARTNERS' CAPITAL
Years ended December 31, 1995, 1994, and 1993
<TABLE>
Limited
Special Partners' Total
General Limited Unit Partners'
Partner Partner Holders' Capital
<S> <C> <C> <C> <C>
Balance, December 31, 1992 $ (7,004) $(491,870) $10,134,072 $9,635,198
Net loss (31,588) - (2,684,945) (2,716,533)
------- -------------- ----------- ---------
Balance, December 31, 1993 (38,592) (491,870) 7,449,127 6,918,665
Net loss (431) (6,036) (36,652) (43,119)
--------- ---------- ------------- -----------
Balance, December 31, 1994 (39,023) (497,906) 7,412,475 6,875,546
Partner distributions ($6.00 per unit) (30) (3,030) (299,953) (303,013)
Net income 2,676 37,476 227,526 267,678
--------- --------- ------------ ----------
Balance, December 31, 1995 $(36,377) $(463,460) $ 7,340,048 $6,840,211
======= ======== =========== =========
</TABLE>
See notes to Financial Statements.
6
<PAGE>
Southeastern Income Properties Limited Partnership
STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993
<TABLE>
1995 1994 1993
------------ ------------ ---------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ 267,678 $ (43,119) $(2,716,533)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
Depreciation and amortization 935,138 782,050 1,032,543
Provision for investment property writedown - - 2,150,000
Increase in tenant security deposits - cash (17,968) (8,328) (35,826)
(Increase) decrease in other assets (80,645) 23,618 32,313
Increase (decrease) accounts payable 202,698 (193,931) 88,396
Increase (decrease) rents received in advance 117 3,955 (5,016)
(Decrease) Increase tenant security deposits (11,419) 40,927 16,981
Increase (decrease) other liabilities 26,975 (36,747) 45,725
Net cash provided by operating activities 1,322,574 568,425 608,583
Cash flows from investing activities
Investment in rental property (570,757) (341,882) (546,801)
Increase in replacement reserves (73,729) (97,391) (27,572)
----------- --------- -----------
Net cash used in investing activities (644,486) (439,273) (574,373)
---------- -------- ----------
Cash flows from financing activities
Distributions to partners (303,013) - -
Payments on mortgages (48,493) (44,083) (40,056)
----------- --------- -----------
Net cash used in financing activities (351,506) (44,083) (40,056)
---------- --------- -----------
Increase (decrease) in cash and cash equivalents 326,582 85,059 (5,846)
Cash and cash equivalents, beginning 248,928 163,869 169,715
---------- -------- ----------
Cash and cash equivalents, ending $ 575,510 $ 248,928 $ 163,869
========== ======== ==========
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ 775,440 $ 779,850 $ 783,877
========== ========== ===========
</TABLE>
See notes to Financial Statements.
<PAGE>
Southeastern Income Properties Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Southeastern Income Properties Limited Partnership (the "Partnership") is a
Virginia limited partnership formed in November 1985 for the purpose of
acquiring, managing and ultimately selling existing apartment communities. At
that time, K-A Southeastern Income Properties Limited Partnership ("K-A SIP")
was the general partner. Glade M. Knight is the principal general partner of
K-A SIP. Knight Austin Corporation ("Knight Austin"), a management firm
controlled by Knight, served as the management agent for the Partnership's
properties until August 1, 1991.
The Partnership Agreement provided for a public offering of up to 50,000
assignee units of limited partnership interest ("Units") at $500 per unit.
Purchasers of Units ("Unit Holders") are assignees of the Limited Partner and
are entitled to all the rights and economic benefits of a limited partner.
During 1987, the Partnership sold all 50,000 Units.
In contemplation of this public offering, the Partnership acquired two
apartment communities - Sterlingwood in Roanoke, Virginia in November 1985;
and Forestbrook in Charlotte, North Carolina in August 1986- with borrowed
funds. The Partnership used a portion of the proceeds of the public offering
to repay all the mortgages payable related to Sterlingwood and Forestbrook
and to pay for a portion of the cost of acquiring Seasons Chase in
Greensboro, North Carolina and Pelham Ridge in Greenville, South Carolina
(See Note B).
The Partnership Agreement provided that upon/and after the initial closing of
the public offering both taxable loss and taxable income would be allocated
15% to K-A SIP and 85% to the Unit Holders. Further, K-A SIP would be
allocated 1% of the distributable cash from operations until the Unit Holders
had received a noncompounded, noncumulative annual cash return equal to 10%
of their capital contribution, as adjusted for certain capital transactions,
and 15% of the distributable cash from operations thereafter. However,
distributions to K-A SIP through any date could not exceed 10% of the total
amount of cash distributed through such date.
Upon liquidation of the Partnership, after payment of, or adequate provision
for, the debts and obligations of the Partnership, the remaining assets of
the Partnership would be distributed to all partners and Unit Holders with
positive capital accounts in the proportion that the positive balance in each
partner's or Unit Holder's capital account bore to the aggregate of such
positive balances, after taking into account all capital account adjustments
for the Partnership's taxable year during which such liquidation occurred.
In early 1992, the Unit Holders approved certain changes in (and amendments
to) the Partnership Agreement, which converted K-A SIP to a special limited
partner and admitted Winthrop Southeast Limited Partnership ("WSLP") as the
sole general partner, effective February 12, 1992. K-A SIP retained its
current capital account and adjusted capital contribution upon its conversion
to special limited partner status. Under the revised Partnership Agreement,
taxable income and loss was to be allocated 85% to Unit Holders, 14% to K-A
SIP and 1% to WSLP. Federal tax regulations, however, limit allocations of
net losses due to considerations as provided in Internal Revenue Section
704(b). As a result, the Partnership's 1993 federal tax return reflect a
reallocation of losses only to the limited partners and WSLP. The revised
Partnership Agreement also provides for K-A SIP and WSLP to receive .99% and
.01%, respectively, of distributable cash from operations for the five-year
period commencing February 12, 1992 and .88% and .12%, respectively,
thereafter, until the Unit Holders have received their preferred return.
After the Unit Holders have received a noncompounded, noncumulative annual
cost return on their capital contributions, as adjusted for certain capital
transactions, K-A SIP and WSLP will receive 14% and 1%, respectively, of
distributable cash from operations for the five-year period commencing
February 12, 1992 and 12.32% and 2.68%, respectively, thereafter. Winthrop
Management (Winthrop), an affiliate of WSLP, has served as the management
agent for the properties since August 1, 1991.
<PAGE>
Southeastern Income Properties Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investment in Rental Property
The investment in rental property is recorded at cost, not in excess of net
realizable value, which includes acquisition fees paid to Knight Austin.
Depreciation is determined by the straight-line method over the estimated
useful lives of the various assets. Estimated useful lives are 30 years for
buildings and building improvements and 5 years for personal property.
Loan Costs
Loan costs of $304,147, which were incurred in connection with obtaining
financing on Forestbrook and Sterlingwood, are being amortized over 84
months.
Replacement Reserves
Replacement Reserves (included in other assets) are comprised of Partnership
funds held by the Partnership's mortgage lenders, the use of which are
limited to specific capital or other costs, which are included in other
assets and total $460,161 in 1995, and $386,432 in 1994. The Partnership
Agreement requires the General Partner to maintain cash and reserves in an
amount equal to at least 1% of the capital contributions of the Unit Holders.
Rental Income
Rental income is recognized as rents become due. Rental payments received in
advance are deferred until earned. All leases between the partnership and the
tenants of the property are operating leases.
Income Taxes
No provision or benefit for income taxes has been included in these financial
statements since taxable income or loss passes through to, and is reportable
by, the partners individually.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Net Loss Allocated to Each Unit
Net loss allocable to each Limited Partner's Unit is computed using the
weighted average number of units outstanding in each year.
Reclassification of Certain Revenue and Expenses
Certain revenue and expenses in the 1993 Statement of Operations were
reclassified to conform to the presentation in 1995 and 1994.
Cash Equivalents
For purposes of the statement of cash flows, the partnership considers all
highly liquid investments consisting of a money market fund to be cash
equivalents. The carrying amount as of December 31, 1995 of $465,697
approximates fair value because of the short maturity of this instrument.
<PAGE>
Southeastern Income Properties Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Statements Not Yet Adopted
In March, 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Live Assets and for Long-Lived Assets to be Disposed Of." SFAS No.
121 is effective for financial statements issued for fiscal years beginning
after December 15, 1995, with earlier application permitted. SFAS No. 121
addresses the accounting for long-lived assets and certain identifiable
intangibles to be held and used by an entity to be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. The partnership will adopt SFAS No. 121
on January 1, 1996, as required. Adopting SFAS No. 121 is not expected to
have a significant effect on the partnership's financial statements.
NOTE B - INVESTMENT IN RENTAL PROPERTY
On November 27, 1985, the Partnership acquired Sterlingwood, a 162-unit
apartment complex in Roanoke, Virginia. The total cost of the acquisition was
$4,227,000. The Partnership financed the acquisition and used a portion of
the proceeds from the public offering of the Units to repay the outstanding
debt.
On August 28, 1986, the Partnership acquired Forestbrook, a 262-unit
apartment complex in Charlotte, North Carolina. The total cost of the
acquisition was $5,894,000. The Partnership financed the acquisition and used
a portion of the proceeds from the public offering of the Units to extinguish
the outstanding debt.
On August 18, 1987, the Partnership acquired Seasons Chase, a 225-unit
apartment complex in Greensboro, North Carolina. The total cost of the
acquisition of $4,650,000, which included a rental guarantee agreement of
$200,000, which was funded by a portion of the proceeds from the public
offering of the Units.
On August 22, 1988, the Partnership acquired Pelham Ridge, a 184-unit
apartment complex in Greenville, South Carolina. The total cost of the
property of $4,100,000, which included a rental guarantee agreement of
$100,000, which was funded by a portion of the proceeds from the public
offering of the Units.
NOTE C - MORTGAGES PAYABLE
During 1989, the partnership financed Forestbrook by obtaining a $5,726,600
mortgage. The existing mortgage with a balance of $5,564,046 at December 31,
1995 and $5,598,280 at December 31, 1994 is collateralized by the apartment
community in Charlotte, North Carolina and is payable in monthly installments
totalling $47,050 of principal and interest at 9.50% per annum through
January 1, 1997. The unpaid principal balance and interest is due and payable
in full on January 1, 1997. Prepayment during the initial five years of the
loan term carries a penalty based upon the yield rate on a 7.75% U.S.
Treasury security due February, 1995. Prepayment after five years carries a
penalty of 1% of the outstanding loan balance.
During 1990, the partnership financed Sterlingwood by obtaining a $2,570,900
mortgage. The existing mortgage with a balance of $2,505,688 at December 31,
1995 and $2,519,947 at December 31, 1994 is collateralized by the apartment
community in Roanoke, Virginia and is payable in monthly installments
totalling $21,611 of principal and interest at 9.75% per annum through April
1, 1997. The unpaid principal balance, in the amount of $8,012,216, and
interest is due and payable in full on April 1, 1997. Prepayment during the
initial five years of the loan term carries a penalty based upon the yield
rate on a 7.75% U.S. Treasury Security due February 1995. Prepayment after
five years carries a penalty of 1% of the outstanding loan balance.
<PAGE>
Southeastern Income Properties Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE C - MORTGAGES PAYABLE (Continued)
Based on the interest rates of loans with similar maturities currently
available to the partnership, the estimated fair value of the mortgages
payable is $8,228,482.
The liability of the partnership under the mortgages is limited to the
underlying value of the real estate collateral, plus other amounts deposited
with the lender.
Aggregate maturities of the mortgage notes payable for the years following
December 31, 1995 are as follows:
1996 $ 53,345
1997 8,016,389
NOTE D - RELATED-PARTY TRANSACTIONS
The Partnership has incurred management fees, accounting fees and investor
servicing fees resulting from transactions with WSLP and Winthrop
Management. The investor servicing fees for 1993, 1994 and part of 1995
were paid to First Winthrop Corporation.
<TABLE>
1995 1994 1993
---------- ---------- --------
<S> <C> <C> <C>
Management $204,246 $185,061 $169,728
Investor servicing 35,408 37,187 34,768
Accounting 21,000 24,990 24,990
-------- -------- --------
$260,654 $247,238 $229,486
======= ======= =======
</TABLE>
After the approval of the amendments to the Partnership Agreement (see Note
A), the Partnership entered into new management agreements with Winthrop
which provide for a management fee of 5% of gross revenues, as defined. The
accounting fees are included in general and administrative expenses and
investor servicing fees are included in management fees on the Statements of
Operations.
<PAGE>
Southeastern Income Properties Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE E - INCOME TAXES AND PARTNERS' CAPITAL
The following is a reconciliation of the net loss and partners' capital for
financial statement purposes with the net loss and partners' capital for
income tax purposes:
<TABLE>
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income (loss) for
financial statement
purposes $267,678 $ (43,119) $(2,716,533)
Excess of tax
depreciation
over depreciation
for book purposes (98,855) (337,038) (104,291)
Provision for investment
property writedown
deducted for book
purpose but not
deductible for federal
tax purposes - - 2,150,000
Other 117 3,956 (813)
---------- ----------- --------------
Income (loss) for
federal income
tax purposes $168,940 $(376,201) $ (671,637)
======= ======== ===========
Partners' capital
for financial statement
purposes $6,840,211 $6,875,546 $6,918,665
Cumulative effect of
Depreciation for
federal income tax
purposes in excess of
depreciation for book
purposes (2,651,020) (2,552,165) (2,215,127)
Provision for investment property
writedown deducted for book
purposes and not deductible
for tax purposes 2,150,000 2,150,000 2,150,000
Other 18,384 18,267 14,312
Write-off of loan costs deductible
for federal income tax purposes and not
deductible for book
purposes (120,253) (120,253) (120,253)
Syndication costs not deductible for
tax purposes 2,250,000 2,250,000 2,250,000
Recapitalization of Partnership
for generally accepted accounting
principles and not included for
federal income tax purposes (396,817) (396,817) (396,817)
---------- ---------- ----------
Partners' capital for federal
Income tax purposes $8,090,505 $8,224,578 $8,600,780
========= ========= =========
In addition, the difference between investment rental property for tax
purposes and financial statement purposes for 1995 and 1994 is as follows:
1995 1994
-------------- ---------
Investment in rental property $14,137,905 $14,458,836
Investment in rental property - tax property 13,125,284 13,545,070
---------- ----------
$ 1,012,621 $ 913,766
============ ============
</TABLE>
NOTE F - INVESTMENT PROPERTY WRITEDOWN
Annually, management of the Partnership reviews the carrying value of
properties in order to determine if an impairment to the asset value has
occurred. Properties are then written down to management's estimate of net
realizable value if necessary. For the year ended December 31, 1993, a
provision for investment property writedown of $1,350,000 for Seasons Chase
and $800,000 for Pelham Ridge was recorded. The reserve is reflected as a
component of accumulated depreciation in the accompanying balance sheets.
NOTE G - CONCENTRATION OF CREDIT RISK
At December 31, 1995, the partnership has cash in the amount of $460,161 held
by the mortgage lenders. The account is insured by the Federal Deposit
Insurance Corporation up to $100,000. The uninsured portion of this balance
at December 31, 1995 is $360,161.
13
<PAGE>
Southeastern Income Properties Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
SCHEDULE
INVESTMENT IN RENTAL PROPERTY
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
Initial Cost
to the Partnership Improvements
Number Buildings Capitalized
of and Subsequent Buildings and
Description Encumbrances Land Improvements Acquisition Land Improvements Total
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sterlingwood First Deed
Roanoke, VA of Trust $ 352,825 $4,379,369 $ 184,245 $352,825 $ 4,563,614 $4,916,439
Forestbrook First Deed
Charlotte, NC of Trust 418,145 6,326,905 1,055,682 418,145 7,382,587 7,800,732
Seasons Chase
Greensboro, NC None 438,505 4,422,399 975,977 438,505 5,398,376 5,836,881
Pelham Ridge
Greenville, SC None 607,622 3,647,331 659,056 607,622 4,306,387 4,914,009
- ------------------------------------------------------------------------------------------------------------------
$1,817,097 $18,776,004 $2,874,960 $1,817,097 $21,650,964 $23,468,061
</TABLE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
Life on which
Accumulated Date or Date Depreciation
Description Depreciation Construction Acquired is computed(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sterlingwood 30 years for buildings;
Roanoke, VA $1,351,197 Completed 1973 11/27/85 5 years for other
Forestbrook 30 Years for buildings;
Charlotte, NC 2,415,110 Completed 1974 08/28/86 5 years for other
Seasons Chase 30 years for buildings;
Greensboro, NC 1,584,098 Completed 1973 08/18/87 5 years for other
Pelham Ridge 30 years for buildings;
Greenville, SC 1,112,101 Completed 1973 08/22/88 5 years for other
- -------------------------------------------------------------------------------------
$8,612,506
- -------------------------------------------------------------------------------------
</TABLE>
(1) Depreciation of buildings for federal income tax purposes is determined
over the following useful lives: Sterlingwood - 19 years;
Forestbrook - 19 years; Seasons Chase - 27.5 years; and
Pelham Ridge - 27.5 years.
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
Effective November 21, 1994, the Registrant dismissed its former
independent auditors, Coopers & Lybrand, for economic reasons and retained as
its new independent auditors, Reznick, Fedder & Silverman. The Independent
Auditor's Report for the calendar year ended 1993 did not contain an adverse
opinion or a disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope, or accounting principles. The decision to change
independent auditors was approved by the Registrant's Managing General Partner.
During the calendar year 1993 and through November 21, 1994, there were no
disagreements between the Registrant and the former accountants on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure which disagreements if not resolved to the satisfaction of
the former accountant, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports.
Effective November 21, 1994, the Registrant engaged Reznick, Fedder &
Silverman as its independent auditors. The Registrant did not consult Reznick,
Fedder & Silverman regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K prior to November 21, 1994.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) and (b) Identification of Directors and Executive
Officers.
The Registrant has no officers or directors. The Managing General
Partner manages and controls substantially all of the Registrant's affairs and
has general responsibility and ultimate authority in all matters affecting its
business. As of March 1, 1996, the names of the directors and executive officers
of Eight Winthrop, the general partner of the Managing General Partner, and the
position held by each of them, are as follows:
Has served as a
Director and/or
Officer of the Managing
Name Positions Held General Partner since
Michael L. Ashner Chief Executive January 1996
Officer and
Director
Ronald Kravit Director July 1995
W. Edward Scheetz Director July 1995
Richard J. McCready Chief Operating July 1995
Officer and
President
Jeffrey Furber Executive Vice January 1996
President
and Clerk
Anthony R. Page Chief Financial August 1995
Officer,
Vice President
and Treasurer
Peter Braverman Senior Vice January 1996
President
Each director and officer of Eight Winthrop will hold office until the
next annual meeting of the stockholders of Eight Winthrop and until his
successor is elected and qualified.
<PAGE>
(c) Identification of Certain Significant Employees. None.
(d) Family Relationships. None.
(e) Business Experience. Eight Winthrop was incorporated in
Delaware in August 1991. The background and experience of the
executive officers and directors of Eight Winthrop, described
above in Items 10(a) and (b), are as follows:
Michael L. Ashner, age 44, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") since January 15,
1996. From June 1994 until January 1996, Mr. Ashner was a Director, President
and Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships.
W. Edward Scheetz, age 31, has been a Director of WFA since July 1995.
Mr. Scheetz was a director of NPI from October 1994 until January 1996. Since
May 1993, Mr. Scheetz has been a limited partner of Apollo Real Estate Advisors,
L.P. ("Apollo"), the managing general partner of Apollo Real Estate Investment
Fund, L.P., a private investment fund. Mr. Scheetz has also served as a Director
of Roland International, Inc., a real estate investment company since January
1994, and as a Director of Capital Apartment Properties, Inc., a multi-family
residential real estate investment trust, since January 1994. From 1989 to May
1993, Mr. Scheetz was a principal of Trammel Crow Ventures, a national real
estate investment firm.
Ronald Kravit, age 39, has been a Director of WFA since July 1995. Mr.
Kravit has been associated with Apollo since August 1995. From October 1993 to
August 1995, Mr. Kravit was a Senior Vice President with G. Soros Realty
Advisors/Reichman International. Mr. Kravit was a Vice President and Chief
Financial Officer of MAXXAM Property Company from July 1991 to October 1993.
Richard J. McCready, age 37, is the Chief Operating Officer of WFA and its
subsidiaries. Mr. McCready previously served as a Managing Director, Vice
President and Clerk of WFA and a Director, Vice President and Clerk of the
Managing General Partner and all other subsidiaries of WFA. Mr. McCready joined
the Winthrop organization in 1990
Jeffrey Furber, age 36, has been the Executive Vice President of WFA
and the President of Winthrop Management since January 1996. Mr. Furber served
as a Managing Director of WFA from January 1991 to December 1995 and as a Vice
President from June 1984 until December 1990.
Anthony R. Page, age 32, has been the Chief Financial Officer for WFA since
August 1995. From July 1994 to August 1995, Mr. Page was a Vice President with
Victor Capital Group, L.P. and from 1990 to June 1994, Mr. Page was a Managing
Director with Principal Venture Group. Victor Capital and Principal Venture are
investment banks emphasizing on real estate securities, mergers and
acquisitions.
Peter Braverman, age 44, has been a Senior Vice President of WFA since
January 1996. From June 1995 until January 1996, Mr. Braverman was a Vice
President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop Partners
81 Limited Partnership; Winthrop Residential Associates I, A Limited
Partnership; Winthrop Residential Associates II, A Limited Partnership; Winthrop
Residential Associates III, A Limited Partnership; 1626 New York Associates
Limited Partnership; 1999 Broadway Associates Limited Partnership; Indian River
Citrus Investors Limited Partnership; Nantucket Island Associates Limited
Partnership; One Financial Place Limited Partnership; Presidential Associates I
Limited Partnership; Riverside Park Associates Limited Partnership;
<PAGE>
Sixty-Six Associates Limited Partnership; Springhill Lake Investors Limited
Partnership; Twelve AMH Associates Limited Partnership; Winthrop California
Investors Limited Partnership; Winthrop Growth Investors I Limited Partnership;
Winthrop Interim Partners I, A Limited Partnership; Winthrop Financial
Associates, A Limited Partnership; Southeastern Income Properties II Limited
Partnership; Winthrop Miami Associates Limited Partnership and Winthrop
Apartment Investors Limited Partnership.
(f) Involvement in Certain Legal Proceedings. None.
Item 11. Executive Compensation.
The Registrant is not required to and did not pay any compensation to
the officers or directors of Eight Winthrop. Eight Winthrop does not presently
pay any compensation to any of its officers and directors (See "Item 13, Certain
Relationships and Related Transactions").
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 Registrant to be the beneficial
owner of more than 5% of the outstanding Units as of March 15, 1996. Under the
Registrant's 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.
(b) Security Ownership of Management.
As of March 15, 1996, no officers, directors or partners of WFA, WSLP
or Eight Winthrop own any Units of the Registrant.
(c) Changes in Control.
As of March 15, 1996, there exists no arrangement known to the
Registrant the operation of which may at a subsequent date result in a change in
control of the Registrant, other than the following:
<PAGE>
In connection with the withdrawal of the Original General Partner and
the substitution of WSLP as the Managing General Partner, WSLP entered into
certain loan arrangements with ISB, including the pledge of its general
partnership interest. (See the 1991 Solicitation of Consents which is hereby
incorporated by reference, and "Item 3, Legal Proceedings.") In the event the
RTC Loan Trust, successor in interest to ISB, was successful in enforcing its
remedies under the security agreement, the RTC Loan Trust may claim an interest
in the general partnership interest of the Registrant. WSLP disputes the
validity of the security interest, and would vigorously defend any action, and
raise, among other meritorious defenses, the fact that the transfer of the
general partnership interest requires the consent of a majority of Unit holders.
In connection with its acquisition of control of Linnaeus,
Londonderry II issued NACC a $22 million non-recourse purchase money note due
1998 (the "Purchase Money Note"), as set forth in a loan agreement, dated as of
July 14, 1995, by and between NACC and Londonderry II. Initial security for the
Purchase Money Note includes, among other things, the partnership interests in
W.L. Realty acquired by Londonderry II and the W.L. Realty partnership interest
in Linnaeus. Accordingly, if Londonderry II does not satisfy its obligations
under the Purchase Money Note, NACC would have the right to foreclose upon this
security and, as a result, would gain control of the Registrant.
<PAGE>
Item 13. Certain Relationships and Related Transactions.
Under the Registrant's partnership agreement, the Managing General
Partner and its affiliates are entitled to receive various fees, commissions,
cash distributions, allocations of taxable income or loss and expense
reimbursements from the Registrant.
The following tables sets forth the amounts of the fees, commissions
and cash distributions which the Registrant paid to or accrued for the account
of the Managing General Partner and its affiliates for the years ended December
31, 1995, 1994 and 1993:
<TABLE>
Recipient Type of Compensation 1995 1994 1993
<S> <C> <C> <C> <C>
WSLP Cash Distribution (1) $ 30 $ 0 $ 0
Winthrop Management Property Management Fee (2) 204,246 185,061 169,728
First Winthrop Corp. Investor Servicing Fee (3) 35,408 37,187 34,768
Winthrop Management Accounting Services Fee (4) 21,000 24,990 24,990
TOTAL: $260,654 $247,238 $229,486
</TABLE>
- ---------------
(1) Equal to .01% of cash flow distributed to all partners of the Registrant.
(2) Equal to 5.0% of gross collected revenues of the Registrant's properties.
(3) Equal to 1.0% of gross collected revenues of the Registrant's properties.
(4) Equal to $2.50 per apartment unit per month.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) The following documents are filed as part of this
report:
1. Financial Statements - See Index to Financial
Statements in Item 8.
2. Financial Statement Schedules - See Index to Financial
Statement Schedule filed pursuant to Item 14(a)(2) in "Item 8, Financial
Statements and Supplementary Data." Financial statement schedules not included
in "Item 8" have been omitted because of the absence of conditions under which
they are required or because the information is included elsewhere in the
financial statements.
3. Exhibits - The Exhibits listed in the accompanying
Index to Exhibits are filed as part of this Annual Report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter covered by
this report.
<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.
SOUTHEASTERN INCOME PROPERTIES
LIMITED PARTNERSHIP
By: Winthrop Southeastern Limited
Partnership,
Its General Partner
By: Eight Winthrop
Properties, Inc.,
Its General Partner
By: /s/ Michael L. Ashner
Michael L. Ashner
Chief Executive Officer
Date: March 29, 1996
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/Name Title Date
/s/ Michael L. Ashner Chief Executive March 29, 1996
- ---------------------
Michael L. Ashner Officer and Director
/s/ Ronald Kravit Director March 29, 1996
Ronald Kravit
/s/ Anthony R. Page Chief Financial Officer March 29, 1996
Anthony R. Page
<PAGE>
Index to Exhibits
Exhibit
Number Document
2.1 Agreement and Addendum to Agreement by and among Glade
M. Knight ("Knight"), Ben T. Austin, II ("Austin"),
Winthrop Southeast Limited Partnership ("WSLP") and
Investors Savings Bank, F.S.B. ("ISB") (the
"Agreement") dated as of August 8, 1991 and effective
as of August 16, 1991. [The exhibits to the Agreement
have been omitted from the Agreement and are listed in
the Agreement.] (Exhibit 2.1)(8)
2.2 Supplemental Agreement by and among WSLP, Knight and
ISB (the "Knight Agreement") dated as of August 8, 1991
and effective as of August 16, 1991. [The exhibits to
the Knight Agreement have been omitted from the Knight
Agreement and are listed in the Knight Agreement.]
(Exhibit 2.2)(8)
2.3 Supplemental Agreement and Addendum to Supplemental
Agreement by and among WSLP, Austin and ISB dated as of
August 8, 1991 and effective as of August 16, 1991.
(Exhibit 2.3)(8)
2.4 Employment Agreement by and between WSLP and Austin
dated as of August 8, 1991 and effective as of August
16, 1991. (Exhibit 2.4)(8)
2.5 Supplemental Agreement by and between WSLP and ISB
dated as of August 8, 1991 and effective as of August
16, 1991. (Exhibit 2.5)(8)
3.1 Amended and Restated Certificate and Agreement of
Limited Partnership of Southeastern Income Properties
Limited Partnership. (Exhibit 4.1)(1)
3.2 First Amendment to Amended and Restated Certificate and
Agreement of Limited Partnership of Southeastern Income
Properties Limited Partnership dated as of February 17,
1987. (Exhibit 4.2)(1)
<PAGE>
3.3 Second Amendment to Amended and Restated Certificate
and Agreement of Limited Partnership of Southeastern
Income Properties Limited Partnership dated as of March
16, 1987. (Exhibit 4.3)(1)
3.4 Third Amendment to Amended and Restated Certificate and
Agreement of Limited Partnership of Southeastern Income
Properties Limited Partnership dated as of April 30,
1987. (Exhibit 4.4)(1)
3.5 Fourth Amendment to Amended and Restated Certificate
and Agreement of Limited Partnership of Southeastern
Income Properties Limited Partnership dated as of May
28, 1987. (Exhibit 4.1)(2)
3.6 Fifth Amendment to Amended and Restated Certificate and
Agreement of Limited Partnership of Southeastern Income
Properties Limited Partnership dated as of June 29,
1987. (Exhibit 4.2)(2)
3.7 Sixth Amendment to Amended and Restated Certificate and
Agreement of Limited Partnership of Southeastern Income
Properties Limited Partnership dated as of February 12,
1992. (Exhibit 3.7)(9)
3.8 Articles of Incorporation of SIP Assignor Corporation.
(Exhibit 3.6)(3)
3.9 Bylaws of SIP Assignor Corporation. (Exhibit 3.7)(3)
10.1 Apartment Management Agreement (for the Sterlingwood
Apartments). (Exhibit 28.1)(1)
10.2 Apartment Management Agreement (for the Forestbrook
Apartments). (Exhibit 28.2)(1)
10.3 Apartment Management Agreement (for the Seasons Chase
Apartments). (Exhibit 10.5)(4)
10.4 Apartment Management Agreement (for the Pelham Ridge
Apartments). (Exhibit 10.4)(5)
10.5 Apartment Management Agreement, dated February 12, 1992
between the Registrant and Winthrop Management (for
Pelham Ridge Apartments). (Exhibit 10.5) (9)
<PAGE>
10.6 Apartment Management Agreement, dated February 12, 1992
between the Registrant and Winthrop Management (for
Forestbrook Apartments). (Exhibit 10.6)(9)
10.7 Apartment Management Agreement, dated February 12, 1992
between the Registrant and Winthrop Management (for
Seasons Chase Apartments). (Exhibit 10.7) (9)
10.8 Apartment Management Agreement, dated February 12, 1992
between the Registrant and Winthrop Management (for
Sterlingwood Apartments). (Exhibit 10.8) (9)
10.9 Property Acquisition Agreement between Southeastern
Income Properties Limited Partnership and Knight Austin
Corporation. (Exhibit 28.3)(1)
10.10 Real Estate Consulting Agreement between Southeastern
Income Properties Limited Partnership and WFS Realty
Corporation. (Exhibit 28.4)(1)
10.11 Rent Guarantee and Escrow Agreement for the Seasons
Chase Apartments. (Exhibit 29.2)(6)
10.12 Novation to Rent Guarantee and Escrow Agreement for the
Seasons Chase Apartments. (Exhibit 19.3)(6)
10.13 Rent Guarantee Agreement for the Pelham Ridge
Apartments. (Exhibit 10.3)(5)
10.14 Repair Supervisory Contract. (Exhibit 10.10)(7)
10.15 Supervisory Insurance Adjustment Contract. (Exhibit
10.11)(7)
10.16 Mortgage Brokerage and Consulting Agreement. (Exhibit
10.12)(7)
- ------------------------
(1) Incorporated by reference to the exhibit shown in parentheses filed
with the Commission in the Registrant's quarterly report on Form 10-Q
for the quarter ended March 30, 1987.
<PAGE>
(2) Incorporated by reference to the exhibit shown in parentheses filed
with the Commission in the Registrant's quarterly report on Form 10-Q
for the quarter ended June 30, 1987.
(3) Incorporated by reference to the exhibit shown in
parentheses filed with the Commission in the Registrant's
registration statement on Form S-11 (Registration No. 33-
9085).
(4) Incorporated by reference to the exhibit shown in parentheses filed
with the Commission in the Registrant's current report on Form 8-K
dated September 2, 1987.
(5) Incorporated by reference to the exhibit shown in parentheses filed
with the Commission in the Registrant's current report on Form 8-K
dated September 6, 1988.
(6) Incorporated by reference to the exhibit shown in parentheses filed
with the Commission in the Registrant's quarterly report on Form 10-Q
for the quarter ended September 30, 1987.
(7) Incorporated by reference to the exhibit shown in
parentheses filed with the Commission in the Registrant's
1989 Annual Report.
(8) Incorporated by reference to the exhibit shown in parentheses filed
with the Commission in the Registrant's current report on Form 8-K on
September 3, 1991.
(9) Incorporated by reference to the exhibit shown in parentheses filed
with the Commission in the Registrant's annual report on Form 10-K for
the year ended December 31, 1991.
(10) Incorporated by reference to the exhibit shown in parentheses filed
with the Commission in the Registrant's annual report on Form 10-K for
the year ended December 31, 1992.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from audited financial
statements for the one year period ending
December 31, 1995 and is qualified in its
entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000802969
<NAME> Southeastern Income Properties Limited Partn
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1.0000
<CASH> 575510
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 895969
<PP&E> 24380700
<DEPRECIATION> 10242795
<TOTAL-ASSETS> 15609384
<CURRENT-LIABILITIES> 699439
<BONDS> 8069734
0
0
<COMMON> 0
<OTHER-SE> 6840211
<TOTAL-LIABILITY-AND-EQUITY> 15609384
<SALES> 0
<TOTAL-REVENUES> 4208409
<CGS> 0
<TOTAL-COSTS> 2230153
<OTHER-EXPENSES> 935138
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 775440
<INCOME-PRETAX> 267678
<INCOME-TAX> 0
<INCOME-CONTINUING> 267678
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 267678
<EPS-PRIMARY> 4.55
<EPS-DILUTED> 0
</TABLE>
