<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1997 Commission File Number 0-16848
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SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
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(exact name of small business issuer as specified in its charter)
Virginia 54-1350850
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, MA 02110
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(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
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited) (Audited)
------------ ------------
ASSETS
<S> <C> <C>
Investment in real estate
Land $ 1,817,097 $ 1,817,097
Buildings and building improvements 18,821,069 18,735,741
Personal property 4,197,445 4,197,445
24,835,611 24,750,283
Less accumulated depreciation 11,316,622 11,101,857
------------ ------------
13,518,989 13,648,426
------------ ------------
Cash and cash equivalents 336,477 384,491
Tenant security deposits - funded 117,007 111,422
Loan cost, net accumulated amortization of $304,147 -- 3,800
and $300,347
Other assets 792,043 707,728
------------ ------------
1,345,527 1,207,441
------------ ------------
Total assets $ 14,864,516 $ 14,855,867
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities applicable to investment in real estate
Mortgage payable $ 8,002,239 $ 8,016,389
Other liabilities
Rent deferred credits -- 10,580
Accrued interest payable 66,020 66,020
Tenant security deposits liability 127,895 116,129
Other liabilities 185,266 159,240
------------ ------------
Total liabilities 8,381,420 8,368,358
============ ============
Partners' capital
Limited partners' unit holders' 50,000 units authorized
and outstanding 7,015,288 7,019,039
Special limited partner (493,744) (493,126)
General partner (38,448) (38,404)
Total partners' capital 6,483,096 6,487,509
------------ ------------
Total liabilities and partners' capital $ 14,864,516 $ 14,855,867
============ ============
</TABLE>
See Notes to Financial Statements
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
PART 1 - FINANCIAL INFORMATION
STATEMENTS OF OPERATIONS
ITEM 1- FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
For the three months ended March 31, 1997 and 1996 1997 1996
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Income
Rental $ 979,055 $ 966,510
Interest income 601 5,242
Other income 75,815 51,258
----------- -----------
Total income 1,055,471 1,023,010
----------- -----------
Expenses
Leasing 32,213 30,006
General and administrative 78,092 78,767
Management fees 52,725 59,820
Utilities 115,348 117,886
Repairs and maintenance 219,814 278,914
Insurance 35,296 41,921
Taxes 76,116 85,657
----------- -----------
Total operating expenses 609,604 692,971
----------- -----------
Other expenses
Partnership expense 39,882 18,773
Interest expense 191,833 193,120
Depreciation and amortization 218,565 229,546
----------- -----------
Total expenses 1,059,884 1,134,410
=========== ===========
Net loss $ (4,413) $ (111,400)
=========== ===========
Net loss allocated to general partner $ (44) $ (1,114)
=========== ===========
Net loss allocated to limited partner unit holders $ (3,751) $ (94,690)
=========== ===========
Net loss allocated to special limited partner $ (618) $ (15,596)
=========== ===========
Net loss allocated to each unit $ (.08) $ (1.89)
=========== ===========
Weighted average number of units outstanding 50,000 50,000
=========== ===========
</TABLE>
See Notes to Financial Statements
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS CAPITAL
<TABLE>
<CAPTION>
For the three months ended Units of General Special Partner Total
March 31, 1997 and 1996 limited partner limited unit partners'
(unaudited) partnership partner holders capital
interest
<S> <C> <C> <C> <C> <C>
Balance December 31, 1996 50,000 $ (38,404) $ (493,126) $ 7,019,039 $ 6,487,509
Net income (44) (618) (3,751) (4,413)
--------------- --------------- --------------- ---------------- ----------------
Balance, March 31, 1997 50,000 $ (38,448) $ (493,744) $ 7,015,288 $ 6,483,096
=============== =============== =============== ================ ================
Balance December 31, 1995 50,000 $ (36,377) $ (463,460) $ 7,340,048 $ 6,840,211
Net loss (1,114) (15,596) (94,690) (111,400)
Distributions (1,504) (21,204) (128,777) (151,485)
--------------- --------------- --------------- ---------------- ----------------
Balance, March 31, 1996 50,000 $ (38,995) $ (500,260) $ 7,116,581 $ 6,577,326
=============== =============== =============== ================ ================
</TABLE>
See Notes to Financial Statements
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the three months ended 1997 1996
March 31, 1997 and 1996 (Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (4,413) $(111,400)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 218,565 229,546
Changes in assets and liabilities:
Increase in security deposits cash (5,585) (26,033)
Increase in other assets (84,315) (48,659)
Decrease in accounts payable -- (197,085)
Decrease in prepaid rent -- (7,759)
Increase in tenant security deposits 11,766 383
Increase (decrease) in other liabilities 26,026 (40,433)
Decrease in rent deferred credits (10,580) --
Net cash provided by (used in) operating activities 151,464 (201,440)
----------- -----------
Cash flows from investing activities:
Additions to buildings and improvements (185,328) (72,009)
Net cash used in investing activities (185,328) (72,009)
----------- -----------
Cash flows from financing activities:
Principal payments on mortgage note (14,150) (12,863)
Cash distributions paid to partners -- (151,485)
Net cash used in financing activities (14,150) (164,348)
----------- -----------
Net increase (decrease) in cash and cash equivalents (48,014) (437,797)
----------- -----------
Cash and cash equivalents, beginning of period 384,491 575,510
Cash and cash equivalents, end of period $ 336,477 $ 137,713
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 191,833 $ 193,120
========= =========
</TABLE>
See Notes to Financial Statements
-5-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed consolidated financial statements included herein have been
prepared by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The Partnership's
accounting an 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 Partnership's latest annual
report on Form 10-KSB.
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,
1997.
2. TAXABLE INCOME
The Partnership's results of operations on a tax basis are expected to
differ from net income for financial reporting purposes primarily due to the
accounting differences in the recognition of depreciation and amortization.
3. RELATED PARTY TRANSACTIONS
Property management and asset management fees paid or accrued by the
Partnership to affiliates of the general partner, totaled $52,725 and
$59,820 during the three months ended March 31, 1997 and 1996, respectively.
On March 15, 1996 the Partnership terminated Winthrop Management as the
managing agent effective March 18, 1996 and appointed Insigna Management
Corporation, an unaffiliated third party, to assume management of the
properties.
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources
The Partnership receives rental income from its properties and is responsible
for operating expenses, administrative expenses, capital improvements and debt
service payments. The Partnership's properties are leased to tenants who are
subject to leases of up to one year.
During the three months ended March 31, 1997, rental revenue and other income
from the properties, along with interest income from the Partnership's
short-term investments, was insufficient to cover: (i) all operating expenses
and debt service of the properties and all administrative expenses of the
partnership; and (ii) all capital improvements made to the properties during
1997. As a result, as of March 31, 1997, the Partnership's unrestricted cash
balance had decreased to $336,477 from $384,491 at December 31, 1996.
It is expected that future rental revenue and other income from the
Partnership's properties will be sufficient to cover all administrative
expenses of the partnership and all operating expenses and debt service of the
properties. The Partnership intends to continued to limit cash distributions to
fund the capital improvement program. However, the performance of the
Partnership's properties and its distributions policy will continue to be
reviewed on a quarterly basis.
In addition, the ability of the Partnership's properties to improve operations
may affect the liquidity of the Partnership. Inflation and changing economic
conditions in the future could affect vacancy levels, rental payment defaults
and operating expenses of the partnership's revenue, net income and liquidity.
The markets in which the properties are located, which had softened as a result
of general economic conditions and difficulties in the real estate industry,
have stabilized, and in some instances have started to show signs of recovery.
In general, the age of the properties and the fact that capital improvements
and ordinary maintenance were deferred by prior management had reduced the
properties= competitiveness within their markets. In 1992, the partnership
commenced a capital improvement program at each of the properties, which was
estimated cost approximately $1.5 to $2.0 million over an approximate four-year
period. From 1992 through 1996, the Partnership spent approximately $1,885,000
on capital improvements.
With respect to the capital improvement program, the Partnership has spent
$85,328 for the three months ending March 31, 1997. The Partnership has
budgeted an additional $371,082 for capital improvements during the remainder
of 1997 which would include asphalt concrete work at Forestbrook, roof repairs
at Sterlingwood, asphalt and common area improvements at Seasons Chase, and
appliance replacement at all four properties. At two of the Partnership's four
properties (Forestbrook and Sterlingwood Apartments) a portion of the capital
improvement program is funded by replacement
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
reserves held by the mortgage lenders, with the balance being funded from
operations. The balance of these replacement reserves was $569,633 at March 31,
1997. Capital improvements at the remaining two properties (Pelham Ridge and
Seasons Chase Apartments) are funded from operations.
Results of Operations
The Partnership generated a net loss for three months ended March 31, 1997 of
$4,413 as compared to a net loss of $111,400 for the three months March 31,
1996. Total income increased slightly as a result of a 1.3% increase in rental
income and a 48% increase in other income for the first three months of 1997,
as compared to the first three months of 1996, which was substantially offset
by a decrease in interest income. Average rents at the properties have
increased 4.7% since the first three months of 1996, while average occupancy
has remained relatively at constant 89.7% compared to 88.8%. Sterlingwood
experienced a slight increase in occupancy from 90.8% to 92.8%. Decreases in
occupancy have occured at Forestbrook from 91.8% to 85.2% and Pelham Ridge from
89.4% to 88.9%. Seasons Chase had an increase from 87.4% to 89.2%. The
decreases were caused primarily by non-renewals due to the rental increases and
the limited number of qualified applicants seeking to rent units. A fire in
September 1995 had left Season Chase with 13 units unavailable for occupancy.
These units became availilable for rental during the second quarter of 1996
resulting in an increase in occupancy of approximately 3%. Rental revenues were
negatively impacted by an increase in concessions from $3,067 in the quarter
ended March 31, 1996 to $32,890 in the first quarter of 1997 in an effort to
increase occupancy and compete in the current market.
Direct operating costs of the Partnership's properties decreased from $692,971
in the quarter ending March 31, 1996 to $609,604 in the quarter ending March
31, 1997. The decrease was primarily the result of a decrease in repair &
maintenance costs of $59,100 and a decrease in insurance and real estate tax
expenses of $16,166. The decrease in repair and maintenance expense was due to
lower damage insurance claim expense of $2,519 compared to $68,296 in the first
quarter of 1996. The remaining operating costs were maintained relatively at
the same level as in the prior year. Debt service, interest and amortization
expenses remained stable, while depreciation expenses of the Partnership
increased as a result of capital spending in 1997.
The results of operations in future periods may differ from those for the three
months ended March 31, 1997, due to inflation and changing economic conditions
which could affect vacancy levels, rental rates and operating expenses.
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
ITEM 6 -EXHIBITS AND REPORTS ON FORM 8-K
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Ex. 27 - Financial Data Schedule
b) Reports on Form 8-K. No report on Form 8-K was required to be
filed during the period.
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities and 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 Properties, Inc.
Its General Partner
By: Eight Winthrop Properties, Inc.,
Its General Partner
By: /s/Michael L. Ashner
--------------------------------
Michael L. Ashner
Chief Executive Officer
By: /s/Edward V. Williams
--------------------------------
Edward V. Williams
Chief Financial Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from unaudited financial statements for the
three month period ending March 31, 1997 and is
qualified in its entirety by reference to such financial
statements
</LEGEND>
<CIK> 0000802969
<NAME> SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 336,477
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 24,835,611
<DEPRECIATION> (11,316,622)
<TOTAL-ASSETS> 14,864,516
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,483,096
<TOTAL-LIABILITY-AND-EQUITY> 14,864,516
<SALES> 0
<TOTAL-REVENUES> 1,054,870
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 531,512
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 191,833
<INCOME-PRETAX> (4,413)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,413)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,413)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
