<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 June 30, 1997 Commission File Number 0-16848
------------- -------
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
(exact name of small business issuer as specified in its charter)
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>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
June 30, December 31,
1997 1996
(Unaudited) (Audited)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in real estate
Land $ 1,817,097 $ 1,817,097
Buildings and building improvements 18,846,822 18,735,741
Personal property 4,292,670 4,197,445
------------------ ------------------
24,956,589 24,750,283
Less accumulated depreciation 11,531,387 11,101,857
------------------ ------------------
13,425,202 13,648,426
------------------ ------------------
Cash and cash equivalents 501,165 384,491
Tenant security deposits - funded 158,971 111,422
Loan cost, net accumulated amortization
of $304,147 and $300,347 117,500 3,800
Other assets 865,998 707,728
------------------ ------------------
1,643,634 1,207,441
------------------ ------------------
Total assets $ 15,068,836 $ 14,855,867
================== ==================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities applicable to investment in real estate
Mortgage payable $ 7,987,747 $ 8,016,389
Other liabilities
Rent deferred credits 9,249 10,580
Accrued interest payable 66,020 66,020
Tenant security deposits liability 168,292 116,129
Other liabilities 303,736 159,240
------------------ ------------------
Total liabilities 8,535,044 8,368,358
------------------ ------------------
Partners' capital
Limited partners' unit holders' $50,000 units authorized
and outstanding 7,058,379 7,019,039
Special limited partner (486,646) (493,126)
General partner (37,941) (38,404)
------------------ ------------------
Total partners' capital 6,533,792 6,487,509
================== ==================
Total liabilities and partners' capital $ 15,068,836 $ 14,855,867
================== ==================
</TABLE>
See notes to financial statements
-2-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
PART 1 - FINANCIAL INFORMATION
STATEMENTS OF OPERATIONS
ITEM 1- FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the three and six months ended Three months ended June 30, Six months ended June 30,
June 30, 1997 and 1996 (Unaudited) (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Income
Rental $ 1,056,765 $ 994,374 $ 2,035,820 $ 1,960,884
Interest income 1,019 1,285 1,620 6,527
Other income 79,394 54,251 155,209 105,509
----------------- --------------- --------------- ---------------
Total income 1,137,178 1,049,910 2,192,649 2,072,920
----------------- --------------- --------------- ---------------
Expenses
Leasing 30,609 15,451 62,822 41,139
Payroll and benefits 142,943 125,010 277,807 276,363
General and administrative 34,663 37,888 64,447 62,340
Management fees 73,672 46,517 135,090 106,337
Utilities 104,257 103,087 219,605 220,973
Repairs and maintenance 146,892 155,200 304,716 367,867
Insurance 25,554 16,652 48,055 43,152
Taxes 66,782 45,083 131,965 119,688
----------------- --------------- --------------- ---------------
Total operating expenses 625,372 544,888 1,244,507 1,237,859
----------------- --------------- --------------- ---------------
Other expenses
Partnership expense 54,854 60,529 85,204 79,301
Interest expense 191,492 192,762 383,325 385,882
Depreciation and amortization 214,764 247,868 433,330 477,414
----------------- --------------- --------------- ---------------
Total expenses 1,086,482 1,046,047 2,146,366 2,180,456
----------------- --------------- --------------- ---------------
Net income (loss) $ 50,696 $ 3,863 $ 46,283 $ (107,536)
================= =============== =============== ===============
Net income (loss) allocated to
general partner $ 507 $ 39 $ 463 $ (1,075)
================= =============== =============== ===============
Net income (loss) allocated to
limited partner unit holders $ 43,092 $ 3,824 $ 39,340 $ (106,461)
================= =============== =============== ===============
Net income allocated to
special limited partner $ 7,097 $ - $ 6,480 $ -
================= =============== =============== ===============
Net income (loss) allocated to each
unit $ 0.86 $ .08 $ 0.79 $ (2.13)
================= =============== =============== ===============
Weighted average number of units
outstanding 50,000 50,000 50,000 50,000
================= =============== =============== ===============
</TABLE>
See notes to financial statements
-3-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
For the six months ended June Units of Special Partner Total
30, 1997 and 1996 limited General limited unit partners'
(unaudited) partnership partner 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 463 6,480 39,340 46,283
---------------- ---------------- -------------- --------------- ---------------
Balance, June 30, 1997 50,000 $ (37,941) $ (486,646) $ 7,058,379 $ 6,533,792
================ ================ ============== =============== ===============
Balance December 31, 1995 50,000 $ (36,377) $ (463,460) $ 7,340,048 $ 6,840,211
Net loss (1,075) - (106,461) (107,536)
Distributions (1,504) (21,204) (128,777) (151,485)
---------------- ---------------- -------------- --------------- ---------------
Balance, June 30, 1996 50,000 $ (38,956) $ (484,664) $ 7,104,810 $ 6,581,190
================ ================ ============== =============== ===============
</TABLE>
See notes to financial statements
-4-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
For the six months ended 1997 1996
June 30, 1997 and 1996 (Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ 46,283 $ (107,536)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 433,330 477,414
Changes in assets and liabilities:
(Increase) decrease in security deposits cash (47,549) 17,811
Increase in other assets (158,270) (104,539)
Decrease in accounts payable - (199,400)
Increase (decrease) in tenant security deposits 52,163 (935)
Increase in other liabilities 144,496 39,039
Decrease in rent deferred credits (1,331) (7,759)
------------------ -----------------
Net cash provided by operating activities 469,122 114,095
------------------ -----------------
Cash flows from investing activities:
Additions to rental property (206,306) (144,594)
------------------ -----------------
Net cash used in investing activities (206,306) (144,594)
------------------ -----------------
Cash flows from financing activities:
Principal payments on mortgage note (28,642) (26,086)
Cash distributions paid to partners - (151,485)
Payment of loan cost (117,500) -
------------------ -----------------
Net cash used in financing activities (146,142) (177,571)
------------------ -----------------
Net increase (decrease) in cash and cash equivalents 116,674 (208,070)
Cash and cash equivalents, beginning of period 384,491 575,510
------------------ -----------------
Cash and cash equivalents, end of period $ 501,165 $ 367,440
================== =================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 383,325 $ 385,882
================== =================
</TABLE>
See notes to financial statements
-5-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed consolidated financial statements included herein have been
prepared by Southeastern Income Properties Limited Partnership (the
Partnership), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The Partnership's accounting and financial
reporting policies conform 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 Annual
Report on Form 10-KSB for the year ended December 31, 1996.
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 and Asset management fees paid or accrued by the Partnership to an
affiliate of the General Partner, totaled $ 0 and $51,131 during the six months
ended June 30, 1997 and 1996, respectively. On March 15, 1996 the partnership
terminated Winthrop Management as the managing agent effective March 18, 1996
and appointed an unaffiliated third party to assume management of the
properties.
4. RECLASSIFICATION
Certain items in the 1996 Statement of Operations have been reclassified to
conform with the current year presentation.
-6-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
5. SUBSEQUENT EVENT
In July, 1997, the loan encumbering the Partnership's Forest Brook Apartment
property, which matured, was refinanced. The new loan in the principal amount of
$5,750,000 bears interest at 8.3% per annum, requires monthly principal and
interest payments of approximately $45,528 and matures on August 1, 2007. A
prepayment penalty is to be calculated under the terms of the loan if the loan
is prepaid before May 3, 2007. In addition, the Partnership is required to make
a monthly payment of $6,550 into a tenant improvement escrow account, which is
held by lender. The Partnership is currently marketing the Forest Brook
Apartment property for sale.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources
All of the Partnership's real estate properties are residential properties with
apartments leased to tenants pursuant to lease with original terms ranging from
three to fourteen months. The Partnership receives rental income from its
apartments and is responsible for operating expenses, administrative expenses,
capital improvements and debt service payments. The Partnership uses working
capital reserves provided from any undistributed cash flow from operations and
proceeds from mortgage refinancings as its primary source of liquidity. For the
long term, cash from operations is expected to remain the Partnership's primary
source of liquidity, (i.e., until additional debt is refinanced or properties
sold).
The level of liquidity based on cash and cash equivalents experienced a $116,674
increase at June 30, 1997, as compared to December 31, 1996. The increase was
due to $469,122 of net cash provided by operating activities which was partially
offset by $146,142 of cash used in financing activities and $206,306 of net cash
used in investing activities. Financing activities consisted of $28,642 of
mortgage principal payments and $117,500 of loan commitment fees. Investing
activities consisted of improvements to real estate. All other increases
(decreases) in certain assets and liabilities are the result of the timing of
receipt and payment of various operating activities.
The Partnership continues to make capital improvements to the properties to
enhance their competitiveness within their markets. The Partnership spent
$206,306 on capital improvements during the six months ended June 30, 1997,
which was funded from operating cash and replacement reserves held by mortgage
lenders. The Partnership anticipates it will spend approximately $189,000 for
capital improvements during the balance of 1997. The Partnership expects to
spend approximately $20,000 for structural improvements (doors and stairways)
and $32,000 in roof replacements at Sterlingwood, and approximately $36,000 for
deck replacement at Seasons Chase.
The Partnership invests its working capital reserves in a money market account.
The Managing General Partner believes that, if market conditions remain
relatively stable, cash flow from operations, when combined with working capital
reserves, will be sufficient to fund required capital improvements, and regular
debt service payments until the mortgages mature.
-7-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
In July, 1997, the loan encumbering the Partnership's Forest Brook Apartment
property matured and was refinanced. The new loan in the principal amount of
$5,750,000 bears interest at 8.3% per annum, requires monthly principal and
interest payments of approximately $45,528 and matures on August 1, 2007. A
prepayment penalty is to be calculated under the terms of the loan if the loan
is prepaid before May 3, 2007. The Partnership is currently marketing the Forest
Brook Apartment property for sale.
The loan encumbering the Partnership's Sterlingwood Apartments property matured
on April 1, 1997. The loan has been extended until August 1, 1997. It is
expected that the Partnership will be able to refinance this loan during the
third quarter of 1997.
Results of Operations
The Partnership's investment properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for the six
months ended June 30, 1997 and 1996:
Average Occupancy
-------------------------
Property 1997 1996
- --------------------------------------- ------------ -----------
Forest Brook Apartments 90% 89%
Pelham Ridge Apartments 88% 88%
Seasons Chase Apartments 92% 89%
Sterlingwood Apartments 95% 93%
The Partnership generated net income for six months ended June 30, 1997 of
$46,283 as compared to a net loss of $107,536 for the six months June 30, 1996.
Net income for the three months ended June 30, 1997 was $50,696 as compared to
net income of $3,863 for the three months ended June 30, 1996. Total income
increased slightly as a result of a $74,936 increase in rental income and
$49,700 increase in other income for the first six months of 1997, as compared
to the first six months of 1996, which was partially offset by a decrease in
interest income. Average rents at the properties have increased by approximately
2.0% and average occupancy has increased to 91% for the six months ended June
30, 1997 compared to 89% for the six months ended June 30, 1996.
Total operating expenses of the Partnership's properties increased from
$1,237,859 to $1,244,507 or approximately .5% compared to the first six months
of 1996. The increase was primarily the result of increased management fees,
leasing and taxes partially offset by lower repairs and maintenance expenses.
The decrease in repairs and maintenance was due to lower damage insurance claim
expense of $53,729 in 1996 compared to $10,269 in the first six months of 1997.
The remaining operating costs were maintained at approximately the same level as
in the prior year. Debt service, interest and amortization expenses remained
stable, while depreciation expenses of the Partnership decreased.
The results of operations in future periods may differ from those for the six
months ended June 30, 1997, due to inflation and changing economic conditions
which could affect vacancy levels, rental rates and operating expenses.
-8-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
ITEM 6 -EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No report on Form 8-K were filed the three months ended June 30, 1997.
-9-
<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SOUTHEASTERN INCOME PROPERTIES
LIMITED PARTNERSHIP
By: Winthrop Southeastern Properties, Inc.
Its General Partner
By: Eight Winthrop Properties, Inc.,
Its General Partner
Date: August 14, 1997 By: /s/ Michael L. Ashner
---------------------
Michael L. Ashner
Chief Executive Officer
Date: August 14, 1997 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
six month period ending June 30, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 501,165
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 24,956,589
<DEPRECIATION> (11,531,387)
<TOTAL-ASSETS> 15,068,836
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 6,533,792
<TOTAL-LIABILITY-AND-EQUITY> 15,068,836
<SALES> 0
<TOTAL-REVENUES> 2,191,029
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,180,060
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 383,325
<INCOME-PRETAX> 46,283
<INCOME-TAX> 0
<INCOME-CONTINUING> 46,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,283
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
