<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 September 30, 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)
Five Cambridge Center, Cambridge, MA 02142-1493
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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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
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION
ITEM 1- FINANCIAL STATEMENTS
BALANCE SHEETS
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September 30, December 31,
1997 1996
(Unaudited) (Audited)
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<S> <C> <C>
ASSETS
Investment in real estate
Land $ 1,817,097 $ 1,817,097
Buildings and building improvements 18,886,487 18,735,741
Personal property 4,365,877 4,197,445
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25,069,461 24,750,283
Less accumulated depreciation 11,756,387 11,101,857
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13,313,074 13,648,426
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Cash and cash equivalents 1,055,305 384,491
Tenant security deposits - funded 132,125 111,422
Loan cost, net accumulated amortization
of $21,725 and $300,347 262,466 3,800
Other assets 766,518 707,728
------------ ------------
2,216,414 1,207,441
------------ ------------
Total assets $ 15,529,488 $ 14,855,867
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities applicable to investment in real estate
Mortgage payable $ 8,500,000 $ 8,016,389
Other liabilities
Accounts payable 19,034 10,580
Accrued interest payable 107,295 66,020
Tenant security deposits liability 139,939 116,129
Other liabilities 128,956 159,240
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Total liabilities 8,895,224 8,368,358
------------ ------------
Partners' capital
Limited partners' unit holders' 50,000 units authorized
and outstanding 7,143,780 7,019,039
Special limited partner (472,580) (493,126)
General partner (36,936) (38,404)
------------ ------------
Total partners' capital 6,634,264 6,487,509
============ ============
Total liabilities and partners' capital $ 15,529,488 $ 14,855,867
============ ============
</TABLE>
See notes to financial statements
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
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For the three and nine months ended Three months ended September 30, Nine months ended September 30,
September 30, 1997 and 1996 (Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Income
Rental income $ 1,065,676 $ 988,985 $ 3,101,496 $ 2,949,869
Interest income 7,417 1,760 9,037 8,287
Other income 100,503 64,553 259,964 170,062
----------- ----------- ----------- -----------
Total income 1,173,596 1,055,298 3,370,497 3,128,218
----------- ----------- ----------- -----------
Expenses
Leasing 29,650 35,323 93,532 76,462
Payroll and benefits 144,842 141,287 422,649 417,650
General and administrative 62,353 37,010 126,380 99,349
Management fees 62,106 77,321 196,556 183,658
Utilities 95,725 99,865 315,330 320,838
Repairs and maintenance 159,800 200,708 464,516 563,610
Insurance 52,102 33,378 100,157 76,530
Taxes 65,989 93,377 226,422 213,065
----------- ----------- ----------- -----------
Total operating expenses 672,567 718,269 1,945,542 1,951,162
----------- ----------- ----------- -----------
Other expenses
Partnership expense 24,393 36,326 85,380 115,627
Interest expense 129,440 190,599 512,765 581,447
Depreciation and amortization 246,724 242,199 680,055 719,613
----------- ----------- ----------- -----------
Total expenses 1,073,124 1,187,393 3,223,742 3,367,849
----------- ----------- ----------- -----------
Net income (loss) $ 100,472 $ (132,095) $ 146,755 $ (239,631)
=========== =========== =========== ===========
Net income (loss) allocated to
general partner $ 1,005 $ (1,320) $ 1,468 $ (2,396)
=========== =========== =========== ===========
Net income (loss) allocated to
limited partner unit holders $ 85,401 $ (130,775) $ 124,741 $ (237,235)
=========== =========== =========== ===========
Net income allocated to
special limited partner $ 14,066 $ -- $ 20,546 $ --
=========== =========== =========== ===========
Net income (loss) allocated to
each unit $ 1.71 $ (2.61) $ 2.50 $ (4.74)
=========== =========== =========== ===========
Weighted average number of units
outstanding 50,000 50,000 50,000 50,000
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
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Units of
For the nine months ended limited Special Partner Total
September 30, 1997 and 1996 partnership General limited unit partners'
(unaudited) interest partner partner holders capital
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1996 50,000 $ (38,404) $ (493,126) $ 7,019,039 $ 6,487,509
Net income -- 1,468 20,546 124,741 146,755
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1997 50,000 $ (36,936) $ (472,580) $ 7,143,780 $ 6,634,264
=========== =========== =========== =========== ===========
Balance December 31, 1995 50,000 $ (36,377) $ (463,460) $ 7,340,048 $ 6,840,211
Net loss -- (2,396) -- (237,235) (239,631)
Distributions -- (15) (1,470) (150,000) (151,485)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1996 50,000 $ (38,788) $ (464,930) $ 6,952,813 $ 6,449,095
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
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For the nine months ended 1997 1996
September 30, 1997 and 1996 (Unaudited) (Unaudited)
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<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ 146,755 $ (239,631)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 680,055 719,613
Changes in assets and liabilities:
(Increase) decrease in security deposits cash (20,703) 16,992
Increase in other assets (58,790) (233,935)
Increase (decrease) in accounts payable and accrued interest
payable 49,729 (175,971)
Increase (decrease) in tenant security deposits 23,810 (4,978)
(Decrease) increase in other liabilities (30,284) 61,611
----------- -----------
Net cash provided by operating activities 790,572 143,701
----------- -----------
Cash flows from investing activities:
Additions to rental property (319,178) (244,169)
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Net cash used in investing activities (319,178) (244,169)
----------- -----------
Cash flows from financing activities:
Principal payments on mortgages payable (30,090) (39,578)
Satisfaction of mortgages payable (7,986,299) --
Mortgages payable proceeds 8,500,000 --
Deferred financing cost (284,191) --
Cash distributions paid to partners -- (151,485)
----------- -----------
Net cash provided by (used in) financing activities 199,420 (191,063)
----------- -----------
Net increase (decrease) in cash and cash equivalents 670,814 (291,531)
Cash and cash equivalents, beginning of period 384,491 575,510
----------- -----------
Cash and cash equivalents, end of period $ 1,055,305 $ 283,979
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 471,490 $ 578,404
=========== ===========
</TABLE>
See notes to financial statements
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 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. Certain amounts have been
reclassified to conform to the September 30, 1997 presentation. 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 $31,255 and $58,535 during the nine
months ended September 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.
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
4. REFINANCING
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.
On April 1, 1997, the loan encumbering the Partnership's Sterlingwood Apartments
property matured. The loan was extended until August 1, 1997. On August 27, 1997
the loan was refinanced. The new loan, in the principal amount of $2,750,000
bears interest at 7.625%, requires monthly principal and interest payments of
approximately $20,546 and matures on September 1, 2007.
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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
All of the Partnership's real estate properties are residential properties with
apartments leased to tenants pursuant to lease agreements 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 are sold).
The level of liquidity based on cash and cash equivalents experienced a $670,814
increase at September 30, 1997, as compared to December 31, 1996. The increase
was due to $790,572 of net cash provided by operating activities and $199,420 of
cash provided by financing activities which was partially offset by $319,178 of
net cash used in investing activities. Financing activities consisted of new
mortgage notes payable of $8,500,000 offset by the payoff of the previous
mortgage notes payable of $7,986,299, $30,090 of mortgage principal payments and
$284,191 of loan costs. 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
$319,178 on capital improvements during the nine months ended September 30,
1997, which was funded from operating cash and replacement reserves held by
mortgage lenders. The Partnership anticipates it will spend approximately
$76,000 for capital improvements during the balance of 1997.
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.
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 was extended until August 1, 1997. On August 27,
1997, the loan was refinanced. The new loan in the principal amount of
$2,750,000 bears interest at 7.625% , requires monthly principal and interest
payments of approximately $20,546 and matures on September 1, 2007.
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<PAGE>
SOUTHEASTERN INCOME PROPERTIES LIMITED PARTNERSHIP
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION (Continued)
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 nine
months ended September 30, 1997 and 1996:
Average Occupancy
-------------------------
Property 1997 1996
- ---------------------------- ----------- -----------
Forest Brook Apartments 91% 89%
Pelham Ridge Apartments 90% 86%
Seasons Chase Apartments 92% 89%
Sterlingwood Apartments 96% 93%
The Partnership generated net income for the nine months ended September 30,
1997 of $146,755 as compared to a net loss of $239,631 for the nine months
September 30, 1996. Net income for the three months ended September 30, 1997 was
$100,472 as compared to net loss of $132,095 for the three months ended
September 30, 1996. Total income increased 7.7% as a result of a $151,627
increase in rental income and $89,902 increase in other income for the first
nine months of 1997, as compared to the first nine months of 1996. Average rents
at the properties have increased by approximately 2% and average occupancy has
increased to 92% for the nine months ended September 30, 1997 compared to 89%
for the nine months ended September 30, 1996.
Total operating expenses of the Partnership's properties remained relatively
constant, decreasing from $1,951,162 for the nine months ended September 30,
1996 to $1,945,542 for the nine months ended September 30, 1997. The decrease
was the result of decreased repairs and maintenance and utilities expenses,
which were partially offset by an increase in management fees, leasing,
insurance, general and administrative and tax expense. The remaining operating
costs were maintained at approximately the same level as in the prior year.
Interest expense decreased by $68,682 for the nine months ended September 30,
1997 compared to the nine months ended September 30, 1996 as a result of payoff
of the previous mortgage notes and refinancing at lower interest rates.
Amortization expenses remained stable, while depreciation expenses of the
Partnership decreased.
The results of operations in future periods may differ from those for the nine
months ended September 30, 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
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No report on Form 8-K was filed during the three months ended
September 30, 1997.
- 10 -
<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: November 14, 1997 By: /s/ Michael L. Ashner
--------------------------------------
Michael L. Ashner
Chief Executive Officer
Date: November 14, 1997 By: /s/ Edward V. Williams
--------------------------------------
Edward V. Williams
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from unaudited financial statements for the
nine month period ending September 30, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,055,305
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 25,069,461
<DEPRECIATION> (11,756,387)
<TOTAL-ASSETS> 15,529,488
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 6,634,264
<TOTAL-LIABILITY-AND-EQUITY> 15,529,488
<SALES> 0
<TOTAL-REVENUES> 3,361,460
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,819,162
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 512,765
<INCOME-PRETAX> 146,755
<INCOME-TAX> 0
<INCOME-CONTINUING> 146,755
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146,755
<EPS-PRIMARY> 2.50
<EPS-DILUTED> 2.50
</TABLE>
