SECURITIES AND EXCHANGE COMMISSION
Washington, DC
_________________________
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17412
Secured Income L.P.
(Exact name of Registrant as specified in its charter)
Delaware 06-1185846
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
599 West Putnam Avenue
Greenwich, Connecticut 06830
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (203) 869-0900
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
filing requirements for the past 90 days.
Yes X No
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<CAPTION>
SECURED INCOME L.P. AND SUBSIDIARIES
Part I - Financial Information
<S> <C>
Table of Contents
Item 1. Financial Statements Page
Consolidated Balance Sheets as of March 31, 1997
(Unaudited) and December 31, 1996 3
Consolidated Statements of Operations for the three months
ended March 31, 1997 and 1996 (Unaudited) 4
Consolidated Statements of Cash Flows for the three months
ended March 31, 1997 and 1996 (Unaudited) 5
Notes to Consolidated Financial Statements as of March
31, 1997 (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
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3
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<CAPTION>
SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1997
(Unaudited) December 31, 1996
ASSETS
<S> <C> <C>
Property and equipment (net
of accumulated depreciation
of $13,338,871 and $12,959,855) $ 30,849,567 $ 31,228,583
Cash and cash equivalents 989,216 896,433
Cash restricted for tenants'
security deposits 451,401 451,401
Restricted assets and funded reserves 4,518,129 4,322,124
Investment - guaranteed investment
contract 75,695 92,585
Interest and accounts receivable 69,253 67,094
Prepaid expenses 175,527 135,734
Intangible assets, net of accumulated
amortization 1,977,035 2,093,714
Other assets 34,708
$ 39,105,823 $ 39,322,376
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgages payable $ 35,204,372 $ 35,320,565
Accounts payable and accrued expenses 181,667 236,891
Tenants' security deposits payable 452,626 451,401
Due to general partners and affiliates 3,975,840 3,970,278
Deferred income 171,046 164,368
39,985,551 40,143,503
Partners' Deficit
Limited partners' equity - -
General partners' deficit (879,728) (821,127)
(879,728) (821,127)
$ 39,105,823 $ 39,322,376
</TABLE>
See notes to consolidated financial statements.
4
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<CAPTION>
SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<S> <C> <C>
1997 1996
REVENUE
Rental $ 1,622,602 $ 1,506,553
Interest 43,577 31,605
1,666,179 1,538,158
EXPENSES
Administrative and management 151,045 155,290
Operating and maintenance 369,345 293,268
Taxes and insurance 282,951 273,019
Interest 425,744 430,126
Depreciation and amortization 495,695 496,148
1,724,780 1,647,851
NET LOSS $ (58,601) $ (109,693)
NET LOSS ATTRIBUTABLE TO
Limited partners $ - $ -
General partners (58,601) (109,693)
$ (58,601) $ (109,693)
NET LOSS ALLOCATED PER UNIT OF
LIMITED PARTNERSHIP INTEREST $ - $ -
</TABLE>
See notes to consolidated financial statements.
5
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<CAPTION>
SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<S> <C> <C>
1997 1996
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (58,601) $ (109,693)
Adjustments to reconcile net loss
to net cash provided by operating
activities
Depreciation and amortization 495,695 496,148
Decrease (increase) in assets
Restricted assets and funded reserves (196,005) (296,847)
Tenants' security deposits (2,144)
Interest and accounts receivable (2,159) (14,587)
Prepaid expenses (39,793) 238,428
Other assets 34,708
(Decrease) increase in liabilities
Accounts payable and accrued expenses (55,224) (43,811)
Tenants' security deposits payable 1,225 5,891
Due to general partners and affiliates 5,562 47,624
Deferred income 6,678 3,748
Net cash provided by operating
activities 192,086 324,757
CASH FLOWS FROM INVESTING ACTIVITIES
Principal proceeds from guaranteed
investment contracts 16,890 16,512
Net cash provided by investing
activities 16,890 16,512
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of principal on permanent
financing (116,193) (314,122)
Net cash used in financing
activities (116,193) (314,122)
NET INCREASE IN CASH AND CASH EQUIVALENTS 92,783 27,147
CASH AND CASH EQUIVALENTS, beginning of
period 896,433 776,227
CASH AND CASH EQUIVALENTS, end of period $ 989,216 $ 803,374
SUPPLEMENTAL INFORMATION
Interest paid $ 382,164 $ 375,355
</TABLE>
See notes to consolidated financial statements.
6
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SECURED INCOME L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. They do not include all information
and footnotes required by generally accepted accounting principles for
complete financial statements. The results of operations are impacted
significantly by the results of operations of the Carrollton and
Columbia Partnerships, which is provided on an unaudited basis during
interim periods. Accordingly, the accompanying consolidated financial
statements are dependent on such unaudited information. In the opinion
of the General Partners, the consolidated financial statements include
all adjustments necessary to reflect fairly the results of the interim
periods presented. All adjustments are of a normal recurring nature.
No significant events have occurred subsequent to December 31, 1996
and no material contingencies exist which would require additional
disclosure in the report under Regulation S-X, Rule 10-01 paragraph
A-5.
The results of operations for the three months ended March 31,
1997 are not necessarily indicative of the results to be expected for
the entire year.
2. Additional information, including the audited December 31, 1996
Consolidated Financial Statements and the Summary of Significant
Accounting Policies, is included in Partnership's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 on file with
the Securities and Exchange Commission.
7
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SECURED INCOME L.P. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Material changes in financial condition and results of operations.
The results of operations of Secured Income L.P. and Subsidiaries (the
"Partnership") for the first three months of 1997 were comparable to the first
three months of 1996. Changes in assets and liabilities are comprised of
periodic transactions and adjustments, including payments made pursuant to the
Columbia loan documents and depreciation and amortization. During the three
months ended March 31, 1997, the Complexes generated net operating income before
scheduled principal reduction on the mortgages and, in the case of the Columbia
Partnership, prior to mandatory deposits to the Pledged Cap Account (see
discussion below) and the Bond Retirement Escrow of approximately $462,000. Such
amount reflects cash flow after replacement reserve activity and capital
expenditures and excludes proceeds from the remaining guaranteed investment
contract. Mortgage principal payments during the period for the Columbia
Partnership and the Carrollton Partnership were approximately $88,000 and
$28,000, respectively. During the three months ended March 31, 1997, the
Columbia Partnership deposited approximately $140,000 to the Pledged Cap Account
and approximately $71,000 to the Bond Retirement Escrow. Restricted assets and
funded reserves as of March 31, 1997 include Columbia Partnership deposits in
the Pledged Cap Account, Operating Deficit Escrow and Bond Retirement Escrow of
approximately $1,894,000, approximately $502,000 and approximately $253,000,
respectively. To the extent the future cash flow of the Columbia Partnership is
not utilized to fund the Operating Deficit Reserve or Pledged Cap Account, such
cash flow, under the Citibank loan terms, will be deposited to the Bond
Retirement Escrow to make additional mortgage principal payments. Operating and
maintenance expenses increased for the three months ended March 31, 1997 as
compared to the three months ended March 31, 1996 due to an increase in planned
improvements, repairs and replacements in 1997 as compared to 1996. The 1993
mortgage modification of the Columbia Partnership has substantially improved the
financial condition of that partnership; however, there can be no assurance that
interest rates on the adjustable rate bonds underlying the Columbia
Partnership's mortgage will remain at current low levels. The weighted average
interest rate on the Columbia Partnership debt, exclusive of the lender's credit
enhancement fee (see below), was approximately 3.17% and approximately 3.10%
during the three months ended March 31, 1997 and 1996, respectively. Although
the properties are currently generating cash flow, the General Partners do not
anticipate significant future cash flow distributions from the properties given
the distribution restriction on the Columbia Partnership resulting from the
restructuring of its debt.
As discussed above, the balance in the Columbia Partnership's Pledged Cap
Account as of March 31, 1997 is approximately $1,894,000. Although the original
outside date for the Pledged Cap Account to be utilized for its intended purpose
was October 31, 1996, the Columbia Operating General Partners have been
conducting ongoing discussions with the lender in order to address other
potential uses of such account, including utilizing such funds for costs in
connection with a potential refinancing of the mortgages with another lender.
Under the current financing terms, the lender is entitled to a credit
enhancement fee of 2.5% per annum, commencing February 1, 1997, based on the
outstanding loan balance. Therefore, the Columbia Operating General Partners
have been conducting discussions with other potential credit enhancers in order
to obtain a lower effective borrowing rate. However, there can be no assurance
that the lender would approve any alternative utilization of such account, or
that the Columbia Operating General Partners will procure suitable alternative
financing.
As of March 31, 1997, the occupancy of the Fieldpointe Complex (owned by
the Carrollton Partnership) was approximately 99% and the occupancy of the
Westmont Complex (owned by the Columbia Partnership) was approximately 100% as
to both residential units and commercial space. Rental revenue of the Complexes
increased by approximately 8% due to higher average residential occupancy and
increased rental rates during the first three months of 1997. The future
operating results of the Complexes will be extremely dependent on market
conditions and interest rate fluctuations and therefore may be subject to
significant volatility.
8
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SECURED INCOME L.P. AND SUBSIDIARIES
Part II - Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
9
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SIGNATURES
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.
SECURED INCOME L.P.
By: Wilder Richman Resources Corporation
General Partner
Date: May 15, 1997 /s/ Richard Paul Richman
Richard Paul Richman
President, Chief Executive Officer
and Director
10
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<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the three months
ended March 31, 1997 Form 10-Q consolidated Balance Sheet and Consolidated
Statement of Operations as of March 31, 1997 and is qualified in is entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000804217
<NAME> Neal Ludeke
<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> 1.00
<CASH> 989,216
<SECURITIES> 0
<RECEIVABLES> 69,253
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 44,188,438
<DEPRECIATION> (13,338,871)
<TOTAL-ASSETS> 39,105,823
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (879,728)
<TOTAL-LIABILITY-AND-EQUITY> 39,105,823
<SALES> 1,622,602
<TOTAL-REVENUES> 1,666,179
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,299,036
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 425,744
<INCOME-PRETAX> (58,601)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,601)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
