<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
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Commission file number 0-18382
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
North Carolina 56-1623861
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
INTERSTATE TOWER
SUITE 1500
P. O. BOX 1012
CHARLOTTE, NORTH CAROLINA 28201-1012
---------------------------------------
(Address of principal executive offices)
(Zip Code)
(704)379-9164
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Registrant's telephone number, including area code:
NOT APPLICABLE
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(Former Name, former address and former fiscal year,
if changed since last report)
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 twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to the
foregoing filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
508,844 Beneficial Unit Certificates outstanding as of August 8, 1996.
Page 1 of 10 sequentially numbered pages
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 555,634 $ 483,885
Restricted cash and cash equivalents 214,591 134,232
Receivables, net of allowance 44,323 296,517
Rental property:
Land 4,759,041 4,759,041
Buildings and Improvements 19,407,384 19,212,524
----------- -----------
24,166,425 23,971,565
Less accumulated depreciation (4,286,298) (3,964,123)
----------- -----------
19,880,127 20,007,442
Deferred loan costs, net of accumulated
amortization of $203,243 and $169,510 at
June 30, 1996 and December 31, 1995,
respectively 33,380 47,923
Other 18,070 0
----------- -----------
$20,746,125 $20,969,999
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Long-term debt $14,452,480 $14,649,738
Accounts payable and accrued expenses 308,873 161,064
Due to general partners and affiliates 428,114 446,114
Tenants' security deposits 57,583 60,754
----------- -----------
15,247,050 15,317,670
Partners' equity:
General partners 5,136 5,344
Limited Partners beneficial unit
certificates, authorized 1,000,000 units,
issued and outstanding 508,844 and
508,844 units at June 30, 1996 and
December 31, 1995, respectively 5,493,939 5,646,985
----------- -----------
5,499,075 5,652,329
----------- -----------
$20,746,125 $20,969,999
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
2
<PAGE> 3
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
Statements of Operations (unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------ ----------- ---------- ---------
<S> <C> <C> <C> <C>
Revenue:
Rental Income $689,017 $740,364 $1,429,381 $1,571,390
Interest and other income 12,971 11,025 22,023 18,045
-------- -------- ---------- ----------
701,988 751,389 1,451,404 1,589,435
Expenses:
Interest 327,087 338,039 655,178 683,306
Depreciation and amortization 178,185 168,619 355,908 339,231
Other operating expenses 228,736 194,877 461,081 413,297
-------- -------- ---------- ----------
734,008 701,535 1,472,167 1,435,834
-------- -------- ---------- ----------
NET INCOME (LOSS) ($32,020) $49,854 ($20,763) $153,601
======== ======== ========== ==========
Net income (loss) per Beneficial
Unit Certificate ($0.06) $0.10 ($0.04) $0.30
======== ======== ========== ==========
Beneficial Unit Certificates
Outstanding--weighted average 508,844 508,844 508,844 508,844
======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE> 4
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
Statements of Partners' Equity (unaudited)
For the Six Months Ended June 30, 1995 and 1996
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Partners' equity at December 31, 1994 $ 9,968 $5,585,042 $5,575,074
Net income for the six months ended
June 30, 1995 (1,536) 152,065 153,601
Distributions to partners 0 (101,768) (101,768)
------- ---------- ----------
PARTNERS' EQUITY AT JUNE 30, 1995 $ 8,432 $5,635,339 $5,626,907
======= ========== ==========
Partners' equity at December 31, 1995 $ 5,344 $5,646,985 $5,652,329
Net loss for the six months ended
June 30, 1996 (208) (20,555) (20,763)
Distributions to partners 0 (132,491) (132,491)
------- ---------- ----------
PARTNERS' EQUITY AT JUNE 30, 1996 $ 5,136 $5,493,939 $5,499,075
======= ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE> 5
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ($20,763) $153,601
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 355,908 339,231
Decrease in rents receivable, net 252,194 111,456
Decrease in amounts due to General Partners and Affiliates (18,000) (18,000)
Increase (Decrease) in accounts payable and accrued expenses 147,809 98,063
Increase in restricted cash and cash equivalents (80,359) (101,287)
Increase in other assets (21,240) (18,188)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 615,549 564,876
-------- --------
INVESTING ACTIVITIES
Improvements to rental properties (214,052) (67,320)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (214,052) (67,320)
-------- --------
FINANCING ACTIVITIES
Increase in deferred building and loan costs 0 (2,097)
Mortgage principal reduction (197,257) (183,577)
Distributions to Limited Partners (132,491) (101,768)
-------- --------
NET CASH USED BY FINANCING ACTIVITIES (329,748) (287,442)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 71,749 210,114
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 483,885 483,885
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $555,634 $693,999
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE> 6
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1996
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. For further information, refer to the financial
statements and footnotes thereto included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1995.
2. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Atlantic Income Properties Limited Partnership (the Partnership) was formed on
March 30, 1988 for the purpose of developing, leasing and investing in
commercial real estate properties located primarily in the southeastern United
States. ISC Realty Corporation and Chadsford Associates II are the general
partners and Atlantic Income, Inc., is the initial limited partner. The
Partnership will be terminated upon the occurrence of certain events as defined
in the Partnership's limited partnership agreement but, in any event, on
December 31, 2028.
A public offering of Beneficial Unit Certificates (BUC's) became effective on
June 16, 1988 and terminated on February 7, 1990. Public investors subscribed
for $10,174,012 of the BUC's. The initial admission of investors to the
Partnership occurred on August 1, 1988. Investors were admitted to the
Partnership monthly on the first day of the month their subscription funds were
received.
The Partnership incurred costs in connection with the offering, registration
and sale of the BUC's of $1,294,817. These costs have been charged against
partners' capital as a reduction of the proceeds from the sale of the BUC's.
The Partnership completed the acquisition of the final property in September
1989 and currently owns five properties consisting of: Southwest Plaza,
Roanoke, Virginia; Lincoln Center, Lincolnton, North Carolina; Sangaree Plaza,
Berkeley County, South Carolina; Rosewood Shopping Center, Columbia, South
Carolina; and West Ridge Plaza, Bristol, Tennessee.
All profits, gains and losses of the Partnership are allocated among the
general and limited partners in accordance with the Partnership agreement.
6
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3. RELATED PARTY TRANSACTIONS
The Partnership incurs certain costs and expenses related to services provided
by its general partners and their affiliates. These costs and expenses are as
follows for the six months ended June 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Property/asset management fees $93,231 $96,391
Leasing commissions $30,628 $16,511
</TABLE>
7
<PAGE> 8
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES.
The Registrant paid a distribution on July 15, 1996 for the quarter ended June
30, 1996 at an annualized rate of 2.5%. The total distribution was $63,605.
Management anticipates that quarterly distributions will be maintained at this
level.
At June 30, 1996, the Registrant held $555,634 as operating cash. These funds
will continue to be distributed to the limited partners at the rate discussed
above and will also be maintained for any necessary capital expenditures.
RESULTS OF OPERATIONS.
SIX MONTHS ENDED JUNE 30, 1996 AS COMPARED TO
THE SIX MONTHS ENDED JUNE 30, 1995
The Partnership reported a net loss for the six months ended June 30, 1996 of
$20,763 as compared to net income in the same period of 1995 of $153,601. The
decrease is due to the following:
Rental income decreased from $1,571,390 for the six months ended June 30, 1995
to $1,429,381 for the six months ended June 30, 1996 as a result of 1994 expense
reimbursements received in the first quarter of 1995.
Interest and other income increased from $18,045 to $22,023 for the six months
ended June 30, 1995 and June 30, 1996, respectively, as a result of greater
cash reserves earning income in 1996.
Other operating expenses increased from $413,297 for the six months ended June
30, 1995 to $461,081 for the six months ended June 30, 1996. The increase
results primarily from an increase in common area maintenance expense and an
increase in building repairs expense. Paving repairs and landscaping at
Westridge and Lincoln contributed to the increase as well as snow removal costs
at Westridge and Southwest.
THREE MONTHS ENDED JUNE 30, 1996 AS COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1995
The Partnership reported a net loss of $32,020 for the three months ended June
30, 1996 as compared to net income of $49,854 for the same period in 1995.
Rental income decreased $51,000 for the three month period ended June 30, 1996
as compared to the same period in 1995 due to higher vacancy at Westridge and
Southwest.
8
<PAGE> 9
Operating expenses increased from $194,877 for the three months ended June 30,
1995 to $228,736 for the same period in 1996. The increase results from an
increase in common area maintenance and building repairs expense as explained
above.
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None.
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted for vote during the quarter covered by
this report.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Financial Data Schedules
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the six months ended June 30,
1996.
9
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
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.
ATLANTIC INCOME PROPERTIES
LIMITED PARTNERSHIP
By: ISC Realty Corporation,
General Partner and
Principal Financial Officer
of the Registrant
Date: August 13, 1996 By: /s/ J. Christopher Boone
------------------------ --------------------------------
J. Christopher Boone,
President
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 555,634
<SECURITIES> 0
<RECEIVABLES> 44,323
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 814,548
<PP&E> 24,166,425
<DEPRECIATION> 4,286,298
<TOTAL-ASSETS> 20,746,125
<CURRENT-LIABILITIES> 794,570
<BONDS> 14,452,480
0
0
<COMMON> 0
<OTHER-SE> 5,499,075
<TOTAL-LIABILITY-AND-EQUITY> 20,746,125
<SALES> 0
<TOTAL-REVENUES> 1,451,404
<CGS> 0
<TOTAL-COSTS> 461,081
<OTHER-EXPENSES> 355,908
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 655,178
<INCOME-PRETAX> (20,763)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,763)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,763)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
