<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 MARCH 31, 1996
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 0-18382
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 executive offices)
(Zip Code)
(704)379-9164
Registrant's telephone number, including area code:
NOT APPLICABLE
(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.
508,594 Beneficial Unit Certificates outstanding as of April 30, 1996.
Page 1 of 9 sequentially numbered pages
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
March 31,
1996 December 31,
(unaudited) 1995
----------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 637,647 $ 483,885
Restricted cash and cash equivalents 144,777 134,232
Receivables, net of allowance 133,972 296,517
Rental property:
Land 4,759,041 4,759,041
Buildings and Improvements 19,212,524 19,212,524
----------- -----------
23,971,565 23,971,565
Less accumulated depreciation (4,115,587) (3,964,123)
----------- -----------
19,855,978 20,007,442
Deferred loan costs, net of accumulated
amortization of $195,769 and $169,510 at March 31,
1996 and December 31, 1995, respectively 28,252 47,923
Other 12,528 0
----------- -----------
$20,813,154 $20,969,999
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Long-term debt $14,551,632 $14,649,738
Accounts payable and accrued expenses 190,852 161,064
Due to general partners and affiliates 437,114 446,114
Tenants' security deposits 58,940 60,754
----------- -----------
15,238,538 15,317,670
Partners' equity (deficit):
General partners 5,203 5,344
Limited Partners beneficial unit certificates,
authorized 1,000,000 units, issued and outstanding
508,594 and 508,594 units at March 31, 1996 and
December 31, 1995, respectively 5,569,413 5,646,985
----------- -----------
5,574,616 5,652,329
----------- -----------
$20,813,154 $20,969,999
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
2
<PAGE> 3
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
-------- --------
<S> <C> <C>
Revenue:
Rental Income $715,719 $831,026
Interest and other income 8,333 7,020
-------- --------
724,052 838,046
Expenses:
Interest 328,091 338,306
Depreciation and amortization 177,723 170,612
Other operating expenses 232,345 218,420
-------- --------
738,159 727,338
-------- --------
NET INCOME (LOSS) (14,107) 110,708
======== ========
Net income (loss) per Beneficial Unit Certifica ($0.03) $ 0.22
======== ========
Beneficial Unit Certificates
Outstanding--weighted average 508,594 508,594
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE> 4
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- ---------- ----------
<S> <C> <C> <C>
Partners' equity (deficit) at
December 31, 1994 ($9,968) $5,585,042 $5,575,074
Net income for the three months ended
March 31, 1995 $ 1,107 $ 109,601 $ 110,708
Distributions to partners 0 (50,884) (50,884)
------- ---------- ----------
PARTNERS' EQUITY (DEFICIT) AT
March 31, 1995 ($8,861) $5,643,759 $5,634,898
======= ========== ==========
Partners' equity (deficit) at
December 31, 1995 $ 5,344 $5,646,985 $5,652,329
Net loss for the three months ended
March 31, 1996 ($141) ($13,966) ($14,107)
Distributions to partners 0 (63,606) (63,606)
------- ---------- ----------
PARTNERS' EQUITY (DEFICIT) AT
March 31, 1996 $ 5,203 $5,569,413 $5,574,616
======= ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE> 5
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ($14,107) $ 110,708
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 177,723 170,612
Decrease in rents receivable, net 162,545 113,112
Decrease in amounts due to General Partners and Affiliates (9,000) (9,001)
Increase in accounts payable and accrued expenses 29,788 33,195
Increase (Decrease) in tenant's security deposits (1,814) 971
Increase in other assets (12,528) (9,439)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 332,607 410,158
--------- ---------
INVESTING ACTIVITIES
Increase in building improvements 0 (26,934)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES 0 (26,934)
--------- ---------
FINANCING ACTIVITIES
Increase in deferred building and loan costs (6,588) (2,747)
Mortgage principal reduction (98,106) (89,317)
Distributions to Limited Partners (63,606) (50,884)
Increase in restricted cash and cash equivalents (10,545) (58,596)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (178,845) (201,544)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS CASH 153,762 181,680
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 483,885 303,738
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 637,647 $ 485,418
========= =========
</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)
MARCH 31, 1996
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 three-month period ended March 31,
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.
ORGANIZATION
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.
ADDITIONS TO RENTAL PROPERTY
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.
6
<PAGE> 7
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 April 15, 1996 for the quarter ended
March 31, 1996 at an annualized rate of two and one-half percent. The
Registrant intends to continue the quarterly distribution at this rate in 1996.
As of March 31, 1996, the Registrant had cash and cash equivalents of $637,647.
The Registrant also held restricted cash and cash equivalents of $144,777
which includes property tax escrows and tenant security deposits at March 31,
1996.
The Registrant is holding these cash reserves for anticipated tenant expansion
costs and other necessary capital improvements.
RESULTS OF OPERATIONS.
The Partnership recorded a net loss for the three months ended March 31, 1996
of $14,107 as compared to $110,708 in 1995. The change is due to the following
factors:
Rental income decreased approximately $115,307 for the three months ended March
31, 1996 as compared to the three months ended March 31, 1995 as a result of
annual CAM, Tax and Insurance reimbursements of approximately $153,200 which
were accrued in the fourth quarter of 1995. Higher rental revenue at Lincoln
and Rosewood partially offset this decrease.
Operating expenses for the three months ended March 31, 1996 increased compared
to the same period in 1995 by $13,925 or 6.4%. The increase was the result of
higher common area maintenance expense resulting from several one time charges
to improve the appearance of the common areas and increased snow removal costs.
Interest expense decreased from $338,306 for the three months March 31, 1995 to
$328,091 for the three months ended March 31, 1996 due to an increased portion
of payments attributable to principal rather than interest.
7
<PAGE> 8
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
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
During the first quarter of 1996, the general partners solicited the BUC
holders for their approval to engage an investment property broker and approve
a minimum sale price for the Partnership's assets. Brokers affiliated with Lat
Purser & Associates were selected to market the properties for sale at a
minimum price. This selection was approved by over 89% of the responding BUC
holders. Accordingly, the properties are currently being marketed for sale.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the
three months ended March 31, 1996.
8
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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
A NORTH CAROLINA LIMITED PARTNERSHIP
(REGISTRANT)
BY: /S/ J. CHRISTOPHER BOONE
-------------------------------------------
J. CHRISTOPHER BOONE
ISC REALTY CORPORATION,
GENERAL PARTNER AND PRINCIPAL EXECUTIVE
OFFICER, PRINCIPAL FINANCIAL OFFICER OF THE
REGISTRANT
DATE: MAY 10, 1996
--------------------------
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ATLANTIC INCOME PROPERTIES FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 637,647
<SECURITIES> 0
<RECEIVABLES> 133,972
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 771,619
<PP&E> 23,971,565
<DEPRECIATION> (4,115,587)
<TOTAL-ASSETS> 20,813,154
<CURRENT-LIABILITIES> 190,852
<BONDS> 14,551,632
0
0
<COMMON> 0
<OTHER-SE> 5,574,616
<TOTAL-LIABILITY-AND-EQUITY> 20,813,154
<SALES> 0
<TOTAL-REVENUES> 724,052
<CGS> 0
<TOTAL-COSTS> 232,345
<OTHER-EXPENSES> 177,723
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 328,091
<INCOME-PRETAX> (14,107)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,107)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,107)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
