<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, 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 0-18382
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, 1997.
Page 1 of 9 sequentially numbered pages
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
March 31,
1997 December 31,
(unaudited) 1996
------------ ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 32,514 $ 266,603
Restricted cash and cash equivalents 137,178 94,699
Receivables, net of allowance 242,201 309,164
Rental property:
Land 4,567,041 4,567,041
Buildings and Improvements 19,505,044 19,262,045
------------ ------------
24,072,085 23,829,086
Less accumulated depreciation (4,122,885) (3,944,932)
------------ ------------
19,949,200 19,884,154
Deferred loan costs, net of accumulated
amortization of $89,206 and $206,849 at March 31,
1997 and December 31, 1996, respectively 54,207 19,317
Other 48,269 0
------------ ------------
$ 20,463,569 $ 20,573,937
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Long-term debt $ 14,143,887 $ 14,250,705
Accounts payable and accrued expenses 302,859 247,436
Due to general partners and affiliates 484,575 493,576
Tenants' security deposits 58,241 55,085
------------ ------------
14,989,562 15,046,802
Partners' equity (deficit):
General partners 12,718 12,069
Limited Partners beneficial unit certificates,
authorized 1,000,000 units, issued and outstanding
508,594 and 508,594 units at March 31, 1997, and
December 31, 1996, respectively 5,461,289 5,515,066
------------ ------------
5,474,007 5,527,135
------------ ------------
$ 20,463,569 $ 20,573,937
============ ============
</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, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
-------- ---------
<S> <C> <C>
Revenue:
Rental Income $741,127 $ 715,719
Interest and other income 5,438 8,333
-------- ---------
746,565 724,052
Expenses:
Interest 319,358 328,091
Depreciation and amortization 184,986 177,723
Other operating expenses 229,243 232,345
-------- ---------
733,587 738,159
-------- ---------
NET INCOME (LOSS) 12,978 (14,107)
======== =========
Net income (loss) per Beneficial Unit Certificate $ 0.03 ($ 0.03)
======== =========
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, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
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
======== =========== ===========
Partners' equity (deficit) at December 31, 1996 $ 12,069 $ 5,515,066 $ 5,527,135
Net income for the three months ended
March 31, 1997 $ 649 $ 12,329 $ 12,978
Distributions to partners 0 (66,106) (66,106)
-------- ----------- -----------
PARTNERS' EQUITY (DEFICIT) AT
March 31, 1997 $ 12,718 $ 5,461,289 $ 5,474,007
======== =========== ===========
</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, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 12,978 ($ 14,107)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 184,986 177,723
Decrease in rents receivable, net 66,963 162,545
Decrease in amounts due to General Partners and Affiliates (9,001) (9,000)
Increase in accounts payable and accrued expenses 55,423 29,788
Increase (Decrease) in tenant's security deposits 3,156 (1,814)
Increase in other assets (48,269) (12,528)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 266,236 332,607
--------- ---------
INVESTING ACTIVITIES
Increase in building improvements (242,999) 0
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (242,999) 0
--------- ---------
FINANCING ACTIVITIES
Increase in deferred building and loan costs (41,923) (6,588)
Mortgage principal reduction (106,818) (98,106)
Distributions to Limited Partners (66,106) (63,606)
Increase in restricted cash and cash equivalents (42,479) (10,545)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (257,326) (178,845)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (234,089) 153,762
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 266,603 483,885
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 32,514 $ 637,647
========= =========
</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, 1997
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, 1997, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. 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, 1996.
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
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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, 1997, for the quarter ended
March 31, 1997, at an annualized rate of two and one-half percent. The
Registrant intends to continue the quarterly distribution at this rate in 1997.
As of March 31, 1997, the Registrant had cash and cash equivalents of $32,514.
The Registrant also held restricted cash and cash equivalents of $137,178 which
includes property tax escrows and tenant security deposits at March 31, 1997.
The Registrant is holding these cash reserves for anticipated tenant expansion
costs and other necessary capital improvements. On April 9, 1997, the Registrant
established a line of credit borrowing facility with First Citizens Bank and
Trust Company. Borrowing capacity under the line of credit is $250,000 with
balances accruing interest at prime plus 1%.
Results of Operations.
The Partnership recorded net income for the three months ended March 31, 1997,
of $12,978 as compared to a net loss of $14,107 in 1996. The change is due to
the following factors:
Rental income increased approximately $25,408 for the three months ended March
31, 1997, as compared to the three months ended March 31, 1996. This increase
was primarily due to scheduled rent increases as well as continued high
occupancy levels at the properties.
Operating expenses for the three months ended March 31, 1997, decreased slightly
compared to the same period in 1996. The 1996 figure was influenced by several
factors, including increased snow removal costs and higher common area
maintenance expense resulting from several one time charges to improve the
appearance of the common areas.
Interest expense decreased from $328,091 for the three months March 31, 1996, to
$319,358 for the three months ended March 31, 1997, 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 of $22.5 million. Brokers
affiliated with Lat Purser & Associates were selected to market the properties
for sale at the minimum price. This selection was approved by over 89% of the
responding BUC holders.
During the first quarter of 1997, the general partners again solicited
the BUC holders for their approval of a minimum sale price for the Partnership's
assets of no less than $13 per BUC. This price was approved by over 98% of the
responding BUC holders. The properties are currently being marketed for sale.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
EX-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, 1997.
8
<PAGE> 9
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, 1997
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, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 32,514
<SECURITIES> 0
<RECEIVABLES> 242,201
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 411,893
<PP&E> 24,072,085
<DEPRECIATION> (4,122,885)
<TOTAL-ASSETS> 20,463,569
<CURRENT-LIABILITIES> 845,675
<BONDS> 14,143,887
0
0
<COMMON> 0
<OTHER-SE> 5,474,007
<TOTAL-LIABILITY-AND-EQUITY> 20,463,569
<SALES> 0
<TOTAL-REVENUES> 746,565
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 414,229
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 319,358
<INCOME-PRETAX> 12,978
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,978
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
