<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, 1998
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.)
IJL Financial Center
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 August 13, 1998.
Page 1 of 9 sequentially numbered pages
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
Balance Sheets
<TABLE>
<CAPTION>
June 30,
1998 December 31,
(unaudited) 1997
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 392,022 $ 283,889
Restricted cash and cash equivalents 148,791 122,066
Receivables, net of allowance 245,531 308,641
Rental property:
Land 1,738,000 4,137,041
Buildings and Improvements 5,289,127 18,400,368
------------ ------------
7,027,127 22,537,409
Less accumulated depreciation (1,389,231) (3,944,932)
------------ ------------
5,637,896 18,592,477
Deferred loan costs, net of accumulated
amortization of $0 and $206,849 at June 30,
1998, and December 31, 1997,respectively 0 3,665
------------ ------------
$ 6,424,240 $ 19,310,738
============ ============
LIABILITIES AND PARTNERS' EQUITY
Long-term debt $ 5,585,508 $ 13,829,851
Short-term borrowings 0 75,000
Accounts payable and accrued expenses 386,135 521,036
Due to general partners and affiliates 572,878 445,243
Tenants' security deposits 11,037 58,386
------------ ------------
6,555,558 14,929,516
Partners' equity (deficit):
General partners 31,836 3,179
Limited Partners beneficial unit certificates,
authorized 1,000,000 units, issued and outstanding
508,594 and 508,594 units at June 30, 1997, and
December 31, 1996, respectively (163,154) 4,378,043
------------ ------------
(131,318) 4,381,222
------------ ------------
$ 6,424,240 $ 19,310,738
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements
2
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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,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rental Income $ 247,892 $ 758,160 $1,055,221 $1,499,287
Interest and other income 17,871 4,763 27,520 10,201
---------- ---------- ---------- ----------
265,763 762,923 1,082,741 1,509,488
Expenses:
Interest 135,650 340,968 469,882 660,326
Depreciation and amortization 0 182,960 0 367,946
Other operating expenses 103,846 196,992 378,175 426,235
---------- ---------- ---------- ----------
239,496 720,920 848,057 1,454,507
Operating Income (Loss) $ 26,267 $ 42,003 $ 234,684 $ 54,981
Gain from sale of rental properties 2,631,014 0 2,631,014 0
---------- ---------- ---------- ----------
NET INCOME (LOSS) $2,657,281 $ 42,003 $2,865,698 $ 54,981
========== ========== ========== ==========
Net income (loss) per Beneficial
Unit Certificate $ 5.17 $ 0.08 $ 5.58 $ 0.11
========== ========== ========== ==========
Beneficial Unit Certificates
Outstanding--weighted average 508,594 508,594 508,594 508,594
========== ========== ========== ==========
</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, 1998, and 1997
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Partners' equity at December 31, 1996 $ 5,344 $ 5,646,985 $ 5,652,329
Net income for the six months ended
June 30, 1997 (208) (20,555) ($ 20,763)
Distributions to partners 0 (132,491) ($ 132,491)
-------- ----------- -----------
PARTNERS' EQUITY AT
JUNE 30, 1997 $ 5,136 $ 5,493,939 $ 5,499,075
======== =========== ===========
Partners' equity at December 31, 1997 $ 3,179 $ 4,378,043 $ 4,381,222
Net income for the six months ended
June 30, 1998 28,657 2,837,041 $ 2,865,698
Distributions to partners 0 (7,378,238) (7,378,238)
-------- ----------- -----------
PARTNERS' EQUITY (DEFICIT) AT
JUNE 30, 1998 $ 31,836 ($ 163,154) ($ 131,318)
======== =========== ===========
</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 Month Six Months
Ended Ended
June 30, June 30,
1998 1997
------------ ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,865,698 $ 54,981
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Gain on sale of rental property (2,631,014) 0
(Increase) Decrease in depreciation and amortization 0 367,946
(Increase) Decrease in rents receivable, net 63,110 110,494
Increase (Decrease) in amounts due to General Partners and Affiliates 127,635 (12,471)
Increase (Decrease) in accounts payable and accrued expenses (182,250) 105,981
(Increase) Decrease in restricted cash and cash equivalents (26,725) (107,286)
(Increase) Decrease in other assets 0 (40,540)
------------ ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 216,454 479,105
------------ ---------
INVESTING ACTIVITIES
Improvements to rental properties 0 (348,114)
Cash proceeds from sale of rental properties 15,585,595
------------ ---------
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES 15,585,595 (348,114)
------------ ---------
FINANCING ACTIVITIES
Decrease (Increase) in deferred building and loan costs 3,665 (50,845)
Mortgage principal reduction (8,244,343) (209,146)
Proceeds from (payments to) short-term borrowings (75,000) 150,000
Distributions to limited partners (7,378,238) (129,712)
------------ ---------
NET CASH USED BY FINANCING ACTIVITIES (15,693,916) (239,703)
------------ ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 108,133 (108,712)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 283,889 266,603
------------ ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 392,022 $ 157,891
============ =========
</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, 1998
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, 1998, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. 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, 1997.
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.
RENTAL PROPERTY
The Partnership completed the acquisition of the final property in September
1989. As of June 30, 1998, the Registrant owned two properties consisting of:
Rosewood Shopping Center, Columbia, South Carolina; and West Ridge Plaza,
Bristol, Tennessee. Three properties owned by the Partnership, Southwest Plaza,
Lincoln Center, and Sangaree Plaza, were sold to Edens & Avant Properties
Limited Partnership on April 1, 1998. For additional information, please refer
to the Registrant's Form 10-K for the year ended December 31, 1997 filed on
April 15, 1998. On April 19, 1998, the Registrant entered into a Purchase and
Sale Agreement for the disposition of Rosewood. The property closed on July 16,
1998, at a price of $1,800,000. Proceeds from the sale total approximately
$315,000.
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West Ridge Plaza was foreclosed on by the lender on July 28, 1998. The
Registrant chose not to contest the foreclosure because the fair market value of
the property was below the mortgage balance. Previous attempts to sell the
property resulted in no buyers willing to purchase the property for an amount in
excess of the mortgage balance.
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, 1998 of $14.50 per BUC
representing the proceeds from the sale of the assets as previously discussed.
The Registrant does not intend to make additional distributions until the
completion of the sales of the remaining properties. It is anticipated that both
of the remaining properties will be sold in 1998.
As of June 30, 1998, the Registrant had cash and cash equivalents of $392,022.
The Registrant also held restricted cash and cash equivalents of $148,791 which
includes property tax escrows and tenant security deposits at June 30, 1998. The
Registrant is holding these cash reserves for operations and other necessary
capital improvements.
Results of Operations.
The Partnership recorded net income for the six months ended June 30, 1998, of
$2,865,698 as compared to net income of $54,981 in 1997. The change is due to
the following factors:
Rental income decreased approximately $444,066 for the six months ended June 30,
1998, as compared to the six months ended June 30, 1997. This decrease was
primarily due to the loss of income from properties that were sold.
Operating expenses for the six months ended June 30, 1998, decreased to $848,057
from $1,454,507 in the six months ended June 30, 1997. The decrease results from
the sale of the properties.
Interest expense decreased from $660,326 for the six months June 30, 1997, to
$469,882 for the six months ended June 30, 1998, due to retirement of the debt
on properties sold.
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
SunWest lawsuit was settled for $41,000 with proceeds to the
Partnership.
Item 2 - Changes in Securities
None.
Item 3 - Defaults Upon Senior Securities
None.
Item 4 - Submissions of Matters to a Vote of Security Holders
None.
Item 5 - Other Information
Having disposed of all the properties originally owned, the Registrant,
plans to make a final distribution to the limited partners of all remaining cash
after settling all outstanding liabilities within the next 60 to 90 days. The
partnership will be dissolved at that time.
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 six months ended June 30, 1998.
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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
(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: August 13, 1998
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP FOR THE
SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 392,022
<SECURITIES> 0
<RECEIVABLES> 245,531
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 786,344
<PP&E> 7,027,127
<DEPRECIATION> 1,389,231
<TOTAL-ASSETS> 6,424,240
<CURRENT-LIABILITIES> 397,172
<BONDS> 5,585,508
0
0
<COMMON> 0
<OTHER-SE> (131,318)
<TOTAL-LIABILITY-AND-EQUITY> 6,424,240
<SALES> 0
<TOTAL-REVENUES> 1,082,741
<CGS> 0
<TOTAL-COSTS> 378,175
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 469,882
<INCOME-PRETAX> 234,684
<INCOME-TAX> 0
<INCOME-CONTINUING> 234,684
<DISCONTINUED> 0
<EXTRAORDINARY> 2,631,014
<CHANGES> 0
<NET-INCOME> 2,865,698
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
