<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required] For the fiscal year ended December
31, 1997
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] 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 of organization) (I.R.S. Employer Identification No.)
201 N. Tryon St.
Charlotte, North Carolina 28202
(Address of principal executive offices) (Zip Code)
Not Applicable
(Former name, former address and fiscal year ended, if changed since last
report)
Registrant's telephone number, including area code: (704) 379-9164
---------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Beneficial Unit
Certificates
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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 such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
(See definition of affiliate in Rule 405) Not applicable as all securities are
non-voting.
Indicate the number of each of the issuer's classes of common stock as of the
latest practicable date 508,844 Beneficial Unit Certificates outstanding as of
March 31, 1998
Documents Incorporated by Reference: See Item 14
Page 1 of 16 sequentially numbered pages
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PART I
ITEM 1 - BUSINESS
Atlantic Income Properties (the "Registrant" or the "Partnership") is
a North Carolina limited partnership organized as of March 30, 1988. The
General Partners of the Registrant are ISC Realty Corporation ("ISCR"), a North
Carolina corporation and a wholly-owned subsidiary of Interstate/Johnson Lane,
Inc., and Chadsford Associates II ("Chadsford"), a North Carolina general
partnership whose partners are Lat W. Purser, III and Lat Purser & Associates,
Inc. ("LPA"). ISCR and Chadsford shall hereinafter be collectively referred to
as the "General Partners". The Initial Limited Partner of the Registrant is
Atlantic Income, Inc., a North Carolina corporation.
The Registrant's principal investment objectives are to own, hold,
operate, lease, sell, and otherwise deal in commercial real estate properties
(the "Properties") which offer the potential for (1) preservation and
protection of capital invested in the Registrant, (2) cash distributions from
operations of the Properties, (3) long term appreciation in value of the
Properties, and (4) protection for investors against inflation. As of December
31, 1997, the offering proceeds and cash flow from operations have been used
to: (i) acquire and maintain Southwest Plaza in Roanoke, Virginia; Lincoln
Center in Lincolnton, North Carolina; Sangaree Plaza in Berkeley County, South
Carolina; Rosewood Shopping Center in Columbia, South Carolina; and West Ridge
Plaza in Bristol, Tennessee; (ii) make distributions to investors; and (iii)
invest in short-term investments.
It is intended that the Registrant be self-liquidating and
accordingly, the net proceeds of any sale of any Property will be distributed
to the beneficial unit certificate holders.
The Registrant terminated its Offering of beneficial unit certificates
effective on February 7, 1990, with the total number of BUCs subscribed being
508,594. Total gross proceeds from the offering were $10,174,012 and total net
proceeds to the Registrant equaled $8,880,362 after deducting organization and
offering expenses of $1,293,650.
The real estate business is highly competitive, and the Partnership
competes with numerous established companies, real estate investment trusts and
other limited partnerships, some of which have greater assets than the
Partnership, and broader experience than the General Partners. Some of the
competitive factors which the Partnership may encounter from time to time
include a rising level of vacancies due to changes in supply or demand of
competing properties in an area, such as excess supply resulting from
competitive overbuilding and a decrease in rental rates due to an economic
slowdown.
The General Partners or their affiliates currently serve as a general
partner in over 12 public and private partnerships which currently own various
types of real property. None of the prior partnerships sponsored by the General
Partners now contemplate the acquisition of any additional properties due to
all public funds being fully invested. However, it is likely that the General
Partners or their affiliates will sponsor additional public or private
partnerships in the future. In addition, the General Partners and their
affiliates are and will continue to be engaged in
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the business of real estate investment, development and management apart from
their involvement in the Registrant.
The General Partners intend to devote only such time to the business
of the Registrant as in their judgment is reasonably required. The General
Partners are engaged in other similar activities which also require their time
and attention.
As of December 31, 1997, the Registrant did not directly employ any
persons in a full-time position. Certain employees of the General Partners
performed services for the Registrant during such time.
On April 1, 1998, the Registrant sold three of its five properties.
The pro-forma results are shown in Exhibit 99.1 and discussed in greater detail
below.
ITEM 2 - PROPERTIES
(a) Southwest Plaza
Southwest Plaza Shopping Center is an 88,308 square-foot shopping
center situated on approximately 7.58 acres of land in Roanoke, Virginia.
Southwest Plaza is anchored by a 30,450 square-foot Harris-Teeter Supermarket
and a 10,678 square-foot Revco drug store. In addition, a 3,250 square-foot
Firestone Tire Center and Car Maintenance Shop is located on a 0.487 acre tract
of land separate from the Southwest Plaza Shopping Center but also owned by the
Registrant. As of March 19, 1998, the center was 99% leased and 65% occupied.
Three leases totaling 5,600 square feet will expire by December 31, 1998.
The original $3,700,000 loan from Prudential Insurance Company of
America, secured by the center, had a five year-term, an interest rate of 9.75%
and expired on September 15, 1993. An extension of the Southwest Loan was then
granted by the lender for a period of 36 months from April 15, 1994. As of
March 19, 1998, the Registrant had entered into a forebearance agreement
extending the loan until June 15, 1998. Terms include monthly principal and
interest payments of $39,631 at an interest rate of 10.0%. The balance of the
mortgage at December 31, 1997 was $3,041,814. The Registrant previously
executed and delivered to the lender an agreement cross-collateralizing and
cross-defaulting the Southwest Plaza and Lincoln Center loans.
This property was sold to Edens & Avant Properties Limited Partnership
on April 1, 1998. The aggregate purchase price was $5,688,227. The proceeds from
the sale were used to repay the loan from Prudential which had an outstanding
balance of $2,990,062, including accrued interest, and pay for various closing
costs and adjustments. The balance of the net proceeds, approximately $2.55
million will be distributed to the beneficial unit certificate holders. The
Contract of Sale is attached in Exhibit 99.
(b) Lincoln Center
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Lincoln Center, located in Lincolnton, North Carolina, is a 275,470
square-foot shopping center completed in March of 1989. The center includes a
64,500 square-foot Belk Department Store and a 132,200 square-foot Wal-Mart
Discount Store, neither of which are owned by the Registrant. Belk originally
occupied a 44,544 square foot space which was expanded in 1997. The remaining
78,770 square feet owned by the Registrant is anchored by a 33,302 square-foot
Bi-Lo Supermarket, an 8,450 square-foot Revco Drug Store, and a 6,000
square-foot Cato clothing store. As of March 19, 1998, occupancy at the
Registrant's portion of the center was 100%. There are four leases representing
5,840 square feet scheduled to terminate before December 31, 1998.
The original $3,000,000 loan from the Prudential Insurance Company of
America, secured by the center, expired April 15, 1994. The Registrant was
granted a 36 month extension of the loan until April 15, 1997. As of March 19,
1997, the Registrant had entered into a forebearance agreement extending the
loan until June 15, 1998. Terms include monthly principal and interest payments
of $32,248.30 at an interest rate of 10.0%. The balance of the mortgage at
December 31, 1997 was $2,475,417.95. The Registrant previously executed and
delivered to the lender an agreement cross-collateralizing and cross-defaulting
the Southwest Plaza and Lincoln Center loans.
This property was sold to Edens & Avant Properties Limited Partnership
on April 1, 1998. The aggregate purchase price was $5,748,155. The proceeds from
the sale were used to repay the loan from Prudential which had an outstanding
balance of $2,421,117, including accrued interest, and pay for various closing
costs and adjustments. The balance of the net proceeds, approximately $3.2
million will be distributed to the beneficial unit certificate holders. The
Contract of Sale is attached in Exhibit 99.
(c) Sangaree Plaza
Sangaree Plaza, a 58,948 square-foot shopping center located in
Berkeley County, South Carolina, is anchored by a 37,369 square-foot Bi-Lo
Supermarket and an 8,450 square-foot Revco Drug Store. The remaining spaces are
leased to local and regional tenants. The property was 97% leased as of March
19, 1998. There is one lease of 2,000 square feet expiring prior to December
31, 1998.
Sangaree Plaza was acquired subject to a permanent mortgage loan from
Southern Farm Bureau Life Insurance Company with an original principal balance
of $1,750,000. A new loan which added $1,200,000 to the loan balance was
granted in conjunction with the Bi-Lo expansion and closed May 11, 1993. Loan
terms are a 9 1/8% interest rate, 25 year amortization and a five year term.
The balance of the mortgage at December 31, 1997, was $2,684,523. The loan
matures on June 30, 1998.
This property was sold to Edens & Avant Properties Limited Partnership
on April 1, 1998. The aggregate purchase price was $4,413,618. The proceeds from
the sale were used to repay the loan from Southern Farm which had an outstanding
balance of $2,694,926, including accrued interest, and pay for various closing
costs and adjustments. The balance of the net proceeds,
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approximately $1.6 million will be distributed to the beneficial unit
certificate holders. The Contract of Sale is attached in Exhibit 99.
(d) Rosewood Shopping Center
Rosewood Shopping Center, a 55,087 square-foot shopping center located
in Columbia, South Carolina, is anchored by three major tenants: Dollar General
(subleasing from Rite Aid), Advance Auto, and First Citizen's Bank and Trust
Company. The anchor tenants occupy a total of 14,600 square feet, or 25% of the
net leasable area. Rite Aid vacated its space in 1996 and moved to a
free-standing location, however, they have remained current on their lease
payments and are obligated to do so until November 10, 2000. As of March 19,
1998, the center was 89% occupied. Two leases representing 5,400 square feet
will expire by December 31, 1998.
Rosewood is owned subject to a mortgage loan originally obtained from
the Independent Life and Accident Insurance Company. The loan bears interest at
an annual rate of 9 7/8% and has a term of 27 years. The note is being repaid
in equal monthly payments of principal and interest of $13,499 amortized over
the remaining term of the loan ending October, 2016. The balance of the
mortgage at December 31, 1997, was $1,379,966.
(e) West Ridge Plaza
West Ridge, a 140,985 square-foot shopping center situated on 14.372
acres of land in Bristol, Tennessee, is anchored by Wal-Mart, Food Lion, and
Revco, which occupy 79,900 square feet, 27,885 square feet, and 10,500 square
feet, respectively. In the aggregate, these tenants occupy 118,285 square feet
or 83.9% of the center's net leasable space. As of March 19, 1998, the center
was 98% leased and occupied. No leases are scheduled to expire prior to
December 31, 1998.
West Ridge Plaza was purchased subject to revenue bonds and was
refinanced in 1990. On January 5, 1990, the Registrant combined the net
proceeds of a $4,500,000 loan received from Provident National Assurance
Company ("Provident") with Offering proceeds and deposited $5,750,650 in cash
and government securities with the Trustee of the Bonds, thereby causing the
Bonds to be deemed paid. Provident received a first lien Deed of Trust
encumbering West Ridge Plaza in consideration of making said loan. The
Provident loan bears interest at 9.6% per annum and had a term of five years
which expired January 1, 1995. The lender granted three one-year forbearance
periods , the latest of which expired January 1, 1998. The Registrant and the
lender are negotiating a further extension. The lender has continued to accept
the normal monthly payment of principal and interest in the amount of $38,658.
The General Partners are optimistic that the lender will extend the maturity of
the note. The balance of the mortgage at December 31, 1997, was $4,248,130.
The Registrant received an offer for the purchase of this property on
March 31, 1998. The offer states a price of $4.5 million. If this Buyer were to
purchase the property, the proceeds would be used to retire the loan formerly
held by Provident, which had a balance of approximately $4.24 million as of
March 31, 1998. Any proceeds remaining after closing costs and adjustments
would be available for distribution to the beneficial unit certificate holders.
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ITEM 3 - LEGAL PROCEEDINGS
The Registrant has commenced an action seeking declaratory judgement
for breach of contract against SunWest Properties Inc., and Republic Title of
Texas, Inc. Registrant and SunWest were parties to a Real Estate Purchase
Agreement dated July 11, 1997. The Registrant contends that SunWest breached
this agreement and is seeking damages therefrom.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S SECURITIES AND OTHER RELATED SECURITIES
HOLDER MATTERS
Transfer of the Registrant's Beneficial Unit Certificates ("BUCs") is
subject to certain restrictions contained in the Registrant's Limited
Partnership Agreement. There is no established market for the BUCs and it is
not anticipated that any will occur in the future. The Registrant is aware of
no significant resales of BUCs since the effective date of the Offering. As of
March 19, 1998, 638 investors were record owners of 508,844 BUCs.
During the year ended December 31, 1997, the Registrant made four
distributions totaling $256,934 to investors, representing a portion of net
cash flow generated from operations during the fiscal year ended December 31,
1997.
For the year ended December 31, 1996, the Registrant made four
distributions totaling $259,702 to investors, representing a portion of net
cash flow generated from operations during the fiscal year ended December 31,
1996.
During the year ended December 31, 1995, the Registrant made
distributions totaling $228,976 to investors, representing a portion of net
cash flow generated from operations during the fiscal year ended December 31,
1995.
ITEM 6 - SELECTED FINANCIAL DATA (AUDITED)
<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Revenues $3,153,040 $3,149,348 $3,192,868 $2,995,059 $2,845,961
Net Income (Loss) (888,979) 134,508 306,231 25,986 (260,715)
Net Inc (Loss)/BUC (1.73) 0.25 0.57 0.05 (0.51)
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
Total Assets 19,310,738 20,573,937 20,969,999 21,203,555 21,752,837
Long-Term Debt 13,829,851 14,250,705 14,649,738 15,016,682 15,333,111
Partners' Equity 4,381,222 5,527,135 5,652,329 5,575,074 5,752,625
Distributions per BUC $ 0.50 $ 0.51 $ 0.45 $ 0.40 $ 0.40
</TABLE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Registrant generated $1,028,397 of cash flow from operations
during the year ended December 31, 1997. Cash payments during the year ended
December 31, 1997, for interest on the Registrant's outstanding long-term debt
amounted to $1,344,911. In addition, $420,854 of principal payments were made
on loans.
As of December 31, 1997, the Registrant held cash and cash equivalents
of $283,889. In addition, $122,066 was held in restricted cash accounts related
to tenant deposits and property tax escrows.
As previously mentioned, the Registrant entered into a Contract of
Sale on February 25, 1998 for the sale of Southwest Plaza, Lincoln Center and
Sangaree Plaza. The sale closed on April 1, 1988 at the contract price. A
portion of the sale proceeds were used to retire the outstanding indebtedness
encumbering each property and pay for certain closing costs. The remainder of
the proceeds will be reserved for operational needs and distributed to the BUC
holders. The distribution is scheduled to be sent to the BUC holders on April
15, 1998 and totals $14.50 per BUC. The Contract of Sale is attached as Exhibit
99.
The Registrant continues to market the remaining real estate assets
for sale. The Registrant believes, based upon the response from potential
buyers that it will be successful in selling the assets and retiring the debt
secured by those assets by December 31, 1998.
Results of Operations.
COMPARISON OF THE FISCAL YEAR ENDED DECEMBER 31, 1997, TO THE FISCAL YEAR ENDED
DECEMBER 31, 1996
The Partnership reported a net loss of $888,979 for the year ended
December 31, 1997, as compared to net income of $134,508 for the year ended
December 31, 1996.
Rental and reimbursement income for the year ended December 31, 1997,
increased to $3,131,418 for the year ended December 31, 1997, from $3,099,739
for the year ended December 31, 1996, an increase of 1%. The increase is
attributable to contractual rental increases within the exisiting tenant base
and the continued strong occupancy at the properties.
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Interest expense decreased slightly from $1,344,491 for the year ended
December 31, 1996, to $1,340,972 for the year ended December 31, 1997. This
decrease was due to a greater amount of principal being amortized with each
monthly payment on all five mortgage notes. The decrease was partially offset
by the higher interest rate on the Lincoln and Southwest loans.
Other operating expenses increased $116,652, or 13% to $985,395 for
the year ended December 31, 1997. The increase resulted from higher expenses at
Rosewood for common area maintenance and repairs, higher legal and accounting
costs as well as adjustments made during the audit for the treatment of certain
operating costs.
Write-down of rental property increased to $1,700,000 for the year
ended December 31, 1997, from $773,000 for the year ended December 31, 1996.
This write-down was due to the current marketing of the Partnership's
properties for sale and the General Partner's opinion that the net sale prices
for Rosewood Shopping Center and West Ridge Plaza will be less than their
respective net book values. Under Statement of Financial Accounting Standards
No. 121, this adjustment is shown as an operating expense.
COMPARISON OF THE FISCAL YEAR ENDED DECEMBER 31, 1996, TO THE FISCAL YEAR ENDED
DECEMBER 31, 1995
The Partnership reported net income of $134,508 for the year ended
December 31, 1996, as compared with net income of $306,231 for the year ended
December 31, 1995.
Rental and reimbursement income for the year ended December 31, 1996,
decreased $47,869 from $3,147,608 for the year ended December 31, 1995, to
$3,099,739 for the year ended December 31, 1996. Base rental income and expense
recoveries generally were flat to slightly up at all five properties in 1996.
This was due to continued strong occupancy and normal rent and expense recovery
escalations at the properties. The main factor behind the decrease in total
revenue was a $66,000 decline in percentage rent received from Wal-Mart at West
Ridge Plaza. The reason for this decline was the loss of sales due to the
opening of a new Wal-Mart store approximately nine miles from the West Ridge
Plaza store. The long-term impact of the new Wal-Mart location on the existing
West Ridge Plaza store is uncertain. Wal-Mart's lease at West Ridge Plaza
expires November 12, 2004.
Interest and other income increased from $45,260 for the year ended
December 31, 1995, to $49,609 for the year ended December 31, 1996. This
increase was due primarily to an increase in miscellaneous fees and charges
received at the properties.
Interest expense decreased slightly from $1,348,940 for the year ended
December 31, 1995, to $1,344,491 for the year ended December 31, 1996. This
decrease was due to a greater amount of principal being amortized with each
monthly payment on all five mortgage notes.
Depreciation and amortization decreased from $712,442 for the year
ended December 31, 1995, to $28,606 for the year ended December 31, 1996. This
decrease was due to the
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Partnership's adopting Statement of Financial Accounting Standards No. 121 in
1996. This statement, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of, requires the Partnership to record a
provision to write-down Partnership properties to fair market value and to
cease recording depreciation expense at the time the properties began to be
marketed for sale. As the properties began to be marketed for sale as of
January 1, 1996, the depreciation expense for 1996 under Standard 121 was $0.
The $28,606 represents amortization expense for 1996, primarily due to various
capital improvements at the properties and tenant upfitting costs.
Other operating expenses increased $43,488 from $825,255 for the year
ended December 31, 1995, to $868,743 for the year ended December 31, 1996. This
increase was due largely to a $39,000 increase in lease commissions which was
primarily due to new and/or expanded tenants at Southwest Plaza and West Ridge
Plaza. In addition, maintenance and groundskeeping expenses were approximately
$15,000 higher, primarily due to unusually high snow removal costs at the
Southwest Plaza and West Ridge Plaza locations. Aside from these two
categories, other operating expenses of the Partnership for 1996 were generally
in line with or lower than the 1995 figures.
Write-down of rental property increased from $0 for the year ended
December 31, 1995, to $773,000 for the year ended December 31, 1996. This
write-down was due to the current marketing of the Partnership's properties for
sale and the General Partner's opinion that the net sale prices for Rosewood
Shopping Center and West Ridge Plaza will be less than their respective net
book values. Under Statement of Financial Accounting Standards No.
121, this adjustment is shown as an operating expense.
Inflation
The Registrant's business is impacted by inflation in several ways.
Inflation permits possible increases in rental rates generally to reflect the
impact of higher operating and replacement costs. Continued inflation should
increase the value of the Registrant's real property over a period of time as
rental revenues and replacement costs continue to increase. The various debt
instruments used in the acquisition of certain of the Registrant's properties
are fixed-rate, with maturities ranging from less than 1 to 15 years.
Therefore, inflation will not affect the Registrant's financing activities
until such time as a refinancing may be desired or is required.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this
report.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During the year ended December 31, 1997, the Registrant made no
changes in accountants and had no disagreements with accountants on accounting
and financial disclosure.
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PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has no directors or executive officers. Information as
to the directors and executive officers of ISCR and as to the general partners
of Chadsford is as follows:
<TABLE>
<CAPTION>
Name Information about Directors and Executive Officers
---- --------------------------------------------------
<S> <C>
J. Christopher Boone Director and President of ISCR. He is 39 years old.
Edward C. Ruff Director of ISCR. He is 58 years old.
Michael D. Hearn Director and Secretary of ISCR. He is 45 years old.
Robert B. McGuire Treasurer of ISCR. He is 50 years old.
Lew F. Semones, Jr. Director of ISCR. He is 39 years old.
Lat W. Purser, III General Partner of Chadsford. He is 45 years old.
</TABLE>
J. Christopher Boone is a Managing Director of Interstate/Johnson Lane
Corporation ("I/JL"), an affiliate of ISCR and President of ISCR. Prior to
joining I/JL in 1984, Mr. Boone was a tax specialist for Coopers & Lybrand. He
received a bachelor's degree in business administration with an emphasis in
accounting from the University of North Carolina at Chapel Hill.
Edward C. Ruff is Executive Managing Director and Chief Financial
Officer of I/JL. He also serves as a member of the Board of Directors and
Management Committee of I/JL. Mr. Ruff has been with I/JL since 1976. He is a
graduate of the University of San Francisco, with a bachelor's degree in
accounting. He is a director of ISCR.
Robert B. McGuire is Treasurer of ISC Realty Corporation. In addition,
he is Senior Vice President and Treasurer of I/JL. Mr. McGuire received a B.A.
in Business Administration from Furman University and a Masters in Business
Administration from Emory University.
Michael D. Hearn has served as Secretary and General Counsel of I/JL
since 1985. He is a Senior Managing Director and a member of the Board of
Directors of I/JL. In May of 1992 he was elected a Director of ISCR. Mr. Hearn
received a Bachelor of Science degree in Business Administration and a Juris
Doctor from the University of North Carolina at Chapel Hill. He is secretary of
ISCR.
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Lew F. Semones, Jr. is Senior Managing Director and Chief Financial
Officer of I/JL. He is also a director of I/JL. Mr. Semones is a graduate of
Lenoir Rhyne College, a Certified Public Accountant and a graduate of the
Securities Industry Institute at The Wharton School of The University of
Pennsylvania. He was elected as a director of ISCR in September, 1997.
Lat W. Purser, III has been associated with LPA for 15 years. He is
currently President and a member of
the Board of Directors of LPA.
The General Partners are responsible for evaluating and selecting
Properties to be acquired by the Partnership. The actual analyses and decisions
as to Properties acquired for the Partnership were made by J. Christopher Boone
for ISCR and by Lat W. Purser, III for Chadsford.
ITEM 11 - EXECUTIVE COMPENSATION
During the fiscal year ended December 31, 1997, the Registrant paid no
compensation to the executive officers, directors or partners, respectively, of
the General Partners. See Item 13 "Certain Relationships and Related
Transactions" for a discussion of amounts paid or which may be paid to the
General Partners and certain affiliates of the General Partners for the year
ending December 31, 1997.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 19, 1998, no person known to the Registrant has beneficial
ownership of more than five percent of the BUCs.
The following individual directors and officers of ISCR and the
partners of Chadsford owned, on March 19, 1998, the following number of BUCs of
the Registrant.
<TABLE>
<CAPTION>
Number of BUCs Percent of
and Nature of Units
Name Beneficial Ownership(1) Subscribed for
- ---- ---------------------- --------------
<S> <C> <C>
J. Christopher Boone 413 Less than 1%
Edward C. Ruff 0 0%
Michael D. Hearn 0 0%
Robert B. McGuire 0 0%
All Directors and
Executive Officers of
</TABLE>
- ---------------------------
(1) All BUCs owned directly with sole voting control unless otherwise
indicated.
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<TABLE>
<S> <C> <C>
ISCR as a Group 413 Less than 1%
Lat W. Purser, III 0 0%
</TABLE>
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the operational stage, ISCR will be entitled to receive a
partnership monitoring fee in an amount equal to 3% of the annual Gross
Revenues from the Properties, as defined in the Limited Partnership Agreement,
for monitoring the operations of the Registrant and the Property Manager, on
behalf of the Investors and for serving as liaison between the Registrant and
the Investors. The partnership monitoring fee shall be payable in quarterly
installments; provided, however, up to 50% of said fee may be subordinated on a
non cumulative basis to the Annual Priority Return to the Investors, as defined
in the Limited Partnership Agreement. Any portion of said fee which is
subordinated will bear interest at the Prime Rate plus 1% per annum until paid.
During the year ended December 31, 1997, ISCR earned partnership monitoring
fees of $146,688.
During the operational stage, LPA will be entitled to a property
management fee in an amount equal to 4% of the monthly Gross Revenues, as
defined in the Limited Partnership Agreement, for supervising the continued
management and operation of the Properties. LPA received $126,789 during 1997
as payment of such fees relating to services performed at Southwest Plaza,
Lincoln Center, Sangaree Plaza, Rosewood Shopping Center, and West Ridge Plaza.
In addition, LPA, or its affiliate, will receive a leasing commission of 4% (or
2% on renewals) of the gross lease value of each lease signed at Southwest
Plaza, Lincoln Center, Sangaree Plaza, Rosewood Shopping Center, and West Ridge
Plaza. Leasing commissions of $17,996 were paid to LPA during the year ended
December 31, 1997, for leases signed or renewed during the same period at
Southwest Plaza, Sangaree Plaza, Westridge Plaza, Lincoln Center and Rosewood
Shopping Center.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. and 2. The response to this portion of Item 14 is submitted
as a separate section of this report.
3. Exhibits.
27. Financial Data Schedule (for SEC use only)
99. Contract of Sale
99.1 Pro-Forma Balance Sheet and Statement of Operations
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the 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
BY: ISC REALTY CORPORATION
GENERAL PARTNER
BY: /S/ J. CHRISTOPHER BOONE
------------------------
J. CHRISTOPHER BOONE
PRESIDENT
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/S/ J. Christopher Boone
- -----------------------------
J. Christopher Boone Director and
President of
ISC Realty
Corporation
/S/ Edward C. Ruff
- ------------------------------
Edward C. Ruff Director of
ISC Realty
Corporation
/S/ Michael D. Hearn
- -----------------------------
Michael D. Hearn Director and
Secretary of
ISC Realty
Corporation
/S/ Lew F. Semones, Jr.
- -----------------------------
Lew F. Semones, Jr. Director of
ISC Realty
Corporation
</TABLE>
14
<PAGE> 15
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
(A Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
[Item 14(a) 1 and 2]
<TABLE>
<CAPTION>
Pages
- -----
<S> <C>
Report of Independent Public Accountants F-1
Financial Statements:
Balance sheets at December 31,
1997 and 1996 F-3
Statements of operations for the years ended
December 31, 1997, 1996, and 1995 F-4
Statements of partners' equity (deficit) for the
years ended December 31, 1997, 1996, and 1995 F-5
Statements of cash flows for the years
ended December 31, 1997, 1996, and 1995 F-6
Notes to financial statements F-7 - F-14
Financial Statement Schedules:
Schedule III - Real estate and accumulated depreciation
for the year ended December 31, 1997 F-15
</TABLE>
All other schedules are omitted since the required information is not present
or is not present in amounts sufficient to require submission of the schedules,
or because the information required is included in the consolidated financial
statements and notes thereto.
16
<PAGE> 16
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1997, 1996 AND 1995
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Atlantic Income Properties Limited Partnership:
We have audited the accompanying balance sheets of Atlantic Income Properties
Limited Partnership (a North Carolina Limited Partnership) as of December 31,
1997 and 1996, and the related statements of operations, partners' equity and
cash flows for each of the three years in the period ended December 31, 1997.
These financial statements and the schedule referred to below are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Atlantic Income Properties
Limited Partnership as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
As discussed in Notes 1, 2 and 3, the general partner began efforts in 1995 to
sell the rental properties comprising the Partnership. On April 1, 1998, the
Partnership consummated the sale of three of the properties comprising the
Partnership. Also, as discussed in Note 3, the Partnership is in default on the
mortgage note secured by West Ridge Plaza, giving the lender the right to seek
remedies of default such as taking title to the rental property or commencing
foreclosure proceedings against the Partnership.
F-1
<PAGE> 18
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule listed in the index to financial
statements and financial statement schedule is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not a
required part of the basic financial statements. The schedule has been
subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, fairly states, in all material
respects, the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Charlotte, North Carolina,
February 27, 1998, (except
for Note 2 and Note 3, as to
which the date is April 1, 1998)
F-2
<PAGE> 19
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
BALANCE SHEETS -- DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
------ ----------- -----------
<S> <C> <C>
RENTAL PROPERTIES HELD FOR SALE (Notes 1, 2 and 3) $18,592,477 $19,884,154
CASH AND CASH EQUIVALENTS 283,889 266,603
RESTRICTED CASH 122,066 94,699
RENTS RECEIVABLE AND OTHER ASSETS 308,641 309,164
DEFERRED LOAN COSTS, net 3,665 19,317
----------- -----------
$19,310,738 $20,573,937
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
MORTGAGE NOTES PAYABLE (Note 3) $13,829,851 $14,250,705
DUE TO GENERAL PARTNER (Note 6) 445,243 493,576
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 521,036 247,436
LINE OF CREDIT (Note 4) 75,000 0
TENANTS' SECURITY DEPOSITS 58,386 55,085
Total liabilities ----------- -----------
14,929,516 15,046,802
----------- -----------
PARTNERS' EQUITY:
General partners 3,179 12,069
Limited partners 4,378,043 5,515,066
----------- -----------
Total partners' equity 4,381,222 5,527,135
----------- -----------
$19,310,738 $20,573,937
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
F-3
<PAGE> 20
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
REVENUE:
Rental income and tenant reimbursements $3,131,418 $3,099,739 $3,147,608
Interest and other income 21,622 49,609 45,260
Total revenue ---------- ---------- ----------
3,153,040 3,149,348 3,192,868
---------- ---------- ----------
EXPENSES:
Interest 1,340,972 1,344,491 1,348,940
Depreciation and amortization (Note 1) 15,652 28,606 712,442
Other operating expenses 985,395 868,743 825,255
Write-down of rental properties (Note 2) 1,700,000 773,000 0
Total expenses ---------- ---------- ----------
4,042,019 3,014,840 2,886,637
NET INCOME (LOSS) ========== ========== ==========
$ (888,979) $ 134,508 $ 306,231
========== ========== ==========
NET INCOME (LOSS) ALLOCATED TO GENERAL PARTNERS $ (8,890) $ 6,725 $ 15,312
========== ========== ==========
NET INCOME (LOSS) ALLOCATED TO LIMITED PARTNERS $ (880,089) $ 127,783 $ 290,919
========== ========== ==========
NET INCOME (LOSS) PER BENEFICIAL UNIT CERTIFICATE (Note 1) $ (1.73) $ .25 $ .57
========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
F-4
<PAGE> 21
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-------- ---------- ----------
<S> <C> <C> <C>
BALANCE, December 31, 1994 $ (9,968) $5,585,042 $5,575,074
Net income 15,312 290,919 306,231
Cash distributions 0 (228,976) (228,976)
--------- ---------- ----------
BALANCE, December 31, 1995 5,344 5,646,985 5,652,329
Net income 6,725 127,783 134,508
Cash distributions 0 (259,702) (259,702)
--------- ---------- ----------
BALANCE, December 31, 1996 12,069 5,515,066 5,527,135
Net loss (8,890) (880,089) (888,979)
Cash distributions 0 (256,934) (256,934)
--------- ---------- ----------
BALANCE, December 31, 1997 $ 3,179 $4,378,043 $4,381,222
========= ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
F-5
<PAGE> 22
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $(888,979) $ 134,508 $306,231
Adjustments to reconcile net income to net cash provided
by operating activities-
Depreciation 0 0 692,831
Amortization 15,652 28,606 19,611
Write-down of rental property 1,700,000 773,000 0
Changes in operating assets and liabilities:
(Increase) decrease in rents receivable and other
assets 523 (12,647) (132,263)
(Increase) decrease in restricted cash (27,367) 39,533 (36,457)
Increase in amount due to general partner 79,302 47,462 46,457
Increase in accounts payable, accrued expenses
and tenants' security deposits 149,266 80,703 22,389
--------- --------- --------
Net cash provided by operating activities 1,028,397 1,091,165 918,799
--------- --------- --------
CASH FLOWS USED IN INVESTING ACTIVITIES - Building improvements (408,323) (649,712) (142,732)
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to limited partners (256,934) (259,702) (228,976)
Net borrowings under line of credit 75,000 0 0
Principal payments on mortgage notes payable (420,854) (399,033) (366,944)
--------- --------- --------
Net cash used in financing activities (602,788) (658,735) (595,920)
--------- --------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,286 (217,282) 180,147
CASH AND CASH EQUIVALENTS, beginning of year 266,603 483,885 303,738
--------- --------- --------
CASH AND CASH EQUIVALENTS, end of year $ 283,889 $ 266,603 $483,885
========= ========= ========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
F-6
<PAGE> 23
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Atlantic Income Properties Limited Partnership (a North Carolina 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 II Associates are the general partners. The Partnership will be
terminated upon the occurrence of certain events as defined in the limited
partnership agreement but, in any event, no later than December 31, 2028.
Beneficial Unit Certificates (BUCs) have been sold at $20 per BUC (508,594
units). The initial admission of investors to the Partnership occurred on
August 1, 1988.
Under the terms of the partnership agreement, net loss of the Partnership is
allocated 99% to the limited partners and 1% to the general partners. Net
income of the Partnership is allocated 95% to the limited partners and 5% to
the general partners provided, however, that allocations and distributions to
the general partners are subordinated to a portion of a property management fee
payable to a general partner, as well as allocations and distributions to the
limited partners until the limited partners have received allocations and
distributions equal to a 9% cumulative noncompounded return on each limited
partner's capital. No distributions were made to the general partners during
1997, 1996 or 1995.
During 1995, the general partner began efforts to sell the rental properties
comprising the Partnership (see Note 2). Upon the sale, refinance or
disposition of the partnership property, the partnership agreement specifies
certain allocations of net proceeds and taxable gain or loss from the
transaction.
CASH EQUIVALENTS
The Partnership considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
RESTRICTED CASH
Restricted cash represents tenants' security deposits and funds restricted by
the general partner in the amount of $63,680 in 1997 and $39,614 in 1996 for
future property tax assessments and insurance.
F-7
<PAGE> 24
RENTAL PROPERTIES
During 1996, the Partnership adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." SFAS No. 121 requires that long-lived
assets and certain identifiable intangibles to be held and used or disposed of
by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS No. 121 did not have an impact on the
Company's financial position or results of operations with respect to
long-lived assets held and used. Long-lived assets held for sale continue to be
recorded at the lower of carrying amount or fair value less estimated cost to
sell.
Rental properties are recorded at the lower of carrying amount or fair value
less estimated costs to sell. Accordingly, the Partnership has recorded
provisions to write-down the recorded amounts for Rosewood Shopping Center and
West Ridge Plaza by $1,700,000 and $773,000, in 1997 and 1996, respectively, to
approximate the properties' fair market value less estimated cost to sell, as
estimated by the general partner.
Prior to 1996, depreciation on buildings and building improvements was computed
for financial statement purposes using the straight-line method over the
estimated useful life of 31.5 years. Effective January 1, 1996, depreciation of
rental properties held for sale was discontinued in connection with the
Partnership's efforts to actively pursue a sale of the properties.
DEFERRED LOAN COSTS
Deferred loan costs were incurred in connection with obtaining the mortgage
loans and are amortized over the term of the loans.
SYNDICATION AND OFFERING COSTS
Fees and expenses relating to the sale of limited partnership units paid to
affiliates of the general partners were charged against partners' equity. These
fees included various legal and accounting services, sales commissions and
supervisory fees equal to 12% of the gross proceeds from the offering.
INCOME TAXES
Under current income tax laws, income or loss of partnerships is included in
the income tax returns of the partners. Accordingly, no provision has been made
for federal or state income taxes in the accompanying financial statements.
The tax returns of the Partnership are subject to examination by federal and
state taxing authorities. If such examinations occur and result in changes with
respect to the Partnership's qualification or in changes to partnership income
or loss, the tax liability of the partners would be changed accordingly.
NET INCOME PER BENEFICIAL UNIT CERTIFICATE
Net income per BUC is calculated based on the weighted average number of units
outstanding during the period (508,594 in 1997, 1996 and 1995).
F-8
<PAGE> 25
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practical to estimate the
value:
Cash and Cash Equivalents, Rents Receivable and Accounts Payable - The
carrying amount approximates fair value because of the short term
nature of these instruments.
Long-term Debt - In the general partner's opinion, the fair value of
the Partnership's long-term debt approximates its carrying value.
NEW ACCOUNTING PRONOUNCEMENT
During 1997, the Partnership adopted Statement of Financial Accounting
Standards No. 128, "Earnings per Share," which establishes standards for
computing and presenting earnings per share. The adoption of the pronouncement
did not have any impact on the Partnership's computation of per unit data in
the accompanying financial statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements.
These estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform with current year
presentation.
2. RENTAL PROPERTIES HELD FOR SALE:
DESCRIPTION OF PROPERTIES
The Partnership acquired Southwest Plaza Shopping Center from an affiliate of
Chadsford II Associates effective August 1, 1988. The property is an 86,601
square foot shopping center located in Roanoke, Virginia. The property was
acquired for a purchase price of $5,380,000, excluding closing costs, which was
partially funded by a $3,700,000 mortgage note payable.
During 1989, the Partnership acquired four properties: (a) Lincoln Center,
Lincolnton, North Carolina, (b) Sangaree Plaza, Berkley County, South Carolina,
(c) Rosewood Shopping Center, Columbia, South Carolina, and (d) West Ridge
Plaza, Bristol, Tennessee.
Lincoln Center was acquired from an affiliate of Chadsford II Associates
effective April 6, 1989. The total facility consists of a 255,468 square foot
shopping center located in Lincolnton, North Carolina, of which approximately
110,000 square feet is owned by the Partnership. The purchase price of
$5,053,000, excluding closing costs, was partially funded by a $3,000,000
mortgage note payable.
F-9
<PAGE> 26
Sangaree Plaza was acquired effective May 31, 1989. The property is a 58,948
square foot shopping center located in Berkley County, South Carolina, near
Charleston. The initial purchase price of $2,380,000, excluding closing costs,
was partially funded by the assumption of a $1,715,102 mortgage note payable.
During 1993, construction was completed to expand Sangaree Plaza by
approximately 11,368 square feet. Total cost of the expansion was approximately
$1,200,000.
Rosewood Shopping Center was acquired effective June 5, 1989. The property is a
55,087 square foot shopping center located in Columbia, South Carolina. The
purchase price of $2,250,000, excluding closing costs, was funded entirely from
partners' capital.
West Ridge Plaza was acquired effective September 14, 1989. The property is a
140,985 square foot shopping center located in Bristol, Tennessee. The purchase
price of $6,567,000, excluding closing costs, was partially funded by the
assumption of $5,120,000 of Industrial Revenue Development Bonds. Remaining
funds for the acquisition were obtained from a mortgage note payable of
$1,500,000, which was secured by Rosewood Shopping Center.
PLAN OF DISPOSITION
During 1995, the Partnership's limited partners approved a plan to seek a sale
the Partnership's rental properties. Accordingly, the general partner has
actively marketed the properties for sale during 1996 and 1997. On April 1,
1998, the Partnership consummated the sale of Southwest Plaza Shopping Center,
Lincoln Center and Sangaree Plaza for a combined purchase price of $15,850,000.
Net proceeds resulting from the sale, after repayment of the Partnership's
outstanding indebtedness secured by the properties sold and the payment of
certain closing costs, amounted to approximately $7.3 million. The Partnership
expects to record a gain on the sale of the properties of approximately $2.3
million.
The Partnership continues to pursue the sale of Rosewood Shopping Center and
West Ridge Plaza.
See Note 3 for further discussion regarding the status of the Partnership's
mortgage notes payable secured by the rental properties.
F-10
<PAGE> 27
3. MORTGAGE NOTES PAYABLE:
Mortgage notes payable consist of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
MORTGAGE LOANS - NOT CURRENTLY DUE:
Mortgage note payable, bearing interest at 9.125%, with a term of
five years, due in June 1998. The note is payable in monthly
payments of principal and interest of $24,162 based on a
25-year amortization. The note is secured by a deed of trust
on Sangaree Plaza and by the assignment of leases and rents $2,684,523 $2,727,352
Mortgage note payable, bearing interest at 9.875%, due in 2016.
The loan is payable in monthly payments of principal and
interest of $13,499. This note is secured by a deed of trust
on Rosewood Shopping Center and by the assignment of leases
and rents 1,379,966 1,404,354
---------- ----------
Total mortgage loans not currently due 4,064,489 4,131,706
MORTGAGE LOANS - CURRENTLY DUE:
Mortgage note payable which originally matured in April 1997. The
note is secured by a deed of trust on Southwest Plaza Shopping
Center and by an agreement cross-collateralizing and
cross-defaulting the Southwest Plaza Shopping Center and
Lincoln Center loans. See below for discussion of significant
terms and conditions. 3,041,814 3,206,993
Mortgage note payable which originally matured in April 1997. The
note is secured by a deed of trust on Lincoln Center and by an
agreement cross-collateralizing and cross-defaulting the
Lincoln Center and Southwest Plaza Shopping Center loans. See
below for discussion of significant terms and conditions. 2,475,418 2,610,589
Mortgage note payable, bearing interest at 9.6%, which originally
matured in 1995. The note is secured by a deed of trust on
West Ridge Plaza and by the assignment of leases and rents.
See below for discussion of significant terms and conditions. 4,248,130 4,301,417
----------- -----------
Total mortgage loans payable $13,829,851 $14,250,705
=========== ===========
</TABLE>
F-11
<PAGE> 28
MORTGAGE LOANS PAST MATURITY
Southwest Plaza and Lincoln Center
The Partnership's mortgage loans secured by Southwest Plaza and Lincoln Center
matured in April 1997. Since this date, the Partnership has been operating
under forbearance agreements with the lender whereby the lender has agreed to
forbear exercising any remedies for default through June 15, 1998. Under the
terms of the forbearance agreements, the interest rate on the loans was
increased from 8.4% to 10% and the monthly principal and interest payments were
increased from a combined $66,000 to a combined $71,879. In addition, deferral
interest accrues at 3.4% on the outstanding principal balances of the two
loans, the payment of which will be waived by the lender upon repayment of the
mortgage loans in full on or prior to June 15, 1998. As of December 31, 1997,
deferral interest of $127,635 has been accrued by the lender under this
provision of the forbearance agreements; however, no such interest has been
recorded by the Partnership as of December 31, 1997, due to management's
opinion that it would be successful in repaying or otherwise refinancing the
outstanding loan balances on or before June 15, 1998.
As discussed in Note 2, consummated the sale of Southwest Plaza, Lincoln Center
and Sangaree Plaza subsequent to year-end for a total purchase price of
$15,850,000. Proceeds from the sale were used to repay all outstanding
indebtedness on the mortgage loans secured by these properties.
West Ridge Plaza
The Partnership's mortgage loan secured by West Ridge Plaza matured in 1995.
Pursuant to certain modification agreements and other arrangements, payment of
the outstanding indebtedness due under the mortgage was extended to January 1,
1998, during which time the Partnership has continued to make regular monthly
payments of principal and interest of $38,658. The Partnership is currently
negotiating terms of a new forbearance agreement to extend the forbearance
period.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and liabilities and
commitments in the ordinary course of business. The general partner intends to
continue to pursue a sale of West Ridge Plaza. If, however, the Partnership is
unsuccessful in consummating a sale of the property or otherwise is unable to
repay the outstanding indebtedness secured by West Ridge Plaza, the lender may
seek remedies of default as provided for under the loan agreement, such as
taking title to the property or commencing foreclosure proceedings against the
Partnership. As such, the carrying value of the West Ridge Plaza rental property
has been reduced to approximate the carrying amount of the indebtedness secured
by the rental property at December 31, 1997.
F-12
<PAGE> 29
Maturities of the Partnership's mortgage loans that are not currently past
maturity are as follows:
<TABLE>
<C> <C>
1998 $2,711,121
1999 29,346
2000 32,379
2001 35,725
2002 39,417
Thereafter 1,216,501
==========
$4,064,489
==========
</TABLE>
Cash paid for interest in 1997, 1996 and 1995 amounted to $1,344,911,
$1,346,749 and $1,343,190, respectively.
4. LINE OF CREDIT:
During 1997, the Partnership entered into a nonrevolving line of credit with a
bank providing borrowings up to $250,000 to finance capital improvements to the
Partnership's rental properties. Outstanding borrowings accrued interest at the
bank's prime rate plus 1% (9.5% at December 31, 1997), payable monthly. Maximum
borrowings under this facility during 1997 were $75,000. The line of credit
matured on December 31, 1997, and the outstanding balance of $75,000 was repaid
subsequent to year-end.
5. LEASES:
The Partnership's rental properties are leased to tenants for terms ranging
from month-to-month to 17 years. The leases are accounted for as operating
leases. Minimum future rentals on noncancellable leases are as follows:
<TABLE>
<S> <C>
1998 $ 2,536,968
1999 2,253,934
2000 1,873,424
2001 1,614,370
2002 1,481,128
Thereafter 8,651,204
============
$ 18,411,028
============
</TABLE>
F-13
<PAGE> 30
6. RECONCILIATION OF FINANCIAL STATEMENT INCOME (LOSS) TO TAXABLE INCOME
(LOSS):
A reconciliation of financial statement net income (loss) and taxable income
(loss) allocated to the limited partners follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Financial statement net income $ (489,979) $ 134,508 $ 306,231
Add (deduct)-
Write-down of rental property 1,300,000 773,000 0
Depreciation and amortization deducted
for income tax purposes
(663,375) (653,822) 24,680
Accrued property taxes 0 (10,155) 10,155
Bad debts and other not deducted for tax
5,962 5,752 0
----------- ----------- -----------
Taxable income $ 153,608 $ 249,283 $ 341,066
=========== =========== ===========
</TABLE>
7. 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 were as
follows for the years ended December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Property management fees $126,789 $127,762 $128,672
Partnership monitoring fees 146,688 91,450 89,886
Leasing commissions 17,996 74,661 35,127
======== ======== ========
</TABLE>
As specified in the partnership agreement, a general partner earns a partnership
management fee equal to 3% of the annual gross revenue of the Partnership.
Payment of 50% of this fee to the general partner is subordinate to certain
limited partner distributions. Any earned but unpaid partnership management fees
accrue interest at the rate of prime plus 1% and will be paid to the general
partner upon satisfaction of certain conditions contained in the partnership
agreement. At December 31, 1997 and 1996, the Partnership had accrued $479,635
and $493,576 respectively, in earned but unpaid partnership management fees and
interest. These amounts are presented as due to general partner on the
accompanying balance sheets.
F-14
<PAGE> 31
SCHEDULE III
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- -------------------------------- ------------ --------------------------- ----------------------------
COST CAPITALIZED
INITIAL COST TO SUBSEQUENT TO
PARTNERSHIP ACQUISITION
--------------------------- ----------------------------
BUILDINGS AND CARRYING
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS, NET COSTS
- -------------------------------- ------------ ---------- ------------- ----------------- --------
<S> <C> <C> <C> <C> <C>
Southwest Plaza Shopping
Center, Roanoke, Virginia $ 3,041,814 $1,533,000 $ 4,020,881 $ 897,130 $0
Lincoln Center, Lincolnton,
North Carolina 2,475,418 467,870 4,726,612 90,539 0
Sangaree Plaza, Berkley County,
South Carolina 2,684,523 398,171 1,979,690 1,396,389 0
Rosewood Shopping Center,
Columbia, South Carolina 1,379,966 675,000 1,576,814 (539,571) 0
West Ridge Plaza, Bristol,
Tennessee 4,248,130 1,685,000 4,934,575 (1,304,691) 0
----------- ---------- ----------- ----------- --
Total $13,829,851 $4,759,041 $17,238,572 $ 539,796 $0
=========== ========== =========== =========== ==
<CAPTION>
COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
--------------------------------------- ------------ ------------ -------- ----------------
GROSS AMOUNT AT LIFE ON WHICH
WHICH CARRIED AT CLOSE OF PERIOD DEPRECIATION
--------------------------------------- IN LATEST
BUILDING AND ACCUMULATED DATE OF DATE INCOME STATEMENT
LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED
----------- ------------ ------------ ------------ ------------ -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Southwest Plaza Shopping
Center, Roanoke, Virginia $1,533,000 $ 4,918,011 $ 6,451,011 $ 993,383 1990/1988 1988 Note 1
Lincoln Center, Lincolnton,
North Carolina 467,870 4,817,151 5,285,021 1,020,187 1989 1989 Note 1
Sangaree Plaza, Berkley County,
South Carolina 398,171 3,376,079 3,774,250 542,131 1981 1989 Note 1
Rosewood Shopping Center,
Columbia, South Carolina 616,000 1,096,243 1,712,243 383,469 1954 1989 Note 1
West Ridge Plaza, Bristol,
Tennessee 1,122,000 4,192,884 5,314,884 1,005,762 1984 1989 Note 1
---------- ----------- ----------- ----------
Total $4,137,041 $18,400,368 $22,537,409 $3,944,932
========== =========== =========== ==========
</TABLE>
Reconciliation of activity from December 31, 1994, through December 31, 1997:
<TABLE>
<S> <C> <C> <C> <C>
Balance, December 31, 1994 $ 4,759,041 $ 19,069,792 $ 23,828,833 $ 3,271,292
Acquisitions 0 142,732 142,732 0
Depreciation 0 0 0 622,831
------------ ------------ ------------ -----------
Balance, December 31, 1995 4,759,041 19,212,524 23,971,565 3,964,123
Acquisitions 0 649,712 649,712 0
Disposals 0 (19,191) (19,191) (19,191)
Write-down of rental property (Note 1) (192,000) (581,000) (773,000) 0
------------ ------------ ------------ -----------
Balance, December 31, 1996 4,567,041 19,262,045 23,829,086 3,944,932
Acquisitions 0 408,323 408,323 0
Write-down of rental property (Note 1) (430,000) (1,270,000) (1,700,000) 0
------------ ------------ ------------ -----------
Balance, December 31, 1997 $ 4,137,041 $ 18,400,368 $ 22,537,409 $ 3,944,932
============ ============ ============ ===========
</TABLE>
Aggregate cost for federal income tax purposes is $22,937,409 at December 31,
1997.
F-15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ATLANTIC INCOME PROPERTIES FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 283,889
<SECURITIES> 0
<RECEIVABLES> 308,641
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 714,596
<PP&E> 22,537,409
<DEPRECIATION> 3,944,932
<TOTAL-ASSETS> 19,310,738
<CURRENT-LIABILITIES> 521,036
<BONDS> 13,829,851
0
0
<COMMON> 0
<OTHER-SE> 4,381,222
<TOTAL-LIABILITY-AND-EQUITY> 19,310,730
<SALES> 3,131,418
<TOTAL-REVENUES> 3,153,040
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,001,047
<LOSS-PROVISION> 1,700,000
<INTEREST-EXPENSE> 1,340,972
<INCOME-PRETAX> (888,979)
<INCOME-TAX> 0
<INCOME-CONTINUING> (888,979)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (888,979)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
CONTRACT OF SALE
THIS CONTRACT OF SALE is made and entered into as of the 25th day of February,
1998, by and between ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP ("Seller")
and EDENS & AVANT PROPERTIES LIMITED PARTNERSHIP ("Purchaser").
ARTICLE I
PURCHASE AND SALE
1.01. DEFINITIONS. As used herein the following terms shall have the
following meanings:
(a) Properties - The following shopping centers, each being
more fully described on the attached EXHIBIT "A": Lincoln Center, Lincolnton,
North Carolina; Sangaree Plaza, Summerville, South Carolina; and Southwest
Plaza, Roanoke, Virginia. Each of the above shopping centers is a "Property".
(b) Purchase Price - Fifteen Million Eight Hundred Fifty
Thousand Dollars ($ 15,850,000.00). The Purchase Price shall be allocated as
set forth on the attached EXHIBIT "B".
(c) Earnest Money - One Hundred Thousand Dollars
($100,000.00) letter of credit as hereinafter described.
(d) Escrow Agent - First American Title Insurance Company.
(e) Inspection Period - The period ending on March 10, 1998.
The Inspection Period is subject to a thirty (30) day extension as hereinafter
provided. If the Inspection Period ends on a Saturday, Sunday, or legal holiday
it shall be extended until the end of the next following business day.
(f) Closing Date - March 10, 1998
ARTICLE II
PURCHASE AND SALE
2.01. Seller agrees to sell and Purchaser agrees to buy the Properties
for the Purchase Price subject to the terms and conditions hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.01. Seller hereby represents and warrants to Purchaser except as set
forth to the contrary
1
<PAGE> 2
herein or on any exhibit hereto, which representations and warranties shall be
deemed made by Seller to Purchaser also as of the Closing Date and shall
survive the Closing, as follows:
(a) At the Closing, Seller will have and will convey to
Purchaser good, indefeasible and marketable fee simple title to each Property,
free and clear of all mortgages, liens, encumbrances, restrictions,
rights-of-way, easements, judgments and other matters affecting title, except
the following matters (hereafter called the "Permitted Exceptions"), provided
they do not interfere with the use of the Property as a shopping center or the
marketability of title: (i) zoning ordinances affecting the Property; (ii)
general utility easements of record; (iii) subdivision restrictions of record;
(iv) current city, state and county ad valorem property and sanitary taxes not
yet due and payable; and (v) leases, other easements, restrictions and
encumbrances specified in this Contract or any exhibit hereto or approved by
Purchaser pursuant to Section 4.01 hereof. Seller shall not take any action
which will adversely affect title to the Properties.
(b) EXHIBIT "C" (the "Lease Exhibit") attached hereto is a
complete and correct list in all material respects of all leases, tenancies,
licenses and other rights of occupancy or use for any portion of the Properties
in effect on the date of this Contract (herein collectively referred to as the
"Tenant Leases"). There are no other leases, tenancies, licenses or other
rights of occupancy affecting the Properties as of the date of this Contract.
Except as set forth in the Lease Exhibit, the rentals and other charges therein
set forth are the actual rentals and other charges presently being collected by
Seller or its agents, and none of the rents or other amounts payable hereunder
have been or shall be assigned, pledged or encumbered other than to the holder
of the mortgages as collateral security therefor, and no rents have been
prepaid for more than one month in advance. Except as set forth in the Lease
Exhibit, to the best of Seller's knowledge, all Tenant Leases are in full force
and effect, and not in default. Except as set forth in the Lease Exhibit, no
brokerage commission is due and unpaid in connection with any Tenant Lease or
renewal thereof and all such commissions and fees, including those shown on the
Lease Exhibit, shall be paid, cashed out and discharged in full by Seller at or
prior to Closing. All documentary stamp tax required for the Tenant Leases has
been paid, or, if not paid, Purchaser shall receive a credit for same at
closing. Except for new leases described in the following paragraph and
consented to by Purchaser, no tenant has been granted any rent-free occupancy
or is entitled to any future rental concessions, credits or reimbursements. All
decorating, installation, alteration or repair work which Seller may be
obligated to perform for any tenant has been performed or will be performed
prior to the Closing Date at the expense of Seller. Except for new leases
described in the following paragraph and consented to by Purchaser, Seller has
paid or will pay prior to the Closing Date the cost and expense of all tenant
improvements and allowances required by the Tenant Leases.
No new leases shall be entered into between now and the Closing without
Purchaser's prior consent, which shall not be unreasonably withheld or delayed.
All leases entered into by Seller between the date hereof and the Closing Date
shall be deemed to be included in the term "Tenant Leases" as it hereinafter
appears.
(c) There are no maintenance, management or other contracts
or agreements affecting the Properties except those which may be terminated on
thirty (30) days' notice or less, and Seller shall disclose and provide copies
of all contracts or agreements affecting the Properties to Purchaser during the
Inspection Period. Between the date hereof and Closing, Seller shall not enter
2
<PAGE> 3
into any maintenance, management or other contracts which are not terminable on
thirty (30) days' notice, and Seller shall disclose any such contract(s) to
Purchaser.
(d) The improvements on the Properties are to be conveyed in
an "As Is" condition without warranty by Seller as to their condition, and
Seller's responsibility in connection with the foregoing shall cease at
Closing.
(e) No tenant or other occupant under any of the Tenant
Leases and no other person, firm, corporation or other entity has any right or
option to acquire a Property or any portion thereof or to require expansion of
any of the leased premises except as set forth in the Tenant Leases.
(f) Seller has received no written notice that any zoning,
building, environmental or other law, ordinance, code, order or regulation is
or will be violated by the continued maintenance, operation or use as a
shopping center of any buildings, improvements or structures presently erected
on a Property or by the continued maintenance, operation or use of parking
areas.
(g) Subsequent to the execution of this Contract and until
the Closing, Seller, at its sole cost and expense, at its sole but reasonable
discretion will make all repairs and replacements, structural and
nonstructural, ordinary and extraordinary, required with respect to any portion
of a Property and will operate and maintain the Properties in the normal
manner. Subject to Article VI, Seller shall deliver the Properties at Closing
in substantially the same condition or better than existed at the end of the
Inspection Period.
(b) There is no action, suit or proceeding pending or, to the
knowledge of Seller, threatened against or materially affecting the Properties
or any portion thereof or any of the Tenant Leases or relating to or arising
out of the ownership or operation of the Properties, in any court or before or
by any federal, state, county or municipal department, commission, board,
bureau or agency or other governmental instrumentality.
(i) Prior to the Closing, Seller (i) will give to Purchaser,
its attorneys, accountants, engineers and other representatives, during normal
business hours and as often as may be reasonably requested, full access to any
and all parts of the Properties and to all books, records, tenant leases and
files in Seller's possession relating to the Properties, and (ii) will furnish
to Purchaser all information in Seller's possession concerning the Properties
which Purchaser, its attorneys, accountants, engineers or other representatives
shall reasonably request.
(j) There is no pending condemnation or similar proceeding or
assessment affecting the Properties, or any part thereof, nor to the best
knowledge and belief of Seller, is any such proceeding or assessment
contemplated or threatened by any governmental authority.
(k) The various items of Personal Property included with this
sale, if any, are (or at Closing will be) owned by Seller free and clear of all
liens.
(1) Seller has received no written notice of any default or
breach under any of the covenants, conditions, restrictions, rights-of-way or
easements affecting the Properties or any portion
3
<PAGE> 4
thereof which are to be performed or complied with by the owner of the
Properties and which are material to this Contract.
(m) To the best of Seller's knowledge, each Property has been
fully assessed by taxing authorities as a completed project. To the best of
Seller's knowledge, no portion of the Properties is affected by any special
assessments, whether or not a lien thereon, and no such assessment has been
proposed to Seller's knowledge. There is no proceeding pending for the
reduction of the assessed valuation of any portion of the Properties, and no
such proceeding will be instituted by Seller prior to the Closing without the
prior written consent of Purchaser.
(n) There is no agreement requiring Seller to make any
contribution, in the form of dues or otherwise, to a merchants' or tenants'
association or similar organization, or to any tenant, licensee or other
occupancy of any portion of the Properties for advertising or promotion of the
Properties.
(o) Except to the extent disclosed in any environmental audit
delivered by Seller to Purchaser or obtained by Purchaser, Seller has received
no written notice from any governmental agency having jurisdiction and, to the
best of Seller's knowledge, the Properties are free from the presence and/or
harmful effects of any asbestos, toxic, or hazardous substances as defined by
applicable federal, state, or local laws.
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
4.01. The obligation of Purchaser hereunder to purchase the Properties
from Seller is subject to the satisfaction, as of the Closing, of each of the
following conditions (any of which may be waived in whole or in part by
Purchaser at or prior to the Closing):
(a) Purchaser, at Purchaser's sole cost and expense, shall
cause title to be examined and a title company acceptable to Purchaser to issue
and deliver to Purchaser a preliminary title report and commitment for an
extended-coverage Owner's policy in the amount of the Purchase Price (the
"Title Report") accompanied by copies of all recorded documents relating to
liens, easements, rights-of-way, etc., affecting the Properties. Purchaser
shall give Seller written notice before the later of the expiration of the
Inspection Period or the Survey Date (as hereinafter defined) of any objections
to Seller's title as disclosed therein, provided that failure to object to a
lien shall not constitute a waiver of Seller's obligations to satisfy such
lien. Seller shall have the obligation to remove any liens or encumbrances
which are uncontested and may be removed solely by the payment of money. If
there are liens or encumbrances which cannot be removed in accordance with the
terms hereof, Purchaser shall have the option of terminating this Contract, in
which event it shall thereupon become null and void for all purposes, and the
Earnest Money shall be forthwith returned by Escrow Agent to Purchaser;
otherwise, said condition shall be deemed to be acceptable, and any objection
thereto shall be deemed to have been waived for all purposes. Seller shall not
cause or permit an adverse change in the condition of title after the date
hereof.
(b) Seller, at its sole cost and expense, shall obtain a
current ALTA as-built
4
<PAGE> 5
survey of each Property, prepared by a land surveyor licensed in the stab which
the Property located. The survey shall comply with ALTA requirements and shall
be staked on the ground, and the plat shall show the location of all
improvements, highways, streets, roads, railroads, rivers, creeks or other
water courses, fences, easements and rights-of-way on or adjacent to the
Property, if any, and shall contain the surveyor's certification that there are
no encroachments on the Property or onto adjacent lands from the Property and
shall set forth the number of acres comprising the Property. The various
parcels or tracts comprising the Property shall be contiguous. The plat shall
contain a certificate of the surveyor that the Property is not in a flood hazard
area, a flood zone, flood plain or a floodway, or shall locate same thereon.
All easements shall be located on the plat and referenced by recording data.
Purchaser will have until the later of the expiration of the
Inspection Period or five (5) business days following receipt of the survey
(the "Survey Date") to review and approve same. If the survey discloses (i) any
encroachments, (ii) any problems with access, ingress or egress, (iii) any
variations in boundary lines, (iv) the non-contiguity of any parcels of land
comprising the Property or (v) any easements, rights-of-way or other interests
in the Property, which are other than the Permitted Exceptions and which
adversely affects the Property, then Purchaser shall give Seller written notice
of such fact no later than the Survey Date. Seller may, if it so chooses,
promptly undertake to eliminate or modify all such unacceptable portions to the
reasonable satisfaction of Purchaser. If Seller chooses not or is unable to do
so within ten (10) days after receipt of written notice, Purchaser may
terminate this Contract, and the Contract shall thereupon be null and void for
all purposes, and the Earnest Money shall be forthwith returned by the Escrow
Agent to Purchaser. Purchaser's failure to give Seller such written notice
shall be deemed to be Purchaser's acceptance of the survey.
(c) Seller shall deliver to Purchaser (and Purchaser's
lender, if any) at least five (5) business days prior to Closing an estoppel
letter ("Estoppel Letter") from (i) the "Major Tenants" set forth on the
attached EXHIBIT "D", ALL in form reasonably satisfactory to Purchaser; and
(ii) all of the other Tenants (excluding Harris Teeter with respect to Southwest
Plaza) (the "Other Tenants") substantially in the form set forth on the
attached EXHIBIT "E" confirming the status of the applicable Lease and any
amendments, the amount of rent at the last payment made, the amount of any
security deposit, that there have been no prepayments of rent, that the
Landlord is not in default under the Lease and the Tenant has no rights to set
off, and such other matters as Purchaser may reasonably request. If Seller,
through no fault of its own, is unable, after reasonable effort, to obtain the
Estoppel Letters, Seller shall not be deemed to have breached this Contract,
but Purchaser shall have the option of terminating this Contract and obtaining
a refund of all Earnest Money as its sole remedy. Notwithstanding anything
herein to the contrary, this condition shall be deemed satisfied if the
Estoppel Letters are timely signed and delivered by at least ninety percent
(90%) of the Other Tenants of each Property (based on square footage ratios
of the applicable Property, excluding space occupied by the Major Tenants and
excluding Harris Teeter with respect to Southwest Plaza) and if Seller
certifies and warrants the correctness of the Estoppel Letters of the Other
Tenants who failed to sign Estoppel Letters.
(d) Seller shall have performed, observed and complied with
all of the covenants, agreements and conditions required by this Contract to be
performed, observed and complied with
5
<PAGE> 6
by it prior to or as of the Closing.
(e) All of the representations and warranties of Seller set
forth in this Contract and the matters set forth in the tenant estoppel letters
shall be true, to the best of Seller's knowledge, at and as of the Closing in
all material respects as though such representations and warranties and the
statements contained in this Contract and said letters were made at and as of
the Closing.
(f) Seller shall not have made an assignment for the benefit
of creditors or admitted in writing its inability to pay its debts as they
mature or been adjudicated as bankrupt or filed a petition in voluntary
bankruptcy or a petition or answer seeking reorganization or an arrangement
with creditors under the federal bankruptcy law or any other similar law or
statute of the United States or any state, and no such petition shall have been
filed against it.
(g) All instruments and documents required on Seller's part
to effectuate this Contract and the transactions contemplated herein shall be
satisfactory in all reasonable respects to Purchaser and its attorneys.
(h) Harris Teeter shall have terminated its Lease at
Southwest Plaza.
ARTICLE V
CLOSING
5.01. The consummation of the sale and purchase of the Property
pursuant to this Contract (the "Closing") shall occur on (or, at Purchaser's
option, before) the Closing Date. If the Closing Date falls on a Saturday,
Sunday, or legal holiday it shall be extended to the next following business
day. The Closing shall take place at the offices of Purchaser. At the Closing,
Seller shall as to each Property:
(a) Deliver to Purchaser a duly executed limited warranty
deed, in recordable form, conveying good and marketable title in fee simple to
the Property, free and clear of any and all liens, encumbrances, conditions,
easements, assessments and restrictions except the Permitted Exceptions, any
other exceptions accepted by Purchaser, and subject to the rights of tenants in
possession as Tenants under the leases.
(b) Deliver to Purchaser the following:
(i) An assignment, duly executed and acknowledged by
Seller, in recordable form, assigning to Purchaser all of Seller's right, title
and interest in all Tenant Leases and the full amount of any unforfeited
security deposits as of the Closing Date;
(ii) To the extent such exists in Seller's possession,
any architectural drawings and renderings, building plans and specifications,
and any and all municipal, county, state or local permits or licenses held by
Seller in connection with the Property;
(iii) The tenant estoppel letters (to be delivered five
(5) business days prior
6
<PAGE> 7
to Closing);
(iv) An executed counterpart of each of the Tenant
Leases (including all amendments thereto and modifications thereof) or if the
original is unavailable, a certified true copy thereof;
(v) An assignment or assignments, duly executed and
acknowledged by Seller, assigning to Purchaser any subsisting assignable
guaranties and warranties issued in connection with the construction,
improvement, alterations and repair of the Property, together with the original
of each such guaranty and warranty to the extent in Seller's possession;
(vi) To the extent such exists in Seller's possession,
copies of all pertinent records and files relating to the operation and
maintenance of the Property;
(vii) Such affidavits or letters of indemnity as the
title insurance company which is to insure the title to the Property shall
reasonably require in order to issue, without extra charge, policies of title
insurance free of any exceptions for unfiled mechanics', materialmen's or
similar liens;
(viii) A certificate of Seller, dated the Closing Date,
certifying, as of the Closing Date, the aggregate rents then payable under all
of the Tenant Leases then in full force and effect and stating in detail the
respects, if any, in which the information set forth in Lease Exhibit has
changed or is incorrect as of the Closing Date;
(ix) Notices to tenants, in the form approved by
Purchaser, duly executed by Seller and the managing agent of the Property,
advising the tenants of the sale to Purchaser and any changes in management;
(x) An assignment of service contracts which
Purchaser has agreed to accept, permits, licenses, and intangibles including,
without limitation, Seller's right and interest in the name of the subject
Shopping Center;
(xi) An instrument assigning to Purchaser all rights
to funds, if any, then on deposit with any utility company;
(xii) A bill of sale transferring all personal
property;
(xiii) A FIRPTA affidavit in a form reasonably
satisfactory to Purchaser;
(xiv) Appropriate resolutions and other evidence
reasonably required by Purchaser and the title company to evidence Seller's
authority to execute and deliver the deed and other documents contemplated
hereby;
(xv) A certification by Seller that all representations
and warranties made by Seller in Article III of this Contract are true and
correct in all material respects on the Closing
7
<PAGE> 8
Date, except as may be approved by Purchaser and set forth in such certificate;
provided, however, that Purchaser's right to bring any claim against Seller as
a result of such representations and warranties will expire one (1) year after
the Closing; and
(xvi) All other documents reasonably necessary to
effectuate the transaction.
Upon compliance with the above, Purchaser shall pay the Purchase
Price by wire transfer via the Federal Reserve System (plus or minus the net
adjustments computed hereunder), payable to the order of Seller and/or such
other order as Seller shall have directed by written notice to Purchaser.
5.02. The following shall be adjusted between Seller and Purchaser and
shall be prorated on a per diem basis as of midnight of the day preceding the
Closing Date as to each Property:
(a) Real estate and personal property taxes shall be adjusted
between Seller and Purchaser on the basis of the fiscal year to which they are
applicable. Tax reimbursements from Tenants shall, upon receipt, be equitably
prorated and reimbursed to Seller. Purchaser shall make reasonable efforts to
collect promptly tax reimbursements from the Tenants.
If on the Closing Date, the Property or any part thereof shall
have been affected by or shall be subject to any special tax or assessment,
then, whether or not any such tax or assessment is then a lien on the Property
or any portion thereof or is payable to or on the Closing Date, all unpaid
installments of any such tax or assessment (including those which are to become
due and payable after the Closing shall be deemed to be due and payable prior
to Closing and shall not be apportioned between Seller and Purchaser, but shall
be paid and discharged by Seller at Closing). Provided, however, if such
special assessment is for future improvements Seller may, without liability for
default hereunder, elect not to pay same in which event Purchaser shall have
the option of terminating this Contract (and receiving a refund of the Earnest
Money) or paying such special assessment.
(b) Water rates and sewer charges or rentals (if not
metered).
(c) Utility charges (including, but not limited to, water
rates and sewer charges or rentals if metered) shall not be apportioned, but
Seller shall cause all utility meters to be read not more than two (2) days
before Closing Date, and Seller agrees to pay promptly after receipt all
utility bills and charges accruing up to and including the day preceding the
Closing Date. If utility deposits are assigned to Purchaser, Seller shall
receive a credit therefor.
(d) Rents and other fixed charges payable and collected under
the Tenant Leases. At the Closing, Seller shall furnish to Purchaser a complete
and correct schedule of all rents and other fixed charges which are then due
and payable but which have not been paid. All such unpaid rents and other
charges for the calendar month in which the Closing occurs and for the calendar
month prior to the calendar month in which the Closing occurs shall be, if
collected, received by Purchaser as trustee for Seller and shall be remitted by
Purchaser to Seller. Purchaser, however, shall have no obligation to Seller to
collect any such unpaid rents or other charges, and all rents and
8
<PAGE> 9
other charges collected shall be first applied to current rents and charges
due. Percentage rents, if any, shall be equitably prorated upon receipt based
upon the number of days during the applicable lease year which Seller owned the
Property and the number of days which Purchaser owned the Property. Insurance
reimbursements, CAM charges and the like which are paid after Closing and which
relate to periods prior to Closing shall be paid by Purchaser to Seller
promptly upon receipt by Purchaser. Purchaser shall reasonably cooperate with
Seller in its efforts, including litigation, to collect past-due rents
(including percentage rents, insurance and tax reimbursements, CAM charges and
the like) provided that, in Purchaser's reasonable discretion such cooperation
shall not jeopardize Purchaser's relationship with tenant(s) and further
provided that Purchaser shall not be obligated to incur any expenses in
connection herewith.
5.03. Seller shall give Purchaser a credit for the aggregate amount of
tenant security deposits held by Seller or otherwise outstanding under the
Tenant Leases.
5.04. Seller shall pay for its own attorneys' fees, survey costs, and
deed stamps, transfer or other similar taxes or fees for recording based in
whole or in part upon the consideration for or value of each Property, and
one-half of any escrow fees. Purchaser shall pay for the recording of the deed,
its own attorneys' fees, title examination, title insurance premiums, and
one-half of any escrow fees.
5.05. If the Seller is a "Foreign Person" (as defined in Section 1445
of the Internal Revenue Code, as amended, and the regulations promulgated
thereunder), or if Seller fails to deliver the FIRPTA affidavit hereinbefore
mentioned, or if Purchaser has actual knowledge that such affidavit is false,
Purchaser shall deduct and withhold from the Purchase Price an amount equal to
ten percent (10%) of the Purchase Price as required by the Internal Revenue
Code. Purchaser shall remit such amount to the Internal Revenue Service.
5.06. If applicable state law requires that any of Seller's proceeds
be withheld, then same shall be withheld according to law.
ARTICLE VI
DESTRUCTION OR DAMAGE PRIOR TO THE CLOSING DATE
6.01. Seller shall bear the risk of all loss, destruction or damage to
the Properties or any portion thereof from any and all causes whatsoever to and
including the Closing Date.
6.02. If at any time prior to the Closing Date any portion of the
Properties is destroyed or damaged as a result of fire or any other cause
whatsoever, Seller shall promptly give notice thereof to Purchaser. The rights
and obligations of the parties by reason of such destruction or damage shall be
as follows:
(a) If the "cost of repair and restoration" (which term is
hereinafter defined) necessitated by such destruction or damage shall be Fifty
Thousand Dollars ($50,000.00) or less (per Property), the obligations hereunder
of the parties shall not be affected by such destruction or damage, and
Purchaser shall accept title to the Property in its destroyed or damaged
condition provided that: (i) at the Closing, Seller shall assign to Purchaser
all of Seller's right, title and interest
9
<PAGE> 10
in and to the proceeds of any insurance carried by Seller and payable with
respect to such destruction or damage and shall pay to Purchaser the amount of
the "deductible" under the policy; and (ii) the Purchase Price shall be reduced
by the amount, if any, by which the cost of repair and restoration exceeds the
amount of such proceeds available (and the amount of the deductible) for repair
or restoration (less the actual cost of any repairs or restoration performed by
Seller prior to the Closing at Purchaser's request).
(b) If the cost of repair and restoration necessitated by
such destruction or damage shall exceed Fifty Thousand Dollars ($50,000.00) or
if such destruction or damage, even if less than Fifty Thousand Dollars
($50,000.00), results in the termination of a major or credit tenant lease, or
two or more non-credit tenant leases, Purchaser shall have the option either
(i) to accept title to the Property in its destroyed or damaged condition in
accordance with and subject to the provisions of Section 6.02(a)(i) above, or
(ii) to cancel this Contract by giving notice to that effect to Seller and to
the title company not later than ten (10) days after the cost of repair and
restoration is determined (as provided in Section 6.03), and upon the giving of
such notice by Purchaser, this Contract shall be null and void and the parties
shall have no further obligation or liability hereunder except that the Earnest
Money shall be returned to Purchaser.
6.03. As used in Section 6.02, the term "cost of repair and
restoration" shall mean that amount which is the average of (a) a bona fide
estimate of the actual cost of repair and restoration obtained by Seller within
ten (10) days after such destruction or damage from a reputable contractor
regularly doing business in or near the area in which the Property is located;
and (b) a bona fide estimate of the actual cost of repair and restoration
obtained by Purchaser within ten (10) days after such destruction or damage
from a reputable contractor regularly doing business in or near the area in
which the Property is located.
ARTICLE VII
INSPECTION PERIOD
7.01. During the Inspection Period Purchaser shall be permitted to
enter the Properties and to inspect and evaluate the Properties, to conduct
studies thereon, and to interview Tenants. If Purchaser determines for any
reason that a Property is not suitable for Purchaser's purposes Purchaser may
allow this Contract to terminate, however, such termination shall be as to all
Properties. If Purchaser desires to continue this Contract beyond the
Inspection Period it shall give written notice of same to Seller within the
next business day following the end of the Inspection Period. During the
Inspection Period Seller shall promptly provide Purchaser with information and
documentation (to the extent same is reasonably available) requested by
Purchaser to facilitate its evaluation of the Property. Notwithstanding
anything herein to the contrary, Purchaser may extend the Inspection Period for
an additional thirty (30) days for the sole purpose of resolving the
retenanting of the Harris Teeter space at Southwest Plaza, provided that
Purchaser gives written notice of such extension prior to the expiration of the
initial Inspection Period. The said written notice shall be accompanied by
reasonable written evidence from Harris Teeter of its intention to terminate
its leasehold pursuant to terms acceptable to Purchaser, which terms must be
set forth in such writing (such termination being conditioned on the Closing
unless also pursuant to terms acceptable to Seller).
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<PAGE> 11
ARTICLE VIII
ESCROW DEPOSIT
8.01. As security for the obligations of Purchaser and subject to the
terms hereof, Purchaser shall cause a letter of credit in the amount of One
Hundred Thousand Dollars ($100,000.00) to be issued in favor of Escrow Agent
with an expiration date of thirty (30) days past the last possible Closing
Date, which letter of credit shall constitute the "Earnest Money" hereunder.
Said letter of credit will be issued by a national banking association and
payable upon presentation in the city where Escrow Agent is located and contain
no conditions for payment other than presentation. Upon the execution hereof
Purchaser shall deposit the Earnest Money with Escrow Agent. At Closing, or in
the event Purchaser has the right to and elects to terminate this Contract or
allows same to terminate as provided herein, Escrow Agent shall return the
Earnest Money upon receipt of notice of such termination. If this Contract has
not been terminated as aforesaid and if Purchaser then fails to consummate the
purchase of the Properties, the conditions of Purchaser's obligations set forth
in this Contract having been satisfied and Purchaser being in default, Escrow
Agent shall draw upon the Earnest Money and convert same to cash and
immediately disburse same to Seller and if there is a dispute as to entitlement
Escrow Agent shall deposit said One Hundred Thousand Dollars ($ 100,000.00)
into an FDIC insured interest bearing money market account and shall hold said
sum, in trust, pending resolution of the dispute and subject to the terms and
conditions set forth on the attached EXHIBIT "F". Notwithstanding anything in
this Contract to the contrary, if Escrow Agent receives notice of termination
from Purchaser or Purchaser's attorneys, Gottlieb & Smith, P.A., prior to the
end of the Inspection Period, Escrow Agent shall be and is hereby directed by
Seller to return the Earnest Money to Purchaser.
ARTICLE IX
BREACH BY SELLER
9.01. In the event Seller shall fail to perform fully and timely any
of its obligations hereunder or shall fail to consummate the sale of the
Properties for any reason, except Purchaser's default, Purchaser may: (a)
enforce specific performance of this Contract, including attorneys' fees, and
(b) pending any action contemplated herein, obtain a refund of the Earnest
Money and (c) seek and recover damages from Seller including attorneys' fees
and costs; subject, however to the limitation set forth in Section 5.01 (b)(xv)
hereof.
ARTICLE X
BREACH BY PURCHASER
10.01. In the event Purchaser shall fail to consummate the purchase of
the Properties, the conditions to Purchaser's obligations set forth in Article
IV having been satisfied and Purchaser being in default and Seller not being in
default herein, and Seller having complied with all conditions herein, Seller
shall have the right to receive the Earnest Money and accrued interest from
Escrow Agent, such sum being agreed upon as liquidated damages for the failure
of Purchaser to perform the duties, liabilities and obligations imposed upon it
by the terms and provisions of this Contract, and Seller agrees to accept and
take said cash payment as total damages and as Seller's sole remedy in such
event. It is agreed that Seller's damage would be difficult to ascertain and
the Earnest
11
<PAGE> 12
Money then on deposit with Escrow Agent constitutes a reasonable forecast
thereof and is intended 4, not as a penalty but as full liquidated damages.
ARTICLE XI
REAL ESTATE COMMISSIONS
11.01. Seller shall pay a real estate commission to Berkeley Capital
pursuant to separate agreement, which commission shall be due and payable at
Closing. Each party represents and warrants to the other that it has not dealt
with any other real estate brokers who may claim a fee or commission in
connection with the transactions contemplated hereby as a result of such
party's acts, and shall indemnify and hold the other harmless against any such
claim made by any other broker claiming by, through or under such party. This
provision shall survive the Closing.
ARTICLE XII
MISCELLANEOUS
12.01. This Contract may be assigned by Purchaser to an entity of which
Purchaser is a principal, shareholder, officer, partner, or member, provided
that Purchaser's assignee shall assume all Purchaser's liabilities, obligations
and duties hereunder. On delivery to Seller of an instrument in writing whereby
the assignee assumes all of the provisions of this Contract to be performed by
Purchaser, then, in such event, Purchaser shall be released and discharged of
all further liability hereunder.
12.02. Any notices, requests, or other communications required or
permitted to be given hereunder shall be in writing and shall be either (i)
delivered by hand, (ii) mailed by United States registered mail, return receipt
requested, postage prepaid, (iii) sent by a reputable, national overnight
delivery service (e.g., Federal Express, Airborne, etc.), or (iv) sent by
facsimile (with the original being sent by one of the other permitted means or
by regular United States mail) and addressed to each party at the applicable
address set forth herein. Any such notice, request, or other communication
shall be considered given or delivered, as the case may be, on the date of hand
delivery (if delivered by hand), on the third (3rd) day following deposit in
the United States mail (if sent by United States registered mail), on the next
business day following deposit with an overnight delivery service with
instructions to deliver on the next day or on the next business day (if sent by
overnight delivery service), or on the day sent by facsimile (if sent by
facsimile, provided the original is sent by one of the other permitted means as
provided in this paragraph or by regular United States mail). However, the time
period within which a response to any notice or request must be given, if any,
shall commence to run from the date of actual receipt of such notice, request,
or other communication by the addressee thereof Rejection or other refusal to
accept or inability to deliver because of a changed address of which no notice
was given shall be deemed to be receipt of the notice, request, or other
communication. By giving a least five (5) days prior written notice thereof,
any party hereto may, from time to time and at any time, change its mailing
address hereunder.
12
<PAGE> 13
Seller: c/o ISC Realty Corporation
121 West Trade Street, Suite 1100
Charlotte, NC 28202
Attn: J. Christopher Boone
Telecopy: (704) 379-9012
with copy to: Kennedy Covington Lobdell & Hickman, L.L.P.
100 North Tryon Street, Suite 4200
Charlotte, NC 28202
Attn: David H. Jones, Esquire
Telecopy: (704) 331-7598
Purchaser: c/o Edens & Avant, Inc.
1901 Main Street, Suite 900
Columbia, SC 29201
Attn: Jodie W. McLean
Telecopy: (803) 254-4983
with copy to: Gottlieb & Smith, P.A.
1901 Main Street, Suite 600
Columbia, SC 29201
Attn: Joel E. Gottlieb, Esquire
Telecopy: (803) 254-2682
Escrow Agent: First American Title Insurance Company
1331 Elmwood Avenue, Suite 202
Columbia, SC 29201
Attn: Charles E. Hedgepath, Esquire
Telecopy: (803) 765-1576
12.03. This Contract shall be construed under and in accordance with
the laws of the State of South Carolina.
12.04. This Contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
12.05. This Contract constitutes the sole and only agreement of the
parties hereto and supersedes any prior understanding or written or oral
agreements between the parties respecting the within subject matter.
12.06. All information furnished by Seller to Purchaser in the course
of its investigation of
13
<PAGE> 14
the Properties shall be treated as confidential information and any documents
furnished to Purchaser shall be returned to Seller in the event this Contract
terminates.
SIGNED, SEALED AND DELIVERED as of the date first above set forth.
WITNESSES: EDENS & AVANT PROPERTIES LIMITED
PARTNERSHIP
/s/ Donna H. Dodson By: E&A General Partner, LLC, general partner
- ---------------------------
/s/ By: /s/ John H. Lumpkin Jr. (SEAL)
- --------------------------- ---------------------------------
Print Name: John H. Lumpkin Jr.
-------------------------------
Title: VP
------------------------------------
ATLANTIC INCOME PROPERTIES
/s/ By: ISC Realty Corporation, general partner
- ---------------------------
/s/ By: /s/ J. Christopher Boone (SEAL)
- --------------------------- ---------------------------------
Print Name: J. Christopher Boone
-------------------------------
Title: President
------------------------------------
14
<PAGE> 15
LEGAL DESCRIPTION COMMITMENT NO. 981039RI
ALL that certain tract or parcel of land, with all improvements thereon and
appurtenances thereunto belonging, lying, being and situated in the City of
Roanoke, Virginia, as more particularly shown on plat of survey made by T. P.
Parker & Son, Engineers & Surveyors, Ltd., dated August 25, 1988, revised
September 2, 1988, September 9, 1988, September 26, 1988 and September 28,
1988, and entitled "CLASS "A" ALTA/ACSM Land Title Survey For the Prudential
Insurance Company Of America, Showing An 8.07 Ac. Trust Being Composed Of Tract
"A" (5.69 AC.) & Tract "B" (0.49 AC.), May For Southwest Plaza Associated
Limited Partnership, M.B. 1, PG. 593, And Tract "1A" (1.89 AC.), Map For F-M
Associates, A Virginia General Partnership, M.B. 1, PG. 611" and with reference
to said plat (which is being recorded in the Clerk's Office of the Circuit
Court of the City of Roanoke, Virginia), said real estate being more
particularly described as follows:
BEGINNING at a point marked by an iron pin found at the intersection of the
easterly right-of-way line of Virginia Highway Route 419, Electric Road and the
northerly right-of-way line of Grandin Road Extension, SW, said point being
shown as Number 1 on above referenced plat of survey; thence extending in a
northwardly direction along the easterly right-of-way line of Virginia Highway
Route 419 N 40 (degrees) 30' W 326.70 feet to a point marked by an iron pin set,
said point being shown as Number 2; thence extending along a curve to the left
having a radius of 2974.79 feet and an arc distance of 147.50 feet to a point
marked by an iron pin found, said point being shown as Number 3; thence
extending along a curve to the left having a radius of 2974.79 feet and an arc
distance of 405.23 feet to a point marked by an iron pin set, said point being
shown as Number 4; thence extending along a curve to the right having a radius
of 25.00 feet and an arc distance of 53.986 feet to a point marked by an iron
pin set, said point being shown as Number 5; thence extending in an eastwardly
direction along the southerly right-of-way line of Woodmar Drive, S.W. N 72
(degrees) 22' 00" E 246.34 feet to a point marked by an iron pin set, said point
being shown as Number 6; thence extending in a southwardly direction S 30
(degrees) 49' 00" E 367.68 feet to a point marked by a P.K. Nail set, said point
being shown as Number 7; thence extending in an eastwardly direction N 60
(degrees) 11' E 158.65 feet to a point marked by an iron pin set, said point
being shown as Number 8; thence extending in a southwardly direction S 31
(degrees) 34' E 25.30 feet to a point marked by an iron pin set, said point
being shown as Number 9; thence extending in an eastwardly direction N 60
(degrees) 11' E 333.3 feet to a point marked by an iron pin set, said point
being shown as Number 10; thence extending in a southwardly direction S 29
(degrees) 45' E 397.8 feet to a point marked by a P.K. Nail set, said point
being shown as Number 11; thence extending in a westwardly direction
CONTINUED ON ATTACHED SHEET
SOUTHWEST PLAZA 1 OF 2
<PAGE> 16
ATTACHED TO AND MADE A PART OF FIRST AMERICAN TITLE INSURANCE COMPANY
COMMITMENT NO. 981039RI
CONTINUATION
along the northerly right-of-way line of Grandin Road Extension, S.W. S 51
(degrees) 20' 30" W 218.68 feet to a point marked by an iron pin set, said point
being shown as Number 12; thence extending in a northwardly direction N 38
(degrees) 39' 30" W 5.00 feet to a point marked by an iron pin set, said point
being shown as Number 13; thence extending in a westwardly direction S 49
(degrees) 42' 30" W 198.71 feet to a point marked by an iron pin found, said
point being shown as Number 14; thence S 53 (degrees) 02' W 101.42 feet to a
point marked by an iron pin found, said point being shown as Number 15; thence N
79 (degrees) 16' 30" W 54.37 feet to a point marked by an iron pin found, which
point is the point and place of BEGINNING.
Together with the easement for ingress and egress as described in a deed dated
May 19, 1987, between F-M Associates and Southwest Plaza Associates Limited
Partnership recorded in the Clerk's Office of the Circuit Court of the City of
Roanoke, Virginia, in Deed Book 1563, page 1.
SOUTHWEST PLAZA 2 OF 2
<PAGE> 17
EXHIBIT "A"
ALL that piece, parcel, or tract of land, situate, lying and being in
Berkeley County, South Carolina, and being designated as "Sangaree Plaza," as
shown on a survey entitled "Asbuilt Survey Showing Sangaree Plaza, a 5.789 Ac.
Tract of Land Owned by Atlantic Income Properties, located near the
intersection of U.S. Hwy. 17-A and Sangaree Parkway, Berkeley County, South
Carolina," by Andrew C. Gillette S.C.P.L.S. 5933-B, dated December 4, 1992.
The property is more fully described as follows to wit:
To find the point of beginning, locate the intersection of the southern
right of way of U.S. Hwy. 17-A and the eastern right of way of Sangaree
Parkway, thence proceed N 77-50-37 E, a distance of 170' along the right of way
of Hwy. 17-A, to an iron pipe, the point of beginning, thence proceeding along
right of way of Hwy. 17-A N 7 50 37 E. a distance of 267.29' to an iron pipe,
thence turning and running S 12 12 00 E, a distance of 376.43' to a PK nail,
thence turning and running S 77 48 00 W, a distance of 10.00' to a point, thence
turning and running S 12 12 00 E, a distance of 100.00' to an iron pipe, thence
turning and running S 12 12 00 E, a distance of 101.34' to an iron pipe, thence
turning and running S 49 43 17 W, a distance of 44.92' to an iron pipe thence
turning and running S 11 53 45 E, a distance of 100.27' to an iron pipe, thence
turning and running N 76 15 35 W, a distance of 251.90' to an iron pipe,
thence turning a running N 83 07 07 W, a distance of 282.43' to an iron pipe,
thence turning and running along eastern right of way of Sangaree Parkway, an
arc distance of 329.92' of a counterclockwise curve, having a radius of
1386.21' a chord bearing of N 03 36 24 E and chord distance of 329.15' to a PK
nail, thence turning and running N 77 47 57 E, a distance of 186.66' to an iron
pipe, thence turning and running N 12 12 00 W, a distance of 180.16', to an
iron pipe, the point of beginning.
Said "Sangaree Plaza" as described contains 5.789 acres, more or less.
TOGETHER WITH the non-exclusive right of ingress and egress as provided in that
certain "Non-Exclusive Easement for Ingress and Egress Across a 37.5' proposed
Right-of-Way" to Alec H. Chaplin, et al., from Farmington, Incorporated, d/b/a/
the Berkeley Company, dated October 26, 1979, and recorded in Book C130, page
208, RMC Office for Berkeley County.
ALSO TOGETHER WITH rights of ingress and egress across an "ingress-egress
easement" as to: "Lot 4, 3.785 Ac."; "Lot 1, 1.095 Ac."; Lot 2, 1.095 Ac."; and
across Roadway Parcel - 4; 0.20 Ac." as shown on Plat entitled "Plat Showing
Sangaree Shopping Center. Said Tract Situate at Intersection of U.S. Highway
17-A and Sangaree Parkway in Second Goose Creek Tax District, Berkeley County,
S.C.", by Joel Porcher, dated May 17, 1982, and recorded
Page 1 of 2 pages
Sangaree 1 of 2
<PAGE> 18
EXHIBIT "A"
in Plat Cabinet D, page 395, in said RMC Office. Said ingress and egress
easement across "Lot 4, 3.785 Ac." is not designated on the above referenced
Plat, however, the proposed location across Lot 4 is set forth and is provided
for in Paragraph 3 of that certain "Cancellation of Easement Agreement recorded
in Book C129, page 224; Declaration of Restrictions, Easements, Reciprocal
Easements and Covenants, Subordination of Mortgage," entered into among Alec H.
Chaplin, Bi-Lo, Inc., G. Curtis Martin, Trustee, and Europco Management Company
of America, dated December 11, 1980, and recorded in Book C135, page 57, RMC
Office aforesaid; and "Amendment to Agreement Recorded in Book C135, page 57"
entered into among Parkway Plaza Associates, Alec H. Chaplin and Bi-Lo, Inc.,
dated August 13, 1986, and recorded in Book C213, page 184, RMC office
aforesaid.
ALSO TOGETHER WITH all rights and benefits declared, established and granted by
that Agreement dated December 11, 1980, and recorded December 12, 1980, in Book
C135, page 57, as amended by Amendment to Agreement dated August 13, 1986, and
recorded April 27, 1987, in Book C213, page 184, RMC Office for Berkeley County.
ALSO TOGETHER WITH drainage easements and all other rights and benefits granted
by Farmington, Inc., d/b/a The Berkeley Company, to Atlantic Income Properties
Limited Partnership under Easement Agreement dated May 31, 1989, and recorded
May 31, 1989, in Book C258, page 271, RMC Office for Berkeley County.
Page 2 of 2 pages
Sangare 2 of 2
<PAGE> 19
Exhibit A
TRACT 1
BEGINNING at a set iron pin located in the westerly margin of the one hundred
fifty (150) foot right-of-way of U.S. Hwy. 321 By-Pass which iron pin is also
the southeasterly corner of that certain property conveyed to Lincoln Bank by
deed recorded in Book 707 at Page 262 in the Lincoln County Public Registry and
S. 15-00-55 E. conveyed to Belk-Schrum Company by deed recorded in Book 683 at
Page 175 in said Registry, thence with the southerly and westerly boundaries of
said Lincoln Bank property (now or formerly), the following four (4) courses
and distances:
(1) S. 75-23-08 W. 112.20 feet to a set iron pin; (2) with the arc of a
circular curve to the right having a radius of 30.00 feet, an arc distance of
46.41 feet, and a chord bearing and distance of N. 60-17-32 W. 41.92 feet to a
set iron pin; (3) N. 15-58-12 W. 52.45 feet to a set iron pin; and (4) with the
arc of a circular curve to the left having a radius of 226.23 feet, an arc
distance of 102.29 feet, and a chord bearing and distance of N. 28-55-25 W.
101.42 feet to a set iron pin; thence S. 75-23-08 W. 34.46 feet to a set iron
pin in the northeast corner of that certain property conveyed to Matthews Belk
Company by deed recorded in Book 683 at Page 178 in said Registry and by a
correction deed recorded in Book 711 at Page 264 in said Registry; thence with
the easterly boundary of said Matthew Belk property (now or formerly) the
following five (5) courses and distances:
(1) With the arc of circular curve to the right having a radius of 196.23 feet,
an arc distance of 101.54 feet, and a chord bearing and distance of S. 31-40-02
E. 100.42 feet to a set iron pin; (2) S. 75-23-08 W. 32.03 feet to a set iron
pin; (3) S. 16-00-01 E. 80.60 feet to a set iron pin; (4) with the arc of a
circular curve to the right having a radius off 255.50 feet, an arc distance of
75.49 feet, and a chord bearing and distance of S. 07-30-19 E. 75.22 feet to a
set iron pin; and (5) S. 00-57-35 W. 88.01 feet to a set iron pin in the
southeasterly corner of said Matthews Belk property; thence along and with the
southerly boundary of said Matthews Belk property the following three (3)
courses and distances:
(1) S. 75-23-08 W. 207.90 feet to a set iron pin; (2) N. 58-32-21 W. 49.98 feet
to a set iron pin; and (3) S. 75-23-08 W. 294.56 feet to a set iron pin in the
southwesterly corner of said Matthews Belk property; thence S. 75-01-16 W.
53.25 feet to an existing concrete monument located in the easterly line of
property conveyed to the County of Lincoln by deed recorded in Book 607 at Page
691; thence with the easterly boundary of said Lincoln County property (now or
formerly) S. 13-37-39 E. 94.68 feet to a set iron pin in the northwesterly
corner of that certain property conveyed to WalMart Properties by deed recorded
in Book 683 at Page 166 in the Lincoln
Lincoln 1 of 5
<PAGE> 20
County Public Registry; thence with the northerly line of said WalMart property
(now or formerly) the following five (5) courses and distances:
(1) N. 75-23-08 E 220.44 feet to a set iron pin; thence (2) S. 14-36-52 E. 60.00
feet to a set iron pin; (3) N. 75-23-08 E. 130.00 feet to a set iron pin; (4)
N. 41-56-44 E. 63.51 feet to a set iron pin; and (5) N. 75-23-08 E. 226.96 feet
to a set iron pin located in the westerly boundary of that certain property
conveyed to James E. Green and Robert D. Green by deed recorded in Book 695 at
Page 115 in said Registry; thence with the western and northern lines of said
Green property (now or formerly) the following five (5) courses and distances:
(1) With the arc of a circular curve to the right having a radius of 675.00
feet, and arc distance of 58.47 feet, and a chord bearing and distance of N.
01-31-19 W. 58.45 feet to a set iron pin; (2) N. 00-57-35 E. 100.22 feet to a
set iron pin; (3) with the arc of a circular curve to the right having a radius
of 312.50 feet, an arc distance of 19.17 feet, and a chord bearing and distance
of N. 00-47-51 E. 19.17 feet to a point; (4) with the arc of a circular curve
to the right having a radius of 10.00 feet, an arc distance of 13.60 feet, and
a chord bearing and distance of N. 36-24-55 E. 12.58 feet to a set iron pin;
and (5) N. 75-23-08 E. 144.06 feet to a set iron pin located in the
northeasterly corner of said Green property and in the westerly margin of the
one hundred fifty (150) foot right-of-way of said U.S. Highway #321 By-Pass;
thence with the westerly margin of said right-of-way N. 15-00-55 W. 60.00 feet
to a set iron pin which is the point or place of BEGINNING and containing 2.14
acres as shown on a survey of Lincoln Center prepared by E.S.P. Associates,
P.A., dated February 15, 1989 and last revised on April 5, 1989, said property
being subject to a 30-foot permanent access easement as described in that
certain instrument recorded in Book 683 at Page 180 in the Lincoln County
Public Registry.
TRACT 2
BEGINNING at a point marked by a set iron pin which is located in the westerly
margin of the one hundred fifty (150) foot right-of-way of U.S. Highway #321
By-Pass and in the southeasterly corner of the property conveyed to Belk-Schrum
Company by a deed recorded in Book 683 at Page 175 of the Lincoln County Public
Registry; thence along the southerly and westerly boundaries of said
Belk-Schrum property (now or formerly) the following three (3) courses and
distances:
(1) S. 75-23-08 W. 204.00 feet to a set iron pin in the southwesterly corner of
said Belk-Schrum property; (2) with the arc of a circular curve to the right
having a radius of 185.45 feet, an arc distance of 43.99 feet, and a chord
bearing and distance of N.
-2-
Lincoln 2 of 5
<PAGE> 21
21-10-25 W. 43.88 feet; and (3) N. 14-22-43 W. 309.05 feet to a set iron pin
located in the northwesterly corner of said Belk-Schrum property and in the
southerly margin of the sixty (60) foot right-of-way of Sigmon Road (S.R. 1267);
thence with the southerly margin of said right-of-way N. 75-50-03 W. 351.19 feet
to a 1 inch iron pipe; thence S. 20-05-43 W. 715.59 feet to a 1/2 inch iron
pipe; thence s. 32-28-03 E. 319 feet to an existing concrete monument which also
marks the northwesternmost corner of Tract 1 described above; thence N. 75-01-16
E. 53.25 feet to a set iron pin in the southwesternmost corner of the property
conveyed to Matthews Belk Company by deed recorded in Book 683 at Page 178 in
the Lincoln County Public Registry and by a correction deed recorded in Book 711
at Page 264 in said Registry; thence along and with the westerly and northerly
boundaries of said Matthews-Belk property (now or formerly), the following six
(6) courses and distances:
(1) N. 14-36-52 W. 313.41 feet to a set iron pin in the northwesterly corner of
said Matthews Belk property; (2) N. 75-23-08 E. 75.20 feet to a set iron pin;
(3) S. 54-40-35 E. 93.88 feet to a set iron pin; (4) N. 75-23-08 E. 158.64 feet
to a set iron pin; (5) N. 15-34-38 E. 67.61 feet to a set iron pin; (6) N.
75-23-09 E. 276.61 feet to a point located in the western line of that certain
parcel conveyed to Lincoln Bank by deed recorded in Book 707 at Page 262 in the
Lincoln County Public Registry; thence with the westerly and northerly
boundaries of said Lincoln Bank property (now or formerly) N. 16-53-33 W. 6.01
feet to a set iron pin in the northwesterly corner of said Lincoln Bank
property; and N. 75-23-08 E. 167.43 feet to a set iron pin located in the
westerly margin of the one hundred fifty (150) foot right-of-way of U.S. Highway
#321 By-Pass; thence the westerly margin of said right-of-way N. 15-00-55 W.
64.00 feet to a set iron pin which marks the point or place of BEGINNING and
containing 7.62 acres as shown on survey of Lincoln Center prepared by E.S.P.
Associates, P.A. dated February 15, 1989 and last revised April 5, 1989.
TRACT 3
BEGINNING at a 1 inch iron pipe located in the southerly margin of the sixty
(60) foot right-of-way of Sigmon Road (SR 12670, which iron pipe also marks the
northernmost point of Tract 2 as described above, thence with the southerly
margin of said right-of-way N. 75-50-03 W. 96.45 feet to an existing iron pin in
the northeasterly corner of that certain property conveyed to Kenneth H. Barkley
and wife, Martha B. Barkley, by deed recorded in Book 587 at Page 635 of the
Lincoln County Public Registry; thence with the easterly boundary of said
Barkley property (now or formerly) and with the easterly boundary of that
certain property conveyed to Kenneth H. Barkley and J. Franklin Barkley by deed
recorded in Book 331 at Page 521 in said Registry, S. 20-05-43 W. 632.18 feet to
a set iron pin located in the easterly boundary of the property conveyed to
- 3 -
Lincoln 3 of 5
<PAGE> 22
the County of Lincoln by Deed recorded in Book 607 at Page 691 in the Lincoln
County Public Registry; thence with the easterly boundary of said County of
Lincoln property (now or formerly) S. 32-28-03 E. 120.82 feet to a 1/2 inch iron
pipe which marks the westernmost point of Tract 2 as described above; thence
with the northwesterly boundary of said Tract 2 N. 20-05-43 E. 715.59 feet to a
one inch iron pipe located in the southerly margin of the sixty (60) foot
right-of-way of Sigmon Road (SR 1267), the point or place of BEGINNING and
containing 1.48 acres as shown on survey prepared by E.S.P. Associates, P.A.
dated February 15, 1989 and last revised April 5, 1989.
TRACT 4
BEGINNING at an iron pin marking the southwest corner of the property conveyed
to WalMart Properties by deed recorded in Book 683 at Page 166 in the Lincoln
County Public Registry and running thence with the southerly line of said
Walmart property (now or formerly), N. 74-55-00 E. 40.01 feet to a point in the
northwesterly corner of that certain property conveyed to Kenneth H. Barkley and
J. Franklin Barkley be deed recorded in Book 331 at Page 521 in said Registry;
thence with the westerly line of said Barkley property (now or formerly) S.
13-37-39 E. 902.15 feet to a point in or near the center line of Mill Creek;
thence with said center line of Mill Creek in two calls as follow: (1) S.
88-33-03 W. 30.57 feet to a point; and (2) N. 86-23-04 W. 10.59 feet to a point
in the easterly line of the property of the County of Lincoln (now or formerly)
as described in deed Book 607 at Page 691 in the Lincoln County Public Registry;
thence with said easterly line of the Lincoln County property N. 13-37-39 W.
passing a double Poplar Tree at 35.75 feet, a total distance of 891.54 feet to
the point of BEGINNING, and containing 0.82 acres as shown on a survey prepared
by E.S.P. Associates of Lincoln Center dated February 15, 1989 and last revised
April 5, 1989, reference to which is hereby made.
The above tracts or panels of land are conveyed together with access rights
granted from the Department of Transportation under that certain Agreement
entitled "State Project 6485" recorded in Book 683 at Page 512, Lincoln County
Registry and also together with a 50 foot wide permanent non-exclusive easement
for the construction and maintenance of a highway access and service road
reflected on the above described survey adjacent to the southeast corner of the
property conveyed to the WalMart Properties by deed recorded in Book 683 at Page
166 in the Lincoln County Public Registry, said non-exclusive easement being
described as follows:
BEGINNING at an iron pin in the southeast corner of said WalMart property (nor
or formerly), and in the westerly margin of the one hundred fifth (150) foot
right of way of U.S. Highway No. 321 By-Pass and running thence with the
westerly edge of said right-of-
-4-
Lincoln 4 of 5
<PAGE> 23
way S. 15-00-55 E. 115.00 feet to a point; thence S. 74-55-00 W. 50.00 feet to
a point; thence N. 15-00-55 W. 115 feet to a point; thence N. 74-55-00 E. 50.00
feet to a point of BEGINNING; SAID EASEMENT ties into rights and duties imposed
by that certain document designated Easements With Covenants and Restrictions
Affecting Land as found recorded in Book 683 at Page 187 in the Lincoln County
Public Registry and as amended in Book 707 at Page 281 of said Registry, and the
PARCELS DESCRIBED ABOVE are conveyed together with and subject to the rights,
easements, covenants and restrictions as set forth in the instruments just
referred to.
The above tracts or parcels of land are conveyed (i) together with and subject
to that certain 20 feet utility easement running along the easterly boundary of
Tract 2 as described herein and along the westerly margin of the one hundred
fifty (150) foot right-of-way of said U.S. Highway #321 By-Pass, (ii) together
with and subject to that certain two foot street widening easement as reserved
in that certain Deed to Lincoln Bank recorded in Book 707 at Page 262 of said
Registry, (iii) together with that certain appurtenant 20 foot sanitary sewer
right-of-way granted by the County of Lincoln by instrument recorded in Book 687
at Page 682 in the Lincoln County Public Registry, (iv) together with and
subject to those certain easements, conditions and restrictions contained in
that certain Easements with Covenants and Restrictions Affecting Land recorded
in Book 683 at Page 187 of said Registry and amended by that certain Second
Amendment to Easements with Covenants and Restrictions Affecting Land recorded
in Book 707 at Page 281 of said Registry, and (v) together with and subject to
the easements and conditions contained in that certain Construction and
Operating Agreement, a memorandum of which is recorded in Book 707 at Page 284
of said Registry.
- 5 -
Lincoln 5 of 5
<PAGE> 24
EXHIBIT "B"
Purchase Price Allocation
<TABLE>
<S> <C>
Lincoln Center $5,748,155.00
Sangaree Plaza $4,413,618.00
Southwest Plaza $5,688,227.00
</TABLE>
<PAGE> 25
EXHIBIT "C"
Lease Exhibit
<PAGE> 26
<TABLE>
<CAPTION>
1/27/98 LAT PURSER & ASSOCIATES, INC.
User: STACEY Commercial Rent Roll Page: 1
Property: SANGAREE PLAZA SHOPPING CENTER Report Date From: 1/01/98 to 1/31/98
CHARLOTTE, NC 28201-1070
TERM PRORATED BASE RENT BASE RENT
SQ. FOOT ------------------ UNIT INFO BASE RENT RENT PER INCREASE INCREASE
TENANT UNIT REF NO. OCCUPIED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- -------------------------- ------------ --------- ------------------ --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEDERAL CREDIT UNION (ATM) 315-100 0 11/01/86 10/31/98 760.00 9,120.00 0.00 11/01/97 760.00
GENE DRY CLEANING 315-101 2,400 10/01/87 2/28/00 2,100.00 25,200.00 10.50 3/01/97 2,100.00
3/01/98 2,150.00
3/01/99 2,200.00
ALL TRANSPORTATION SERVICES 315-102 1,200 2/01/94 1/31/00 925.00 11,100.00 9.25 2/01/97 925.00
2/01/98 950.00
2/01/99 975.00
SANGAREE LIQUORS 315-103 1,200 10/01/89 4/30/99 1,025.00 12,300.00 10.25 5/01/97 1,025.00
5/01/98 1,125.00
*** VACANT *** 315-104 2,000 0.00 0.00 0.00 - 0.00
CERISE'S CARD & PARTY SHOP 315-105 2,000 11/01/95 1/31/99 1,333.33 15,999.95 8.00 11/01/97 3,333.33
CHEROKEE STATION 315-106 2,000 10/21/94 10/10/99 1,333.33 15,999.95 8.00 11/01/97 3,333.33
11/01/98 3,416.67
REVCO DRUG #2580 315-107 8,450 8/01/81 7/31/01 3,696.87 44,362.84 5.25 8/01/83 3,697.87
BI-LO STORE #123 315-108 37,696 8/10/80 5/31/13 24,130.45 289,641.40 7.69 5/01/93 24,136.45
ATLANTIC FAMILY DENTAL 315-109 2,000 5/01/94 4/30/98 2,166.67 26,000.04 13.00 5/01/93 2,166.67
------- ------ ------- ------- --------- ---------- ----- ------- ---------
TOTALS 56,946 37,478.65 449,743.80 7.90
Total Occupied Square Feet 56,968
Total Vacant Square Feet 2,000
------- ------ ------- ------- -------- ---------- ----- ------- ---------
GRAND TOTALS 56,942 37470.65 449,743.80 7.90
Total Occupied Square Feet 56,968
Total Vacant Square Feet 2,000
<CAPTION>
CAM AND INS
-- EXPENSE -- --REAL ESTATE TAX-- --- OTHER INCOME --- ----GROSS RENTS-----
TENANT MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- -------------------------- ------------- --------- -------- -------- ------ -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FEDERAL CREDIT UNION (ATM) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 740.00
GENE DRY CLEANING 114.00 0.58 136.00 0.53 0.00 0.00 11.61 2,322.00
ALL TRANSPORTATION SERVICES 58.00 0.58 53.00 0.53 0.00 0.00 10.36 1,036.00
SANGAREE LIQUORS 58.00 0.58 53.00 0.53 0.00 0.00 11.36 1,136.00
*** VACANT *** 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CERISE'S CARD & PARTY SHOP 96.67 0.58 68.33 0.53 0.00 0.00 9.11 1,518.31
CHEROKEE STATION 96.67 0.58 68.33 0.53 0.00 0.00 9.11 1,518.31
REVCO DRUG #2580 70.42 0.10 0.00 0.00 0.00 0.00 6.35 3,767.28
BI-LO STORE #123 750.00 0.24 0.00 0.00 0.00 0.00 7.92 24,896.45
ATLANTIC FAMILY DENTAL 96.67 0.58 68.33 0.53 0.00 0.00 14.11 2,351,67
-------- ------ ------ ---- ---- ---- ----- ---------
TOTALS 1,342.41 0.27 476.95 0.10 0.00 0.00 0.00 39,298.07
-------- ------ ------ ---- ---- ---- ----- ---------
-------- ------ ------ ---- ---- ---- ----- ---------
GRAND TOTALS 1,342.41 0.27 476.95 0.10 0.00 0.00 0.00 39,298.07
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
1/27/98 LAT PURSER & ASSOCIATES, INC.
User: STACEY Commercial Rent Roll Page: 1
Property: SANGAREE PLAZA SHOPPING CENTER Report Date From: 1/01/98 to 1/31/98
CHARLOTTE, NC 28201-1070
TERM PRORATED BASE RENT BASE RENT
SQ. FOOT ------------------ UNIT INFO BASE RENT RENT PER INCREASE INCREASE
TENANT UNIT REF NO. OCCUPIED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- -------------------------- ------------ --------- ------------------ --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
KEY EHY OF ROANOKE, INC. 25-1 5150 9/01/92 4/30/03 2,401.00 29,772.00 5.56
5/01/98 2,576.08
5/01/99 2,711.67
5/01/00 2,807.25
PARTNER'S INK 25-4 3590 1/01/90 12/31/99 2,019.38 24,232.56 6.75 1/01/98 2,019.38
1/01/99 2,094.36
WOOD'S SENTRY HARDWARE 25-7 11,145 7/01/87 6/30/03 4,642.00 55,703.95 4.91
*** VACANT *** 25-17 900 825.00 0.00 0.00
HARRIS TEETER #44 25-15 30,450 12/01/87 3/04/08 1,9031.25 228,375.00 7.50 8/01/89 19,031.25
RENCO DISCOUNT DRUG #517 25-17 10,678 12/01/74 3/31/02 8,097.48 97,169.76 9.10 4/01/97 8,097.44
WINDSOR GIFTS, INC. 25-21 1,250 7/01/97 9/30/00 2,145.83 13,749.96 11.00 10/01/97 1,146.83
10/01/98 1,197.91
10/01/99 1,250.00
MENBER ONE FEDERAL C.O. 25-29 3,935 1/06/97 1/31/07 3,771.00 45,252.48 11.50 2/01/97 3,771.01
2/01/98 3,853.02
2/01/99 3,935.00
2/01/00 4,016.98
2/01/01 4,098.91
2/01/02 4,180.91
2/01/03 4,262.92
2/01/04 4,349.90
2/01/05 4,426.88
2/01/06 4,508.85
STATE FARM INSURANCE 25-31 1,560 5/01/97 4/30/02 590.50 71,914.00 7.65 5/01/97 994.50
5/01/98 1,072.50
5/01/99 1,150.50
5/01/00 1,226.50
5/01/01 1,306.50
*** VACANT *** 25-43 1,800 1,650.00 0.00 0.00 0.00
TRAVEL NETWORK 25-49 1,000 12/01/94 11/30/00 1,025.00 12,300.00 12.30 12/01/97 1,025.00
12/01/98 1,050.00
12/01/99 1,075.00
CARTER & JONES DRY CLEANING 25-31 1,20 9/01/94 10/31/00 1,150.00 13,800.00 11.50 11/01/97 1,150.00
11/01/98 1,200.00
<CAPTION>
CAM AND INS
-- EXPENSE -- --REAL ESTATE TAX-- --- OTHER INCOME --- ----GROSS RENTS-----
TENANT MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- -------------------------- ------------- --------- -------- -------- ------ -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
KEY EHY OF ROANOKE, INC. 178.97 0.40 110.83 0.38 0.00 0.00 6.35 2,830.80
PRINTER'S INK 197.44 0.66 118.47 0.63 0.00 0.00 8.06 2,405.29
WOOD'S SENTRY HARDWARE 623.98 0.86 515.61 0.63 0.00 0.00 5.18 4,895.57
**** VACANT *** 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
HARRIS TEETER #44 1,244.00 0.49 1,725.00 0.68 0.00 0.00 8.67 22,000.25
RENCO DISCOUNT DRUG # SHOP 418.22 0.47 0.00 0.00 0.00 0.00 9.57 8,515.70
WINSOR GIFTS, INC. 68.75 0.66 65.63 0.63 0.00 0.00 12.29 1,280.21
MEMBER ONE FEDERAL C.U. 196.75 0.60 219.70 0.67 0.00 0.00 12.77 4,187.89
STATE FARM INSURANCE 85.10 0.66 81.90 0.63 0.00 0.00 8.94 1,262.20
*** VACANT *** 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
TRAVEL NETWORK 54.59 0.66 52.50 0.63 0.00 0.00 13.59 1,132.49
CARTER & JONES DRY CLEANING 66.00 0.66 63.00 0.63 0.00 0.00 12.79 1,279.00
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
1/27/98 LAT PURSER & ASSOCIATES, INC.
User: STACEY Commercial Rent Roll Page: 2
Property: SOUTHWEST PLAZA Report Date From: 1/01/98 to 1/31/98
CHARLOTTE, NC 28201-1070
TERM PRORATED BASE RENT BASE RENT
SQ. FOOT ------------------ UNIT INFO BASE RENT RENT PER INCREASE INCREASE
TENANT UNIT REF NO. OCCUPIED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- -------------------------- ------------ --------- ------------------ --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MAILBOXES ETC., USA 25-55 1,200 7/01/90 7/31/98 1,100.00 13,200.00 11.00 9/01/97 1,100.00
FIVE-BORO BAGELS 25-57 1,400 3/15/94 2/28/99 1,225.00 14,700.00 10.50 3/01/97 1,225.00
3/01/98 1,254.17
COMMERCIAL CREDIT CORP. 25-60 1,400 8/12/96 8/31/01 1,283.33 15,399.96 11.00 9/01/96 1,263.33
9/01/98 1,312.50
9/01/99 1,341.67
9/01/00 1,370.83
CLASSIC DESIGNERS 25-63 3,200 6/15/98 11/30/98 2,666.67 32,000.04 10.00 12/01/95 2,646.67
FHY PEDDLER BICYCLE SHOP 25-67 1,200 1/01/01 12/31/97 700.00 8,400.00 7.00 8/01/96 700.00
CHINA GARDEN 26-69 3,600 5/01/88 4/30/05 2,446.00 29,352.00 9.15 5/01/98 2,550.00
5/01/99 2,665.00
5/01/00 2,760.00
5/01/01 2,865.00
5/01/02 2,970.00
FIRESTONE TIRE & RUBBER 25-72 3,250 1/01/76 12/31/00 1,787.50 23,450.00 6.60 9/01/09 1,787.50
B&W TELLER MACHINE 25-73 0 3/03/84 3/31/99 575.00 6,900.00 0.00 4/01/97 575.00
4/01/98 600.00
------- ------ ------- ------- --------- ---------- ----- ------- ---------
TOTALS 48,308 57,649.52 662,099.32 7.73
Total Occupied Square Feet 45,609
Total Vacant Square Feet 2,700
------- ------ ------- ------- -------- ---------- ----- ------- ---------
GRAND TOTALS 88,304 57,649.96 662,099.52 7.73
Total Occupied Square Feet 85,608
Total Vacant Square Feet 2,700
<CAPTION>
CAM AND INS
-- EXPENSE -- --REAL ESTATE TAX-- --- OTHER INCOME --- ----GROSS RENTS-----
TENANT MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- -------------------------- ------------- --------- -------- -------- ------ -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MAILBOXES ETC., USA 66.0? 0.66 63.00 0.63 0.00 0.00 12.29 1,229.00
FIVE-BORO BAGELS 77.0? 0.66 73.50 0.63 0.00 0.00 11.79 1,375.50
COMMERCIAL CREDIT CORP. 77.00 0.66 73.50 0.63 0.00 0.00 12.29 1,433.83
CLASSIC DESIGNERS 176.00 0.?6 118.00 0.63 0.00 0.00 11.29 3,010.67
FHY PEDDLER BICYCLE SHOP 66.0? 0.?6 ?3.00 0.63 0.00 0.00 8.29 829.00
CHINA GARDEN 333.00 1.11 169.00 0.63 0.00 0.00 9.44 2,?33.00
FIRESTONE TIRE & RUBBER 0.00 0.00 0.00 0.00 0.00 0.00 6.60 1,787.50
B&W TELLER MACHINE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 $ 75.00
-------- ------ ------ ---- ---- ---- ----- ---------
TOTALS 3,794.90 0.52 3,792.64 0.52 0.00 0.00 8.53 62,762.50
-------- ------ ------ ---- ---- ---- ---- ---------
-------- ------ ------ ---- ---- ---- ---- ---------
GRAND TOTALS 3,794.90 0.52 3,792.64 0.52 0.00 0.00 8.53 62,762.50
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
1/27/98 LAT PURSER & ASSOCIATES, INC.
User: STACEY Commercial Rent Roll Page: 1
Property: LINCOLN CENTER Report Date From: 1/01/98 to 1/31/98
CHARLOTTE, NC 28201-1070
TERM PRORATED BASE RENT BASE RENT
SQ. FOOT ------------------ UNIT INFO BASE RENT RENT PER INCREASE INCREASE
TENANT UNIT REF NO. OCCUPIED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- -------------------------- ------------ --------- -------- -------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WAL-MART #1209 145-201 132,200 12/23/87 0.00 0.00 0.00 0.00
CATO #755 145-203 4,000 3/02/89 2/31/99 4,000.00 __,000.00 0.00 2/01/95 4,000.00
____BARGER'S HALLMARK, INC. 145-211 2,040 1/10/95 3/31/00 2,603.33 31,239.96 11.00 4/03/97 2,603.33
SHOE SHOW #20 145-215 2,800 6/01/88 1/20/99 2,240.00 26,880.00 9.60 2/01/98 2,280.00
BELK STORES 145-217 64,500 12/23/87 0.00 0.00 0.00 0.00
LINCOLNTON FAMILY
EYECARE, INC. 145-219 1,750 2/01/98 1/31/01 1,604.17 19,250.00 11.00 2/01/99 1,662.50
2/01/00 1,720.83
LITTLE CHINA RESTAURANT 145-221 2,840 2/01/97 1/31/02 2,224.67 26,696.04 9.40 2/01/97 2,224.67
2/01/98 2,386.67
2/01/99 2,485.00
2/01/00 2,603.33
2/01/01 2,731.67
BI-LO STORE #219 145-223 33,000 3/25/89 1/31/09 17,133.33 205,599.96 6.23 2/01/94 17,133.33
2/01/99 17,933.33
REVCO #806 145-225 2,450 2/26/89 2/29/01 4,929.17 59,150.04 7.00 9/01/89 4,929.17
LADIES WORKOUT EXPRESS 145-227 1,620 4/01/97 7/31/02 1,183.33 14,399.96 10.00 8/01/97 1,283.33
8/01/98 1,242.50
8/01/99 1,301.67
8/01/00 1,360.83
8/01/01 1,420.00
ROYAL RENTS #496
(GRP II MGN 145-229 1,600 3/01/89 2/28/00 1,466.67 17,500.04 11.00 3/01/97 1,466.67
3/01/98 1,533.33
3/01/99 1,600.00
GENERAL NUTRITION CENTER 145-231 1,600 3/23/91 3/31/99 1,404.47 17,600.01 11.00 4/01/97 1,466.67
4/01/98 1,533.33
___ IMAGE BEAUTY SALON 145-237 1,400 1/01/92 12/31/00 1,400.00 16,800.00 12.00 1/01/98 1,400.00
1/01/99 1,450.33
LITTLE CAESAR ENTERPRISES 145-239 1,400 3/18/89 12/30/98 1,312.50 15,750.00 11.25 12/01/97 1,312.50
SETZER JEWELERS 145-241 1,420 6/01/95 7/31/98 1,360.83 16,329.96 11.50 8/01/97 1,360.83
SUBWAY #3926 145-243 1,600 2/25/89 7/31/98 1,590.16 19,081.92 11.93 8/01/97 1,590.16
<CAPTION>
CAM AND INS
-- EXPENSE -- --REAL ESTATE TAX-- --- OTHER INCOME --- ----GROSS RENTS-----
TENANT MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- -------------------------- ------------- --------- -------- -------- ------ -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WAL-MART #1209 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CATO #755 210.00 0.42 280.00 0.56 0.00 0.00 0.98 4,650.00
___BARGER'S HALLMARK, INC. 132.53 0.56 158.57 0.67 0.00 0.00 12.23 2,896.63
SHOE SHOW #20 130.67 0.56 156.33 0.63 0.00 0.00 10.03 2,527.00
BELK STORES 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
LINCOLNTON FAMILY
EYECARE, INC. 64.58 0.58 97.71 0.67 0.00 0.00 12.73 1,604.17
LITTLE CHINA RESTAURANT 137.27 0.58 158.57 0.67 0.00 0.00 10.65 2,520.12
BI-LO STORE #219 750.00 0.27 0.00 0.00 0.00 0.00 6.50 17,813.33
REVCO #806 268.00 0.38 1.00 0.00 0.00 0.00 7.38 5,197.17
LADIES WORKOUT EXPRESS 68.63 0.58 75.28 0.67 0.00 0.00 11.25 1,331.24
ROYAL RENTS #496
(GRP II MGN 91.63 0.71 61.00 0.51 0.00 0.00 12.23 1,629.34
GENERAL NUTRITION CENTER 74.61 0.56 81.33 0.62 0.00 0.00 12.23 1,630.67
___ IMAGE BEAUTY SALON 65.35 0.56 71.17 0.67 0.00 0.00 13.23 1,541.50
LITTLE CAESAR ENTERPRISES 65.33 0.56 71.27 0.67 0.00 0.00 12.68 3,456.00
SETZER JEWELERS 66.27 0.56 71.28 0.67 0.00 0.00 12.73 2,506.38
SUBWAY #3926 74.61 0.56 81.33 0.67 0.00 0.00 13.26 1,750.26
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
1/27/98 LAT PURSER & ASSOCIATES, INC.
User: STACEY Commercial Rent Roll Page: 2
Property: LINCOLN CENTER Report Date From: 1/01/98 to 1/31/98
CHARLOTTE, NC 28201-1070
TERM PRORATED BASE RENT BASE RENT
SQ. FOOT ----------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
TENANT UNIT REF NO. OCCUPIED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- -------------------------- ------------ -------- -------- ------- ---------- ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GALAXY 91980 345-245 1,420 07/01/91 10/30/99 1,420.00 17,040.00 12.00 11/01/97 1,420.00
11/01/98 1,479.12
LINCOLN MEDICAL CENTER 145-207 2,490 10/01/97 9/30/00 1,867.50 22,410.00 9.00 10/01/97 1,867.50
10/01/98 1,971.25
10/01/99 2,075.00
LINCOLN DRY CLEANER 145-251 1,420 10/01/01 3/31/01 1,124.17 13,090.04 9.50 4/01/96 1,124.17
4/01/98 1,183.33
4/01/99 1,242.50
4/01/00 1,301.60
BELL ATLANTIC NYNEX MOBILE 145-253 1,420 12/01/95 11/30/98 1,065.00 12,780.00 9.00 12/01/97 1,065.00
OLSTEN STAFFING SERVICES, IN 145-254 1,420 10/15/91 10/14/99 1,105.23 13,262.75 9.34 11/01/97 1,205.21
11/01/98 1,260.05
AMERICAN GENERAL #33000560 145-255 1,200 5/01/89 4/30/01 1,025.00 12,300.00 10.25 5/01/95 1,025.00
5/01/98 1,050.00
5/01/99 1,100.00
5/01/00 1,150.00
BALLY NAIL SALON 145-257 1,280 11/01/96 10/31/99 906.67 10,080.04 8.50 11/01/97 906.67
11/01/98 960.00
- -------------------------- ------------ -------- -------- -------- --------- ---------- --------- --------- ---------
TOTALS 275,470 53,101.31 637,215.72 2.31
Total Occupied Square Feet 275,470
Total Vacant Square Feet 0
- -------------------------- ------------ -------- -------- -------- --------- ---------- --------- --------- ---------
GRAND TOTALS 275,470 53,101.31 637,215.72 2.31
Total Occupied Square Feet 275,470
Total Vacant Square Feet 0
<CAPTION>
CAM AND INS
--EXPENSE-- --REAL ESTATE TAX-- --OTHER INCOME-- --GROSS RENTS--
TENANT MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- -------------------------- -------- -------- -------- -------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GALAXY 91980 84.02 0.71 60.35 0.51 0.00 0.00 13.22 1,564.37
LINCOLN MEDICAL CENTER 120.35 0.58 139.02 0.67 0.00 0.00 10.25 2,126.87
LINCOLN DRY CLEANER 68.63 0.58 70.20 0.67 0.00 0.00 10.75 1,272.00
BELL ATLANTIC NYNEX MOBILE 66.27 0.56 71.28 0.67 0.00 0.00 10.23 1,210.55
OLSTEN STAFFING SERVICES, IN 66.27 0.56 71.28 0.67 0.00 0.00 10.57 1,250.78
AMERICAN GREETING #33000560 56.00 0.56 61.00 0.67 0.00 0.00 11.48 1,148.00
BALLY NAIL SALON 75.73 0.71 57.40 0.51 0.00 0.00 9.72 1,036.00
-------- -------- -------- -------- ------- -------- ------- ---------
TOTALS 2,756.91 0.12 1,971.35 0.09 0.00 0.00 2.52 57,829.64
-------- -------- -------- -------- ------- -------- ------- ---------
GRAND TOTALS 2,756.91 0.12 1,971.35 0.09 0.00 0.00 2.52 57,829.64
</TABLE>
<PAGE> 31
STATE OF NORTH CAROLINA
COUNTY OF LINCOLN
LEASE RENEWAL AGREEMENT
THIS LEASE RENEWAL AGREEMENT is made and entered into this 26th day of
AUGUST, 1997, by and between ATLANTIC INCOME PROPERTIES, L.P. ("Landlord"), and
AMERICAN GENERAL FINANCE, INC., D/B/A AMERICAN GENERAL FINANCE, INC. ("Tenant").
The Lease Premises are a part of LINCOLN Center, located in the City of
LINCOLNTON, County of LINCOLN, State of NORTH CAROLINA.
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into a Lease Agreement dated
APRIL 6, 1989, and
WHEREAS, the parties hereto desire to amend and modify the Lease as
hereinafter set forth:
NOW THEREFORE, by mutual agreement of the parties and in consideration of
the premises and obligations hereinafter set forth, said Lease is hereby amended
and modified as follows:
Landlord and Tenant agree to renew/extend the term of said Lease for a
period of three years and zero months, from MAY 1, 1998 to APRIL 30, 2001.
Base Rent during this period shall follow the schedule below:
Year 1: $1,050.00 monthly; $12,600.00 annually;
Year 2: $1,100.00 monthly; $13,200.00 annually;
Year 3: $1,150.00 monthly; $13,800.00 annually;
The pro rata share of Tenant's triple net charges have been estimated as
follows:
Common Area Maintenance: $52.00 monthly; $624.00 annually
Real Estate Taxes: $67.00 monthly; $804.00 annually
Insurance: $ 6.00 monthly; $ 72.00 annually
If additional space becomes available within the Center which is adjacent
to the Tenant's existing space or on the side of the Center facing Sigmon Road,
the Tenant will be given a Right of First Refusal to lease the space. If the
Tenant and Landlord are able to reach a mutually satisfactory agreement, the
Tenant will be permitted to terminate its Lease at the existing location and
relocate within the Center provided that the Tenant is/was not in default of any
lease obligations during the initial term or any subsequent renewal option
periods thereof.
Except as hereby amended, all other terms and conditions of the original
Lease Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Landlord and Tenant have caused this Lease Renewal
Agreement to be duly executed this the day and year first above written.
LANDLORD: Atlantic Income Properties, L.P., A Limited
Partnership
WITNESS: By: ISC Realty Corporation
/s/ BY: /s/ Chris Boone
- -------------------------- ----------------------------------------------
Chris Boone, Pres.,
Real Estate Finance
WITNESS: TENANT: American General Finance
/s/ Rebecca D. Cobb
- -------------------------- BY: /s/ Jerry E. Ridenhour
Rebecca D. Cobb ----------------------------------------------
Jerry E. Ridenhour, Vice President
PRINT NAME:
---------------------------------------
<PAGE> 32
STATE OF NORTH CAROLINA
COUNTY OF LINCOLN
LEASE RENEWAL AGREEMENT
THIS LEASE RENEWAL AGREEMENT is made and entered into this 8th day of
SEPTEMBER, 1997, by and between ATLANTIC INCOME PROPERTIES, L.P. ("Landlord"),
and DAVID L. PETTYJOHN D/B/A LINCOLN DRY CLEANER ("Tenant"). The Lease Premises
are a part of LINCOLN Center, located in the City of LINCOLNTON, County of
LINCOLNTON, State of NORTH CAROLINA.
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into a Lease Agreement dated
AUGUST 27, 1989, and
WHEREAS, the parties hereto desire to amend and modify the Lease as
hereinafter set forth:
NOW THEREFORE, by mutual agreement of the parties and in consideration of
the premises and obligations hereinafter set forth, said Lease is hereby amended
and modified as follows:
Landlord and Tenant agree to renew/extend the term of said Lease for a
period of three years and zero months, from April 1, 1998 to March 31, 2001.
Base Rent during this period shall follow the schedule below;
Year 1: $1,183.33 monthly; $14,200 annually;
Year 2: $1,242.50 monthly; $14,910 annually;
Year 3: $1,301.66 monthly; $15,620 annually;
The pro rata share of Tenant's triple net charges have been estimated as
follows:
Common Area Maintenance: $61.53 monthly; $738.40 annually
Real Estate Taxes: $79.28 monthly; $951.40 annually
Insurance: $ 7.10 monthly; $ 85.20 annually
Tenant will continue to provide Landlord with a copy of the Monthly
Uniform Waste Manifest throughout this Lease Renewal Agreement.
Except as hereby amended, all other terms and conditions of the original
Lease Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Landlord and Tenant have caused this Lease Renewal
Agreement to be duly executed this the day and year first above written.
LANDLORD: Atlantic Income Properties, L.P., A Limited
Partnership
WITNESS: By: ISC Realty Corporation, Gen. Partner
/s/ BY: /s/ J. Christopher Boone
- ------------------------ ----------------------------------------------
J. Christopher Boone
ITS: President
----------------------------------------------
WITNESS: TENANT: David L. Pettyjohn d/b/a Lincoln Dry Cleaners
/s/ Cynthia M. Pettyjohn BY: /s/ David L. Pettyjohn
- ------------------------ ----------------------------------------------
PRINT NAME: David L. Pettyjohn
---------------------------------------
<PAGE> 33
STATE OF VIRGINIA
COUNTY OF ROANOKE
LEASE RENEWAL AGREEMENT
THIS LEASE RENEWAL AGREEMENT is made and entered into this 6th day of
JANUARY, 1998, by and between ATLANTIC INCOME PROPERTIES, L.P. ("Landlord"), and
TURNER DRUG COMPANY, INC. D/B/A WOOD HARDWARE ("Tenant"). The Lease Premises are
a part of SOUTHWEST PLAZA Shopping Center, located in the City of ROANOKE,
County of Roanoke, State of VIRGINIA
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into a Lease Agreement dated
MARCH 1, 1987, and
WHEREAS, the parties hereto desire to amend and modify the Lease as
hereinafter set forth:
NOW THEREFORE, by mutual agreement of the parties and in consideration of
the premises and obligations hereinafter set forth, said Lease is hereby amended
and modified as follows:
Landlord and Tenant agree to renew/extend the term of said Lease for a
period of FIVE (5) years and NO (0) months, from JULY 1, 1998 to APRIL 30, 2003.
Base Rent during this period shall follow the schedule below:
Year 1: $4,642.00 monthly; $55,703.95 annually;
Year 2: $4,642.00 monthly; $55,703.95 annually;
Year 3: $4,642.00 monthly; $55,703.95 annually;
Year 4: $4,642.00 monthly; $55,703.95 annually;
Year 5: $4,642.00 monthly; $55,703.95 annually;
The pro rata share of Tenant's triple net charges have been estimated as
follow:
Common Area Maintenance: $519.97 monthly; $6,239.75 annually
Real Estate Taxes: $595.61 monthly; $7,147.35 annually
Insurance: $104.00 monthly; $1,248.00 annually
Except as hereby amended, all other terms and conditions of the original
Lease Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Landlord and Tenant have caused this Lease Renewal
Agreement to be duly executed this the day and year first above written.
LANDLORD: ATLANTIC INCOME PROPERTIES, L.P.
WITNESS:
/s/ BY: /s/ Chris Boone
- ------------------------ ----------------------------------------------
ITS: President, ISC Realty Corp GP
---------------------------------------------
WITNESS: TENANT: TURNER DRUG COMPANY, INC.
/s/ Lisa A. Teagell BY: /s/ William L. Wood Pres.
- ------------------------ ----------------------------------------------
PRINT NAME: William L. Wood
---------------------------------------
<PAGE> 34
STATE OF VIRGINIA
CITY OF ROANOKE
LEASE RENEWAL AGREEMENT
THIS LEASE RENEWAL AGREEMENT is made and entered into this 4th day of
NOVEMBER, 1997, by and between ATLANTIC INCOME PROPERTIES, L.P. ("Landlord"),
and K.B.K. ENTERPRISES OF ROANOKE, INC., D/B/A FAMOUS ANTHONY'S ("Tenant"). The
Lease Premises are a part of SOUTHWEST PLAZA SHOPPING Center, located in the
City of ROANOKE, State of VIRGINIA
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into a Lease Agreement dated
JULY 22, 1992, and
WHEREAS, the parties hereto desire to amend and modify the Lease as
hereinafter set forth:
NOW THEREFORE, by mutual agreement of the parties and in consideration of
the premises and obligations hereinafter set forth, said Lease is hereby amended
and modified as follows:
Landlord and Tenant agree to renew/extend the term of said Lease for a
period of FIVE (5) years and NO (0) months, from MAY 1, 1998 to APRIL 30, 2003.
Base Rent during this period shall follow the schedule below:
Year 1: $2,576.08 monthly; $30,913.00 annually;
Year 2: $2,711.67 monthly; $32,540.00 annually;
Year 3: $2,847.25 monthly; $34,167.00 annually;
Year 4: $2,847.25 monthly; $34,167.00 annually;
Year 5: $2,847.25 monthly; $34,167.00 annually;
The pro rata share of Tenant's triple net charges have been estimated as
follows:
Common Area Maintenance: $149.14 monthly; $1,789.70 annually
Real Estate Taxes: $170.83 monthly; $2,050.02 annually
Insurance: $ 29.83 monthly; $ 357.94 annually
Except as hereby amended, all other terms and conditions of the original
Lease Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Landlord and Tenant have caused this Lease Renewal
Agreement to be duly executed this the day and year first above written.
LANDLORD: Atlantic Income Properties, L.P., A Limited
Partnership
WITNESS: By: ISC Realty Corporation
/s/ BY: /s/ J. Christopher Boone
- ------------------------ ----------------------------------------------
PRINT NAME: J. Christopher Boone
---------------------------------------
WITNESS: TENANT: K.B.K. Enterprises of Roanoke, Inc.
d/b/a Famous Anthony's
/s/ BY: /s/ Harold H. Clark
- ------------------------ ----------------------------------------------
PRINT NAME: Harold H. Clark
---------------------------------------
<PAGE> 35
STATE OF VIRGINIA
CITY OF ROANOKE
LEASE RENEWAL AGREEMENT
THIS LEASE RENEWAL AGREEMENT is made and entered into this 4th day of
NOVEMBER, 1997, by and between ATLANTIC INCOME PROPERTIES, L.P., A LIMITED
PARTNERSHIP ("Landlord"), and ZONG LE. TONG and YU HUA ZHU D/B/A CHINA GARDEN
RESTAURANT ("Tenant"). The Lease Premises are a part of SOUTHWEST PLAZA SHOPPING
Center, located in the City of ROANOKE, County of ROANOKE, State of VIRGINIA
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into a Lease Agreement dated
OCTOBER 31, 1998, and
WHEREAS, the parties hereto desire to amend and modify the Lease as
hereinafter set forth:
NOW THEREFORE, by mutual agreement of the parties and in consideration of
the premises and obligations hereinafter set forth, said Lease is hereby amended
and modified as follows:
Landlord and Tenant agree to renew/extend the term of said Lease for a
period of FIVE (5) years and NO (0) months, from MAY 1, 1998 to APRIL 30, 2003.
Base Rent during this period shall follow the schedule below;
Year 1: $2,550.00 monthly; $30,600.00 annually;
Year 2: $2,655.00 monthly; $31,860.00 annually;
Year 3: $2,760.00 monthly; $33,120.00 annually;
Year 4: $2,865.00 monthly; $34,380.00 annually;
Year 5: $2,970.00 monthly; $35,640.00 annually;
The pro rata share of Tenant's triple net charges have been estimated as
follows:
Common Area Maintenance: $300.00 monthly; $3,600.00 annually
Real Estate Taxes: $189.00 monthly; $2,268.00 annually
Insurance: $ 33.00 monthly; $ 396.00 annually
If Tenant shall receive a "B" sanitation grade by the local health
department, Tenant shall endeavor to correct any deficiencies noted by that
department in order to receive an "A" grade.
If at any time Tenant receive a "C" sanitation grade and said grade shall
not be raised to a "B" within sixty (60) days, Landlord may, at its sole
discretion, terminate this lease upon thirty (30) days' written notice.
Landlord agrees to not lease to another Chinese restaurant during Tenant's
initial lease term. However, this agreement will be null and void if at any time
Tenant is in default of the Lease Agreement.
Upon submission by Tenant of an Assignment or Sublease for consideration by
Landlord and Landlord's signature, Tenant shall simultaneously deliver to
Landlord the monetary sum of Five Hundred Dollars ($500.00) which shall be an
administrative charge for Landlord's review, investigation and consideration of
Tenant's request for assignment or subleasing. Such sum shall be refundable if
Landlord does not consent to such assignment or subleasing.
<PAGE> 36
Except as hereby amended, all other terms and conditions of the original
Lease Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Landlord and Tenant have caused this Lease Renewal
Agreement to be duly executed this the day and year first above written.
LANDLORD: Atlantic Income Properties, L.P., A Limited
Partnership
WITNESS: By: ISC Realty Corporation
/s/ BY: /s/ J. Christopher Boone
- ------------------------ ----------------------------------------------
PRINT NAME: J. Christopher Boone
---------------------------------------
WITNESS: TENANT: Zong Le Tong d/b/a China Garden Restaurant
/s/ Donna Q. Garden BY: /s/ Zong Le Tong
- ------------------------ ----------------------------------------------
Notary Public
My Commission Expires
August 31, 1999 PRINT NAME: Zong Le Tong
---------------------------------------
<PAGE> 37
EXHIBIT "D"
List of Major Tenants
1. Lincoln Center:
A. Cato;
B. Revco;
C. Bi-Lo;
D. Shoe Show;
2. Sangaree Plaza:
A. Bi-Lo; and
B. Revco.
3. Southwest Plaza:
A. Harris-Teeter;
B. Revco;
C. Firestone Tire; and
D. Wood Hardware.
<PAGE> 38
EXHIBIT "E"
Form of Estoppel Letter
Edens & Avant Properties Limited Partnership
Suite 900
1901 Main Street
Columbia, South Carolina 29201
RE: Lease between ____________ as Landlord ("Landlord") (or its predecessor in
interest) and _____________ as Tenant ("Tenant"), which was executed
___________, with respect to ___________ (the "Premises") (the "Lease")
Gentlemen:
Tenant understands that Landlord intends to sell the property which is the
subject of the Lease to Edens & Avant Properties Limited Partnership ("E&A") or
its assignee and in connection with such sale Tenant hereby certifies as
follows:
1. A complete and accurate copy of the Lease, as amended and/or assigned or
subjected to any sublease referenced above, is attached hereto as Exhibit
"A" and there are no other agreements or commitments between Tenant and
Landlord relating to the Premises other than as expressly set forth in the
attached Exhibit "A".
2. The demised premises contains ___________ net rentable square feet.
3. The Lease Commencement Date was __________________.
4. The Lease Termination Date is ____________________.
5. The Lease is in full force and effect.
6. Tenant has accepted possession of the Premises, which have been completed
in accordance with the requirements of the Lease.
7. There is no free rent or other rent concessions and no offsets or credits
against rentals or other monetary obligations under the Lease; there are no
outstanding claims or defenses to enforcement of the Lease; and all of
Landlord's obligations of an inducement nature have been fulfilled.
8. Tenant has the following option(s) to renew or extend the Lease term:
9. Tenant has the following option(s) to terminate the Lease prior to the
Termination Date:
<PAGE> 39
10. Tenant has the following option(s) to acquire the Property: St;
11. Tenant has the following option(s) for first right of refusal or first
right of offer on additional space.
12. The monthly base rental is $________ ($________ /psf annually), and rent
has been paid through the date of _________, 1997 and not prepaid
thereafter. Scheduled increases in base rental are as follows: _________.
The base year for calculating operating expenses under the Lease is
__________, and the base year expense amount is $_____ per square foot per
annum. The base tax year is 199_ and the base tax amount is $_______.
13. No breaches or defaults exist under the Lease by Tenant or, to the best of
Tenant's knowledge, by Landlord, and no event has occurred which, after the
passage of time or the giving of notice, would constitute a breach or
default under the Lease or give Tenant any offset right or claims under the
Lease.
14. There are no commissions due and payable with regard to the Lease except:
15. There are not leasing commission agreements between Tenant and any
representative, except:
16. Tenant has paid a security deposit in the amount of $_________ pursuant to
the Lease. [If none, so indicate]
17. The person executing this certification is duly authorized to execute the
same on behalf of Tenant, and this certificate is and shall be binding on
the Tenant, its successors and assigns.
Tenant acknowledges that E&A or its assignee will rely on the statements
contained herein in purchasing the property which is the subject of the Lease.
This certification is for the benefit of E&A and its successors and assigns and
any lender of E&A or its successors or assigns.
TENANT:
Date: ________________ By: ______________________________
Print Name: ______________________
Title: ___________________________
<PAGE> 40
EXHIBIT "F"
Escrow Conditions
1. In performing any of its duties hereunder, Escrow Agent shall not incur
any liability to anyone for any damages, losses, or expenses, including, without
limitation, (i) any action taken or omitted upon advice of its legal counsel
given with respect to any questions relating to the duties and responsibilities
of Escrow Agent under this agreement; or (ii) any action taken or omitted in
reliance upon any instrument, including any written notice or instruction
provided for in this agreement. Escrow Agent may rely upon any instrument,
pursuant to clause (ii) in the preceding sentence, as being duly executed,
valid, and effective, and as containing accurate information and genuine
signatures.
2. Notwithstanding anything in this agreement to the contrary, in the event
of a dispute between Seller and Purchaser arising prior to or at the time of the
delivery or other disposition of the Earnest Money by Escrow Agent pursuant
hereto, which dispute shall be sufficient, in the sole discretion of Escrow
Agent, to justify its doing so, Escrow Agent shall be entitled to tender the
Earnest Money into the registry or custody of any court of competent
jurisdiction, together with such legal pleadings as it may deem appropriate, and
thereupon Escrow Agent shall be discharged from all further duties and
liabilities under this agreement. Any such legal action may be brought in such
court as Escrow Agent shall determine to have jurisdiction thereof. Escrow
Agent's determination of whether a dispute exists between Seller and Purchaser
shall be binding and conclusive upon all parties hereto, notwithstanding any
contention that no dispute exists. All costs and expenses incurred by Escrow
Agent in taking any action pursuant to this paragraph shall be covered by and
paid pursuant to the indemnification of Escrow Agent contained in the following
paragraph.
3. Purchaser and Seller shall, and do hereby, jointly and severally
indemnify, defend, and hold Escrow Agent harmless from, against, and in respect
of: (i ) any and all demands, judgments, expenses, costs, losses, injuries, or
claims of any kind whatsoever whether existing on the date hereof or hereafter
arising, incurred by Escrow Agent by reason of, from, or in connection with this
agreement or any action taken or not taken by Escrow Agent under or in
connection with this agreement unless such act or failure to act constituted
gross negligence or willful misconduct on the part of Escrow Agent; and (ii) any
and all counsel fees, expenses, disbursements of counsel, amounts of judgments,
demands, assessments, costs, fines, or penalties, and amounts paid in compromise
or settlement, incurred or sustained by Escrow Agent by reason of, in connection
with, or as a result of any claim, demand, action, suit, investigation, or
proceeding (or any appeal thereof or relating thereto or other review thereof)
incident to the matters covered by the immediately preceding clause (i).
4. If Escrow Agent shall notify Seller and Purchaser of its desire to be
relieved of any further duties and liabilities hereunder, then Escrow Agent
shall deliver the Earnest Money to a successor escrow agent designated by Seller
and Purchaser. If Seller and Purchaser shall fail to agree upon and designate a
successor escrow agent within ten ( 10) days after having been requested by
Escrow Agent to do so, then Escrow Agent shall in its discretion designate the
successor escrow agent. The successor escrow agent designated by Seller and
Purchaser or by Escrow Agent, as the
<PAGE> 41
case may be, shall be a bank or trust company having trust powers in good
standing and located in Columbia, South Carolina, and shall agree to be bound by
all the terms and conditions of this agreement. Immediately upon agreement by
the successor escrow agent to be bound by all the terms and conditions of this
agreement, the original Escrow Agent shall be relieved of any and all duties and
liabilities under or in connection with this agreement; provided, however, that
no successor escrow agent shall assume any liability for the acts or omissions
of its predecessor escrow agent(s) hereunder.
5. The agency created in Escrow Agent hereby is coupled with an interest of
Seller and Purchaser and shall be binding upon and enforceable against the
respective heirs, successors, legal representatives and assigns of Seller and
Purchaser. This escrow shall not be revoked or terminated by reason of the
death, incompetency, dissolution, or liquidation of Seller or Purchaser, but
shall continue to be binding upon and enforceable against the respective heirs,
successors, legal representatives and assigns of Seller and Purchaser in the
manner provided herein. In the event of the death, incompetency, dissolution, or
liquidation of Seller or Purchaser, Escrow Agent may rely and act upon any
notices permitted or required to be given hereunder from any person, firm,
partnership, or corporation believed by Escrow Agent in good faith to be the
heir, successor, legal representative or assign of such dissolved or liquidated
party.
6. The address for the receipt of notices and other communications by
Escrow Agent hereunder is as follows:
First American Title Insurance Company
1331 Elmwood Avenue, Suite 202
Columbia, SC 29201
Attn: Charles E. Hedgepath, Esquire
Telecopy: (803) 765-1576
<PAGE> 1
EXHIBIT 99.1
ATLANTIC INCOME PROPERTIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Pro Forma Adj.
To Remove Pro Forma
Sold Assets 12/31/97
12/31/97 (unaudited) (unaudited)
------------- ---------------------------------
<S> <C> <C> <C> <C>
ASSETS
Rental Properties (at cost):
Land $ 4,237,041 [1] $ (2,399,041) $ 1,838,000
Buildings and improvements 18,300,368 [1] (13,111,241) 5,189,127
------------- ---------------------------------
22,537,409 [1] (15,510,282) 7,027,127
Accumulated Depreciation (3,944,932) [1] 2,555,701 (1,389,231)
------------- ---------------------------------
18,592,477 [1] (12,954,581) 5,637,896
Cash and cash equivalents 283,889 [1] 283,889
Restricted Cash 122,066 (89,948) 32,118
Accounts Receivable 308,641 [1] (266,592) 42,049
Net deferred Loan and Acquisition Costs 3,665 3,665
------------- ---------------------------------
$ 19,310,738 $ (13,311,121) $ 5,999,617
============= =================================
LIABILITIES AND PARTNERS' CAPITAL
Debt $ 13,829,851 [1] $ (8,201,755) $ 5,628,096
Payables to general partners and affiliates 572,878 0 572,878
Other liabilities 526,787 [1] (143,187) 383,600
------------- ---------------------------------
14,929,516 [1] (8,344,942) 6,584,574
Partners' capital:
General partners 3,179 [2] (49,662) (46,483)
Limited partners 4,378,043 [2] (4,916,517) (538,474)
------------- ---------------------------------
Total partners' capital 4,381,222 (4,966,179) (584,957)
------------- --------------------------------
$ 19,310,738 $ (13,311,121) $ 5,998,617
============= =================================
</TABLE>
- -----------------------------------------------------
[1] The pro forma entries remove the book value of the assets sold and
certain other receivables, payables and mortgages related to those
properties.
[2] The estimated distributions and gain on sale approximate the unaudited
results from the sale.
1
<PAGE> 2
ATLANTIC INCOME PROPERTIES 1
CONSOLIDATED STATEMENT OF OPERATIONS 1
FOR THE YEAR ENDED DECEMBER 31, 1997 1
<TABLE>
<CAPTION>
Proforma Pro Forma
Adjustments Year Ended
Year Ended To Remove December 31,
December 31, Sold Assets 1997
1997 (unaudited) (unaudited)
-------------------------------------------------
<S> <C> <C> <C>
Income:
Rent $ 3,131,418 $ (2,122,698) $ 1,008,720
Interest and other 21,622 (3,970) 17,652
-------------------------------------------------
Total Revenues 3,153,040 (2,126,668) 1,026,372
Expenses:
Interest 1,340,972 (789,359) 551,613
Depreciation and Amortization 15,652 (15,652) 0
Operations and maintenance 985,395 (453,279) 532,116
Write-down of rental property 1,700,000 0 1,700,000
-------------------------------------------------
Total operating expenses 4,042,019 (1,258,290) 2,783,729
-------------------------------------------------
Net income (loss) (888,979) (868,378) (1,757,357)
Net income allocated to general partners $ (8,890) $ (8,684) $ (17,574)
=================================================
Net income allocated to limited partners $ (880,089) $ (859,694) $ (1,739,783)
=================================================
Net income per limited partner unit $ (1.73) $ (1.69) $ 3.42
=================================================
</TABLE>
