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FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _______ to _______
Commission file number 0-18382
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
North Carolina 56-1623861
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
INTERSTATE TOWER
SUITE 1500
P. O. BOX 1012
CHARLOTTE, NORTH CAROLINA 28201-1012
(Address of principal executive offices)
(Zip Code)
(704)379-9164
Registrant's telephone number, including area code:
NOT APPLICABLE
(Former Name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to the foregoing filing
requirements for the past 90 days.
Yes X No
----- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
508,594 Beneficial Unit Certificates outstanding as of July 31, 1997.
Page 1 of 9 sequentially numbered pages
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
AMENDED
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
1997 December 31,
(unaudited) 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 157,891 $ 266,603
Restricted cash and cash equivalents 203,274 94,699
Receivables, net of allowance 198,670 309,164
Rental property:
Land 4,567,041 4,567,041
Buildings and Improvements 19,610,159 19,262,045
------------ ------------
24,177,200 23,829,086
Less accumulated depreciation (3,944,932) (3,944,932)
------------ ------------
20,232,268 19,884,154
Deferred loan costs, net of accumulated
amortization of $93,350 and $206,849 at June 30,
1997, and December 31, 1996, respectively 58,987 19,317
Other 40,540 0
------------ ------------
$ 20,891,630 $ 20,573,937
============ ============
LIABILITIES AND PARTNERS' EQUITY
Long-term debt $ 14,041,559 $ 14,250,705
Short-term borrowings 150,000 0
Accounts payable and accrued expenses 353,417 247,436
Due to general partners and affiliates 481,105 493,576
Tenants' security deposits 56,374 55,085
------------ ------------
15,082,455 15,046,802
Partners' equity:
General partners 32,657 12,069
Limited Partners beneficial unit certificates,
authorized 1,000,000 units, issued and outstanding
508,594 and 508,594 units at June 30, 1997, and
December 31, 1996, respectively 5,776,517 5,515,066
------------ ------------
5,809,174 5,527,135
------------ ------------
$ 20,891,629 $ 20,573,937
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements
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<PAGE> 3
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
AMENDED
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Revenue:
Rental Income $758,160 $ 689,017 $1,499,287 $ 1,429,381
Interest and other income 4,763 12,971 10,201 22,023
-------- ----------- ---------- -----------
762,923 701,988 1,509,488 1,451,404
Expenses:
Interest 340,968 327,087 660,326 655,178
Depreciation and amortization 4,144 178,185 11,176 355,908
Other operating expenses 196,992 228,736 426,235 461,081
-------- ----------- ---------- -----------
542,104 734,008 1,097,737 1,472,167
-------- ----------- ---------- -----------
NET INCOME (LOSS) $220,819 ($ 32,020) $ 411,751 ($ 20,763)
======== =========== ========== ===========
Net income (loss) per Beneficial
Unit Certificate $ 0.43 ($ 0.06) $ 0.80 ($ 0.04)
======== =========== ========== ===========
Beneficial Unit Certificates
Outstanding--weighted average 508,594 508,594 508,594 508,594
======== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE> 4
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
AMENDED
STATEMENTS OF PARTNERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997, AND 1996
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
--------- ------------ -----------
<S> <C> <C> <C>
Partners' equity at December 31, 1995 $ 5,344 $ 5,646,985 $ 5,652,329
Net income for the six months ended
June 30, 1996 (208) (20,555) ($ 20,763)
Distributions to partners 0 (132,491) ($ 132,491)
-------- ----------- -----------
PARTNERS' EQUITY AT
JUNE 30, 1996 $ 5,136 $ 5,493,939 $ 5,499,075
======== =========== ===========
Partners' equity at December 31, 1996 $ 12,069 $ 5,515,066 $ 5,527,135
Net income for the six months ended
June 30, 1997 20,588 391,163 $ 411,751
Distributions to partners 0 (129,712) (129,712)
-------- ----------- -----------
PARTNERS' EQUITY AT
JUNE 30, 1997 $ 32,657 $ 5,776,517 $ 5,809,174
======== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE> 5
ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
AMENDED
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 411,751 ($ 20,763)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 11,176 355,908
Decrease in rents receivable, net 110,494 252,194
Decrease in amounts due to General Partners and Affiliates (12,471) (18,000)
Increase in accounts payable and accrued expenses 105,981 147,809
Increase in restricted cash and cash equivalents (107,286) (80,359)
Increase in other assets (40,540) (21,240)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 479,105 615,549
--------- ---------
INVESTING ACTIVITIES
Improvements to rental properties (348,114) (214,052)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (348,114) (214,052)
--------- ---------
FINANCING ACTIVITIES
Increase in deferred building and loan costs (50,845) 0
Mortgage principal reduction (209,146) (197,257)
Proceeds from short-term borrowings 150,000 0
Distributions to limited partners (129,712) (132,491)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (239,703) (329,748)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (108,712) 71,749
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 266,603 266,603
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 157,891 $ 338,352
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements
5
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES.
The Registrant paid a distribution on July 15, 1997, for the quarter ended June
30, 1997, at an annualized rate of 2.5%. The total distribution was $63,605.
Management anticipates that quarterly distributions will be maintained at this
level.
At June 30, 1997, the Registrant held $157,891 as operating cash. These funds
will continue to be distributed to the limited partners at the rate discussed
above and will also be maintained for any necessary capital expenditures.
The Partnership has been unsuccessful in refinancing the mortgage note payable
secured by West Ridge Plaza, originally maturing in December 1995 and extended
to December 1996. However, the Partnership has received verbal confirmation from
the lender that loan payments will be accepted through December 31, 1997. The
Partnership continues to make normal monthly payments of principal and interest
on this loan.
The mortgage notes payable secured by Southwest Plaza and Lincoln Center matured
in April 1997 and were extended to December 15, 1997. As part of the extension,
the interest rates on the notes were increased from 8.4% to 10.0%.
In light of the expiration of extension agreements for loans secured by West
Ridge Plaza, Southwest Plaza and Lincoln Center, the general partners will seek
to either payoff or extend the maturity date of the loans upon expiration. The
payoff cannot occur without either selling the properties or securing additional
debt financing, which the general partners believe is currently available, in
amounts and upon terms acceptable to the Partnership.
On April 9, 1997, the Registrant entered into a short-term borrowing agreement
with a large regional bank under which the bank agreed to extend a $250,000 line
of credit to the Registrant. This line of credit is payable on demand and
matures on December 31, 1997. As of June 30, 1997, the Registrant had drawn
$150,000 under this line, however, at the date of this filing, the balance on
the line was $75,000.
RESULTS OF OPERATIONS.
SIX MONTHS ENDED JUNE 30, 1997, AS COMPARED TO THE SIX MONTHS ENDED JUNE 30,
1996
The Partnership reported net income for the six months ended June 30, 1997, of
$411,751 as compared to a net loss in the same period of 1996 of $20,763. The
decrease is due to the following:
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Rental income increased from $1,429,381 for the six months ended June 30, 1996,
to $1,499,287 for the six months ended June 30, 1997, primarily due to expense
reimbursements received in the second quarter of 1997 but not 1996.Interest and
other income decreased from $22,023 to $10,201 for the six months ended June 30,
1996, and June 30, 1997, respectively, as a result of lower cash reserves
earning income in 1997.
Depreciation and amortization expense decreased $344,732 to $11,176 for the
period ending June 30, 1997 in accordance with the accounting policy to
discontinue depreciating assets held for sale. Other operating expenses
decreased from $461,081 for the six months ended June 30, 1996, to $426,235 for
the six months ended June 30, 1997. The decrease results primarily from lower
common area maintenance expense and lower lease commissions. Paving repairs and
landscaping at Westridge and Lincoln as well as snow removal costs at Westridge
and Southwest contributed to the higher common area maintenance expense in 1996.
THREE MONTHS ENDED JUNE 30, 1997, AS COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1996
The Partnership reported net income of $220,819 for the three months ended June
30, 1997, as compared to a net loss of $32,020 for the same period in 1996.
Rental income increased $69,143 for the three months period ended June 30, 1997,
as compared to the same period in 1996 due to higher expense recoveries
collected in the second quarter of 1997.
Depreciation and amortization expense decreased $174,041 to $4,144 for the three
month period ending June 30, 1997 in accordance with the accounting policy to
discontinue depreciating assets held for sale. Interest expense increased from
$327,087 to $340,968 for the three months ended June 30, 1997, and 1996,
respectively. This was due primarily to the additional borrowings under the line
of credit. Operating expenses decreased from $228,736 for the three months ended
June 30, 1996, to $196,992 for the same period in 1997. The increase results
from an decrease in common area maintenance, building repairs expense, and
leasing commissions as explained above.
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PART II. OTHER INFORMATION
ITEM 5 - OTHER INFORMATION
On July 11, 1997, the General Partners entered into a Real Estate Purchase
Agreement to sell the five Partnership properties for a net sale price of
$22,000,000. The sale price would be paid in a combination of cash and the
assumption of debt. Under the Purchase Agreement, the buyer has a due diligence
period from July 11, 1997, until August 25, 1997, and must close by September
24, 1997. There are numerous conditions required under the contract and there is
no guarantee that the sale will be successfully completed.
If the sale is not completed and the marketing effort of the brokers does not
generate an offer that the general partners feel reflects the properties'
inherent value, then the properties may not be marketed for sale until such time
as the general partners feel that market conditions have improved, making the
realization of an acceptable offer likely.
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ATLANTIC INCOME PROPERTIES LIMITED PARTNERSHIP
AMENDED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Atlantic Income Properties Limited Partnership
(Registrant)
By: ISC Realty Corporation,
General Partner and
Principal Financial Officer
of the Registrant
Date: November 18, 1997 By: /s/ J. Christopher Boone
------------------ ------------------------
J. Christopher Boone,
President
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