FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-17412
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Secured Income L.P.
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(Exact name of Registrant as specified in its charter)
Delaware 06-1185846
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
599 West Putnam Avenue
Greenwich, Connecticut 06830
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (203) 869-0900
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 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes X No
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SECURED INCOME L.P. AND SUBSIDIARIES
Part I - Financial Information
Table of Contents
Item 1 Financial Statements Page
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Consolidated Balance Sheets 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3 Quantitative and Qualitative Disclosure about Market Risk 8
SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2001
(Unaudited) December 31, 2000
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ASSETS
Property and equipment (net of accumulated
depreciation of $19,452,112 and $19,070,644) $ 25,234,708 $ 25,616,176
Cash and cash equivalents 4,726,386 4,320,459
Restricted assets and funded reserves 853,299 531,606
Tenant security deposits 554,298 565,654
Accounts receivable 26,626 87,403
Prepaid expenses 333,825 628,819
Intangible assets, net of accumulated amortization 2,318,438 2,349,492
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$ 34,047,580 $ 34,099,609
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LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgages payable $ 42,209,695 $ 42,321,643
Accounts payable and accrued expenses 292,920 466,091
Tenant security deposits payable 554,298 535,568
Due to general partners and affiliates 666,876 651,871
Deferred revenue 116,552 116,552
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43,840,341 44,091,725
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Partners' deficit
Limited partners (8,219,480) (8,219,480)
General partners (1,573,281) (1,772,636)
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(9,792,761) (9,992,116)
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$ 34,047,580 $ 34,099,609
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See notes to consolidated financial statements.
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SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
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REVENUE
Rental $ 2,009,934 $ 1,887,829
Interest 36,691 42,316
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TOTAL REVENUE 2,046,625 1,930,145
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EXPENSES
Administrative and management 164,918 188,690
Operating and maintenance 367,481 277,226
Taxes and insurance 325,438 323,061
Financial 576,911 587,846
Depreciation and amortization 412,522 438,991
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TOTAL EXPENSES 1,847,270 1,815,814
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NET EARNINGS $ 199,355 $ 114,331
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NET EARNINGS ATTRIBUTABLE TO
Limited partners $ - $ -
General partners 199,355 114,331
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$ 199,355 $ 114,331
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NET EARNINGS ALLOCATED PER UNIT OF
LIMITED PARTNERSHIP INTEREST $ - $ -
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See notes to consolidated financial statements.
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SECURED INCOME L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 199,355 $ 114,331
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 412,522 438,991
Increase in restricted assets and funded reserves (321,693) (614,184)
Decrease (increase) in tenant security deposits 11,356 (5,609)
Decrease (increase) in accounts receivable 60,777 (25,013)
Decrease in prepaid expenses 294,994 284,363
Increase (decrease) in accounts payable and
accrued expenses (173,171) 149,924
Increase in tenant security deposits payable 18,730 7,252
Increase in due to general partners and affiliates 15,005 58,405
Increase in intangible assets (55,375)
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Net cash provided by operating activities 517,875 353,085
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages (111,948) (121,279)
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Net cash used in financing activities (111,948) (121,279)
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NET INCREASE IN CASH AND CASH EQUIVALENTS 405,927 231,806
Cash and cash equivalents at beginning of period 4,320,459 1,910,060
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,726,386 $ 2,141,866
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SUPPLEMENTAL INFORMATION
Financial expenses paid $ 577,427 $ 545,339
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See notes to consolidated financial statements.
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SECURED INCOME L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(Unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. They do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements. The results of operations are impacted significantly
by the results of operations of the Carrollton and Columbia Partnerships,
which is provided on an unaudited basis during interim periods. Accordingly,
the accompanying consolidated financial statements are dependent on such
unaudited information. In the opinion of the General Partners, the
consolidated financial statements include all adjustments necessary to
reflect fairly the results of the interim periods presented. All adjustments
are of a normal recurring nature. No significant events have occurred
subsequent to December 31, 2000 and no material contingencies exist which
would require additional disclosure in the report under Regulation S-X, Rule
10-01 paragraph A-5.
The results of operations for the three months ended March 31, 2001 are not
necessarily indicative of the results to be expected for the entire year.
2. Additional information, including the audited December 31, 2000 Consolidated
Financial Statements and the Summary of Significant Accounting Policies, is
included in Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 on file with the Securities and Exchange Commission.
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SECURED INCOME L.P. AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership's primary sources of funds are rents generated by the Operating
Partnerships and interest derived from investments and deposits, a portion of
which are restricted in accordance with the terms of the mortgages of the
Operating Partnerships. The Partnership's investments are highly illiquid.
The Partnership is not expected to have access to additional sources of
financing. Accordingly, if unforeseen circumstances arise that cause an
Operating Partnership to require additional capital, potential sources from
which such capital needs will be able to be satisfied (other than reserves)
would be additional equity contributions of the Operating General Partners or
other equity reserves, if any, which could adversely impact the operating cash
flow of the Operating Partnerships.
During the three months ended March 31, 2001, as a result of the cash flows
generated by the operations of the Complexes, cash and cash equivalents
increased by approximately $406,000. Mortgages payable decreased due to
principal amortization of approximately $112,000. Property and equipment
decreased by approximately $381,000 due to depreciation, while intangible assets
decreased by approximately $31,000 due to amortization. Property and equipment
and intangible assets are expected to decrease annually as the cost of these
assets is allocated to future periods over their remaining lives. Prepaid
expenses and accounts payable and accrued expenses decreased in the ordinary
course of operations.
The Partnership anticipates making a quarterly distribution on or about May 15,
2001 of approximately $.30 per Unit to Unit holders of record as of March 31,
2001, resulting primarily from operating cash flow generated by the Operating
Partnerships. The Partnership intends to make regular quarterly distributions on
an ongoing basis to the extent distributions are received from the Operating
Partnerships. There can be no assurance that the Operating Partnerships will
continue to generate cash flow sufficient to make regular quarterly
distributions.
Results of Operations
Three Months Ended March 31, 2001
During the three months ended March 31, 2001, the Columbia Partnership and the
Carrollton Partnership generated income from operating activities, before
financial expenses, of approximately $893,000 and approximately $289,000,
respectively. Mortgage principal payments during the period for the Columbia
Partnership and the Carrollton Partnership were approximately $77,000 and
approximately $35,000, respectively. After considering the respective mandatory
mortgage principal payments and required deposits to mortgage escrows, among
other things, the Complexes generated combined cash flow of approximately
$472,000 during the three months ended March 31, 2001. However, there can be no
assurance that the level of cash flow generated by the Complexes during the
three months ended March 31, 2001 will continue in future periods.
Results of operations improved for the three months ended March 31, 2001 as
compared to the three months ended March 31, 2000. Although certain fees
incurred in connection with the Columbia Partnership's mortgages have been
significantly reduced as a result of the June 2000 refinancing (the
"Refinancing"), the savings was offset by the interest incurred on the
additional borrowings in connection with the Refinancing. Operating and
maintenance expenses increased for the three months ended March 31, 2001 as
compared to the three months ended March 31, 2000 primarily as a result of
scheduled repairs and improvements.
As of March 31, 2001, the occupancy of Fieldpointe Apartments (Carrollton) was
approximately 98% and the occupancy of The Westmont (Columbia) was approximately
99% as to residential units and 100% as to commercial space. The future
operating results of the Complexes will be extremely dependent on market
conditions and therefore may be subject to significant volatility.
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SECURED INCOME L.P. AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Three Months Ended March 31, 2000
During the three months ended March 31, 2000, the Columbia Partnership and the
Carrollton Partnership generated income from operating activities, before
financial expenses, of approximately $884,000 and approximately $265,000,
respectively. Mortgage principal payments during the period for the Columbia
Partnership and the Carrollton Partnership were approximately $88,000 and
approximately $33,000, respectively. Prior to the Refinancing, Columbia was
required to deposit certain operating cash flows to prescribed escrow accounts
held by the lender to be utilized as described in the mortgage documents and the
lender was entitled to a credit enhancement fee of 2.5% per annum based on the
outstanding loan balance. Deposits to such escrows during the three months ended
March 31, 2000 were approximately $296,000 and the Columbia Partnership incurred
approximately $156,000 in connection with the credit enhancement fee. After
considering the respective mandatory mortgage principal payments, required
deposits to mortgage escrows and payments for the credit enhancement fee, among
other things, the Complexes generated combined cash flow of approximately
$123,000 during the three months ended March 31, 2000. As of March 31, 2000, the
occupancy of Fieldpointe Apartments was approximately 96% and the occupancy of
The Westmont was approximately 99% as to residential units and 100% as to
commercial space.
Item 3 Quantitative and Qualitative Disclosure about Market Risk
The Partnership has market risk sensitivity with regard to financial instruments
concerning potential interest rate fluctuations in connection with the low
floater rates associated with the Columbia Partnership's first mortgage.
Accordingly, a fluctuation in the low-floater interest rates of .25% would have
a $60,500 annualized impact on the Partnership's results of operations.
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SECURED INCOME L.P. AND SUBSIDIARIES
Part II - Other Information
Item 1 Legal Proceedings
Registrant is not aware of any material legal proceedings.
Item 2 Changes in Securities
None
Item 3 Defaults upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
A Current Report on Form 8-K was filed on April 30, 2001 relating to
the distribution of $0.30 per Unit of limited partnership interest to Unit
holders of record as of March 31, 2001 (see discussion in Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of Operations).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SECURED INCOME L.P.
By: Wilder Richman Resources Corporation
General Partner
Date: May 10, 2001 /s/ Richard Paul Richman
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Richard Paul Richman
President, Chief Executive
Officer and Director
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