ITEM 1. BUSINESS
Background
Southeast Acquisitions I, L.P. (the "Partnership") was formed on December 5, 1986, as a Delaware limited partnership. On January 2, 1987, the Partnership acquired 202.72 acres of unimproved land (the "Property") near Columbia, South Carolina. The Partnership's primary business objective is to realize appreciation in the value of the Property by holding the Property for investment and eventual sale, although there is no assurance that this will be attained. The Partnership terminated on December 31, 2000. There are currently no plans to extend the term of the Partnership. Since there is land remaining at December 31, 2000, the current General Partner will continue to run operations through the liquidation mode.
The Partnership's public offering of 4,225 units of limited partnership interest ("Units") commenced on May 14, 1987 and terminated on June 5, 1987. As of the close of the offering, the Partnership had raised $4,225,000 through the sale of the 4,225 Units.
The Partnership has been marketing the Property and expects that it will dispose of the Property as conditions warrant. The remaining portion of the Property may be sold in a single sale or divided into parcels which will be sold separately. The timing and manner of sale will be determined by Southern Management Group, LLC, the General Partner of the Partnership. The General Partner generally has the right to sell the Property, or portions thereof, without the consent of the Limited Partners. The Partnership Agreement provides, however, that a majority in interest of the Limited Partners must consent to the sale or disposition at one time of 60% or more of the real estate acreage held by the Partnership as of September 22, 1997, unless the sale or disposition is being made in connection with the liquidation of the Partnership pursuant to the Partnership Agreement or the net proceeds of the sale, when distributed in accordance with the Partnership Agreement, will be sufficient to provide the Limited Partners with distributions equal to the acquisition cost of the assets sold.
The General Partner believes that the Partnership's cash reserves will be sufficient to last through the liquidation mode assuming no significant increases in expenses. However, if the reserves are exhausted and the Partnership is unable to borrow funds, the Partnership may have to sell the Property on unfavorable terms.
At a special meeting of the Limited Partners held on November 6, 1997, the Partnership Agreement was amended to (i) extend the term of the Partnership from its original expiration date of December 31, 1997 to December 31, 2000; (ii) substitute Southern Management Group, LLC for Southeast Acquisitions, Inc. as the general partner of the Partnership; (iii) authorize new commissions and new management fees for the new General Partner; (iv) give the new General Partner the exclusive right to sell Partnership property; and (v) modify the Partnership Agreement to require that a majority in interest of the Limited Partners must consent to the sale or disposition at one time of 60% or more of the real estate acreage held by the Partnership as of September 22, 1997 unless the sale or disposition is being made in connection with the liquidation of the Partnership pursuant to the Partnership Agreement or the net proceeds of the sale, when distributed in accordance with the Partnership Agreement, will be sufficient to provide the Limited Partners with distributions equal to the acquisition cost of the assets sold.
Material Recent Developments
There have been no sales nor any meaningful offers received on the Property during 2000. The Property has been listed through an agreement with a Columbia agent, Colliers Keenan. Subsequent to the year ended December 31, 2000, the Partnership has received an independent offer to purchase all of the remaining land for $2,000,000. This sale is expected to close by May, 2001.
Employees
The Partnership presently has no employees. The General Partner manages and controls the affairs of the Partnership. (See Part III, Item 10, Directors and Executive Officers of the Partnership).
Competition
The General Partner believes that there is significant direct competition within a five-mile radius of the Property. The Property consists of approximately 186 acres of undeveloped land situated in the southwest quadrant of the intersection of Interstate 77 ("I-77") and Killian Road. Killian Road is one of only three interchanges with I-77 in the Columbia standard metropolitan statistical area.
Undeveloped land intended for industrial use is abundant in northern Richland County. The South Carolina Department of Commerce has provided information showing about 5,000 acres of available industrial sites in the I-77 Business Corridor, all of which are within five miles of the Partnership's Property. These include sites known as Barnett, IBM, Sony, and Northpoint Business Park. Many of these sites have rail, internal roads and all utilities. There have been very few completed sales since 1997. Thus, competitive conditions remain abundant.
The former general partner was marketing the Property and in March of 1996 the Property was designated as part of the State of South Carolina's Enterprise Zone. This designation is at least partially the result of numerous conversations with the Department of Commerce during 1996. By being awarded this designation, it means that special tax and other incentives will be available to industrial users who locate on the Partnership's Property.
Trademarks and Patents
The Partnership has no trademarks or patents.
ITEM 2.
ITEM 2. PROPERTY
Other than the approximately 186 acres of undeveloped land discussed above, the partnership owns no other properties.
During 1996, management of the prior general partner commissioned an appraisal of the Property in an ongoing effort to assess its current market value and the best ways to market and sell the Property. The appraiser evaluated a bulk sale of the Property, assuming a phased sell out of the land, which resulted in a value as of September 30, 1996 of $2,800,000 ($13,800 per acre).
The findings of the appraiser were then supported by the information gathered as a result of the former general partner's conversations and meetings with the appraiser, brokers, developers in the area and the South Carolina Department of Commerce.
A write-down of the Property of $457,996 was recognized during the last quarter of the year ended December 31, 2000. The December 31, 2000 carrying value was based on a pending contract for the sale of all of the Property, less cost to sell, estimated at 10% of fair value.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not directly a party to, nor is the Partnership's Property directly the subject of, any material legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders in 2000.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE PARTNERSHIP'S UNITS OF LIMITED PARTNERSHIP INTEREST AND RELATED SECURITY HOLDER MATTERS
There is no established public trading market for the Units and it is not anticipated that any will develop in the future. The Partnership commenced an offering to the public on May 14, 1987 of 4,225 Units of limited Partnership interests. The offering of $4,225,000 was fully subscribed and terminated on June 5, 1987. As of December 31, 2000, there were 205 limited partners in the Partnership.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
* Includes a provision for loss on land of $457,996.00.
** Includes a provision for loss on land of $996,645.00.
SELECTED QUARTERLY FINANCIAL DATA
* In the real estate industry, costs of sales are netted in the gain on sale of land and are included in operating revenues; therefore, there is no breakdown for gross profit.
** Includes a provision for loss on land of $457,996.00.
*** Net income (loss) per unit of limited partnership interest for the first three quarters of 1999 and 2000 have been restated to conform to the year-end presentation.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Background
The Partnership was formed to acquire and realize appreciation in the Property by holding it for investment and eventual sale. However, there can be no assurance that the Partnership's objectives will be realized.
Results of Operations
The Partnership had no operations from the date of its formation on December 5, 1986 until January 2, 1987 when it acquired the Property. Since its acquisition of the Property, the Partnership offered and sold 4,225 Units of limited Partnership interests and obtained the rezoning of the Property.
2000 Compared to 1999
The Partnership's activities for fiscal years 2000 and 1999 were primarily focused on selling the Property. During 2000, as in 1999, no property was sold. The income for 2000 consisted only of $1,029 of interest income compared to $1,829 of interest income in 1999. There were no distributions during 2000 or 1999.
In 2000 the Partnership had $26,668 in expenses compared to $26,303 in 1999. These expenses included $17,611 in general and administrative fees, $8,100 in management fees, $288 in real estate taxes and $669 for insurance. As previously mentioned in Item 2, the Partnership also recognized a provision for loss on land of $457,996 during 2000.
1999 Compared to 1998
The Partnership's activities for fiscal years 1999 and 1998 were primarily focused on selling the Property. During 1999 no property was sold, nor were any meaningful offers received, and income consisted only of $1,829 of interest income. During 1998 the Partnership sold 16.918 acres of land at $22,000 per acre and had interest income of $4,350. This sale resulted in a gain of $71,190. During 1998 a distribution of $60 per Unit was made to the Limited Partners. There were no distributions during 1999.
In 1999 the Partnership had $26,303 in expenses compared to $40,884 in 1998. These expenses included $17,289 in general and administrative fees, $8,100 in management fees, $281 in real estate taxes, $303 for insurance and $330 for Delaware franchise and excise tax. The decrease in general and administrative expenses from 1998 to 1999 resulted primarily from a decrease of $14,378 for legal and accounting fees which resulted from a decreased dependency on legal and accounting professionals for assistance in preparing Securities & Exchange Commission reports.
An appraisal of the Property was commissioned by the former general partner in 1996 since the last appraisal prior to such time was four years old. The 1996 appraiser determined the fair value for the Property to be $2,800,000. The prior appraiser had established a value of $4,055,000. The former general partner reviewed the assumptions and conclusions of the appraisal and met with the appraiser, numerous local real estate professionals, the Central Carolina Economic Development Alliance and the South Carolina Department of Commerce to confirm the reasonableness of the appraisal. Based upon the results of these activities, the former general partner concluded that the 1996 appraisal was a reasonable approximation of the Property's market value at the time. As a result, in 1996 the Partnership adjusted the carrying value of the Property to reflect its fair value, less estimated disposition costs, in accordance with generally accepted accounting principles for land that is held for sale by recording a write-down of $996,645.
Inflation did not have a material impact on operations during 2,000, 1999 and 1998.
Liquidity And Capital Resources
Cash generated by operating activities varies from year to year based on the level of land sale activity. The Partnership had cash reserves of $24,814 at December 31, 2000. The General Partner believes that the Partnership has sufficient cash reserves to cover normal partnership expenses through the liquidation mode. However, if additional expenses are incurred, the reserves may be inadequate to cover the Partnership's operating expenses. If the reserves are exhausted, the Partnership may have to dispose of some of the Property or incur indebtedness on unfavorable terms.
Year 2000 Compliance
The Partnership's operations are not dependent in any meaningful way on computer hardware or software. The "Year 2000 Issue" generally refers to the inability of computer software or hardware to recognize years in more than two digits. As a result, the year 2000 would appear as "00" and may be viewed by the computer as the year 1900. There was no effect on the Partnership's accounting systems or the Limited Partner registration records from the "Year 2000 Issue."
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the years ended December 31, 2000, 1999 and 1998, together with the report of the Partnership's independent auditors, Williams Benator & Libby, LLP, are included in this Form 10-K.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III.
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Partnership does not have any directors or officers. The General Partner manages and controls the affairs of the Partnership and has responsibility for all aspects of the Partnership's operations. The current members and executive officers and directors of the General Partner are identified and described below.
The General Partner is a Tennessee limited liability company whose members are Richard W. Sorenson, who owns a 50% interest in the General Partner and has a 51% voting right, and Southeast Venture LLC, a Tennessee limited liability company which owns 50% and has a 49% voting right.
Mr. Sorenson, age 75 has over 39 years experience in several real estate disciplines, including land acquisition and development, development of office buildings, shopping centers, warehouses and medical facilities. All of these activities occurred in the southeastern United States.
Mr. Sorenson was President of Phoenix Investment Company ("Phoenix"), a publicly owned, Atlanta based real estate development and investment firm from 1965 to 1970. Concurrent with his employment at Phoenix, he was President of First Atlanta Realty Fund, a publicly owned real estate investment trust. During his tenure with the trust, he served as a Trustee of the National Association of Real Estate Investment Trusts.
Following his departure from Phoenix in 1970, Mr. Sorenson became Vice President of Cousins Properties in Atlanta, where he was responsible for development of office buildings, shopping centers and apartments until 1971. Until forming Southeast Venture Companies ("SV") in 1979, Mr. Sorenson was an independent real estate developer.
Mr. Sorenson was co-founder of SV in 1979. In 1992, substantially all of the assets of SV were sold to Southeast Venture Corporation.
Mr. Sorenson is a graduate of the Northwestern University Business School with a major in real estate.
The other member of the General Partner is Southeast Venture LLC ("SVLLC"). The officers and key employees of SVLLC include the following:
Paul J. Plummer, age 51. Mr. Plummer is a registered architect and serves as director of architectural services for SVLLC. Mr. Plummer is responsible for facility programming, planning, master planning, facility assessment and design. Before joining SVLLC in 1986, Mr. Plummer served as a partner and director of design for the Nashville-based architecture and engineering firm of Gresham, Smith and Partners. In that capacity he was responsible for the design and planning of over 15 major projects throughout the United States and Saudi Arabia. Mr. Plummer earned his bachelor of architecture degree from the University of Kentucky and is a member of the American Institute of Architects.
Wood S. Caldwell, age 47. Mr. Caldwell is responsible for all site development activities on behalf of commercial and health care clients of SVLLC, including managing all design consultants, permitting, scheduling, budgeting and construction management. He contributes to SVLLC's development team in the areas of land planning, zoning, permitting, engineering and construction. Before joining SV in 1985, Mr. Caldwell served as a professional engineer for Gresham, Smith and Partners. As the prime site design engineer for Gresham, Smith and Partners, Mr. Caldwell produced and coordinated site development plans for over 50 separate medical facilities in over 40 different communities throughout the southeast. Mr. Caldwell earned his bachelor of engineering degree from the Vanderbilt University School of Engineering.
Axson E. West, age 46. Mr. West serves as vice president of brokerage services for SVLLC, specializing in office and industrial leasing, improved property sales and land disposition for several commercial and residential projects. Mr. West has sold real estate and real estate securities since 1980 and, since joining SV in 1988, he has been responsible for the disposition of land encompassing industrial, office and retail developments. He received his bachelor of arts degree from Vanderbilt University and is a Certified Commercial Investment Member, a designation of the Commercial Investment Real Estate Institute.
Cameron W. Sorenson, age 39. Mr. Sorenson serves as director of vertical development for SVLLC. He is primarily responsible for providing development and project management for the clients of SVLLC. Prior to assuming these
responsibilities, Mr. Sorenson was project director for two large scale land development ventures for SVLLC. Prior to joining SV in 1987, Mr. Sorenson was with Trust Company Bank in Atlanta, as an officer in the National Division, managing a credit portfolio in excess of $150 million. He received his bachelor of science degree in finance from the MacIntyre School of Business at the University of Virginia. Cameron Sorenson is the son of Richard W. Sorenson, the individual majority member of the General Partner.
Randall W. Parham, age 45. Mr. Parham is the President of SVLLC. He is primarily responsible for property management, park and association management and also specializes in real estate development and brokerage. Mr. Parham is a licensed real estate broker and architect. Prior to joining SVLLC in 1998, Mr. Parham was a project manager with Gresham, Smith and Partners from 1978 to 1983 and was responsible for overall project management of project team and project financial management. Following his departure from Gresham, Smith and Partners, Mr. Parham joined MetroCenter Properties, Inc., an 850 acre mixed-use development in Nashville, Tennessee. He was Vice President and was responsible for initiation and development of new projects, land sales and lease negotiations. In 1991 he purchased the assets of MetroCenter Properties and formed MetroCenter Management, Inc. where he served as President through 1997.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
During the fiscal years ended December 31, 2000 and 1999, the Partnership did not pay compensation to any officers of the General Partner. The Partnership paid to the General Partner management fees of $8,100 in the fiscal years ended December 31, 2000 and 1999. See Item 13 of this report, "Certain Relationships and Related Transactions."
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 2000, no other person or "group" (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) was known by the Partnership to beneficially own more than five percent of the Units of the Partnership.
Security Ownership of Management
No individual member, or director or officer of a member, of the General Partner nor such directors or officers as a group, owns any of the Partnership's outstanding securities. The General Partner owns a general partnership interest which entitles it to receive 1% of cash distributions until the Limited Partners have received their cumulative distributions equal to a 10% non-compounded Cumulative Annual Return of their Adjusted Capital Contribution plus a return of their Capital Contributions as those terms are defined in the Partnership Agreement. Thereafter, the General Partner will receive 30% of cash distributions. The General Partner will share in taxable income to reflect cash distributions or, to the extent there are losses, 1% of such losses.
Changes in Control
There are no arrangements known to the Partnership that would at any subsequent date result in a change in control of the Partnership.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From 1987 to November 6, 1997, the Partnership Agreement required the payment of $8,100 annually as an administration fee to the former general partner. The cumulative amount of such fee could not exceed $64,800 and, as of December 31, 1994, fees charged since inception amounted to $64,800. As of November 6, 1997, the Limited Partners voted and agreed to pay the new General Partner, Southern Management Group, LLC, a fee of $1,221 for the period November 6, 1997 through December 31, 1997 and annual fees of $8,100 from January 1, 1998 through December 31, 2000. No fees will be paid in 2001 since the Partnership will be operating in liquidation mode.
The General Partner is entitled to receive 1% of cash distributions until the Limited Partners have received (i) cumulative distributions equal to a 10% Cumulative Annual Return on their Adjusted Capital Contributions plus (ii) a return of their Capital Contributions (as those terms are defined in the Partnership Agreement). Thereafter, the General Partner will receive 30% of cash distributions. During 2000, 1999, and 1998 the General Partner received no cash distributions.
At the special meeting of Limited Partners held on November 6, 1997, the Partnership Agreement was amended to provide that total compensation paid to all persons, including the General Partner, for the sale of the Partnership's Property is limited to a competitive real estate commission or disposition fee not to exceed 10% of the contract price of the property, provided that the General Partner or its affiliates would only be entitled to up to 50% of any such compensation. Any such real estate commission or disposition fee that is paid to the General Partner will reduce distributions to which it would otherwise be entitled under the amended Partnership Agreement. In addition, the Partnership Agreement was amended to provide that the General Partner may act as the exclusive agent for the sale of the Property. During 2000 and 1999, the General Partner did not receive any real estate sales commissions. During 1998, the Partnership paid a commission of $18,610 to the General Partner in relation to the sale of land.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
* Incorporated by reference to Exhibit 3.1 filed as part of the Exhibits to the Partnership's Registration Statement on Form S-18, Registration No. 33-12125.
* Incorporated by reference to Exhibit 3.2 as part of the Partnership's Registration Statement on Form S-18, Registration No. 33-12125.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SOUTHEAST ACQUISITIONS I, L.P. a Delaware limited partnership
By: SOUTHERN MANAGEMENT GROUP, LLC General Partner
By: /s/ Richard W. Sorenson -------------------------------------------- RICHARD W. SORENSON President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the date indicated.
Audited Financial Statements
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
December 31, 2000
[WILLIAMS BENATOR & LIBBY, LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Partners Southeast Acquisitions I, L.P. Nashville, Tennessee
We have audited the accompanying balance sheets of Southeast Acquisitions I, L.P. (a limited partnership operating in liquidation mode) as of December 31, 2000 and 1999, and the related statements of operations, partners' equity (deficit), and cash flows for the years ended December 31, 2000, 1999, and 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements 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 Southeast Acquisitions I, L.P. (a limited partnership operating in liquidation mode) as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years ended December 31, 2000, 1999, and 1998 in conformity with generally accepted accounting principles.
As more fully described in Note A, according to the terms of the partnership agreement, the Partnership was scheduled to terminate on December 31, 2000 and is continuing to operate in liquidation mode.
/S/ WILLIAMS BENATOR & LIBBY LLP
Atlanta, Georgia January 15, 2001
BALANCE SHEETS
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
See notes to financial statements.
STATEMENTS OF OPERATIONS
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
See notes to financial statements.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
See notes to financial statements.
STATEMENTS OF CASH FLOWS
SOUTHEAST ACQUISITIONS I, L.P (A Limited Partnership Operating in Liquidation Mode)
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
December 31, 2000
NOTE A--DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Southeast Acquisitions I, L.P. (a limited partnership operating in liquidation mode) ("the Partnership") is a Delaware limited partnership that was formed to acquire and sell undeveloped land. The Partnership was formed during December 1986 and received equity contributions totaling $4,225,000 through the sale of 4,225 limited partnership units during 1987. The Partnership was originally scheduled to terminate on December 31, 1997. However, during November 1997, concurrent with the replacement of the previous general partner, the term of the Partnership was extended to December 31, 2000. It is the intention of the general partner to operate in liquidation mode until all of the Partnership's land is sold. At December 31, 2000, there were no adjustments necessary to present the financial statements on a liquidation basis.
During 1987, the Partnership purchased approximately 203 acres of undeveloped land near Columbia, South Carolina, which is being marketed for sale. During 1998, the Partnership sold approximately 17 acres. There were no sales of land during the years ended December 31, 2000 and 1999. At December 31, 2000, the land consisted of approximately 186 acres.
The following accounting policies are presented to assist the reader in understanding the Partnership's financial statements:
Basis of Accounting: The Partnership maintains its accounting records on the accrual basis of accounting. Sales of land are recognized upon the closing of an enforceable sales contract and upon the Partnership's full execution of its obligations under the contract.
Land Held for Sale: Land held for sale is carried at the lower of cost or fair value less estimated cost to sell. The Partnership's land is carried net of a write-down of $457,996 that was recognized during the last quarter of the year ended December 31, 2000 and net of the remaining portion of an original write-down of $996,645 that was recognized during the year ended December 31, 1996. At December 31, 2000, the carrying value was based on a pending contract for the sale of all of the land, less cost to sell, estimated at 10% of fair value.
Income Taxes: Federal and state income taxes have not been provided for in the financial statements. Under existing law, the Partnership is not treated as a taxable entity. Rather, each partner must include his allocated share of Partnership income, loss, gain, deduction, and credit in his individual income tax return. Write-downs of the land's carrying value that have been recorded for financial statement purposes will not be recognized for income tax purposes until the land is sold. At December 31, 2000 and 1999, write-downs that had not been recognized for income tax purposes totaled $1,423,163 and $965,167, respectively.
NOTES TO FINANCIAL STATEMENTS--Continued
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
NOTE A--DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES--Continued
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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash Equivalents: For purposes of reporting cash flows, the Partnership considers all demand deposits and highly liquid investments purchased with an original maturity of three months or less which can be readily converted to cash on demand, without penalty, to be cash equivalents.
NOTE B--RELATED PARTY TRANSACTIONS
During each of the years ended December 31, 2000, 1999 and 1998, the Partnership paid management fees of $8,100 to the general partner, as provided for in the amendment to the partnership agreement that was adopted during November 1997. No management fees will be paid during 2001 since the Partnership will be operating in liquidation mode.
The Partnership agreement provides for reimbursement of expenses incurred by the general partner related to the administration and operation of the Partnership. During the years ended December 31, 2000, 1999 and 1998, reimbursements to the general partner's members and related companies totaled $1,325, $1,241, and $7,693, respectively.
During the year ended December 31, 1998, the Partnership paid a commission to the general partner of $18,610 related to the sale of land, as provided for in the amended partnership agreement.
NOTES TO FINANCIAL STATEMENTS--Continued
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
NOTE C--PARTNERSHIP AGREEMENT
In accordance with the partnership agreement (as amended in November 1997), cash distributions and Partnership profits and losses are to be allocated as follows:
(a) Except for distributions in connection with the liquidation of the Partnership, cash distributions are to be allocated 1% to the general partner and 99% to the limited partners, in proportion to their units, until the limited partners have received distributions equal to a 10% noncompounded cumulative annual return on their adjusted capital contributions, as defined ($5,483,471 at December 31, 2000). After the 10% cumulative return has been satisfied, cash distributions are to be allocated 1% to the general partner and 99% to the return of the limited partners' capital contributions, in proportion to their units ($4,225,000 at December 31, 2000). Any subsequent cash distributions are to be allocated 30% to the general partner and 70% to the limited partners in proportion to their units. Amounts distributed in connection with the liquidation of the Partnership are to be distributed in accordance with each partner's adjusted capital account as defined in the partnership agreement.
(b) Profits and losses are to be allocated as provided in the partnership agreement. Generally, profits will be allocated to reflect cash distributions or to offset any negative balances in the partners' capital accounts. Losses will generally be allocated 99% to the limited partners, in proportion to their units, and 1% to the general partner, or to reduce any positive account balances in the partners' capital accounts. In no event will the general partner be allocated less than 1% of the profits or losses for any year.
Upon dissolution and termination of the Partnership, the general partner is required to contribute to the capital of the Partnership the lesser of any negative amount of its capital account, as defined, or 1.01% of the capital contributions made by the limited partners. Any amount so contributed will be distributed to the limited partners in proportion to their positive capital account balances. If, upon dissolution and termination of the Partnership, the limited partners do not receive distributions which cumulatively total their initial capital contributions plus a 10% noncompounded cumulative annual return, the general partner will be required to contribute to the capital of the Partnership an amount equal to the lesser of cumulative distributions to the general partner or the amount necessary to provide the limited partners with a return of their initial capital contribution plus the 10% noncompounded cumulative annual return.
NOTES TO FINANCIAL STATEMENTS--Continued
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
NOTE C--PARTNERSHIP AGREEMENT--Continued
No distributions were paid during the year ended December 31, 2000. During the years ended December 31, 1999 and 1998, the Partnership paid distributions against the limited partners' cumulative annual return in accordance with the partnership agreement of $1,987 and $253,500, respectively.
Total compensation paid to all persons, including the general partner, upon sale of the Partnership's property, is limited to a competitive real estate commission or disposition fee not to exceed 10% of the contract price. The general partner or its affiliates are entitled to receive up to 50% of any such compensation. Any such commission or disposition fee paid to the general partner would reduce any distribution that it would otherwise be entitled to pursuant to the partnership agreement. The general partner or an affiliate may be given the exclusive right to sell the property.
NOTE D--SUMMARY OF PROPERTY AND ACTIVITY
At December 31, 2000, land consisted of the following:
There were no liens on the land as of December 31, 2000. At December 31, 2000, the aggregate carrying value of the land for income tax purposes was $3,223,163. The difference between the carrying value for financial statement purposes and income tax purposes resulted from write-downs that were recorded for financial statement purposes as more fully described in Note A.
During the year ended December 31, 2000, a provision for loss on land was recorded in the amount of $457,996. This amount was recorded based on a pending contract for the sale of all of the remaining acreage.
NOTES TO FINANCIAL STATEMENTS--Continued
SOUTHEAST ACQUISITIONS I, L.P. (A Limited Partnership Operating in Liquidation Mode)
NOTE D--SUMMARY OF PROPERTY AND ACTIVITY--Continued
Land activity during the years ended December 31, 1998, 1999 and 2000 consisted of the following: