SECURED INCOME L P - FORM 10-Q

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EX-31.1 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF CHIEF EXECUTIVE OFFICER - SECURED INCOME L P	secured10q20110331ex31-1.htm
EX-32.2 - SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER - SECURED INCOME L P	secured10q20110331ex32-2.htm
EX-32.1 - SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - SECURED INCOME L P	secured10q20110331ex32-1.htm
EX-31.2 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER - SECURED INCOME L P	secured10q20110331ex31-2.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, DC

_________________________

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, 2011

___ 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 0-17412

Secured Income L.P.

(Exact Name of Registrant as Specified in its Charter)

Delaware	06-1185846
State or Other Jurisdiction of	(IRS Employer
Incorporation or Organization	Identification No.)

340 Pemberwick Road
Greenwich, Connecticut	06831
(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 such filing requirements for the past 90 days. Yes X No ___

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes ___ No ___

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ___ Accelerated Filer ___ Non-Accelerated Filer ___ Smaller Reporting Company X

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ___ No X

As of May 10, 2011, there are 984,369 units of limited partnership interest outstanding.

SECURED INCOME L.P. AND SUBSIDIARY

Part I - Financial Information.

Table of Contents		Page

Item 1.	Financial Statements.

	Consolidated Balance Sheets	3

	Consolidated Income Statements	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.	9

Item 4.	Controls and Procedures.	9

Item 4T.	Internal Control Over Financial Reporting.	9

SECURED INCOME L.P. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			December 31,
	2011			2010

ASSETS

Property and equipment, net of accumulated depreciation	$	2,263,501		$	2,368,956
Cash and cash equivalents		692,116			649,843
Mortgage escrow deposits		896,768			806,380
Investment in bond		99,873			101,238
Tenant security deposits		49,525			42,462
Interest and accounts receivable		123			2,341
Prepaid expenses		138,387			219,111
Intangible assets, net of accumulated amortization		254,736			260,162

	$	4,395,029		$	4,450,493

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

Mortgage payable	$	7,705,777		$	7,770,499
Accounts payable and accrued expenses		102,936			105,140
Tenant security deposits payable		47,914			40,473
Due to affiliates		8,440			18,678

		7,865,067			7,934,790

Partners' equity (deficit)

Limited partners (984,369 units issued and outstanding)		655,135			598,301
General partners		(3,903,552	)		(3,904,126	)
Noncontrolling interest		(224,351	)		(181,953	)
Accumulated other comprehensive income		2,730			3,481

		(3,470,038	)		(3,484,297	)

	$	4,395,029		$	4,450,493

See notes to consolidated financial statements.

SECURED INCOME L.P. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(Unaudited)

	2011			2010

REVENUE

Rental	$	677,153		$	634,967
Interest		2,485			254

TOTAL REVENUE		679,638			635,221

EXPENSES

Administration and management		126,037			127,693
Operating and maintenance		128,131			136,657
Taxes and insurance		126,630			119,058
Financial		128,827			132,875
Depreciation and amortization		110,881			107,995

TOTAL EXPENSES		620,506			624,278

NET INCOME		59,132			10,943

Other comprehensive loss		(751	)

COMPREHENSIVE INCOME	$	58,381		$	10,943


NET INCOME ATTRIBUTABLE TO

General partners	$	574		$	97
Limited partners		56,834			9,607
Noncontrolling interest		1,724			1,239

	$	59,132		$	10,943


NET INCOME ALLOCATED PER UNIT OF LIMITED PARTNERSHIP INTEREST	$	.06		$	.01


Weighted number of units outstanding		984,369			984,369

See notes to consolidated financial statements.

SECURED INCOME L.P. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(Unaudited)

	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES

Net income	$	59,132		$	10,943

Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization expense		110,881			107,995
Increase in mortgage escrow deposits		(90,388	)		(105,275	)
Amortization of premium on investment in bond		614
Decrease (increase) in tenant security deposits		(7,063	)		7,022
Decrease (increase) in interest and accounts receivable		2,218			(965	)
Decrease in prepaid expenses		80,724			81,859
Decrease in accounts payable and accrued expenses		(2,204	)		(19,223	)
Increase (decrease) in tenant security deposits payable		7,441			(4,855	)
Increase (decrease) in due to affiliates		(10,238	)		4,591

Net cash provided by operating activities		151,117			82,092

CASH FLOWS FROM FINANCING ACTIVITIES

Mortgage principal payments		(64,722	)		(60,908	)
Distributions to noncontrolling interest		(44,122	)
Distributions to partners					(246,092	)

Net cash used in financing activities		(108,844	)		(307,000	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		42,273			(224,908	)

Cash and cash equivalents at beginning of period		649,843			797,648

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	692,116		$	572,740

SIGNIFICANT NONCASH INVESTING AND FINANCING ACTIVITIES

Unrealized loss on investment in bond	$	(751	)

SUPPLEMENTAL INFORMATION

Financial expenses paid	$	160,353		$	165,189

See notes to consolidated financial statements.

SECURED INCOME L.P. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

1.	Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. They do not include all information and footnotes required by GAAP for complete financial statements. The results of operations are impacted significantly by the results of operations of Carrollton X Associates Limited Partnership (“Carrollton”), which are provided on an unaudited basis during interim periods. Accordingly, the accompanying unaudited consolidated financial statements are dependent on such unaudited information. In the opinion of the General Partners of the Partnership, the accompanying unaudited consolidated financial statements include all adjustments necessary to reflect fairly the results of operations and cash flows for the interim periods presented. All adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the entire year.

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), amending Accounting Standards Codification (“ASC”) Topic 820 to increase disclosure requirements regarding recurring and nonrecurring fair value measurements. The Partnership adopted ASU 2010-06 in January 2010, except for the disclosures about activity in Level 3 fair value measurements, which became effective for the Partnership’s fiscal year beginning January 1, 2011. The full adoption of ASC Topic 820 on January 1, 2011 did not have a material impact on the Partnership’s consolidated financial statements.

2.	Investment in Bond

The Partnership carries its investment in bond as available-for-sale because such investment is used to facilitate and provide flexibility for its obligations. Investment in bond is reflected in the accompanying unaudited consolidated balance sheets at estimated fair value and is classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements as defined in ASC Topic 820. Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Partnership has the ability to access. The unrealized gain of $2,730 is reflected as accumulated other comprehensive income in the accompanying unaudited consolidated balance sheet as of March 31, 2011.

As of March 31, 2011, certain information concerning investment in bond is as follows:

Description and maturity	Amortized cost		Gross unrealized gain		Gross unrealized loss		Estimated fair value

Corporate debt security Callable in September 2013	$	97,143	$	2,730	$	--	$	99,873

3.	Additional Information

Additional information, including the audited December 31, 2010 Consolidated Financial Statements and the Organization and Summary of Significant Accounting Policies, is included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 on file with the Securities and Exchange Commission.

SECURED INCOME L.P. AND SUBSIDIARY

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Liquidity and Capital Resources

Secured Income L.P. (the “Registrant”) owns a 98.9 % interest in Carrollton X Associates Limited Partnership (“Carrollton”). Fieldpointe, the operating complex owned by Carrollton, remains on the market for sale as the Carrollton general partners (the “Carrollton General Partners”) continue to receive inquiries; however, given the current real estate market, the Carrollton General Partners believe the likelihood that an acceptable offer might be received in the near term is not probable. The Carrollton General Partners cannot accurately predict the direction of the real estate market, and there can be no assurance that an acceptable offer will be received or that a sale will be consummated. Notwithstanding the foregoing, if a sale of Fieldpointe were to occur, Registrant intends to distribute the net proceeds received to its partners, less a reasonable reserve, in accordance with the terms and conditions of Registrant’s Partnership Agreement. At such time, Registrant intends to dissolve.

Registrant anticipates that it will make a distribution in the second quarter of 2011 in the amount of approximately $0.25 per Unit to Unit holders of record as of March 31, 2011. The ability to make future distributions, and the amount of such distributions, if any, will depend on Carrollton’s cash flow and reserve levels, among other things. Accordingly, there can be no certainty as to the payment of future distributions or the amount and timing thereof.

Registrant's primary source of funds is currently rents generated by Fieldpointe. Registrant's investment is considered highly illiquid.

In the event a sale of Fieldpointe does not take place, Registrant is not expected to have access to additional sources of financing. Accordingly, if unforeseen contingencies arise that cause Carrollton to require capital in addition to that contributed by Registrant and any equity of the Carrollton General Partners, potential sources from which such capital needs will be able to be satisfied (other than reserves) would be additional equity contributions or voluntary loans from the Carrollton General Partners (which are not required to fund such amounts) or other reserves, if any, which could adversely impact distributions from Carrollton to Registrant of operating cash flow and any sale or refinancing proceeds.

Registrant formerly held an interest in Columbia Westmont Associates, L.P. (“Columbia”), which sold its underlying property in 2006. After an appeal, Columbia received a real estate tax refund for a prior year in the amount of approximately $998,000, which amount is net of professional fees incurred in connection with the appeal. Registrant and the general partners of Columbia are currently undergoing discussions and seeking guidance in an effort to determine how the funds received should be characterized and applied under the terms of Columbia’s partnership agreement, and the amount, if any, that should be paid to Registrant and the other partners of Columbia.

Results of Operations

Registrant generated cash from operations during the three months ended March 31, 2011, resulting in cash and cash equivalents having increased by approximately $42,000 during the period after Carrollton making principal payments on its mortgage and distributions to the Carrollton General Partners. Carrollton also distributed approximately $419,000 to Registrant during the period, which distribution has been eliminated in consolidation. Property and equipment decreased as a result of depreciation expense. Mortgage escrow deposits increased while prepaid expenses decreased in the ordinary course of operations. Mortgage payable decreased as a result of principal payments on Carrollton’s mortgage.

The discussion below refers primarily to the operations of Carrollton and not to that of Registrant as a whole.

Three Months Ended March 31, 2011

During the three months ended March 31, 2011, Carrollton's operations resulted in net income of approximately $90,000, which includes financial expenses and depreciation and amortization of approximately $129,000 and approximately $109,000, respectively. Accordingly, Carrollton generated income from operating activities prior to financial expenses and depreciation and amortization of approximately $328,000. Mortgage principal payments during the period were approximately $65,000. After considering the mandatory mortgage principal payments and required deposits to mortgage escrows, among other things, Carrollton generated cash flow of approximately $130,000 during the three months ended March 31, 2011. There can be no assurance that the level of cash flow generated by Carrollton during the three months ended March 31, 2011 will continue in future periods.

SECURED INCOME L.P. AND SUBSIDIARY

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

Registrant’s results of operations as a whole have improved for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010 primarily as a result of higher average occupancy of Fieldpointe.

As of March 31, 2011, the occupancy of Fieldpointe was approximately 100%. In the event a sale of Fieldpointe does not take place, the future operating results of Carrollton will be extremely dependent on market conditions and therefore may be subject to significant volatility.

Three Months Ended March 31, 2010

During the three months ended March 31, 2010, Carrollton's operations resulted in net income of approximately $50,000, which includes financial expenses and depreciation and amortization of approximately $133,000 and approximately $106,000, respectively. Accordingly, Carrollton generated income from operating activities prior to financial expenses and depreciation and amortization of approximately $289,000. Mortgage principal payments during the period were approximately $61,000. After considering the mandatory mortgage principal payments and required deposits to mortgage escrows, among other things, Carrollton generated cash flow of approximately $85,000 during the three months ended March 31, 2010. As of March 31, 2010, the occupancy of Fieldpointe was approximately 94%.

Critical Accounting Policies and Estimates

The accompanying unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires Registrant to make certain estimates and assumptions. The following section is a summary of certain aspects of those accounting policies that may require subjective or complex judgments and are most important to the portrayal of Registrant’s consolidated financial condition and results of operations. Registrant believes that there is a low probability that the use of different estimates or assumptions in making these judgments would result in materially different amounts being reported in the accompanying unaudited consolidated financial statements.

Registrant records its real estate assets at cost less accumulated depreciation and, if there are indications that impairment exists, adjusts the carrying value of those assets in accordance with Accounting Standards Codification (“ASC”) Topic 360; Subtopic 10. In accordance with ASC Topic 360; Subtopic 10, long-lived assets, primarily property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets, Registrant recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value. No such adjustment for impairment loss is required as of March 31, 2011.

Forward-Looking Information

As a cautionary note, with the exception of historical facts, the matters discussed in this quarterly report on Form 10-Q are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Forward-looking statements may relate to, among other things, current expectations, forecasts of future events, future actions, future performance generally, business development activities, capital expenditures, strategies, the outcome of contingencies, future financial results, financing sources and availability and the effects of regulation and competition. Words such as “anticipate,” “expect,” “intend,” “plan,” “seek,” “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements. Registrant may also provide written forward-looking statements in other materials released to the public. Such statements are made in good faith by Registrant pursuant to the “Safe Harbor” provisions of the Reform Act. Registrant undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Such forward-looking statements involve known risks, uncertainties and other factors that may cause Registrant’s actual results of operations or actions to be materially different from future results of operations or actions expressed or implied by the forward-looking statements.

SECURED INCOME L.P. AND SUBSIDIARY

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), amending ASC Topic 820 to increase disclosure requirements regarding recurring and nonrecurring fair value measurements. Registrant adopted ASU 2010-06 in January 2010, except for the disclosures about activity in Level 3 fair value measurements, which are effective for Registrant’s fiscal year beginning January 1, 2011. The full adoption of ASC Topic 820 on January 1, 2011 did not have a material impact on Registrant’s consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

The market value of Registrant’s investment in bond is subject to fluctuation based upon changes in interest rates relative to the investment’s maturity date and the associated bond rating. Since Registrant’s investment in bond is callable in 2013, the value of such investment may be adversely impacted in an environment of rising interest rates in the event Registrant decides to liquidate the investment prior to its call date. Although Registrant may utilize the investment to pay for its operating expenses, it otherwise intends to hold such investment to its call date. Therefore, Registrant does not anticipate any material adverse impact in connection with such investment.

Item 4. Controls and Procedures.

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed by Registrant in reports that Registrant files or submits under the Exchange Act is recorded, processed, summarized and timely reported as provided in SEC rules and forms. Registrant periodically reviews the design and effectiveness of its disclosure controls and procedures, including compliance with various laws and regulations that apply to its operations. Registrant makes modifications to improve the design and effectiveness of its disclosure controls and procedures, and may take other corrective action, if its reviews identify a need for such modifications or actions. In designing and evaluating the disclosure controls and procedures, Registrant recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Registrant has carried out an evaluation, under the supervision and the participation of its management, including the Chief Executive Officer and Chief Financial Officer of Wilder Richman Resources Corporation (“WRRC”), one of Registrant’s general partners, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the three months ended March 31, 2011. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of WRRC concluded that Registrant’s disclosure controls and procedures were effective as of March 31, 2011.

Item 4T. Internal Control Over Financial Reporting.

There were no changes in Registrant’s internal control over financial reporting during the three months ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, Registrant’s internal control over financial reporting.

SECURED INCOME L.P. AND SUBSIDIARY

Part II - Other Information.

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Removed and Reserved.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

Exhibit 32.1 - Section 1350 Certification of Chief Executive Officer.

Exhibit 32.2 - Section 1350 Certification of Chief Financial Officer.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on the 10th day of May 2011.

SECURED INCOME L.P.

By:	Wilder Richman Resources Corporation, General Partner

	By:	/s/Richard Paul Richman
		Richard Paul Richman
		Chief Executive Officer

	By:	/s/James Hussey
		James Hussey
		Chief Financial Officer


By:	WRC-87A Corporation, General Partner

	By:	/s/Richard Paul Richman
		Richard Paul Richman
		Executive Vice President and Treasurer

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