<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
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: 33-1889
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MARKETPLACE INCOME PROPERTIES, A NORTH CAROLINA LIMITED PARTNERSHIP
-------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1493986
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(State of other jurisdiction of (I.R.S. Employer
or organization) Identification No.)
Interstate Tower
P.O. Box 1012
Charlotte, NC 28201-1012
------------------------
(Address of principal executive offices)
(Zip Code)
704/379-9164
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(Registrant's telephone number, including area code)
(Former name, former address and fiscal year ended,
if changed since last report)
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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
5,000 limited partnership units outstanding as of July 24, 1995
Page 1 of 11 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(unaudited) 1994
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<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 3,873,911 $ 3,873,911
Buildings 20,476,307 20,456,387
Furniture and equipment 410,143 410,143
Construction in Progress 554,562 0
----------- -----------
25,314,923 24,740,441
Accumulated depreciation (5,746,851) (5,404,224)
----------- -----------
19,568,072 19,336,217
Cash and cash equivalents 1,338,074 1,258,117
Restricted Cash 220,137 64,553
Cash on deposit with lender 875,659 1,401,571
Accounts Receivable 15,476 118,036
Net Deferred Loan and Acquisition Costs 244,367 194,964
Other 35,128 69,694
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$22,296,913 $22,443,152
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Debt $15,611,699 $15,705,327
Payables to general partners and affiliates 39,651 22,318
Other liabilities 463,372 262,708
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16,114,722 15,990,353
Minority interest 27,546 27,675
Partners' capital:
General partners 84,495 86,829
Limited partners 6,070,150 6,338,295
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6,154,645 6,425,124
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$22,296,913 $22,443,152
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
2
<PAGE> 3
MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(unaudited)
<TABLE>
<CAPTION>
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
--------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Rent $581,426 $794,106 $1,287,612 $1,723,920
Interest and other 28,573 3,735 55,378 9,397
--------- -------- ---------- ----------
609,999 797,841 1,342,990 1,733,317
Expenses:
Interest 304,475 340,732 673,240 753,524
Depreciation 170,917 193,473 342,626 386,945
Amortization 13,854 14,678 28,026 29,356
Operations and maintenance 256,668 216,063 458,002 417,256
Professional fees 6,093 7,449 26,561 30,859
Lease management fees 4,500 13,610 9,000 27,220
Administrative and other 16,676 12,357 39,051 29,113
--------- -------- ---------- ----------
773,183 798,362 1,576,506 1,674,273
Income before minority interest (163,184) (521) (233,516) 59,044
Minority interest 113 816 (129) 1,090
--------- -------- ---------- ----------
Net income (loss) ($163,297) ($1,337) ($233,387) $ 57,954
========= ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE> 4
MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- ---------- ----------
<S> <C> <C> <C>
Balance, December 31, 1993 $68,401 $5,263,963 $5,332,364
Net loss for the period 580 57,374 57,954
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Balance, June 30, 1994 $84,495 $6,107,242 $6,191,737
======= ========== ==========
Balance, December 31, 1994 $86,829 $6,338,295 $6,425,124
Net income for the period (2,334) (231,053) (233,387)
Distributions 0 (37,092) (37,092)
------- ---------- ----------
Balance, June 30, 1995 $84,495 $6,070,150 $6,154,645
======= ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE> 5
MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1995 June 30, 1994
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<S> <C> <C>
Net Income ($233,387) $ 57,954
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Adjustments to reconcile net income to net cash provided by operations:
Decrease in accounts receivable 102,560 14,868
Depreciation 342,626 386,945
Amortization 28,026 29,356
Minority Interest (129) 1,090
Other 404,894 (131,923)
Increase in accrued liabilities 217,997 75,347
Increase in deferred loan costs (77,429) (980)
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Total adjustments 1,018,545 374,703
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Net cash provided by operating activities 785,158 432,657
Cash flows from investing activities:
Improvements in rental properties (574,482) (2,578)
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Net cash used by investing activities (574,482) (2,578)
Cash flows from financing activities:
Repayments of debt (93,628) (296,102)
Distributions to limited partners (37,092) 0
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Net cash used by financing activities (130,720) (296,102)
Net increase in cash and cash equivalents 79,956 133,977
Cash and cash equivalents at beginning of period 1,258,117 272,119
---------- --------
Cash and cash equivalents at end of period $1,338,074 $406,096
========== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE> 6
MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements of Marketplace Income Properties Limited
Partnership ("the Partnership") included herein have been prepared for
submission to the Securities and Exchange Commission on Form 10-Q. The
consolidated financial statements were prepared by the general partner without
audit, and include all adjustments which are, in the opinion of the general
partner, necessary for a fair presentation of the results of operations for the
six month period ended June 30, 1995. The consolidated financial statements
were prepared in accordance with generally accepted accounting principles,
however, certain information and note disclosures normally included have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission. The consolidated financial statements should be read
in conjunction with the Partnership's 1994 Annual Report filed with the
Securities and Exchange Commission on Form 10-K. The results of operations for
the six month period ended June 30, 1995 are not necessarily indicative of the
results for a full year.
2. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On November 27, 1985, the Partnership was formed under the North Carolina
Uniform Limited Partnership Act. The Partnership acquired property on January
30, 1986 and will continue until December 31, 2015 unless sooner terminated
under the provisions of the Partnership Agreement. The Partnership has issued
3,000 limited partner units at $5,000 per unit. The total number of investors
at July 24, 1995 was 773. ISC Realty is the sole general partner.
The consolidated financial statements include the accounts of Marketplace
Income Properties and its subsidiary, Marketplace Income Properties of Florida,
collectively referred to as "the Partnership". All significant intercompany
transactions have been eliminated in consolidation.
Distributions and Allocations of Income and Losses - Profits, gains and losses
of the Partnership are allocated between general and limited partners, as
provided in the Partnership Agreement. The net cash flow from operations in
each year is to be distributed 99% to limited partners and 1% to the general
partner.
Certain items in the financial statements for prior periods have been
reclassified to conform to the format presented for these statements.
6
<PAGE> 7
3. RELATED PARTY TRANSACTIONS
Amounts paid to the general partner for the reimbursement of expenses of
operating the Partnership were $25,000 for the six months ended June 30, 1995
and 1994, respectively. For the six months ended June 30, 1995, the general
partner earned $9,000 as a lease management fee for Town & Country and $27,220
as a lease management fee for Town & Country and MeadowBrook Manor of Siler
City for the six months ended June 30, 1994, based upon operating income.
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PARTNERSHIP MATTERS
The Partnership was formed under the North Carolina Limited Partnership Act in
November 1985. The property investment portfolio consists of the Marketplace
Mall (the "Mall") in Winston-Salem, NC, Mt. Pilot Shopping Center ("Mt. Pilot")
in Pilot Mountain, NC, Amelia Plaza ("Amelia") in Fernandina Beach, FL and Town
& Country Convalescent Center ("Town & Country") in Tampa, FL, which is a
nursing home. Meadowbrook Manor of Siler City, NC was sold in June 1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $1,338,074 at June 30, 1995, up from
$1,258,117 at December 31, 1994. The cash is being maintained in order to
close the newly negotiated mortgage on the Mall and provide funding for the
Hamrick's construction. On July 5, 1995 the Partnership paid off the State
Mutual Life mortgage on the Mall at the discounted amount of $6,300,000 as
agreed in the December 1994 modification. The Partnership funded the payoff
with a new $5,500,000 mortgage on the Mall from First Union National Bank and
from cash reserves. The First Union loan provides for maximum borrowings of
$5,800,000 and accrues interest at LIBOR plus 2.15%. The Partnership entered
into a swap agreement with First Union to fix the interest rate at 8.35% on
$4,750,000 of the loan. The loan shall be repaid with interest only payments
for the first three months. Beginning November 1, 1995 the loan will be repaid
in fixed monthly principal payments of $17,521 plus interest on the outstanding
balance. As noted above, an additional $300,000 may be borrowed subject to
certain leasing requirements. The note has a maturity date of June 30, 1998.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1994
The Partnership had a net loss of $233,387 for the six months ended June 30,
1995 compared to net income of $57,954 for the same period of 1994. The
decrease in net income is attributable to the following variances in income and
expense components.
7
<PAGE> 8
The decrease in gross income was partially attributed to a decrease in rental
income of approximately $436,000. The decrease is comprised of a $157,000
decrease in rental income resulting from the new lease on Town & Country, a
$211,000 decrease in rent from Siler City due to the sale of the facility in
1994, and a decrease of $68,000 in rental income and expense reimbursements at
the Mall as a result of decreased occupancy at the Mall.
Interest income increased from $9,397 at June 30, 1994 to $55,378 for the six
months ended June 30, 1995. The increase is attributable to increased interest
earned of approximately $10,000 on the construction escrow for Hamrick's at the
Mall and an increase of approximately $35,000 earned on cash reserves
maintained by the Partnership.
Interest expense for the six months ended June 30, 1995 was $673,240 compared
with $753,524 for the same period of 1994. The decrease of $80,284 in 1995 was
due to a decrease of approximately $62,000 for the Siler City mortgage
subsequent to the sale in 1994, and a decrease of approximately $21,000 in
interest payments attributable to the restructuring of the Mall mortgage.
Depreciation expense decreased from $386,945 to $342,626 in 1995 due to the
sale of Siler City in 1994.
Lease management fees decreased from $27,220 for the six months ended June 30,
1994 to $9,000 for the six months ended June 30, 1995 due to the decreased
rental income received from Town & Country as well as the absence of income
from Siler City in 1995 due to the sale in 1994.
Operations and maintenance expense increased from $417,256 for the six months
ended June 30, 1994 to $458,002 for the same period in 1995. The increase of
approximately $40,000 is attributable to an increase in common area maintenance
expense of $24,000 at the Mall offset by a decrease of approximately $8,000 in
advertising expense, an increase of $12,000 in building service and maintenance
expense at Amelia, an increase of $8,700 in insurance expense at Amelia due to
a change in the accrual for 1995, an increase in lease commission expense at
Amelia of $6,100 representing amortization of deferred lease commissions.
Administrative and other expenses increased from $29,113 for the six months
ended June 30, 1994 to $39,051 for the six months ended June 30, 1995. The
higher amount in 1995 is attributed to an increase in bad debt expense of
approximately $6,800 at the Mall and an increase in various administrative
charges of approximately $2,800 at the properties.
THREE MONTHS ENDED JUNE 30, 1995 AS COMPARED TO THREE MONTHS ENDED JUNE 30, 1994
The Partnership reported a net loss of $163,297 for the three months ended June
30, 1995 as compared to $1,337 for the same period ended 1994.
Rental income for the three months ended June 30, 1995 as compared to June 30,
1994 decreased approximately $213,000. The decrease is the result of the
decrease in rental income of $78,500 from Town & Country and $105,810 from
Siler City, as well as, a decrease in rental income and expense reimbursements
of approximately $28,000 at the Mall.
8
<PAGE> 9
The decrease in interest expense of $36,000 during the three months ended June
30, 1995 as compared to the same period ended June 30, 1994 is attributable to
the restructured Mall mortgage which decreased interest expense by
approximately $48,000 and reduced debt service subsequent to the sale of Siler
City of approximately $20,000. These increases were offset by an increase in
interest expense for Town & Country of approximately $32,000 as a result of an
adjustment made to correct the interest expense accrual.
Depreciation expense decreased from $193,473 for the three months ended June
30, 1994 to $170,917 for the three months ended June 30, 1995 due to the sale
of Siler City as discussed above in the six months operations.
Operations and maintenance expenses increased approximately $40,000 from the
three months ended June 30, 1994 to the three months ended June 30, 1995. The
increase is attributable to an increase of $16,000 in common area maintenance
and building service expense at the Mall, a $6,000 increase in insurance
expense at Amelia, a $9,500 increase in building repairs and maintenance
expense at Amelia an increase of approximately $7,000 in accrued property tax
expense at Amelia and a $2,700 increase in lease commissions at the Mall.
Lease management fees decreased for the three month period from $13,610 at June
30, 1994 to $4,000 at June 30, 1995 due to the decrease in rental income from
Town & Country and Siler City as discussed in the six month discussion.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submissions of Matter to a vote of Securities Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 -- Financial Data Schedule (for SEC use only)
9
<PAGE> 10
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the
three months ended June 30, 1995.
10
<PAGE> 11
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.
MARKETPLACE INCOME PROPERTIES
LIMITED PARTNERSHIP
-------------------
(REGISTRANT)
BY: /s/ J. CHRISTOPHER BOONE
------------------------
J. CHRISTOPHER BOONE
PRESIDENT
ISC REALTY CORPORATION
GENERAL PARTNER
DATE: August 9, 1995
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11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MARKETPLACE INCOME PROPERTIES FOR THE SIX MONTHS ENDED
JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 1,338,074
<SECURITIES> 0
<RECEIVABLES> 15,476
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,630,956
<PP&E> 25,314,923
<DEPRECIATION> 5,746,851
<TOTAL-ASSETS> 22,296,913
<CURRENT-LIABILITIES> 463,372
<BONDS> 15,611,699
<COMMON> 0
0
0
<OTHER-SE> 6,154,645
<TOTAL-LIABILITY-AND-EQUITY> 22,296,913
<SALES> 0
<TOTAL-REVENUES> 1,342,990
<CGS> 0
<TOTAL-COSTS> 458,002
<OTHER-EXPENSES> 445,135
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 673,240
<INCOME-PRETAX> (233,387)
<INCOME-TAX> 0
<INCOME-CONTINUING> (233,387)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (233,387)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
