<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required] for the fiscal year ended December 31, 1995
--------------------
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period
from to
------------------------------- -----------------------
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
(State of organization) (I.R.S. Employer Identification No.)
121 W. Trade St.
Charlotte, North Carolina 28202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 379-9164
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: (Title of Class)
Units of Limited Partnership Interests
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant. The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of filing. (See definition of affiliate in Rule 405)
Indicate the number of shares outstanding of each of the issuers' classes of
common stock as of the latest practicable date
3,000 Limited Partnership units outstanding as of March 1, 1996
Documents Incorporated by Reference: NONE
Page 1 of 15 sequentially numbered pages
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PART I
ITEM 1 - BUSINESS
Marketplace Income Properties (the "Registrant" or the "Partnership") is a
North Carolina limited partnership organized in 1985. Until September 16,
1992, the general partners of the Partnership were ISC Realty Corporation
("ISCR" or the "General Partners"), a North Carolina corporation and a
wholly-owned subsidiary of Interstate/Johnson Lane, Inc., and Benton Investment
Company ("Benton"), a North Carolina corporation. On September 16, 1992,
Benton was removed as a general partner after ISCR solicited proxies from the
Limited Partners to vote for Benton's removal and Benton's request for a
preliminary injunction to prohibit its removal was denied by the United States
District Court for the Middle District of North Carolina. As a result, ISCR
became the managing general partner of the Partnership. On January 11, 1993,
ISCR and Benton closed a purchase agreement whereby ISCR purchased Benton's
entire general partner interest in the Partnership effective January 1, 1993.
Pursuant to this purchase transaction, ISCR succeeded to all of Benton's rights
and interests under the Partnership Agreement, including Benton's interest in
management fees, rights to reimbursement of administrative expenses and its
0.5% interest in Partnership distributions. None of the costs associated with
these events and transactions, including the cost of purchasing Benton's
interest in the Partnership, were charged to the Partnership.
The Registrant's principal investment objectives are to own, hold,
operate, lease, sell, and otherwise deal in commercial real estate properties
(the "Properties") which offer the potential for (1) preservation and
protection of capital invested in the Registrant, (2) cash distributions from
operations of the Properties, (3) long term appreciation in value of the
Properties, and (4) protection for investors against inflation. The Registrant
currently owns the Marketplace Mall & Theaters in Winston-Salem, North Carolina
(the "Mall"), Mt. Pilot Shopping Center in Pilot Mountain, North Carolina
("Mt. Pilot"), Amelia Plaza Shopping Center in Fernandina Beach, Florida
("Amelia"), and Town & Country Convalescent Center in Tampa, Florida (the
"Tampa Project"). Country Forest Manor in Siler City, North Carolina (the
"Siler City Project") was sold in June 1994. See item 2 for further discussion.
It is intended that the Registrant be self-liquidating and accordingly,
the net proceeds of any sale of any Property will be distributed to the
Investors.
The real estate business is highly competitive, and the Partnership
competes with numerous established companies, real estate investment trusts and
other limited partnerships, some of which have greater assets than the
Partnership, and broader experience than the General Partner. Some of the
competitive factors which the Partnership may encounter from time to time
include rising levels of vacancies due to changes in supply or demand of
competing properties in an area, such as excess supply resulting from
competitive overbuilding.
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ISCR or its affiliates currently serve as a general partner in 19 public
and private partnerships which currently own various types of real property.
None of the prior partnerships sponsored by ISCR now contemplate the
acquisition of any additional properties due to all public funds being fully
invested. However, it is likely that the General Partner or its affiliates
will sponsor additional public or private partnerships in the future. In
addition, the General Partner and their affiliates are and will continue to be
engaged in the business of real estate investment, development and management
apart from their involvement in the Registrant.
ISCR intends to devote only such time to the business of the Registrant as
in its judgment is reasonably required. ISCR is engaged in other similar
activities which also require the time and attention of its management and
staff.
As of March 1, 1996, the Registrant did not directly employ any persons in
a full-time position. Certain employees of ISCR performed services for the
Registrant during 1995.
ITEM 2 - PROPERTIES
(a) The Marketplace Mall & Theaters
The Marketplace Mall & Theaters complex is a 177,600 square foot enclosed
shopping mall with a separate 20,576 square foot theater building on
approximately 23 acres of land in Winston-Salem, (Forsyth County) North
Carolina. The Mall is currently predominantly occupied by many small tenants
between the range of 1,000 and 7,500 square feet in addition to the Hamricks
space which is approximately 48,000 square feet. The separate theater building
is occupied by Carmike Cinemas under a long-term lease.
As of March 1, 1996, the Mall was 91% occupied. A retail space survey of
Forsyth County indicated an overall vacancy rate of 6.4% for the mall
submarket. The southwest submarket of Winston-Salem, where the Mall is
located, contains 3,850,610 of aggregate leasable square feet. On December 6,
1994, the Registrant entered into a agreement with Hamricks to occupy
approximately 48,355 square feet at the Mall. The lease term is for ten years
and four months with rent commencing January 15, 1996. The initial annual rent
is $181,331. The tenant has two five-year options.
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 was 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.
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In October 1995, an additional $200,000 of the $300,000 maximum additional
borrowings was borrowed on the note. The note has a maturity date of June 30,
1998. The balance of the mortgage at December 31, 1995 totaled $5,664,958.
(b) Amelia Plaza Shopping Center
Amelia Plaza ("Amelia") is a 91,952 square foot neighborhood strip
shopping center located in Fernandina Beach, Florida. The property is located
in Nassau County which has approximately 670,000 square feet of retail space
with a overall vacancy factor of 5%. Fernandina Beach is the largest of three
municipalities within Nassau County. Leasing negotiations remain competitive
within the local market.
The principle tenants at Amelia are a Winn Dixie food store (45,965 square
feet) and Eckerd Drugs (10,080 square feet). The high sales volume of these
tenants and the presence of Wal-Mart adjacent to the property but not owned by
the Registrant enhances the customer traffic to the center. As of March 1,
1996, the Center was 98.5% leased and occupied.
The Amelia Plaza mortgage has a balance of $3,705,643 at December 31,
1995. Connecticut Mutual Life Insurance Company also has a staged equity
participation in sales proceeds over $4,175,000.
(c) Mt. Pilot Shopping Center
Mt. Pilot is a 38,650 square foot neighborhood strip shopping center in
Pilot Mountain, North Carolina. Because of the small size of this market, no
formal statistics exist relative to retail space or overall vacancy. The
General Partner believes that this market is relatively stable. The primary
tenants are Lowe's Food Stores occupying 21,000 square feet, Revco Drugs
occupying 8,450 square feet, and Family Dollar occupying 6,000 square feet.
Mt. Pilot is currently 100% leased and occupied. Currently, this property is
unencumbered by a mortgage.
(d) Town & Country Convalescent Center
The Tampa Project is a 120 bed skilled and intermediate care nursing home
located on approximately 6 1/2 acres of land in Tampa, Florida. The lease with
Advocare of Florida ("Advocare") under sublease from Hillhaven, Inc. expired
August 30, 1994. A new lease was negotiated with Advocare dated September 1,
1994. The lease term commenced September 1, 1994 and expires August 31, 2004.
The lessee is to provide monthly rent payments in the amount of $30,000 plus
supplemental rent, if any, as defined in the lease, which decreased from
$56,158 in the former lease.
The property is subject to a first mortgage which expired August 31, 1994. The
loan was renewed with the current lender in June 1995 and bears interest at
11.5%, up from 10% under the previous note. Monthly payments of principal and
interest in the amount of $29,991 are to be made based upon a 25 year
amortization. The mortgage balance at December 31, 1995 was $2,939,925.
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In August, 1995, the Partnership entered into a contract with a unaffiliated
party to sell Town & Country Nursing Home at a price of $3,935,000. Advocare
of Florida, the current lessee, has a right of first refusal to purchase the
home at the same terms and conditions and exercised this option. The
Registrant considered the original third party's purchase contract canceled
upon Advocare of Florida exercising their right of first refusal. Advocare
failed to meet certain requirements necessary to close the sale and the
contract with Advocare was canceled. Subsequently, the contract with Advocare
was reinstated and was anticipated to close by January 1996. In late 1995, the
unaffiliated third party who originally entered into the sales contract
initiated a lawsuit against the Registrant for breach of contract. The
Registrant believes the outcome of the litigation will be the determination of
which party will purchase the property. The financial impact is expected to be
immaterial to the Registrant.
(e) Country Forest Manor
On June 30, 1994, the Partnership entered into a purchase agreement with an
unaffiliated buyer for the sale of Meadowbrook Manor of Siler City ("Siler
City") for an approximate price of $4,522,051. The purchase agreement provided
for the sale of Siler City as well as four other nursing facilities from
partnerships for which ISC Realty Corporation is the managing General Partner
("Affiliated Partnerships"). The sale was contingent upon the majority
approval by the limited partners of one of the Affiliated Partnerships
("HCPII"). Approval by a majority of the limited partners of HCPII was
received and sales proceeds were released from escrow on August 24, 1994.
From the purchase proceeds, $1,511,585 was used to pay off the first mortgage
on the property. Closing costs incurred at settlement totaled $25,353 leaving
net cash proceeds to the partnership of $2,985,113. A net gain of $1,794,382
resulted from the transaction. In December 1994, $750,000 of the net proceeds
were distributed to the limited partners representing $250 per unit.
ITEM 3 - LEGAL PROCEEDINGS
The Registrant was named in a lawsuit brought against the former property
manager and leasing agent of the Marketplace Mall by a former tenant. The
tenant is in default of his lease and owes approximately $15,000 in past due
rent. The tenant alleges that he was "fraudulently induced" into signing his
lease at the Mall and is seeking compensatory damages for purchased trade
equipment and operating losses. During September 1994, the Registrant was
dismissed from the suit. The tenant vacated the premises in January 1994 and
was notified that he must surrender possession of the space in October of 1994.
The Registrant had a lien on the kitchen equipment which still remained in the
space, however, in 1995, the Registrant released the lien and returned
possession of the equipment to the former tenant.
See discussion at Item 2(d) Properties for detail of legal proceeding related
to Town & Country.
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ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - MARKET FOR REGISTRANT'S SECURITIES AND OTHER RELATED SECURITIES
HOLDER MATTERS
Transfer of the Registrant's Limited Partnership Units (the "Units") is
subject to certain restrictions contained in the Registrant's Limited
Partnership Agreement. There is no established market for the Units and it is
not anticipated that any will occur in the future. The Registrant is aware of
no significant resales of Units. As of March 1, 1996, 777 investors were
recorded owners of 3,000 units. During the year ended December 31, 1994, the
Registrant made a distribution of $250 per unit to the Limited Partners.
During 1995, the Registrant paid $37,095 to the North Carolina Department of
Revenue on behalf of nonresidents of North Carolina for income taxes resulting
from the sale of Siler City in 1994. This amount appears as a distribution on
the Statement of Partners Equity in the Financial Statements attached.
ITEM 6 -SELECTED FINANCIAL DATA (AUDITED)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating Revenues $2,304,536 $2,691,315 $2,910,684 $3,004,061 $3,078,945
Net Income (loss) $2,131,222 1,842,760 (64,670) (3,278,775) (571,596)
Cash Distributions declared
to Limited Partners 37,095* 750,000 0 0 0
Cash Distributions declared
per unit N/A 250 0 0 0
Total Assets 21,218,733 22,443,152 23,347,975 23,917,291 27,504,253
Long-Term Debt 12,310,526 15,705,327 17,704,926 18,243,204 18,368,115
Partners' Equity 8,519,251 6,425,124 5,332,364 5,397,034 8,675,809
</TABLE>
* See Item 5 for discussion regarding the 1995 distribution.
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ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
The Registrant generated $526,117 of cash flow from operations during the year
ended December 31, 1995. Cash payments during the year ended December 31, 1995
for improvements to rental properties amounted to $1,559,794 primarily for the
construction of the Hamricks space at the Mall and other improvements at the
Mall. In addition, $915,174 of principal payments were made on loans.
As of December 31, 1995, the Registrant held cash and cash equivalents of
$522,598. The Registrant feels that these funds should be used as a reserve
for the cost of operating and maintaining the properties. It is anticipated
that the Registrant's revenues from the operation of properties will be
sufficient to meet both the Registrant's operating and capital expenditures
through 1996. In addition, $80,482 was held in restricted cash accounts
related to tenant deposits, and property tax escrows.
Results of Operations
COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 1995 TO FISCAL YEAR ENDED
DECEMBER 31, 1994
For the year ended December 31, 1995, the Registrant reported net income in the
amount of $2,131,222 as compared to $1,842,760 for the year ended December 31,
1994. The most significant cause of the increase is the $2,413,950
extraordinary gain recorded as the result of the forgiveness of debt on the
Mall mortgage. (See Note 3 of the financial statements).
Rental income decreased from $2,576,216 for the year ended December 31, 1994 to
$2,225,534 for the year ended December 31, 1995. The primary reason was a
decrease in rental income from the new lease on Town & Country of approximately
$154,365 and the lack of rental income provided by Siler City Nursing Home due
to the sale in 1994 which amounted to approximately $209,000 in 1994. These
decreases were offset by a increase in base rent and percentage rent at Mt.
Pilot of approximately $12,000.
Interest and other income decreased approximately $36,000 during the year ended
December 31, 1995 as compared to 1994 due to less interest earned on a lesser
amount of cash reserves held during the year.
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Interest expense decreased from $1,445,255 for the year ended December 31, 1994
to $1,112,734 for the year ended December 31, 1995. Due to the sale of Siler
City in 1994, interest expense decreased $81,000 in 1995 and as a result of the
refinancing of the Mall mortgage, interest expense decreased $277,660 in 1995
for the Mall. These decreases were offset by an increase at Town & Country of
$29,000 due to an increase in the interest rate from 10% to 11.5%.
Provision for doubtful accounts decreased approximately $21,000 during 1995 at
the Mall due to a decrease in the write off of delinquent tenant receivables.
Operations and maintenance increased $312,687 during the year ended December
31, 1995 as compared to the year ended December 31, 1994. The increase is the
result of the following: Common area maintenance expense increased
approximately $161,000, of which $146,000 was at the Mall and $14,000 was at
Amelia Plaza. Leasing commissions increased approximately $65,000 in 1995 as
compared to 1994. Of that increase, $55,000 was related to leasing activity at
the Mall and the remaining $10,000 was the result of the amortization of
deferred lease commissions at Amelia. In addition, marketing expense increased
approximately $21,000 at the Mall as a result of the increased marketing and
advertising efforts related to the Mall.
Administrative expense decreased from $139,219 for the year ended December 31,
1994 to $118,726 for the year ended December 31, 1995 due to a decrease in
legal fees incurred at the Mall in 1995 as compared to 1994.
COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 1994 TO FISCAL YEAR ENDED
DECEMBER 31, 1993
For the years ended December 31, 1994 and 1993, the Registrant realized rental
income from its properties of $2,576,216 and $2,886,729, respectively. The
decrease is due to a decrease in rent from Siler City of approximately $211,000
due to the sale of the property in June 1994, a decrease of approximately
$125,000 from Town & Country related to the new lease signed in 1994, and an
increase in rental income from Amelia of approximately $82,000 which was offset
by a decrease in percentage rent at the Mall of approximately $62,000.
The Registrant realized $115,099 and $23,955, respectively in interest and
other income during the years ended December 31, 1994 and 1993, respectively.
The increase in 1994 is primarily related to interest earned from temporary
investment of the sales proceeds of Siler City.
The Registrant incurred interest expense of $1,445,255 and $1,636,778 for the
years ended December 31, 1994 and December 31, 1993, respectively. The change
in 1994 was due to a decrease of approximately $92,000 for the Mall related to
the decrease in the monthly payments remitted (see further discussion at Item
2), a decrease of $46,000 due to the sale of Siler City and the payoff of the
mortgage in June and a larger portion of debt service payments which were
attributable to principal at Amelia and Town & Country throughout the year.
Amortization expense increased from $36,641 for the year ended December 31,
1993 to $51,738 for the year ended December 31, 1994 due to an increase of
amortization expense for loan costs incurred for the modification of the Mall
mortgage in 1993.
Depreciation expense decreased from $773,889 for the year end December 31, 1993
to $693,984 for the year end December 31, 1994 primarily due to the sale of
Siler City in June 1994 which
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reduced depreciation expense by approximately $40,000 and an audit adjustment
of approximately $39,000 for depreciation expense at the Mall.
Operations and maintenance expense decreased from $358,846 for the year end
December 31, 1993 to $279,414 for the year end December 31, 1994 due to a
decrease of approximately $21,000 in advertising expense at the Mall, a
decrease of $18,000 in building service expense at the Mall, a decrease of
$29,000 in common area maintenance expense at the Mall, and a decrease of
approximately $10,000 in insurance expense at the Mall.
Net income for the Registrant was $1,842,760 during the year ended December 31,
1994. The significant increase in the net income as compared to 1994 is
primarily the result of the gain resulting on the sale of Siler City. The
weighted average number of units outstanding during the year was 3,000
resulting in a net income per unit of $608.11.
Net cash provided by operating activities increased in 1994 to $802,250 from
$787,943 for the year ended December 31, 1993, primarily due to the gain
provided by the sale of Siler City during 1993.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this
report.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has no directors or executive officers. Information as to
the directors and executive officers of ISCR are as follows:
Name Information about Directors and Executive Officers
---- --------------------------------------------------
J. Christopher Boone Director and President of ISCR. He is 37 years old.
James C. Cole, Jr. Vice President of ISCR. He is 30 years old.
Parks H. Dalton Director of ISCR. He is 66 years old.
Michael D. Hearn Director of ISCR. He is 43 years old
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Edward C. Ruff Director of ISCR. He is 56 years old.
Robert B. McGuire Treasurer of ISCR. He is 48 years old.
J. Christopher Boone, President of ISCR, was formerly a Vice President of
ISCR and is a First Vice President of Interstate/Johnson Lane Corporation
("I/JL"). Prior to joining I/JL in 1984, Mr. Boone was a tax specialist for
Coopers & Lybrand, Certified Public Accountants. He received a Bachelor's
Degree in Business Administration with an emphasis in accounting from the
University of North Carolina at Chapel Hill.
James C. Cole, Jr., Vice President of ISCR since 1992 and Vice President
of I/JL since September 1993. Prior to joining ISCR in 1991, Mr. Cole was a
Senior Tax Specialist for Arthur Andersen & Company, Certified Public
Accountants. Mr. Cole received a B.S. in Business Administration from the
University of North Carolina at Chapel Hill with an emphasis in Accounting.
Parks H. Dalton was a director of Interstate/Johnson Lane, Inc. (the
"Company") from 1985 until his retirement in 1988. He also served as Chief
Executive Officer of I/JL from 1968 to 1988, President from 1968 to 1983, and
Chairman from 1983 to 1988. In November 1990, he was re-elected Chairman and
Chief Executive Officer of I/JL. He was re-elected as a director of the
Company in July 1990 and as Chairman and Chief Executive Officer of the Company
in September 1990. In 1994, he transferred the duties of Chief Executive
Officer to the current President of I/JL and remains Chairman. He is a
director of ISCR.
Edward C. Ruff is a Senior Vice President and the Chief Financial Officer
of I/JL and also serves on its Board of Directors. Mr. Ruff has been employed
by I/JL since 1976. He is a graduate of the University of San Francisco, with
a bachelor's degree in accounting. He is a director of ISCR.
Robert B. McGuire is Treasurer of ISCR. In addition, he is Senior Vice
President and Treasurer for I/JL. Mr. McGuire received a B.A. in Business
Administration from Furman University and a Masters in Business Administration
from Emory University.
Michael D. Hearn has served as Secretary and General Counsel of I/JL since
1985. He was elected a Senior Vice President of Interstate in 1978 and a
Director in 1986. In May of 1992 he was elected a Director of ISCR. Mr. Hearn
received a Bachelor of Science degree in Business Administration and a Juris
Doctor from the University of North Carolina at Chapel Hill. He is secretary
of ISCR.
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ITEM 11 - EXECUTIVE COMPENSATION
During the fiscal year ended December 31, 1995, the Registrant paid no
compensation to the executive officers, directors or partners, of ISCR. See
Item 13 "Certain Relationships and Related Transactions" for a discussion of
amounts paid or which may be paid to ISCR for the year ending December 31,
1995.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 1, 1996, ISCR, the sole general partner, owns a 1% interest in
net profits and net losses and distributions of distributable cash from
operations and sale or refinancing proceeds of the Partnership as set forth in
the Partnership Agreement. As of March 1, 1996, the following officer of ISCR
owned the following number of LP units of the Registrant:
NAME NUMBER OF UNITS PERCENT OF UNITS SUBSCRIBED FOR:
J. Christopher Boone 4 Less than 1%
ISCR is not aware of any beneficial owners of greater than five percent (5%) of
the Limited Partners' Units.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Compensation
ISCR is entitled to compensation, fees and distributions in connection with the
acquisition, operations and liquidation stages of the Partnership, all as set
forth in the Partnership Agreement. No payments in excess of $60,000 were made
to related parties during 1995. See Note 5 of the financial statements
attached for detailed disclosure of fees paid to ISCR during the year.
As the sole general partner of the Partnership, ISCR is entitled to the
following pursuant to the Partnership Agreement:
(1) A one percent (1%) interest in net profit and net loss of the Partnership
and a one percent (1%) interest in distributable cash flow from operations
of the Partnership after certain prior distributions to Limited Partners.
(2) A Partnership Management Fee of 10% of the net cash flow for its services
in managing the partnership. ISCR has had the right to defer any portion
of this fee. Any amount deferred will bear interest at a rate not to
exceed 120% of the then applicable Federal Rate as
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determined under Internal Revenue Code Section 1274 and regulations
promulgated thereunder.
(3) Initially a one percent (1%) interest in net cash proceeds resulting from
a sale or refinancing until such time as the investors have received a
return equal to the amount of their adjusted capital contribution plus a
10% cumulative, annual, non-compounded return thereon, less all prior
distributions not a return of capital, then after such return ISCR will be
entitled to 15%. After certain adjustments to capital accounts, net
profit from a sale is allocated to the partners in the same proportion as
the distribution of net cash proceeds from such sale and net loss is
allocated 99% to the Limited Partners and one percent (1%) to ISCR.
(4) A Property and Lease Management Fee computed annually not to exceed 5% of
annual operating income of the Partnership for services in monitoring each
lessee's operation of each lease project. This fee applies only to Town &
Country Convalescent Center and Meadowbrook Manor of Siler City prior to
its sale in June 1994.
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PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
(a) 1. and 2. The response to this portion of
Item 14 is submitted as a separate section of this
report.
3. Exhibits.
27. Financial Data Schedule (for SEC use only).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the 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
a North Carolina Limited Partnership
BY: ISC Realty Corporation
General Partner
BY: /S/ J. Christopher Boone
------------------------
J. Christopher Boone
President
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the
date indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ J. Christopher Boone Director and 3-27-96
- ------------------------ President of --------------
J. Christopher Boone ISC Realty
Corporation
/S/ Edward C. Ruff Director of 3-27-96
- ------------------------- ISC Realty --------------
Edward C. Ruff Corporation
Director of
- ------------------------- ISC Realty --------------
Parks H. Dalton Corporation
/s/ Michael D. Hearn Director of 3-27-96
- ------------------------- ISC Realty --------------
Michael D. Hearn Corporation
</TABLE>
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EXHIBIT F
MARKETPLACE INCOME PROPERTIES
(A Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
[Item 14(a)1 and 2]
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Report of Independent Public Accountants F-1-F-2
Financial Statements:
Balance sheets at December 31,
1995 and 1994 F-3
Statements of operations for the years ended
December 31, 1995, 1994, and 1993 F-4
Statements of partners' capital for the
years ended December 31, 1995, 1994, and 1993 F-5
Statements of cash flows for the years
ended December 31, 1995, 1994, and 1993 F-6
Notes to financial statements F-7-F-13
Financial Statement Schedules:
Schedule III - Real estate and accumulated depreciation
for the year ended December 31, 1995 F-14
</TABLE>
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission
of the schedules, or because the information required is included in
the consolidated financial statements and notes thereto.
16
<PAGE> 17
MARKETPLACE INCOME PROPERTIES
ANNUAL REPORT ON FORM 10-K
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995, 1994 AND 1993
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Marketplace Income Properties:
We have audited the accompanying consolidated balance sheets of Marketplace
Income Properties as of December 31, 1995 and 1994, and the related
consolidated statements of operations, partners' capital and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements and schedule referred to below are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements and schedule 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Marketplace Income
Properties as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule listed in the index to financial
statements and financial statement schedule is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not a
required part of the basic financial statements. The schedule has been
subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, fairly states, in all material
respects, the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
Charlotte, North Carolina,
February 9, 1996.
F-1
<PAGE> 19
MARKETPLACE INCOME PROPERTIES
CONSOLIDATED BALANCE SHEETS -- DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ --------- ---------
<S> <C> <C>
RENTAL PROPERTIES, at cost (Note 2):
Land and land improvements $ 3,873,911 $ 3,873,911
Buildings and building improvements 22,016,181 20,456,387
Furniture and equipment 410,143 410,143
----------- -----------
26,300,235 24,740,441
Accumulated depreciation (6,101,961) (5,404,224)
----------- -----------
Rental properties, net 20,198,274 19,336,217
CASH AND CASH EQUIVALENTS 522,598 1,258,117
RESTRICTED CASH 80,482 64,553
CASH ON DEPOSIT WITH LENDER (Note 3) 0 1,401,571
RENTS RECEIVABLE 104,794 118,036
DEFERRED ASSETS, net of accumulated
amortization of $114,265 in 1995 and
$211,047 in 1994 225,017 194,964
OTHER ASSETS 87,568 69,694
----------- -----------
$21,218,733 $22,443,152
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
MORTGAGE NOTES PAYABLE (Note 3) $12,310,526 $15,705,327
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 263,908 216,567
PAYABLES TO GENERAL PARTNERS AND AFFILIATES 60,391 22,318
OTHER LIABILITIES 38,156 46,141
----------- -----------
Total liabilities 12,672,981 15,990,353
----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)
MINORITY INTEREST 26,501 27,675
----------- -----------
PARTNERS' CAPITAL:
General partners 108,141 86,829
Limited partners 8,411,110 6,338,295
----------- -----------
Total partners' capital 8,519,251 6,425,124
----------- -----------
$21,218,733 $22,443,152
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
F-2
<PAGE> 20
MARKETPLACE INCOME PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
REVENUE:
Rental income $2,225,534 $2,576,216 $2,886,729
Interest and other income 79,002 115,099 23,955
---------- ---------- ----------
Total revenue 2,304,536 2,691,315 2,910,684
---------- ---------- ----------
OPERATING EXPENSES:
Interest 1,112,734 1,445,255 1,636,778
Depreciation 697,737 693,984 773,889
Amortization 55,413 51,738 36,641
Provision for doubtful accounts 11,727 32,454 23,974
Operations and maintenance 592,101 279,414 358,846
Administrative 118,726 139,219 143,093
---------- ---------- ----------
Total operating expenses 2,588,438 2,642,064 2,973,221
---------- ---------- ----------
OPERATING INCOME (LOSS) (283,902) 49,251 (62,537)
MINORITY INTEREST 1,174 (873) (2,133)
GAIN ON SALE OF RENTAL PROPERTY (Note 2) 0 1,794,382 0
EXTRAORDINARY GAIN ON EXTINGUISHMENT OF
LONG-TERM DEBT (Note 3) 2,413,950 0 0
---------- ---------- ----------
NET INCOME (LOSS) $2,131,222 $1,842,760 $ (64,670)
========== ========== ==========
NET INCOME (LOSS) ALLOCATED TO GENERAL
PARTNERS $ 21,312 $ 18,428 $ (647)
========== ========== ==========
NET INCOME (LOSS) ALLOCATED TO LIMITED
PARTNERS $2,109,910 $1,824,332 $ (64,023)
========== ========== ==========
NET INCOME (LOSS) PER LIMITED PARTNER
UNIT (Note 1) $ 703.30 $ 608.11 $ (21.34)
========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
F-3
<PAGE> 21
MARKETPLACE INCOME PROPERTIES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-------- ---------- ---------
<S> <C> <C> <C>
BALANCE, December 31, 1992 $ 69,048 $5,327,986 $5,397,034
Net loss (647) (64,023) (64,670)
-------- ---------- ----------
BALANCE, December 31, 1993 68,401 5,263,963 5,332,364
Net income 18,428 1,824,332 1,842,760
Cash distributions 0 (750,000) (750,000)
-------- ---------- ----------
BALANCE, December 31, 1994 86,829 6,338,295 6,425,124
Net income 21,312 2,109,910 2,131,222
Cash distributions 0 (37,095) (37,095)
-------- ---------- ----------
BALANCE, December 31, 1995 $108,141 $8,411,110 $8,519,251
======== ========== ==========
</TABLE>
The accompanying notes to consolidate financial statements
are an integral part of these statements.
F-4
<PAGE> 22
MARKETPLACE INCOME PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,131,222 $ 1,842,760 $ (64,670)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities-
Extraordinary gain on extinguishment of
long-term debt (2,413,950) 0 0
Gain on sale of rental property 0 (1,794,382) 0
Depreciation and amortization 753,150 745,722 810,530
Provision for doubtful accounts 11,727 32,454 23,974
Minority interest (1,174) 873 2,133
(Increase) decrease in rent receivable 1,515 (23,184) 35,074
Other, net 43,627 (1,993) (19,098)
----------- ----------- ---------
Net cash provided by operating
activities 526,117 802,250 787,943
----------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to rental properties, net (1,559,794) (5,249) (3,110)
Cash proceeds from sale of rental property, net 0 4,340,167 0
----------- ----------- ---------
Net cash provided by (used in) investing
activities (1,559,794) 4,334,918 (3,110)
----------- ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt (915,174) (1,999,599) (538,278)
Decrease (increase) in cash on deposit with lender 1,401,571 (1,401,571) 0
Payment of loan closing costs (151,144) 0 (183,557)
Cash distributions paid to limited partners (37,095) (750,000) 0
----------- ----------- ---------
Net cash provided by (used in) financing
activities 298,158 (4,151,170) (721,835)
----------- ----------- ---------
NET INCREASE (DECREASE) IN CASH (735,519) 985,998 62,998
CASH AND CASH EQUIVALENTS, beginning of year 1,258,117 272,119 209,121
----------- ----------- ---------
CASH AND CASH EQUIVALENTS, end of year $ 522,598 $ 1,258,117 $ 272,119
=========== =========== =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-5
<PAGE> 23
MARKETPLACE INCOME PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Marketplace Income Properties (the Partnership) was formed on November 27,
1985, under the North Carolina Uniform Limited Partnership Act. The
Partnership was formed for the purpose of acquiring, owning, leasing and
operating real property and improvements existing thereon. ISC Realty
Corporation (ISC) and Benton Investment Company (Benton) were the general
partners. William G. Benton was the initial limited partner. Effective
January 1, 1993, ISC purchased the general partner interest of Benton. The
Partnership will be terminated upon the occurrence of certain events as defined
in the limited partnership agreement but, in any event, no later than December
31, 2016.
Limited partner units were sold at $5,000 per unit ($2,500 per one-half unit)
(3,000 units) for a total of $15,000,000.
Under the terms of the partnership agreement, net income (loss) of the
Partnership is allocated 99% to the limited partners and 1% to the general
partner. Distributions are to be made (99% to limited partners and 1% to
general partner) semiannually, or more frequently in the discretion of the
general partner provided, however, that the Partnership generates distributable
cash flow as defined by the limited partnership agreement. Distributions of
$37,095 and $750,000 were made to the limited partners during 1995 and 1994,
respectively. No distributions to partners were declared during 1993.
Upon the sale, refinance or disposition of the partnership property, the
partnership agreement specifies certain allocations of net proceeds and taxable
gain or loss from the transaction.
PRINCIPLES OF CONSOLIDATION
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.
RENTAL PROPERTIES
The Partnership owns shopping centers and nursing home properties which are
recorded at cost. Depreciation is provided on a straight-line basis over the
estimated economic useful lives of the assets as follows:
<TABLE>
<S> <C>
Land improvements 10 years
Buildings and building improvements 35 to 40 years
Furniture and equipment 5 to 10 years
</TABLE>
F-6
<PAGE> 24
DEFERRED ASSETS
Deferred assets consist of deferred loan costs and deferred acquisition costs
incurred in connection with the purchase of rental properties. Deferred loan
costs are being amortized over the terms of the respective loans. Deferred
acquisition costs are being amortized on a straight-line basis over a period of
40 years.
SYNDICATION COSTS
Certain fees and expenses relating to the sale of limited partnership units
paid to affiliates of the general partner were charged against partners'
equity.
INCOME TAXES
Under current income tax laws, income or loss of partnerships is included in
the income tax returns of the partners. Accordingly, no provision has been
made for federal or state income taxes in the accompanying financial
statements.
The tax returns of the Partnership are subject to examination by federal and
state taxing authorities. If such examinations occur and result in changes
with respect to the Partnership's qualification or in changes to partnership
income or loss, the tax liability of the partners would be changed accordingly.
NET INCOME (LOSS) PER LIMITED PARTNER UNIT
Net income (loss) per limited partner unit is calculated based on the weighted
average number of units outstanding during the period (3,000 in 1995, 1994 and
1993).
RESTRICTED CASH
Restricted cash consists of tenant security deposits and certain escrowed funds
at December 31, 1995 and 1994.
PERVASIVENESS OF 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 disclosure 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.
F-7
<PAGE> 25
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practical to estimate the
value.
Cash and Cash Equivalents - The carrying amount approximates fair value
because of the short maturity of these instruments.
Long-term Debt - The fair value of the Partnership's long-term debt
approximates its carrying value.
2. RENTAL PROPERTIES:
Marketplace Mall was acquired effective January 30, 1986. The property
consists of a 177,600 square foot enclosed shopping mall with an adjacent
20,576 square foot cinema complex located in Winston-Salem, North Carolina.
The purchase price of $14,100,000, excluding closing costs, was partially
funded by a $9,500,000 mortgage note payable.
Mount Pilot Shopping Center was acquired effective October 1, 1986. The
property consists of a 38,650 square foot shopping center located in Pilot
Mountain, North Carolina. The purchase price of $1,600,000, excluding closing
costs, was funded entirely from partners' capital.
Amelia Plaza Shopping Center was acquired effective November 30, 1987. The
property consists of a 91,952 square foot shopping center located in Fernandina
Beach, Florida. The purchase price of $5,550,000, excluding closing costs, was
partially funded by a $4,175,000 mortgage note payable.
On August 1, 1987, the Partnership acquired a 99% interest in Marketplace
Income Properties of Florida (d/b/a Town and Country Convalescent Center). The
property is a 120-bed skilled and intermediate care nursing home located in
Tampa, Florida. The facility is operated by an unrelated third party under a
triple net lease. The purchase price of $4,930,000, excluding closing costs,
was partially funded by a $3,300,000 mortgage note payable.
Country Forest Manor was acquired effective October 20, 1987. The property is
a 160-bed skilled and intermediate care nursing home located in Siler City,
North Carolina. The facility is operated by an unrelated third party under a
triple net lease. The purchase price of $2,989,280, excluding closing costs,
was partially funded by a $1,650,000 mortgage note payable. Effective June 30,
1994, the Partnership sold Country Forest Manor to an unrelated third party for
a purchase price of $4,522,051, less certain closing costs. The sale resulted
in a gain to the Partnership of $1,794,382 which has been included in the
accompanying consolidated statements of operations. Country Forest Manor was
one of five nursing homes acquired for a lump-sum purchase price. ISC served
as general partner for the partnerships which owned the five properties prior
to sale. ISC allocated the lump-sum purchase price to the individual nursing
homes based on estimated fair market value at the time of sale. Country Forest
Manor's total revenue was approximately $233,000 and $422,000, while total
operating expenses were approximately $134,000 and $218,000 during 1994 and
1993, respectively.
F-8
<PAGE> 26
3. MORTGAGE NOTES PAYABLE:
The Partnership's debt consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
Mortgage note payable, bearing interest at 8.35%, due
June 30, 1998. The note is payable in monthly
installments of $17,521, plus accrued interest.
The note is secured by a deed of trust on Marketplace
Mall and by the assignment of leases and rents $ 5,664,958 $ 0
Mortgage note payable, bearing interest at 8%, payable
interest only until maturity on February 1, 1998. This note,
which was refinanced during 1995, was secured by a deed of
trust on Marketplace Mall and by the assignment of leases
and rents 0 7,337,880
Mortgage note payable, bearing interest at 9.56%, due
February 1, 1998. This note, which was refinanced during 1995,
was secured by a deed of trust on Marketplace Mall and by the
assignment of leases and rents 0 1,541,023
Mortgage note payable, bearing interest at 8.25%, due
October 1, 1998. Additional interest may result from a staged
equity participation with the lender. The note is payable in
monthly payments of principal and interest of $39,000 based on a
15-year amortization. This note is secured by a deed of trust on
Amelia Plaza Shopping Center 3,705,643 3,856,266
Mortgage note payable, bearing interest at 10%, which matured in
1994. The note was renewed in June 1995, and now bears interest at
11.5% and is due in monthly installments of $29,991 (based on a
25-year amortization) through January 1, 2002. This note is
nonrecourse and is secured by a deed of trust on Town and Country
Convalescent Center $ 2,939,925 $ 2,970,158
----------- -----------
$12,310,526 $15,705,327
=========== ===========
</TABLE>
The Partnership paid interest of $1,151,956, $1,422,096, and $1,621,913 for the
years ended December 31, 1995, 1994 and 1993, respectively.
A portion of the note secured by Marketplace Mall is guaranteed by an affiliate
of the general partner. The partnership compensates the guarantor 2% of the
average annual outstanding balance of the note. This fee amounted to $20,073
during 1995.
F-9
<PAGE> 27
Future maturities of mortgage notes payable are as follows:
<TABLE>
<S> <C>
1996 $ 395,973
1997 413,783
1998 8,636,385
1999 31,520
2000 35,343
Thereafter 2,797,522
-----------
$12,310,526
===========
</TABLE>
Effective December 16, 1994, the Partnership entered into an agreement with the
lender to modify both mortgage notes secured by deeds of trust on Marketplace
Mall. Terms of the modification required that all net operating income, as
defined in the modification agreement, of Marketplace Mall be applied toward
principal and interest of the outstanding debt. The modification further
provided for a discounted prepayment of both notes for $6,300,000, plus accrued
interest. In addition, the Partnership was required to maintain $1,400,000 in
an escrow account to fund certain improvements planned for Marketplace Mall.
During July 1995, the mortgage notes were refinanced through another lender.
The Partnership was required to pay $6,300,000 to satisfy both obligations;
$5,500,000 of which was funded through a new mortgage note and the remaining
$800,000 paid for with cash on hand. Later in 1995, an additional $200,000 was
drawn on this note to be used by the Partnership to fund certain capital
improvements. An additional $100,000 may be borrowed subject to certain
leasing requirements specified by the lender. The discounted prepayment
resulted in a gain, net of related deferred loan costs, to the Partnership of
$2,413,950, which is presented as an extraordinary item in the accompanying
consolidated statement of operations.
4. LEASES:
The Partnership leases its rental properties under operating leases with
initial terms that expire from 1996 through 2007. The nursing home and
shopping center leases are primarily net leases which require the lessee to pay
substantially all operating, maintenance and repairs, and insurance and taxes
on the leased property. Related expenses have been recorded net of such tenant
reimbursements. The Partnership may receive additional rental income if tenant
sales are in excess of stipulated amounts. Overage rents were $31,834, $17,841
and $88,479 for the years ended December 31, 1995, 1994 and 1993, respectively.
F-10
<PAGE> 28
Future minimum lease payments under noncancelable operating leases as of
December 31, 1995, are as follows:
<TABLE>
<S> <C>
1996 $2,194,744
1997 2,043,958
1998 1,857,172
1999 1,532,497
2000 1,230,736
Thereafter 6,323,587
-----------
$15,182,694
===========
</TABLE>
Approximately 14% of the rental property is leased to one tenant under a lease
that expires in 2005. Approximately 13% of the rental property is leased to
another tenant under a lease that expires in 2006. In addition, the
Partnership received rental income of $415,900 in 1994, and $673,760 in 1993
from one lessee, Advocare of Florida, under sublease from Hillhaven
Corporation. Hillhaven Corporation elected not to renew this lease upon its
expiration in 1994. A new lease was signed with Advocare of Florida, Inc. in
1994 with a 10-year term that provides for base rent of $360,000 per year, plus
supplemental rents, as defined in the lease agreement. The Partnership
received rental income of $360,000 in 1995 and $120,000 in 1994 from Advocare
of Florida, Inc.
5. RELATED-PARTY TRANSACTIONS:
The Partnership incurs certain costs and expenses related to services provided
by its general partner and their affiliates. These costs and expenses were as
follows for the years ended December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- -------
<S> <C> <C> <C>
Sales commission - ISC $ 0 $113,051 $ 0
Lease management fees - ISC 18,000 35,928 54,767
Overhead reimbursement charge - ISC 50,000 50,000 50,000
Loan placement fees - ISC 0 0 16,800
Loan guarantee fees - ISC (Note 3) 20,073 0 0
Lease commission - ISC 45,000 0 0
======== ======== =======
</TABLE>
F-11
<PAGE> 29
6. RECONCILIATION OF FINANCIAL STATEMENT INCOME (LOSS) TO TAXABLE INCOME
(LOSS):
A reconciliation of financial statement and taxable income (loss) allocated to
the limited partners follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Financial statement net income (loss) $2,131,222 $1,842,760 $ (64,670)
Add (deduct)-
Depreciation and amortization deducted for
income tax purposes (219,916) (271,936) (368,007)
Minority interest in subsidiary (127,230) 107,697 (15,762)
Tax greater than book gain on sale of assets 0 203,427 0
Unearned rent income (10,180) 30,815 0
Bad-debt expense 0 (23,416) 0
Property taxes accrued (14,790) 18,928 0
Write-off of deferred loan costs for book
not tax 65,677 0 0
---------- ---------- ----------
Taxable income (loss) $1,824,783 $1,908,275 $ (448,439)
========== ========== ==========
Weighted average number of units outstanding 3,000 3,000 3,000
========== ========== ==========
</TABLE>
7. SALE OF TOWN AND COUNTRY CONVALESCENT CENTER:
The Partnership has entered into a contract to sell Town and Country
Convalescent Center for $3,935,000, subject to certain conditions and approvals
required by the contract. The net carrying value of Town and Country
Convalescent Center was $3,623,207 at December 31, 1995.
8. CONTINGENCIES:
The Partnership has been named as a defendant in a lawsuit arising out of its
normal course of business. In the opinion of the general partner, after
consultation with legal counsel, the outcome of this lawsuit will not have a
material adverse affect on the financial position or results of operations of
the Partnership.
F-12
<PAGE> 30
SCHEDULE III
MARKETPLACE INCOME PROPERTIES
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Costs Capitalized
Initial Cost to Company Subsequent to Acquisition
-------------------------------- -------------------------------
Land and Buildings and Carrying
Description Encumbrances Improvements Improvements Improvements Costs
- ------------------- -------------- ------------ -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Shopping mall and
theater, Winston-
Salem, North Carolina $ 5,664,958 $2,483,199 $12,081,900 $2,182,828 $(2,605,379)
Shopping center, Pilot
Mountain, North
Carolina 0 102,211 1,558,719 0 0
Nursing home, Tampa,
Florida 2,939,925 360,918 4,218,229 0 0
Shopping Center, Amelia
Island, Florida 3,705,643 1,292,400 4,536,021 89,189 0
----------- ---------- ----------- ---------- -----------
$12,310,526 $4,238,728 $22,394,869 $2,272,017 $(2,605,379)
=========== ========== =========== ========== ===========
<CAPTION>
Gross Amount at Which Carried at Life on Which
Close of Period Depreciation
-------------------------------------- in Latest
Land and Buildings and Accumulated Date of Date of Income Statement
Description Improvements Improvements Total Depreciation Construction Acquired is Capitalized
- --------------- ------------ ------------- ------- ------------ ------------ -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shopping mall and
theater, Winston-
Salem, North Carolina $2,108,540 $12,034,008 $14,142,548 $3,535,524 N/A 01/30/86 5 and 40 years
Shopping center, Pilot
Mountain, North
Carolina 102,211 1,558,719 1,660,930 360,464 N/A 10/01/86 40 years
Nursing home, Tampa,
Florida 360,918 4,218,229 4,579,147 955,940 N/A 08/01/87 10 and 40 years
Shopping Center, Amelia
Island, Florida 1,302,242 4,615,368 5,917,610 1,250,033 N/A 11/30/87 10 and 40 years
---------- ----------- ----------- ----------
$3,873,911 $22,426,324 $26,300,235 $6,101,961
========== =========== =========== ==========
The activity in rental properties and related accumulated depreciation for the
year ended December 31, 1995, is summarized as follows:
Balance, December 31, 1992 $3,950,081 $23,910,516 $27,860,597 $4,519,605
Additions 0 (3,110) (3,110) 0
Depreciation 0 0 0 773,889
---------- ----------- ----------- ----------
Balance December 31, 1993 3,950,081 23,907,406 27,857,487 5,293,494
Additions (19,811) 25,060 5,249 0
Depreciation 0 0 0 693,984
Sale of rental property (56,359) (3,065,936) (3,122,295) (583,254)
---------- ----------- ----------- ----------
Balance, December 31, 1994 3,873,911 20,866,530 24,740,441 5,404,224
Additions 0 1,559,794 1,559,794 0
Depreciation 0 0 0 697,737
---------- ----------- ----------- ----------
Balance, December 31, 1995 $3,873,911 $22,426,324 $26,300,235 $6,101,961
========== =========== =========== ==========
</TABLE>
Note: Aggregate cost for federal income tax purposes is $24,326,467 at
December 31, 1995.
F-13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MARKETPLACE INCOME PROPERTIES FOR THE YEAR ENDED
DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
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0
0
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