<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, 1996
OR
[ ] 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: 33-1889
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
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(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, 1996
Page 1 of 10 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(unaudited) 1995
----------- -----------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 3,844,259 $ 3,873,911
Buildings 22,117,464 22,016,181
Furniture and equipment 410,143 410,143
----------- -----------
26,371,866 26,300,235
Accumulated depreciation (6,405,013) (6,101,961)
----------- -----------
19,966,853 20,198,274
Cash and cash equivalents 552,940 522,598
Restricted Cash 121,576 80,482
Accounts Receivable 1,190 104,794
Net Deferred Loan and Acquisition Costs 200,153 225,017
Other 75,880 87,568
----------- -----------
$20,918,592 $21,218,733
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Debt $12,114,259 $12,310,526
Payables to general partners and affiliates 60,391 60,391
Other liabilities 263,700 302,064
----------- -----------
12,438,350 12,672,981
Minority interest 26,023 26,501
Partners' capital:
General partners 107,504 108,141
Limited partners 8,346,728 8,411,110
----------- -----------
8,454,219 8,519,251
----------- -----------
$20,918,592 $21,218,733
=========== ===========
</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, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Rent $650,462 $ 581,426 $1,384,566 $1,287,612
Interest and other 38,645 28,573 43,937 55,378
-------- --------- ---------- ----------
689,107 609,999 1,428,503 1,342,990
Expenses:
Interest 279,050 304,475 559,057 673,240
Depreciation 148,384 170,917 303,053 342,626
Amortization 11,010 13,854 24,863 28,026
Operations and maintenance 152,747 256,668 370,095 458,002
Professional fees 0 6,093 22,949 26,561
Legal fees 24,080 1,389 142,854 4,528
Administrative and other 37,329 19,787 71,143 43,523
-------- --------- ---------- ----------
652,600 773,183 1,494,014 1,576,506
Income before minority interest 36,507 (163,184) (65,511) (233,516)
Minority interest (265) 113 (479) (129)
-------- --------- ---------- ----------
Net income (loss) $ 36,772 $(163,297) $ (65,032) $ (233,387)
======== ========= ========== ==========
</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, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- --------- -----------
<S> <C> <C> <C>
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
======== ========== ==========
Balance, December 31, 1995 $108,141 $8,411,110 $8,519,251
Net loss for the period (650) (64,382) (65,032)
Distributions 0 0 0
-------- --------- ----------
Balance, June 30, 1996 $107,491 $8,346,728 $8,454,219
======== ========== ==========
</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, 1996 AND 1995
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Net Income $(65,032) $ (233,387)
-------- ----------
Adjustments to reconcile net income to net cash provided by operations:
Decrease in accounts receivable 103,604 102,560
Depreciation 303,053 342,626
Amortization 24,863 28,026
Minority Interest (478) (129)
Other (29,406) 404,894
Increase in accrued liabilities (38,364) 217,997
Increase in deferred loan costs 0 (77,429)
-------- ----------
Total adjustments 363,272 1,018,545
-------- ----------
Net cash provided by operating activities 298,240 785,158
Cash flows from investing activities:
Improvements in rental properties (71,631) (574,482)
-------- ----------
Net cash used by investing activities (71,631) (574,482)
Cash flows from financing activities:
Repayments of debt (196,267) (93,628)
Distributions to limited partners 0 (37,092)
-------- ----------
Net cash used by financing activities (196,267) (130,720)
Net increase in cash and cash equivalents 30,342 79,956
Cash and cash equivalents at beginning of period 522,598 1,258,117
-------- ----------
Cash and cash equivalents at end of period $552,940 $1,338,073
======== ==========
</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 A North
Carolina 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, 1996. 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 1995 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, 1996 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 August 12, 1996 was 775. 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
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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, 1996
and 1995, respectively. The general partner earned $9,741 as a lease
management fee for Town & Country for the six months ended June 30, 1996 and
$9,000 for the six months ended June 30, 1995, based upon rental revenue. The
general partner also earned a fee of approximately $9,800 for guaranteeing the
mortgage on the Mall. This fee represents 2% of the amount of the balance
guaranteed.
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 $552,940 at June 30, 1996, up from $522,598
at December 31, 1995. This balance is being maintained as a reserve for
capital improvements, debt repayments and other contingencies.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
The Partnership had a net loss of $233,387 for the six months ended June 30,
1995 compared to a net loss of $65,032 for the same period in 1996. The change
in net loss is attributable to the following variances in income and expense
components.
Gross income increased approximately $86,000. The increase is the result of
higher rental income and expense reimbursements at the Mall due to higher
occupancy resulting from the Hamrick's expansion that occurred in 1995.
Interest expense for the six months ended June 30, 1996 was $559,057 compared
with $673,240 for the same period of 1995. The decrease of $114,183 in 1996 is
attributable to the restructuring of the Mall mortgage as well as a higher
percentage of the debt service payments allocated to principal.
7
<PAGE> 8
Operations and maintenance expense decreased from $458,002 for the six months
ended June 30, 1995 to $370,095 for the same period in 1996. The decrease of
approximately $88,000 is attributable to a decrease in common area maintenance
expense and property taxes at the Mall. The property taxes were reduced upon
appeal to the State Tax Commission. The general partner has appealed the value
determination and is seeking a further reduction.
Administrative and other expenses increased from $43,523 for the six months
ended June 30, 1995 to $71,143 for the six months ended June 30, 1996. The
higher amount in 1996 is attributed to the loan guarantee fees mentioned above
as well as higher management fees at the properties associated with the higher
gross income.
THREE MONTHS ENDED JUNE 30, 1996 AS COMPARED TO
THREE MONTHS ENDED JUNE 30, 1995
The Partnership reported net income of $36,772 for the three months ended
June 30, 1996 as compared to a net loss of $163,297 for the same period in 1995.
Rental income for the three months ended June 30, 1996 increased over $69,000
to $650,462 as compared to the same three month period in 1995. The increase
is the result of the higher rental income and expense reimbursements at the
Mall as discussed above.
Operations and maintenance expenses decreased approximately $104,000 from the
three months ended June 30, 1996 to the three months ended June 30, 1995. The
decrease is attributable to the property tax reduction as explained above as
well as a decrease in advertising and marketing expenses at the Mall. It is
likely that the decrease in advertising will reverse in the fourth quarter as
promotions increase for the holiday season.
Legal expense was $24,080 for the three months ended June 30, 1996, a $22,500
increase over the same period in 1995. The increase stems from the settlement
of the litigation surrounding the sale of the Town & Country nursing home.
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
8
<PAGE> 9
Item 5. Other Information
On July 11, 1996, the Partnership completed the sale of Town & Country
Nursing Home for $3,935,000, as agreed upon in the purchase and sale
agreement. The Partnership received approximately $1.0 million in net
proceeds which will be distributed by August 19, 1996 to the limited
partners at the rate of $325 per unit.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the six
months ended June 30, 1996.
9
<PAGE> 10
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 13, 1996
---------------------------
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 552,940
<SECURITIES> 0
<RECEIVABLES> 1,190
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 675,706
<PP&E> 26,371,866
<DEPRECIATION> 6,405,013
<TOTAL-ASSETS> 20,918,592
<CURRENT-LIABILITIES> 324,091
<BONDS> 12,114,259
0
0
<COMMON> 0
<OTHER-SE> 8,454,219
<TOTAL-LIABILITY-AND-EQUITY> 20,918,592
<SALES> 1,384,566
<TOTAL-REVENUES> 1,428,503
<CGS> 0
<TOTAL-COSTS> 934,957
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 559,057
<INCOME-PRETAX> (65,511)
<INCOME-TAX> 0
<INCOME-CONTINUING> (65,511)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (65,032)
<EPS-PRIMARY> (21.68)
<EPS-DILUTED> (21.68)
</TABLE>
