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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 MARCH 31, 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
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MARKETPLACE INCOME PROPERTIES, A NORTH CAROLINA LIMITED PARTNERSHIP
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(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.
3,000 limited partnership units outstanding as of April 30, 1996
Page 1 of 9 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(unaudited)
----------- -----------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 3,844,259 $ 3,873,911
Buildings 22,116,004 22,016,181
Furniture and equipment 410,143 410,143
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26,370,406 26,300,235
Accumulated depreciation (6,256,630) (6,101,961)
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20,113,776 20,198,274
Cash and cash equivalents 440,769 522,598
Restricted Cash 95,069 80,482
Accounts Receivable 28,894 104,794
Net Deferred Loan and Acquisition Costs 211,164 225,017
Other 99,773 87,568
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20,989,445 21,218,733
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Debt 12,212,480 12,310,526
Payables to general partners and affiliates 60,391 60,391
Other liabilities 272,840 302,064
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12,545,711 12,672,981
Minority interest 26,287 26,501
Partners' capital:
General partners 107,123 108,141
Limited partners 8,310,324 8,411,110
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$20,989,445 $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 MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
March 31, March 31,
1996 1995
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<S> <C> <C>
Income:
Rent $ 734,104 $706,186
Interest and other 5,292 26,805
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739,396 732,991
Expenses:
Interest 280,007 368,765
Depreciation 154,669 171,709
Amortization 13,853 14,172
Operations and maintenance 217,348 195,308
Professional fees 22,949 12,873
Legal Fees 118,774 7,595
Administrative and Other 33,814 26,875
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841,414 797,297
Income before minority interest (102,018) (64,306)
Minority interest (214) (242)
--------- --------
Net income (loss) $(101,804) $(64,064)
========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements
3
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 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 loss for the period (641) (63,423) (64,064)
Balance, March 31, 1995 0 (37,092) (37,092)
-------- ---------- ----------
$ 86,188 $6,237,780 $6,323,968
======== ========== ==========
Balance, December 31, 1995 $108,141 $8,411,110 $8,519,251
Net loss for the period (1,018) (100,786) (101,804)
-------- ---------- ----------
Balance, March 31, 1996 $107,123 $8,310,324 $8,417,447
======== ========== ==========
</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 THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Net Loss $(101,804) $ (64,064)
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Adjustments to reconcile net income to net cash provided by operations:
Decrease (Increase) in accounts receivable 75,900 (32,135)
Depreciation 154,669 171,709
Amortization 13,853 14,172
Minority Interest (214) (242)
Increase in other assets (26,792) (87,064)
Increase (Decrease) in accrued liabilities (29,224) 152,393
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Total adjustments 188,192 218,833
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Net cash provided by operating activities 86,388 154,769
Cash flows from investing activities:
Improvements in rental properties (70,171) (57,486)
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Net cash used by investing activities (70,171) (57,486)
Cash flows from financing activities:
Repayments of debt (98,046) (53,073)
Distributions to limited partners 0 (37,092)
Increase in deposits with lender 0 (10,928)
Increase in deferred loan costs 0 (23,923)
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Net cash used by financing activities (98,046) (125,016)
Net decrease in cash and cash equivalents (81,829) (27,733)
Cash and cash equivalents at beginning of period 522,598 1,258,117
--------- ----------
Cash and cash equivalents at end of period $ 440,769 $1,230,384
========= ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
5
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MARKETPLACE INCOME PROPERTIES,
A NORTH CAROLINA LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 three month period ended March 31, 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 three month period ended March 31, 1996 are not necessarily
indicative of the results for a full year.
1. PARTNERSHIP MATTERS AND 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 April 30, 1996 was 776. ISC Realty Corporation 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.
2. RELATED PARTY TRANSACTIONS
The general partner earned $4,500 for managing leases on the Partnership's
nursing home property during the three months ended March 31, 1996, and for the
three months ended March 31, 1995. Amounts earned by the general partner for
the reimbursement of expenses of operating the Partnership was $12,500 for the
three months ended March 31, 1995 and $8,333 for the three months ended March
31, 1996.
In addition, the general partner was paid $9,975 for guaranteeing the mortgage
on the Mall, for the three months ended March 31, 1996.
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PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PARTNERSHIP MATTERS
The property investment portfolio consists of the Marketplace Mall in
Winston-Salem, NC, Mt. Pilot Shopping Center in Pilot Mountain, NC, Amelia
Plaza in Fernandina Beach, FL and Town & Country Convalescent Center in Tampa,
FL. Meadowbrook Manor in Siler City, NC was sold in June 1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $440,769 at March 31, 1996, down from
$522,598 at December 31, 1995.
The Registrant feels that these funds should be maintained as a reserve for the
cost of operating and maintaining the properties.
RESULTS OF OPERATION
THREE MONTHS ENDED MARCH 31, 1996 AS COMPARED TO THE THREE MONTHS ENDED MARCH
31, 1995
The Partnership had a net loss of $101,804 for the three months ended March 31,
1996 compared to a net loss of $64,064 for the same period of 1995. Rental
income increased from $706,186 for the three months ended March 31, 1995 to
$734,104 for the three months ended March 31, 1996. The increase is the result
of higher occupancy at the Mall and the rent received from Hamrick's.
Interest income decreased from $26,805 for the three months ended March 31,
1995 to $5,292 for the three months ended March 31, 1996 as a result of lower
cash reserves earning interest.
Interest expense for the three months ended March 31, 1996 was $280,007
compared with $368,765 for the same period of 1995. The decrease in 1996 as
compared to 1995 was primarily due to the refinancing of the mortgage on the
Mall.
Depreciation expense decreased from $171,709 for the three months ended March
31, 1995 to $154,699 for the three months ended March 31, 1996 as a result of
several assets becoming fully depreciated.
Administrative and other expenses increased $6,939 to $33,814 when compared to
the three months ended March 31, 1995. The increase was the result of the
guarantee fee associated with the new Mall mortgage obtained in the third
quarter of 1995.
Legal expense increased from $7,595 to $118,774 as a result of legal costs and
settlement expenses from litigation associated with the sale of Town & Country
Convalescent Center. This
7
<PAGE> 8
litigation is further discussed in Part II, Item 1.
Operations and maintenance expense increased 11.28% of $22,040 compared to the
same period in 1995. Approximately $11,000 of this difference relates to snow
removal costs from the unusually harsh winter. The remainder is made up of an
increase in management fees associated with the higher rental income and an
increase in common area maintenance costs.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In August, 1995, the Partnership entered into a contract with an unaffiliated
party to sell Town & Country Nursing Home at a price of $3,935,000. Advocare
of Florida, the current lessee, had 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 party initiated a lawsuit against the Registrant for breach of
contract.
During the first quarter of 1996, the Partnership agreed to settle litigation
arising from the sale of Town & Country Convalescent Center. The Partnership
has agreed to sell Town & Country to Advocare, the lessee, and expects to close
the sale by July 31, 1996. The sale price is $3,935,000.
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
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Exhibit 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
three months ended March 31, 1995.
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
A NORTH CAROLINA LIMITED PARTNERSHIP
------------------------------------
(REGISTRANT)
BY: /S/ J. CHRISTOPHER BOONE
-----------------------
J. CHRISTOPHER BOONE
ISC REALTY CORPORATION,
GENERAL PARTNER AND PRINCIPAL EXECUTIVE
OFFICER, PRINCIPAL FINANCIAL OFFICER OF THE
REGISTRANT
DATE: MAY 10, 1996
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9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MARKETPLACE INCOME PROPERTIES FOR THE THREE MONTHS ENDED
MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 440,769
<SECURITIES> 0
<RECEIVABLES> 50,634
<ALLOWANCES> (21,740)
<INVENTORY> 0
<CURRENT-ASSETS> 578,879
<PP&E> 26,370,406
<DEPRECIATION> (6,256,630)
<TOTAL-ASSETS> 20,989,445
<CURRENT-LIABILITIES> 255,319
<BONDS> 12,212,480
0
0
<COMMON> 0
<OTHER-SE> 8,417,447
<TOTAL-LIABILITY-AND-EQUITY> 20,989,445
<SALES> 0
<TOTAL-REVENUES> 739,396
<CGS> 0
<TOTAL-COSTS> 217,348
<OTHER-EXPENSES> 344,059
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 280,007
<INCOME-PRETAX> (101,804)
<INCOME-TAX> 0
<INCOME-CONTINUING> (101,804)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (101,804)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
