<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, 1997
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 No X
--- ---
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 31, 1997
Page 1 of 10 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997, AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
June 30,
1997 December 31,
(unaudited) 1996
------------ ------------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 2,974,341 $ 3,003,993
Buildings 15,365,634 15,273,412
Furniture and equipment 301,867 301,868
------------ ------------
18,641,842 18,579,273
Accumulated depreciation (5,472,641) (5,146,021)
------------ ------------
13,169,201 13,433,252
Cash and cash equivalents 233,805 267,027
Restricted Cash 188,024 67,662
Accounts Receivable 47,139 38,776
Net Deferred Loan and Acquisition Costs 307,738 184,446
Other 105,452 90,163
------------ ------------
$ 14,051,359 $ 14,081,326
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Debt $ 8,853,168 $ 8,996,987
Payables to general partners and affiliates 80,287 26,287
Other liabilities 199,663 156,150
------------ ------------
9,133,118 9,179,424
Partners' capital:
General partners 72,130 71,967
Limited partners 4,846,111 4,829,935
------------ ------------
4,918,241 4,901,902
------------ ------------
$ 14,051,359 $ 14,081,326
============ ============
</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, 1997, AND 1996
(unaudited)
<TABLE>
<CAPTION>
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Income:
Rent $678,367 $ 650,462 $1,298,977 $ 1,384,566
Interest and other 2,753 38,645 9,628 43,937
-------- ----------- ---------- -----------
681,120 689,107 1,308,605 1,428,503
Expenses:
Interest 189,642 279,050 402,514 559,057
Depreciation 163,310 148,384 326,620 303,053
Amortization 9,280 11,010 18,560 24,863
Operations and maintenance 228,302 152,747 407,303 370,095
Professional fees 731 0 23,226 22,949
Legal 6,471 24,080 9,682 142,854
Administrative and other 79,826 37,329 104,361 71,143
-------- ----------- ---------- -----------
677,562 652,600 1,292,266 1,494,014
Income before minority interest 3,558 36,507 16,339 (65,511)
Minority interest 0 (265) 0 (479)
-------- ----------- ---------- -----------
Net income (loss) $ 3,558 $ 36,772 $ 16,339 ($ 65,032)
======== =========== ========== ===========
</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, 1997, AND 1996
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
--------- ----------- -----------
<S> <C> <C> <C>
Balance, December 31, 1995 $ 108,141 $ 8,411,110 $ 8,519,251
Net loss for the period (650) (64,382) (65,032)
--------- ----------- -----------
Balance, June 30, 1996 $ 107,491 $ 8,346,728 $ 8,454,219
========= =========== ===========
Balance, December 31, 1996 $ 71,967 $ 4,829,935 $ 4,901,902
Net loss for the period 163 16,176 $ 16,339
--------- ----------- -----------
Balance, June 30, 1997 $ 72,130 $ 4,846,111 $ 4,918,241
========= =========== ===========
</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, 1997, AND 1996
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Net Income $ 16,339 ($ 65,032)
--------- ---------
Adjustments to reconcile net income to net cash provided by operations:
(Increase) Decrease in accounts receivable (8,363) 103,604
Depreciation 326,620 303,053
Amortization 18,560 24,863
Minority Interest 0 (478)
Increase in other assets (135,651) (29,406)
Increase (Decrease) in accrued liabilities 97,513 (38,364)
Increase in deferred loan and acquisition costs (141,852) 0
--------- ---------
Total adjustments 156,827 363,272
--------- ---------
Net cash provided by operating activities 173,166 298,240
Cash flows from investing activities:
Improvements in rental properties (62,569) (71,631)
--------- ---------
Net cash used by investing activities (62,569) (71,631)
Cash flows from financing activities:
Repayments of debt (143,819) (196,267)
Distributions to limited partners 0 0
--------- ---------
Net cash used by financing activities (143,819) (196,267)
Net increase in cash and cash equivalents (33,222) 30,342
Cash and cash equivalents at beginning of period 267,027 522,598
--------- ---------
Cash and cash equivalents at end of period $ 233,805 $ 552,940
========= =========
</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, 1997. 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 1996 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, 1997, 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 31, 1997, was 779. 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, 1997,
and 1996, respectively. The general partner earned a $54,000 fee for refinancing
the mortgage on the Mall. This fee represents 1% of the amount of the mortgage.
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, and Amelia Plaza ("Amelia") in Fernandina Beach, FL.
Meadowbrook Manor of Siler City, NC, was sold in June of 1994 and Town & Country
Convalescent Center ("Town & Country") in Tampa, FL, was sold in July of 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $233,805 at June 30, 1997, down from $267,027
at December 31, 1996. This balance is being maintained as a reserve for capital
improvements, debt repayments and other contingencies.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997, AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
The Partnership had net income of $16,339 for the six months ended June 30,
1997, compared to a net loss of $65,032 for the same period in 1996. The change
is attributable to the following variances in income and expense components.
Rental income decreased from $1,384,566 for the six months ended June 30, 1996,
to $1,298,977 for the six months ended June 30, 1997. The decrease is due
primarily to the loss of Town & Country rental income in 1997. Interest and
other income fell from $43,937 to $9,628 due to lower cash balances held at the
Partnership.
Interest expense for the six months ended June 30, 1997, was $402,514 compared
with $559,057 for the same period in 1996. This decrease is primarily due to the
July 1996 sale of Town & Country and retirement of the associated debt.
7
<PAGE> 8
Operations and maintenance expense increased to $407,303 for the six months
ended June 30, 1997, from $370,095 for the same period in 1996. This increase is
attributable to several reasons, including higher common area maintenance and
repair expenses at the Mall and Mt. Pilot, higher advertising expenses
associated with a new national tenant at the Mall, and property tax and
insurance escrows associated with the refinancing of the debt on the Mall.
Legal expense fell from $142,854 for the six months ended June 30, 1996, to
$9,682 for the six months ended June 30, 1997. This drop in 1997 was due
primarily to the legal fees incurred in 1996 in relation to the sale of Town &
Country.
Administrative and other expenses increased from $71,143 for the six months
ended June 30, 1996, to $104,361 for the six months ended June 30, 1997. The
higher amount in 1997 is attributed primarily to the 1% mortgage banking fee
earned by the general partner in association with the refinancing of the
mortgage on the Mall.
THREE MONTHS ENDED JUNE 30, 1997, AS COMPARED TO THREE MONTHS ENDED
JUNE 30, 1996
The Partnership reported net income of $3,558 for the three months ended June
30, 1997, as compared to net income of $36,772 for the same period in 1996.
Rental income for the three months ended June 30, 1997, increased to $678,367 as
compared to rental income of $650,462 for the same three month period in 1996.
The increase is primarily the result of a timing difference in a large recovery
collection from a major Amelia tenant. Partially offsetting this increase was
the loss of rental income in 1997 from Town & Country.
Operations and maintenance expenses increased from $152,747 for the three months
ended June 30, 1996, to $228,302 for the three months ended June 30, 1997. The
increase is attributable to the factors explained above, including higher common
area maintenance and repair expenses at the Mall and Mt. Pilot, higher
advertising expenses associated with a new national tenant at the Mall, and
property tax and insurance escrows associated with the refinancing of the debt
on the Mall.
Legal expense was $6,471 for the three months ended June 30, 1997, a $17,609
decrease over the same period in 1996. The decrease stems from 1996 litigation
costs surrounding the sale of Town & Country.
Administrative and other costs increased from $37,329 for the six months ended
June 30, 1996, to $79,826 for the six months ended June 30, 1997. As explained
above, the higher amount in 1997 is attributed primarily to the 1% mortgage
banking fee earned by the general partner in association with the refinancing of
the mortgage on the Mall.
8
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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
In June of 1997, the general partner submitted a matter to a vote of
the security holders. The general partner asked for limited partner approval for
a sale of Marketplace Mall for a sale price that would generate a cash
distribution amounting to no less than $500 per limited partner unit. The
general partner also asked for limited partner approval for a sale of Amelia
Plaza Shopping Center for a sale price that would generate a cash distribution
amounting to no less than $200 per limited partner unit. Both matters were
approved by the limited partners.
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 was distributed on August 19, 1996, to the limited partners at the rate of
$325 per unit.
On March 14, 1997, the Partnership entered into a Real Estate
Purchase Agreement to sell Mt. Pilot Shopping Center for a net sale price of
$1,300,000. The sale price is to be paid in cash. Under the Purchase Agreement
and its two Amendments, the buyer's due diligence period expired June 12, 1997,
with closing scheduled for September 15, 1997. There are numerous conditions
required under the contract and there is no guarantee that the sale will be
successfully completed.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EX 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, 1997.
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, 1997
10
<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, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 233,805
<SECURITIES> 0
<RECEIVABLES> 47,139
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 468,968
<PP&E> 18,641,842
<DEPRECIATION> (5,472,641)
<TOTAL-ASSETS> 14,051,359
<CURRENT-LIABILITIES> 279,950
<BONDS> 8,853,168
0
0
<COMMON> 0
<OTHER-SE> 4,918,241
<TOTAL-LIABILITY-AND-EQUITY> 14,051,359
<SALES> 0
<TOTAL-REVENUES> 1,308,605
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 889,752
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 402,514
<INCOME-PRETAX> 16,339
<INCOME-TAX> 0
<INCOME-CONTINUING> 16,339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,339
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
