<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 MARCH 31, 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
- -------------------------------- -------------------
(State of other jurisdiction of (I.R.S. Employer
or organization) Identification No.)
Interstate Tower
P.O. Box 1012
Charlotte, NC 28201-1012
----------------------------------------
(Address of principal executive offices)
(Zip Code)
704/379-9164
----------------------------------------------------
(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.
3,000 limited partnership units outstanding as of April 30, 1997
Page 1 of 9 sequentially numbered pages
<PAGE> 2
MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
March 31,
1997 December 31,
(unaudited) 1996
------------ ------------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 2,974,341 $ 3,003,993
Buildings 15,325,735 15,273,412
Furniture and equipment 301,868 301,868
------------ ------------
18,601,944 18,579,273
Accumulated depreciation (5,309,332) (5,146,021)
------------ ------------
13,292,612 13,433,252
Cash and cash equivalents 121,992 267,027
Restricted Cash 129,447 67,662
Accounts Receivable 42,303 38,776
Net Deferred Loan and Acquisition Costs 309,517 184,446
Other 142,203 90,163
------------ ------------
14,038,074 14,081,326
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Debt 8,870,943 8,996,987
Payables to general partners and affiliates 80,287 26,287
Other liabilities 172,161 156,150
------------ ------------
9,123,391 9,179,424
Partners' capital:
General partners 72,095 71,967
Limited partners 4,842,588 4,829,935
------------ ------------
$ 14,038,074 $ 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 MONTHS ENDED MARCH 31, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
March 31, March 31,
1997 1996
-------- ---------
<S> <C> <C>
Income:
Rent $620,610 $ 734,104
Interest and other 6,875 5,292
-------- ---------
627,485 739,396
Expenses:
Interest 212,872 280,007
Depreciation 163,310 154,669
Amortization 9,280 13,853
Operations and maintenance 179,001 217,348
Professional fees 22,495 22,949
Legal Fees 3,211 118,774
Administrative and Other 24,535 33,814
-------- ---------
614,704 841,414
Income Before Minority Interest 12,781 (102,018)
Minority Interest 0 (214)
-------- ---------
Net income (loss) $ 12,781 ($101,804)
======== =========
</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 THREE MONTHS ENDED MARCH 31, 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 (1,018) (100,786) (101,804)
--------- ----------- -----------
Balance, March 31, 1996 $ 107,123 $ 8,310,324 $ 8,417,447
========= =========== ===========
Balance, December 31, 1996 $ 71,967 $ 4,829,935 $ 4,901,902
Net income for the period 128 12,653 12,781
--------- ----------- -----------
Balance, March 31, 1997 $ 72,095 $ 4,842,588 $ 4,914,683
========= =========== ===========
</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, 1997 AND 1996
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Net Income (Loss) $ 12,781 ($101,804)
--------- ---------
Adjustments to reconcile net income to net cash provided by operations:
Decrease (Increase) in accounts receivable (3,527) 75,900
Depreciation 163,310 154,669
Amortization 9,280 13,853
Minority Interest 0 (214)
Increase in other assets (123,105) (26,792)
Increase (Decrease) in accrued liabilities 70,011 (29,224)
--------- ---------
Total adjustments 115,969 188,192
--------- ---------
Net cash provided by operating activities 128,750 86,388
Cash flows from investing activities:
Improvements in rental properties (22,670) (70,171)
--------- ---------
Net cash used by investing activities (22,670) (70,171)
Cash flows from financing activities:
Repayments of debt (126,044) (98,046)
Distributions to limited partners 0 0
Increase in deferred loan costs (125,071) 0
--------- ---------
Net cash used by financing activities (251,115) (98,046)
Net increase in cash and cash equivalents (145,035) (81,829)
Cash and cash equivalents at beginning of period 267,027 522,598
--------- ---------
Cash and cash equivalents at end of period $ 121,992 $ 440,769
========= =========
</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
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, 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 three month period ended March 31, 1997, 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, 1997, was 779. 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 $0 for managing leases on the Partnership's nursing
home property during the three months ended March 31, 1997, and $4,500 for the
three months ended March 31, 1996. Amounts earned by the general partner for the
reimbursement of expenses of operating the Partnership was $8,333 for the three
months ended March 31, 1996, and $12,500 for the three months ended March 31,
1997.
In addition, the general partner was paid $8,874 for guaranteeing the mortgage
on the Mall for the three months ended March 31, 1997.
6
<PAGE> 7
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, and Amelia
Plaza in Fernandina Beach, FL. Meadowbrook Manor in Siler City, NC was sold in
June, 1994, and Town & Country Convalescent Center in Tampa, FL was sold in
July, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $121,922 at March 31, 1997, down from $267,027
at December 31, 1996.
The Registrant feels that these funds should be maintained as a reserve for the
cost of operating and maintaining the properties.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997, AS COMPARED TO THE THREE MONTHS ENDED MARCH
31, 1996
The Partnership had net income of $12,781 for the three months ended March 31,
1997, compared to a net loss of $101,804 for the same period of 1996. Rental
income decreased from $734,104 for the three months ended March 31, 1996, to
$620,610 for the three months ended March 31, 1997. The decrease is the result
of the lost rental income associated with the sale of Town & Country.
Interest income increased from $5,292 for the three months ended March 31, 1996,
to $6,875 for the three months ended March 31, 1997, as a result of higher cash
reserves earning interest.
Interest expense for the three months ended March 31, 1997, was $212,872
compared with $280,007 for the same period of 1996. The decrease in 1997 as
compared to 1996 was primarily due to the retirement of debt associated with the
sale of Town & Country. On March 25, 1997, the Partnership refinanced the
existing debt on Marketplace Mall, a move which will lower the Partnership's
debt service by over $60,000 per year.
Depreciation expense increased from $154,669 for the three months ended March
31, 1996, to $163,310 for the three months ended March 31, 1997, as a result of
additional capital improvements related to the food court construction project
at Marketplace Mall in late 1996.
7
<PAGE> 8
Administrative and other expenses decreased $9,279 to $24,535 when compared to
the three months ended March 31, 1996. The decrease was largely the result of
lower leasing commissions paid in 1997.
Legal expense decreased from $118,774 in first quarter 1996 to $3,211 in first
quarter of 1997. The large expense in 1996 was due to legal costs and settlement
expenses from litigation associated with the sale of Town & Country Convalescent
Center. This litigation is further discussed in Part II, Item 1.
Operations and maintenance expense decreased from $217,348 in first quarter
1996, to $179,001 in first quarter 1997, due largely to higher snow removal and
common area costs in 1996.
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
sold Town & Country to Advocare, the lessee, on July 9, 1996, for a sale price
of $3,935,000. As of March 31, 1997, there was no pending legal action in
association with this transaction.
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
8
<PAGE> 9
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 three months ended March 31, 1997.
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, 1997
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, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 121,992
<SECURITIES> 0
<RECEIVABLES> 42,303
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 293,742
<PP&E> 18,601,944
<DEPRECIATION> (5,309,332)
<TOTAL-ASSETS> 14,038,074
<CURRENT-LIABILITIES> 252,448
<BONDS> 8,870,943
0
0
<COMMON> 0
<OTHER-SE> 4,914,683
<TOTAL-LIABILITY-AND-EQUITY> 14,038,074
<SALES> 0
<TOTAL-REVENUES> 627,485
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 401,832
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 212,872
<INCOME-PRETAX> 12,781
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,781
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,781
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
