<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 SEPTEMBER 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
(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 X No
----- -----
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 November 8, 1997
Page 1 of 10 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
September 30,
1997 December 31,
(unaudited) 1996
------------- -------------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 2,874,130 $ 3,003,993
Buildings 13,838,908 15,273,412
Furniture and equipment 301,868 301,868
------------ ------------
17,014,906 18,579,273
Accumulated depreciation (4,896,467) (5,146,021)
------------ ------------
12,118,439 13,433,252
Cash and cash equivalents 1,600,940 267,027
Restricted Cash 255,000 67,662
Accounts Receivable 35,533 38,776
Net deferred Loan and Acquisition Costs 351,466 184,446
Other 24,717 90,163
------------ ------------
$ 14,386,095 $ 14,081,326
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Debt $ 8,744,480 $ 8,996,987
Payables to general partners and affiliates 80,287 26,287
Other liabilities 270,478 156,150
------------ ------------
9,095,245 9,179,424
Partners' capital:
General partner 75,856 71,967
Limited partners 5,214,994 4,829,935
------------ ------------
5,290,850 4,901,902
------------ ------------
$ 14,386,095 $ 14,081,326
============ ============
</TABLE>
See attached notes to the consolidated financial statements
2
<PAGE> 3
MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
--------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rent $ 586,961 $ 681,365 $ 1,885,939 $2,065,931
Interest and other 15,468 10,619 25,095 54,556
--------- ---------- ----------- ----------
602,429 691,984 1,911,034 2,120,487
Expenses:
Interest 194,716 204,543 597,230 763,600
Depreciation 0 123,440 0 426,493
Amortization 9,280 2,028 27,839 26,891
Operations and maintenance 209,528 219,040 616,830 589,135
Professional fees 588 1,826 23,815 24,775
Legal fees 6,676 9,700 16,358 152,554
Administrative and Other 31,406 42,454 135,768 113,597
--------- ---------- ----------- ----------
452,194 603,031 1,417,840 2,097,045
--------- ---------- ----------- ----------
Income before gain, extraordinary income
and minority interest 150,235 88,953 493,194 23,442
Net gain (loss) on sale of Partnership assets (104,246) 255,140 (104,246) 255,140
--------- ---------- ----------- ----------
Income (loss) before extraordinary income and
minority interest 45,989 344,093 388,948 278,582
Extraordinary gain on extinquishment of debt 0 58,532 0 58,532
--------- ---------- ----------- ----------
Income after gain and before minority interest 45,989 402,625 388,948 337,114
Minority interest 0 2,427 0 1,948
--------- ---------- ----------- ----------
Net income (loss) $ 45,989 $ 400,198 $ 388,948 $ 335,166
========= ========== =========== ==========
</TABLE>
See attached notes to the consolidated financial statements
3
<PAGE> 4
MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 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 income for the period 4,168 412,619 416,787
Distributions (9,848) (975,000) (984,848)
--------- ----------- -----------
Balance, September 30, 1996 $ 102,461 $ 7,848,729 $ 7,951,190
========= =========== ===========
Balance, December 31, 1996 $ 71,967 $ 4,829,935 $ 4,901,902
Net income for the period 3,889 385,059 388,948
Distributions 0 0 0
--------- ----------- -----------
Balance, September 30, 1997 $ 75,856 $ 5,214,994 $ 5,290,850
========= =========== ===========
</TABLE>
See attached notes to the consolidated financial statements
4
<PAGE> 5
MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(unaudited)
<TABLE>
<CAPTION>
Nine Nine
Months Months
Ended Ended
September 30, September 30,
1997 1996
----------- -----------
<S> <C> <C>
Net Income $ 388,948 $ 335,166
Adjustments to reconcile net income to net cash provided by operations:
Decrease in accounts receivable 3,243 75,477
Depreciation 0 426,493
Amortization 27,839 26,891
Minority Interest 0 (26,501)
Increase in restricted cash and deposits (187,338) (50,087)
Other 48,786 4,403
(Decrease) Increase in accrued liabilities 168,328 (60,695)
(Decrease) Increase in deferred loan costs (194,859) 11,333
----------- -----------
Total adjustments (134,001) 407,314
----------- -----------
Net cash provided by operating activities 254,947 742,480
----------- -----------
Cash flows from investing activities:
Improvements in rental properties (74,432) 0
Disposition of P, P & E, net of accumulated depreciation
upon sale of Town & Country 1,389,246 3,475,635
----------- -----------
Net cash provided by investing activities 1,314,814 3,475,635
Cash flows from financing activities:
Repayments of debt (252,507) (291,606)
Proceeds from Mall refinancing 5,464,215 0
Repayment of debt upon Mall refinancing (5,447,556) 0
Retirement of debt upon sale of Town & Country 0 (2,926,835)
Distributions to General Partner 0 (9,848)
Distributions to Limited Partners 0 (975,000)
----------- -----------
Net cash used by financing activities (235,848) (4,203,289)
Net increase in cash and cash equivalents 1,333,913 14,826
Cash and cash equivalents at beginning of period 267,027 522,598
----------- -----------
Cash and cash equivalents at end of period $ 1,600,940 $ 537,424
=========== ===========
</TABLE>
See attached notes to the consolidated 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 nine month period ended September 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 nine month period ended September 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
November 7, 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.
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3. RELATED PARTY TRANSACTIONS
Amounts paid to the general partner for the reimbursement of expenses of
operating the Partnership were $37,500 for the nine months ended September 30,
1997, and 1996, respectively. The general partner earned $28,100 as a lease
management fee (including accrued lease management fees of $18,000) for Town &
Country for the nine months ended September 30, 1996, based upon rental revenue.
The general partner also earned a fee of approximately $29,281 in 1996 for
guaranteeing the mortgage on the Mall. This fee represents 2% of the amount of
the balance guaranteed. Also in 1996, the general partner earned a 2% brokerage
commission of $78,700 in conjunction with the sale of Town & Country. In 1997,
the general partner earned a $54,000 fee, representing 1% of the mortgage
balance, for the placement of a new loan for the Mall.
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. Meadowbrook Manor of Siler City, NC, was
sold in June 1994. Town & Country Convalescent Center ("Town & Country") in
Tampa, FL, was sold in July 1996. Mt. Pilot Shopping Center ("Mt. Pilot") in
Pilot Mountain, NC, was sold in September 1997 and Amelia Plaza ("Amelia") in
Fernandina Beach, FL was sold in November 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $1,600,940 at September 30, 1997, up from
$267,027 at December 31, 1996. At least $1,300,000 of this balance will be
distributed to the limited partners by the end of November 1997. This remaining
balance is being maintained as a reserve for capital improvements, debt
repayments and other contingencies.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997, AS COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996
The Partnership reported income of $388,948 for the nine months ended September
30, 1997, compared to net income of $335,166 for the same period in 1996. The
1997 results include a $104,000 loss on the sale of Mt. Pilot compared to the
1996 results which include a $255,000 gain on sale and a $58,500 gain on
extinguishment of debt in conjunction with the sale of Town & Country.
Rental Revenue decreased approximately $180,000 in 1997 compared to 1996. The
decrease is primarily the result of the sale of Town & Country in 1996. The
other revenue accounts were comparable to the prior period results.
7
<PAGE> 8
Depreciation and amortization expense decreased $425,545 to $27,839 for the
period ending September 30, 1997 in accordance with the accounting policy to
discontinue depreciating assets held for sale.
Interest expense for the nine months ended September 30, 1997, was $597,300
compared with $763,300 for the same period of 1996. The decrease of $166,000 in
1997 is attributable to the retirement of the Town & Country mortgage debt in
1996.
Operations and maintenance expense increased to $616,800 in 1997 from $589,135
for the nine month period in 1996. The increase of approximately $27,700 is
attributable to an increase in common area maintenance expense and insurance
costs at the Mall. In addition, the property taxes at Mt. Pilot, normally paid
in the fourth quarter, were recognized upon the sale of the property in
September.
Administrative and other expenses increased to $135,768 for the nine months
ended September 30, 1997, from $113,597 for the nine months ended September 30,
1996. The higher amount in 1997 is attributed to the financing costs associated
with the new Mall mortgage.
Legal expense decreased to $16,358 for the nine months ended September 30, 1997,
a $136,000 decrease compared to the same period in 1996. The decrease results
from the litigation surrounding the sale of Town & Country in 1996.
THREE MONTHS ENDED SEPTEMBER 30, 1997, AS COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1996
The Partnership reported net income of $45,989 for the three months ended
September 30, 1997 compared to net income of $400,198 for the three months ended
September 30, 1996.
Rental revenue for the three months ended September 30, 1997, decreased almost
$95,000 to $586,900 as compared to the same three month period in 1996. The
cause for the decrease is the loss of rental revenue from the sale of Town &
Country as explained above.
Depreciation and amortization expense decreased from $125,500 for the three
months ended September 30, 1996 to $9,280 for three month period ending
September 30, 1997 in accordance with the accounting policy to discontinue
depreciating assets held for sale.
Operations and maintenance expenses decreased approximately $9,500 in the three
months ended September 30, 1997, compared to the three months ended September
30, 1996. The decrease is attributable to the adjustment of payments for
property taxes and insurance associated with the refinancing of the Mall
mortgage as explained above.
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
None
Item 5. Other Information
The sale of Mt. Pilot Shopping Center to Glenwood Pilot Mountain
Company was completed on September 19, 1997. The financial results
of the sale are included in the financial statements contained
herein. The Partnership received approximately $1,270,000 in net
proceeds from the sale. These funds are expected to be distributed
to the limited partners by November 18, 1997.
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 filed during the nine months ended
September 30, 1997. An 8-K will be filed subsequent to the
filing of this report, referencing the sale of Amelia Plaza.
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: November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MARKETPLACE INCOME PROPERTIES FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,600,940
<SECURITIES> 0
<RECEIVABLES> 35,533
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,891,473
<PP&E> 17,014,906
<DEPRECIATION> 4,896,467
<TOTAL-ASSETS> 14,386,095
<CURRENT-LIABILITIES> 350,765
<BONDS> 8,744,480
0
0
<COMMON> 0
<OTHER-SE> 5,290,850
<TOTAL-LIABILITY-AND-EQUITY> 14,386,095
<SALES> 1,885,939
<TOTAL-REVENUES> 1,911,034
<CGS> 0
<TOTAL-COSTS> 820,610
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 597,230
<INCOME-PRETAX> 493,194
<INCOME-TAX> 0
<INCOME-CONTINUING> 493,194
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 388,948
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
