<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, 1998
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.)
IJL Financial Center
P.O. Box 1012
Charlotte, NC 28201-1012
------------------------
(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
--- ---
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 13, 1998
Page 1 of 10 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
September 30,
1998 December 31,
(unaudited) 1997
------------- ------------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 1,588,847 $ 1,639,540
Buildings 6,173,953 9,311,450
Furniture and equipment 293,141 293,141
----------- ------------
8,055,942 11,244,131
Accumulated depreciation (293,141) (3,535,684)
----------- ------------
7,762,801 7,708,447
Cash and cash equivalents 551,020 560,286
Restricted Cash 79,167 77,620
Accounts Receivable 3,358 5,651
Net deferred Loan and Acquisition Costs 222,491 173,019
Other 139,877 149,650
----------- ------------
$ 8,758,714 $ 8,674,673
=========== ============
LIABILITIES AND PARTNERS' CAPITAL
Debt $ 5,314,166 $ 5,359,624
Payables to general partners and affiliates 480 170,537
Other liabilities 92,101 132,652
----------- ------------
5,406,747 5,662,813
Partners' capital:
General partner 56,797 53,067
Limited partners 3,295,171 2,958,793
----------- ------------
3,351,967 3,011,860
----------- ------------
$ 8,758,714 $ 8,674,673
=========== ============
</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, 1998 AND 1997
(unaudited)
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue:
Rent $ 419,794 $ 586,961 $ 1,239,597 $ 1,885,939
Interest and other 7,355 15,468 70,777 25,095
--------- ----------- ----------- -----------
427,149 602,429 1,310,374 1,911,034
Expenses:
Interest 118,087 194,716 358,237 597,230
Depreciation 0 0 0 0
Amortization 0 9,280 0 27,839
Operations and maintenance 254,772 209,528 553,872 616,830
Professional fees 207 588 23,515 23,815
Legal fees 628 6,676 5,076 16,358
Administrative and Other (124,373) 31,406 (3,286) 135,768
--------- ----------- ----------- -----------
249,321 452,195 937,413 1,417,841
--------- ----------- ----------- -----------
Income before gain, extraordinary income 177,827 150,234 372,961 493,193
Net gain(loss) on sale of Partnership assets 0 (104,246) 0 (104,246)
--------- ----------- ----------- -----------
Net income (loss) $ 177,827 $ 45,988 $ 372,961 $ 388,948
========= =========== =========== ===========
Net income per limited partner unit $ 58.68 $ 15.18 $ 123.08 $ 128.35
========= =========== =========== ===========
Limited Partner Units outstanding-wgtd. avg 3,000 3,000 3,000 3,000
========= =========== =========== ===========
</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, 1998 AND 1997
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
------- ---------- ----------
<S> <C> <C> <C>
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
======= ========== ==========
Balance, December 31, 1997 $53,067 $2,958,793 $3,011,860
Net income for the period 3,730 369,232 372,961
Distributions 0 (32,854) (32,854)
------- ---------- ----------
Balance, September 30, 1998 $56,797 $3,295,171 $3,351,967
======= ========== ==========
</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, 1998 AND 1997
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Nine Nine
Months Months
Ended Ended
September 30, September 30,
1998 1997
------------- -----------
<S> <C> <C>
Net Income $ 372,961 $ 388,948
Adjustments to reconcile net income to net cash
provided by operations:
Loss(Gain) on sale of rental properties 0 104,246
Decrease in accounts receivable 2,293 3,243
Amortization 0 27,839
Increase in restricted cash and deposits (1,547) (187,338)
Other 9,773 48,788
(Decrease) Increase in accrued liabilities (210,608) 168,328
(Decrease) Increase in deferred loan costs 49,472 (194,859)
--------- -----------
Total adjustments (150,616) (29,753)
--------- -----------
Net cash provided by operating activities 222,345 359,194
--------- -----------
Cash flows from investing activities:
Improvements in rental properties (153,299) (74,432)
Proceeds from sale of rental properties 0 1,285,000
--------- -----------
Net cash provided by investing activities (153,299) 1,210,568
Cash flows from financing activities:
Repayments of debt (45,458) (252,507)
Proceeds from Mall refinancing 0 5,464,215
Retirement of debt upon Mall refinancing 0 (5,447,556)
Distributions to General Partner 0 0
Distributions to Limited Partners (32,854) 0
--------- -----------
Net cash used by financing activities (78,312) (235,848)
Net increase in cash and cash equivalents (9,266) 1,333,914
Cash and cash equivalents at beginning of period 560,286 267,027
--------- -----------
Cash and cash equivalents at end of period $ 551,020 $ 1,600,940
========= ===========
</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, 1998. 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 1997 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, 1998, 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 13, 1998, was 781. 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
In September 1998, the general partner was paid a fee of $26,287 for
distributions that had been accrued which resulted from the sale of properties
in 1997. The general partner was paid $20,167 for reimbursement of expenses of
operating the Partnership for the nine months ended September 30, 1998, compared
to $37,500 for the nine months ended September 30, 1997. The lower fee results
from adjustments made after the sale of properties in 1997. In January 1998, the
general partner was paid a fee of $90,250 for sales commissions related to the
sale of Mt. Pilot and Amelia Plaza Shopping Center that had previously been
accrued. In June 1997, the general partner was paid a $54,000 fee, representing
1% of the mortgage balance, for the placement of a new loan for the Marketplace
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 1997. 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 October 1997. The general partner is actively
marketing the Marketplace Mall for sale. No agreement has been reached as of the
date of this report.
Liquidity and Capital Resources
Cash and cash equivalents totaled $551,020 at September 30, 1998, down from
$560,286 at December 31, 1997. In July 1998, $32,854 was distributed to the
limited partners. The distribution was the repayment of state sales tax withheld
in this excess amount for 1997. The general partner feels that remaining cash
should be retained for repairs and improvements to the Marketplace Mall, as may
be necessary, while the property is offered for sale.
Results of Operations
The Partnership reported net income of $372,961 for the nine months ended
September 30, 1998, compared to net income of $388,948 for the same period in
1997.
Rental revenue decreased approximately $646,342 in 1998 compared to 1997. The
sale of properties during 1997 is reflected by this decrease in rental revenue.
Interest income totaled $70,777 for the nine months ended September 30, 1998,
compared to $25,095 for the same period in 1997. The increase in interest income
is the result of maintaining higher cash reserves.
Depreciation and amortization expense decreased $27,839 to $0 for period ending
September 30, 1998, in accordance with the accounting policy to discontinue
depreciating assets held for sale.
7
<PAGE> 8
Interest expense for the nine months ended September 30, 1998, was $358,237
compared with $597,230 for the same period in 1997. The decrease is attributable
to the retirement of mortgage debt upon the sale of properties during 1997.
Operations and maintenance expense decreased to $553,872 in 1998 from $616,830
for the same nine month period in 1997. A portion of the Marketplace Mall
parking lot was repaved during July 1998, at a cost of $89,100, which amount was
reimbursed in November 1998, from the reserve escrow account held with the
mortgage lender.
Administrative and other expenses decreased from $135,768 for the nine months
ended September 30, 1997, to ($3,286) for the nine months ended September 30,
1998. This substantial decrease reflects a correcting entry made to reverse the
accruals for general partner fees paid and expensed in 1997 and 1998.
Legal expense decreased to $5,076 for the nine months ended September 30, 1998,
a $11,282 decrease compared to the same period in 1997. The decrease results
from the ending of litigation surrounding the sale of Town & Country in 1997.
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 Marketplace Mall continues to be listed for sale. Offers
that have been received to date have been below expectations
and below what the general partner believes to be an
acceptable price. Consequently, the offers were turned down.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
8
<PAGE> 9
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, 1998.
9
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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 13, 1998
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MARKETPLACE INCOME PROPERTIES L.P. FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 551,020
<SECURITIES> 0
<RECEIVABLES> 3,358
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,055,942
<DEPRECIATION> (293,141)
<TOTAL-ASSETS> 8,758,714
<CURRENT-LIABILITIES> 92,581
<BONDS> 5,314,166
0
0
<COMMON> 0
<OTHER-SE> 3,351,967
<TOTAL-LIABILITY-AND-EQUITY> 8,758,714
<SALES> 0
<TOTAL-REVENUES> 1,310,374
<CGS> 0
<TOTAL-COSTS> 579,176
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 358,237
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 372,961
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
