<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, 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
(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.
3,000 limited partnership units outstanding as of April 30, 1998
Page 1 of 9 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
March 31,
1998 December 31,
(unaudited) 1997
------------ -------------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 1,639,540 $ 1,639,540
Buildings 9,316,790 9,311,450
Furniture and equipment 293,140 293,141
------------ ------------
11,249,470 11,244,131
Accumulated depreciation (3,535,524) (3,535,684)
------------ ------------
7,713,946 7,708,447
Cash and cash equivalents 463,274 560,286
Restricted Cash 103,813 77,620
Accounts Receivable 27,128 5,651
Net Deferred Loan and Acquisition Costs 248,939 173,019
Other 115,309 149,650
------------ ------------
8,672,409 8,674,673
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Debt 5,351,888 5,359,624
Payables to general partners and affiliates 157,016 170,537
Other liabilities 111,336 132,652
------------ ------------
5,620,240 5,662,813
Partners' capital:
General partners 53,470 53,067
Limited partners 2,998,699 2,958,793
------------ ------------
$ 8,672,409 $ 8,674,673
============ ============
</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, 1998 AND 1997
(unaudited)
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
March 31, March 31,
1998 1997
-------- --------
<S> <C> <C>
Income:
Rent $365,952 $620,610
Interest and other 15,300 6,875
-------- --------
381,252 627,485
Expenses:
Interest 103,024 212,872
Amortization 0 9,280
Operations and maintenance 200,177 179,001
Professional fees 21,326 22,495
Legal Fees 1,435 3,211
Administrative and Other 14,981 24,535
-------- --------
340,943 451,394
Net income $ 40,309 $176,091
======== ========
</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, 1998 AND 1997
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- ----------- ----------
<S> <C> <C> <C>
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
======= ========== ==========
Balance, December 31, 1997 $53,067 $2,958,793 $3,011,860
Net income for the period 403 39,906 40,309
------- ---------- ----------
Balance, March 31, 1998 $53,470 $2,998,699 $3,052,169
======= ========== ==========
</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, 1998 AND 1997
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1997
-------------- --------------
<S> <C> <C>
Net Income $ 40,309 $ 176,091
--------- ---------
Adjustments to reconcile net income to net cash provided by operations:
Increase in accounts receivable (21,477) (3,527)
Amortization 0 9,280
Decrease (Increase) in other assets 8,148 (123,105)
Increase (Decrease) in accrued liabilities (34,997) 70,011
--------- ---------
Total adjustments (48,326) (47,341)
--------- ---------
Net cash provided by operating activities (8,017) 128,750
Cash flows from investing activities:
Improvements in rental properties (5,339) (22,670)
--------- ---------
Net cash used by investing activities (5,339) (22,670)
Cash flows from financing activities:
Repayments of debt (7,736) (126,044)
Increase in deferred loan costs (75,920) (125,071)
--------- ---------
Net cash used by financing activities (83,656) (251,115)
Net increase in cash and cash equivalents (97,012) (145,035)
Cash and cash equivalents at beginning of period 560,286 267,027
--------- ---------
Cash and cash equivalents at end of period $ 463,274 $ 121,992
========= =========
</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, 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 three month period ended March 31, 1998, 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, 1998, was 781. ISC Realty Corporation is the sole general partner.
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
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, 1998,
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 were sold in 1997. 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 $463,274 at March 31, 1998, down from $560,286
at December 31, 1997.
The Registrant feels that these funds should be maintained as a reserve for the
cost of operating and maintaining the property.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998, AS COMPARED TO THE THREE MONTHS ENDED MARCH
31, 1997
The Partnership had net income of $40,309 for the three months ended March 31,
1998, compared to income of $176,091 for the same period of 1997. Rental income
decreased from $627,485 for the three months ended March 31, 1997, to $381,252
for the three months ended March 31, 1998. The decrease is the result of the
lost rental income associated with the sale of Amelia Plaza and Mt. Pilot.
For the three months ended March 31, 1998, interest and other income increased
to $15,300 from $6,875, as a result of higher cash reserves earning interest.
Interest expense for the three months ended March 31, 1998, was $103,024
compared with $212,872 for the same period of 1997. The decrease in 1998 as
compared to 1997 was primarily due to the retirement of debt on Amelia Plaza
upon the sale of the property.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
7
<PAGE> 8
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
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, 1998.
8
<PAGE> 9
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 11, 1998
------------------------
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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 463,274
<SECURITIES> 0
<RECEIVABLES> 27,128
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 594,215
<PP&E> 11,249,470
<DEPRECIATION> (3,535,524)
<TOTAL-ASSETS> 8,672,409
<CURRENT-LIABILITIES> 268,352
<BONDS> 5,351,888
0
0
<COMMON> 0
<OTHER-SE> 3,052,169
<TOTAL-LIABILITY-AND-EQUITY> 8,672,409
<SALES> 0
<TOTAL-REVENUES> 381,252
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 237,919
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 103,024
<INCOME-PRETAX> 40,309
<INCOME-TAX> 0
<INCOME-CONTINUING> 40,309
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,309
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
