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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, 1999
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
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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
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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 [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 August 3, 1999
Page 1 of 9 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
June 30,
1999 December 31,
(unaudited) 1998
----------- -----------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 1,689,308 $ 1,639,540
Buildings 7,601,126 7,601,126
Furniture and equipment 293,141 293,141
----------- -----------
9,583,575 9,533,807
Accumulated depreciation (3,535,684) (3,535,684)
----------- -----------
6,047,891 5,998,123
Cash and cash equivalents 301,001 728,381
Restricted Cash 152,249 103,292
Accounts Receivable 29,545 32,129
Net Deferred Loan and Acquisition Costs 87,048 87,048
Other 8,218 6,250
----------- -----------
$ 6,625,952 $ 6,955,223
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Debt $ 5,272,365 $ 5,307,196
Payables to general partners and affiliates 0 0
Other liabilities 145,342 151,100
----------- -----------
5,417,707 5,458,296
Partners' capital:
General partners 39,531 37,918
Limited partners 1,168,714 1,459,009
----------- -----------
$ 6,625,952 $ 6,955,223
=========== ===========
</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, 1999 AND 1998
(unaudited)
<TABLE>
<CAPTION>
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income:
Rent $ 308,902 $ 407,521 $ 696,238 $ 819,804
Interest and other (19,709) 42,395 12,652 63,422
--------- --------- --------- ---------
289,193 449,916 708,890 883,226
Expenses:
Interest 116,957 118,487 234,299 240,150
Operations and maintenance 109,276 149,813 248,802 299,100
Professional fees 3,300 3,881 18,600 23,308
Legal Fees 473 2,687 1,157 4,447
Administrative and Other 32,318 13,258 44,714 121,087
--------- --------- --------- ---------
262,325 288,126 547,572 688,092
Net income $ 26,869 $ 161,790 $ 161,318 $ 195,134
========= ========= ========= =========
Net income per limited partner unit $ 8.87 $ 53.39 $ 53.23 $ 64.39
========= ========= ========= =========
Limited Partner Units outstanding-wgtd. avg 3,000 3,000 3,000 3,000
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Balance, December 31, 1997 $ 53,067 $ 2,958,793 $ 3,011,860
Net income for the period 1,951 193,183 195,134
----------- ----------- -----------
Balance, June 30, 1998 $ 55,018 $ 3,151,976 $ 3,206,994
=========== =========== ===========
Balance, December 31, 1998 $ 37,918 $ 1,459,009 $ 1,496,927
Net income for the period 1,613 159,705 161,318
Distributions (450,000) ($ 450,000)
----------- ----------- -----------
Balance, June 30, 1999 $ 39,531 $ 1,168,714 $ 1,208,245
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Net Income $ 161,318 $ 195,134
--------- ---------
Adjustments to reconcile net income to
net cash provided by operations:
Decrease (Increase) in accounts receivable 2,584 (6,206)
Amortization 0 0
Decrease (Increase) in restricted cash (48,957) 0
Decrease (Increase) in other assets (1,968) (100,530)
Increase (Decrease) in accrued liabilities (5,758) (22,544)
--------- ---------
Total adjustments (54,100) (129,280)
--------- ---------
Net cash Provided by (Used for) operating activities 107,218 65,854
Cash flows from investing activities:
Improvements in rental properties (49,768) (13,131)
--------- ---------
Net cash used by investing activities (49,768) (13,131)
Cash flows from financing activities:
Increase (Decrease) in Note Payable (34,831) (28,980)
Decrease (Increase) in deferred loan costs (0) (57,437)
Distributions to Limited Partners (450,000) 0
--------- ---------
Net cash used by financing activities (484,831) (86,417)
Net decrease in cash and cash equivalents (427,380) (33,694)
Cash and cash equivalents at beginning of period 728,381 560,286
--------- ---------
Cash and cash equivalents at end of period $ 301,001 $ 526,592
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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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 six month period ended June 30, 1999. 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 1998 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, 1999, 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
August 3, 1999, 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
The amount earned by the general partner for the reimbursement of expenses of
operating the Partnership was $12,000 for the six months ended June 30, 1999, as
compared to $14,167 for the six months ended June 30, 1998. The lower fee
results from adjustments made after the sale of the properties in 1997 and
completion of administrative responsibilities associated with managing these
properties during 1998.
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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. The general partner is actively marketing the
Marketplace Mall for sale. No agreement had been reached as of the date of this
report.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $301,001 at June 30, 1999, down from $526,592
at June 30, 1998. The Registrant maintained these funds should be as a reserve
for the cost of operating and maintaining the property. Analysis of 1999 budget
requirements indicated that the Partnership held excess cash and on April 15,
1999, the Registrant distributed $450,000 to the limited partners of record as
of April 1, 1999.
RESULTS OF OPERATIONS
The Partnership reported net income of $161,318 for the six months ended June
30, 1999, compared to income of $195,134 for the same period in 1998. Rental
income decreased from $819,804 for the six months ended June 30, 1998, to
$696,238 for the six months ended June 30, 1999, due to a decrease in percentage
and temporary rents. Interest and other income decreased from $63,422 for the
six months ended June 30, 1998, to $12,652 for the same period in 1999. This
decrease reflects interest earned on lower amounts of cash reserves held at June
30, 1999, and receipt of refunds, in 1998, for property tax and utilities
deposits associated with the sale of properties.
Interest expense for the six months ended June 30, 1999, was $234,299 compared
with $240,150 for the same period of 1998. The decrease reflects interest paid
on the lower mortgage principal balance. Operations and maintenance expense
decreased to $248,802 for the six months ended June 30, 1999, from $299,100 for
the same period in 1998. This decrease reflects lower operating and repair costs
for the Mall. Professional fees decreased to $18,600 for the six months ended
June 30, 1999, down from $23,308 for the same 1998 period. Legal fees decreased
to $1,157 for the six months ended June 30, 1999, compared to $4,447 for the
same period in 1998. Administrative and other expenses also decreased to $44,714
for the current quarter from $121,087 for the same period in 1998. These
decreases reflect lower charges incurred to operate only one remaining property.
The Year 2000 Issue
The Registrant determined that the potential consequences of year 2000 will not
have a material effect on business, results of operations, or financial
condition. This conclusion was reached after researching computer programs and
third party vendors that are currently used to manage this limited partnership.
The Registrant is not solely reliant upon outside systems or vendors for record
keeping. Information is on file in our offices which states that existing
computer software is Y2K compliant and that the third party vendor currently
utilized is Y2K compliant as of June 30, 1999. The computer hardware and
peripherals located in the Registrant's offices are also Y2K ready.
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If necessary, the Registrant can revert to manual methods for bookkeeping, check
writing, preparation of financial statements and investor correspondence. Hard
copies of essential information are available and will continue to be available
well into the year 2000.
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
Effective April 1, 1999, Interstate/Johnson Lane merged into Wachovia
Corporation and officially changed its name to Wachovia Securities, Inc. The
Registrant is an affiliate of Wachovia Securities, Inc., but not part of
Wachovia Corporation's banking subsidiary. Personnel and offices continue to
operate as usual.
On April 15, 1999, the Registrant distributed $450,000 excess cash on hand to
the limited partners of record as of April 1, 1999.
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, 1999.
8
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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
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: AUGUST 12, 1999
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9
<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 SIX MONTHS
ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 301,001
<SECURITIES> 0
<RECEIVABLES> 29,545
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,047,891
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,625,952
<CURRENT-LIABILITIES> 145,342
<BONDS> 5,272,365
0
0
<COMMON> 0
<OTHER-SE> 1,208,245
<TOTAL-LIABILITY-AND-EQUITY> 6,625,952
<SALES> 0
<TOTAL-REVENUES> 708,890
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 313,273
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 234,299
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 161,318
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
