<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, 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
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.)
IJL Financial Center
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 May 18, 1999
Page 1 of 9 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
March 31,
1999 December 31,
(unaudited) 1998
-------------------- -------------------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $1,639,540 $1,639,540
Buildings 7,601,126 7,601,126
Furniture and equipment 293,141 293,141
-------------------- -------------------
9,533,807 9,533,807
Accumulated Depreciation (3,535,684) (3,535,684)
-------------------- -------------------
5,998,123 5,998,123
Cash and cash equivalents 769,762 728,381
Restricted Cash 145,449 103,292
Accounts Receivable 65,262 32,129
Net Deferred Loan and Acquisition Costs 78,711 87,048
Other 13,935 6,250
-------------------- -------------------
7,071,242 6,955,223
==================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Debt 5,289,973 5,307,196
Payables to general partners and affiliates 0 0
Other liabilities 149,892 151,100
-------------------- -------------------
5,439,865 5,458,296
Partners' capital:
General partners 39,263 37,918
Limited partners 1,592,115 1,459,009
-------------------- -------------------
$7,071,242 $6,955,223
==================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(unaudited)
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
March 31, March 31,
1999 1998
---------------- ----------------
<S> <C> <C>
Income:
Rent $387,336 $365,952
Interest and other 32,361 15,300
---------------- ----------------
419,697 381,252
Expenses:
Interest 117,342 103,024
Operations and maintenance 139,526 200,177
Professional fees 16,829 21,326
Legal Fees 684 1,435
Administrative and Other 10,866 14,981
---------------- ----------------
285,247 340,943
Net income $134,450 $40,309
================ ================
Net income per limited partner unit $44.37 $13.30
================ ================
Limited Partner Units outstanding-wgtd. avg. 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 THREE MONTHS ENDED MARCH 31, 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 403 39,906 40,309
-------------- ------------------- ------------------
Balance, March 31, 1997 $53,470 $2,998,699 $3,052,169
============== =================== ==================
Balance, December 31, 1998 $37,918 $1,459,009 $1,496,927
Net income for the period 1,345 133,106 134,450
-------------- ------------------- ------------------
Balance, March 31, 1999 $39,263 $1,592,115 $1,631,377
============== =================== ==================
</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 THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
--------------------- ---------------------
<S> <C> <C>
Net Income $134,450 $40,309
--------------------- ---------------------
Adjustments to reconcile net income to
net cash provided by operations:
Increase in accounts receivable (33,133) (21,477)
Property write-down 0 0
Decrease (Increase) in other assets (49,841) 8,148
Increase (Decrease) in accrued liabilities (1,208) (34,997)
--------------------- ---------------------
Total adjustments (84,183) (48,326)
--------------------- ---------------------
Net cash provided by operating activities 50,268 (8,017)
Cash flows from investing activities:
Improvements in rental properties 0 (5,339)
--------------------- ---------------------
Net cash used by investing activities 0 (5,339)
Cash flows from financing activities:
Repayments of debt (17,223) (7,736)
Decrease (Increase) in deferred loan costs 8,337 (75,920)
--------------------- ---------------------
Net cash used by financing activities (8,886) (83,656)
Net decrease in cash and cash equivalents 41,381 (97,012)
Cash and cash equivalents at beginning of period 728,381 560,286
--------------------- ---------------------
Cash and cash equivalents at end of period $769,762 $463,274
===================== =====================
</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 three month period ended March 31, 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 three month period ended March 31, 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
May 18, 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
Amounts earned by the general partner for the reimbursement of expenses of
operating the Partnership was $$6,000 for the three months ended March 31, 1999,
as compared to $8,333 for the three months ended March 31, 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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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 $769,762 at March 31, 1998, up from $463,274
at March 31, 1998. The Registrant felt that these funds should be maintained 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 $134,450 for the three months ended March
31, 1999, compared to income of $40,309 for the same period in 1998. Rental
income increased from $365,952 for the three months ended March 31, 1998, to
$387,336 for the three months ended March 31, 1999. This increase is the result
of higher percentage rent receipts and base rental rate increases over last
year.
For the three months ended March 31, 1999, interest and other income increased
to $32,361 from 15,300 for the same period in 1998. This increase reflects
interest earned on higher cash reserves and refund of property tax escrows held
in excess by the mortgage lender.
Interest expense for the three months ended March 31, 1999, was $117,342
compared with $103,024 for the same period of 1998. The increase reflects a
posting classification difference from the prior year as the interest expense
for the 1999 quarter is $4,321 less than in 1998. Operations and maintenance
expense decreased to $139,526 for the three months ended March 31, 1999, from
$200,177 for the same period in 1998. This decrease reflects lower operating and
repair costs for the Mall. Professional fees decreased to $16,829 for the three
months ended March 31, 1999, down from $21,326 for the same 1998 period. Legal
fees decreased to $684 for the three months ended March 31, 1999, compared to
$1,435 for the same period in 1998. Administrative and other expenses also
decreased to $10,866 for the current quarter from $14,981 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 will be Y2K compliant by June 30, 1999. The computer hardware and
peripherals located in the Registrant's offices are also Y2K ready.
7
<PAGE> 8
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 will be an affiliate of Wachovia Securities, Inc., but not be part of
Wachovia Corporation's banking subsidiary. Personnel and offices will 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 three months ended March 31, 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: May 18, 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, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 769,762
<SECURITIES> 0
<RECEIVABLES> 65,262
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,533,807
<DEPRECIATION> (3,535,684)
<TOTAL-ASSETS> 7,071,242
<CURRENT-LIABILITIES> 149,892
<BONDS> 5,289,973
0
0
<COMMON> 0
<OTHER-SE> 1,631,377
<TOTAL-LIABILITY-AND-EQUITY> 7,071,242
<SALES> 0
<TOTAL-REVENUES> 419,697
<CGS> 0
<TOTAL-COSTS> 167,905
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 117,342
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 134,450
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
