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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 SEPTEMBER 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
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
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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.
5,000 limited partnership units outstanding as of November 9, 1999
Page 1 of 10 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
September 30,
1999 December 31,
(unaudited) 1998
----------- -----------
<S> <C> <C>
ASSETS
Rental Properties (at cost):
Land and improvements $ 1,639,540 $ 1,639,540
Buildings 7,680,894 7,601,126
Furniture and equipment 293,141 293,141
----------- -----------
9,613,575 9,533,807
Accumulated depreciation (3,535,684) (3,535,684)
----------- -----------
6,077,891 5,998,123
Cash and cash equivalents 362,208 728,381
Restricted Cash 170,831 103,292
Accounts Receivable 18,710 32,129
Net deferred Loan and Acquisition Costs 87,048 87,048
Other 8,218 6,250
----------- -----------
$ 6,724,907 $ 6,955,223
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Debt $ 5,254,364 $ 5,307,196
Payables to general partners and affiliates 0 0
Other liabilities 208,306 151,100
----------- -----------
5,462,670 5,458,296
Partners' capital:
General partner 40,071 37,918
Limited partners 1,222,165 1,459,009
----------- -----------
$ 6,724,907 $ 6,955,223
=========== ===========
</TABLE>
See attached notes to the consolidated financial statements.
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(unaudited)
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Revenue:
Rent $335,909 $ 419,794 $1,032,147 $ 1,239,597
Interest and other 3,743 7,355 16,396 70,777
-------- ----------- ---------- -----------
339,652 427,149 1,048,543 1,310,374
Expenses:
Interest 116,564 118,087 350,863 358,237
Operations and maintenance 146,917 254,772 395,719 553,872
Professional fees 0 207 18,600 23,515
Legal fees 5,421 628 6,578 5,076
Administrative and Other 16,760 (124,373) 61,473 (3,286)
-------- ----------- ---------- -----------
285,662 249,321 833,233 937,413
-------- ----------- ---------- -----------
Income before gain, extraordinary income 53,991 177,827 215,310 372,961
Net income (loss) $ 53,991 $ 177,827 $ 215,310 $ 372,961
======== =========== ========== ===========
Net income per limited partner unit $ 17.82 $ 58.68 $ 71.05 $ 123.08
======== =========== ========== ===========
Limited Partner Units outstanding-wgtd. avg 3,000 3,000 3,000 3,000
======== =========== ========== ===========
</TABLE>
See attached notes to the consolidated financial statements.
3
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
------- ----------- -----------
<S> <C> <C> <C>
Balance, December 31, 1997 $53,067 $ 2,958,793 $ 3,011,860
Net income for the period 3,730 369,231 372,961
Distributions 0 (32,854) (32,854)
------- ----------- -----------
Balance, September 30, 1998 $56,797 $ 3,295,170 $ 3,351,967
======= =========== ===========
Balance, December 31, 1998 $37,918 $ 1,459,009 $ 1,496,927
Net income for the period 2,153 213,156 215,310
Distributions 0 (450,000) (450,000)
------- ----------- -----------
Balance, September 30, 1999 $40,071 $ 1,222,165 $ 1,262,237
======= =========== ===========
</TABLE>
See attached notes to the consolidated financial statements.
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(unaudited)
<TABLE>
<CAPTION>
Nine Nine
Months Months
Ended Ended
September 30, September 30,
1999 1998
--------- ---------
<S> <C> <C>
Net Income $ 215,310 $ 372,961
Adjustments to reconcile net income to net cash provided by operations:
Decrease in accounts receivable 13,419 2,293
Increase in restricted cash and deposits (66,869) (1,547)
Other (Increase) Decrease (2,639) 9,773
(Decrease) Increase in accrued liabilities 57,206 (210,608)
(Decrease) Increase in deferred loan costs 0 49,472
--------- ---------
Total adjustments 1,117 (150,617)
--------- ---------
Net cash provided by operating activities 216,427 222,344
--------- ---------
Cash flows from investing activities:
Improvements in rental properties (79,768) (153,299)
--------- ---------
Net cash provided by investing activities (79,768) (153,299)
--------- ---------
Cash flows from financing activities:
Repayments of debt (52,832) (45,458)
Distributions to Limited Partners (450,000) (32,854)
--------- ---------
Net cash used by financing activities (502,832) (78,312)
--------- ---------
Net increase in cash and cash equivalents (366,173) (9,266)
Cash and cash equivalents at beginning of period 728,381 560,286
--------- ---------
Cash and cash equivalents at end of period $ 362,208 $ 551,020
========= =========
</TABLE>
See attached notes to the consolidated financial statements.
5
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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, 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 nine month period ended September 30, 1999, 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 9, 1999, 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
The general partner was paid $18,000 for reimbursement of expenses of operating
the Partnership for the nine months ended September 30, 1999, compared to
$20,167 for the nine months ended September 30, 1998. The lower fee results from
adjustments made after the sale of properties. 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. 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 continues to market the one remaining property for
sale-Marketplace Mall in Winston-Salem, NC-and our goal remains to sell it and
liquidate the Partnership. However, due to changing area demographics,
difficulties with long term renewals that create an unstable tenant base and
short term leases, we have not received any offers above $6,000,000. We are
estimating a lower sale price of $6,000,000 or less for Marketplace Mall that
would result in a final distribution to the limited partners estimated at
approximately $100 - $150 per $5,000 limited partner unit.
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LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $362,208 at September 30, 1999, down from
$728,381 at December 31, 1998. In April 1999, $450,000 was distributed to the
limited partners. The distribution was paid from the cash-on-hand held in excess
for repairs and improvements to the Marketplace Mall, while the property is
offered for sale.
RESULTS OF OPERATIONS
The Partnership reported net income of $215,310 for the nine months ended
September 30, 1999, compared to net income of $372,961 for the same period in
1998.
Rental revenue decreased to $1,032,147 for the nine months ended September 30,
1999, compared to $1,239,597 for the same period in 1998 due to a decrease in
percentage and temporary rents. Interest income totaled $16,396 for the nine
months ended September 30, 1999, compared to $70,777 for the same period in
1998. The decrease in interest income is the result of maintaining lower cash
reserves after the distribution was paid to the limited partners in April 1999.
Interest expense for the nine months ended September 30, 1999 was $350,836
compared with $358,237 for the same period in 1998. The decrease reflects
interest paid on the lower mortgage principal balance.
Operations and maintenance expense decreased to $395,719 for the nine months
ended September 30, 1999, down from $553,872 in 1998. This decrease reflects
lower costs incurred for repair and maintenance for the Mall.
Administrative and other expenses increased to $61,473 for the nine months ended
September 30, 1999, from ($3,286) for the nine months ended September 30, 1998.
This increase reflects less costs associated with operating one remaining
property and a correcting entry made in 1998 to reverse the accruals for general
partner fees paid and expensed in 1997 and 1998 .
Legal expense increased to $6,578 for the nine months ended September 30, 1999,
compared to $5,076 for the same period in 1998. Professional fees decreased to
$18,600 for the nine months ended September 30, 1999, compared to $23,515 for
the same period in 1998. These expenses are in line with budget figures.
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. If
necessary, the Registrant can revert to manual methods for bookkeeping, check
writing, preparation of financial statements and
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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.
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
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, 1999.
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 9, 1999
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, 1999 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-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 362,208
<SECURITIES> 0
<RECEIVABLES> 18,710
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,077,891
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,724,907
<CURRENT-LIABILITIES> 208,306
<BONDS> 5,254,364
0
0
<COMMON> 0
<OTHER-SE> 1,262,237
<TOTAL-LIABILITY-AND-EQUITY> 6,724,907
<SALES> 0
<TOTAL-REVENUES> 1,048,543
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 482,370
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 350,863
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 215,310
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
