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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, 2000
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
incorporation 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 sharesoutstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
3,000 limited partnership units outstanding as of November 8, 2000
Page 1 of 10 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
September 30,
2000 December 31,
(unaudited) 1999
------------------- ------------------
ASSETS
Rental Properties (at cost):
Land and improvements $1,639,540 $1,639,540
Buildings 7,253,003 7,253,003
Furniture and equipment 293,141 293,141
------------------- ------------------
9,185,684 9,185,684
Accumulated depreciation (3,535,684) (3,535,684)
------------------- ------------------
5,650,000 5,650,000
Cash and cash equivalents 537,383 408,231
Restricted Cash 99,629 92,126
Accounts Receivable 30,822 26,398
Other 2,589 2,156
------------------- ------------------
$6,320,423 $6,178,911
=================== ==================
LIABILITIES AND PARTNERS' CAPITAL
Debt $5,197,069 $5,243,891
Other liabilities 157,596 122,597
------------------- ------------------
5,354,665 5,366,488
Partners' capital:
General partner 37,106 35,573
Limited partners 928,652 776,850
------------------- ------------------
$6,320,423 $6,178,911
=================== ==================
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, 2000 AND 1999
(unaudited)
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue:
Rent $354,691 $335,909 $1,058,224 $1,032,147
Interest and other 8,638 3,743 14,786 16,396
---------------- ---------------- ---------------- ----------------
363,329 339,652 1,073,010 1,048,543
Expenses:
Interest 118,221 116,564 356,877 350,863
Operations and maintenance 234,353 146,917 503,547 395,719
Professional fees 0 0 10,048 18,600
Legal fees 253 5,421 564 6,578
Administrative and Other 16,031 16,760 48,640 61,473
---------------- ---------------- ---------------- ----------------
368,858 285,662 919,675 833,233
---------------- ---------------- ---------------- ----------------
Net income (loss) ($5,529) $53,991 $153,335 $215,310
================ ================ ================ ================
Net income per limited partner unit ($1.82) $17.82 $50.60 $71.05
================ ================ ================ ================
Limited Partner Units outstanding-wgtd. avg. 3,000 3,000 3,000 3,000
================ ================ ================ ================
</TABLE>
See attached notes to the consolidated financial statements
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(unaudited)
General Limited
Partner Partners Total
------- ----------- -----------
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
======= =========== ===========
Balance, December 31, 1999 $35,573 $ 776,850 $ 812,423
Net income for the period 1,533 151,802 153,335
------- ----------- -----------
Balance, September 30, 2000 $37,106 $ 928,652 $ 965,758
======= =========== ===========
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, 2000 AND 1999
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(unaudited)
Nine Nine
Months Months
Ended Ended
September 30, September 30,
2000 1999
------------- -------------
Net Income $153,335 $215,310
Adjustments to reconcile net income to net cash
provided by operations:
(Increase) Decrease in accounts receivable (4,424) 13,419
Increase in restricted cash and deposits (7,503) (66,869)
Other Increase (433) (2,639)
Increase in accrued liabilities 34,999 57,206
Total adjustments 22,639 1,117
------------- -------------
Net cash provided by operating activities 175,974 216,427
------------- -------------
Cash flows from investing activities:
Improvements in rental properties 0 (79,768)
------------- -------------
Net cash provided by investing activities 0 (79,768)
------------- -------------
Cash flows from financing activities:
Repayments of debt (46,822) (52,832)
Distributions to Limited Partners 0 (450,000)
------------- -------------
Net cash used by financing activities (46,822) (502,832)
------------- -------------
Net increase in cash and cash equivalents 129,152 (366,173)
Cash and cash equivalents at beginning of period 408,231 728,381
------------- -------------
Cash and cash equivalents at end of period $537,383 $362,208
============= =============
See attached notes to the consolidated financial statements
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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, 2000. 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 1999 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, 2000, 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 8, 2000, was 787. 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.
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, 2000, the same amount
was paid for the nine months ended September 30, 1999.
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 (the "Mall")
in Winston-Salem. 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.
In 1998, during its annual planning and budgeting process, the general partner
determined that, primiarily due to increased competition, a decline in future
expected operating income resulted in anticipated future cash flows below the
carrying value of the property. Accordingly, the general partner adjusted the
carrying value of the property to its estimated realizable value resulting in a
non-cash impairment loss of $1,756,000. During 1999, the general partner
determined an additional write-down of approximately $420,000 was necessary to
adjust the carrying value of the property to its estimated realizable value.
The general partner continues to market for sale the one remaining property,
Marketplace Mall in Winston-Salem, NC. However, due to changing area
demographics, difficulties with long term renewals that create an unstable
tenant base and short term leases, offers received to date have not been in
excess of the outstanding mortgage balance.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $537,383 at September 30, 2000, up from
$408,231 at December 31, 1999. The Registrant will hold these funds as reserves
while the property is offered for sale. 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.
Carmike Theatres, located in a separate building beside the main Mall property,
has recently filed for bankruptcy and will close more than 41 theatres
nationwide, including the location at Marketplace Mall. The general partner will
file the maximum claim for future rents that is allowed under the bankruptcy
code, however, it is questionable how much, if anything, will be received once
the claim is settled. Our property manager is actively seeking other replacement
tenants. The loss of Carmike Theatres will substantially reduce the net cash
flow of the Partnership. This reduction is estimated to be approximately
$283,000 per year. Based on current operating cash flow, excluding the rent from
Carmike, the Partnership is expected to incur an operating cash deficit of
approximately $75,000 per
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year. The general partner is seriously questioning whether these deficits should
be funded when it is unlikely that the property can be sold for an amount in
excess of the debt. If we elect not to fund the operating deficits, by not
paying the full amount of the monthly interest and principal due on the loan, it
is likely that the lender will move to foreclose on the property. We will
attempt, however, to negotiate a reduction in debt service with the lender, so
we can avoid incurring a cash deficit.
RESULTS OF OPERATIONS
The Partnership reported net income of $153,335 for the nine months ended
September 30, 2000, compared to net income of $215,310 for the same period in
1999.
Rental revenue increased from $1,032,147 for the nine months ended September 30,
1999, to $1,058,224 for the same period in 2000 due to an increase in percentage
and temporary rents. Interest income totaled $14,786 for the nine months ended
September 30, 2000, compared to $16,396 for the same period in 1999. 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 $356,877
compared with $350,863 for the same period in 1999.
Operations and maintenance expense increased to $503,547 for the nine months
ended September 30, 2000, up from $395,719 in 1999. This increase reflects costs
incurred for repair and maintenance for the Mall. Expense of approximately
$98,000 for resurfacing the parking lot was reimbursed from the deferred
maintenance account that is held by the lender for this purpose.
Administrative and other expenses decreased to $48,640 for the nine months ended
September 30, 2000, from $61,473 for the nine months ended September 30, 1999.
Legal expense decreased to $564 for the nine months ended September 30, 2000,
compared to $6,578 for the same period in 1999. Professional fees decreased to
$10,048 for the nine months ended September 30, 2000, compared to $18,600 for
the same period in 1999. These decreases reflect the overall lower leasing
activity and lower lease commissions paid to the property manager.
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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
We continue to market the Marketplace Mall in Winston-Salem, NC and
our goal remains to sell the mall and liquidate the Partnership. The
loss of Carmike Theatres will seriously impact our ability to sell the
property at an amount in excess of the debt. Should we not be able to
sell the property for an amount in excess of the debt, the only
proceeds to distribute to the limited partners would be the cash on
hand held by the Partnership which equates to approximately $100 -
$125 per unit.
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, 2000.
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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 17, 2000
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