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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, 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
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MARKETPLACE INCOME PROPERTIES, A NORTH CAROLINA LIMITED PARTNERSHIP
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(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 8, 2000
Page 1 of 9 sequentially numbered pages
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
June 30,
2000 December 31,
(unaudited) 1999
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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
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9,185,684 9,185,684
Accumulated depreciation (3,535,684) (3,535,684)
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5,650,000 5,650,000
Cash and cash equivalents 499,113 408,231
Restricted Cash 163,994 92,126
Accounts Receivable 15,381 26,398
Other 0 2,156
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$ 6,328,487 6,178,911
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LIABILITIES AND PARTNERS' CAPITAL
Debt $ 5,223,233 5,243,891
Other liabilities 133,967 122,597
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5,357,200 5,366,488
Partners' capital:
General partners 37,162 35,573
Limited partners 934,125 776,850
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$ 6,328,487 $ 6,178,911
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The accompanying notes are an integral part of the financial statements
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(unaudited)
<TABLE>
<CAPTION>
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Income:
Rent $333,148 $308,902 $688,366 $696,238
Interest and other 12,076 (19,709) 21,315 12,652
-------- -------- -------- --------
345,224 289,193 709,681 708,890
Expenses:
Interest 118,427 116,957 238,655 234,299
Operations and maintenance 147,016 109,276 269,194 248,802
Professional fees 0 3,300 10,048 18,600
Legal Fees 15 473 311 1,157
Administrative and Other 23,677 32,318 32,609 44,714
-------- -------- -------- --------
289,135 262,325 550,817 547,572
Net income $ 56,089 $ 26,869 $158,864 $161,318
======== ======== ======== ========
Net income per limited partner unit $ 18.51 $ 8.87 $ 52.43 $ 53.23
======== ======== ======== ========
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
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(unaudited)
General Limited
Partners Partners Total
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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)
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Balance, June 30, 1999 $39,531 $1,168,714 $1,208,245
======= ========== ==========
Balance, December 31, 1999 $35,573 $ 776,850 $ 812,423
Net income for the period 1,589 157,275 158,864
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Balance, June 30, 2000 $37,162 $ 934,125 $ 971,287
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The accompanying notes are an integral part of the financial statements
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MARKETPLACE INCOME PROPERTIES
A NORTH CAROLINA LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 2000 June 30, 1999
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<S> <C> <C>
Net Income $158,864 $ 161,318
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Adjustments to reconcile net income to
net cash provided by operations:
Decrease (Increase) in accounts receivable 11,017 (6,206)
Decrease (Increase) in restricted cash (71,868) 0
Decrease (Increase) in other assets 2,156 (100,530)
Increase (Decrease) in accrued liabilities 11,370 (22,544)
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Total adjustments (47,325) (129,280)
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Net cash Provided by (Used for) operating activities 111,539 32,038
Cash flows from investing activities:
Improvements in rental properties 0 (13,131)
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Net cash used by investing activities 0 (13,131)
Cash flows from financing activities:
Increase (Decrease) in Note Payable 20,658 (28,980)
Decrease (Increase) in deferred loan costs 0 (57,437)
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Net cash used by financing activities 20,658 (86,417)
Net increase in cash and cash equivalents 90,882 (67,510)
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Cash and cash equivalents at beginning of period 408,231 560,286
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Cash and cash equivalents at end of period $499,113 $ 492,776
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</TABLE>
The accompanying notes are an integral part of the financial statements
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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, 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 six month period ended June 30, 2000, 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 8, 2000, was 788. 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, 2000 and
1999.
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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.
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. The general partner estimates a
lower sale price of $6,000,000 or less for Marketplace Mall that would result in
liquidation of the Partnership and a final distribution to the limited partners
estimated at approximately $100 - $150 per $5,000 limited partner unit.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $499,113 at June 30, 2000, up from $408,231 at
June 30, 1999. The Registrant will hold these funds as reserves for the cost of
operating, repairing and maintaining the property. Current year budget analysis
is underway as of this filing. Payment of approximately $100,000 for the
resurfacing of the parking lot is expected during the third quarter.
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 $158,864 for the six months ended June
30, 2000, compared to income of $161,318 for the six months ended June 30, 1999.
Rental income decreased from $696,238 for the six months ended June 30, 1999, to
$688,366 for the six months ended June 30, 2000. This decrease is from increased
vacancy resulting in lower base rental income and lower tenant sales that
reduced receipts of percentage rent. Interest and other income increased from
$12,652 for the six months ended June 30, 1999, to $21,315 for the same period
in 2000. This increase reflects reclass of $5,200 tax escrow refund and receipt
of $5,283 cash for the purchase, by a tenant in the mall, of restaurant
equipment that the property manager held since a prior tenant defaulted.
Interest expense for the six months ended June 30, 1999, was $234,299 compared
with $238,655 for the same period of 2000. Operations and maintenance expense
increased to $269,194 for the six months ended June 30, 2000, from $248,802 for
the same period in 1999. This increase reflects higher operating and repair
costs for the Mall. Professional fees decreased to $10,048 for the six months
ended June 30, 2000,
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down from $18,600 for the same 1999 period. Legal fees decreased to $311 for the
six months ended June 30, 2000, compared to $1,157 for the same period in 1999.
Administrative and other expenses also decreased to $32,609 for the current year
from $44,714 for the same period in 1999. These decrease reflects the overall
lower leasing activity and lower lease commissions paid to the property manager.
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
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 six
months ended June 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
A NORTH CAROLINA LIMITED PARTNERSHIP
(REGISTRANT)
BY: /S/ J. CHRISTOPHER BOONE
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J. CHRISTOPHER BOONE
ISC REALTY CORPORATION,
GENERAL PARTNER AND PRINCIPAL EXECUTIVE
OFFICER, PRINCIPAL FINANCIAL OFFICER OF THE
REGISTRANT
DATE: AUGUST 8, 2000
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