10-Q 1 g69196e10-q.txt MARKETPLACE INCOME PROPERTIES 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, 2001 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 9, 2001 Page 1 of 9 sequentially numbered pages 2 MARKETPLACE INCOME PROPERTIES A NORTH CAROLINA LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS MARCH 31, 2001 AND DECEMBER 31, 2000

The accompanying notes are an integral part of the financial statements. 2 3 MARKETPLACE INCOME PROPERTIES A NORTH CAROLINA LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (unaudited)

The accompanying notes are an integral part of the financial statements. 3 4 MARKETPLACE INCOME PROPERTIES A NORTH CAROLINA LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (unaudited)

The accompanying notes are an integral part of the financial statements. 4 5 MARKETPLACE INCOME PROPERTIES A NORTH CAROLINA LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 Increase (Decrease) in Cash and Cash Equivalents (unaudited)

The accompanying notes are an integral part of the financial statements. 5 6 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, 2001. 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 2000 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, 2001, 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 8, 2001, 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. 2. Related Party Transactions Amounts earned by the general partner for the reimbursement of expenses of operating the Partnership were $6,000 for both three month periods ended March 31, 2000 and 2001. 6 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. 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 primarily 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. The general partner determined that additional write-downs of approximately $420,000 during 1999 and $450,000 in the fourth quarter of 2000, were necessary to adjust the carrying value of the property to its estimated realizable value. Liquidity and Capital Resources Cash and cash equivalents totaled $157,009 at March 31, 2001, compared to $546,169 at March 31, 2000. A cash distribution of $375,000, or $125.00 per limited partner unit, was paid to the limited partners in February 2001. The Registrant will hold the remaining cash balance as reserves for the cost of operating, repairing and maintaining the property. Carmike Theatres, located in a separate building beside the main Mall property, filed for bankruptcy in 2000 and has closed 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 year. In April, 2001, the general partner decided to stop paying deferred maintenance to the mortgage lender and is seriously questioning whether projected cash deficits should be funded when it is unlikely that the property can be sold for an amount in excess of the debt. By electing not to fund operating deficits and 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. The Partnership is current on all debt service with the exception of the operating reserve amount for April and May of 2001. Results of Operations The Partnership reported net income of $49,141 for the three months ended March 31, 2001, compared to income of $102,775 for the same period in 2000. Rental income decreased from $288,640 for the three months ended March 31, 2000, to $216,094 for the three months ended March 31, 2001. This decrease is from increased vacancy resulting in lower base rental income and lower tenant sales that reduced receipts of percentage rent. 7 8 For the three months ended March 31, 2001, interest and other income increased to $80,517 from $75,817 for the same period in 2000. This increase reflects interest earned on higher cash reserves. Interest expense for the three months ended March 31, 2001, was $114,578 compared with $120,228 for the same period of 2000. Operations and maintenance expense decreased to $112,176 for the three months ended March 31, 2001, from $122,178 for the same period in 2000. This decrease reflects lower operating and repair costs for the Mall. Professional fees decreased to $8,500 for the three months ended March 31, 2001, down from $10,048 for the same 2000 period. Legal fees decreased to $0 for the three months ended March 31, 2001, compared to $296 for the same period in 2000. Administrative and other expenses decreased to $12,216 for the current quarter from $8,933 for the same period in 2000. These decreases reflect lower charges incurred to operate the one remaining property. 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. In February 2001, a cash distribution was paid to the limited partners of $375,000 or $125 per limited partnership unit. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K No reports on Form 8-K were required to be filed during the three months ended March 31, 2001. 8 9 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 9, 2001 --------------------------- 9

MARKETPLACE INCOME PROPERTIES LIMITED PARTNERSHIP 10-Q