-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KxYFyrSWkBBy1bvtfKdL4Yw1BeGPZowLvEmQ/a0MkjoMfQtKBVIzthdZBdBKGWra 6jnrRbIJblt+FLj5G0JhTg== 0000903112-97-001306.txt : 19971020 0000903112-97-001306.hdr.sgml : 19971020 ACCESSION NUMBER: 0000903112-97-001306 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19971017 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL TRUST CENTRAL INDEX KEY: 0000016387 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 946181186 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-08063 FILM NUMBER: 97697466 BUSINESS ADDRESS: STREET 1: 605 THIRD AVENUE 26TH FLOOR STREET 2: STE 200 CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126550220 MAIL ADDRESS: STREET 1: 605 THIRD AVENUE 26TH FLOOR STREET 2: #200 CITY: NEW YORK STATE: NY ZIP: 10016 FORMER COMPANY: FORMER CONFORMED NAME: CALIFORNIA REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19920703 10-Q/A 1 FORM 10-Q/A As filed with the Securities and Exchange Commission on October 17, 1997 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (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, 1997 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: 1-8063 California Real Estate Investment Trust (Exact name of registrant as specified in its charter) California 94-6181186 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 131 Steuart Street, Suite 200, San Francisco, CA 94105 (Address of principal executive offices) (Zip Code) (415) 905-0288 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 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 close of the latest practical date. Class Outstanding at March 31, 1997 Common Shares of Beneficial Interest $1.00 par value ("Common Shares") 9,137,335 629215.3 - ------------------------------------------------------------------------------- CALIFORNIA REAL ESTATE INVESTMENT TRUST - ------------------------------------------------------------------------------- INDEX PAGE Part I. Financial Information Item 1: Financial Statements Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 1 Consolidated Statements of Operations - For the Three Months Ended March 31, 1997 and 1996 2 Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 1997 and 1996 3 Notes to Consolidated Financial Statements 4 629215.3 PART I. FINANCIAL INFORMATION - ------------------------------------------------------------------------------- Item 1. Financial Statements - ------------------------------------------------------------------------------- CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY Consolidated Balance Sheets
March 31, December 31, 1997 1996 (Unaudited) (Audited) ASSETS Investments, Generally Held for Sale: Rental properties $ -- $ 8,585,000 Notes receivable, net of valuation allowances and deferred gains of $6,127,000 at March 31, 1997 and December 31, 1996 2,658,000 1,576,000 Marketable securities available for sale 13,141.000 14,115,000 ----------- ------------ 15,799,000 24,276,000 Cash 8,330,000 4,698,000 Receivables, net of allowance of $1,126,000 and $1,001,000 at March 31, 1997 and December 31, 1996, respectively 687,000 707,000 Other assets 208,000 355,000 ----------- ------------ Total Assets $ 25,024,000 $ 30,036,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Long-term notes payable, collateralized by deeds of trust on rental properties $ 880,000 $ 5,169,000 Accounts payable and accrued expenses 113,000 326,000 Other liabilities -- 70,000 ----------- ----------- Total Liabilities 993,000 5,565,000 ----------- ----------- Shareholders' Equity: Shares of beneficial interest, par value $1 a share; unlimited authorization, 9,137,000 shares outstanding at March 31, 1997 and December 31, 1996 9,137,000 9,137,000 Additional paid-in capital 55,145,000 55,118,000 Unrealized holding income (loss) on marketable securities 19,000 (22,000) Accumulated deficit (40,270,000) (39,762,000) ----------- ----------- Total Shareholders' Equity 24,031,000 24,471,000 ----------- ----------- Total Liabilities and Shareholders' Equity $ 25,024,000 $ 30,036,000 =========== ===========
See accompanying notes to consolidated financial statements. 629215.3 CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 1997 1996 ---- ---- Revenues: Rent $ 236,000 $ 569,000 Interest 323,000 302,000 Other 54,000 -- -------- -------- 613,000 871,000 ------- -------- Expenses: Operating expenses 123,000 148,000 Property management 14,000 27,000 Depreciation and amortization 21,000 5,000 Interest 99,000 137,000 General and administrative 432,000 413,000 ------- -------- 689,000 730,000 ------- -------- Income (loss) before gain (loss) on sale of investments (76,000) 141,000 Gain (loss) on sale of investments (432,000) 299,000 ----------- -------- Net income (loss) $ (508,000) $ 440,000 =========== ======== Net income (loss) per share of beneficial interest $ (0.06) $ 0.05 =========== ======== See accompanying notes to consolidated financial statements. 629215.3 CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1997 1996 ---- ---- Cash flows from operating activities: Net income (loss) $ (508,000) $ 440,000 ----------- ---------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21,000 5,000 Loss (gain) on sale of investments 432,000 (299,000) Changes in assets and liabilities: Decrease (increase) in receivables, net 20,000 (9,000) (Increase) in other assets 147,000 (59,000) (Decrease) increase in accounts payable and accrued expenses (213,000) 258,000 (Decrease) increase in other liabilities (70,000) 2,000 ----------- ---------- Total adjustments to net (loss) income 337,000 (102,000) ----------- ---------- Net cash (used) provided by operating activities (171,000) 338,000 ----------- ---------- Cash flows from investing activities: Proceeds from sale of investments 7,306,000 -- Improvements to rental properties (64,000) (45,000) Principal collections on notes receivable 8,000 12,000 Principal collections on marketable securities 1,015,000 -- ----------- ---------- Net cash provided by (used in) investing activities 8,265,000 (33,000) ----------- ---------- Cash flows from financing activities: Principal payments on long-term notes payable (4,289,000) (23,000) Additional paid-in capital 27,000 -- ----------- ---------- Net cash used in financing activities (4,262,000) (23,000) ----------- ---------- Net increase in cash 3,832,000 282,000 Cash, beginning of period 4,698,000 4,778,000 ----------- ---------- Cash, end of period $ 8,530,000 $ 5,060,000 =========== ==========
See accompanying notes to consolidated financial statements. 629215.3 CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 1. Organization and Basis of Presentation: -------------------------------------- Organization ------------ California Real Estate Investment Trust (the "Trust" or "CalREIT") was organized under the laws of the State of California pursuant to a Declaration of Trust dated September 15, 1966. The Trust became a partner of Totem Square, L. P. ("Totem"), a Washington Limited Partnership in which the Trust owns a 59% interest, on November 30, 1990. The Trust also formed CalREIT Totem Square, Inc. ("Cal- CORP") to act as general partner of Totem. Cal-CORP has a 1% interest in Totem, and Totem Square Associates, an unrelated party, has the remaining 40%. In 1994 the Trust operated as a subsidiary of The Peregrine Real Estate Trust ("Peregrine"), which then held 76% of the Trust's outstanding Common Shares. In April 1994, Peregrine replaced the CalREIT Board of Trustees with a slate of its own Trustees. In 1995, the Board was expanded from three to five Trustees, two of whom were independent. In 1996, the Board of Trustees was comprised of two independent Trustees, one Trustee who concurrently served on the Board of Trustees of Peregrine, a former officer of the Trust, and the then Chief Executive Officer of the Trust. On January 3, 1997, Peregrine sold its entire 76%-ownership interest in the Trust to CalREIT Investors Limited Partnership ("CRIL"), an entity controlled by Samuel Zell. Simultaneous with the closing of this Transaction, the Board of Trustees was expanded to seven members; one Trustee, who also served on the Peregrine Board of Trustees, resigned; and three additional Trustees, nominated by CRIL, were appointed to the Board. As of March 31, 1997, the Trust had sold its two remaining commercial rental properties, Fulton Square Shopping Center and Totem Square in Sacramento, California and in Kirkland, Washington, respectively. At the end of the first quarter, the Trust owned a mortgage note portfolio of four notes encompassing approximately $8,785,000 in loans with an aggregate book value of approximately $2,658,000. These loans bear interest at an overall effective rate of approximately 8%. They are collateralized by mortgages on real property. Three of the investments in the four loans were originated by the Trust in connection with the disposition of Trust properties prior to 1996. The remaining note, in the face amount of approximately $1,090,000, was made in conjunction with the sale of Fulton Square Shopping Center in February 1997. Additionally, as of March 31, 1997 the Trust had approximately $13,141,000 invested in liquid mortgage-backed securities. 629215.3 CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 1. Organization and Basis of Presentation, continued: -------------------------------------- Basis of Presentation --------------------- The accompanying financial statements are unaudited; however, they have been prepared in accordance with generally accepted accounting principles for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. The results for the interim period ended March 31, 1997, are not necessarily indicative of the results to be obtained for the full fiscal year. These financial statements should be read in conjunction with the December 31, 1996, audited financial statements and notes thereto, included in the California Real Estate Investment Trust Annual Report on Form 10-K. The accompanying unaudited consolidated financial statements of California Real Estate Investment Trust include the accounts of the Trust, Cal-CORP and Totem. Stock-Based Compensation ------------------------ As of March 31, 1997 and December 31, 1996 there were no stock options outstanding nor stock option plans in place. 2. Investments in Notes Receivable: As of March 31, 1997 and December 31, 1996, the Trust had long-term notes receivable, collateralized by deeds of trust (before valuation allowances and deferred gains) of $8,785,000 and $7,703,000, respectively. The notes are collateralized by real estate properties in California and Arizona. In conjunction with the Trust's plan to monetize assets, its mortgage note investments are classified for accounting purposes as "held for sale." The notes bear interest at rates ranging from 7.63% to 9.5% as of March 31, 1997. For the quarter ended March 31, 1997 the overall effective rate was approximately 8%. 629215.3 CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 3. Investments in Marketable Securities: At March 31, 1997, the Trust had $13,141,000 invested in liquid mortgage-backed securities classified as "available-for-sale." Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," (SFAS 115) issued in May 1993 requires that at the date of acquisition and at each reporting date, debt and equity securities be classified as "held-to-maturity," "trading," or "available for sale." Investments in debt securities in which the Trust has the positive intent and ability to hold to maturity are required to be classified as "held-to-maturity." "Held-to-maturity" securities are required to be stated at cost and adjusted for amortization of premiums and discounts to maturity in the consolidated balance sheet. Investments in debt and equity securities that are not classified as "held-to-maturity" and equity securities that have readily determinable fair values are to be classified as "trading" or "available-for-sale" and are measured at fair value in the consolidated balance sheet. Securities that are bought and held principally for the purpose of selling them in the near term are classified as "trading." Unrealized holding gains and losses for "trading" securities are included in earnings. Investments that are not classified as "held-to-maturity" or "trading" securities are classified as "available-for-sale." Unrealized holding gains and losses for "available-for-sale" securities are excluded from earnings and reported as a separate component of shareholders' equity until realized. In accordance with SFAS 115, the Trust determines the appropriate classification at the time of purchase and reevaluates such designation at each balance sheet date. 629215.3 CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 3. Investments in Marketable Securities, continued: ------------------------------------ At March 31, 1997, the Trust's "available-for-sale" securities consisted of the following:
(In thousands) Unrealized Estimated Cost Gains Losses Fair Value Federal National Mortgage Association, adjustable rate interest currently at 7.842%, due April 1, 2024 $ 2,681 $ -- $ (17) $ 2,664 Federal Home Loan Mortgage Corporation, adjustable rate interest currently at 7.666%, due June 1, 2024 908 -- (3) 905 Federal National Mortgage Association, adjustable rate interest currently at 7.311%, due April 1, 2025 656 -- (5) 651 Federal National Mortgage Association, adjustable rate interest currently at 6.147%, due May 1, 2026 3,089 17 -- 3,106 Federal National Mortgage Association, adjustable rate interest currently at 6.156%, due June 1, 2026 5,788 27 -- 5,815 ------- ------ ----- ------- $ 13,122 $ 44 $ (25) $ 13,141 ======= ====== ===== =======
The maturity dates above are not necessarily indicative of expected maturities as principal is often prepaid on such instruments. 4. Long-Term Notes Payable: The Trust has one note payable to John Alden Life Insurance Company with an interest rate of 9.25% per annum. Principal and interest are payable monthly until August 7, 2017 when the entire unpaid principal balance and any unpaid interest are due. 629215.3 CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 5. Income Taxes: The Trust has elected to be taxed as a real estate investment trust and as such, is not taxed on that portion of its taxable income which is distributed to shareholders, provided that at least 95% of its real estate trust taxable income is distributed and that the Trust meets certain other REIT requirements. 6. Related-Party Transactions: Pursuant to an oral agreement with Peregrine, costs for certain general administrative services, including executive services, accounting services, treasury services, financial reporting and internal bookkeeping services, shareholder relations, and directors and officers insurance were shared with Peregrine. The shared costs were allocated to the Trust and Peregrine based upon their respective asset values (real property and notes receivable), subject to annual negotiation. At March 31, 1997 and December 31, 1996, the Trust had $9,000, and $31,000, respectively due to Peregrine pursuant to the cost allocation arrangement. The cost allocation arrangement between the Trust and Peregrine was terminated on January 7, 1997. 7. Statements of Cash Flows Supplemental Information: In connection with the sale and foreclosure of properties, the Trust entered into various non-cash transactions as follows: For the Three Months Ended March 31, March 31, 1997 1996 -------- -------- Sales price less selling costs $ 8,396,000 $ 1,033,000 Amount due from Buyer 1,090,000 (1,033,000) ---------- ----------- Net cash received $ 7,306,000 $ -- ========== =========== Cash paid for interest on the Trust's outstanding debt during the three-month periods ended March 31, 1997 and 1996, was $99,000 and $139,000, respectively. 629215.3 CALIFORNIA REAL ESTATE INVESTMENT TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 8. Per Share Data: -------------- Per share data is for the three-month periods ended March 31, 1997, and March 31, 1996, based on the weighted average number of Common Shares outstanding during each period. The weighted average number of shares used in the computation was 9,137,000. 9. Gain (loss) on Sale of Investments: ---------------------------------- Components of the gain (loss) on the sale of investments for the three months ended March 31, 1997, and March 31, 1996, were as follows: For the Three Months Ended March 31, 1997 1996 ---- ---- Sale of Redfield Commercial Center $ -- $ 299,000 Sale of Fulton Square Shopping Center (34,000) -- Sale of Totem Square (398,000) -- ---------- --------- $ (432,000) $ 299,000 ========== ========= 10. Changes in and Disagreements with Accountants on Accounting and Financial --------------------------------------------------------------------------- Disclosure ---------- On April 14, 1997, the Board of Trustees adopted a resolution (i) not to retain Coopers & Lybrand LLP ("C&L") as the Trust's auditors for the fiscal year ending December 31, 1997 and (ii) to engage Ernst & Young LLP as the Trust's independent auditors for the fiscal year ending December 31, 1997. The reports of C&L on the Trust's consolidated financial statements as of and for the two years ended December 31, 1996 and December 31, 1995 did not contain an adverse opinion or a disclaimer opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During the Trust's two most recent fiscal years ended December 31, 1996, there were no disagreements with C&L on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of C&L, would have caused them to make reference thereto in their report(s) on the Trust's financial statements for such fiscal year(s), nor were there any "reportable events" within the meaning of Item 304(a)(1)(v) of Regulation S-K promulgated under the Exchange Act. 629215.3 SIGNATURES Pursuant to the requirement 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. CALIFORNIA REAL ESTATE INVESTMENT TRUST October 17, 1997 /s/ John R. Klopp - ---------------- ----------------------- Date John R. Klopp Chief Executive Officer 629215.3 -----END PRIVACY-ENHANCED MESSAGE-----