-----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, UoeSjcfvY4dPPzWG8es/RX8NnzMWpQLeCZOKg0LD2KT5qKr5lKGnv82MGNS7UK9e B67NLr2ZcWaOpr4HsdOG0w== 0000950152-96-000374.txt : 19960410 0000950152-96-000374.hdr.sgml : 19960410 ACCESSION NUMBER: 0000950152-96-000374 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960209 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEVETRUST REALTY INVESTORS CENTRAL INDEX KEY: 0000020975 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 341085584 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05641 FILM NUMBER: 96513917 BUSINESS ADDRESS: STREET 1: 2001 CROCKER RD STE 400 CITY: WESTLAKE STATE: OH ZIP: 44145 BUSINESS PHONE: 2168990909 MAIL ADDRESS: STREET 1: 2001 CROCKER ROAD STREET 2: STE 400 CITY: WESTLAKE STATE: OH ZIP: 44145 10-Q 1 CLEVETRUST REALTY INVESTORS 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1995 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 0-5641 CLEVETRUST REALTY INVESTORS (Exact name of registrant as specified in its charter) Massachusetts 34-1085584 (State or other jurisdiction of incorporation (I. R. S. Employer or organization) Identification No.) 2001 Crocker Road, Suite 400 Westlake, Ohio 44145 (Address of Principal Executive Offices) (Zip Code) (216) 899-0909 (Registrant's telephone number, including area code) Not Applicable Former name, former address and former fiscal year if changed since last report 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 ________ Shares of Beneficial Interest Outstanding at February 7, 1996: 5,179,143 The sequential page in this Report where the Exhibit Index is located is Page 11. 2 CLEVETRUST REALTY INVESTORS INDEX
Sequential Page Number PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Statement of Financial Condition -- December 31,1995 and September 30, 1995 3 Statement of Operations -- Three Months ended December 31, 1995 and 1994 4 Statement of Cash Flows -- Three Months ended December 31, 1995 and 1994 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition 8 and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings 9 Item 2. Changes in Securities 9 Item 3. Defaults upon Senior Securities 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Item 5. Other Information 9 Item 6. Exhibits and Reports on Form 8-K 9
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CLEVETRUST REALTY INVESTORS STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 1995 SEPTEMBER 30, 1995 ------------------------- --------------------------- (in thousands) ASSETS - ---------------------------------------------------------- Invested assets: Investments in real estate: Improved properties $63,518 $63,282 Less: Depreciation 22,993 22,543 ------------------------- --------------------------- 40,525 40,739 Land held for sale or development 203 203 ------------------------- --------------------------- 40,728 40,942 Investments in securities - NOTE B 2,295 267 Real estate mortgage loans 216 303 ------------------------- --------------------------- 43,239 41,512 Cash and cash equivalents 787 188 Other assets 1,401 1,376 ------------------------- --------------------------- TOTAL ASSETS $45,427 $43,076 ========================= =========================== LIABILITIES - ---------------------------------------------------------- Mortgage notes payable - NOTE C $9,721 $9,266 Bank notes payable - NOTE D 8,600 6,600 Accrued interest on notes payable 34 23 Accrued expenses and other liabilities 2,027 2,061 ------------------------- --------------------------- TOTAL LIABILITIES 20,382 17,950 SHAREHOLDERS' EQUITY - ---------------------------------------------------------- Shares of Beneficial Interest, par value $1 per Share: Authorized - - Unlimited Issued and outstanding shares (12/31/95 - 5,179,143; 9/30/95 - 5,217,143) 5,179 5,217 Additional paid-in capital 38,850 38,986 Accumulated deficit (18,982) (19,104) ------------------------- --------------------------- 25,047 25,099 Unrealized gains (losses) on securities - NOTE B (2) 27 ------------------------- --------------------------- TOTAL SHAREHOLDERS' EQUITY 25,045 25,126 ------------------------- --------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $45,427 $43,076 ========================= =========================== See notes to financial statements.
- 3 - 4 CLEVETRUST REALTY INVESTORS STATEMENT OF OPERATIONS The following statement of operations of CleveTrust Realty Investors for the three-month periods ended December 31, 1995 and 1994, respectively, is unaudited, but in the opinion of management includes all adjustments necessary to present fairly the results of operations. All such adjustments were of a normal, recurring nature. The results of operations of the three-month period ended December 31, 1995 are not necessarily indicative of the results of operations for succeeding periods.
Three Months Ended ------------------------------ 12/31/95 12/31/94 ------------- ------------ (in thousands, except per share data) INCOME - -------------------------------------------------- Real estate operations: Rental Income $2,567 $2,615 Less: Real estate operating expenses 1,252 1,371 Less: Depreciation expense 450 492 ------------- ------------ 1,702 1,863 ------------- ------------ Income from real estate operations 865 752 Interest income 8 35 Dividend income 61 0 Other 2 16 ------------- ------------ 936 803 EXPENSES - -------------------------------------------------- Interest: Mortgage notes payable 222 269 Bank notes payable - NOTE D 188 243 ------------- ------------ 410 512 General and administrative 195 224 ------------- ------------ 605 736 ------------- ------------ NET INCOME $331 $67 ============= ============ Per Share of Beneficial Interest - NOTE F: NET INCOME PER SHARE $0.06 $0.01 ============= ============ Weighted Average Number of Shares of Beneficial Interest Outstanding 5,217 5,471 ============= ============ See notes to financial statements.
-4- 5 CLEVETRUST REALTY INVESTORS STATEMENT OF CASH FLOWS
Three Months Ended ----------------------------- 12/31/95 12/31/94 ------------ ------------ (in thousands) CASH FLOW FROM OPERATING ACTIVITIES: Net income $331 $67 Non-cash revenues and expenses included in income: Depreciation expense 450 492 (Increase) in other assets (25) (22) Increase in accrued interest on notes payable 11 24 (Decrease) in accrued expenses and other liabilities (34) (203) ------------ ------------ Cash Flow From Operating Activities 733 358 CASH FLOW FROM INVESTING ACTIVITIES: Equity investments: Improvements to existing properties (236) (121) (Increase) in investments in securities (2,057) 0 Net insurance proceeds 0 1,989 Real estate mortgage loan repayments 87 43 ------------ ------------ Cash Flow (Used in) From Investing Activities (2,206) 1,911 CASH FLOW FROM FINANCING ACTIVITIES: Mortgage notes payable: Principal borrowings 500 0 Principal amortization payments (45) (124) Bank notes payable: Borrowings 2,000 0 Repayments 0 (1,989) Principal amortization payments 0 (19) Certificate of deposit 0 500 Shares repurchased and subsequently retired (174) 0 Distributions to shareholders (209) (218) ------------ ------------ Cash Flow From (Used In) Financing Activities 2,072 (1,850) ------------ ------------ Increase in cash and short-term investments 599 419 Balance at beginning of year 188 251 ------------ ------------ Balance at end of period $787 $670 ============ ============ See notes to financial statements.
-5- 6 CLEVETRUST REALTY INVESTORS NOTES TO FINANCIAL STATEMENTS December 31, 1995 NOTE A - INCOME TAXES As of October 1, 1992 the Trust adopted, Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). The adoption of SFAS 109 had no effect on net income. The Trust had no income tax expense for the three month period ended December 31, 1994 or for the fiscal year ended September 30, 1995. The Trust had no income tax expense for the three month period ended December 31, 1995 and it expects to have no income tax expense for the fiscal year ended September 30, 1996. The Trust had a net deferred tax asset position at December 31, 1995 and September 30, 1996 of approximately $2,455,000 and $2,567,000, respectively. The Trust maintains a valuation reserve equal to its net deferred tax asset as there is doubt as to whether the net deferred tax will be realized. NOTE B - INVESTMENTS IN SECURITIES The Trust has adopted Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities". The Trust has classified its investments in equity securities as available for sale and as a result these are stated at fair value at December 31, 1995 and September 30, 1995. The effect of the unrealized gains (losses) are included as a component of Shareholders' Equity. There was no commulative effect adjustment as a result of adoption. NOTE C - MORTGAGE NOTES PAYABLE Effective December 28, 1995 the Trust and its Lender modified the first mortgage loan on the 14800 Quorum Office Building located in Dallas, Texas as follows: The Trust borrowed an additional $500,000, which increased the outstanding borrowings to $2,640,000 at December 31, 1995. Additionally, the base interest rate, which was 1.75% over the prime lending rate (9.5% at the time of the modification) adjusted every two years, was changed to a fixed rate of 8.30%, effective January 1, 1996, until the maturity date of August 19, 2000. NOTE D - BANK NOTES PAYABLE The Trust has a revolving line of credit ("1994 Credit") issued by National City Bank of Cleveland ("NCB") and Manufacturer's and Traders Trust Company of Buffalo, New York ("M&T"), which was signed effective November 30, 1994. The 1994 Credit is for up to $25,000,000 (but is limited by the value of the collateral provided). Of this amount a maximum of $15,000,000 is currently available and $10,000,000 will be available upon payment of an activation fee of 3/4 of 1% on the $10,000,000. Interest will be at either i) 1/4 of 1% over the prime rate; ii) 250 basis points over the LIBOR rate; or iii) NCB's fixed interest rate available from time to time. Additionally, a commitment fee of 3/8 of 1% is due on any funds available but not borrowed. The initial term was for three years. Each year the lenders - 6 - 7 CLEVETRUST REALTY INVESTORS NOTES TO FINANCIAL STATEMENTS - (Continued) NOTE D - BANK NOTES PAYABLE - (Continued) will review the 1994 Credit with the right to extend it for one additional year. Accordingly, the lenders have extended the 1994 Credit for one additional year through March 1, 1999. At December 31, 1995 the outstanding balance was $8,600,000. At September 30, 1995 the outstanding balance was $6,600,000. The 1994 Credit is secured by certain of the Trust's real estate and contains certain covenants including a covenant for a minimum shareholders' equity. At December 31, 1995 the amount of shareholders' equity free from such restrictions was approximately $5,045,000. The Trust also had a loan with another bank which has a maturity date of December 25, 1997. The interest rate on this loan was prime plus 1% with a minimum rate of 7.5%. On February 28, 1995 the Trust made a principal payment of $2,200,000 and on March 15, 1995 paid off the remaining balance of $1,260,000. NOTE E - DISTRIBUTIONS The Trustees, at their October 24, 1995 meeting declared a quarterly cash distribution of $.04 per share payable January 19, 1996 to shareholders of record as of January 5, 1996. NOTE F - NET INCOME PER SHARE Net income per Share of Beneficial Interest has been computed using the weighted average number of Shares of Beneficial Interest outstanding each period. - 7 - 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. FINANCIAL CONDITION At December 31, 1995 the Trust owned $63,721,000 in real estate investments at cost, had $2,295,000 of investments in securities at market value, and had two real estate mortgage loan with a combined balance of $216,000. These investments, net of accumulated depreciation, totaled $43,239,000. This compared with total real estate investments at cost of $63,282,000, investments in securities at market value of $267,000, two real estate mortgage loan with a combined balance of $303,000 and a carrying value after accumulated depreciation of $41,512,000 at September 30, 1995. The change since year end was the net result of the Trust receiving $87,000 in real estate loan repayments, increasing its market value invest- ments in securities by $2,028,000, spending $236,000 on improvements to existing properties and recording depreciation expense of $450,000. During the three months ended December 31, 1995 the Trust increased its borrowings under the 1994 Credit Agreement by $2,000,000. These borrowings were used to purchase securities in real estate companies. Also, in December, 1995 the Trust borrowed an additional $500,000 in a restructuring of the first mortgage loan on the 14800 Quorum Office Building in Dallas, Texas (see Note C to the financial statements). The $81,000 reduction in shareholders' equity at December 31, 1995 from September 30, 1995 was the net effect of the Trust's recording net income of $331,000, making distributions to shareholders of $209,000, repurchasing and retiring 38,000 of the Trust's shares at a total cost of $174,000, and reducing the unrealized gains (losses) on investments in securities by $29,000 during the three months ended December 31, 1995. At December 31, 1995 the Trust's debt to equity ratio was .73-to-1.00 compared to .63-to-1.00 at September 30, 1995. RESULTS OF OPERATIONS Income from real estate operations during the quarter ended December 31, 1995 increased $113,000 (15%) when compared to the quarter ended December 31, 1994. Rental income for the quarter ended December 31, 1995 decreased $48,000 (2%) compared to the quarter ended December 31, 1994. Real estate operating expenses decreased $119,000 (9%) in the three months ended December 31, 1995 versus 1994. Also depreciation expense decreased $42,000 (8.5%) for the three months ended December 31, 1995 compared to December 31, 1994. The decreases in each category are primarily due to the sales in February and March, 1995 of three improved properties, the 197 room hotel located at the St. Louis airport, the 51,000 square foot office building located in Dallas, Texas, and the 124 unit apartment complex located in Greeley, Colorado. Additionally, two of the Trust's office buildings located in Dallas, Texas had increased rental income during the current quarter compared to the quarter one year ago as a result of increased occupanies due to leasing efforts in August and September, 1995. The $102,000 (20%) decrease in interest expense for the three month period ended December 31, 1995 when compared to the same period one year ago was primarily due to less borrowings outstanding. During the three months ended December 31, 1995 the average daily outstanding borrowings were $17,236,000 compared to an average daily outstanding balance of $21,533,000 for the three months ended December 31, 1994. - 8 - 9
P A R T I I Item 1. Legal Proceedings There are no items or events requiring reporting with respect to this item. Item 2. Changes in Securities There are no items or events requiring reporting with respect to this item. Item 3. Defaults upon Senior Securities There are no items or events requiring reporting with respect to this item. Item 4. Submission of Matters to a Vote of Security Holders There are no items or events requiring reporting with respect to this item. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 27: Financial Data Schedule (b) There were no Reports on Form 8-K filed during the quarter for which this report is filed.
- 9 - 10 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. CLEVETRUST REALTY INVESTORS (Registrant) Date: February 9, 1996 By: /S/JOHN C. KIKOL ---------------------------------- John C. Kikol, President Date: February 9, 1996 By: /S/ MICHAEL R. THOMS ---------------------------------- Michael R. Thoms, Vice President and Treasurer - 10 - 11 CLEVETRUST REALTY INVESTORS QUARTERLY REPORT ON FORM 10-Q FOR QUARTER ENDED DECEMBER 31, 1995
EXHIBIT INDEX "Assigned" "Sequential" Exhibit No. Description Page No. - ----------- ----------- -------- (27) Financial Data Schedule 12
- 11 - EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE PERIOD ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-1996 OCT-01-1995 DEC-31-1995 787 2,295 610 0 0 1,007 63,721 22,993 45,427 2,061 18,321 5,179 0 0 19,866 45,427 0 2,638 0 1,702 195 0 410 331 0 331 0 0 0 331 .06 .06
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