-----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, SPz/8yRkb8BGNtoEg32agLCnKJpIoj1GYUx4q5OfmZ4tQs+lWl9yGQ7ZJ0R1l4G7 9kTeCQaIt0N/I9g19keb8w== 0000912057-96-009423.txt : 19960515 0000912057-96-009423.hdr.sgml : 19960515 ACCESSION NUMBER: 0000912057-96-009423 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFIC REAL ESTATE INVESTMENT TRUST INC CENTRAL INDEX KEY: 0000230437 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 941572930 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08725 FILM NUMBER: 96562914 BUSINESS ADDRESS: STREET 1: 1010 EL CAMINO REAL STE 210 CITY: MENLO PARK STATE: CA ZIP: 95025 BUSINESS PHONE: 4143277147 MAIL ADDRESS: STREET 1: 1010 EL CAMINO REAL STREET 2: STE 210 CITY: MENLO PARK STATE: CA ZIP: 95025 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19920703 10-Q 1 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER MARCH 31, 1996 Commission File Number 0-8725 PACIFIC REAL ESTATE INVESTMENT TRUST A CALIFORNIA TRUST I.R.S. Employer Identification No. 94-1572930 1010 El Camino Real, Suite 210 Menlo Park, CA 94025 Telephone: (415) 327-7147 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 ------ ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. $10 Par Value, 3,706,845 shares - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PACIFIC REAL ESTATE INVESTMENT TRUST PART I - FINANCIAL INFORMATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ITEM I - FINANCIAL STATEMENTS
THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, 1996 MARCH 31, 1995 Rental revenues. . . . . . . . . . . . . . . . . $ 1,859,000 $ 2,898,000 -------------- -------------- Operating expenses (including related party amounts of $144,000 and $239,000 in 1996 and 1995 respectively): Operating . . . . . . . . . . . . . . . . . . 479,000 547,000 Property tax. . . . . . . . . . . . . . . . . 161,000 241,000 General and administrative. . . . . . . . . . 123,000 182,000 Depreciation and amortization . . . . . . . . 608,000 882,000 Property management fees. . . . . . . . . . . 64,000 109,000 -------------- -------------- Total operating expenses. . . . . . 1,435,000 1,961,000 -------------- -------------- Operating income . . . . . . . . . . . . . . . . 424,000 937,000 -------------- -------------- Other income/(expense): Interest income. . . . . . . . . . . . . . . 156,000 153,000 Interest expense . . . . . . . . . . . . . . (1,070,000) 1,810,000) Reincorporation expenses . . . . . . . . . . (67,000) Gain on property sale. . . . . . . . . . . . 952,000 -------------- -------------- Total other income/(expense). . . . . . . . 38,000 (1,724,000) -------------- -------------- Net income (loss) before minority interest . . . 462,000 (787,000) Minority interest in joint venture . . . . . . . (99,000) (85,000) -------------- -------------- Net income (loss). . . . . . . . . . . . . . . . $ 363,000 $ (872,000) -------------- -------------- -------------- -------------- Net income (loss) per share of beneficial interest . . . . . . . . . . . . . . . . . . . . $ 0.10 $ (0.24) -------------- -------------- -------------- --------------
See notes to consolidated financial statements. Page 2 of 7 PACIFIC REAL ESTATE INVESTMENT TRUST CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS MAR 31, 1996 DEC 31, 1995 -------------- -------------- Investment in commercial properties: Operating properties: Land. . . . . . . . . . . . . . . . . . . . . $ 10,979,000 $ 14,308,000 Buildings and improvements. . . . . . . . . . 42,324,000 56,345,000 Accumulated depreciation. . . . . . . . . . . (16,019,000) (18,375,000) ------------- ------------- Operating properties - net. . . . . . . . . . 37,284,000 52,278,000 Mortgage notes receivable. . . . . . . . . . . . . 6,567,000 6,565,000 Tenant and other notes receivable - net. . . . . . 230,000 246,000 Cash . . . . . . . . . . . . . . . . . . . . . . . 790,000 308,000 Restricted cash. . . . . . . . . . . . . . . . . . 100,000 100,000 Accounts receivable (net of allowance of $169,000 in 1996 and $136,000 in 1995 . . . . . . . . . . . 991,000 891,000 Deferred lease commissions - net . . . . . . . . . 514,000 742,000 Deferred financing costs - net . . . . . . . . . . 279,000 440,000 Other assets . . . . . . . . . . . . . . . . . . . 1,262,000 1,305,000 ------------- ------------- Total . . . . . . . . . . . . . . . . . . . . $48,017,000 $62,875,000 ------------- ------------- ------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage loans. . . . . . . . . . . . . . . . . $ 25,976,000 $ 36,818,000 Short-term notes. . . . . . . . . . . . . . . . 7,090,000 11,190,000 Security deposits . . . . . . . . . . . . . . . 139,000 231,000 Accounts payable and other liabilities. . . . . 401,000 566,000 ------------- ------------- Total liabilities . . . . . . . . . . . . . . 33,606,000 48,805,000 ------------- ------------- Commitments and contingencies Minority interest in joint venture . . . . . . . . 3,299,000 3,321,000 Shareholders' Equity: Shares of beneficial interest, $10 par value, authorized: 1996 and 1995, 10,611,863; shares issued and outstanding: 1996 and 1995, 3,706,845 . . . . . . . . . . . . . . . . . . 37,068,000 37,068,000 Additional paid-in capital . . . . . . . . . . . . 11,009,000 11,009,000 Distributions in excess of net income. . . . . . . (36,965,000) (37,328,000) ------------- ------------- Shareholders' equity - net . . . . . . . . . . . . 11,112,000 10,749,000 ------------- ------------- Total . . . . . . . . . . . . . . . . . . . . $48,017,000 $62,875,000 ------------- ------------- ------------- -------------
See notes to consolidated financial statements. Page 3 of 7 PACIFIC REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended March 31, 1996 1995 -------------- -------------- Cash Flow from Operating Activities: Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $ 363,000 $ (872,000) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation. . . . . . . . . . . . . . . . . . . . . . . 539,000 747,000 Amortization of note receivable discount. . . . . . . . . (5,000) (19,000) Amortization of deferred cost . . . . . . . . . . . . . . 68,000 122,000 Minority interest in joint venture's operations . . . . . 99,000 85,000 Provision for doubtful receivables. . . . . . . . . . . . (26,000) 30,000 Gain on sale of property. . . . . . . . . . . . . . . . . (952,000) Changes in operating assets and liabilities: Accounts payable and other liabilities. . . . . . . . . . (156,000) (997,000) Security deposits . . . . . . . . . . . . . . . . . . . . 31,000 (48,000) Deferred lease commissions. . . . . . . . . . . . . . . . (44,000) (49,000) Accounts receivable . . . . . . . . . . . . . . . . . . . (89,000) 4,000 Other assets. . . . . . . . . . . . . . . . . . . . . . (32,000) (40,000) ------------- ------------- Net cash used by operating activities. . . . . . . . . . . . . (204,000) (1,037,000) ------------- ------------- Cash Flow from Investing Activities: Construction of properties. . . . . . . . . . . . . . . . (26,000) (29,000) Collection of notes receivable. . . . . . . . . . . . . . 19,000 17,000 Proceeds from sale of Lakeshore . . . . . . . . . . . . . 14,043,000 Proceeds from sale of Menlo Center. . . . . . . . . . . . 5,025,000 ------------- ------------- Net cash provided in investing activities. . . . . . . . . . . 5,018,000 14,031,000 ------------- ------------- Cash Flow from Financing Activities: Proceeds from short-term notes. . . . . . . . . . . . . . 100,000 Re-Payment of mortgage loans. . . . . . . . . . . . . . . (112,000) (4,324,000) Re-Payment of short-term notes. . . . . . . . . . . . . . (4,100,000) (5,045,000) Re-Payment of unsecured loans . . . . . . . . . . . . . . (3,000,000) Distributions of joint venture partner. . . . . . . . . . (120,000) (120,000) ------------- ------------- Net cash used by financing activities. . . . . . . . . . . . . (4,332,000) (12,389,000) ------------- ------------- Increase in cash . . . . . . . . . . . . . . . . . . . . . . . 482,000 605,000 Cash, January 1 . . . . . . . . . . . . . . . . . . . . . 308,000 666,000 ------------- ------------- Cash, March 31. . . . . . . . . . . . . . . . . . . . . . $790,000 $1,271,000 ------------- ------------- ------------- -------------
NON CASH TRANSACTIONS Assumption of mortgage note payable by the buyers of Lakeshore Plaza Shopping for $15,826,000 in 1995 and Menlo Center for $10,730,000 in 1996. See notes to consolidated financial statements. Page 4 of 7 PACIFIC REAL ESTATE INVESTMENT TRUST NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED) Basis of Presentation The accompanying unaudited financial statements include all adjustments which are, in the opinion of management, necessary for fair presentation of the Trust's financial position, including changes therein, and results of operations for the interim period reported upon. Such statements have been prepared from the Trust's accounting records in accordance with the instructions to Form 10-Q. Income Taxes The Internal Revenue Code provides that a trust qualifies as a real estate investment trust if, among other things, the trust distributes each year at least 95% of its taxable income to shareholders. If the Trust distributes at least 95% of its taxable income to shareholders, such distributions can be treated as deductions for income tax purposes. Because it is the policy of the Trust to distribute amounts approximately equal to its taxable income plus depreciation and amortization, no provision for incomes taxes has been made in the accompanying financial statements. Sale of Menlo Center The Trust sold Menlo Center on February 29, 1996. The sale price was $16,200,000. The buyer assumed the existing financing in the amount of $10,730,000. After payment of the closing costs, transfer taxes, real estate commissions and miscellaneous selling expenses, all totalling approximately $445,000, the net proceeds of approximately $5,025,000 were used to repay short-term debt and to provide working capital. Under the terms of the sale contract, the Trust is obligated to subsidize the buyer's net operating income to the extent necessary to assure the buyer of an 8.5% investment yield from the operation of Menlo Center. The Trust's liability in this respect extends to the maturity date of the existing First Trust Deed financing which the buyer assumed in the purchase. The financing expires in 2000. Reclassifications Certain 1995 amounts have been reclassified to conform with the 1996 presentation. Related Party Transactions Fees paid or payable to the Advisor and Menlo Management Company for three months ended March 31, 1996 and 1995 were as follows:
1996 1995 --------- ----------- ADVISOR Advisory fee - .1% of Assets. . . . . $ 14,000 $ 28,000 MENLO MANAGEMENT COMPANY Property management fees. . . . . . . 64,000 109,000 Administrative services . . . . . . . 38,000 65,000 Lease commissions . . . . . . . . . . 23,000 18,000 Loan fee . . . . . . . . . . . . . . 28,000 37,000 Total . . . . . . . . . . . . . . . $ 167,000 $ 257,000
Net Income Per Share of Beneficial Interest Net income per share of beneficial interest is computed by dividing net income the weighted average number of shares outstanding for the three months ended March 31, 1996 and 1995 were as follows: 1996 1995 ---- ---- Weighted average number of shares outstanding 3,706,845 3,706,845 Page 5 of 7 PACIFIC REAL ESTATE INVESTMENT TRUST PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OF OPERATIONS. (1) LIQUIDITY AND CAPITAL RESOURCES: Cash flow used by operating activities was $204,000 for the three months ended March 31, 1996 as compared to cash used of $1,037,000 for the three months ended March 31, 1995. The net change is primarily due to both the sale of Lakeshore Plaza Shopping Center in 1995 and Menlo Center in 1996. Cash flow provided by investing activities was $5,018,000 for the three months ended March 31, 1996 compared to $14,031,000 for the three months ended March 31, 1995. The results are from the proceeds from the sale of Menlo Center in 1996 compared to the proceeds from the sale of Lakeshore Plaza Shopping Center in March 1995. Cash flow used by financing activities was $4,332,000 for the three months ended March 31, 1996 as compared to $12,389,000 for the three months ended March 31, 1995. The decrease in 1996 is due to repayment of short term notes payable due to the sale of Menlo Center. The increase in 1995 is due to repayment of an unsecured notes payable and short term notes payable due to the sale of Lakeshore Plaza Shopping Center. The Trust's other sources of liquidity include: (1) extension of short-term notes payable for periods not to exceed five years; (2) approximately $6,567,000 in mortgage loans receivable which mature at various dates over the next four years. (2) MATERIAL CHANGES IN RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 1996 VS. 1995: Net income for the three months ended March 31, 1996 was $363,000 as compared to a net loss of $872,000 for the three months ended March 31, 1995. During the first three months rental revenues decreased from $2,898,000 in 1995 to $1,859,000 as a result of declining revenues at El Portal Shopping Center and the sale of both Lakeshore Plaza Shopping Center in March 1995 and Menlo Center in February 1996. Operating expenses decreased from $547,000 in 1995 to $479,000 in 1996, a decrease of $68,000 or 12% due to the sale of Lakeshore Plaza Shopping Center in 1995 and Menlo Center in 1996. This decrease was partially offset by an increase in El Portal Shopping Center ground lease. Property taxes decreased from $241,000 in 1995 to $161,000 in 1996, a decrease of $80,000, or 33%. Property management fees decreased from $109,000 in 1995 to $64,000 in 1996, a decrease of $45,000, or 41%. Depreciation and Amortization decreased from $882,000 in 1995 to $608,000 in 1996, a decrease of $274,000, or 31%. Each of these decreases resulted from both the sale of Lakeshore Plaza Shopping Center on March 13, 1995 and Menlo Center on February 29, 1996. General and administrative expense decreased from $182,000 in 1995 to $123,000 in 1996, a decrease of $59,000 or 32% due to cost saving measures. Interest expense decreased by $740,000, or 41%, from $1,810,000 in 1995 to $1,070,000 in 1996. Of this decrease $330,000 is due to the sale of Lakeshore Plaza Shopping Center in 1995, $93,000 is due to the sale of Menlo Center in 1996, and $295,000 is due to the repayment of unsecured note payable and short term notes payable which were paid off in 1995 and 1996. ITEM 6 (B) - Report on Form 8K was filed on March 14, 1996. Page 6 of 7 SIGNATURE 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. PACIFIC REAL ESTATE INVESTMENT TRUST Date: MAY 6, 1996 By: _____________________ ------------ Robert Ch. Gould VICE PRESIDENT Date: MAY 6, 1996 By: _____________________ ------------ Harry E. Kellogg TREASURER Page 7 of 7 EX-27 2 EXHIBIT 27
5 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 890,000 0 6,827,000 169,000 0 1,881,000 53,303,000 (16,019,000) 48,017,000 540,000 33,066,000 0 0 37,068,000 (25,986,000) 48,017,000 0 2,015,000 0 1,553,000 99,000 207,000 1,070,000 363,000 0 363,000 0 0 0 363,000 .10 .10 Includes $3,299,000 of Minority Interest in joint venture Includes a gain from the sale of a property of $952,000 Represents Minority Interest portion of Current Net Income
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