0000912057-95-006496.txt : 19950815 0000912057-95-006496.hdr.sgml : 19950815 ACCESSION NUMBER: 0000912057-95-006496 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 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: 95563125 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 JUNE 30, 1995 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 1 -- FINANCIAL STATEMENTS
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------ ------------------------------ JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1995 JUNE 30, 1994 -------------- -------------- -------------- -------------- Rental revenues................................... $ 2,109,000 $ 3,099,000 $ 5,007,000 $ 6,194,000 -------------- -------------- -------------- -------------- Operating expenses (including related party amounts of $155,000 three months ended June 30, 1995 and $394,000 six months ended June 30, 1995, $382,000 three months ended June 30, 1994 and $653,000 six months ended June 30, 1994): Operating....................................... 563,000 539,000 1,110,000 1,074,000 Property tax.................................... 170,000 257,000 411,000 517,000 General and administrative...................... 185,000 240,000 367,000 428,000 Depreciation and amortization................... 665,000 948,000 1,547,000 1,900,000 Property management fees........................ 68,000 111,000 177,000 222,000 -------------- -------------- -------------- -------------- Total operating expenses...................... 1,651,000 2,095,000 3,612,000 4,141,000 -------------- -------------- -------------- -------------- Operating income.................................. 458,000 1,004,000 1,395,000 2,053,000 -------------- -------------- -------------- -------------- Other income/(expense): Interest income................................. 160,000 260,000 313,000 606,000 Interest expense................................ (1,185,000) (2,075,000) (2,995,000) (4,137,000) Recapitalization expenses....................... (63,000) (191,000) (130,000) (318,000) Property acquisition expenses................... 0 (3,000) 0 (3,000) Gain on sale of options......................... (102,000) 994,000 (102,000) 994,000 -------------- -------------- -------------- -------------- Total other income/(expense).................. (1,190,000) (1,015,000) (2,914,000) (2,858,000) -------------- -------------- -------------- -------------- Net loss before minority interest................. (732,000) (11,000) (1,519,000) (805,000) Minority interest in joint venture................ (85,000) (80,000) (170,000) (161,000) -------------- -------------- -------------- -------------- Net loss.......................................... (817,000) (91,000) (1,689,000) (966,000) -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Net loss per share of beneficial interest......... ($0.22) ($0.02) ($0.46) ($0.26) -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Weighted average number of shares................. 3,706,845 3,707,072 3,706,845 3,707,072
See notes to consolidated financial statements. Page 2 of 7 PACIFIC REAL ESTATE INVESTMENT TRUST CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, DECEMBER 31, 1995 1994 --------------- --------------- ASSETS Investment in commercial properties: Operating properties: Land....................................................................... $ 14,308,000 $ 24,015,000 Buildings and improvements................................................. 56,304,000 77,521,000 Accumulated depreciation................................................... (17,208,000) (17,000,000) --------------- --------------- Operating properties -- net................................................ 53,404,000 84,536,000 Mortgage notes receivable...................................................... 5,222,000 5,190,000 Tenant and other notes receivable -- net....................................... 1,571,000 1,596,000 Cash........................................................................... 850,000 666,000 Accounts receivable (net of allowance of $161,000 in 1995 and $193,000 in 1994)......................................................................... 1,095,000 1,191,000 Deferred lease commissions -- net.............................................. 785,000 860,000 Deferred financing costs -- net................................................ 502,000 584,000 Other assets................................................................... 746,000 664,000 --------------- --------------- Total...................................................................... $ 64,175,000 $ 95,287,000 --------------- --------------- --------------- --------------- LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage loans............................................................... $ 37,065,000 $ 57,335,000 Short-term notes............................................................. 10,490,000 15,435,000 Unsecured note payable....................................................... 3,000,000 Security deposits............................................................ 226,000 291,000 Accounts payable and other liabilities....................................... 540,000 1,673,000 --------------- --------------- Total liabilities.......................................................... 48,321,000 77,734,000 --------------- --------------- Commitments and contingencies Minority interest in joint venture............................................. 3,346,000 3,356,000 Shareholders' Equity: Shares of beneficial interest, $10 par value, authorized: 1995 and 1994, 10,611,863; shares issued and outstanding: 1995: 3,706,845; 1994: 3,707,072................................................................... 37,068,000 37,068,000 Additional paid-in capital..................................................... 11,009,000 11,009,000 Distributions in excess of net income.......................................... (35,569,000) (33,880,000) --------------- --------------- Shareholders' equity -- net.................................................... 12,508,000 14,197,000 --------------- --------------- Total...................................................................... $ 64,175,000 $ 95,287,000 --------------- --------------- --------------- ---------------
See notes to consolidated financial statements. Page 3 of 7 PACIFIC REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, ---------------------------------- 1995 1994 -------------- -------------- Cash Flow from Operating Activities: Net loss........................................................................... $ (1,689,000) $ (966,000) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation..................................................................... 1,329,000 1,635,000 Amortization of note receivable discount......................................... (39,000) (81,000) Amortization of deferred cost.................................................... 203,000 277,000 Minority interest in joint venture's operations.................................. 170,000 161,000 Provision for doubtful receivables............................................... 30,000 97,000 Gain (loss) on sale of options................................................... 102,000 (994,000) Changes in operating assets and liabilities: Accounts payable and other liabilities......................................... (1,133,000) 147,000 Security deposits.............................................................. (65,000) (38,000) Deferred lease commissions..................................................... (46,000) (129,000) Accounts receivable............................................................ 66,000 46,000 Other assets................................................................... (82,000) (731,000) -------------- -------------- Net cash (used) by operating activities.............................................. (1,154,000) (576,000) -------------- -------------- Cash Flow from Investing Activities: Construction of properties....................................................... (66,000) (959,000) Collection of notes receivable................................................... 36,000 796,000 Addition to notes receivable..................................................... (4,000) (1,327,000) Proceeds from sale of Lakeshore.................................................. 29,869,000 0 Proceeds (uses) from sale of option.............................................. (102,000) 1,279,000 -------------- -------------- Net cash provided (used) by investing activities..................................... 29,733,000 (211,000) -------------- -------------- Cash Flow from Financing Activities: Proceeds from short-term notes due affiliates...................................... 100,000 4,655,000 Proceeds from mortgage loans....................................................... 0 1,500,000 Re-payment of mortgage loans....................................................... (20,270,000) (2,033,000) Re-payment of short-term notes due affiliates...................................... (5,045,000) (2,910,000) Re-payment of unsecured note payable............................................... (3,000,000) 0 Payment of financing costs......................................................... 0 (89,000) Distributions to joint venture partner............................................. (180,000) (180,000) -------------- -------------- Net cash provided (used) by financing activities..................................... (28,395,000) 943,000 -------------- -------------- Increase (decrease) in cash........................................................ 184,000 156,000 Cash, January 1.................................................................. 666,000 856,000 -------------- -------------- Cash, June 30.................................................................... $ 850,000 $ 1,012,000 -------------- -------------- -------------- --------------
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 Since it is the policy of the Trust to distribute amounts approximately equal to its taxable income plus depreciation, no provision for income taxes has been made in the accompanying financial statements. SALE OF LAKESHORE PLAZA During March 1995 the Trust sold Lakeshore Plaza shopping center for $31,292,000. After re-payment of the existing first and second mortgage loan balances of $15,880,000 and $4,000,000, respectively, expenses related to the sale of $1,750,000 and an assumption charge of $158,000 the proceeds to the Trust were approximately $9,484,000. In anticipation of above sale the Trust reported a $4,400,000 provision for loss in the fourth quarter of 1994. RELATED PARTY TRANSACTIONS Fees paid or payable to Collier Investment (the "Advisor"), Menlo Management Company and Presco for three months and six months ended in 1995 and 1994 were as follows:
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------ ------------------------ JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- ADVISOR Advisory fee.............................. 9,000 28,000 37,000 56,000 MENLO MANAGEMENT COMPANY Property management fees.................. 68,000 111,000 177,000 222,000 Administrative services................... 50,000 65,000 115,000 130,000 Lease commission.......................... 0 51,000 18,000 83,000 Brokerage Fee............................. 0 145,000 0 145,000 Loan fee.................................. 25,000 33,000 62,000 64,000 Rent...................................... 3,000 0 3,000 0 PRESCO Capital fund raising...................... 0 0 0 36,000 ----------- ----------- ----------- ----------- Total................................. 155,000 433,000 412,000 736,000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
NET INCOME PER SHARE OF BENEFICIAL INTEREST Net income per share of beneficial interest is computed by dividing net income by the weighted average number of shares outstanding during the period as follows:
1995 1994 ----------- ----------- 3,706,845 3,707,072
Page 5 of 7 PACIFIC REAL ESTATE INVESTMENT TRUST ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OF OPERATIONS. (1) LIQUIDITY AND CAPITAL RESOURCES: Cash used by operating activities was $1,256,000 for the six months ended June 30, 1995 as compared to cash used of $576,000 for the six months ended June 30, 1994 as a result of payment of $1,133,000 of accounts payable accrued at December 31, 1995. Of this sum $382,000 comprised interest accrued on an unsecured note payable which was paid in full in March 1995 and $345,000 accrued supplemental taxes on Lakeshore Plaza Shopping Center which were paid at date of sale in March 1995 and $406,000 represented various other operating liabilities. Cash flow provided by investing activities was $29,835,000 for the six months ended June 30, 1995 compared to $211,000 used in the six months ended June 30, 1994 as a result of the sale of Lakeshore Plaza Shopping Center. Cash flow used by financing activities was $28,395,000 for the six months ended June 30, 1995 compared to $943,000 provided for the six months ended June 30, 1994 due to the payoff of mortgage note related to Lakeshore Plaza Shopping Center as well as other secured and unsecured notes payable. The Trust's sources of liquity include: extension of short-term notes payable for periods not to exceed five years; and approximately $5,206,000 in mortgage loans receivable which mature at various dates over the next five years. (2) MATERIAL CHANGES IN RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1995 VS. 1994: Net loss for the six months ended June 30, 1995 was $1,689,000 as compared to a net loss of $966,000 for the six months ended June 30, 1994. During the first six months rental revenues decreased from $6,194,000 in 1994 to $5,007,000 in 1995, as a result of the sale of Lakeshore Plaza Shopping Center and the declining revenues at El Portal Shopping Center as a result of the Homebase lease termination in 1994. Operating expenses, property taxes, property management fees and depreciation expenses decreased from $3,713,000 in 1994 to $3,347,000 in 1995, a decrease of $366,000 or 10%. This decrease is due chiefly to the sale of Lakeshore Plaza Shopping Center on March 13, 1995. General and administrative expense decreased from $428,000 in 1994 to $367,000 in 1995, a decrease of $61,000 or 16%. This decrease is due to lower transfer agent costs, legal expenses, advisory fees, and administrative services. Interest income decreased by $293,000 as compared to 1994 primarily as the result of the payoff of a note receivable in December 1994. Interest expense decreased by $1,142,000, or 28%, from $4,137,000 in 1994 to $2,995,000 in 1995. Of this decrease $288,000 is related to the lower mortgage loan on El Portal Shopping Center due to a principal paydown of $5,729,000 in December 1994, $556,000 is related to the sale of Lakeshore Plaza Shopping Center, $146,000 is related to the payoff of the Yale University and California Bavarian loans and $152,000 is due to the payoff of an underlying note payable on the aforementioned note receivable. The expense of $102,000 related to options sold in 1994 was accrued to reflect additional contingent liability as of June 30, 1995. Item 6 (b) -- Report on Form 8K was filed on March 27, 1995. 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: , 1995 By: ____________________________ Robert Ch. Gould VICE PRESIDENT Date: , 1995 By: ____________________________ Harry E. Kellogg TREASURER Page 7 of 7 EX-27 2 EX-27
5 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 850,000 0 6,954,000 161,000 0 1,945,000 70,612,000 (17,208,000) 64,175,000 766,000 47,555,000 37,068,000 0 0 (24,560,000) 64,175,000 0 5,320,000 0 6,839,000 170,000 170,000 2,995,000 (1,689,000) 0 (1,689,000) 0 0 0 (1,689,000) (0.46) (0.46) Includes $3,346,000 of Minority Interest in joint Venture Represents Minority interest portion of current net income