-----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, VUZcBVZiHYXYrYynYAo9kCV2Ssm9d3Ayz/t5bFGjD9F1xXkV+jC8Ob60LHn8arRi ebcyTrHYaLJWptsCw5pHvA== 0000912057-99-004438.txt : 19991111 0000912057-99-004438.hdr.sgml : 19991111 ACCESSION NUMBER: 0000912057-99-004438 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991110 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: SEC FILE NUMBER: 000-08725 FILM NUMBER: 99745688 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 ENDED SEPTEMBER 30, 1999 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: (650) 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 ENDED NINE MONTHS ENDED ------------------ ----------------- SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, 1999 1998 1999 1998 ------------- ------------- ------------- ------------- (LIQUIDATION (LIQUIDATION (LIQUIDATION (LIQUIDATION BASIS) BASIS) BASIS) BASIS) Rental revenues...................................... $ 45,000 $ 358,000 $ 139,000 $ 1,229,000 ---------------- -------------- ------------- ------------- Operating expenses (including related party amounts of $33,000 for the three months ended September 30, 1999 $48,000 for the three months ended September 30, 1998 $115,000 for the nine months ended September 30, 1999 and $156,000 for the nine months ended September 30, 1998) Operating.................................... 34,000 183,000 102,000 513,000 Property tax................................ 5,000 19,000 15,000 65,000 General and administrative .................. 130,000 82,000 377,000 255,000 Property management fees................... 3,000 20,000 8,000 51,000 Loss (gain) on property sale ................ 393,000 (4,948,000) 393,000 (4,984,000) ---------------- -------------- ------------- ------------- Total operating expenses/(income) ........ 565,000 (4,644,000) 895,000 (4,100,000) ---------------- -------------- ------------- ------------- Operating income (loss)............................. (520,000) 5,002,000 (756,000) 5,329,000 ---------------- -------------- ------------- ------------- Other income /(expense): Interest Income.............................. 40,000 34,000 113,000 81,000 Interest expense........................... (20,000) (85,000) ---------------- -------------- ------------- ------------- Total other income/(expense) .............. 40,000 14,000 113,000 (4,000) ---------------- -------------- ------------- ------------- Net income (loss) before minority interest.......... (480,000) 5,016,000 (643,000) 5,325,000 ---------------- ------------- ------------- ------------- Minority interest in joint venture............... (2,888,000) (3,201,000) Income Tax........................................ 1,000 66,000 Net Income (loss).................................... $ (481,000) $ 2,128,000 $ (709,000) $ 2,124,000 ================ ============= ============ ============ Basic and diluted income (loss) per share of beneficial interest .......................................... $ (0.13) $ 0.57 $ (0.19) $ (0.57) ================ ============= ============ =============
Page 2 of 9 PACIFIC REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF NET ASSETS (LIQUIDATION BASIS) (UNAUDITED) ASSETS
SEPT 30, 1999 DEC 31, 1998 ----------------- ---------------- Investment in operating commercial properties: Land................................................. $ 600,000 $ 1,650,000 Buildings and improvements........................... 1,275,000 ------------------ ---------------- Commercial properties - net.......................... 600,000 2,925,000 Cash........................................................ 5,614,000 3,563,000 Accounts receivable (net of allowance of $43,000 in 1998 and $42,000 in 1997)........................................ 4,000 30,000 Other assets................................................ 119,000 578,000 ------------------ ---------------- Total.............................................. $ 6,337,000 $ 7,096,000 ================== ================ LIABILITIES Liabilities: Security deposits..................................... $ $ 1,000 Accounts payable and other liabilities................ 20,000 69,000 Reserve for estimated costs during the period of liquidation........................................... 244,000 244,000 ------------------ ---------------- Total liabilities.................................. 264,000 314,000 ------------------ ---------------- Net assets.................................................. $ 6,073,000 $ 6,782,000 ================== ================
See notes to consolidated financial statements. Page 3 of 9 PACIFIC REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 1998 -------------------- -------------------- (liquidation basis) (liquidation basis) Cash Flow from Operating Activities: Net income (loss).................................... $ (709,000) $ 2,124,000 Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Minority interest in joint venture's operations.... 3,201,000 Loss (gain) on sale of property.................... 393,000 (4,984,000) Changes in operating assets and liabilities Accounts payable and other liabilities............. (49,000) (505,000) Security deposits.................................. 3,000 Accounts receivable................................ 26,000 74,000 Other assets....................................... 427,000 89,000 -------------------- ------------------ Net cash provided (used) by operating activities.......... 91,000 (1,000) -------------------- ------------------ Cash Flow from Investing Activities: Decrease in restricted cash........................ Construction of properties......................... (52,000) (560,000) Property acquisitions.............................. (1,688,000) Collection of notes receivable..................... 147,000 Proceeds from the sale of property................. 2,012,000 3,985,000 -------------------- ------------------ Net cash provided in investing activities................. 1,960,000 1,884,000 -------------------- ------------------ Cash Flow from Financing Activities: Proceeds from short-term notes..................... 300,000 Re-payment of mortgage loans....................... (1,271,000) Re-payment of short-term notes..................... (300,000) Distributions of joint venture partner............. (240,000) -------------------- ------------------ Net cash used by financing activities..................... - (1,511,000) -------------------- ------------------ Increase in cash..................................... 2,051,000 372,000 Cash, January 1.................................... 3,563,000 3,479,000 -------------------- ------------------ Cash, September 30................................. $ 5,614,000 $ 3,851,000 ==================== ==================
See notes to consolidated financial statements. Page 4 of 9 PACIFIC REAL ESTATE INVESTMENT TRUST NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED) Basis of Presentation The accompanying unaudited financial statements include all adjustments that 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. Plan of Liquidation On February 4, 1998, the Trust's shareholders approved a Plan of Dissolution. As a result, the Trust's financial statements as of December 31, 1997 and thereafter have been prepared on a liquidation basis. Accordingly, assets have been valued at estimated net realizable value and liabilities include estimated costs associated with carrying out the plan of liquidation. Income Taxes The Trust qualifies as a real estate investment trust under the Internal Revenue Code. The Sale of the Wanlass Shopping Center Parcels and the Westwood Village Pad In 1998, the Trust purchased the fee title to the land at the Wanlass Shopping Center, located in San Pablo, California, for $1,780,000. This purchase was required under the terms of the then existing ground lease between the Trust and the seller who was also the ground lessor. The land was subsequently subdivided into three separate parcels described as Parcel I, II and III on the map of subdivision M.S. 354-98, filed on June 17, 1999 in book 177 of Parcel Maps, Page 1, Contra Costa Records. On September 17, 1999 the Trust sold Parcel III and conveyed fee title to Kwok Ying Wong, Margaret Wong, Jerry Lee and Angela C. Lee for $1,488,000 before sale costs. On September 24, 1999 the Trust sold Parcel I and conveyed fee title to The Chiu Family Revocable Trust for $524,013 before sale costs. The Trust has one remaining parcel, Parcel II, that was sold to The Chiu Family Revocable Trust on October 14, 1999 for $600,000 before sale costs. The terms of the sale require that the sum of $297,311 be retained in escrow to allow for the completion of site work on the property. Of this sum approximately $150,000 is expected to be returned to Pacific Real Estate Investment Trust at completion of the contemplated work. The net proceeds paid to the Trust from escrow at closing were $251,260. In 1996, the Trust purchased a 20,000 square foot parcel of land located at the periphery of Westwood Village Shopping Center in Redding, CA.. This property is described as Parcel A on Map #LS 66-87, filed December 23, 1987 in book 26 of Parcel Maps, Page 95, Shasta County Records. This acquisition was undertaken in order to extinguish a lease obligation that the Trust had with the then owner of the land. The Trust entered into this lease in 1987. The purchase price to the Trust was $200,000, the then estimated current value of the land. In addition, the Trust paid the seller a lease termination fee of $240,000. This fee was based on the discounted value of the Trust's residual lease rental obligation. The land acquisition price and the lease termination fee were accrued in 1996 and paid in 1997. On August 11, 1999 the Trust sold the land to Redding Oasis, L.L.C., a California Limited Liability Company. The gross sales price before sale costs was $135,000. Page 5 of 9 Related Party Transactions Fees paid or payable to the Advisor and Menlo Management Company for three months and nine months ended 1999 and 1998 were as follows:
Three months ended Nine months ended Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998 -------------- ------------- ------------- ------------- MENLO MANAGEMENT COMPANY Property management fees...................... 3,000 19,000 8,000 50,000 Administrative services....................... 16,000 16,000 49,000 49,000 Lease commissions............................. 13,000 44,000 57,000 Commission Westwood Village Pad............... 14,000 14,000 ----------- ---------- ---------- --------- Total.................................. $ 33,000 $ 48,000 $ 115,000 $ 156,000 =========== ========== ========== =========
Basic and Diluted Income (Loss) Per Share of Beneficial Interest Basic and diluted income (loss) per share of beneficial interest, computed by dividing net income (loss) by the weighted average number of shares outstanding for the three months and nine months ended September 30, 1999 and 1998 were as follows:
1999 1998 ---- ---- Weighted average number of shares outstanding 3,706,845 3,706,845
Page 6 of 9 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 provided by operating activities was $91,000 for the nine months ended September 30, 1999 as compared to cash flow used by operating activities of $1,000 for the nine months ended September 30, 1998. The net change is primarily due to the loss on the sale of the Wanlass Parcels I and III and the change in other assets due to insurance reimbursements for the Kings Court remediation clean up in 1999 offset by the change in operation from the sale of Kings Court Center in 1998. Cash flow provided by investing activities was $1,960,000 for the nine months ended September 30, 1999 compared to $1,884,000 for the nine months ended September 30, 1998. The net change is primarily the result of the sale of two parcels of the Wanlass property and the decrease in construction costs at the Wanlass property in 1999 compared to the sale of Kings Court offset by the Wanlass Acquisition in 1998. Cash flow used by financing activities was zero for the nine months ended September 30, 1999 compared to $1,511,000 for the nine months ended September 30, 1998. The decrease is primarily due to the re-payment of the Kings Court mortgage debt and distribution to joint venture partners in 1998. In 1998, the Trust purchased the fee title to the land at the Wanlass Shopping Center, located in San Pablo, California, for $1,780,000. This purchase was required under the terms of the then existing ground lease between the Trust and the seller who was also the ground lessor. The land was subsequently subdivided into three separate parcels described as Parcel I, II and III on the map of subdivision M.S. 354-98, filed on June 17, 1999 in book 177 of Parcel Maps, Page 1, Contra Costa Records. On September 17, 1999 the Trust sold Parcel III and conveyed fee title to Kwok Ying Wong, Margaret Wong, Jerry Lee and Angela C. Lee for $1,488,000 before sale costs. On September 24, 1999 the Trust sold Parcel I and conveyed fee title to The Chiu Family Revocable Trust for $524,013 before sale costs. The Trust has one remaining parcel, Parcel II, that was sold to The Chiu Family Revocable Trust on October 14, 1999 for $600,000 before sale costs. The terms of the sale require that the sum of $297,311 be retained in escrow to allow for the completion of site work on the property. Of this sum approximately $150,000 is expected to be returned to Pacific Real Estate Investment Trust at completion of the contemplated work. The net proceeds paid to the Trust from escrow at closing were $251,260. In 1996, the Trust purchased a 20,000 square foot parcel of land located at the periphery of Westwood Village Shopping Center in Redding, CA. This property is described as Parcel A on Map #LS 66-87, filed December 23, 1987 in book 26 of Parcel Maps, Page 95, Shasta County Records. This acquisition was undertaken in order to extinguish a lease obligation that the Trust had with the then owner of the land. The Trust entered into this lease in 1987. The purchase price to the Trust was $200,000, the then estimated current value of the land. In addition, the Trust paid the seller a lease termination fee of $240,000. This fee was based on the discounted value of the Trust's residual lease rental obligation. The land acquisition price and the lease termination fee were accrued in 1996 and paid in 1997. On August 11, 1999 the Trust sold the land to Redding Oasis, L.L.C., a California Limited Liability Company. The gross sales price before costs was $135,000. (2) MATERIAL CHANGES IN RESULTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO 1998: Net loss for the nine months ended September 30, 1999 was $709,000 compared to net income of $2,124,000 for the nine months ended September 30, 1998. During the first nine months rental revenues decreased from $1,229,000 in 1998 to $139,000 in 1999, a decrease of $1,090,000 or 89%. This decrease resulted from the sale of Kings Court Shopping Center in August 1998. Page 7 of 9 Operating expenses decreased from $513,000 in 1998 to $102,000 in 1999, a decrease of $411,000 or 80%. Property taxes decreased from $65,000 in 1998 to $15,000 in 1999, a decrease of $50,000, or 77%. Property management fees decreased from $51,000 in 1998 to $8,000 in 1999, a decrease of $43,000, or 84%. Each of these decreases resulted from the sale of Kings Court Shopping Center in August 1998. General and administrative expense increased from $255,000 in 1998 to $377,000 in 1999, an increase of $122,000 or 48%. The increase in 1999 is the result of insurance expense related to the liquidation. Loss on the sale of property of $393,000 in 1999 represents the loss on the sale of the Parcels I and III at the Wanlass property Gain on the sale of property of $4,984,000 in 1998 represents the gain on the sale of the El Portal pad and the sale of Kings Court Shopping Center. Interest income increased from $81,000 in 1998 to $113,000 in 1999, an increase of $32,000, or 40%. The net change was primarily the result of cash received from the sale of the Wanlass property in 1999 and Kings Court Shopping Center in 1998. Interest expense decreased from $85,000 in 1998 to zero in 1999, a decrease of $85,000, or 100%. The decrease was primarily due to the re-payment of the Kings Court mortgage debt in 1998. Material changes for the three months ended September 30, 1999 as compared to 1998 were for the same reasons in relative proportionate amounts as those shown for the nine months. ITEM 6 (b) - Report on Form 8K was filed on September 17, 1999 and October 28, 1999. Page 8 of 9 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: November 9, 1999 By: /s/ Robert Ch. Gould ---------------- --------------------------------------- Robert Ch. Gould VICE PRESIDENT Date: November 9, 1999 By: /s/ Harry E. Kellogg ---------------- ---------------------------------------- Harry E. Kellogg TREASURER Page 9 of 9 EX-27 2 EXHIBIT 27
5 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 5,614,000 0 47,000 43,000 0 5,737,000 600,000 0 6,337,000 264,000 0 0 0 0 0 6,073,000 0 252,000 0 895,000 0 0 0 (643,000) (66,000) (709,000) 0 0 0 (709,000) (0.19) (0.19) Net Assets - Liquidation Basis
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