-----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, UTydIzbadQWegeNqweFtp4cBkDJy4pne/7RtyPQy+CGyhPd0WHDIiQR2tNnseQiA 1lULHA2GDy3ZE5xceVvuHA== 0001047469-98-019833.txt : 19980514 0001047469-98-019833.hdr.sgml : 19980514 ACCESSION NUMBER: 0001047469-98-019833 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 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: SEC FILE NUMBER: 000-08725 FILM NUMBER: 98618682 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, 1998 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 THREE MONTHS MONTHS ENDED ENDED MARCH 31, MARCH 31, 1998 1997 (LIQUIDATION (GOING- BASIS) CONCERN BASIS) Rental revenues . . . . . . . . . . . . . . . . . . . $ 406,000 $ 1,130,000 ---------- ----------- Operating expenses (including related party amounts of $76,000 and $110,000 in 1998 and 1997 respectively): Operating . . . . . . . . . . . . . . . . . 187,000 313,000 Property tax . . . . . . . . . . . . . . . . 23,000 105,000 General and administrative . . . . . . . . . 95,000 110,000 Depreciation and amortization . . . . . . . 296,000 Property management fees . . . . . . . . . . 15,000 42,000 Loss on sale of property . . . . . . . . . . 770,000 ---------- ----------- Total operating expenses . . . . . 320,000 1,636,000 ---------- ----------- Operating income (loss) . . . . . . . . . . . . . 86,000 (506,000) ---------- ----------- Other income/(expense): Interest income . . . . . . . . . . . . . . 23,000 164,000 Interest expense . . . . . . . . . . . . . . (32,000) (724,000) Reincorporation/merger expenses . . . . . . (98,000) ---------- ----------- Total other income/(expense) . . . . . (9,000) (658,000) ---------- ----------- Net income (loss) before minority interest . . . 77,000 (1,164,000) ---------- ----------- Minority interest in joint venture . . . . . . . (141,000) (79,000) ---------- ----------- Net loss . . . . . . . . . . . . . . . . . . . . $ (64,000) $(1,243,000) ---------- ----------- ---------- ----------- Basic and diluted loss per share of beneficial interest . . . . . . . . . . . . . . . . . . . . $ (0.02) $ (0.34) ---------- ----------- ---------- -----------
See notes to consolidated financial statements. Page 2 of 9 PACIFIC REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF NET ASSETS (LIQUIDATION BASIS) (UNAUDITED)
ASSETS MAR 31, 1998 DEC 31, 1997 ----------- ----------- Investment in commercial properties: Land . . . . . . . . . . . . . . . . . $ 240,000 $ 200,000 Buildings and improvements . . . . . . 10,406,000 11,210,000 Deferral of estimated appreciation on commercial properties . . . . . . (3,014,000) (3,280,000) ----------- ----------- Commercial properties - net . . . . . 7,632,000 8,130,000 Property in development 980,000 868,000 Notes receivable (net of allowance of $20,000 in 1998 and $495,000 in 1997) . . 143,000 148,000 Cash . . . . . . . . . . . . . . . . . . . 3,048,000 3,479,000 Accounts receivable (net of allowance of $43,000 in 1998 and $67,000 in 1997 . . . 30,000 75,000 Other assets . . . . . . . . . . . . . . . 710,000 685,000 ----------- ----------- Total . . . . . . . . . . . $12,543,000 $13,385,000 ----------- -----------
LIABILITIES Liabilities: Mortgage loans . . . . . . . . . . . . $ 1,262,000 $ 1,271,000 Security deposits . . . . . . . . . . 51,000 52,000 Accounts payable and other liabilities 339,000 630,000 Reserve for estimated costs during the period of liquidation . . . . . . . 40,000 40,000 ----------- ----------- Total liabilities . . . . . 1,692,000 1,993,000 ----------- ----------- Minority interest in joint venture . . . . 5,486,000 5,963,000 ----------- ----------- Net assets . . . . . . . . . . . . . . . . 5,365,000 5,429,000 ----------- ----------- ----------- -----------
See notes to consolidated financial statements. Page 3 of 9 PACIFIC REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the three months ended March 31,
1998 1997 ------------ ------------- (liquidation (going-concern basis) basis) Cash Flow from Operating Activities: Net loss . . . . . . . . . . . . . . $ (64,000) $ (1,243,000) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation . . . . . . . . . 252,000 Amortization of note receivable discount . . . . . . . . . . . (6,000) Amortization of deferred cost . 44,000 Minority interest in joint venture's operations . . . . . 141,000 79,000 Provision for doubtful receivables . . . . . . . . . . 63,000 Loss on sale of property . . . 770,000 Changes in operating assets and liabilities: Accounts payable and other liabilities . . . . . . . . . . (291,000) (416,000) Security deposits . . . . . . . (1,000) (11,000) Accounts receivable . . . . . . 45,000 226,000 Other assets . . . . . . . . . (25,000) 19,000 ------------ ------------- Net cash used by operating activities . . (195,000) (241,000) ------------ ------------- Cash Flow from Investing Activities: Decrease in restricted cash . . 131,000 Construction of properties . . (112,000) (1,000) Collection of notes receivable 5,000 13,000 ------------ ------------- Net cash provided (used) in investing activities . . . . . . . . . . . . . . . (107,000) 143,000 ------------ ------------- Cash Flow from Financing Activities: Proceeds from short-term notes 140,000 Re-payment of mortgage loans . (9,000) (74,000) Distributions to joint venture partner . . . . . . . . . . . . (120,000) (120,000) ------------ ------------- Net cash used by financing activities . . (129,000) (54,000) ------------ ------------- Decrease in cash . . . . . . . . . . (431,000) (152,000) Cash, January 1 . . . . . . . . 3,479,000 1,011,000 ------------ ------------- Cash, March 31 . . . . . . . . $ 3,048,000 $ 859,000 ------------ ------------- ------------ -------------
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 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. 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 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 income taxes has been made in the accompanying financial statements. Sale of Kings Court Shopping Center In 1997, the Trust entered into a letter of intent to sell its 40% interest in Kingsco, a General Partnership. Kingsco's sole asset is the Kings Court Shopping Center, in Los Gatos, CA. The sale is contingent upon the approval of the ground lessors of the Kings Court Shopping Center. During April 1998, the estimated net sales price of Kings Court Shopping Center was decreased by $850,000. This decrease is reflected in a reduction in the estimated appreciation of commercial properties and a reduction of the deferral of estimated appreciation of commercial properties at March 31, 1998. Reclassifications Certain 1997 amounts have been reclassified to conform with the 1998 presentation. Related Party Transactions Fees paid or payable to the Advisor and Menlo Management Company for three months ended March 31, 1998 and 1997 were as follows:
1998 1997 ------------- -------------- ADVISOR Advisory fee - .1% of Assets . . . . . . . . . . . $ $ 11,000 MENLO MANAGEMENT COMPANY Property management fees . . 15,000 42,000 Administrative services . . . 17,000 38,000 Lease commissions . . . . . . 44,000 Loan fee . . . . . . . . . . 19,000 ------------- -------------- Total . . . . . . . . . $ 76,000 $ 110,000 ------------- -------------- ------------- --------------
Page 5 of 9 Basic and Diluted Loss Per Share of Beneficial Interest Basic and diluted loss income per share of beneficial interest is computed by dividing net loss by the weighted average number of shares outstanding for the three months ended March 31, 1998 and 1997 were as follows:
1998 1997 ---- ---- 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 used by operating activities was $195,000 for the three months ended March 31, 1998 as compared to cash flow used by operating activities of $241,000 for the three months ended March 31, 1997. The net change is primarily due to the timing differences in the receipt of rents and payments of trade payables and change in expense levels resulting from property dispositions. Cash flow used by investing activities was $107,000 for the three months ended March 31, 1998 compared to cash flow provided by investing activities was $143,000 for the three months ended March 31, 1997. The net change was primarily the result of a decrease in restricted cash and an increase in construction costs at one property. Cash flow used by financing activities was $129,000 for the three months ended March 31, 1998 as compared to $54,000 for the three months ended March 31, 1997. The increase in 1998 is primarily due to no proceeds from short-term notes payable. The Trust has a letter of intent to sell its 40% interest in Kingsco, a General Partnership. Kingsco's sole asset is the Kings Court Shopping Center, in Los Gatos, CA. The sale is contingent upon the approval of the ground lessors of Kings Court Shopping Center. During April 1998, the estimated sale price of Kings Court Shopping Center was decreased by $850,000. This decrease is reflected in a reduction of the estimated appreciation of commercial properties and a reduction of the deferral of estimated appreciation of commercial properties at March 31, 1998. In connection with the completion of the development of the Wanlass Shopping Center, there are two factors which could adversely affect the net realizable value of the property. First, the purchase price of the fee estate could increase above the current negotiated limit. Second, the necessary site plan approvals could be withheld by the City of San Pablo, thereby reducing the amount of leasable area and rent revenues for the overall project. The ultimate outcome of these factors and the impact, if any, on the net realizable value is not yet determinable. Accordingly, no adjustment for these uncertainties has been recorded in the accompanying financial statements. (2) MATERIAL CHANGES IN RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 1998 VS. 1997: Net loss for the three months ended March 31, 1998 was $64,000 as compared to a net loss of $1,243,000 for the three months ended March 31, 1997, a decrease in the loss of $1,179,000. During the first three months rental revenues decreased from $1,130,000 in 1997 to $406,000 in 1998, a decrease of $724,000 or 64%. This decrease resulted from the sale of Monterey Plaza Shopping Center in April 1997 and the vacancies at Kings Court Shopping Center in anticipation of the construction of a new Longs Drugs Store in 1998. Operating expenses decreased from $313,000 in 1997 to $187,000 in 1998, a decrease of $126,000 or 40%. Property taxes decreased from $105,000 in 1997 to $23,000 in 1998, a decrease of $82,000, or 78%. Property management fees decreased from $42,000 in 1997 to $15,000 in 1998, a decrease of $27,000, or 64%. Each of these decreases resulted primarily from the sale of Monterey Plaza Shopping Center in April 1997. Depreciation and amortization decreased from $296,000 in 1997 to $0 in 1998, a decrease of $296,000, or 100%, resulting from the change to liquidation basis of accounting. General and administrative expense decreased from $110,000 in 1997 to $95,000 in 1998, a decrease of $15,000 or 14% due to cost saving measures. Loss on the sale of property of $770,000 as of March 31, 1997, represents the loss on Monterey Plaza Shopping Center and the Trust's five notes receivable. Interest income decreased by $141,000, or 86%, from $164,000 in 1997 to $23,000 in 1998, as a result of the sale of the Trust's five notes receivable in April 1997. Page 7 of 9 Interest expense decreased by $692,000, or 96%, from $724,000 in 1997 to $32,000 in 1998, due to the assumption of mortgage debt by the buyer of Monterey Plaza Shopping Center and the pay-down of short-term debt in 1997. In connection with a potential merger, the Trust incurred expenses of $98,000 during the quarter ended March 31, 1997. ITEM 6 (b) - Report on Form 8K was filed on February 4, 1998. 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: 5/12/95 By: /s/ Robert Ch. Gould --------------- --------------------------------- Robert Ch. Gould VICE PRESIDENT Date: 5/12/95 By: /s/ Harry E. Kellogg --------------- --------------------------------- Harry E. Kellogg TREASURER Page 9 of 9 EX-27 2 EX-27
5 3-MOS MAR-31-1998 JAN-01-1998 MAR-31-1998 3,048,000 0 236,000 63,000 0 3,078,000 11,626,000 (3,014,000) 12,543,000 430,000 1,262,000 0 0 0 5,486,000 12,543,000 0 429,000 0 352,000 141,000 63,000 32,000 (64,000) 0 (64,000) 0 0 0 (64,000) (.02) (.02) Includes $5,486,000 of Minority Interest in Joint Venture. Represents Minority Interest Portion of Current Income/Loss. No value difference between EPS-Primary & EPS-Diluted.
-----END PRIVACY-ENHANCED MESSAGE-----