-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jkBjRvk6i3f9U32f+ewG78zO7HL8arNJOTCploftqiLRnbq+63JG/7+ap3O58G0a V2GOz+QWLg14pzvt8dSILg== 0000048896-94-000010.txt : 19941219 0000048896-94-000010.hdr.sgml : 19941219 ACCESSION NUMBER: 0000048896-94-000010 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940731 FILED AS OF DATE: 19941216 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HRE PROPERTIES CENTRAL INDEX KEY: 0000048896 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 042458042 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06309 FILM NUMBER: 94565022 BUSINESS ADDRESS: STREET 1: 530 5TH AVE CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2126424800 MAIL ADDRESS: STREET 1: 530 5TH AVE CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: HUBBARD REAL ESTATE INVESTMENTS DATE OF NAME CHANGE: 19860120 10-Q/A 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Quarterly Report under Section 13 or 15(d) of The Securities Exchange Act of 1934 For Quarter Ended July 31, 1994 Commission File Number 1-6309 HRE PROPERTIES (Exact Name of Registrant as Specified in Charter) MASSACHUSETTS (State or other jurisdiction of incorporation or organization) 04-245-8042 (I.R.S. Employer Identification Number) 530 FIFTH AVENUE, 21ST FLOOR, NEW YORK, NY (Address of principal executive offices) 10036 (Zip Code) Registrant's telephone number, including area code: (212) 642-4800 The number of shares of Registrant's common shares outstanding as of the close of period covered by this report: 5,337,054 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 / / THE SEC FORM 10-Q, FILED HEREWITH, CONTAINS 10 PAGES, NUMBERED CONSECUTIVELY FROM 1 TO 10 INCLUSIVE, OF WHICH THIS PAGE IS 1. INDEX HRE PROPERTIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statements of Income--Three months ended July 31, 1994 and 1993, Nine months ended July 31, 1994 and 1993. Consolidated Balance Sheets--July 31, 1994 and October 31, 1993. Consolidated Statements of Cash Flows--Nine months ended July 31, 1994 and 1993. Consolidated Statements of Shareholders' Equity--Nine months ended July 31, 1994 and 1993. Notes to Consolidated Financial Statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K SIGNATURES Page 2 of 10 HRE PROPERTIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED THREE MONTHS ENDED JULY 31 JULY 31 ----------------------- ------------------------ 1994 1993 1994 1993 ------- -------- ---------- -------- REVENUES: Operating leases $12,232 $10,567 $4,217 $2,949 Financing leases 1,055 1,150 343 375 Interest 779 848 259 265 Interest from and equity in losses of unconsolidated joint ventures -- (243) -- (92) --------- ------- -------- -------- 14,066 12,322 4,819 3,497 --------- ------- -------- -------- EXPENSES: Real estate operations 5,473 4,829 1,835 1,409 Interest 2,678 2,036 965 433 Depreciation and amortization 3,001 3,093 1,061 815 General and administrative 1,091 1,443 336 471 Trustees' fees and expenses 123 105 38 32 Consulting fee -- 145 -- -- Write-down in carrying value of investments -- 8,285 -- 4,985 --------- ------- -------- -------- 12,366 19,936 4,235 8,145 --------- ------- -------- -------- INCOME (LOSS) BEFORE GAINS ON SALES OF PROPERTIES 1,700 (7,614) 584 (4,648) GAINS ON SALES OF PROPERTIES 82 2,330 -- -- --------- ------- -------- -------- NET INCOME (LOSS) $1,782 $(5,284) $ 584 $(4,648) ========= ========= ======== ======== NET INCOME (LOSS) PER COMMON SHARE: Income (loss) before gains on sales of properties $ .32 $ (1.44) $ .11 $ (.88) Gains on sales of properties .02 .44 -- -- --------- ------- -------- -------- Net Income (Loss) $ .34 $ (1.00) $ .11 $ (.88) ========= ========= ======== ======== Weighted Average Number of Common Shares Outstanding 5,326 5,293 5,333 5,297 ========= ========= ======== ========
The accompanying notes to consolidated financial statements are an integral part of these statements. Page 3 of 10 HRE PROPERTIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
July 31, 1994 October 31, 1993 ------------- ---------------- (UNAUDITED) ASSETS Real Estate Investments: Properties owned--at cost, net of accumulated depreciation and recoveries of $36,898 at July 31, 1994 and $33,384 at October 31, 1993 $121,712 $ 99,279 Investment in unconsolidated joint venture -- 250 Mortgage notes receivable 8,866 8,917 -------- --------- 130,578 108,446 Cash and cash equivalents 3,593 7,061 Interest and rent receivable 1,965 1,304 Deferred charges, net of accumulated amortization 2,167 1,796 Other assets 1,303 723 -------- --------- $139,606 $119,330 ======== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank note payable $ 5,000 $ -- Mortgage notes payable 41,970 24,227 Accounts payable and accrued expenses 1,075 847 Deferred trustees' fees 635 602 Other liabilities 580 958 -------- -------- 49,260 26,634 -------- -------- Shareholders' Equity: Preferred shares, without par value; 2,000,000 shares authorized; none issued -- -- Common shares, without par value; unlimited shares authorized; 5,515,402 and 5,498,454 issued on July 31, 1994 and October 31, 1993 123,440 123,205 Less 178,348 common shares held in treasury, at cost (2,861) (2,861) Distributions in excess of accumulated net income (30,233) (27,648) --------- --------- 90,346 92,696 --------- --------- $139,606 $119,330
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. Page 4 of 10 HRE PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Nine Months Ended July 31 ------------------------- 1994 1993 -------- --------- Operating Activities: Net income (loss) $1,782 $(5,284) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 3,058 3,152 Recovery of investment in properties owned subject to financing leases 1,092 997 Equity in losses of unconsolidated joint venture -- 269 Minority interests in net losses of consolidated joint ventures (13) (20) Gains on sales of properties (82) (2,330) Write-down in carrying value of investments -- 8,285 ------ ------- 5,837 5,069 Changes in operating assets and liabilities: Increase in interest and rent receivable (661) (405) (Increase) decrease in accounts payable and accrued expenses 261 (60) (Increase) decrease in other assets and other liabilities, net (1,035) 124 ------- ------- Net Cash Provided by Operating Activities 4,402 4,728 ------- ------- Investing Activities: Acquisition of properties owned (25,816) -- Improvements to existing properties owned and deferred charges -- net (1,451) (1,289) Additional capital contributed to unconsolidated joint venture -- (100) Proceeds from sales of properties and investment in unconsolidated joint venture 705 3,230 Payments received on mortgage notes receivable 50 45 Miscellaneous 31 69 -------- -------- Net Cash Provided By (Used In) Investing Activities (26,481) 1,955 -------- -------- Financing Activities: Proceeds from mortgage notes and bank note 23,000 -- Dividends paid (4,367) (4,287) Proceeds from sales of additional common shares 235 178 Payments on mortgage notes payable and other liability (257) (812) ------- ------- Net Cash Used In Financing Activities 18,611 (4,921) ------- ------- Net Increase (Decrease) In Cash and Cash Equivalents (3,468) 1,762 Cash and Cash Equivalents at Beginning of Period 7,061 4,458 ------- ------- Cash and Cash Equivalents at End of Period $ 3,593 $ 6,220 ======= ======== The accompanying notes to consolidated financial Statements are an integral part of these statements. Page 5 of 10 HRE PROPERTIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (In thousands, except shares and per share data)
Common Shares (Distributions Treasury In Excess Outstanding Issued Shares, Accumulated Number Amount at Cost Net Income) Total --------- --------- ------- ----------- ------ Balances-October 31, 1992 5,296,109 $122,590 $(2,705) $(16,967) $102,918 Net (loss) -- -- -- (5,284) (5,284) Cash dividends declared ($.81 per share) -- -- -- (4,287) (4,287) Sale of additional common shares under dividend reinvestment plan 13,212 178 -- -- 178 Common shares acquired in cancel- lation of stock option plan (8,250) 156 (156) -- -- ---------- --------- -------- --------- --------- Balances--July 31, 1993 5,301,071 $122,924 $(2,861) $(26,538) $ 93,525 ========== ======== ======== ========= ========= Balances-October 31, 1993 5,320,106 $123,205 $(2,861) $(27,648) $ 92,696 Net income -- -- -- 1,782 1,782 Cash dividends declared ($.82 per share) -- -- -- (4,367) (4,367) Sale of additional common shares under dividend reinvestment plan and stock option plan 16,948 235 -- -- 235 ---------- --------- -------- ---------- -------- Balances--July 31, 1994 5,337,054 $123,440 $(2,861) $(30,233) $90,346 =========== ======== ======== ========== ========
Page 6 of 10 HRE PROPERTIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying unaudited consolidated financial statements include the accounts of HRE Properties ("the Trust"), its wholly-owned subsidiary, and certain joint ventures where the Trust has the ability to control the affairs of the venture. All significant intercompany transactions and balances have been eliminated. The financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the three-month and nine- month periods ended July 31, 1994 are not necessarily indicative of the results that may be expected for the year ending October 31, 1994. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Trust's annual report for the fiscal year ended October 31, 1993. 2. The Trust accounts for its leases of real property in accordance with the provisions of Financial Accounting Standards Board Statement No. 13, "Accounting for Leases." This statement sets forth specific criteria for determining whether a lease should be accounted for as an operating lease or a financing lease. In general, the financing lease method applies where property is under long-term lease to a credit worthy tenant and the present value of the minimum required lease payments is at least 90% of the value of the property. Other leases are accounted for as operating leases. 3. In December 1993, the Trust acquired a 296,000 square foot retail shopping center located in Meriden, Connecticut for a purchase price of $25 million. The property was acquired subject to a nonrecourse first mortgage loan of $15 million. The mortgage loan bears interest at an annual rate of 7.5% for a five-year term with interest only due monthly for the first two years and monthly installments of principal and interest until maturity. In connection with this acquisition, the Trust used the proceeds of its $5 million line of credit arrangement to complete the purchase. The Trust currently pays interest at an annual rate of LIBOR plus 2.75% on oustanding borrowings. Page 7 of 10 PART I - FINANCIAL INFORMATION (continued) Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources: The Trust believes that the financial resources currently available to it are sufficient to meet all of its known obligations and commitments and to make additional real estate investments when appropriate opportunities arise. At July 31, 1994, the Trust had $3.6 million in cash and cash equivalents and current liabilities of approximately $1.0 million. Long-term debt consists of mortgage loans totaling $42.1 million, of which approximately $350,000 in principal payments are due in fiscal 1994. The Trust also has $15 million in unsecured lines of credit with two commercial banks. As of July 31, 1994, the Trust has drawn $5 million under one of the lines of credit. The lines of credit expire at periods to April, 1995 and it is anticipated that outstanding borrowings, if any, under the lines of credit will be repaid from proceeds of a mortgage loan financing, sales of property or may be extended by the lenders. During fiscal 1994 the Trust also obtained $18 million from two nonrecourse first mortgage loan financings. The loans are collateralized by two of the Trust's properties. In June 1994, the Trust obtained a $4.5 million nonrecourse first mortgage loan commitment from a major commercial mortgage fund. The loan will be secured by one of the Trust's properties. The mortgage loan closed in September 1994 and proceeds from the loan may be used to make new real estate investments. The Trust expects to make new real estate investments periodically. The funds for such investments may come from existing liquid assets, lines of credit, proceeds from property sales, financing of acquired or existing properties or the sale of mortgage notes receivable. In the first quarter of fiscal 1994, the Trust acquired a 296,000 square foot shopping center in Meriden, Connecticut. The total purchase price was $25 million consisting of $10 million cash (including $5 million drawn from the Trust's line of credit arrangement) and first mortgage financing of $15 million. The first mortgage bears interest at 7.5% per annum and matures in five years. In May 1994, the Trust also acquired an office building located in Greenwich Connecticut. The 10,000 square foot property was acquired at a purchase price of $550,000, all cash. The Trust also invests in its existing properties and during the first nine-months of fiscal 1994, spent approximately $1,451,000 on its properties for capital improvement and leasing costs. The Trust sold its distribution property located in Memphis, Tennessee and net leased to the tenant at a net sale price of $450,000, all cash. The transaction closed during the Trust's second quarter and the Trust realized a gain on the sale of $82,000. Results of Operations: "Funds from operations" (net income before gains on sales of properties and non-recurring items, adjusted for non-cash charges and credits, recoveries of investment in properties owned subject to financing leases and cash distributions received from investments in unconsolidated joint ventures) is an important financial measure of the Trust's operating performance. Funds from operations for the three-month and nine-month periods ended July 31, 1994 increased to $2,026,000 and $5,837,000 from $1,592,000 ans $5,069,000 respectively in the year ago periods. Net income for the three-month and nine- month periods ended July 31, 1994 was $584,000 or $.11 per share and $1,782,000 or $.34 per share compared to a net loss of $(4,648,000) or $(.88) per share and $(5,284,000) or $(1.00) per share, respectively for the comparable periods in 1993. Page 8 of 10 PART I - FINANCIAL INFORMATION (continued) Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations (continued) The three-month and nine-month periods in fiscal 1993 included non cash charges aggregating $8,285,000 and $4,985,000 respectively to writedown the carrying values of certain of the Trust's former office building investments to their estimated net realizable values at that time. The investments were subsequently disposed of during fiscal 1993. Revenues: Operating lease income from retail properties increased by approximately $2.9 million in the first nine-months of fiscal 1994 compared to the prior year's period primarily from the added rental revenues of the Trust's retail properties located in Farmingdale, New York and Meriden, Connecticut. These properties were recently acquired by the Trust. Operating lease income from office properties declined by $1.2 million reflecting the disposition of the Trust's office building investment in Portland, Oregon in the second quarter of fiscal 1993 and lower occupancy at the Trust's Denver, Colorado office building. The Trust recently signed leases totaling 22,400 square feet of space at the Denver property. Expenses: General and administrative expenses decreased in the three-month and nine- month periods from the amount of costs allocated to property operating real estate expenses as a result of the Trust's strategic decision to assume the direct property management responsibilities at most of its retail properties. These retail properties were previously managed by third-party management firms pursuant to fee arrangements. The decrease in consulting fee expense resulted from the termination of a consulting arrangement with a trustee in 1993's first quarter. The increase in interest expense in the three-month and nine-month periods is due to interest expense on additional mortgage notes payable in the principal amount of $24.6 million obtained in fiscal 1993 and the first quarter of fiscal 1994. The mortgage notes bear interest at an average annual rate of approximately 7.7%. The Trust recorded gains on sales of properties of $82,000 or $.01 per share and $2,330,000 or $.44 per share during the first nine months of fiscal 1994 and 1993, respectively in connection with sales of single tenant net leased properties. There were no sales of properties during the three-month periods ended July 31, 1994 and 1993. Page 9 of 10 PART II - OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K No reports on Form 8-K have been filed by the Registrant during the three-month period ended July 31, 1994. S I G N A T U R E S 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. HRE PROPERTIES (Registrant) By:_____________/s/_________________ James R. Moore Senior Vice President/ Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) By:_____________/s/_________________ Charles J. Urstadt Chairman, President and Chief Executive Officer Page 10 of 10 EX-27 2
5 9-MOS OCT-31-1994 JUL-31-1994 3593000 0 1965000 0 0 0 158610000 (36898000) 139606000 1075000 4697000 120579000 0 0 (30233000) 139606000 0 14066000 0 5473000 1214000 0 2678000 1700000 0 1700000 0 82000 0 1782000 .34 .34 This item consists of Real Estate Investments: Properties Owned This item consists of Gains on Sales of Properties
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