-----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, Hti3S9F9Onk1/qlRyp/SHUmM/+1o+7t9XATfAM4iWZ+yX3DRpg/1A+8p2y6C5jYA DdUcneoR9sCtQvhCVrqFag== 0000929638-97-000278.txt : 19971022 0000929638-97-000278.hdr.sgml : 19971022 ACCESSION NUMBER: 0000929638-97-000278 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19971021 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL PROPERTIES INVESTMENT TRUST CENTRAL INDEX KEY: 0000761236 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 066290322 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-15713 FILM NUMBER: 97698834 BUSINESS ADDRESS: STREET 1: PO BOX 148 CITY: CANTON CENTER STATE: CT ZIP: 06020 BUSINESS PHONE: 8886781109 MAIL ADDRESS: STREET 1: P O BOX 148 CITY: CANTON CENTER STATE: CT ZIP: 06020 FORMER COMPANY: FORMER CONFORMED NAME: ROBERTS RICHARD REAL ESTATE GROWTH TRUST I DATE OF NAME CHANGE: 19920703 10-K/A 1 10-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A Amendment No. 2 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Fiscal Year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission File Number 2-95449 NATIONAL PROPERTIES INVESTMENT TRUST Formerly Richard Roberts Real Estate Growth Trust I (Exact name of registrant as specified in its charter) Massachusetts 06-6290322 ------------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) P.O. Box 148 Canton Center, CT 06020 --------------------------- -- ----- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (860) 678-1109 Securities registered pursuant to Section 12 (b) of the Act: None Securities registered pursuant to Section 12 (g) of the Act: Shares of Beneficial Interest No Par Value 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 filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 15, 1997:Shares of Beneficial Interest without par value $982,614 * Documents Incorporated by Reference: None Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: Not Applicable * As no established public trading market exists, a value of $1.483 (the approximate Net Asset Value as of December 31, 1996) has been ascribed for the purpose of this calculation. Item 6 of the Registrant's Form 10-K for the year ended December 31, 1996 is amended as follows: Selected Financial Data has been revised due to correction of December 31, 1995 financial statements. * Item 7 of the Registrant's Form 10-K for the year ended December 31, 1996 is amended as follows: Results of Operations for: Year Ended December 31, 1996 compared to Year Ended December 31, 1995 * Year Ended December 31, 1995 compared to Year Ended December 31, 1994 * Year Ended December 31, 1994 compared to Year Ended December 31, 1993 * have been revised in accordance with Item 303 of Regulation S-K. Item 8 of the Registrant's Form 10-K for the year ended December 31, 1996 is amended as follows: The financial statements of the Registrant have been revised. * The Independent Auditors' Report for the year ended December 31, 1994 has been included in accordance with Rules 2-05 and 3-02(a). * * Filed herewith ITEM 6. SELECTED FINANCIAL DATA. The following table summarizes certain selected financial data for the Trust for the years ended December 31, 1996, 1995, 1994, 1993 and 1992, and should be read in conjunction with the accompanying financial statements.
- -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Statement of Operations: 1996 1995 1994 1993 1992 - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Gross Rental Income $ 340,768 $ 311,383 $ 293,882 $ 306,916 $ 422,341 - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Net Income From Property Operations (2&3) (20,187) 51,711 (272,220) (161,071) 6,914 - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Interest Income 1,589 1,260 - 170 233 - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Loss Due to Disposition of Assets & Loss Revenue (2,3&4) - - - ( 15,199) - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Net Income (Loss) (18,598) 33,452 (272,220) (160,901) ( 8,052) - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Per Share Data: - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Net Income (Loss) (1) (0.03) 0.05 (0.39) (0.24) ( 0.01) - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Distributions Declared 0.05 0.00 0.00 0.00 0.00 - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Weighted Average Number of Shares of Beneficial Interest Outstanding (1) 718,496 718,649 693,436 684,395 684,395 - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Balance Sheet: - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Total Assets (2,3&4) 1,050,867 1,102,288 1,014,331 1,209,933 1,067,160 - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Mortgage Loans Payable (2,3&4) 571,258 598,353 398,606 400,000 - - -------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------- Shareholder's Equity 405,681 460,618 386,800 629,020 789,921 - -------------------------------- ----------------- ---------------- ----------------- ---------------- -----------------
(1) Earnings (Loss) per Share of Beneficial Interest are computed based on the weighted average number of Shares of Beneficial Interest outstanding during the period. (2) On November 30, 1993, the Trust borrowed $400,000 to extinguish old payables, pay delinquent real estate taxes and accumulate working capital. The Shoppes at Lake Mary were pledged as collateral for this loan. (3) On May 4, 1994, the Trust borrowed $25,000 to accumulate working capital. The Shoppes at Lake Mary were pledged as collateral for this loan. (4) On October 26, 1995, the Trust borrowed $600,000 to extinguish the mortgage payable, make capital and tenant improvements, pay delinquent real estate taxes, accumulate working capital and to provide funds to pay a one-time dividend. The Shoppes at Lake Mary were pledged as collateral for this loan. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Liquidity and Capital Resources At December 31, 1996, the Trust had cash of approximately $44,404, which is comprised almost entirely of the remaining proceeds from the refinancing of the first and second mortgages on the Trust's property during 1995 and the accrual of 1996's real estate taxes. The Trust anticipates the need for $75,000 to $100,000 for capital expenditures for mandated new sewer lines and tenant improvements during December 1996 and the first half of 1997. During 1995, the cash flow from the operation of The Shoppes at Lake Mary included funds received pursuant to refinancing of the first and second mortgages on the Trust's property. The Advisor (See Item 13 - Certain Relationships and Related Transactions) of the Trust refinanced the first and second mortgages on the Trust's real property for $600,000 on October 26,1995. The proceeds were used to repay the first and second mortgages, in which the first mortgage was due in December 1996, pay the prior years and current years property taxes, provide working capital to perform tenant improvements for two new tenants, provide capital to install sewer lines mandated by the Town of Lake Mary, and to provide funds to issue a shareholder dividend. During 1994, the cash flow from the operation of The Shoppes at Lake Mary included funds received pursuant to a second mortgage of $25,000 placed on the property May 4, 1994. Over the past couple of years, the Trustees have spent a considerable amount of time investigating various alternatives in order to enhance shareholder value and return on equity. The Trustee's primary goal in investigating various investment alternatives is to protect the shareholders' current investment and to enhance the property's current return by reducing general and administrative costs through the enhancement of Trust assets. The Trustees have spoken to numerous people throughout the country involved in all aspects and segments of the real estate industry. The Trustees have received various proposals, and have performed extensive due diligence in assessing these proposals. The Trust has retained Prudential Securities to assist the Trustees with the identification and evaluation of potential candidates for the Trust to acquire additional property or a possible merger. As a result of these activities, the Trustees have been negotiating with a major Northeast based real estate company which has expressed serious interest in proceeding with formal talks with the Trust. Prudential Securities' knowledge of, and the Trustees' preliminary investigations have indicated, that this company would be an excellent fit with the Trust. Upon the advice of Prudential Securities, the Trustees anticipate the possibility of entering into a Letter of Intent with this real estate company to issue shares of beneficial interest in exchange for the Trust's real property. The results of the proposed transaction would likely substantially reduce the administrative burden currently being placed on the Trust's property. These conversations are preliminary and the Trustees are unable to predict whether such a transaction will become a reality and if consummated, whether the shareholders will receive an increased return on their investment. The Trustees believe this is a significant opportunity for the Trust, as the Northeast based real estate company has all the qualities that the Trustees believes Wall Street investors are seeking in a REIT. While this direction is not without risk, the Managing Trustee feels it is in the best interest of the Shareholders. The principal assets of the Trust consists of an equity position in an income producing commercial property and cash. Inflation Inflation has been consistently low during the periods presented in these financial statements and, as a result, has not had a significant effect on the operations of the Trust. Competition The Trust's remaining property investment is subject to competition from similar types of properties in the vicinity in which it is located. While the market in which the property operates is experiencing a recovery, the property values generally remain below the highs realized in the mid-1980's. The property's current 96% occupancy rate, and the Trust's holding of several long-term leases with automatic escalation clauses, are indicators that the Trust is not currently facing heavy competition for tenants. Results of Operations Year Ended December 31, 1996 compared to Year Ended December 31, 1995 For the ended December 31, 1996, the Trust reported a net loss from property operations of $20,187, as compared to net income from property operations of $51,711 for the year ended December 31, 1995. Significant variances from 1995 are as follows; repairs and maintenance expenses were higher due to repairs to the sprinkler system, septic system and air conditioning systems; interest expense increased due to the refinancing and additional borrowing on October 25, 1995; property management costs increased due to a monthly Trustee fee paid to the Managing Trustee as a result of the conversion of the REIT to a self-managed REIT; telephone expenses increased due to increased contact with shareholders, contact with contractors in Florida, and contacts by the Managing Trustee when he is traveling; and revenues increased due to increased occupancy and rent escalations. The appraised market value of The Shoppes at Lake Mary was $2,050,000 as of October 15, 1993, based upon an appraisal prepared by Pomeroy Appraisal Associates of Florida, Inc. This increase in value over the September, 1991 appraisal reflects the stabilization of the tenancy, the increased occupancy at the center and the firming of the local real estate market in general. The Trust's administrative expenses consist of shareholder reporting, legal expenses, recordkeeping and audit expense, all of which are necessary but provide an unfair burden on a single property (See Item 13 - Certain Relationships and Related Transactions). The Advisor began, and the Managing Trustee is continuing, conversations with other REIT and real estate portfolios concerning merging in order for both entities to benefit from the ability to share overhead. The Trustee's primary goal is to protect the shareholders' current investment and to enhance their current return by reduced general and administrative costs. These conversations are preliminary and the Managing Trustee is unable to predict whether such a merger will become a reality and if consummated, whether the shareholders will receive an increased return on their investment. While this direction is not without risk, the Managing Trustee feels it is in the best interest of the Shareholders. Currently, there is no agreement with regards to compensation of the Managing Trustee (See Item 13 - Certain Relationships and Related Transactions) and compensation paid to the Managing Trustee was $46,000 for the year ended December 31, 1996. Year Ended December 31, 1995 compared to Year Ended December 31, 1994 For the year ended December 31, 1995, the Trust reported net income from property operations of $51,711, as compared to a net loss from property operations of $272,220 for the year ended December 31, 1994. Significant variances from 1994 are as follows: general and administrative expenses were reduced due to the waiving of the advisor fees by the advisor due to the limitation of operating expenses per the Declaration of the Trust (See Item 13 Certain Relationships and Related Transactions) and a reduction in travel expenses and costs related to the evaluation of new investments; repairs and maintenance expenses were lower due to substantial reductions in the costs of contracted services and less than average repairs were performed; promotion and administration expense variances are the result of different expense classifications between years; interest expense increased due to increases in interest rates and the refinancing and additional borrowing on October 25, 1997; and revenues increased due to increased occupancy and rent escalations. On October 27, 1995, the Trust changed its operating structure to a self-administered Trust. The Advisor and the Managing Trustee have made a concerted effort to reduce the operating expenses and general and administrative expenses of the Trust. They have terminated the lease for their administrative offices located in Connecticut and are operating out of an office provided by the Managing Trustee (See Item 13 - Certain Relationships and Related Transactions). The travel and investigative expenses have been curtailed to a level which the Managing Trustee feels will be supported by the Trust's Cash Flow. The Trust has entered into a new leasing contract with a local (Florida) real estate company to find new tenants, and the leasing commission is to be paid on an annual basis, rather than entirely up front. This contract should reduce the strain on cash flow due to substantial prepaid fees. There was no agreement with regards to compensation of the Managing Trustee (See Item 13 - Certain Relationships and Related Transactions) and no compensation was provided for the period of October 27, 1995 to December 31, 1995. Year Ended December 31, 1994 compared to Year Ended December 31, 1993 For the year ended December 31, 1994, the Trust reported a net loss from property operations of $272,220, as compared to a net loss from property operations of $160,901 for the year ended December 31, 1993. The loss reported for 1994 is largely attributable to the cost associated with shareholder communication, operational expenses, and the travel and related costs incurred with evaluating new investments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. NATIONAL PROPERTIES INVESTMENT TRUST INDEX Independent Auditors' Reports Comparative Balance Sheet as of December 31, 1996 and 1995 Comparative Statement of Operations for the Years Ended December 31, 1996, 1995 and 1994 Comparative Statement of Changes in Shareholders' Equity for the Years Ended December 31, 1996, 1995 and 1994 Comparative Statement of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 Comparative Schedule of Real Estate Expenses for the Years Ended December 31, 1996, 1995 and 1994 Notes to the Financial Statements Supplemental Financial Statement Schedules: Schedule III, Real Estate and Accumulated Depreciation --------------- Schedules Not Filed: All schedules, except those indicated above, have been omitted because either the required information is not applicable or the information is shown in the financial statements or notes thereto. [LETTERHEAD OF BERNARDI, ALFIN & KOOS, L.L.C. APPEARS HERE] Independent Auditors Report Trustees National Properties Investment Trust P.O. Box 148 Canton Center, Connecticut 06020 We have audited the accompanying balance sheet of National Properties Investment Trust as of December 31, 1996 and December 31, 1995, and the related statements of operations, changes in shareholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of National Properties Investment Trust as of December 31, 1994 were audited by other auditors whose reports dated March 15, 1995, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of National Properties Investment Trust as of December 31, 1996 and December 31, 1995 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Also in our opinion, the financial statement schedules, when considered in relation to the basic financial statements, presents fairly in all material respects the information shown therein. March 18, 1997, except for the Respectfully submitted, Comparative Statement of Operations and Notes 1, 2 and 13, as to which the Date is October 7, 1997 /s/Bernardi, Alfin & Koos, L.L.C. --------------------------------- BERNARDI, ALFIN & KOOS, L.L.C. Certified Public Accountants [LETTERHEAD OF KOSTIN, RUFKESS & COMPANY, LLC APPEARS HERE] Independent Auditors Report The Trustees and Shareholders National Properties Investment Trust We have audited the accompanying balance sheets of National Properties Investment Trust as of December 31, 1994 and 1993 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of National Properties Investment Trust as of December 31, 1994 and 1993 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the index to item 14 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements of National Properties Investment Trust, taken as a whole. /s/ Kostin Ruffkess & Company, LLC - ---------------------------------- KOSTIN, RUFKESS & COMPANY, LLC West Hartford, Connecticut March 15, 1995
NATIONAL PROPERTIES INVESTMENT TRUST CANTON CENTER, CONNECTICUT COMPARATIVE BALANCE SHEET December 31, 1996 1995 ASSETS: Investments in real estate and personal property . $ 948,583 $ 930,294 Cash and cash equivalents ....................... 44,403 108,081 Receivables ..................................... 18,248 13,911 Prepaid expenses ................................ 21,019 22,772 Deposits ........................................ 2,160 1,800 Deferred expenses ............................... 16,454 25,430 --------- --------- TOTAL ASSETS ...................................... $ 1,050,867 $ 1,102,288 LIABILITIES: Accounts payable ................................ $ 17,307 18,896 Accrued expenses ................................ 35,800 6,225 Prepaid rent and security deposits .............. 20,821 18,196 Mortgage payable ................................ 571,258 598,353 --------- --------- Total Liabilities .......................... 645,186 641,670 --------- --------- SHAREHOLDERS' EQUITY: Shares of beneficial interest, no par value, unlimited authorization, shares issued and outstanding were 718,496 in 1996 and 718,860 in 1995 ........... 11,754,966 11,754,966 Accumulated deficit ............................. (11,349,285) (11,294,348) --------- --------- Total Shareholders' Equity ................. 405,681 460,618 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ........ $ 1,050,867 $ 1,102,288 ========== ==========
The accompanying notes are an integral part of the financial statements.
NATIONAL PROPERTIES INVESTMENT TRUST CANTON CENTER, CONNECTICUT COMPARATIVE STATEMENT OF OPERATIONS For the Years Ended December 31, 1996 1995 1994 PROPERTY OPERATIONS: Gross rental income ..................... $ 340,768 $ 311,383 $ 293,883 Rental expenses ......................... (241,778) (214,790) (212,679) General and administrative expenses ..... (119,177) (64,401) (353,424) ------- ------- -------- Net Income from Property Operations . (20,187) 32,192 (272,220) OTHER INCOME (EXPENSE): Interest income ......................... 1,589 1,260 -- ------- ------- ------- NET INCOME (LOSS) ............................ $ (18,598) $ 33,452 $(272,220) ======= ======= ======= INCOME (LOSS) PER SHARE OF BENEFICIAL INTEREST (0.03) 0.05 (0.39) ======= ======= ======= AVERAGE NUMBER OF SHARES OF BENEFICIAL INTEREST ................................ 718,496 718,649 693,436 ======= ======= =======
The accompanying notes are an integral part of the financial statements.
NATIONAL PROPERTIES INVESTMENT TRUST CANTON CENTER, CONNECTICUT COMPARATIVE STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the Years Ended December 31, 1996 1995 1994 Shares Amount Shares Amount Shares Amount SHARES OF BENEFICIAL INTEREST Balance - January 1, .......... 718,860 $11,754,966 714,395 $11,714,600 684,395 $11,684,600 Shares issued ................. -- -- 847 847 30,000 30,000 Contributed capital ........... -- -- -- 39,519 -- -- Corrections of errors ......... (364) -- 3,618 -- -- -- Balance - December 31, ........ 718,496 $11,754,966 718,860 $11,754,966 714,395 $11,714,600 ACCUMULATED DEFICIT Balance - January 1, .......... $(11,294,348) $(11,327,800) $(11,055,580) Net income (loss) ............. (18,598) 33,452 (272,220) Dividends paid ................ (36,339) -- -- Balance - December 31, ........ $(11,349,285) $(11,294,348) $(11,327,800) =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
NATIONAL PROPERTIES INVESTMENT TRUST CANTON CENTER, CONNECTICUT COMPARATIVE STATEMENT OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents For the Years Ended December 31, 1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ............................................. $ (18,598) $ 33,452 $(272,220) ------- ------- ------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization ............................ 50,899 46,131 45,338 Issuance of shares of beneficial interest in lieu of cash -- -- 30,000 Changes in Assets and Liabilities: Receivables .......................................... (4,337) 1,510 24,884 Prepaid expenses ..................................... 1,753 13,188 89,980 Deferred expenses .................................... -- (26,927) 4,516 Other ................................................ (360) 12,957 (3,444) Accounts payable ..................................... (1,589) (57,119) 30,070 Accrued expenses ..................................... 29,575 (414) (3,392) Prepaid rent and security deposits ................... 2,625 (3,056) 487 Due to Advisor ....................................... -- (85,481) -- ------- ------- ------- Total Adjustments ................................ 78,566 (98,383) 218,439 ------- ------- ------- Net Cash Provided By (Used In) Operating Activities ........... 59,968 (64,931) (53,781) ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of personal property ................................. (60,212) (30,113) (7,300) ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt .................................... (27,095) (400,253) (26,395) Mortgage proceeds ............................................. -- 600,000 -- Dividends paid ................................................ (36,339) -- -- Proceeds from note ............................................ -- -- 45,848 ------- ------- ------- Net Cash Provided by (Used In) Financing Activities ...... (63,434) 199,747 19,453 ------- ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............ (63,678) 104,703 (41,628) CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR ................ 108,081 3,378 45,006 ------- ------- ------- CASH AND CASH EQUIVALENTS, END OF THE YEAR ...................... $ 44,403 $ 108,081 $ 3,378 ======= ======= =======
The accompanying notes are an integral part of the financial statements.
NATIONAL PROPERTIES INVESTMENT TRUST CANTON CENTER, CONNECTICUT COMPARATIVE SCHEDULE OF RENTAL EXPENSES For the Years Ended December 31, 1996 1995 1994 ---- ---- ---- RENTAL EXPENSES: Personnel ....................... $ -- $ -- $ 6,291 Promotion and administration .... 21,170 21,193 13,206 Property management ............. -- 15,569 16,500 Leasing commissions ............. 12,713 12,688 12,662 Utilities ....................... 21,264 18,596 12,256 Maintenance and repair .......... 26,234 11,811 12,540 Contract services ............... -- -- 22,368 Insurance ....................... 13,309 9,451 8,528 Property taxes .................. 35,896 33,339 30,571 Interest expense and late charges 60,293 46,012 32,419 Amortization .................... 8,976 7,481 2,992 Depreciation .................... 41,923 38,650 42,346 -------- -------- -------- Total Rental Expenses ..... $ 241,778 $ 214,790 $ 212,679
The accompanying notes are an integral part of the financial statements. NATIONAL PROPERTIES INVESTMENT TRUST NOTES TO FINANCIAL STATEMENTS NOTE 1 - Organization and Summary of Accounting Policies: A. Organization: National Properties Investment Trust (formerly Richard Roberts Real Estate Growth Trust I) (the "Trust") was organized on January 16, 1985 as a Massachusetts Business Trust. The Trust invests directly in equity interests in commercial, industrial and/or residential properties in the United States which have income-producing capabilities and intends to hold its properties for long-term investment. The Trust currently owns a single property located in central Florida. The results of the Trust's operations depend upon the Trust's property's competitive position in its respective leasing market. The Shoppes at Lake Mary, a strip shopping center located in Lake Mary, Florida, is the Trust's sole remaining property. B. Method of Accounting: The financial statements of the Trust have been prepared on the accrual basis of accounting. C. Cash Equivalents: For financial statement purposes, the Trust considers all highly liquid investments with original maturities of three months or less to be cash equivalents. D. Income Taxes: The Trust has made for prior years, and intends to make for 1996, an election to file as a real estate investment trust (REIT) for federal tax purposes, and if so qualified, will not be taxed on earnings distributed to shareholders. Accordingly, no provision for federal income taxes has been made for the periods ended December 31, 1996 and 1995. However, the Trust is subject to state income taxes, where applicable. E. Real Estate Assets and Depreciation: On January 1, 1996, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The statement requires impairment losses to be recognized for long-lived assets, on a property by property basis, used in operations when indicators of impairment are present and the undiscounted future cash flows are not sufficient to recover the assets' carrying value. If such indicators are present, an impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. NOTE 1 - Organization and Summary of Accounting Policies: (Continued) E. Real Estate Assets and Depreciation: (Continued) For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset, less the estimated cost to sell, is less than the carrying value of the asset measured at the time management commits to a plan to dispose of the asset. Assets are classified as assets to be disposed of when management has committed to sell and is actively marketing the property. Assets to be disposed of are carried at the lower of carrying value or fair value less cost to dispose, determined on an asset by asset basis. Depreciation is not recorded during the period in which assets are held for disposal and gains (losses) from initial and subsequent adjustments to the carrying value of the assets, if any, are recorded as a separate component of income from continuing operations. Adoption of this standard did not have a material impact on the Company's financial position or results of operations. Depreciation was computed using the straight-line method over an estimated depreciable life of 40 years for real property, 7 years for personal property, and over the life of the related lease for tenant improvements. The only property owned by the Trust was written down to its realizable value at December 31, 1991. F. Accumulated Deficit: The accumulated deficit, reported as a reduction of Shareholders' Equity, includes net losses recognized and distributions made to Shareholders as a return of capital invested. G. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2 - Related Party Transactions: The Trust paid the Managing Trustee $46,000 and $15,569 as compensation for managing the Trust property for the years ended December 31, 1996 and 1995, respectively. In addition, effective in November 1995, the Trust offices are located at premises owned by the Managing Trustee. No rent was charged to the Trust in 1996 and 1995, although, the Trust paid utility bills for the office of $1,647 in 1996. NOTE 2 - Related Party Transactions: (Continued) The Trust had entered into an agreement (the "Advisory Agreement") with First Investment Properties, Inc., (the "Advisor"), a Connecticut corporation, pursuant to which the Advisor is acting as an investment advisor and administrator of the Trust's day-to-day affairs. Peter Stein, the Managing Trustee, is the manager of First Investment Properties, Inc. The Advisory Agreement expired on October 27, 1995 and was not renewed by the Trust. Under the terms of the Advisory Agreement, the Trust pays to the Advisor: (a) a reimbursement for organizational, offering and selling expenses advanced on behalf of the Trust by the Advisor; (b) an annual Advisory Fee equal to 2.5% of all cash receipts from operations in the ordinary course of business after deducting payments for operating expenses, debt service, capital expenditures with respect to real property investments, amounts set aside for reserves, after the reimbursement of expenses incurred in the performance of advisory duties described below, which is subordinate to an annual cumulative (but not compounded) return to the investors of 10% per annum on the original Price Per Share to the public in the offering, less all distributions of the net proceeds from the sale or refinancing of the Trust's properties (the "Adjusted Price Per Share"); (c) an Acquisition Fee equal to 6% of the purchase price of any real property acquired by the Trust, from which fee, the Advisor, will pay all real estate and mortgage commissions due to unaffiliated parties; (d) a Disposition Fee equal to 15% of any net proceeds from a sale, refinancing or other capital transaction with respect to any of its investments, after the Shareholders have received a return of their capital plus a cumulative (but not compounded) return of 10% per annum on the Adjusted Price Per Share, of which Disposition Fee, the Advisor, may pay up to 10% to any consultants; and (e) a Real Estate Brokerage Commission upon the sale of any Trust real property investments, equal to 3% of the gross sale price. The Trust will also reimburse the Advisor for any expenses attributable to the performance of its duties pursuant to the Advisory Agreement. The Advisor will refund to the Trust within 120 days after the end of the fiscal year, the greater of the amount, if any, by which the Operating Expenses of the Trust (as defined in the Prospectus) exceeded either (a) 2% of the Book Value of Invested Assets (as defined in the Prospectus) or (b) 25% of net income of the Trust, whichever is greater, or (c) 2% of the Trust's base assets defined as total assets of the Trust less cash, cash items and unsecured indebtedness. The Trust had Operating Expenses in excess of the above limits of $85,481 during 1995 which were applied to a note payable due to the Advisor. NOTE 2 - Related Party Transactions: (Continued) The note payable to the Advisor as a Due to Consultant arose as a result of the costs associated with replacing the prior Advisor and Trustees in 1993. The contract with the consultant was entered into with First Investment Properties, Inc. and the Trust was not a party to the agreement. The Declaration of the Trust prohibits the Trust from directly paying third party contractors of the Advisor, but instructs the Trust to pay the Advisor directly and the Advisor is responsible for paying the third party. The Trust has no liability to the consultant. First Investment Properties, Inc. is solely liable to the consultant. First Investment Properties, Inc. has received $85,481 directly and indirectly as payment of this note. The remaining $19,519 due to the Advisor has been forgiven by First Investment Properties, Inc. and recorded as contributed capital. Additionally, First Investment Properties, Inc. has waived all rights to Advisory fees accrued in 1995 of $32,607 and any fees accrued in prior years, which are not payable until such time as the shareholders receive a cumulative, but not compounded ten percent return on their investment. First Investment Properties, Inc. has agreed to this waiver due to the fact they recognize that such a condition will never be met. In March 1995, the Trust issued 847 shares of Beneficial Interest to Gretchen Stein, spouse of Peter Stein, in exchange for the note payable at $1 per share per the agreement with the Trust in 1994. The remaining $20,000 balance was contributed to the Trust as capital. In December 1994, the Trust issued 30,000 shares of beneficial interest at $1 per share to the shareholders of the Advisor in lieu of cash renumeration. Leasing commissions paid to Keystone Advisors, Inc. amounted to $0, $0, and $25,845, for the years ended December 31, 1996, 1995 and 1994, respectively. Due to Advisor is comprised of the following:
12/31/96 12/31/95 Balance at the beginning of the year $ -- $ 105,000 Additions .......................... -- Payments ........................... -- (85,481) Balance written off ................ (19,519) --------- --------- Balance at the end of the year ..... $ -- $ --
NOTE 3 - Earnings Per Share: Earnings per Share of Beneficial Interest are computed on the weighted average number of Shares of Beneficial Interest outstanding during the period. NOTE 4 - Investment in Real Estate and Personal Property: The Trust purchased The Shoppes at Lake Mary, a 38,125 square foot shopping center located in Lake Mary, Florida on March 31, 1986 for $3,200,000. Pursuant to the purchase agreement, the seller guaranteed that the revenues generated by the project during the first two years of its operation would be at least equal to the aggregate of all expenses incurred in connection with the use and operation of the project during each such year plus $360,000. The seller placed $300,000 of the purchase price in an interest bearing escrow account as security for the guarantee. On September 26, 1986, the Trust released the seller from the guarantee in consideration for the funds held in escrow. The funds held in escrow were forwarded to the Trust on October 2, 1986. The basis of the property acquired has been reduced by the amount received under the terms of the cash flow guarantee. On December 31, 1991 the Trust reduced the book value of real property by $1,677,901 to its net realizable value . All of the Trust's property are recorded at historical cost, except for its real property which is recorded at its historical cost, less $310,762 for the reduction in basis due to the release of funds escrowed at closing, and less $1,677,901 loss reserve to reduce the property value to its net realizable value. The Trust's property and equipment are as follows: The Shoppes at Lake Mary 1996 1995 Land ......................... $ 230,299 $ 195,299 Buildings .................... 1,147,584 1,147,584 Tenant Improvements .......... 210,742 188,924 Furnishings and Equipment .... 19,544 16,149 ---------- ---------- Total ..................... 1,608,169 1,547,956 Less: Accumulated Depreciation ( 659,586) ( 617,663) ---------- ---------- Net Investment in Real Estate and Personal Property ........ $ 948,583 $ 930,293 ========= ========= NOTE 5- Receivables: Receivables consist of the following: 12/31/96 12/31/95 Tenant Receivables ................ $18,247 $13,911 Allowance for Doubtful Accounts ... -- -- ------- ------- Tenant Receivables net of Allowance $18,247 $13,911 ======= ======= NOTE 5- Receivables: (Continued) The Allowance for Doubtful Accounts is as follows: 12/31/96 12/31/95 Balance at the beginning of the year $ -- $ -- Charged to expense ................. -- -- Recoveries ......................... -- -- Accounts receivable written off -------- -------- Balance at the end of the year ..... $ -- $ -- ======== ======== NOTE 6 - Accrued Expenses: Accrued Expenses consist of the following: 12/31/96 12/31/95 Accrued real estate taxes $35,800 $ -- Accrued interest ........ -- 6,225 ------- ------ Accrued Expenses ........ $35,800 $6,225 ======= ====== NOTE 7 - Mortgage Payable: 1996 1995 Mortgage payable in monthly installments of $7,201 of principal plus interest at 2% over prime on the outstanding balance. The balance of principal and interest is due in full in October 1998. The loan is secured by a first mortgage lien on The Shoppes at Lake Mary ...................... $571,258 $598,353 ======= ======= The following sets forth the principal payments due on the mortgage payable: 1997 29,205 1998 542,053 NOTE 8 - Correction of Errors: In May, 1993 First Investment Properties, Inc. entered into a consulting agreement with a company, owned by a relative of the former Advisor, to help with the transfer of the Advisor, the resignations of the original Trustees, and the transfer of management of the Lake Mary property. The Trust was not a party to the agreement and is not liable on the note payable. The liability should have been properly classified as an amount Due to Advisor. During 1996 and 1995, the Trust has updated its shareholder records and has corrected several errors by the previous transfer agent. These are reflected in 1996 and 1995 as corrections in the number of shares. NOTE 9- Tenant Leases: The Trust has entered into operating lease agreements with tenants of its rental property, which have various termination dates. Certain leases also contain provisions for inflationary increases and the pass through of a portion of operating expenses under specified circumstances. Future minimum lease payments under noncancellable operating leases are as follows: 20 1997 $ 279,903 1998 215,880 1999 145,864 2000 67,486 2001 6,300 ------- Total $ 715,433 NOTE 10- Dividends Paid to Shareholders: The Trust declared and paid cash dividends on a monthly basis from February 1986 through September 1988. On April 11, 1989, the Trustees voted to suspend the quarterly shareholders' dividend effective with the scheduled distribution for the first quarter of 1989. A one-time dividend was declared in January 1996, paid in February 1996, and payable to shareholders of record as of September 30, 1995, of $0.05 per share. This dividend was a return of capital to the shareholders. The dividend was declared by the sole vote of the Managing Trustee. A specific date of re-establishment of the quarterly shareholders' dividend has not yet been determined. Distributions made by the Trust are at the discretion of the Trustees. Future distributions, if any, will be dependent upon the earnings and cash flow of the Trust, its financial condition and other relevant factors. Dividends declared per share are based upon the actual number of shares outstanding on the date of declaration and not upon the weighted average number of shares outstanding during the period used in computing earnings per share. NOTE 11- Contingencies: George Knude, an Independent Trustee, resigned on November 13, 1995. A successor Trustee had not been appointed until June 25, 1996 which was greater than the 60 days provided in the Declaration of Trust. Salvatore R. Carabetta, an Independent Trustee, resigned on June 30, 1996. A successor Trustee has not been appointed to date, which is more than 60 the day period required by the Declaration of Trust for the appointment of a successor Trustee. The Declaration of the Trust requires a new Trustee to be appointed within 60 days. Additionally until June 25, 1996 when Jay Goldman was elected as Trustee of the Trust, Peter Stein, the Managing Trustee, had been acting on behalf of the Trust without the express approval of the majority of the Trustees. Peter Stein and Salvatore Carabetta were the sole remaining Trustees and since a majority of Trustees need to be present to have a vote, both Trustees need to be present to hold a vote. On January 6, 1996 the Managing Trustee has declared a dividend without the express approval of Mr. Carabetta. Mr. Stein believes that the request for a vote sent to Mr. Carabetta twice by certified mail; and not responded to, constitutes a presence at a vote and abstention from the vote. Management is unable to determine the effects the above events will have on the financial condition of the Trust, if any. NOTE 12- Supplemental Disclosure of Cash Flow Information: 1996 1995 1994 Cash paid during the year - Income taxes ................. $ -- $ -- $ -- Interest ..................... $60,293 $46,012 $30,202 Non-cash Transactions - Issuance of shs. Of beneficial Interest in exchange for debt $ -- $ 847 $ -- Cancellation of indebtedness on Due to Advisor ......... $ -- $19,519 $ -- Conversion of note payable to Contributed capital ............. $ -- $20,000 $ -- NOTE 13- Restatement of Financial Statements: The Comparative Statement of Operations has been restated to reflect that general and administrative expenses are a component of income from operations in accordance with generally accepted accounting principles. Previously, general and administrate expenses were reported as other expenses. This change has no effect on the income (loss) reported by the Trust. The Comparative Statement of Financial Position, the Comparative Statement of Operations, the Comparative Statement of Changes in Shareholders' Equity and the Comparative Statement of Cash Flows for the year ended December 31, 1995 have been restated to reflect the write-off of $19,519 due to First Investment Properties, Inc. as being reclassified to contributed capital. Note 1 of these financial statements has been amended to reflect the adoption of Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of". Adoption of this standard did not have a material impact on the Company's financial position or results of operations.
NATIONAL PROPERTIES INVESTMENT TRUST CANTON CENTER, CONNECTICUT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 Costs Gross Amount Initial Capitalized at which Cost Subsequent Carried at to Trust to Acquisition Close of Period -------- -------------- --------------- Estimated Useful Life Building, Building, Basis Reductions Building, Used in Encum- Land and Land and and Impairment Land and Accumulated Date of Date Computing Description brances Improvements Improvements Writedowns Improvements Depreciation Construction Acquired Depreciation Shoppes at Lake Mary Land ................. (1) $ 432,840 $ 35,000 $ (237,541) $ 230,299 $ 497 3/31/86 -- Building ............. (1) 2,898,706 -- (1,751,122) 1,147,584 475,036 9/85 3/31/86 40 Tenant improvements and furniture & fixtures (1) -- 230,286 -- 230,286 184,053 Various Various (2) -------- ------- --------- --------- ------- Total ........... $3,331,546 $ 265,286 $(1,988,663) $1,608,169 $659,586 ========= ======== ========= ========= =======
NATIONAL PROPERTIES INVESTMENT TRUST CANTON CENTER, CONNECTICUT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 (Continued) NOTES TO SCHEDULE III: (1) Mortgage payable in monthly installments of $7,201 of principal plus interest at 2% over prime on the outstanding balance. The balance of principal and interest is due in full in October 1998. The loan is secured by a first mortgage lien on the real property. (2) The useful lives of tenant improvements are determined based on the remaining lease term and vary lease to lease. (3) The aggregate cost of properties owned at December 31, 1996 for Federal Income Tax purposes is $1,608,169 (4) Reconciliation of Investment Properties Owned: 1996 1995 1994 Balance at the beginning of the period $1,547,956 $1,517,843 $1,510,543 Additions during the period: Sewer lines ........................ 35,000 -- -- Tenant improvements and furniture & fixtures .......... 25,213 30,113 7,300 Deductions during the period: None -- -- -- ---------- ---------- ---------- Balance at the end of the period ...... $1,608,169 $1,547,956 $1,517,843 ========= ========= ========= (5) Reconciliation of Accumulated Depreciation:
1996 1995 1994 ---- ---- ---- Balance at the beginning of the period $617,662 $579,012 $536,666 Additions during the period: Depreciation expense .............. 41,924 38,650 42,346 Deductions during the period: None -------- -------- -------- Balance at the end of the period ..... $659,586 $617,662 $579,012
(6) The Trust recorded a basis reduction of $310,762 in October 1986 for the reduction in basis due to the release of funds escrowed at closing from the seller, and recorded an impairment writedown of $1,677,901 on December 31, 1991. Signatures Pursuant to the requirements of Section 13 or 15(d) 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. NATIONAL PROPERTIES INVESTMENT TRUST Date: 10/21/97 By: /s/ Peter M. Stein -------------------- Peter M. Stein Managing Trustee Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated: Signature Title Date /s/ Peter M. Stein, Managing Trustee 10/21/97 - ------------------- Peter M. Stein /s/ Jay Goldman Trustee 10/21/97 - ------------------- Jay Goldman -----END PRIVACY-ENHANCED MESSAGE-----