-----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, Byeg4zgyoYF/P61A1LUUxnsR73LzSKc88MDO69jw1pB4n8Dkd8UDmMKkTQh7v6hw j3tZ9ctJzW3vfcyPLvOKfw== 0000950149-97-001662.txt : 19970912 0000950149-97-001662.hdr.sgml : 19970912 ACCESSION NUMBER: 0000950149-97-001662 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970902 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRUBB & ELLIS REALTY INCOME TRUST LIQUIDATING TRUST CENTRAL INDEX KEY: 0000763977 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 946649376 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13647 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 433 CALIFORNIA ST STE 610 CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4153919800 MAIL ADDRESS: STREET 1: 433 CALIFORNIA ST STE 610 CITY: SAN FRANCISCO STATE: CA ZIP: 94104 FORMER COMPANY: FORMER CONFORMED NAME: GRUBB & ELLIS REALTY INCOME TRUST DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q FOR PERIOD ENDED 6/30/97 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1997 Commission File Number 0-13647* GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST (Exact name of registrant as specified in its charter) California (94-6649376) (State or Other Jurisdiction (I.R.S. Employer Identification No.) of Incorporation or Organization) 351 California Street Suite 1150 San Francisco, California 94104 (Address of Principal Executive Offices) (Zip Code) (415) 391-9800 Registrant's Telephone Number, including Area Code 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 number of units outstanding of the registrant's units of beneficial interest August 1, 1995 was 2,803,169 units. GRUBB & ELLIS REALTY COMPANY TRUST LIQUIDATING TRUST IS THE DISTRIBUTEE OF THE ASSETS OF GRUBB & ELLIS REALTY INCOME TRUST, AND FILES REPORTS UNDER GRUBB & ELLIS REALTY INCOME TRUST'S FORMER COMMISSION FILE NUMBER 2 GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST FORM 10-Q ------- I N D E X
Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements (unaudited): Condensed Statements of Assets and Liabilities as of June 30, 1997 and March 31, 1997 3 Statements of Income and Expense for the quarters ended June 30, 1997 and 1996 4 Statements of Cash Flows for the three-month periods ended June 30, 1997 and 1996 5 Notes to Financial Statements 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Item 1: Legal Proceedings 10 Item 2: Change of Securities 10 Item 3: Defaults Upon Senior Securities 10 Item 4: Submission of Matters to a Vote of Security Holders 10 Item 5: Exhibits and Reports on Form 8-K 10 Signatures 11
3 GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST CONDENSED STATEMENTS OF ASSETS AND LIABILITIES -------
June 30, March 30, 1997 1997 ------------ ------------ (unaudited) ASSETS Cash and cash equivalents 727,000 22,000 Restricted Cash 242,000 1,289,000 Prepaid expense and other assets -- 0 ------------ ------------ Total assets $ 969,000 $ 1,311,000 ============ ============ LIABILITIES AND BENEFICIARIES' EQUITY Liabilities: Other liabilities 26,000 330,000 ------------ ------------ Total liabilities 330,000 1,041,000 ------------ ------------ Beneficiaries' equity: Units of beneficial interest 12,737,000 12,737,000 Notes receivable from beneficiaries (251,000) (251,000) Reserve for beneficiaries notes receivable 186,000 186,000 Distributions in excess of accumulated earnings (11,729,000) (11,691,000) ------------ ------------ Total beneficiaries' equity 943,000 981,000 ------------ ------------ Total liabilities and beneficiaries' equity $ 969,000 $ 1,311,000 ============ ============
The accompanying notes are an integral part of these financial statements. 3 of 11 4 GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST STATEMENTS OF INCOME AND EXPENSE (UNAUDITED) -------
Quarter Ended Six Months Ended ----------------------------- ----------------------------- March 31, March 31, June 30, June 30, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Income : Rental income $ -- $ 197,000 $ -- $ 394,000 Short-term investment interest and other income 5,000 0 7,000 ----------- ----------- ----------- ----------- 5,000 197,000 7,000 394,000 ----------- ----------- ----------- ----------- Expenses: Construction costs 35,000 -- 145,000 -- Rental operating expenses 0 61,000 27,000 153,000 Interest on mortgage loan -- 159,000 0 289,000 Depreciation -- 47,000 0 94,000 Liquidating agent fee -- 0 0 0 Directors' fees and expenses -- 4,000 0 8,000 General and administrative expenses 8,000 16,000 31,000 29,000 ----------- ----------- ----------- ----------- Total expenses 43,000 287,000 203,000 573,000 ----------- ----------- ----------- ----------- Net income (loss) $ (38,000) $ (90,000) $ (196,000) $ (179,000) =========== =========== =========== =========== Net income (loss) per unit $ (.01) $ (.03) $ (.06) $ (.06) =========== =========== =========== =========== Average number of units utilized in net income (loss) per unit 2,803,169 2,803,169 2,803,169 2,803,169 =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 4 of 11 5 GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST STATEMENTS OF CASH FLOWS (UNAUDITED) -------
For the Three Months Ending ----------------------------- June 30, June 30, 1997 1996 ----------- ----------- Cash flows from operating activities: Net income (Loss): $ (38,000) $ (179,000) Adjustments to reconcile net income (Loss): Depreciation and amortization 0 47,000 Increase (decrease) in other liabilities (304,000) 128,000 Decrease (increase) in prepaid expenses and other assets 0 (144,000) ----------- ----------- Net cash provided by operating activities (342,000) (148,000) Cash flows from investing activities: Property development costs 0 (2,475,000) ----------- ----------- Net cash provided by (used in) investing activities 0 (2,475,000) Cash flows from financing activities: Decrease in restricted cash 1,047,000 -- Construction loan proceeds -- 2,588,000 ----------- ----------- Net cash used in financing activities 1,407,000 2,588,000 ----------- ----------- Net decrease in cash and cash equivalents (705,000) (35,000) Cash and cash equivalents, beginning of period 22,000 64,000 ----------- ----------- Cash and cash equivalents, end of period $ 727,000 $ 29,000 =========== =========== Supplementary information: Cash paid for interest $ 0 $ 136,000 =========== ===========
The accompanying notes are an integral part of these financial statements. 5 of 11 6 GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST NOTES TO CONDENSED FINANCIAL STATEMENTS ------- 1. Organization of the Trust: Grubb & Ellis Realty Income Trust, Liquidating Trust (the Trust), a California trust, was organized under an agreement dated May 14, 1992, between the Trustees and Grubb & Ellis Realty Income Trust (the Company) whereby the trustees received all of the assets and assumed all of the liabilities of the Company, which was subsequently dissolved. The purpose of the Trust was to liquidate the remaining Trust property in a manner to conserve and protect the liquidating trust estate, and to collect and distribute the income and proceeds to the beneficiaries of the Trust by May 15, 1995, the date of intended termination. As further explained in Note 3, although the purpose of the Trust remains the same, the disposition plans for the Trust's remaining property, the Vintner Square Shopping Center (formerly the Livermore Arcade Shopping Center), are such that the Trust's liquidation period has extended beyond May 1995. 2. Basis of Presentation: The financial statements included herein have been prepared by the Trust, without audit, pursuant to the rules and regulation of the Securities and Exchange Commission for reporting on Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In addition, certain reclassifications have been made to the prior year financial statements to conform to the current year's presentation. The statements should be read in conjunction with the Company's report on Form 10-K for the year ended December 31, 1996 and the audited financial statements included therein. In the opinion of the Trustees, the financial statements reflect all adjustments necessary for a fair presentation of financial position, results of operations, and cash flows for the interim period presented. The results of operations for the three-month period ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year. Continued 6 of 11 7 GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST NOTES TO CONDENSED FINANCIAL STATEMENTS ------- 3. Net Real Estate Investment: Prior to the inception of the Trust, the Vintner Square Shopping Center property became subject to an environmental clean-up and remediation program to remedy soil contamination caused by a former tenant. As of May 15, 1992 (date of inception) $241,000 had been paid in connection with the testing and remediation program. During 1993, the procedures required to complete the remediation were approved by the Regional Water Quality Control Board (RWCB). The Trust had taken legal action against the former tenant, previous owners and other related parties of the property in order to recover all costs of the clean-up program. A settlement agreement and general release was executed on January 18, 1994 which shifted the liability for the clean-up to a separate entity and incorporated the RWCB's plan approval. On April 30, 1996 the Trust received a No Further Action Letter from the Regional Water Quality Control Board indicating that the clean-up requirements imposed by the RWCB have been satisfied and that a monitoring program will be required for a period of approximately 24 months. Due to the environmental clean-up program, plans to expand and ultimately sell the Vintner Square Shopping Center were delayed. However, on July 7, 1995, the Trust executed a loan agreement which provided funds for financing the rehabilitation and expansion of the shopping center. In addition, the Trust finalized lease renewals with the three major tenants in the center, Orchard Supply Hardware, Long's Drugs and Safeway Stores. The renewed leases result in increased annual rental income and expire in the years 2011 and 2016. The Orchard Supply lease involved a build-to-suit agreement for a new building. Construction activities started in July, 1995 and include the demolition of a portion of the shopping center. The Trust recorded a reserve approximating $1,300,000 in the quarter ended June 30, 1995, to reflect a reduction in the net book value of buildings and improvements for those assets being demolished. The new Orchard Supply building was completed on April 1, 1996. The construction schedule called for the completion of 20,000 sq. ft of new shop space at various intervals from May 24, 1996 to August 15, 1996. The rehabilitation of the original undemolished shop space and the existing Safeway and Long's stores was completed in August, 1996. The Trust recorded an additional net realizable value reserve allowance of $1,300,000 as of June 30, 1995 and increased the reserve to $1,500,000 as of December 31, 1995. Continued 7 of 11 8 GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST NOTES TO CONDENSED FINANCIAL STATEMENTS ------- 4. Restricted Cash The Vintner Square Shopping Center was sold on September 18, 1996. As part of the Sales Agreement, the Buyer's lender held-back the distribution of $1,234,000 pending completion of tenant improvement construction. The tenant improvements were substantially completed in February, 1997. Various lender requirements such as Tenant Estoppel Statements and Certificates of Occupancy from the City of Livermore have been delivered to the Lender. Distribution of $992,000 of these funds to the Trust was made in June, 1997 and an additional $166,000 was distributed in July, 1997. Distributions of the remaining balance of these funds is expected in August, 1997. Continued 8 of 11 9 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Changes in Financial Condition: Cash and cash equivalents increase from March 30, 1997 to June 30, 1997 by $705,000 resulting from releasing of the restricted cash by buyer's lender. Results of Operations: Six Months Ended June 30, 1997 Compared to the Six Months Ended June 30, 1996: A $196,000 loss was recorded in the six months ended June 30, 1997 as compared with a loss of $179,000 in the comparable period in 1996, as a result of the elimination of rental income due to the sale of Vintner Square Shopping Center, and unanticipated construction costs after the sale of the project. Mortgage loan interest decreased from $289,000 to zero during the period resulting from the payoff of the mortgage as a result of the sale of Vintner Square Shopping Center. 9 of 11 10 PART II - OTHER INFORMATION Items 1 through 4 are not applicable. Item 5, Exhibits and Reports on Form 8-K: None 10 of 11 11 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. GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST By: /s/ HAROLD A. ELLIS, JR. ------------------------------------- Harold A. Ellis, Jr., Trustee Dated: August 12, 1997 11 of 11 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1997 APR-01-1997 JUN-30-1997 969,000 0 0 0 0 969,000 0 0 969,000 26,000 0 0 0 12,737,000 11,794,000 969,000 0 7,000 0 27,000 176,000 0 0 (196,000) 0 (196,000) 0 0 0 (196,000) (0.06) (0.06)
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