-----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, Xi9irrBIG0uPNBSO4eFVuQD0yz+mfM7nGddYTYAIPXPm5JcScbLvaUHtIim27Me9 0DokBAO4/NzIPtKdtMTitw== 0000950152-95-001248.txt : 19950614 0000950152-95-001248.hdr.sgml : 19950614 ACCESSION NUMBER: 0000950152-95-001248 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950613 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REALTY REFUND TRUST CENTRAL INDEX KEY: 0000082473 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 346647590 STATE OF INCORPORATION: OH FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07062 FILM NUMBER: 95546669 BUSINESS ADDRESS: STREET 1: 1385 EATON CENTER STREET 2: 1111 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114 BUSINESS PHONE: 2167717663 MAIL ADDRESS: STREET 1: 1385 EATON CENTER STREET 2: 1111 SUPERIOR AVENUE CITY: CLEVELAND STATE: OH ZIP: 44114 10-Q 1 REALTY REFUND TRUST 10-Q 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 For the quarterly period ended April 30, 1995 [ ] Transition pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________________ to ___________________ Commission File Number 1-7062 ------------------------------------------------------- REALTY ReFUND TRUST - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its chart) Ohio 34-6647590 - -------------------------------------------------------------------------------- (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1385 Eaton Center 1111 Superior Avenue Cleveland, Ohio 44114 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (216) 771-7663 --------------------------- N/A - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 N/A ------- ------- ------- Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No N/A X ------- ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 1,020,586 ------------------------------ 2 REALTY ReFUND TRUST ------------------- PART I. FINANCIAL INFORMATION ----------------------------- -1- 3 REALTY ReFUND TRUST ------------------- BALANCE SHEETS -------------- APRIL 30 AND JANUARY 31, 1995 ----------------------------- ASSETS ------
April 30, January 31, ----------- ----------- (Unaudited) (Audited) INVESTMENTS: Loans receivable $23,039,894 $24,476,670 Loan receivable from related party 10,867,656 11,033,109 CASH 15,127 39,073 INTEREST RECEIVABLE AND OTHER ASSETS 670,796 966,247 REAL ESTATE HELD FOR SALE, net of accumulated depreciation of $460,000 and $360,000 at April 30 and January 31, 1995, respectively 8,675,695 8,650,257 ----------- ----------- $43,269,168 $45,165,356 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ LIABILITIES: Loans payable underlying wrap-around mortgages $ 8,885,626 $10,264,669 Loan payable underlying wrap-around mortgage to related party 3,666,685 3,832,317 Note payable to bank 11,910,000 11,810,000 Note payable to related party 4,875,000 5,000,000 Deposits and accrued expenses 1,280,295 1,543,828 ----------- ----------- Total liabilities 30,617,606 32,450,814 ----------- ----------- SHAREHOLDERS' EQUITY: Shares of beneficial interest without par value; unlimited authorization; 1,020,586 shares outstanding at April 30 and January 31, 1995 12,651,562 12,714,542 ----------- ----------- $43,269,168 $45,165,356 =========== =========== The accompanying notes are an integral part of these balance sheets.
-2- 4 REALTY ReFUND TRUST ------------------- UNAUDITED --------- STATEMENTS OF INCOME -------------------- FOR THE THREE MONTHS ENDED APRIL 30, 1995 AND 1994 --------------------------------------------------
1995 1994 ----------- ---------- REVENUES: Interest income from loans receivable $ 650,917 $1,068,623 Interest income from loan receivable from related party 234,311 304,045 Rental revenue from real estate held for sale 529,834 556,197 ----------- ---------- 1,415,062 1,928,865 ----------- ---------- EXPENSES: Interest on loans underlying wrap-around mortgages and other mortgage loans 195,549 431,962 Interest on loan underlying wrap-around mortgage loan to related party 56,298 66,037 Interest on note payable to bank 222,664 233,424 Interest on note payable to related party 110,438 76,319 Fee to related party investment advisor 73,832 92,215 Operating expenses of real estate held for sale 504,724 495,559 Depreciation of building held for sale 62,283 60,500 Amortization of tenant improvements and deferred leasing commissions 41,362 11,479 Other operating expenses 6,774 235,209 ----------- ---------- 1,273,924 1,702,704 ----------- ---------- NET INCOME $ 141,138 $ 226,161 =========== ========== NET INCOME PER SHARE $.14 $.22 ==== ==== CASH DIVIDENDS PER SHARE DECLARED $.20 $.20 ==== ==== The accompanying notes are an integral part of these statements.
-3- 5 REALTY ReFUND TRUST ------------------- UNAUDITED --------- STATEMENTS OF CASH FLOWS ------------------------ FOR THE THREE MONTHS ENDED APRIL 30, 1995 AND 1994 --------------------------------------------------
1995 1994 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Interest received $ 890,744 $ 1,392,066 Interest paid (591,188) (824,171) Cash payments to investment advisor and other suppliers (291,761) (342,018) Rental revenue received from real estate held for sale 535,780 547,124 Cash payments for operating costs of real estate held for sale (270,973) (540,801) ----------- ----------- Net cash provided by operating activities 272,602 232,200 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Principal collected on mortgage loans receivable 1,602,229 10,841,018 Principal payments on mortgage loans payable (1,544,675) (3,427,132) Payments for tenant improvements (124,985) (14,247) ----------- ----------- Net cash (used for) provided by investing activities (67,431) 7,399,639 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payment on note payable to related party (125,000) - Net bank borrowings (repayments) 100,000 (7,375,000) Payment of cash dividends (204,117) (183,705) ----------- ----------- Net cash used for financing activities (229,117) (7,558,705) ----------- ----------- NET (DECREASE) INCREASE IN CASH (23,946) 73,134 CASH AT BEGINNING OF PERIOD 39,073 50,474 ----------- ----------- CASH AT END OF PERIOD $ 15,127 $ 123,608 =========== ===========
-4- 6
1995 1994 ------------- ------------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net income $ 141,138 $ 226,161 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation 62,283 60,500 Amortization of tenant improvements, deferred leasing commissions and deferred financing costs 41,362 30,958 Amortization of deferred loan fees (4,500) (5,394) Deferral of interest income - (71,650) Decrease in interest receivable and other assets 291,352 88,549 Decrease in deposits and accrued expenses (259,033) (96,924) ------------- ------------- $ 272,602 $ 232,200 ============= ============= The accompanying notes are an integral part of these statements.
-5- 7 REALTY ReFUND TRUST ------------------- NOTES TO UNAUDITED FINANCIAL STATEMENTS --------------------------------------- APRIL 30, 1995 AND 1994 ----------------------- 1. BASIS OF PRESENTATION: --------------------- The accompanying unaudited financial statements contain all adjustments which are, in the opinion of the Trust's management, necessary to present fairly the financial position of the Trust as of April 30, 1995, and the results of its operations and cash flows for the three-month periods ended April 30, 1995 and 1994. Such adjustments are of a normal recurring nature. The financial statements included herein have been prepared by the Trust, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, 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. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Trust's latest annual report on Form 10-K. 2. DIVIDEND DECLARATION: -------------------- On May 15, 1995, the Trustees declared a distribution, payable on June 15, 1995, in the amount of 20 cents per share of beneficial interest. 3. NET INCOME PER SHARE: -------------------- Net income per share has been computed based on the weighted average number of shares outstanding. Net income per share for the three months ended April 30, 1995 and 1994, was based upon 1,020,586 shares. During these periods, the Trust had no potentially dilutive securities outstanding. At April 30, 1995 and 1994, there were 1,020,586 shares of beneficial interest outstanding. 4. PRIOR YEAR RECLASSIFICATIONS: ----------------------------- Certain prior year amounts have been reclassified to conform with current year presentation. -6- 8 Management's Discussion and Analysis of Financial Condition - ----------------------------------------------------------- and Results of Operations - ------------------------- Interest income on mortgage loans receivable decreased during the quarter ended April 30, 1995 as compared to the corresponding period of 1994 due to the prepayments of the Akron, Ohio and Dallas, Texas wrap-around mortgage loans in April and May 1994, respectively, prepayment and other income of $147,000 earned in the prior year period in connection with the Akron, Ohio loan prepayment, principal prepayments of $2,200,000 received on the Toledo, Ohio wrap-around mortgage loan in fiscal 1995 and the normal amortization of mortgage loan balances. Interest income from the Saginaw, Michigan investment made in July 1994 and the effect of higher prime lending rates on variable rate mortgage loans in the current year quarter partially offset the decrease in interest income. Interest expense on mortgage loans payable decreased due to the prepayments of the loans underlying the Akron, Ohio and Dallas, Texas wrap-around loan investments and the normal amortization of mortgage loan balances. During the three months ended April 30, 1995, the Chicago property incurred a net operating loss of approximately $79,000, inclusive of depreciation and amortization charges totaling approximately $104,000. For the prior year quarter, the Chicago property incurred a net operating loss of approximately $11,000 inclusive of depreciation and amortization charges of approximately $72,000. Rental revenue decreased approximately $26,000 between periods primarily due to the expiration of a lease. The impact of this lease expiration will be partially offset by new lease agreements which have been entered into with both new and existing tenants. Operating expenses of the Chicago property remained relatively constant between periods. Amortization of tenant improvements and deferred leasing commissions increased due to increased investments in tenant improvements and higher levels of leasing commissions paid. These expenditures have increased in connection with both the obtaining of new tenants and the renewals of leases with existing tenants. Average bank borrowing levels were considerably lower in the current year quarter as the proceeds received in the prior year in connection with the Akron, Ohio and Dallas, Texas loan prepayments and the principal prepayments received on the Toledo, Ohio loan in the prior fiscal year were used to reduce bank borrowings. The effect of reduced borrowing levels more than offset the effect of higher prime lending rates in the current year quarter. Interest expense on the note payable to related party increased due to higher prime lending rates in the current year period. The fee to investment advisor decreased in the current year due to the lower level of net investment in mortgage loans. Other operating expenses decreased in the current period due to lower levels of legal and professional expense. Such expenses were greater than normal in the prior year period due to a higher level of legal activity. Liquidity - --------- To maintain tax-exempt status, the Trust is required to distribute at least 95% of its taxable income to its shareholders. It is currently the policy of the Trust to distribute sufficient dividends to maintain its tax-exempt status. As a result of the substantial net loss in fiscal 1993, the Trust has available approximately $4.6 million of net operating loss carryforwards for income tax purposes. The loss carryforwards can be used to reduce future dividend payment requirements and still allow the Trust to maintain its tax-exempt status. The Trustees will assess the level of dividends to be declared on a quarterly basis. -7- 9 For the three months ended April 30, 1995 as compared to the prior year period, net cash provided by operating activities increased due to a lower level of net cash payments for operating costs of the Chicago property resulting from the receipt of $300,000 for reimbursement of building repairs and maintenance expenses. The reimbursement was accrued at January 31, 1995 but not received until February. These factors more than offset the effect of prepayment and other income recognized in the prior year quarter on the Akron, Ohio loan prepayment and the current year reduction in interest income. Cash from investing activities decreased considerably in the three-month period ended April 30, 1995 due to the Akron, Ohio wrap-around mortgage loan prepayment in the prior year quarter. The Trust's net investment in the loan was approximately $7,400,000 at the time of prepayment. In addition, the Trust increased expenditures for tenant improvements at the Chicago property in the current year quarter. Cash used for financing activities decreased as the proceeds received from the Akron, Ohio wrap-around mortgage loan prepayment were utilized to reduce bank borrowings in the prior year quarter. Also, dividends paid increased as the Trustees declared and paid a higher dividend in the quarter ended April 30, 1995 than in the prior year. In connection with the Trust's wrap-around loans, while the entire debt service is received in cash, the Trust is obligated to the borrower to make debt service payments on the underlying indebtedness. Additionally, the Trust must fund any operating deficits of the Chicago property until such time as it is sold. The Trust's primary sources of funds are a bank credit agreement in the amount of $22,000,000 until August 1, 1995, at which time availability will be reduced to $10,000,000, repayments of mortgage loans receivable and rental revenue from the Chicago property. The credit agreement is used to provide the Trust with a source of funds when payments due on loans underlying the Trust's wrap-around loans are in excess of the payments due the Trust, to fund any operating deficits of the Chicago property or to fund losses such as experienced in the fiscal year ended January 31, 1993. The credit agreement expires in July 1996. As of April 30, 1995, the Trust had available $10,090,000 under the credit agreement. Inflation - --------- Generally, inflation affects the Trust as it affects its borrowers and the underlying real estate collateral. This type of collateral traditionally has been able to sustain itself during periods of inflation. -8- 10 FORM 10-Q - PART II: OTHER INFORMATION --------------------------------------- Items 1 through 3 and 5 are not applicable or the answer to such items is negative; therefore, the items have been omitted and no reference is required in this report. ITEM 4: Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- (a) The Trust's Annual Meeting of Shareholders was held May 15, 1995. (b) The following Trustees were elected at such annual meeting, each for a one-year term expiring in 1996: James H. Berick Alan M. Krause Alvin M. Kendis Frank L. Kennard Samuel S. Pearlman (c) The Election of Trustees was the only matter voted on at the annual meeting of shareholders:
Trustee Name Votes For Abstentions ------------ --------- ----------- James H. Berick 869,420 17,290 Alan M. Krause 868,720 17,790 Alvin M. Kendis 863,720 22,590 Frank L. Kennard 864,520 22,190 Samuel S. Pearlman 864,620 22,090
ITEM 6: Exhibits and reports on Form 8-K - ------ -------------------------------- (a) Exhibit Number Exhibit ------ ------- 27 Financial Data Schedule(1) (b) No Reports on Form 8-K have been filed during the quarter for which this report is filed. _____________________ (1)Filed only in electronic format pursuant to Item 601(b)(27) of Regulation S-K. 11 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 thereunto duly authorized. June 13, 1995. REALTY ReFUND TRUST ------------------------------- (Registrant) By /s/ Alan M. Krause ------------------------------- Alan M. Krause Chairman And By /s/ James H. Berick ------------------------------- James H. Berick President and Principal Financial Officer -10- EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE SHEETS AS OF APRIL 30, 1995 AND JANUARY 31, 1995 AND STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED APRIL 30, 1995 AND 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000082473 REALITY REFUND TRUST 3-MOS JAN-31-1996 FEB-01-1995 APR-30-1995 15,127 0 33,907,550 0 0 0 9,135,695 460,000 43,269,168 0 29,337,311 12,651,562 0 0 0 43,269,168 0 1,415,062 0 0 688,975 0 584,949 141,138 0 141,138 0 0 0 141,138 .14 .14 The Registrant utilizes an unclassified Balance Sheet. Therefore, the captions "Total Current Assets" and "Total Current Liabilities" are not applicable.
-----END PRIVACY-ENHANCED MESSAGE-----