|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended September 30, 1995 Commission file number 0-7589
USP REAL ESTATE INVESTMENT TRUST
(Exact name of registrant as specified in its charter)
Iowa 42-6149662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4333 Edgewood Road N.E., Cedar 52499
Rapids, IA (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (319) 398-8975
N/A
(Former name, address and 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
The number of shares of beneficial interest of the
registrant outstanding at November 13, 1995 was 3,880,000.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
USP REAL ESTATE INVESTMENT TRUST
Balance Sheets
(unaudited)
<TABLE>
<S> <C> <C> <C>
September 30, December 31,
1995 1994 1994
ASSETS
Real Estate
Land, buildings and improvements at cost 39,651,566 39,653,344 39,651,566
Less accumulated depreciation (10,273,234) (9,520,461) (9,726,767)
Net book value 29,378,332 30,132,883 29,924,799
Mortgage loans receivable, net of deferred gain 1,294,491 1,318,631 1,312,805
Real estate and mortgage loans receivable 30,672,823 31,451,514 31,237,604
Cash and cash equivalents 1,459,938 2,422,541 2,086,511
Rents and other receivables 465,303 411,567 535,792
Prepaid and deferred expenses 291,422 320,206 316,921
Taxes held in escrow 91,729 108,593 156,765
Total Assets 32,981,215 34,714,421 34,333,593
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loans payable 15,388,645 16,976,097 16,853,303
Accounts payable and accrued expenses 616,915 742,593 494,922
Distibution declared 310,400 271,600 271,600
Tenant deposits 82,952 67,980 73,989
Other 40,025 49,497 26,496
Total Liabilities 16,438,937 18,107,767 17,720,310
Shareholders' Equity
Shares of beneficial interest,
$1 par value, 20,000,000
shares authorized, 3,880,000
shares issued and outstanding 3,880,000 3,880,000 3,880,000
Additional paid-in capital 12,018,890 12,726,654 12,018,890
Undistributed net earnings 643,388 -- -- 714,393
Total Shareholders Equity 16,542,278 16,606,654 16,613,283
Total Liabilities & Shareholders' Equity 32,981,215 34,714,421 34,333,593
</TABLE>
USP REAL ESTATE INVESTMENT TRUST
Statements of Operations
(unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
REVENUE
Rents 1,323,794 1,524,057 3,998,884 4,659,830
Interest 63,183 57,029 180,297 155,611
1,386,977 1,581,086 4,179,181 4,815,441
EXPENSES
Property expenses:
Real estate taxes 180,877 224,912 552,775 654,195
Wages and salaries --- 6,156 --- 18,498
Repairs and maintenance 102,701 142,706 320,415 402,452
Utilities 29,673 45,765 78,394 111,795
Management fee 61,735 71,758 186,697 217,659
Insurance 9,870 11,336 33,210 44,576
Other 20,916 32,706 76,386 86,327
Property expenses, excluding depreciation 405,772 535,339 1,247,877 1,535,502
Depreciation 204,722 239,693 617,206 753,921
Total property expenses 610,494 775,032 1,865,083 2,289,423
Interest 377,974 485,998 1,180,803 1,519,459
Administrative expense 100,631 107,193 311,900 350,183
1,089,099 1,368,223 3,357,786 4,159,065
Earnings from operations 297,878 212,863 821,395 656,376
Net gain on sale of property --- 788,588 --- 788,588
Net earnings 297,878 1,001,451 821,395 1,444,964
Net earnings per share .08 .26 .21 .37
Distributions to shareholders 310,400 271,600 892,400 737,200
Distributions to shareholders per share .08 .07 .23 .19
</TABLE>
Notes to Financial Statements
Note 1: The unaudited interim financial statements are
prepared in accordance with generally accepted
accounting principles and include all adjustments of a
normal recurring nature necessary for a fair presentation of
the financial position and quarterly results. Interim
reports should be read in conjunction with the audited
financial
statements and related notes included in the 1994 Annual
Report.
<TABLE>
<S> <C>
Note 2: Shareholders' equity, December 31, 1994 16,613,283
Net earnings 821,395
Distributions to shareholders (892,400)
Shareholders' equity, September 30, 1995 16,542,278
</TABLE>
USP REAL ESTATE INVESTMENT TRUST
Statements of Cash Flows
(unaudited)
<TABLE>
<S> <C> <C>
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Rents collected 4,022,976 4,784,612
Interest received 178,508 153,397
Payments for operating expenses (1,372,307) (2,048,488)
Interest paid (1,156,731) (1,513,040)
Net cash provided by operating activities 1,672,446 1,376,481
Cash flows from investing activities:
Principal collections on mortgage loans receivable 18,314 16,656
Proceeds from property sale, net of closing costs --- 4,641,420
Capital expenditures (70,739) (306,828)
Other, net 78,605 194,874
Net cash provided by investing activities 26,180 4,546,122
Cash flows from financing activities:
Principal payments on mortgage loans payable (335,435) (455,335)
Principal repayment on mortgage loan (1,136,164) (3,141,973)
Net proceeds from refinancing -- 114,369
Distributions paid to shareholders (853,600) (698,400)
Net cash used by financing activities (2,325,199) (4,181,339)
Net increase (decrease) in cash and cash equivalents (626,573) 1,741,264
Cash and cash equivalents at beginning of period 2,086,511 681,277
Cash and cash equivalents at end of period 1,459,938 2,422,541
Reconcilition of net earnings to net cash
provided by operating activities:
Net earnings 821,395 1,444,964
Net gain on sale of property --- (788,588)
Earnings from operations 821,395 656,376
Depreciation 617,206 753,921
Amortization 24,072 46,324
Decrease in rents and other receivables 30,194 118,898
Decrease (increase) in prepaid and deferred expenses 441 (11,888)
Decrease (increase) in taxes held in escrow 65,036 (57,541)
Increase (decrease) in accounts payable
and accrued expenses 121,993 (133,279)
Increase (decrease) in advance rents (7,891) 3,670
Net cash provided by operating activities 1,672,446 1,376,481
</TABLE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
We are pleased to present the Trust's third quarter results
of operations. Net earnings were $297,878 ($.08 per share)
for the three months ended September 30, 1995, bringing year-
to-date net earnings to $821,395 ($.21 per share). Net
earnings in 1994 were $1,001,451 ($.26 per share) and
$1,444,964 ($.37 per share) for the three and nine months,
respectively, including a net gain from the sale of Midway
Business Park in Tucson, Arizona of $788,588 ($.20 per
share). Funds from operations (earnings from operations
plus depreciation) were $1,438,601 for the first nine months
of 1995 compared to $1,410,297 for the first nine months of
1994.
Rents and expenses declined from 1994 to 1995 due to the
sale of Midway. Midway contributed rental income of
$750,000 and incurred property expenses exclusive of
depreciation of $332,000 in 1994. Rents and property
expenses before depreciation for properties owned in both
years increased $89,000 and $44,000, respectively, from 1994
to 1995. Interest income increased $25,000 due to higher
interest rates on investable funds, while interest expense
decreased $339,000 due to the prepayment of mortgage loans.
Overall occupancy of the Trust's real estate portfolio was
96% as of September 30, 1995.
The Trust previously reported that Publix Supermarkets at
Kingsley Square in Orange Park, Florida had exercised an
option to extend its lease for five years. The lease
extension, effective February 11, 1995, requires the Trust
to contribute up to $250,000 toward remodeling costs at the
Publix store. The Trust had expected to incur this cost in
1995, but is now anticipating this to occur in 1996.
Luria's, a 23,587 square foot tenant at Kingsley Square,
discontinued operations there in March 1995. Luria's has
continued to pay rent and has notified the Trust that it
will honor its lease obligations which run through March
2010. The Trust is cooperating with Luria's in securing a
new tenant to sublease this space. The Trust was recently
notified that P.W. Enterprises had filed a Chapter 11
reorganization plan and intends to close its 63,146 square
foot store at Geneva Square in Lake Geneva, Wisconsin in
early 1996. The Trust intends to pursue all legal remedies
available to it under the P.W. Enterprises lease which
expires in September 2004.
Capital resources of the Trust consist of equity in real
estate investments and mortgage loans receivable.
Properties are maintained in good condition and adequate
insurance coverage is provided. Liquidity is represented by
cash and cash equivalents ($1,459,938 at September 30, 1995)
as well as cash flow from the continued operation of the
Trust's real estate portfolio, which is considered
sufficient to meet current obligations. The mortgage on
Geneva Square matures in March 1996, requiring a payoff of
$2,873,831. The Trust expects to refinance this loan with
the current lender.
Earlier this year, the Trust announced that it had begun
exploring strategic alternatives to maximize shareholder
value, including a possible business combination or sale of
assets. The Trust announced in July that it had received an
offer to acquire all of its assets for a price equivalent to
$5.75 per share, less costs required to complete the
transaction. The offer was subject to financing and further
due diligence, as well as ongoing negotiations of
contractual terms and legal structure. Completion of any
such transaction will require the execution of a definitive
agreement and approval of the Trustees and shareholders.
There is no assurance that this or any other transaction
will be consummated.
The Board of Trustees declared a distribution of $.08 per
share, payable November 20, 1995 to shareholders of record
November 7, 1995. Distributions to shareholders continue to
be dependent upon earnings, cash flow, financial condition
and other factors reviewed by the Board of Trustees.
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.
USP REAL ESTATE INVESTMENT TRUST
/s/ Alan F. Fletcher
Alan F. Fletcher
Vice President and Treasurer
(principal financial officer)
/s/ Edward J. Kittleson
Edward J. Kittleson
Controller
(principal accounting officer)
Dated: November 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000102438
<NAME> USP REAL ESTATE INVESTMENT TRUST
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 1,459,938
<SECURITIES> 0
<RECEIVABLES> 568,927
<ALLOWANCES> 103,624
<INVENTORY> 0
<CURRENT-ASSETS> 2,308,392
<PP&E> 39,651,566
<DEPRECIATION> 10,273,234
<TOTAL-ASSETS> 32,981,215
<CURRENT-LIABILITIES> 1,050,292
<BONDS> 15,388,645
<COMMON> 3,880,000
0
0
<OTHER-SE> 12,662,278
<TOTAL-LIABILITY-AND-EQUITY> 32,981,215
<SALES> 0
<TOTAL-REVENUES> 4,179,181
<CGS> 0
<TOTAL-COSTS> 1,865,083
<OTHER-EXPENSES> 311,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,180,803
<INCOME-PRETAX> 821,395
<INCOME-TAX> 0
<INCOME-CONTINUING> 821,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 821,395
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
|
|