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 March 31, Commission file number 0-
1995 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 May 10, 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>
March 31, December 31,
1995 1994 1994
ASSETS
Real Estate
Land, buildings and improvements 39,651,566 44,115,186 39,651,566
at cost
Less accumulated depreciation (9,930,926) (9,925,363) (9,726,767)
Net book value 29,720,640 34,189,823 29,924,799
Mortgage loans receivable, net of 1,306,844 1,329,864 1,312,805
deferred gain
Real estate and mortgage loans 31,027,484 35,519,687 31,237,604
receivable
Cash and cash equivalents 1,055,430 1,065,143 2,086,511
Rents and other receivables 743,518 501,167 535,792
Prepaid and deferred expenses 306,149 317,910 316,921
Taxes held in escrow 218,604 165,132 156,765
Total Assets 33,351,185 37,569,039 34,333,593
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loans payable 15,614,927 20,423,422 16,853,303
Accounts payable and accrued 720,264 810,111 494,922
expenses
Distibution declared 271,600 232,800 271,600
Tenant deposits 75,960 128,550 73,989
Other 25,671 60,738 26,496
Total Liabilities 16,708,422 21,655,621 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 12,033,418 12,018,890
Undistributed net earnings 743,873 -- 714,393
Total Shareholders Equity 16,642,763 15,913,418 16,613,283
Total Liabilities & Shareholders' 33,351,185 37,569,039 34,333,593
Equity
</TABLE>
USP REAL ESTATE INVESTMENT TRUST
Statements of Operations
(unaudited)
<TABLE>
<S> <C> <C>
Three Months Ended
March 31,
1995 1994
REVENUE
Rents 1,363,033 1,605,733
Interest 60,744 45,941
Total Revenue 1,423,777 1,651,674
EXPENSES
Property expenses:
Real estate taxes 185,949 228,346
Wages and salaries -- 7,127
Repairs and maintenance 88,464 116,606
Utilities 24,515 35,485
Management fee 64,704 73,842
Insurance 11,670 16,620
Other 23,428 30,862
Total property expenses, excluding 398,730 508,888
depreciation
Depreciation 206,242 257,040
Total property expenses 604,972 765,928
Interest 408,364 528,161
Administrative expense 109,361 110,257
Total Expenses 1,122,697 1,404,346
Net earnings 301,080 247,328
Net earnings per share .08 .06
Distributions to shareholders 271,600 232,800
Distributions to shareholders per .07 .06
share
</TABLE>
USP REAL ESTATE INVESTMENT TRUST
Statements of Cash Flows
(unaudited)
<TABLE>
<S> <C> <C>
Three Months Ended
March 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Rents collected 1,257,527 1,682,609
Interest received 58,831 45,767
Payments for operating expenses (342,135) (704,452)
Interest paid (395,713) (529,967)
Net cash provided by operating 578,510 493,957
activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal collections on mortgage loans 5,961 5,423
receivable
Capital expenditures (2,083) --
Other, net (96,552) 139,018
Net cash provided (used) by investing (92,674) 144,441
activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgage loans (109,153) (136,101)
payable
Principal repayment on mortgage loan (1,136,164)
Net proceeds from refinancing -- 114,369
Distributions paid to shareholders (271,600) (232,800)
Net cash used by financing activities (1,516,917) (254,532)
Net increase (decrease) in cash and cash (1,031,081) 383,866
equivalents
Cash and cash equivalents at beginning of 2,086,511 681,277
period
Cash and cash equivalents at end of period 1,055,430 1,065,143
RECONCILIATION OF NET EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net earnings 301,080 247,328
Depreciation 206,242 257,040
Amortization 12,651 11,344
Decrease (increase) in rents and other (99,552) 47,678
receivables
Decrease in prepaid and deferred expenses 2,453 16,727
Increase in taxes held in escrow (61,839) (114,080)
Increase (decrease) in accounts payable
and accrued expenses 225,342 (1,104)
Increase (decrease) in advance rents (7,867) 29,024
Net cash provided by operating activities 578,510 493,957
</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.
NOTE 2: Shareholders' equity, 16,613,283
December 31, 1994
Net earnings 301,080
Distributions to shareholders (271,600)
Shareholders' equity, March 31, 1995 16,642,763
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
We are pleased to present the Trust's 1995 first quarter
report. Net earnings were $301,080 ($.08 per share) for the
three months ended March 31, 1995 compared to $247,328 ($.06
per share) for the same period a year ago. Funds from
operations (earnings from operations plus depreciation) were
$507,322 ($.13 per share) for 1995 compared to $504,368
($.13 per share) for 1994.
The increase in earnings was primarily attributable to an
increase in interest income and decreases in depreciation
and interest expense. Interest income increased $15,000 due
to higher interest rates on funds available for investment.
Depreciation expense declined $51,000 primarily due to the
1994 sale of Midway Business Park, Tucson, Arizona.
Interest expense declined $120,000 due to the prepayment of
mortgage loans on Midway and First Tuesday Mall, Carrollton,
Georgia. Partially offsetting these factors was the loss of
Midway's net operating income which was $142,000 in 1994.
Rents and property expenses before depreciation declined
from 1994 to 1995 due to the sale of Midway. Midway
contributed rental income of $245,000 and incurred property
expenses exclusive of depreciation of $103,000 in 1994.
Rents and property expenses before depreciation for
properties owned in both years were stable from 1994 to
1995. Overall occupancy of the Trust's real estate
portfolio remained strong at 95% as of March 31, 1995.
The Trust previously reported that Publix Supermarkets at
Kingsley Square in Orange Park, Florida had exercised its
option to extend their 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 it is now anticipated that this will not be
incurred until 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 which runs through
March 2010. The Trust is cooperating with Luria's in
securing a new tenant to sublease this space.
The Trust has begun exploring strategic alternatives to
maximize shareholder value. Such alternatives may include
a business combination or sale of the Trust's assets.
We are continuing to pursue various possibilities and
will keep you informed.
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 ($1,055,430 at March 31, 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 Board of Trustees declared a fist quarter distribution
of $.07 per share, payable May 22, 1995 to shareholders of
record May 9, 1995. Distributions to shareholders continue
to be dependent upon earnings, cash flow, financial
condition and other factors reviewed by the Board of
Trustees.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders.
At the Trust's annual meeting of shareholders on May 5,
1995, 82% of the Trust's outstanding shares were
represented, either in person or by proxy. All four
incumbent Trustees were re-elected to the Board of Trustees,
with each receiving at least 98% of the vote for the shares
represented. The vote tabulation for each Trustees was as
follows:
<TABLE>
<S> <C> <C> <C>
Trustee Votes For Votes Withheld
Gary A. Downing 3,118,133 57,454
Patrick E. Falconio 3,124,992 50,595
Edwin L. Ingraham 3,125,122 50,465
Samuel L. Kaplan 3,124,697 50,890
</TABLE>
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: May 10, 1995
