SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) February 14, 1997
CALIFORNIA REAL ESTATE INVESTMENT TRUST
(Exact Name of Registrant as Specified in its Charter)
California 1-8063 94-6181186
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
131 Steuart Street, Suite 200
San Francisco, California 94105
(Address of Principal Executive Offices) (Zip Code)
(415) 905-0288
(Registrant's Telephone Number, Including Area Code)
605267.1
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
On February 14, 1997, the Registrant sold its Fulton Square Shopping
Center commercial property located in Sacramento, California. The sale price for
the property was $1,362,000. The Registrant received as consideration for the
sale a $1,089,600 mortgage note on the property and $144,152 of net cash
proceeds after closing adjustments.
On March 3, 1997, the Registrant sold its 60% interest in the Totem
Square commercial property located in Kirkland, Washington. The sale price for
the property was $7,495,474. The Registrant received as consideration for the
sale net cash proceeds of $3,035,499 after payment of related mortgage debt and
closing adjustments.
Pro forma financial information of the Registrant reflecting the
foregoing transactions is attached hereto as indicated in Item 7.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
1. Pro forma financial information of the Registrant as of and for
the year ended December 31, 1996.
605267.1
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SIGNATURES
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 hereunto duly authorized.
CALIFORNIA REAL ESTATE INVESTMENT TRUST
(Registrant)
Date: June 10, 1997 By: /s/ Frank A. Morrow
-------------------------
Name: Frank A. Morrow
Title: Chairman of the Board
605267.1
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Pro Forma Condensed Financial Information of the Registrant
The following pro forma condensed financial statements assume the sale of the
Registrant's two remaining rental properties, Fulton Square Shopping Center and
Totem Square and related transactions (the "Sale"). The pro forma condensed
financial statements are based on and should be read in conjunction with the
historical consolidated financial statements of the Registrant for the year
ended December 31, 1996.
The following pro forma condensed balance sheet as of December 31, 1996 assumes
the Sale occurred on December 31, 1996. The following pro forma condensed
statement of income for the year ended December 31, 1996 assumes the Sale
occurred on January 1, 1996. The following pro forma condensed financial
statements are presented for illustrative purposes only and are not necessarily
indicative of the operating results or financial position that would have
occurred if the Sale had been consummated on the dates indicated, nor is it
indicative of future operating results or financial position.
605267.1
<PAGE>
<TABLE>
Pro Forma Condensed Balance Sheet
December 31, 1996
(000s)
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Notes Combined
-------------- ------------ -------------- ----------------
<S> <C> <C> <C> <C>
Assets
Investments, Generally Held for Sale:
Rental properties $ 8,585 $ (8,585) (1) $ --
Notes receivable, net 1,576 1,090 (1) 2,666
Marketable securities available for sale 14,115 -- 14,115
-------------- ------------ ----------------
24,276 (7,495) 16,781
Cash 4,698 2,937 (1) 7,635
Receivables, net 707 -- 707
Other assets 355 (270) (1) 85
-------------- ------------- ---------------
$ 30,036 $ (4,828) $ 25,208
Total Assets -------------- ------------- ---------------
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 5,169 $ (4,282) (1) $ 887
Accounts payable and accrued expenses 326 (55) (1) 271
70 (70) (1) --
Other liabilities -------------- ---------------- --------------
Total Liabilities 5,565 (4,407) 1,158
Shareholders' equity:
Shares of beneficial interest 9,137 9,137
Additional paid-in capital 55,118 55,118
Unrealized holding loss on marketable
securities (22) (22)
Accumulated deficit (39,762) (421) (1) (40,183)
-------------- --------------- -------------
Total Shareholders' Equity 24,471 (421) 24,050
-------------- --------------- -------------
Total Liabilities and Shareholders' Equity $ 30,036 $ (4,828) $ 25,208
-------------- --------------- -------------
</TABLE>
The accompanying Notes are an integral part of these Pro Forma Condensed
Financial Statements.
605267.1
<PAGE>
Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Notes Combined
-------------- ------------ -------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 2,019 $ (1,806) 1(a) $ 213
Interest and investment income 1,136 -- 1,136
------------------ ----------- ----------------
Total Revenues 3,155 (1,806) 1,349
Expenses
Operating expenses 685 (626) 1(a) 59
Property management 96 (89) 1(a) 7
Depreciation and amortization 64 -- 64
Interest 547 (454) 1(b) 93
General and administrative 1,503 -- 1,503
-------------- ----------- --------------
2,895 (1,169) 1,726
Income before gain on sale of
investments and valuation losses 260 (637) (377)
Net gain (loss) on sale of investments 1,069 -- 1,069
-------------- ------------ --------------
Income (loss) before valuation losses 1,329 (637) 692
Valuation losses 1,743 (1,743) 1(c) ---
-------------- ------------ ---------------
Net Income (Loss) $ (414) $ 1,106 $ 692
============== ========== =============
Net Income (loss) per Share of beneficial
interest
Primary $ (0.05)$ 0.12 $ 0.07
Weighted average common shares
outstanding
Primary 9,137 9,137
</TABLE>
The accompanying Notes are an integral part of these Pro Forma Condensed
Financial Statements.
605267.1
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Notes to Pro Forma Condensed
Financial Information
($'s in 000's)
Balance Sheet
1. Sale of Rental Properties
Reflects sale of the Registrant's remaining commercial rental properties,
Fulton Square Shopping Center and Totem Square. In connection with the sale of
the Fulton Square Shopping Center, the Registrant carried back a note in the
amount of approximately $1,090. The proceeds from sale were used to repay the
mortgage secured by the Totem Square property and pay sale related expenses,
with the balance added to cash. The amount added to cash of $2,937 in the Pro
Forma Condensed Balance Sheet differs from the $3,180 of cash actually received
at the closing of the sale of the two properties as a result of closing
adjustments and the assumed payment of accounts payable and other liabilities
related to the two properties sold.
The sale and related transactions are reflected in the Pro Forma Condensed
Balance Sheet as follows:
Decrease in rental properties $ (8,585)
Increase in notes receivable $ 1,090
Increase in cash $ 2,937
Decrease in other assets $ (270)(a)
Decrease in long-term notes payable $ (4,282)
Decrease in accounts payable and accrued expenses $ (55)
Decrease in other liabilities $ (70)
Net gain (loss) on sale of investments $ (421)
(a) Decrease in other assets is primarily attributable to deferred
financing and leasing costs related to the two properties sold.
<PAGE>
Statement of Income
1. Sale of Rental Properties
(a) Reflects the impact on operating rental income and expenses from
the Sale, as follows:
Decrease in rental income $ (1,806)
Decrease in operating expenses $ (626)
Decrease in property management $(89)
(b) Reflects impact on interest expense from repayment of long-term
notes payable, as follows:
Decrease in interest expense $ (454)
(c) Reflects adjustment to valuation loss as a result of sale of
investments as of the beginning of the year, as follows:
Decrease in valuation losses $ (1,743)
2. Loss on Sale of Rental Properties
A loss of $1,812 on the pro forma sale of the two rental properties on
January 1, 1996 has not been included in the accompanying Pro Forma Condensed
Income Statement.
605267.1
