SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 Commission File Number 0-7716
CENTURY REALTY TRUST
(Exact name of Registrant as specified in its charter)
INDIANA 35-1284316
(State or other jurisdiction (I.R.S. Employer
Incorporation or organization) Identification No.)
419 Chamber of Commerce Building 46204
Indianapolis, Indiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (317)632-5467
Indicate by check mark whether this 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 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 __.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Shares of Beneficial Interest, no par value 1,381,351 shares
<TABLE>
<CAPTION>
BALANCE SHEETS
Century Realty Trust
September December
30, 1995 31, 1994
------------ ------------
Unaudited
<S> <C> <C>
Assets
Real estate investments <F1>
Land $2,068,658 $1,670,658
Buildings 32,870,942 26,153,031
Equipment 933,418 735,063
Allowances for depreciation (6,443,878) (5,662,588)
------------ ------------
29,429,140 22,896,164
Net investment in direct financing leases 492,859 519,505
------------ ------------
29,921,999 23,415,669
Cash and cash equivalents 130,963 58,491
Certificates of deposit 590,015 197,190
Accounts and accrued income receivable 266,387 164,985
Undeveloped land 99,675 99,675
Other assets 352,814 244,708
------------ ------------
$31,361,853 $24,180,718
------------ ------------
------------ ------------
Liabilities and shareholders' equity
Liabilities:
Mortgage notes payable <F1> <F2> $19,822,859 $14,606,780
Notes payable - other <F1> 1,145,762 0
Accounts payable and accrued compensation 434,763 217,163
Accrued interest 149,522 48,145
State income and property taxes 1,195,525 803,194
Tenants' security deposits and unearned rent 403,486 346,675
------------ ------------
23,151,917 16,021,957
Shareholders' equity:
Shares of Beneficial Interest, no par authorized
5,000,000 shares, issued 1,458,765 shares,
including 77,414 shares in treasury 5,645,289 5,645,289
Undistributed income other than from
gain on the sale of real estate 1,778,273 1,727,098
Undistributed net realized gain from the
sale of real estate 1,316,078 1,316,078
Cost of treasury shares (529,704) (529,704)
------------ ------------
8,209,936 8,158,761
------------ ------------
$31,361,853 $24,180,718
------------ ------------
------------ ------------
<FN>
FEDERAL INCOME TAXES
The Trust intends to continue as a real estate investment trust
as defined in the Internal Revenue Code and to distribute its
taxable income. Assuming compliance with other requirements of
the Code, income distributed will not be taxable to the Trust.
Accordingly, no provision for federal income taxes is made in
the financial statements.
<F1>
REAL ESTATE INVESTMENT TRANSACTIONS
On March 31, 1995, the Trust purchased the Fox Run Apartments,
a 256-unit garden apartment property in Indianapolis, Indiana.
The purchase price was $7.2 million including prorations,
credits and assumed liabilities of approximately $640,000. The
balance of the purchase price consisted of a new 9.5%, 10-year
first mortgage loan for $5.4 million from a bank, and a one-year
8% note payable to the seller for $600,000 payable, at the
option of the Trust, in its shares of beneficial interest valued
at the then fair market value. Based on current market value
($9.25 per share) approximately 64,900 shares could be issued in
satisfaction of the note. To complete the purchase, the Trust
borrowed approximately $545,000 from a bank which it expects to
repay with proceeds from refinancing other real estate.
At the close of business on March 31, 1994, the Trust purchased
the Eagle Creek Park apartments, a 188-unit apartment property in
Indianapolis, Indiana, as a replacement for the Greenbriar apartments
that it sold in October, 1993. A qualified intermediary held the sale
proceeds until the Trust purchased replacement property. The
purchase price for the Eagle Creek Park apartments was $6.1
million. Besides $259,000 disbursed by the intermediary, the
Trust paid $674,300 cash and issued 90,953 shares of its Shares
of Beneficial Interest worth $773,101 ($8.50 per share). The
cost basis of the 90,953 shares, previously classified as
treasury shares, was $622,345. Century also assumed a mortgage
loan balance of $4,178,800 and other net liabilities of $214,700.
<F2>
MORTGAGE NOTES PAYABLE
Eight of the Trust's properties are encumbered by mortgage
loans that are payable in monthly installments totaling approximately
$171,500, including interest at rates ranging from 8.125% to 9.75% per
annum, and which mature from June 4, 1996 to March 31, 2005. The aggregate
amount of scheduled mortgage loan repayments for the fourth quarter of
1995 is $73,451.
A mortgage loan with a balance of $2 million will
mature on June 4, 1996. That loan provides for the payment of
interest only at the lender's prime rate (currently 8.75%). The
Trust intends to obtain a longer term loan on the mortgaged
property on or before the maturity date in an amount sufficient
to retire the present balance.
</FN>
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Century Realty Trust
Unaudited
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income
Real estate operations:
Rental Income $1,981,489 $1,546,889 $5,517,306 $4,305,253
Income from financing leases 16,427 17,495 49,281 52,485
---------- ---------- ---------- ----------
1,997,916 1,564,384 5,566,587 4,357,738
Less:
Real estate operating expenses 739,337 557,633 2,047,634 1,599,795
Provision for depreciation 276,480 226,605 783,720 641,265
Real estate taxes 220,191 187,767 616,464 533,844
---------- ---------- ---------- ----------
1,236,008 972,005 3,447,818 2,774,904
---------- ---------- ---------- ----------
761,908 592,379 2,118,769 1,582,834
Interest 6,657 4,761 22,104 17,374
Sundry 42,370 21,113 107,097 55,113
---------- ---------- ---------- ----------
810,935 618,253 2,247,970 1,655,321
Expenses
Interest 481,595 319,521 1,290,051 852,617
State income taxes 36,210 28,639 102,205 87,650
General and administrative 93,489 90,428 279,625 272,312
---------- ---------- ---------- ----------
611,294 438,588 1,671,881 1,212,579
---------- ---------- ---------- ----------
Net income $199,641 $179,665 $576,089 $442,742
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per share of
Beneficial Interest $0.14 $0.13 $0.42 $0.33
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number
of shares outstanding 1,381,351 1,381,351 1,381,351 1,333,366
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOW
Century Realty Trust
Unaudited
Nine Months
Ended September 30,
-----------------------
1995 1994
----------- -----------
<S> <C> <C>
Operating Activities
Net income $576,089 $442,742
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 803,383 657,686
Changes in operating assets and liabilities:
Increase in accounts and income
receivable (101,402) (52,569
Increase in prepaid expenses and other assets (148,198) (44,333
Increase in accounts payable and accrued expenses 373,557 191,191
Increase (decrease) in tenants' security deposits
and unearned rents 56,811 15,257
----------- -----------
Net cash provided by operations 1,560,240 1,209,974
Investing Activities
Investment in certificates of deposit (1,381,639) (1,588,819)
Proceeds from matured certificates of deposit 988,814 1,590,985
Acquisition of real estate, net of debt assumed <F1> (5,964,916) (743,788)
Purchase of property improvements and replacements (356,892) (272,745)
Principal payments received under leases 26,646 23,442
----------- -----------
Net cash used in investing activities (6,687,987) (990,925)
Financing Activities
Proceeds from sale of treasury shares 0 8,750
Short-term bank borrowing <F1> 545,762 500,000
Proceeds from long-term mortgage loans <F1> <F2> 5,368,000 0
Principal payments on mortgage notes payable (183,921) (130,041)
Dividends paid to shareholders (529,622) (464,659)
----------- -----------
Net cash provided by (used in) financing activities 5,200,219 (85,950)
----------- -----------
Net increase (decrease) in cash and cash equivalents 72,472 133,099
Balance at beginning of period 58,491 159,101
----------- -----------
Balance at end of period $130,963 $292,200
----------- -----------
----------- -----------
<FN>
FEDERAL INCOME TAXES
The Trust intends to continue as a real estate investment trust
as defined in the Internal Revenue Code and to distribute its
taxable income. Assuming compliance with other requirements of
the Code, income distributed will not be taxable to the Trust.
Accordingly, no provision for federal income taxes is made in
the financial statements.
<F1>
REAL ESTATE INVESTMENT TRANSACTIONS
On March 31, 1995, the Trust purchased the Fox Run Apartments,
a 256-unit garden apartment property in Indianapolis, Indiana.
The purchase price was $7.2 million including prorations,
credits and assumed liabilities of approximately $640,000. The
balance of the purchase price consisted of a new 9.5%, 10-year
first mortgage loan for $5.4 million from a bank, and a one-year
8% note payable to the seller for $600,000 payable, at the
option of the Trust, in its shares of beneficial interest valued
at the then fair market value. Based on current market value
($9.25 per share) approximately 64,900 shares could be issued in
satisfaction of the note. To complete the purchase, the Trust
borrowed approximately $545,000 from a bank which it expects to
repay with proceeds from refinancing other real estate.
At the close of business on March 31, 1994, the Trust purchased
the Eagle Creek Park apartments, a 188-unit apartment property in
Indianapolis, Indiana, as a replacement for the Greenbriar apartments
that it sold in October, 1993. A qualified intermediary held the sale
proceeds until the Trust purchased replacement property. The
purchase price for the Eagle Creek Park apartments was $6.1
million. Besides $259,000 disbursed by the intermediary, the
Trust paid $674,300 cash and issued 90,953 shares of its Shares
of Beneficial Interest worth $773,101 ($8.50 per share). The
cost basis of the 90,953 shares, previously classified as
treasury shares, was $622,345. Century also assumed a mortgage
loan balance of $4,178,800 and other net liabilities of $214,700.
<F2>
MORTGAGE NOTES PAYABLE
Eight of the Trust's properties are encumbered by mortgage
loans that are payable in monthly installments totaling approximately
$171,500, including interest at rates ranging from 8.125% to 9.75% per
annum, and which mature from June 4, 1996 to March 31, 2005. The aggregate
amount of scheduled mortgage loan repayments for the fourth quarter of
1995 is $73,451.
A mortgage loan with a balance of $2 million will
mature on June 4, 1996. That loan provides for the payment of
interest only at the lender's prime rate (currently 8.75%). The
Trust intends to obtain a longer term loan on the mortgaged
property on or before the maturity date in an amount sufficient
to retire the present balance.
</FN>
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INVESTMENT ACTIVITIES
The changes in the financial condition of the Trust, and the
results of its operations for the quarter and nine months ended
September 30, 1995 and 1994 resulted primarily from investment
property transactions during 1994 and 1995. Within a twelve
month period through March, 1995 the Trust purchased two
apartment properties which resulted in a 49% increase in the
number of apartments owned.
On March 31, 1995, the Trust purchased the Fox Run apartments,
a 256-unit property in Indianapolis, Indiana for $7.2 million
($28,125 / unit). With the addition of Fox Run, the Trust
further increased the number of apartments it owns by 23% to
1,358 units. The addition of Fox Run raised the number of
apartment properties the Trust owns to nine, all of which are
located in Indiana.
On March 31, 1994, the Trust acquired the Eagle Creek Park
apartments, a 188-unit property in Indianapolis, Indiana for
$6.1 million ($32,400 / unit). With that acquisition, the Trust
increased its number of apartment units by 20% to 1,102 units.
Eagle Creek Park apartments was the second of two apartment
properties acquired as like-kind replacement property for an
apartment property that the Trust sold in the fourth quarter of
1993.
FINANCING ACTIVITIES
The purchase of the Fox Run apartments in 1995 was financed by
a combination of long-term and short-term loans. Approximately
75% of the purchase price was paid with proceeds of a new 9.5%,
10-year first mortgage loan from a bank. Short-term financing
included $600,000 of 8% notes payable to the seller due March
31, 1996. The Trust may, at its option, repay all or a portion
of the principal balance of those notes by issuing Shares of
Beneficial Interest of equal market value on or before maturity.
To complete the purchase, the Trust obtained a short-term
unsecured bank loan which it expects to repay with proceeds from
refinancing one or more of its other properties.
In connection with the acquisition of the Eagle Creek Park
apartments in 1994, the Trust assumed an existing mortgage loan
balance of $4.2 million, and issued from treasury, 90,953 shares
of its Shares of Beneficial Interest worth $773,101 ($8.50 /
share).
RESULTS OF OPERATIONS
For the first nine months of 1995, the Trust reported
significant increases over the comparable 1994 period in both
rental income and income from real estate operations. In spite
of a $142,455 increase in the provision for depreciation,
reported net income increased by $133,347. The increase in
net income was due primarily to improved results of operations
from the core properties (properties owned throughout the first
three quarters of 1995 and 1994). The two apartment properties
acquired since the beginning of 1994 and the related financing
activities, accounted for a decrease in net income of $60,810,
after an increase in the provision for depreciation of $142,230.
For the third quarter, net income of the Trust, as a whole,
increased by $20,000, or 11%, over the comparable quarter of
1994 in spite of a $39,800 decrease attributable to the two
recently acquired properties. Substantially all of the $50,000
increase in provision for depreciation related to the recently
acquired properties.
The seven apartment properties (914 units) that the Trust owned
throughout the first three quarters of 1995 and 1994 reported
average nine-month occupancy rates of 96.5% and 95% for the two
periods, respectively. Average rental rates increased 3.8% for
those properties over the prior year period. The combined
effect of the higher occupancy rates and higher rental rates
produced a 5.1% increase in gross rental revenue from the core
group of apartments. Operating expenses, excluding interest and
provision for depreciation, amounted to 46.6% of gross possible
income for the first nine months of 1995, down from 47.9% for
the prior period, and represented a one percent increase in
actual operating expenses.
Occupancy rates for the same apartment properties during the
third quarter of 1995 averaged 96.7%, compared with 95% for the
same quarter a year ago while rental rates increased by an
average of 3.8%, combining to produce a 5.7% increase in gross
revenue. Operating expenses increased by 4.0% from the third
quarter of 1994, to 49.3% of gross possible income. Increases
in maintenance related expenses accounted for most of the
increase.
For the two recently acquired apartment properties, occupancy
rates averaged 96.4% and 95.9% for the third quarter and nine
months of 1995, respectively. Operating expenses, as a percent
of gross possible income, for the two properties amounted to
49.8% and 49.0% for the third quarter and nine months of 1995,
respectively.
Rental properties other than apartments, which accounted for
less than 4.2% percent of total rental income in the first three
quarters of 1995, produced a 13.4% increase in net operating
income compared with the prior year. Gross rental income was up
nearly $18,000, or 8.7%, while operating expenses decreased by
almost $1,300, or 2%. For the third quarter, rental income
increased 4.5% and operating expenses decreased 33.8%, from the
year earlier period, resulting in a $14,000, or 34.9% increase
in net operating income. Leasing fees and expenses related to
tenant turnover during the third quarter of 1994 at one of the
properties, for which no comparable expenses were incurred in
1995, accounted for most of the decrease in expenses.
Due to investing and financing activities during 1994 and 1995,
interest expense was approximately $437,000 higher for the first
nine months of 1995 than for the prior year period. For the
first nine months of 1995 interest related to debt incurred and
assumed by the Trust during 1994 and 1995 accounted for $412,000 of
the increase, while interest related to loans outstanding since the
beginning of 1994 increased by $25,500 from the 1994 period. The
$25,500 increase resulted from rate increases applicable to one
variable-rate mortgage loan which provides for monthly interest
payments at the lender's prime rate.
Investing and financing activities during 1994 and 1995 accounted
for $158,000 of the increase in interest expense between the third
quarters of 1994 and 1995. Interest expense applicable to loans
outstanding throughout both third quarter periods increased $4,000,
due to the impact of higher prevailing prime interest rates during
the 1995 period.
State income taxes for the nine months ended September 30, 1994
included $9,300 in Indiana gross income tax applicable to the
market value of shares of beneficial interest reissued in
connection with the acquisition of the Eagle Creek Park
apartments in 1994. The increase for the third quarter of 1995
and the balance of the increase for the nine months over the
prior year are proportionate to the increases in gross income
for the comparable periods.
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 1995, the Trust held approximately $720,000 in
cash and certificates of deposit. It invests funds in excess of
immediate cash needs in U.S. government securities and
FDIC-insured certificates of deposit. Other than the
requirement for dividends, the Trust has no obligations, nor has
it made any commitments, which will require expenditures in
excess of funds anticipated to be provided by operations during
the remainder of 1995. No transactions or events, other than
the apartment property purchased March 31, 1995, have occurred
to indicate that funds provided by operations during the balance
of 1995 will differ disproportionately from the first half of
the year.
Notes payable, other than mortgage notes, include a $545,000
unsecured note payable to a bank, and $600,000 of notes payable
to the seller of the Fox Run apartments, all of which are due
March 31, 1996. Management expects to repay the bank loan with
proceeds from new mortgage borrowing on other properties owned
by the Trust, and to issue shares of beneficial interest worth
$600,000 to retire the notes payable to the seller of Fox Run
apartments on or before the specified maturity date.
The Trust intends to continue as a real estate investment
trust, and to distribute all of its earnings. Accordingly, no
provision has been made for federal income taxes. The Trust
makes cash distributions to its shareholders in June and
December each year. In June, 1995, the Trust paid $.38 per
share, and in December, 1994, $.39 per share. On November 2,
1995, the Trustees declared a cash distribution of $.40 per
share payable December 18, 1995 to shareholders of record
November 24, 1995. With 1,381,351 shares outstanding, the
December distribution will require the disbursement of $552,540.
INFLATION
Management believes that the direct effects of inflation on the
Trust's operations have been insignificant.
PART II
Item 6(b). No events occurred during the three months ended
September 30, 1995, which would have necessitated the filing of a report on
Form 8K.
MANAGEMENT REPRESENTATIONS
The information furnished in this report, while not audited, includes
all adjustments, in the opinion of management, necessary for a fair
representation of the financial position of Century Realty Trust at September
30, 1995, and December 31, 1994, and the results of its operations and its
cash flow for the three months and nine months ended September 30, 1995, and
September 30, 1994, in accordance with generally accepted accounting
principles consistently applied. The interim results reported are not
necessarily indicative of expected results for the full year, and should be
considered in conjunction with the audited financial statements contained in
the Trust's 1994 annual report.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CENTURY REALTY TRUST
Date: 11/9/95 By: JOHN I. BRADSHAW, JR
Executive Vice President
and Secretary
Date: 11/9/95 By: DAVID F. WHITE
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEETS, STATEMENTS OF INCOME, AND STATEMENTS OF CASH FLOW AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 131
<SECURITIES> 590
<RECEIVABLES> 266
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 36,366
<DEPRECIATION> 6,444
<TOTAL-ASSETS> 31,362
<CURRENT-LIABILITIES> 0
<BONDS> 19,823
<COMMON> 5,645
0
0
<OTHER-SE> 2,565
<TOTAL-LIABILITY-AND-EQUITY> 31,362
<SALES> 5,517
<TOTAL-REVENUES> 5,696
<CGS> 0
<TOTAL-COSTS> 3,448
<OTHER-EXPENSES> 382
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,290
<INCOME-PRETAX> 576
<INCOME-TAX> 0
<INCOME-CONTINUING> 576
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 576
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
