SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20259
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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 of (I.R.S. Employer
incorporation or organization) Identification No.)
419 Chamber of Commerce Building
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 632-5467
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Shares of Beneficial Interest
(Title of Class)
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 aggregate market value of the voting stock held by nonaffiliates of the
Registrant was $11,038,193 based upon the average bid and asked prices on
February 27, 1996.
Shares of Beneficial Interest, no par value--1,453,939 shares outstanding as
of February 27, 1996.
Documents incorporated by reference: Portions of the annual shareholders
report for the year ended December 31, 1995 are incorporated by reference
into Parts I and II as specified therein. Portions of the proxy statement
for the annual meeting of shareholders to be held May 1, 1996 are incorporated
by reference into Part III of this report as specified therein.
PART I
ITEM 1. BUSINESS
The principal business of Century Realty Trust, an Indiana business trust, is
the ownership of income-producing real properties, which consist of nine
apartment complexes, two restaurant properties, two commercial properties, and
various parcels of undeveloped land which are situated adjacent to rental
properties owned by the Trust. Other than long-term leases on the restaurant
properties, the Trust's rental income is derived from short-term leases of
units in its various buildings. The residential rental properties are managed
under agreements with independent property management firms. The Trust
reimburses the property management firms for compensation of approximately 35
persons employed at the apartment properties.
The Trust has elected to be treated as a real estate investment trust under
the Internal Revenue Code and to distribute substantially all of its real
estate investment trust taxable income. A qualified real estate investment
trust is an investment vehicle which permits individuals, by purchasing
shares, to invest in real estate equities and/or mortgage loans, and share in
the profits resulting therefrom without having those profits subjected to
federal income taxes at the trust level.
ITEM 2. PROPERTIES
The following investment properties were owned by the registrant at
December 31, 1995:
<TABLE>
<CAPTION>
No. of 1995 Net
APARTMENTS Location Units Occupancy Investment
- ------------------ ------------------ ------- --------- -----------
<S> <C> <C> <C> <C>
Park Plaza Indianapolis, IN 176 96% $ 751,620
Fontenelle Kokomo, IN 176 96% 1,402,309
Park Forest Marion, IN 64 98% 554,459
Chester Heights Richmond, IN 110 97% 472,896
Driftwood Park Indianapolis, IN 48 92% 1,112,491
Regency Royale Mishawaka, IN 132 94% 3,599,828
Creek Bay Indianapolis, IN 208 97% 7,259,176
Eagle Creek Park Indianapolis, IN 188 96% 6,093,923
Fox Run Indianapolis, IN 256 95% 6,873,056
------- -----------
Total apartments 1,358 28,119,758
<CAPTION>
Square 1995 Net
COMMERCIAL Location Feet Occupancy Investment
- -------------------- ----------------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Office/Warehouse
401 Industrial Dr. Carmel, IN 38,000 100% 316,119
Office building
1810 E. 62nd St. Indianapolis, IN 17,000 97% 415,996
------- ------------
Total Commercial 55,000 731,715
<CAPTION>
Square Lease Net
RESTAURANTS Location Feet Expires Investment
- -------------------- ----------------- ------- --------- ------------
<S> <C> <C> <C> <C>
Fortune House Indianapolis, IN 5,000 2004 494,064
Miami Subs Orlando, FL 3,500 1998 239,885
------- ------------
Total Restaurants 8,500 733,949
------------
ALL INVESTMENT PROPERTIES $29,585,422
------------
------------
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings against the trust, and no such
proceedings are known to be contemplated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Trust's shares of beneficial interest are traded over-the-counter. The
approximate number of record holders of the Trust's shares at December 31,
1995, was 3,700. High and low published bid prices and dividends for the last
two years were as follows:
<TABLE>
<CAPTION>
Bid Price
-------------- Dividends
High Low Declared
------ ------ ----------
<S> <C> <C> <C>
1995 Quarter Ended:
March 31 $8.87 $8.50
June 30 8.87 8.63 $0.38
September 30 9.00 8.63
December 31 9.00 8.63 $0.40
1994 Quarter Ended:
March 31 8.25 7.75
June 30 8.87 8.25 $0.36
September 30 8.87 8.75
December 31 8.87 8.75 $0.39
</TABLE>
The Trust expects to continue to qualify as a real estate investment trust and
to distribute substantially all of its otherwise taxable income to its
shareholders. It is the practice of the Trust to make cash distributions in
June and December each year.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Rental and other
operating income $7,761,464 $6,043,692 $3,921,281 $3,461,259 $3,351,885
Gains on sale of
property -- -- 1,316,078 -- --
Net income 832,379 702,978 2,086,384 852,672 860,896
Total assets 30,762,083 24,180,718 18,877,126 7,827,074 8,008,720
Mortgage and other
notes payable 20,448,825 14,606,780 10,014,167 779,986 925,605
Per share of
beneficial interest:
Net income 0.60 0.52 1.66 0.68 0.69
Cash dividends
declared 0.78 0.75 0.77 0.75 0.72
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS -- 1995
The Trust reported increases of approximately 30% in both income and expenses
related to its real estate operations in 1995. In March, 1994, the Trust
purchased a 188-unit apartment property and in March, 1995, purchased a
256-unit apartment property. Together, those two acquisitions increased by
48%, the number of apartment units in the Trust's investment portfolio since
the beginning of 1994. Each of those purchases is described in Note 3 to the
financial statements. As a result of those investments, apartment rental
income, as a percentage of total income from operations increased to 96% in
1995 from 95% in 1994. For all apartments owned, economic occupancy in 1995
was 96.5%, up from 95.4% in 1994.
The two apartment properties acquired since the beginning of 1994 represent
32.6% of the 1,358 units owned at the end of 1995. Those two properties
accounted fro 86% of the $1.6 million increase in income from real estate
operations in 1995. The same properties were responsible for most of the
increases in rental operating expenses (94%), depreciation (99%), and real
estate taxes (137%). For 1995, the recently acquired apartments were 95.3%
occupied and had an average expense ratio, excluding depreciation, of 49.2%
of gross possible income. For 1994, the 528 apartment units then considered
to have been recently acquired experienced an occupancy rate of 96.4%, and
accounted for 94% of the increase in income from real estate operations from
the previous year.
The Trust owned 914 apartment units in seven complexes throughout 1994 and
1995. Those properties provided 70% of the Trust's total income from
operations in 1995, compared with 86% in 1994. Occupancy rates averaged
97.1% for 1995, up from 95.3% in 1994. Stronger occupancy in 1995, together
with higher rental rates, which were up an average of 3.2%, combined to
produce a $232,000 increase in gross income from those properties. Operating
expenses for the same properties, excluding real estate taxes and depreciation,
increased by approximately $40,000, or 2.2%. Operating expenses, excluding
depreciation, consumed 45.9% of gross possible income in 1995, down from 46.6%
in 1994.
Nonresidential properties owned by the Trust, which accounted for 4% of total
income from operations in 1995, and 5% in 1994, provided 1.1% of the increase
in total rental income. The increased rental income from commercial properties
resulted primarily from higher occupancy rates in 1995.
Approximately 20% of interest income in 1995, and 40% in 1994, was earned at
money market rates on funds held in an escrow account earmarked for investment
in the apartment property (Eagle Creek Park) acquired in 1994. The balance of
interest income was derived from funds invested in short-term certificates of
deposit and U.S. government securities. Interest earned on those investments
in 1995 represented an average yield of 5.6% on an average invested balance of
$423,000. In 1994, the Trust earned 3.6% on an average invested balance of
$403,000. At the end of 1995, funds held in certificates of deposit that
mature in 1996, were invested to yield 5.4%.
Interest expense applicable to loans related to investment activities increased
by $564,000 in 1995, while interest expense related to seasoned amortizing
mortgage loans decreased by $12,000. Interest expense related to a $2 million
variable rate mortgage loan increased by $37,800 in 1995, reflecting an
increase in the average prime rate from 7.05% in 1994 to 8.93% in 1995. At
December 31, 1995, the prime rate was 8.5%. Included in the interest expense
applicable to investment activities in 1995, was $91,000 applicable to
short-term loans to facilitate the acquisition of properties in 1994 and 1995.
The balance of the investment activities interest expense was applicable to
long-term fixed rate mortgage loans on the properties acquired. For 1995,
mortgage interest expense averaged 9.10% on average outstanding balances of
$18.6 million. For 1994, the overall effective interest rate was 8.77% on
average outstanding balances of $13.2 million.
At December 31, 1995, approximately 90% of the Trust's mortgage notes payable
provide for fixed interest rates. Using discounted cash flow analysis based
on the Trust's current incremental borrowing rates, the aggregate fair value
of those notes at December 31, 1995, was approximately 6% higher than the
carrying amount (See Note 7 to the financial statements).
RESULTS OF OPERATIONS -- 1994
In 1994, the Trust reported significant increases in income and expenses
related to its real estate operations. From June, 1993 through March, 1994,
the Trust acquired three apartment properties, re-financed two of its existing
properties, and sold an apartment property. Each of those transactions is
described in Note 3 to the financial statements. Through those transactions
the Trust increased by 57% the number of apartment units in its real estate
investment portfolio, which increased apartment rental income, as a percentage
of total income from operations to 95% in 1994 from 92% in 1993. For all
apartments owned, economic occupancy in 1994 was 95.4%, up from 94.9% in 1993.
At the end of 1994, the Trust owned 528 apartment units in three complexes
that were acquired since the beginning of 1993. Those properties, which
comprised 48% of the total number of units owned at the end of 1994, accounted
for 49% of the Trust's income from operations in 1994. Net of the offsetting
impact of the apartment property (134 units) sold in 1993, the properties
acquired accounted for 94% of the $2.1 million increase in rental income in
1994. The same properties were responsible for most of the increases in rental
operating expenses (94%), depreciation (97%) and real estate taxes (92%). For
1994, the acquired apartments were 96.4% occupied and had an average expense
ratio, excluding depreciation, of 44.8%. For 1993, the 340 units then
considered to have been recently acquired experienced an occupancy rate of
98.7%, but accounted for only 12% of total rental income.
The Trust owned 574 apartment units in five complexes throughout 1993 and
1994. Those properties provided 47% of the Trust's income from operations
in 1994, compared with 69% in 1993. Stronger occupancy in 1994, together
with higher rental rates, which were up an average of 4%, combined to produce
a $120,000 increase in gross income from those properties. Operating expenses
for the same properties, including real estate taxes, increased by $64,000,
or 4.4%, over the 1993 levels. Operating expenses, excluding depreciation,
consumed 50.3% of gross possible income in 1994, up slightly from 50.1% in
1993.
Nonresidential properties, which accounted for 5% of total income from
operations in 1994 and 7% in 1993, provided less than 1% of the increase in
total rental income. The increased rental income from those properties
resulted primarily from higher occupancy in 1994.
Forty percent of interest income in 1994 was earned at money market rates on
funds in an escrow account earmarked for investment in the apartment property
acquired in 1994. The balance was derived from funds invested in short-term
certificates of deposit and U.S. government securities. Interest earned on
those investments in 1994 represented an average yield of 3.5% on an average
invested balance of $403,000. In 1993, the Trust earned 3% on an average
invested balance of $609,000.
Interest expense applicable to loans related to investment activities
increased by $926,000 in 1994, while interest related to seasoned amortizing
mortgage loans decreased by $7,000. In addition to interest on mortgage
loans, the Trust incurred $21,000 of interest expense on $500,000 that it
borrowed from a bank for six months in 1994 to facilitate the acquisition of
an apartment property. For 1994, mortgage interest expense averaged 8.77% on
average outstanding loan balances of $13.2 million. For 1993, the overall
effective interest rate was 7.99% on average outstanding balances of $3.2
million.
LIQUIDITY AND SOURCES OF CAPITAL
During the first half of 1996 two significant loans will mature. The $700,000
short-term bank loan which the Trust obtained to facilitate the purchase of
an apartment property in 1995, will mature in March, and a $2 million
variable-rate mortgage loan obtained on an apartment property purchased in
1993 will mature in June. The Trust is currently negotiating long-term
mortgage loans to refinance the balances coming due on both of those loans.
Management believes that the interest rates on new loans to be obtained will
not differ significantly from the rates being accrued on the existing loans.
Other than the two loans scheduled to mature in 1996, the Trust has no
obligations, nor has it made any commitments, which would require expenditures
in excess of funds expected to be provided by operations during 1996.
Management is not aware of any significant transactions or events which would
require material expenditures in 1996. At December 31, 1995, the Trust had
$484,000 in cash and securities which management believes to be sufficient to
meet anticipated working capital requirements.
Management expects to continue to operate the Trust as a real estate
investment trust, and to distribute to shareholders all of its otherwise
taxable income. At December 31, 1995, the Trust had no undistributed taxable
income or earnings and profits. Distributions during 1995, which totaled
$1,106,000 included all taxable income and earnings and profits for 1995 and
previously undistributed earnings and profits for 1994 ($12,000), plus $76,000
designated as return of capital. During 1994, the Trust distributed
$1,003,000, all of which was taxable to recipients as ordinary dividends.
Due to differences in depreciation rates and carrying values of some
properties, reported income before realized gain (in 1993) on disposal of real
estate for 1995 was 16% lower; for 1994, 14% lower; and, for 1993, 12% lower
than income for income tax purposes.
IMPACT OF INFLATION
Inflation has not had a significant impact on the Trust during 1995, 1994 and
1993.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, which are included on pages 7 through 12 of the
annual shareholders report for the year ended December 31, 1995, are included
as exhibits under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No change of accountants or reported disagreements have occurred which are to
be disclosed hereunder.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
(a) Identification of Trustees:
Period During
Which He Has Shares of the
Served As A Trust Beneficially
Principal Occupation Trustee Owned as of
Name and Address Age For Past Five Years (term expires) March 25, 1995
________________ ___ ____________________ ______________ ______________
<S> <C> <C> <C> <C> <C>
John I. Bradshaw, Jr. 64 Exec. Vice President 1982 to date 91,294 (6.28%)
Indianapolis, IN Century Realty Trust (1997)
Other Directorships:
None
John A. Wallace 72 Real estate investor 1973 to date 15,000 (1.03%)
Indianapolis, IN Self employed (1996)
Other Directorships:
None
Francis M. Hapak 70 Real Estate Investor 1987 to date 47,430 (3.26%)
Indianapolis, IN Self employed (1996)
Other Directorships:
None
King R. Traub 71 President 1973 to date 14,662 (1.01%)
Indianapolis, IN Traub and Co., Inc. (1998)
Securities Brokerage
Other Directorships:
None
John W. Adams 47 Vice President Nominee 1,000 (0.07%)
Indianapolis, IN Browning Investments,
Inc.
Real Estate Developer
Other Directorships:
Brightpoint, Inc.
<FN>
John I. Bradshaw, Jr. is sole owner of 38,935 shares and claims beneficial
ownership of 52,359 shares owned by trusts for his children and his sister.
Francis M. Hapak is sole owner of 23,805 shares and claims beneficial
ownership of 23,625 shares owned by Charlotte H. Hapak, his wife.
King R. Traub is sole owner of 10,579 shares and claims beneficial ownership
of 4,083 shares owned by Jane C. Traub, his wife.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(b) Identification of officers:
Name Age Office(s) Held
- -------------------------- --- ---------------------------------------
<S> <C> <C>
King R. Traub 71 President (since 1973) and Trustee
John I. Bradshaw, Jr. 64 Executive Vice President (since 1973),
Secretary (since 1979) and Trustee
John A. Wallace 72 Treasurer (since 1979) and Trustee
</TABLE>
The Trust has no executive officers other than those individuals listed.
ITEM 11. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
(b) Summary Compensation Table:
Annual Compensation
-------------------------------- Long-Term
Name and Other Compensation
Principal Compen- Awards
Position Year Salary($) Bonus($) sation($) Options(#)
- ---------------------- ---- --------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John I. Bradshaw, Jr. 1995 99,000 --- 1,860*<F1> ---
Exec. Vice Pres. 1994 99,000 --- 1,494*<F1> 5,000
Chief Exec. Off. 1993 99,000 --- --- ---
<FN>
<F1>
*Compensation equivalent of club dues paid on behalf of individual.
</FN>
</TABLE>
(c) Option grants in the last fiscal year: None
(d) Option exercises in the last fiscal year: None
<TABLE>
<CAPTION>
Unexercised options and fiscal year end option value:
Value of
Unexercised
Unexercised In-The-Money
Options at Fiscal Options at Fiscal
Year End (#) Year End**<F1>
Name (All Exercisable) (All Exercisable)
- ---------------------------- ----------------- -----------------
<S> <C> <C>
John I. Bradshaw, Jr. 5,000 $625
Francis M. Hapak 5,000 625
Milton Maidenberg 5,000 625
King R. Traub 5,000 625
John A. Wallace 4,000 500
<FN>
<F1>
** Values based on $8.875 per share, the average of the over-the-counter bid
and asked prices on December 31, 1995.
</FN>
</TABLE>
All options expire 3/21/97 and are exercisable at any time until the
expiration date. Upon exercise, shares in treasury, to the extent available,
will be issued.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
(a) Security ownership of certain beneficial owners
Name and address of Amount and nature Percent
Title of Class beneficial owner of beneficial ownership of class
- ------------------- ---------------------- ----------------------- --------
<S> <C> <C> <C>
Shares of John I Bradshaw, Jr. 92,094 6.3%
Beneficial Interest 320 N. Meridian Street
Indianapolis, IN
<FN>
John I. Bradshaw, Jr. is sole owner of 39,735 shares and claims beneficial
ownership of 52,359 shares owned by trusts for his children and his sister.
</FN>
</TABLE>
(b) Security ownership of management
The response to this portion of Item 12, is included in Item 10.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no relationships or transactions, as defined under this item, nor
are any contemplated, to be disclosed hereunder.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the last
quarter of the period covered by this report.
(c) Exhibits
The response to this portion of Item 14 is submitted as an attachment to
this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CENTURY REALTY TRUST
Date: 2/28/96 By: S/ JOHN I. BRADSHAW, JR.
Executive Vice President
and Trustee
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
S/ DAVID F. WHITE, Controller 2/28/96 ___________________________________
Milton Maidenberg, Trustee Date
S/ KING R. TRAUB, Trustee 2/28/96 S/FRANCIS M. HAPAK, Trustee 2/28/96
_____________________________________
John A. Wallace, Trustee Date
ITEM 14(a)(1) AND (2). LIST OF FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES
The following financial statements of Century Realty Trust are included in the
annual report of the Registrant to its shareholders for the year ended
December 31, 1995:
Balance sheets--December 31, 1995 and 1994
Statements of income and undistributed earnings--Years ended December
31, 1995, 1994 and 1993
Statements of cash flows--Years ended December 31, 1995, 1994 and 1993
Notes to financial statements
The following financial statement schedule of Century Realty Trust is included
in Item 14(d):
Schedule III--Real estate and accumulated depreciation
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
REPORT OF INDEPENDENT AUDITORS
Board of Trustees
Century Realty Trust
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Century Realty Trust of our report dated January 19, 1996, included in the
1995 Annual Report to Shareholders of Century Realty Trust.
Our audits also included the financial statement schedule listed in Item
14(a). This schedules are the responsibility of the Trust's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
the financial statement schedules, referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
January 19, 1996 ERNST & YOUNG LLP
Indianapolis, IN
<TABLE>
<CAPTION>
Century Realty Trust
Balance Sheets
December 31
1995 1994
------------ ------------
<S> <C> <C>
Assets
Real estate investments:
Land $2,068,658 $1,670,658
Buildings 32,778,431 26,153,031
Equipment 765,401 735,063
Allowances for depreciation (6,511,045) (5,662,588)
------------ ------------
29,101,445 22,896,164
Net investment in direct financing leases 483,977 519,505
------------ ------------
29,585,422 23,415,669
Cash and cash equivalents 189,929 58,491
Certificates of deposit 293,946 197,190
Accounts and accrued income receivable 309,873 164,985
Undeveloped land 99,675 99,675
Other assets 283,238 244,708
------------ ------------
$30,762,083 $24,180,718
------------ ------------
------------ ------------
Liabilities and shareholders' equity
Liabilities:
Short-term debt $700,762 ---
Mortgage notes payable 19,748,063 $14,606,780
Accounts payable and accrued compensation 298,553 217,163
Accrued interest 132,056 48,145
State income and property taxes 972,368 803,194
Tenants' security deposits and unearned rent 424,830 346,675
------------ ------------
22,276,632 16,021,957
Shareholders' equity:
Shares of Beneficial Interest, no par
value-authorized 5,000,000 shares,
issued 1,529,353 shares in 1995 and
1,458,765 in 1994, including 77,414
shares in treasury 6,245,289 5,645,289
Undistributed income other than from
gain on the sale of real estate 1,453,788 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)
------------ ------------
8,485,451 8,158,761
------------ ------------
$30,762,083 $24,180,718
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
Century Realty Trust
Statements of Income
Year ended December 31
1995 1994 1993
---------- ---------- -----------
<S> <C> <C> <C>
Income:
Real estate operations:
Rental Income $7,508,685 $5,874,657 $3,759,153
Income from direct financing leases 65,708 69,980 73,737
----------- ----------- -----------
7,574,393 5,944,637 3,832,890
Less:
Real estate operating expenses 2,760,489 2,091,609 1,439,669
Provision for depreciation 1,053,170 864,549 562,934
Real estate taxes 834,212 723,691 465,504
----------- ----------- -----------
4,647,871 3,679,849 2,468,107
----------- ----------- -----------
2,926,522 2,264,788 1,364,783
Interest 30,008 24,609 25,786
Sundry 157,063 74,446 62,605
----------- ----------- -----------
3,113,593 2,363,843 1,453,174
Expenses:
Interest 1,768,795 1,179,274 259,544
State income taxes 131,133 115,714 74,079
General and administrative 381,286 365,877 349,245
----------- ----------- -----------
2,281,214 1,660,865 682,868
----------- ----------- -----------
Income before realized gain on
disposal of real estate 832,379 702,978 770,306
Realized gain on disposal of real estate --- --- 1,316,078
----------- ----------- -----------
Net income $832,379 $702,978 $2,086,384
----------- ----------- -----------
----------- ----------- -----------
Per share data:
Average number of shares outstanding 1,389,087 1,345,605 1,258,310
----------- ----------- -----------
----------- ----------- -----------
Net income $0.60 $0.52 $1.66
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
Century Realty Trust
Statements of Cash Flows
Year ended December 31
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Operating Activities
Net income $832,379 $702,978 $2,086,384
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,080,478 887,684 567,795
Gain on disposal of real estate --- --- (1,316,078)
Changes in operating assets and liabilities:
Accounts and accrued income receivable (144,888) (49,172) (3,805)
Other assets (43,597) (59,910) 5,704
Accounts payable and accrued compensation 122,823 (56,349) 91,851
Tenants' security deposits and uneared rent 40,352 15,241 (24,501)
Net cash provided by operations 1,887,547 1,440,472 1,407,350
----------- ----------- -----------
Investing Activities:
Investment in certificates of deposit (1,974,220) (2,084,112) (2,185,366)
Proceeds from matured certificates of deposit 1,877,464 2,185,350 2,083,831
Acquisition of real estate, net of debt assumed (6,077,196) (710,181) (3,500,163)
Purchase of property and improvements (329,038) (476,844) (317,143)
Lease principal payments received 35,528 31,256 27,499
----------- ----------- -----------
Net cash used in investing activities (6,467,462) (1,054,531) (3,891,342)
Financing Activities:
Net short-term bank borrowings 700,762 --- ---
Net proceeds from mortgage notes payable 5,368,000 1,087,601 3,799,239
Principal payments on mortgage notes payable (258,717) (686,183) (184,964)
Sale of treasury shares --- 8,750 ---
Dividends paid to shareholders (1,098,692) (996,261) (962,062)
----------- ----------- -----------
Net cash provided by (used in) financing activites 4,711,353 (586,093) 2,652,213
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 131,438 (200,152) 168,221
Balance at beginning of year 58,491 258,643 90,422
----------- ----------- -----------
Balance at end of year $189,929 $58,491 $258,643
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
Century Realty Trust
Statements of Shareholders' Equity
Undistributed Unrealized
Income Other Net
Outstanding Than From Realized
Shares of Shares of Gain on Gain from Cost of
Benefical Benefical Sale of Sale of Treasury
Interest Interest Real Estate Real Estate Shares Total
<S> <C> <C> <C> <C> <C> <C>
---------- ----------- ----------- ----------- ------------ -----------
Balance at January 1, 1993 1,246,234 $5,445,497 $2,223,771 --- ($1,454,243) $6,215,025
Net income for 1993 --- --- 770,306 1,316,078 $2,086,384
Dividends ($.77 per share) --- --- (967,047) --- --- (967,047)
Shares issued for real estate
acquisition 43,164 47,130 --- --- 295,350 342,480
---------- ----------- ----------- ----------- ------------ -----------
Balance at December 31, 1993 1,289,398 5,492,627 2,027,030 1,316,078 (1,158,893) 7,676,842
Net income for 1994 --- --- 702,978 --- --- 702,978
Dividends ($.75 per share) --- --- (1,002,910) --- --- (1,002,910)
Shares issued for real estate
acquisition 90,953 150,755 --- --- 622,346 773,101
Stock options exercised 1,000 1,907 --- --- 6,843 8,750
---------- ----------- ----------- ----------- ------------ -----------
Balance at December 31, 1994 1,381,351 5,645,289 1,727,098 1,316,078 (529,704) 8,158,761
Net income for 1995 --- --- 832,379 --- --- 832,379
Dividends ($.78 per share) --- --- (1,105,689) --- --- (1,105,689)
Shares issued for real estate
acquisition 70,588 600,000 --- --- --- 600,000
---------- ----------- ---------- ----------- ------------ -----------
Balance at December 31, 1995 1,451,939 $6,245,289 $1,453,788 $1,316,078 ($529,704) $8,485,451
---------- ----------- ----------- ----------- ------------ -----------
---------- ----------- ----------- ----------- ------------ -----------
</TABLE>
See accompanying notes.
Century Realty Trust
Notes to Financial Statements
December 31, 1995
1. Significant Accounting Policies
Organization and Management Agreements:
Century Realty Trust (the Trust) commenced operations under a Plan of
Reorganization as of January 1, 1973, as the successor in interest to
American National Trust and Republic National Trust.
The Trust's residential rental properties are managed under agreements with
independent property management firms. The agreements provide for management
fees based generally on gross rental collections.
Cash and Cash Equivalents:
Cash and cash equivalents include cash and certificates of deposit with
original maturities of 30 days or less.
Real Estate Investments:
Real estate investments are stated on the basis of cost, except for real
estate investments transferred from the predecessor trusts which are stated
at appraised values as of January 1, 1973. Depreciation is computed by the
straight-line method based on estimated economic lives ranging from 29 to 40
years for buildings and 3 to 15 years for equipment.
Treasury Shares:
Treasury shares are carried at cost and shares reissued are removed based on
average cost. The difference between proceeds received on re-issuance and
the average cost is credited or charged to Shares of Beneficial Interest.
Income Taxes:
The Trust intends to continue to qualify as a real estate investment trust as
defined in the Internal Revenue Code and will distribute its taxable income.
Realized gains on the sale of investments are distributed to shareholders if
and when recognized for income tax purposes. Assuming compliance with other
requirements of the Code, income so distributed will not be taxable to the
Trust. Accordingly, no provision for federal income taxes is made in the
financial statements.
Net Income per Share:
Net income per share is based on the weighted average number of shares
outstanding during the year.
Use of Estimates:
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
New Accounting Pronouncement:
In 1995, the FASB issued Statement No. 121 effective in 1996, which requires
impairment losses, if any, to be recorded on long-lived assets when indicators
of impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount. The
Trust will comply with Statement 121 in the event that a material impairment
is indicated. Under current circumstances the Trust has no impaired
long-lived assets.
2. Real Estate Investments:
Real estate investments consist principally of apartments and commercial
properties in Indiana. In connection with these properties the Trust is
principally a lessor using short-term operating leases except for two
restaurant properties which it leases to the operators using long-term
agreements expiring in 1998 and 2004. In addition to specified minimum
payments, the restaurant leases provide for contingent rentals based upon
percentage of gross receipts derived by the lessees. The Trust has no
obligation to grant purchase options to the lessees. The Trust's net
investment in direct financing leases consists of:
<TABLE>
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
Minimum lease payments receivable $694,772 $796,008
Estimated unguaranteed residual values 101,484 101,484
Unearned income (312,279) (377,987)
---------- ---------
Net investment $483,977 $519,505
---------- ---------
---------- ---------
</TABLE>
At December 31, 1995 future minimum lease payments receivable from direct
financing leases for the years 1996 through 1998 are $101,236 per year,
$66,095 for 1999 and 2000, and $258,873 for all years thereafter. Also, at
December 31, 1995, future minimum lease payments receivable from noncancelable
operating leases for 1996 through 1998 are $33,489 per year, $18,905 for 1999
and 2000, and $74,043 for all years thereafter.
3. Real Estate Investment Transactions
In June 1993, the Trust purchased the 132-unit Regency Royale apartment
property in Mishawaka, Indiana for $3.8 million. In connection with the
purchase, the Trust issued 18,164 shares of beneficial interest and obtained
a $2 million mortgage loan.
In October 1993, through a qualified intermediary, the Trust relinquished the
134-unit Greenbriar apartment property in Hammond, Indiana; and, subsequently
acquired the 208-unit Creek Bay at Meridian Woods apartments in December 1993
and the 188-unit Eagle Creek Park apartments in March 1994, both in
Indianapolis. The disposition and acquisitions were structured as a like-kind
exchange pursuant to Section 1031 of the Internal Revenue Code so that, for
tax purposes, the realized gain from the Greenbriar disposition was no
recognized.
Creek Bay at Meridian Woods was purchased for $7.6 million. The Trust issued
25,000 shares of beneficial interest, and assumed first mortgage loan balances
and other liabilities totaling $5.7 million. The intermediary disbursed $1.7
million of the Greenbriar proceeds to complete the purchase.
Eagle Creek Park apartments was purchased for $6.1 million. The Trust issued
90,953 shares of beneficial interest, assumed an existing first mortgage loan
and other liabilities totaling $4.4 million and paid approximately $900,000 in
cash which included the remaining Greenbriar sale proceeds held by the
qualified intermediary.
In March 1995, the Trust purchased the Fox Run apartments, a 256-unit property
in Indianapolis, Indiana, for $6.9 million, $5.4 million of which was financed
by a new ten-year first mortgage loan. The Trust also obtained a $1 million
one-year unsecured bank line of credit and borrowed $700,000 which it expects
to repay with proceeds from refinancing other real estate. The line of credit
rate of interest was 9% at December 31, 1995. Also, related to the financing
of Fox Run, the Trust issued 70,588 unregistered shares of beneficial interest
valued at $600,000.
4. Mortgage Notes Payable
Mortgage notes are payable in monthly installments, including interest at
rates ranging from 8 1/8% to 9 3/4% per annum, and mature from June 4, 1996 to
April 30, 2005. The aggregate amount of long-term debt maturities for each of
the five years after December 31, 1995 are: 1996, $2,310,662; 1997, $336,139;
1998, $5,676,519; 1999, $299,275 and 2000, $3,735,572.
The Trust used an interest-rate swap agreement to effectively convert the new
$5.4 million Fox Run mortgage loan from a floating interest rate to a fixed
rate, thus reducing the impact of interest rate changes on future income.
At December 31, 1995, approximately $25,811,000 of the real estate investments
owned by the Trust represent collateral for the mortgage notes payable.
5. Shareholder Rights Plan
In 1989, the Board of Trustees adopted a Shareholder Rights Plan and
distributed as a dividend one purchase right (a "Right") for each outstanding
share of Beneficial Interest. At December 31, 1995 there were 1,451,939
Rights outstanding.
Each Right entitles the holder to purchase from the Trust one share of
Beneficial Interest at a price of $15 per share, subject to certain
antidilution adjustments. The Rights are not exercisable or transferable
apart from the shares until certain events occur relating to the acquisition
of shares of the Trust as defined in the Plan. The Rights may be redeemed by
the Board of Trustees at a redemption price of $01 per Right until certain
events relating to the acquisition of shares of the Trust as defined by the
Plan occur.
The Rights will expire October 10, 1999, unless the date is extended or the
Rights are exercised by the holder or redeemed by the Trust before that date.
Until exercised, the holder of the Rights, as such, will have no rights as a
shareholder of the Trust, including, without limitation, the right to vote as
a shareholder or receive dividends.
6. Stock Options
In 1994, the Board of Trustees granted each of the five current members of
the Board an option to purchase up to 5,000 shares of beneficial interest of
the Trust. The options are exercisable on or before March 21, 1997, at a
price of $8.75 per share, the fair market value at the date of grant. During
1994, options for 1,000 shares were exercised. No options were granted or
exercised during 1995, and 24,000 shares were unexercised at December 31,
1995.
7. Fair Values of Financial Instruments
The following methods and assumptions were used by the Trust in estimating its
fair value disclosures for financial instruments:
Cash and Cash Equivalents: The carrying amount reported in the balance sheet
for cash and cash equivalents approximates its fair value.
Certificates of Deposit: The carrying amount reported in the balance sheet
for the certificates of deposit approximates its fair value.
Short-term Debt and Mortgage Notes Payable: The carrying amount of the
Trust's borrowings under its short-term line of credit approximate their fair
value. The fair value of the Trust's mortgage notes payable are estimated
using discounted cash flow analyses, based on the Trust's current incremental
borrowing rates for similar types of borrowing arrangements.
The carrying amounts and fair values of the Trust's financial instruments are
as follows:
<TABLE>
<CAPTION>
December 31, 1995
Carrying Amount Fair Value
--------------- ------------
<S> <C> <C>
Cash and cash equivalents $ 189,929 $ 190,000
Certificates of deposit 293,946 294,000
Short-term debt 700,762 701,000
Mortgage notes payable 19,748,063 20,942,000
Report of Independent Auditors
</TABLE>
Board of Trustees
Century Realty Trust
We have audited the accompanying balance sheets of Century Realty Trust as of
December 31, 1995 and 1994, and the related statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Century Realty Trust as of
December 31, 1995 and 1994, and results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
January 19, 1996 ERNST & YOUNG LLP
Indianapolis, IN
<TABLE>
<CAPTION>
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
CENTURY REALTY TRUST
December 31, 1995
Col. A Col. B Col. C Col. D Col. E Col. F
Cost Capitalized Gross amount at Which
Initial Cost to Company Subsequent to Acquisition Carried at Close of Period
------------------------ ------------------------- --------------------------
Buildings Buildings
and Carrying and Accumulate
Description Encumbrance Land Improvements Improvements Costs Land Improvements Total Depreciation
___________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Apartments-Richmond, IN First Mortg $56,700 $852,500 $391,524 --- $63,445 $1,237,279 $1,300,724 $860,152
Apartments-Marion, IN First Mortg 57,800 517,200 624,923 --- 57,800 1,142,123 1,199,923 659,758
Apartments-Kokomo, IN None 128,000 1,622,000 1,403,867 --- 128,000 3,025,867 3,153,867 1,816,422
Apartments-Indianapolis, IN None 37,655 693,295 307,525 --- 37,655 1,000,820 1,038,475 637,797
Apartments-Indianapolis, IN None 47,345 871,705 --- --- 47,345 871,705 919,050 601,476
Apartments-Indianapolis, IN First Mortg 117,000 1,168,308 101,529 --- 117,000 1,269,837 1,386,837 285,362
Apartments-Mishawaka, IN First Mortg 125,000 3,638,499 37,159 --- 125,000 3,675,658 3,800,658 238,163
Apartments-Indianapolis, IN First Mortg 340,940 7,101,480 10,483 --- 340,940 7,111,963 7,452,903 367,712
Apartments-Indianapolis, IN First Mortg 378,000 5,679,172 231,089 --- 378,000 5,910,261 6,288,261 266,359
Apartments-Indianapolis, IN First Mortg 398,000 6,446,469 52,918 --- 398,000 6,499,387 6,897,387 122,210
Warehouse -Carmel, IN First Mortg 54,000 446,075 89,981 --- 54,000 536,056 590,056 273,937
Restaurant-Longwood, FL None 113,479 --- --- --- 113,479 --- 113,479 ---
Restaurant-Indianapolis, IN None 136,494 --- --- --- 136,494 --- 136,494 ---
Office-Indianapolis, IN None 71,500 457,818 18,685 --- 71,500 476,503 548,003 134,151
---------- ----------- ---------- ----- ---------- ----------- ----------- ----------
2,061,913 29,494,521 3,269,683 --- 2,068,658 32,757,459 34,826,117 6,263,499
Construction in progress
various locations None --- --- 20,972 --- --- 20,972 20,972 ---
---------- ----------- ---------- ----- ---------- ----------- ----------- ----------
2,061,913 29,494,521 3,290,655 --- 2,068,658 32,778,431 34,847,089 6,263,499
Equipment-various locations None --- 246,421 518,980 --- --- 765,401 765,401 247,546
---------- ----------- ---------- ----- ---------- ----------- ----------- ----------
TOTAL REAL ESTATE $2,061,913 $29,740,942 $3,809,635 --- $2,068,658 $33,543,832 $35,612,490<F1> $6,511,045
---------- ----------- ---------- ----- ---------- ----------- ----------- ----------
---------- ----------- ---------- ----- ---------- ----------- ----------- ----------
Undeveloped land
various locations None $99,675 --- --- --- $99,675 --- $99,675<F2> ---
---------- ----------- ---------- ----- ---------- ----------- ----------- ----------
---------- ----------- ---------- ----- ---------- ----------- ----------- ----------
<CAPTION>
Col. A Col. G Col. H Col. I
Life on Which
Depreciation in
Latest Income
Date of Date Statements
Description Construction Acquired Is Computed
__________________________________________________________________________
<S> <C> <C> <C>
Apartments-Richmond, IN 1965 January, 1973 31 years
Apartments-Marion, IN 1962 January, 1973 31 years
Apartments-Kokomo, IN 1965 January, 1973 29 years
Apartments-Indianapolis, IN 1965 January, 1973 33 years
Apartments-Indianapolis, IN 1967 January, 1973 33 years
Apartments-Indianapolis, IN 1963 September, 1989 28 years
Apartments-Mishawaka, IN 1983 June, 1993 40 years
Apartments-Indianapolis, IN 1992 December, 1993 40 years
Apartments-Indianapolis, IN 1974 March, 1994 40 years
Apartments-Indianapolis, IN 1974 March, 1995 40 years
Warehouse -Carmel, IN 1972 October, 1977 33 years
Restaurant-Longwood, FL 1978 January, 1979 N/A
Restaurant-Indianapolis, IN 1979 November, 1986 N/A
Office-Indianapolis, IN 1966 July, 1986 33 years
Construction in progress
various locations N/A
Equipment-various locations Various Various 3-15 years
TOTAL REAL ESTATE
Undeveloped land
various locations N/A January, 1973 N/A
<FN>
<F1>
The aggregate carrying value for tax purposes is $26,200,657.
<F2>
The aggregate carrying value for tax purposes is $72,522.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
CENTURY REALTY TRUST
December 31, 1995
Total Land,
Buildings Buildings
and and Accumulated Undeveloped
Land Improvements Improvements Equipment Depreciation Land
---------- ----------- ----------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1992 $912,218 $10,740,599 $11,652,817 $530,982 $5,471,893 $99,675
Additions:
Acquisitions 465,940 10,739,979 11,205,919 237,656 --- ---
Improvements --- 291,847 291,847 48,234 --- ---
Depreciation --- --- -- 560,912 --- ---
Deductions:
Disposition 85,500 1,641,464 1,726,964 59,911 1,017,077 ---
Fully amortized costs 12,396 12,396 69,416 81,812 ---
---------- ----------- ----------- -------- ----------- -------
Balance December 31, 1993 1,292,658 20,118,565 21,411,223 687,545 4,933,916 99,675
Additions:
Acquisitions 378,000 5,675,312 6,053,312 63,000 --- ---
Improvements --- 428,641 428,641 48,203 --- ---
Depreciation --- --- --- 861,844 --- ---
Deductions:
Fully amortized costs --- 69,487 69,487 63,685 133,172 ---
---------- ----------- ----------- -------- ----------- -------
Balance December 31, 1994 1,670,658 26,153,031 27,823,689 735,063 5,662,588 99,675
Additions:
Acquisitions 398,000 6,446,469 6,844,469 85,000 --- ---
Improvements --- 231,494 231,494 94,730 --- ---
Depreciation --- --- --- --- 1,050,412 ---
Deductions:
Fully amortized costs --- 52,563 52,563 149,392 201,955 ---
---------- ----------- ----------- -------- ----------- -------
Balance December 31, 1995 $2,068,658 $32,778,431 $34,847,089 $765,401 $6,511,045 $99,675
---------- ----------- ----------- -------- ----------- -------
---------- ----------- ----------- -------- ----------- -------
</TABLE>
<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>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 190
<SECURITIES> 294
<RECEIVABLES> 310
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 36,196
<DEPRECIATION> 6,511
<TOTAL-ASSETS> 30,762
<CURRENT-LIABILITIES> 0
<BONDS> 19,748
0
0
<COMMON> 6,245
<OTHER-SE> 2,240
<TOTAL-LIABILITY-AND-EQUITY> 30,762
<SALES> 7,574
<TOTAL-REVENUES> 7,761
<CGS> 0
<TOTAL-COSTS> 4,647
<OTHER-EXPENSES> 512
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,769
<INCOME-PRETAX> 832
<INCOME-TAX> 0
<INCOME-CONTINUING> 832
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 832
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
</TABLE>
