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, 1996 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.)
823 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 $14,019,146 based upon the average bid and asked prices on
January 31, 1997.
Shares of Beneficial Interest, no par value--1,453,939 shares outstanding
as of January 31, 1997.
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, 1996:
No. of 1996 Net
Apartments Location Units Occupancy Investment
- -------------- -------------- ------- --------------- --------------
Park Plaza Indianapolis, IN 176 94% $ 699,993
Fontenelle Kokomo, IN 176 97% 1,287,111
Park Forest Marion, IN 64 97% 496,014
Chester Heights Richmond, IN 110 96% 459,719
Driftwood Park Indianapolis, IN 48 94% 1,076,191
Regency Royale Mishawaka, IN 132 95% 3,524,922
Creek Bay Indianapolis, IN 208 96% 7,081,051
Eagle Creek Park Indianapolis, IN 188 96% 5,960,032
Fox Run Indianapolis, IN 256 94% 6,782,569
Total apartments 1,358 27,367,601
Square 1996 Net
Commercial Location Feet Occupancy Investment
- ------------------ ------------- ------- --------- -----------
Office/Warehouse
401 Industrial Dr. Carmel, IN 38,000 100% 325,593
Office building
1810 E. 62nd St. Indianapolis, IN 17,000 98% 400,236
Total Commercial 55,000 725,829
Square Lease Net
Restaurant Location Feet Expires Investment
- --------------- -------------- ------- ------- -------------
Fortune House Indianapolis, IN 5,000 2004 474,934
Miami Subs Orlando, FL 3,500 1998 218,630
Total Restaurants 8,500 693,563
All Investment Properties $28,786,993
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, 1996.
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, 1996, was 3,481. High and low
published bid prices and dividends for the last two years were
as follows:
Bid Price
--------------------- Dividends
High Low Declared
------- ------- -----------
1996 Quarter Ended:
March 31 $9.13 $8.63
June 30 9.13 9.13 $0.40
September 30 10.25 9.13 $0.21
December 31 10.63 9.13 $0.21
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
The Trust expects to continue to operate as a real estate
investment trust and to distribute substantially all of its
otherwise taxable income to its shareholders. In 1996, the
Trust changed to a quarterly cash distribution schedule. In
1997, cash distributions are scheduled to be paid in February,
May, August and November.
ITEM 6. SELECTED FINANCIAL DATA
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
Rental and other
operating income $8,384,732 $7,761,464 $6,043,692 $3,921,281 $3,461,259
Gains on sale
of property -- -- -- 1,316,078 --
Net income 1,022,470 832,379 702,978 2,086,384 852,672
Total assets 30,538,467 30,762,083 24,180,718 18,877,126 7,827,074
Mortgage and
other notes
payable 20,437,686 20,448,825 14,606,780 10,014,167 779,986
Per share of
beneficial
interest:
Net income 0.70 0.60 0.52 1.66 0.68
Cash dividends
declared 0.82 0.78 0.75 0.77 0.75
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS -- 1996
The Trust reported increases ofapproximately 8% in income and 9% in
expenses related to its real estate operations in 1996. In March, 1995,
the Trust purchased the Fox Run apartments, a 256-unit property, in
Indianapolis, IN. Fox Run increased by 23%, the number of apartment units
in the Trust's investment portfolio since the beginning of 1995. That
purchase is described in Note 3 to the financial statements. Apartment
rental income, as a percentage of total income from operations amounted
to 96% in both 1996 and 1995. For all apartments owned, economic occupancy
in 1996 was 95.4%, down from 96.5% in 1995.
The Fox Run apartments represent 18.8% of the 1,358 units owned
at the end of 1996. That property accounted for 70% of the
$612,000 increase in income from real estate operations in 1996.
Fox Run was also responsible for most of the increases in
rental operating expenses (73%), and depreciation (89%), and for
all of the increase in real estate taxes. For 1996, the Fox Run
apartments were 94.3% occupied and had an operating expense
ratio, excluding depreciation, of 50.5% of gross possible
income. For 1995, the 444 apartment units then considered to
have been recently acquired experienced an occupancy rate of
95.3%, and accounted for 86% of the increase in income from real
estate operations from the previous year.
The Trust owned 1,102 apartment units in eight complexes
throughout 1995 and 1996. Those properties provided 76.5% of
the Trust's total income from operations in 1996, compared with
80% in 1995. Occupancy rates averaged 95.7% for 1996, down from
96.7% in 1995. The small decline in occupancy in 1996 partially
offset higher rental rates, which were up an average of 3.8%, to
produce a $166,000 (2.7%) increase in gross income from those
properties. Operating expenses for the same properties,
excluding real estate taxes and depreciation, increased by
approximately $64,000, or 2.9%. Operating expenses, excluding
depreciation, consumed 45.2% of gross possible income in 1996,
down from 45.9% in 1995.
Nonresidential properties owned by the Trust, which accounted
for 3.8% of total income from operations in 1996, and 3.9% in
1995, provided 3.8% of the increase in total rental income. The
increased rental income from commercial properties resulted
primarily from higher rental rates in 1996.
During 1996, 75% of the interest income earned by the Trust was
derived from the short term investment of funds in FDIC-insured
certificates of deposit and discount notes issued by agencies of
the U.S government. The balance of interest income was earned at
money market rates on sweep account demand deposit funds. In
1996, the Trust earned an average rate of 4.9% on an average
invested balance of $844,500. At the end of 1996, funds
invested in U.S. government agency discount notes that mature in
1997, were invested to yield 5.2%. Approximately 20% of interest
income in 1995, was earned at money market rates on funds held
in an escrow account earmarked for investment in an 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.
Interest expense applicable to loans related to investment
activities increased by $120,000 in 1996, while interest expense
related to seasoned mortgage loans decreased by $28,000. The
increase in investment activities interest expense included
$124,000 applicable to the long-term fixed rate mortgage loan on
the Fox Run apartments acquired in 1995. Related to the Fox Run
acquisition, during 1996 the Trust obtained a new 10-year
amortizing mortgage loan on a non-residential property
and repaid a short-term bank loan. The net effect of the new
mortgage loan to replace the short-term bank loan was a
reduction of $4,000 in interest expense. For 1996, mortgage
interest expense averaged 9.12% on average outstanding balances
of $20.4 million. For 1995, the overall effective interest rate
was 9.10% on average outstanding balances of $18.6 million.
At the end of 1995, approximately 90% of the mortgage notes
payable provided for fixed interest rates. During 1996, the
Trust refinanced a $2 million variable rate (prime rate) loan
which matured with a $2.25 million ten year fixed rate
amortizing loan At December 31, 1996, all 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, 1996, was approximately 4% higher than the
carrying amount. (See Note 7 to the financial statements).
RESULTS OF OPERATIONS -- 1995
In 1995, the Trust reported significant increases of 30% in both
income and expenses related to its real estate operations. In
March, 1994, the Trust acquired a 188-unit apartment property
and, in March, 1995, purchased a 256-unit apartment property.
Each of those transactions is described in Note 3 to the
financial statements. Through those two transactions the Trust
increased by 48% 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 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 with a total of 444 units that were
acquired since the beginning of 1994 comprised 33% of the 1,358
units owned at the end of 1995. Those properties accounted for
30% of the Trust's gross income from real estate operations in
1995, and accounted for 85% of the $1.7 million increase from
1994. The same two properties were responsible for most of the
increases in rental operating expenses (94%), depreciation (99%)
and real estate taxes (137%). For 1995, the acquired apartments
were 95.3% occupied and had an average expense ratio, excluding
depreciation, of 49.2%. For 1994, the 528 units then considered
to have been recently acquired experienced an occupancy rate of
96.4%, and an aggregate expense ratio of 42.2%.
The Trust owned 914 apartment units in seven complexes
throughout 1994 and 1995. Those properties provided 70% of the
Trust's income from operations in 1995, compared with 86% 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, including real
estate taxes, increased by $40,000, or 2.2%, over the 1994
levels. Operating expenses, excluding depreciation, consumed
45.9% of gross possible income in 1995, down from 46.6% in 1994.
Nonresidential properties, 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 those properties resulted primarily from higher
occupancy in 1995.
Approximately 20% of interest income in 1995, and 40% in 1994,
was earned at money market rates on funds in an escrow account
earmarked for investment in the property (Eagle Creek Park
apartments) 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
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.
Interest expense applicable to loans related to investment
activities increased by $564,000 in 1995, while interest 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. 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 provided for fixed interest rates. Using
discounted cash flow analysis based on the Trust's 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).
LIQUIDITY AND SOURCES OF CAPITAL
In November, 1996, the Trust entered into a contract to purchase
a 192-unit apartment property for approximately $5.25 million
and expects to complete that purchase in 1997. The purchase
contract provides that the Trust will assume an existing
mortgage loan with a balance of approximately $3.7 million, or
borrow a comparable amount under a new mortgage loan. To
facilitate the purchase, the Trust has arranged a $2.5 million
unsecured standby line of credit with a bank.
Other than the pending property acquisition, management is not
aware of any significant transactions or events which would
require material expenditures in 1996. The Trust has no other
obligations, nor has it made any commitments, which would
require expenditures in excess of funds expected to be provided
by operations during 1997. At December 31, 1996, the Trust had
$906,000 in cash and securities which management believes is
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, 1996, the
Trust had no undistributed taxable income or earnings and
profits. Distributions during 1996, which totaled $1,192,000
included all taxable income and earnings and profits for 1996
plus $30,000 designated as return of capital. During 1995, the
Trust distributed $1,022,000, of which $76,000 was designated as
a return of capital.
Due to differences in depreciation rates and carrying values of
some properties, reported income for 1996 was 9% lower; for
1995, 16% lower; and, for 1994, 14% lower than income for income
tax purposes.
IMPACT OF INFLATION
Inflation has not had a significant impact on the Trust during
1996, 1995 and 1994.
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, 1996, 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
(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 24, 1997
- -------------------- --- -------------------- -------------- ---------------
John I. Bradshaw, Jr. 65 Exec. Vice President 1982 to date 96,294 (6.53%)
Indianapolis, IN Century Realty Trust (1997)
Other Directorships:
None
John A. Wallace 73 Real estate investor 1973 to date 16,500 (1.12%)
Indianapolis, IN Self employed (1999)
Other Directorships:
None
Francis M. Hapak 71 Real Estate Investor 1987 to date 52,430 (3.56%)
Indianapolis, IN Self employed (1999)
Other Directorships:
None
King R. Traub 72 President 1973 to date 19,662 (1.33%)
Indianapolis, IN Traub and Co., Inc. (1998)
Securities Brokerage
Other Directorships:
None
John W. Adams 48 Vice President 1996 to date 1,700 (0.12%)
Indianapolis, IN Browning Investments, Inc. (1997)
Real Estate Developer
Other Directorships:
Brightpoint, Inc.
John I. Bradshaw, Jr. is sole owner of 43,935 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 26,305 shares and claims
beneficial ownership of 26,125 shares owned by Charlotte H.
Hapak, his wife.
King R. Traub is sole owner of 13,579 shares and claims
beneficial ownership of 6,083 shares owned by Jane C. Traub, his
wife.
John A. Wallace is sole owner of 15,000 shares and claims
beneficial ownership of 1,500 shares owned by Brenda L. Wallace,
his wife.
(b) Identification of officers:
Name Age Office(s) Held
- -------------------------- --- ----------------------------------------
King R. Traub 72 President (since 1973) and Trustee
John I. Bradshaw, Jr. 65 Executive Vice President (since 1973)
Secretary (since 1979), Treasurer (since
1996) and Trustee
John I. Bradshaw, Jr. is the only salaried officer of the Trust
and serves as its Chief Executive Officer. The Trust has no
executive officers other than those individuals listed.
ITEM 11. EXECUTIVE COMPENSATION
(b) Summary Compensation Table:
Annual Compensation
---------------------------------
Long-Term
Name and Other Compensation
Principal Compen- Awards
Position Year Salary($) Bonus($) sation($) Options(#)
- --------------------- ---- ------ ---------- ----------- ---------
John I. Bradshaw, Jr. 1996 99,000 --- 1,513* ---
Exec. Vice Pres. 1995 99,000 --- 1,860* ---
Chief Exec. Off. 1994 99,000 --- 1,494* 5,000
* Compensation equivalent of club dues paid on behalf of individual.
(c) Option grants in the last fiscal year:
Potential Realizable
Individual Grants Value at Assumed
---------------------------------------------- Annual Rates of Stock
% of Total Price Appreciation
Options Exercise for Option Term
Options Granted In Price per Expiration -------------------
Name Granted(#) FiscalYear Share Date 5% 10%
- -------- ---------- ---------- ----------- --------- ------ --------
John W.
Adams 5,000 100 $9.50 4/30/99 $7,485 $15,728
The Options are exercisable at any time until the expiration
date. Upon exercise, shares in treasury, to the extent
available, will be issued.
The exercise price per share represents the average of the
published bid and asked prices at the date of grant.
(d) Option exercises in the last fiscal year and Fiscal Year End
Option Value:
Value of
Unexercised
Unexercised In the Money
Shares Options at Fiscal Options at Fiscal
Acquired on Value Year End (#) Year End**
Name Exercise (#) Realized (All Exercisable) (All Exercisable)
- -------------------- ------------ -------- ----------------- ----------------
John W. Adams --- --- 5,000 $ 6,875
John I. Bradshaw, Jr. --- --- 5,000 10,625
Francis M. Hapak --- --- 5,000 10,625
Milton Maidenberg 2,000 $1,000 3,000 6,375
King R. Traub --- --- 5,000 10,625
John A. Wallace --- --- 4,000 8,500
** Values are based on $10.875 per share, the average of the published
over-the-counter bid ($10.625) and asked ($11.125) prices on December 31, 1996.
Except for the option for 5,000 shares held by John W. Adams, for which
the expiration date is 4/30/99, all options expire 3/21/97. All options
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
(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
- ------------------- ---------------------- ----------------------- --------
Shares of John I Bradshaw, Jr. 96,294 6.5%
Beneficial Interest 320 N. Meridian Street
Indianapolis, IN
John I. Bradshaw, Jr. is sole owner of 43,935 shares and claims beneficial
ownership of 52,359 shares owned by trusts for his children and his sister.
(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: 3/24/97
By: S/ JOHN I. BRADSHAW, JR.
Executive 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 3/24/97
S/ JOHN W. ADAMS, Trustee 3/24/97
S/ KING R. TRAUB,Trustee 3/24/97
S/ FRANCIS M. HAPAK, Trustee 3/24/97
________________________ _______
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, 1996:
Balance sheets--December 31, 1996 and 1995
Statements of income--Years ended December 31, 1996, 1995 and 1994
Statements of cash flows--Years ended December 31, 1996, 1995
and 1994
Statements of shareholders' equity-- Years ended December 31, 1996,
1995 and 1994
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.
CONSENT OF ERNST & YOUNG, 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 17, 1997, included
in the 1996 Annual Report to Shareholders of Century Realty Trust.
Our audits also included the financial statement schedule listed in Item
14(a). This schedule is the responsibility of the Trust's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
the financial statement schedule, referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
ERNST & YOUNG LLP
Indianapolis, Indiana
January 17, 1997
Century Realty Trust
Balance Sheets
December 31
1996 1995
___________ ___________
Assets
Real estate investments:
Land $2,068,658 $2,068,658
Buildings 32,912,673 32,778,431
Equipment 838,254 765,401
Allowances for depreciation (7,476,182) (6,511,045)
___________ ___________
28,343,403 29,101,445
Net investment in direct financing leases 443,590 483,977
___________ ___________
28,786,993 29,585,422
Cash and cash equivalents 315,337 189,929
Stort-term investments 590,993 293,946
Accounts and accrued income receivable 335,303 309,873
Undeveloped land 99,675 99,675
Other assets 410,166 283,238
___________ ___________
$30,538,467 $30,762,083
___________ __________
___________ __________
Liabilities and shareholders' equity
Liabilities:
Short-term debt $ --- $700,762
Mortgage notes payable 20,437,686 19,748,063
Accounts payable and accrued compensation 288,474 298,553
Accrued interest 132,578 132,056
State income and property taxes 952,031 972,368
Tenants' security deposits and unearned rent 394,507 424,830
___________ ___________
22,205,276 22,276,632
Shareholders' equity:
Shares of Beneficial Interest, no par
value - authorized 5,000,000 shares,
issued 1,529,353 including 75,414
shares in 1996 and 77,414 shares
in 1995 in treasury 6,249,104 6,245,289
Undistributed income other than from
gain on the sale of real estate 1,284,028 1,453,788
Undistributed net realized gain from the
sale of real estate 1,316,078 1,316,078
Cost of treasury shares (516,019) (529,704)
___________ ___________
8,333,191 8,485,451
___________ ___________
$30,538,467 $30,762,083
___________ ___________
___________ ___________
See accompanying notes.
Century Realty Trust
Statements of Income
Year ended December 31
1996 1995 1994
__________ __________ __________
Income:
Real estate operations:
Rental Income $8,120,197 $7,508,685 $5,874,657
Income from direct financing leases 60,849 65,708 69,980
Other income 162,266 157,063 74,446
__________ __________ __________
8,343,312 7,731,456 6,019,083
Less:
Real estate operating expenses 3,012,292 2,760,489 2,091,609
Provision for depreciation 1,113,618 1,053,170 864,549
Real estate taxes 842,349 834,212 723,691
__________ __________ __________
4,968,259 4,647,871 3,679,849
__________ __________ __________
3,375,053 3,083,585 2,339,234
Interest 41,420 30,008 24,609
__________ __________ __________
3,416,473 3,113,593 2,363,843
Expenses:
Interest 1,860,759 1,768,795 1,179,274
State income taxes 144,240 131,133 115,714
General and administrative 389,004 381,286 365,877
__________ __________ __________
2,394,003 2,281,214 1,660,865
__________ __________ __________
Net income $1,022,470 $832,379 $702,978
__________ __________ __________
__________ __________ __________
Per share data:
Average number of shares outstanding 1,453,660 1,389,087 1,345,605
Net income $0.70 $0.60 $0.52
See accompanying notes.
Century Realty Trust
Statements of Cash Flows
Year ended December 31
1996 1995 1994
__________ __________ __________
Operating Activities
Net income $1,022,470 $832,379 $702,978
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,142,300 1,080,478 887,684
Changes in operating assets
and liabilities:
Accounts and accrued income
receivable (25,430) (144,888) (49,172)
Other assets (91,266) (43,597) (59,910)
Accounts payable and accrued
expenses (40,842) 122,823 (56,349)
Tenants' security deposits and
unearned rent (30,323) 40,352 15,241
__________ __________ __________
Net cash provided by operations 1,976,909 1,887,547 1,440,472
Investing Activities:
Investment in short term investments (2,567,768) (1,974,220) (2,084,112)
Proceeds from maturities of short term
investments 2,270,721 1,877,464 2,185,350
Acquisition of real estate, net of
debt assumed --- (6,077,196) (710,181)
Purchase of property and improvements (352,450) (329,038) (476,844)
Lease principal payments received 40,387 35,528 31,256
__________ __________ __________
Net cash used in investing activities (609,110) (6,467,462) (1,054,531)
Financing Activities:
Net short-term bank
borrowings (repayments) (700,762) 700,762 ---
Net proceeds from mortgage
notes payable 2,982,530 5,368,000 1,087,601
Principal payments on mortgage
notes payable (2,360,377) (258,717) (686,183)
Sale of treasury shares 17,500 --- 8,750
Dividends paid to shareholders (1,181,282) (1,098,692) (996,261)
__________ __________ __________
Net cash provided by (used in)
financing activities (1,242,391) 4,711,353 (586,093)
__________ __________ __________
Net increase (decrease) in cash
and cash equivalents 125,408 131,438 (200,152)
Balance at beginning of year 189,929 58,491 258,643
__________ __________ __________
Balance at end of year $315,337 $189,929 $58,491
__________ __________ __________
__________ __________ __________
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, 1994 1,289,398 $5,492,627 $2,027,030 $1,316,078 ($1,158,893) $7,676,842
Net income for 1994 702,978 702,978
Dividends ($.77 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 (529,7004) 8,158,761
Net income for 1995 832,379 832,379
Dividends ($.78 per share) (1,105,689) (1,105,689)
Shares issued for real estate 0
acquisition 70,588 600,000 600,000
_________ __________ __________ __________ __________ __________
Balance at December 31, 1995 1,451,939 6,245,289 1,453,788 1,316,078 (529,704) 8,485,451
Net income for 1996 1,022,470 1,022,470
Dividends ($.82 per share) (1,192,230) (1,192,230)
Stock options exercised 2,000 3,815 13,685 17,500
_________ __________ __________ __________ __________ __________
Balance at December 31, 1996 1,453,939 $6,249,104 $1,284,028 $1,316,078 ($516,019) $8,333,191
_________ __________ __________ __________ __________ __________
_________ __________ __________ __________ __________ __________
See accompanying notes.
</TABLE>
Century Realty Trust
Notes to Financial Statements
December 31, 1996
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.
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:
1996 1995
__________ ___________
Minimum lease payments receivable $593,536 $694,772
Estimated unguaranteed residual values 101,484 101,484
Unearned income (251,430) (312,279)
__________ ___________
Net investment $443,590 $483,977
__________ ___________
__________ ___________
At December 31, 1996 future minimum lease payments receivable
from direct financing leases for the years 1997 and 1998 are
$101,236 per year, $66,095 for 1999 through 2001, and $192,778
for all years thereafter. Also, at December 31, 1996, future
minimum lease payments receivable from noncancellable operating
leases for 1997 and 1998 are $33,489 per year, $18,905 for 1999
through 2001, and $55,139 for all years thereafter.
3. Real Estate Investment Transactions
In 1993, through a qualified intermediary, the Trust
relinquished the Greenbriar apartment property in Hammond,
Indiana; and, subsequently acquired the Creek Bay at Meridian
Woods apartments in December 1993 and the Eagle Creek Park
apartments in March 1994. 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 not recognized.
In connection with the acquisition of the Eagle Creek Park
apartments 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
repaid in 1996 with proceeds from refinancing other real estate.
Also, related to the financing of Fox Run, the Trust issued
70,588 unregistered shares of beneficial interest valued at
$600,000.
In November 1996, the Trust agreed in principle to purchase for
$5.25 million, a 192 unit apartment property in Evansville,
Indiana, subject to, among other conditions, the Trust's ability
to obtain acceptable first mortgage financing. If all
conditions are resolved within the time provided by the
agreement, the Trust could acquire the property in February,
1997.
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 April 15, 1998 to October 6, 2006. The aggregate
amount of long-term debt maturities for each of the five years
after December 31, 1996 are: 1997, $362,980; 1998, $5,743,741;
1999, $372,486; 2000, $3,815,308 and 2001, $288,537.
The Trust used an interest-rate swap agreement in 1995 to
effectively convert a $5.4 million mortgage loan from a floating
interest rate to a fixed rate, thus reducing the impact o
interest rate changes on future income.
At December 31, 1996, approximately $25,259,984 of the real
estate investments, after allowances for depreciation, 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,
1996 there were 1,453,939 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 then five
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. In 1996, the Board
granted an option to purchase 5,000 shares to a newly-elected
trustee. That option is exercisable on or before April 30, 1999
at a price of $9.50 per share, the fair market value at the date
of grant. During 1994, options for 1,000 shares were exercised.
In 1995, no options were exercised. In 1996 options for 2,000
shares were exercised at $8.75 per share and options for 27,000
shares were unexercised at December 31, 1996.
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 fair
value.
Short-Term Investments: The carrying amount reported in the
balance sheet for short-term investments approximates fair value.
Short-term Debt and Mortgage Notes Payable: The fair values 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:
December 31, 1996
Carrying Amount Fair Value
_______________ ____________
Cash and cash equivalents $ 315,337 $ 315,000
Short-term investments 590,993 591,000
Mortgage notes payable 20,437,686 21,297,000
December 31, 1995
Carrying Amount Fair Value
_______________ ____________
Cash and cash equivalents $ 189,959 $ 190,000
Short-term investments 293,946 294,000
Short-term debt 700,762 701,000
Mortgage notes payable 19,748,063 20,942,000
Report of Ernst & Young, Independent Auditors
Board of Trustees
Century Realty Trust
We have audited the accompanying balance sheets of Century
Realty Trust as of December 31, 1996 and 1995, and the related
statements of income, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 1996.
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, 1996 and 1995, and
results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
January 17, 1997
Indianapolis, Indiana
<TABLE>
<CAPTION>
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
Century Realty Trust
December 31, 1996
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 Accumulated
Description Encumbrances Land Improvements Improvements Costs Land Improvements Total Depreciation
__________________________ _____________ _________ ___________ __________ ____ __________ ___________ ___________ __________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate investments:
Apartments-Richmond, IN First mortg $56,700 $852,500 $367,712 $--- $63,445 $1,213,467 $1,276,912 $844,903
Apartments-Marion, IN First mortg 57,800 517,200 622,239 --- 57,800 1,139,439 1,197,239 709,382
Apartments-Kokomo, IN None 128,000 1,622,000 1,400,310 --- 128,000 3,022,310 3,150,310 1,923,490
Apartments-Indianapolis, IN None 37,655 693,295 317,544 --- 37,655 1,010,839 1,048,494 669,660
Apartments-Indianapolis, IN None 47,345 871,705 --- 47,345 871,705 919,050 627,627
Apartments-Indianapolis, IN First mortg 117,000 1,168,308 114,241 --- 117,000 1,282,549 1,399,549 335,051
Apartments-Mishawaka, IN First mortg 125,000 3,638,499 54,898 --- 125,000 3,693,397 3,818,397 332,263
Apartments-Indianapolis, IN First mortg 340,940 7,101,480 24,679 --- 340,940 7,126,159 7,467,099 546,762
Apartments-Indianapolis, IN First mortg 378,000 5,679,172 264,706 --- 378,000 5,943,878 6,321,878 425,220
Apartments-Indianapolis, IN First mortg 398,000 6,446,469 116,270 --- 398,000 6,562,739 6,960,739 289,280
Warehouse-Carmel, IN First mortg 54,000 446,075 118,459 --- 54,000 564,534 618,534 292,941
Restaurant-Longwood, FL None 113,479 --- --- --- 113,479 --- 113,479 ---
Restaurant-Indianapolis, IN None 136,494 --- --- --- 136,494 --- 136,494 ---
Office bld-Indianapolis, IN None 71,500 457,818 19,747 --- 71,500 477,565 549,065 149,140
__________ ___________ __________ ____ ___________ ___________ ___________ __________
2,061,913 29,494,521 3,420,804 --- 2,068,658 32,908,580 34,977,238 7,145,719
Construction in progress
various locations --- --- 4,093 --- --- 4,093 4,093 ---
__________ ____________ __________ ____ ___________ ___________ ___________ __________
2,061,913 29,494,521 3,424,897 --- 2,068,658 32,912,673 34,981,331 7,145,719
Equipment--various locations None --- 246,421 591,833 --- --- 838,254 838,254 330,463
__________ ___________ __________ ____ ___________ ___________ ___________ __________
TOTAL REAL ESTATE $2,061,913 $29,740,942 $4,016,729 $--- $2,068,658 $33,750,927 $35,819,585(A) $7,476,182(A)
__________ ___________ __________ ____ ___________ ___________ ___________ __________
__________ ___________ __________ ____ ___________ ___________ ___________ __________
Undeveloped land
various locations None $99,675 $ $ $--- $99,675 $ $99,675(B) $
__________ ___________ __________ ____ ___________ ___________ ___________ __________
__________ ___________ __________ ____ ___________ ___________ ___________ __________
<CAPTION>
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
Century Realty Trust
December 31, 1996
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>
Real estate investments:
Apartments--Richmond, IN 1965 January, 1973 31 years
Apartments--Marion, IN 1962 January, 1973 31 years
Apartments--Kokomo, IN 1966 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, 1979 N/A
Office building--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
</TABLE>
(A) The aggregate carrying value for tax purposes is $27,939,607
(B) The aggregate carrying value for tax purposes is $72,522
<TABLE>
<CAPTION>
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
Century Realty Trust
December 31, 1996
Total Land,
Buildings Buildings
and and Accumulated Undeveloped
Land Improvements Improvements Equipment Depreciation Land
__________ ____________ _____________ ___________ ___________ ________
<S> <C> <C> <C> <C> <C> <C>
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
Additions:
Improvements --- 251,307 251,307 101,144 --- ---
Depreciation --- --- --- --- 1,110,493 ---
Deductions:
Fully amortized costs --- 117,065 117,065 28,291 145,356 ---
__________ ___________ ___________ __________ __________ _______
Balance December 31, 1996 $2,068,658 $32,912,673 $34,981,331 $838,254 $7,476,182 $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 QUILIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 315
<SECURITIES> 591
<RECEIVABLES> 335
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 36,263
<DEPRECIATION> 7,476
<TOTAL-ASSETS> 30,538
<CURRENT-LIABILITIES> 0
<BONDS> 20,468
0
0
<COMMON> 6,249
<OTHER-SE> 2,084
<TOTAL-LIABILITY-AND-EQUITY> 30,538
<SALES> 8,120
<TOTAL-REVENUES> 8,385
<CGS> 0
<TOTAL-COSTS> 4,968
<OTHER-EXPENSES> 533
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,861
<INCOME-PRETAX> 1,022
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,022
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,022
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
