<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1995
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Commission file number 0-8902
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REAL ESTATE FUND INVESTMENT TRUST
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0402813
- --------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
304 South Main Street 29644
P. O. Box 396, Fountain Inn, SC -----------
- ---------------------------------- (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (803) 862-3765
- --------------------------------------------------- --------------
Former name, former address and former fiscal year, if changed since last
- -------------------------------------------------------------------------
report: N/A
- ------ ---
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the Registrant's Shares of Beneficial
Interest, as of November 14, 1995: 2,090,108
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<PAGE> 2
Real Estate Fund Investment Trust
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed balance sheet--September 30, 1995
Condensed statements of income--Three months ended September
30, 1995 and 1994; Nine months ended September 30, 1995 and
1994
Condensed statements of cash flows--Nine months ended
September 30, 1995 and 1994
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE> 3
Part I. Financial Information
Real Estate Fund Investment Trust
Condensed Balance Sheet
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995
--------
(Unaudited)
<S> <C>
ASSETS
Real estate investments:
Equity investments in real estate, less allowances for
depreciation:
Earning $1,416,115
Non-earning 525,542
----------
1,941,657
Net investment in direct financing leases 270,050
Mortgage note receivable 153,117
---------
423,167
Other assets:
Cash and cash equivalents 768,571
Rents and tenant charges receivable, net of allowance for
uncollectible accounts of $43,500 34,205
Prepaid expenses and other 31,363
----------
834,139
----------
$3,198,963
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accrued property taxes $ 95,810
Other accrued expenses 79,004
Federal and state income taxes payable 1,371
Deferred income taxes 2,000
----------
178,185
Shareholders' equity:
Shares of Beneficial Interest, par value $1.00 per
share--unlimited authorization, issued and
outstanding 2,090,108 shares 2,090,108
Additional paid-in capital 759,110
Undistributed net income 171,560
----------
3,020,778
----------
$3,198,963
==========
</TABLE>
<PAGE> 4
Real Estate Fund Investment Trust
Condensed Statements of Income (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------ ------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 213,504 $ 206,131 $ 650,342 $ 616,535
Earned income from direct financing leases 10,626 12,579 33,431 39,337
Interest on mortgage notes and money
market accounts 8,657 8,190 23,982 22,823
Miscellaneous 252 - 252 5
--------- --------- --------- ---------
233,039 226,900 708,007 678,700
Expenses:
Provision for depreciation 42,602 41,750 128,442 122,687
Property and miscellaneous taxes 41,528 42,704 124,449 128,113
Maintenance and repairs, including payments of
$31,312 (1995), $18,447 (1994), $60,661
(1995) and $47,249 (1994) to a company in
which the Trust's manager is a principal owner 57,586 24,368 122,361 76,783
Administrative and other expenses 50,795 39,613 171,723 165,977
--------- --------- --------- ---------
192,511 148,435 546,975 493,560
--------- --------- --------- ---------
Income from operations before income taxes 40,528 78,465 161,032 185,140
Provision for federal and state income taxes 800 1,200 2,700 2,400
--------- --------- --------- ---------
Income from operations 39,728 77,265 158,332 182,740
Gain on sale of equity investment in real estate,
net of taxes - - 203,897 -
--------- --------- --------- ---------
Net income $ 39,728 $ 77,265 $ 362,229 $ 182,740
========= ========= ========= =========
Net income per Share of Beneficial Interest:
Income from operations $ .02 $ .04 $ .07 $ .09
Gain on sale of real estate - - .10 -
--------- --------- --------- ---------
$ .02 $ .04 $ .17 $ .09
========= ========= ======== =========
Number of shares used in computation 2,090,108 2,090,108 2,090,108 2,090,108
========= ========= ========= =========
Cash distributions paid per Share of
Beneficial Interest $ .05 .04 $ .15 $ .12
========= ========= ========= =========
</TABLE>
<PAGE> 5
Real Estate Fund Investment Trust
Condensed Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income $362,229 $182,740
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of equity investments in real estate 128,442 122,687
Gain on sale of equity investments in real estate (203,997) -
Recovery of investment in direct financing leases 33,394 29,820
Decrease in rents and tenant charges receivable,
prepaid expenses, escrow deposits and other assets 98,306 65,416
Decrease in accrued property taxes, other accrued
expenses and federal and state income taxes payable (58,208) (72,030)
-------- --------
Net cash provided by operating activities 360,166 328,633
INVESTING ACTIVITIES
Proceeds from sale of equity investment in real estate,
net of selling expense of $7,542 (1995) 224,958 -
Additional costs of equity investments in real estate,
including $31,367 (1995) and $41,772 (1994) paid
to a company in which the Trust's manager is a
principal owner (64,575) (118,862)
Collections of mortgage notes receivable 19,457 18,055
-------- --------
Net cash provided by (used in) investing activities 179,840 (100,807)
DIVIDENDS PAID (313,516) (250,813)
--------- --------
Increase (decrease) in cash and cash equivalents 226,490 (22,987)
Cash and cash equivalents at beginning of period 542,081 688,124
-------- --------
Cash and cash equivalents at end of period $768,571 $665,137
======== ========
</TABLE>
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
There has been no significant change in the Trust's liquidity or financial
condition since December 31, 1994. At present there are no large capital
expenditures planned that would present a liquidity problem. In the Trust's
Form 10-KSB for the year ended December 31, 1994, disclosure was made of the
shareholders' vote to direct the Board of Trustees to develop a plan of
liquidation of the Trust's assets. Although negotiations are continuing, no
formal agreement to liquidate the Trust's assets has been executed at this
time. The plan of liquidation must also be approved by the shareholders. The
Trust intends to continue to distribute as dividends at least 95% of its
taxable income until such time as the plan of liquidation is approved.
Rental income increased by approximately 4% during the three-month period ended
September 30, 1995 and increased by approximately 5% during the nine-month
period ended September 30, 1995, as compared to the three-month and nine-month
periods ended September 30, 1994. This increase is primarily due to recent
leases of properties, which were vacant as of September 30, 1994. As of
September 30, 1995, the Trust had approximately 118,000 square feet of vacant
space as compared to approximately 169,000 square feet of vacant space at
September 30, 1994. Total expenses increased by approximately 30% during the
three-month period ended September 30, 1995 and increased by approximately 11%
during the nine-month period ended September 30, 1995, as compared to the
three-month and nine-month periods ended September 30, 1994. These increases
are primarily due to an increase in repair and maintenance expenditures.
Repair and maintenance expenditures have increased due to an increase in roof
repairs and other deferred maintenance projects.
For 1995 and 1994, the Trust has provided for federal and state income taxes,
assuming a consistent flow of revenue and expenses for the year. The taxes are
based on estimated taxable income after the 95% dividend distribution required
by IRS code provisions pertaining to real estate investments trusts.
In March 1995, the Trust sold Pete's Restaurant located on Wade Hampton
Boulevard in Greenville, South Carolina for $147,500. A gain of $139,301 and
$134,667 was recognized for financial reporting and income tax purposes,
respectively. In April 1995, the Trust sold the Quik Way property located in
Anderson, South Carolina for $85,000. A gain of $64,696 and $65,781 was
recognized for financial reporting and income tax purposes, respectively. In
addition, the Trust has entered a contract to sell real estate located on
Airport Road in Greenville, South Carolina for $450,000. The Trust anticipates
recognizing a gain for financial statement purposes and for tax purposes if
the property is ultimately sold, pursuant to this contract. The Trust also has
two outstanding offers for the sale of real estate as of the date of this
report. However, contracts for sale have not been entered into at this time.
Based on preliminary discussions, the Trust anticipates recognizing a gain for
financial statement purposes and for tax purposes if either of these properties
are ultimately sold, pursuant to these outstanding offers.
<PAGE> 7
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule (for SEC use only)
The Trust did not file any reports on Form 8-K during
the three months ended September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Real Estate Fund Investment Trust
---------------------------------
(Registrant)
Date November 14, 1995 /s/ WERNER B. MCDANNALD
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Werner B. McDannald, Manager
Date November 14, 1995 /s/ STEWART H. GARRETT
-------------------- ----------------------
Stewart H. Garrett, Sec./Treas.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED BALANCE SHEET, CONDENSED STATEMENT OF INCOME AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH THIRD QUARTER 10-QSB FOR 1995.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 768,571
<SECURITIES> 0
<RECEIVABLES> 230,822
<ALLOWANCES> 43,500
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,198,963
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 2,090,108
0
0
<OTHER-SE> 930,670
<TOTAL-LIABILITY-AND-EQUITY> 3,198,963
<SALES> 0
<TOTAL-REVENUES> 708,007
<CGS> 0
<TOTAL-COSTS> 546,975
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 161,032
<INCOME-TAX> 2,700
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 203,897
<CHANGES> 0
<NET-INCOME> 362,229
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
<FN>
<F1>THIS COMPANY IS A REAL ESTATE INVESTMENT TRUST. THEREFORE, SEVERAL OF THE
ITEMS REQUESTED ARE NOT SPECIFICALLY IDENTIFIED ON THE 10-QSB. A $2,100.00
PROVISION FOR DOUBTFUL ACCOUNTS IS INCLUDED WITH OTHER EXPENSES ON THE INCOME
STATEMENT.
</FN>
</TABLE>
