<PAGE>
FORM 10-Q - QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURTIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
From the transition period from to
------------------ ------------------
Commission file number 0-9097
THE PEREGRINE REAL ESTATE TRUST
(Exact name of registrant as specified in its charter)
California 94-2255677
- --------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1300 Ethan Way, Suite 200, Sacramento, CA 95825
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(916) 929-8244
- -----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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
----- -----
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of November 8, 1999, there were 22,552,440 outstanding Common Shares
of Beneficial Interest. As of November 8, 1999 there were 2,319,915 outstanding
Common Shares of Beneficial Interest held by non-affiliates of the registrant.
<PAGE>
- ------------------------------------------------------------------------------
THE PEREGRINE REAL ESTATE TRUST
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDEX PAGE
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1: Financial Statements
Balance Sheets -
September 30, 1999 and December 31, 1998 1
Statements of Operations -
For the Three Months and Nine Months Ended
September 30,1999 and 1998 2-3
Statements of Cash Flows -
For the Nine Months Ended
September 30, 1999 and 1998 4
Notes to Financial Statements 5 - 11
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 12- 19
Item 3: Quantitative and Qualitative Disclosure about
Market Risk 20
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 21-23
</TABLE>
<PAGE>
PART I: FINANCIAL INFORMATION
THE PEREGRINE REAL ESTATE TRUST
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
(UNAUDITED) (AUDITED)
------------- ------------
<S> <C> <C>
ASSETS
Investments:
Commercial and hotel properties, net of accumulated depreciation of $9,976,000
and $7,617,000 at September 30, 1999 and December 31, 1998, respectively $ 76,968,000 $ 77,873,000
Notes receivable, net of deferred gains of $77,000 and $78,000 at September
30, 1999 and December 31, 1998, respectively 323,000 327,000
------------- ------------
77,291,000 78,200,000
Cash 1,227,000 165,000
Restricted cash 221,000 215,000
Rents, accrued interest, and other receivables, net of allowance of $33,000
and $0 at September 30, 1999 and December 31, 1998, respectively 573,000 605,000
Other assets 2,309,000 1,860,000
============= ============
Total assets $ 81,621,000 $ 81,045,000
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Line of Credit $ 34,554,000 $ 24,478,000
Senior Notes Payable 16,074,000 26,074,000
Long-term notes payable, collateralized by deeds of trust on commercial
properties 23,704,000 23,952,000
Accounts payable and accrued liabilities 2,023,000 2,246,000
Other liabilities 426,000 392,000
------------- ------------
Total Liabilities 76,781,000 77,142,000
Commitments and contingencies (Note 5 to financial statements)
Common Shares of Beneficial Interest: 50,000,000 shares authorized; 22,553,000
shares outstanding at September 30, 1999 and December 31, 1998 47,405,000 47,405,000
Accumulated deficit (42,565,000) (43,502,000)
------------- ------------
Total shareholders' equity 4,840,000 3,903,000
------------- ------------
Total liabilities and shareholders' equity $ 81,621,000 $ 81,045,000
============= ============
</TABLE>
See accompanying notes to financial statements
1
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
REVENUES:
Hotel property $ 4,297,000 $ 3,502,000 $ 11,518,000 $ 10,260,000
Commercial property 2,078,000 2,161,000 6,353,000 6,756,000
Interest 22,000 17,000 60,000 84,000
Other 5,000 8,000 17,000 26,000
------------ ------------ ------------- ---------------
6,402,000 5,688,000 17,948,000 17,126,000
------------ ------------ ------------- ---------------
EXPENSES:
Hotel property operating expenses 3,480,000 3,138,000 9,351,000 8,401,000
Commercial property operating expenses 704,000 739,000 2,032,000 2,191,000
Commercial property management fees 12,000 -- 19,000 --
Depreciation and amortization 1,102,000 886,000 3,302,000 2,510,000
Interest 1,657,000 1,524,000 4,726,000 4,196,000
General and administrative 746,000 934,000 2,460,000 2,453,000
------------ ------------ ------------- ---------------
7,701,000 7,221,000 21,890,000 19,751,000
------------ ------------ ------------- ---------------
Loss before gain on sale of
investments (1,299,000) (3,941,000) (2,625,000)
Gain on sale of investments -- 374,000 4,821,000 374,000
------------ ------------ ------------- ---------------
Net income (loss) before extraordinary (1,299,000) (1,159,000) 879,000 (2,251,000)
item
Extraordinary Item - Forgiveness of Debt 3,000 -- 58,000 --
------------ ------------ ------------- ---------------
Net income (loss) $ (1,296,000) $ (1,159,000) $ 937,000 $ (2,251,000)
============ ============ ============= ===============
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
STATEMENTS OF OPERATIONS - CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Loss per Common Share of Beneficial Interest:
Net income (loss) $ (1,296,000) $ (1,159,000) $ 937,000 $ (2,251,000)
Preferred Stock dividends, net of -- (806,000) -- (2,326,000)
discounts
Accretion of discounts on Preferred Stock -- (138,000) -- (393,000)
------------ ------------ ------------- ------------
Net income (loss) attributable to Common
Shares of Beneficial Interest $ (1,296,000) $ (2,103,000) $ 937,000 $ (4,970,000)
============ ============ ============= ============
Net income (loss) per share attributable
to Common Share of Beneficial Interest,
basic and diluted $ (.06) $ (0.43) $ .04 $ (1.02)
============ ============ ============= ============
Weighted average number of Common Shares
of Beneficial Interest outstanding 22,553,000 4,881,000 22,553,000 4,881,000
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1999 1998
------------ --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 937,000 $ (2,251,000)
------------ --------------
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Interest, fees and reimbursable expenses added to principal
balance of debt 552,000 895,000
Depreciation and amortization 3,303,000 2,489,000
Gain on sale of investments (4,821,000) (267,000)
Changes in other assets and liabilities:
Decrease in rents, accrued interest, and other receivables 32,000 318,000
(Increase) decrease in other assets 347,000 (268,000)
(Decrease) increase in accounts payable and accrued liabilities (223,000) 125,000
Increase in other liabilities 34,000 48,000
------------ --------------
Total adjustments (777,000) 3,340,000
------------ --------------
Net cash provided by operating activities 160,000 1,089,000
------------ --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities -- (1,816,000)
Principal collections on marketable securities -- 1,833,000
Proceeds from the sales of investments 9,534,000 1,019,000
Purchase of hotel investments -- (9,000,000)
Improvements to commercial and hotel properties (6,880,000) (3,558,000)
Purchase of office equipment (41,000) (78,000)
Principal collections on notes receivable 4,000 3,000
------------ --------------
Net cash provided by (used in) investing activities 2,617,000 (11,597,000)
------------ --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term notes payable (248,000) (251,000)
Principal payments on Senior Notes (10,000,000) (856,000)
Borrowings on Line of Credit, net 8,539,000 10,810,000
Increase in restricted cash (6,000) (22,000)
------------ --------------
Net cash (used in) provided by financing activities (1,715,000) 9,681,000
------------ --------------
Net increase (decrease) in cash 1,062,000 (827,000)
Cash, beginning of period 165,000 1,247,000
------------ --------------
Cash, end of period $ 1,227,000 $ 420,000
============ ==============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
NOTES TO FINANCIAL STATEMENTS
----------
1. Organization, Summary of Significant Accounting Policies and
Chapter 11 Proceedings
ORGANIZATION
The Peregrine Real Estate Trust (d.b.a. WinShip Properties), (f.k.a.
Commonwealth Equity Trust) ("Peregrine" or the "Trust") was organized under
the laws of the State of California pursuant to a Declaration of Trust dated
July 31, 1973, and pursuant to a Plan of Reorganization (the "Plan") under
Chapter 11 of the United States Bankruptcy Code was reorganized under a
Restated Declaration of Trust dated October 7, 1994 (the "Effective Date").
On April 28, 1999, the Trust made a motion to the United States Bankruptcy
Court to have a final motion and closing of the Trust's bankruptcy case that
was filed in August 1993. The motion was granted and the final decree and
closing of the Trust bankruptcy case was consummated.
At September 30, 1999, Peregrine owned twelve commercial properties
located primarily in the Sacramento area, four hotel properties located in
northern California, a partnership interest, and one mortgage note secured by
real property.
BASIS OF PRESENTATION
The accompanying financial statements are unaudited; however, they
have been prepared in accordance with generally accepted accounting
principles for interim financial information and in conjunction with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
they do not include all of the disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting solely of normal recurring matters)
necessary for a fair presentation of the financial statements for these
interim periods have been included. The results for the interim period ended
September 30, 1999, are not necessarily indicative of the results to be
obtained for the full fiscal year. These financial statements should be read
in conjunction with the December 31, 1998, audited financial statements and
notes thereto, included in The Peregrine Real Estate Trust's Annual Report on
Form 10-K.
NET INCOME (LOSS) PER SHARE
Net income (loss) per Common Share of Beneficial Interest, basic and
diluted, has been computed and presented in accordance with Statement of
Financial Accounting Standard No. 128, "Earnings Per Share" ("SFAS 128"). The
weighted-average number of Common Shares of Beneficial Interest outstanding
during the nine-month periods ended September 30, 1999 and 1998 was
22,553,000 and 4,881,000, respectively. Common Shares of Beneficial Interest
equivalents are anti-dilutive for the nine-month periods ended September 30,
1999 and 1998, and are not considered in calculating net income (loss) per
Common Share of Beneficial Interest.
5
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
NOTES TO FINANCIAL STATEMENTS
----------
1. ORGANIZATION AND BASIS OF PRESENTATION, CONTINUED
COMPREHENSIVE INCOME (LOSS)
On January 1, 1998, the Trust adopted SFAS No. 130, Reporting
Comprehensive Income. This statement requires that all items recognized under
accounting standards as components of comprehensive income (loss) be reported
in a financial statement that is displayed with the same prominence as other
annual financial statements. This statement also requires that an entity
classify items of other comprehensive income (loss) by their nature in an
annual financial statement. Comprehensive income (loss) includes net income
(loss) and other comprehensive income (loss). For the three and nine months
ended September 30, 1999, and 1998, the Trust had no other comprehensive
income (loss) items.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standard Board issued SFAS
No. 133, Accounting for Derivative Investments and hedging activities. The
statement establishes accounting and reporting standards for derivative
instruments and hedging activities. The effective date for the statement has
been postponed until the year 2001. The company is in the process of
determining the impact of SFAS No. 133 on the company's financial statements.
INCOME TAXES
No provision for income taxes for the nine months ended September
30, 1999 has been recorded in the accompanying financial statement as the
Trust has sufficient tax operating loss carry-forwards available to apply
against income taxes for 1999, if any.
2. COMMERCIAL AND HOTEL PROPERTIES
At September 30, 1999, no commercial or hotel properties were
classified as "held-for-sale". At December 31, 1998, Burbank Mini-Storage
with a total carrying value of $1,373,000 and 3900 Lennane with a total
carrying value of $2,438,000 was classified as "held-for-sale" (and were sold
March 12, 1999).
3. INVESTMENT IN MARKETABLE SECURITIES AVAILABLE-FOR-SALE
At September 30, 1999, and December 31, 1998, the Trust had no
marketable securities.
6
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
NOTES TO FINANCIAL STATEMENTS
----------
4. RESTRICTED CASH
At September 30, 1999 and December 31, 1998, cash of $221,000 and
$215,000, respectively, was restricted. The funds represent a portion of an
Indemnity Trust Fund that was established to fund possible indemnification
obligations with respect to Peregrine's former Trustees and officers. The
Indemnity Trust Fund, which is managed by an independent third-party trustee,
is restricted as to use for a period of three years ended May 29, 2000.
5. COMMITMENTS AND CONTINGENCIES
FINANCIAL STATUS OF PEREGRINE
At September 30, 1999, Peregrine's management believes that because
of improved conditions of the real estate economy, Peregrine will be able to
fund the day-to-day business operations and meet the debt service obligations
on the Line of Credit, first mortgage notes, and Senior Lender Group for the
remainder of 1999. Management also believes that because of the borrowing
capacity on the Line of Credit, Peregrine will be able to fund capital
expenditures for 1999.
6. GAIN ON SALE OF INVESTMENTS
On June 17, 1999, Peregrine sold a light industrial building located
at 11167 Trade Center, Sacramento, CA, to Sam's Airpack Plus, Inc. for a
gross sales price of $1,902,000 resulting in a gain of $842,000.
On March 12, 1999, Peregrine sold an office building located at 3900
Lennane, Sacramento, California, to the Parsons Family Partnership for a
gross sales price of $4,800,000 resulting in a gain of $1,999,000.
On March 12, 1999, Peregrine sold a mini storage facility located at
1435 Sebastopol, Santa Rosa, California to James Ledwith, an individual, for
a gross sales price of $3,625,000 resulting in a gain of $1,980,000.
7
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
NOTES TO FINANCIAL STATEMENTS
----------
6. GAIN ON SALE OF INVESTMENTS (CONTINUED)
On August 4, 1998, Peregrine sold a light industrial building
located at 1541 Commerce Street, Corona, California, to James Scheuer, an
individual, for a gross sales price of $623,000 resulting in a gain of
$205,000.
On September 4, 1998, Peregrine sold a light industrial building
located at 1525 Consumer Circle, Corona, California, to W.K. Machine Co. Inc,
for a gross sales price of $580,000 resulting in a gain of $169,000.
7. RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 1999, Peregrine paid
$275,000 to E.S. Merriman in connection with services provided in the
negotiation of the term of the Line of Credit. During the negotiations for
the Line of Credit, one of Peregrine's trustees, Michael Joseph, was an agent
for E.S. Merriman and assisted in the negotiations of the terms of the Line
of Credit.
During the nine months ended September 30, 1998, Peregrine paid
$10,000 to one of its then current officers, Brian Engstrom, for services
performed as a consultant prior to the commencement of his employment as an
officer of the Trust.
8. STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION
Cash paid for interest during the nine month periods ended September
30, 1999 and 1998, was $4,536,000 and $4,396,000, respectively.
9. LINES OF CREDIT
At March 10, 1999, Peregrine replaced the Fleet Capital Line of
Credit ("Old Line of Credit"), with a new line of credit pursuant to a loan
and security agreement with Fremont Investment & Loan ("Fremont"), to provide
up to $44,000,000, in borrowing capacity, under a revolving line of credit
("Line of Credit"). The maximum amount that may be borrowed under the Line of
Credit is based upon the appraised value of certain parcels of real estate
owned by Peregrine. As of September 30, 1999, the current borrowing capacity
for the Line of Credit is $37,856,000. The maximum borrowing on the Line of
Credit has been reduced due to the sale of certain collateralized properties.
8
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
NOTES TO FINANCIAL STATEMENTS
----------
9. LINES OF CREDIT CONTINUED.
The commitments made under the new Line of Credit expire on April 1,
2001, but may be extended until April 2, 2003 with Fremont's consent. The
Line of Credit is secured by a first lien on certain of Peregrine properties.
In connection with the execution of the Line of Credit; the Trust entered
into a Fifth Amendment to Second Amended and Restated Note Agreement (the
"Fifth Amendment") with the Senior Lender Group to permit the Trust to enter
into the Line of Credit, to release collateral that had previously secured
the Trust's obligations under the Trust's outstanding Senior Notes and to
allow interest on the outstanding Senior Notes to be paid-in-kind rather than
in cash if the Trust does not achieve positive net cash flow in specified
periods. Under the terms of the Fifth Amendment and the new Line of Credit,
the Senior Notes held by the Senior Lender Group are now unsecured. Principal
amounts borrowed under the Line of Credit bear interest at 8.6% for the first
year, then at a range from the six-month LIBOR plus 350 basis points to LIBOR
plus 400 basis points.
The Trust applied approximately $27,500,000 of borrowings incurred
under the Line of Credit to repay all amounts outstanding under the Old Line
of Credit. An additional $10,000,000 of borrowings was incurred under the
Line of Credit and was used to repay a portion of the amounts outstanding on
the Senior Notes to the Senior Lender Group, which is held by entities that
are also significant shareholders of the Trust. The remaining borrowing
capacity, under the Line of Credit, is available to Peregrine only for i)
capital improvements to certain properties and improvements securing the Line
of Credit, ii) costs incurred in the ordinary course of business in
connection with the Peregrine's acquisition of income-producing commercial
properties for its own account, or iii) certain payments to Peregrine's
public common shareholders.
Borrowings under the Line of Credit may not be applied for general
corporate or working capital purposes. The Line of Credit prohibits the Trust
from incurring debt other than specified mortgage indebtedness and permitted
refinancing, indebtedness and restricts the ability of the Trust to incur
liens, distribute assets, and make payments on Senior debt, and contains
certain requirements as to compliance with laws by the Trust, inspection of
properties by the lender, leasing of space, environmental matters, insurance,
notices and information required to be given to Fremont under Line of Credit,
asbestos operations, and maintenance, lead-based paint and hotel renovations.
9
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
NOTES TO FINANCIAL STATEMENTS
----------
10. SENIOR NOTES PAYABLE
In accordance with the Plan of Reorganization, restructured notes
payable in the face amount of $40,000,000, which bear interest at 8.5% per annum
and are due on October 1, 2000, were issued to the Senior Lender Group in
partial satisfaction of the $80,000,000 obligation owed to them. Interest was
payable in-kind through September 30, 1996, by means of interest deferral notes
issued quarterly. Since September 30, 1996, interest has been payable monthly in
cash, with the first payment commencing November 1, 1996.
The restructured notes payable and interest deferral notes ("Senior
Notes Payable" or "Senior Notes") are unsecured and are subordinate to other
certain liens.
In connection with the execution of the Line of Credit, the Trust
entered into a Fifth Amendment to Second Amended and Restated Note Agreement
(the "Fifth Amendment") with the Senior Lender Group to permit the Trust to
enter into the Line of Credit, to release collateral that had previously secured
the Trust's obligations under the Trust's outstanding Senior Notes and to allow
interest on the outstanding Senior Notes to be paid-in-kind rather than in cash
if the Trust does not achieve positive net cash flow for three consecutive
months. Also, no principal payments may be paid to the Senior Lender Group
except from proceeds related to the sales of Peregrine properties. In the event
of default under the terms of the Line of Credit there are no payments allowed
to the Senior Lender Group. In addition, there are covenants related to events
or conditions, which could have or result in a material adverse effect as
defined in the applicable agreement.
11. OPERATING SEGMENTS
Peregrine's reportable segments consist of strategic real estate groups
that consist of different types of properties. The groups are managed separately
because each group requires different management and marketing strategies.
<TABLE>
<CAPTION>
Revenues
(excluding Interest Operating Interest Amortization Gain Extraordinary Net Total
Segment Interest Income Expenses Expense & on Sales Item Income/ Assets
Income) Depreciation (Loss)
------- ----------- --------- --------- -------- ------------- --------- ----------- -------- ----------
(Numbers shown in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR NINE MONTHS ENDED SEPTEMBER 30, 1999
Hotels $11,518 $ -- $ 9,351 $1,796 $1,370 $ -- $ -- $ (999) $34,722
Commercial 6,353 -- 2,051 2,930 1,577 4,821 -- 4,616 44,086
Corporate 17 60 2,460 -- 355 -- 58 (2,680) 2,813
----------- --------- --------- -------- ------------- --------- ----------- -------- ----------
Total $17,888 $ 60 $13,862 $4,726 $3,302 $4,821 $ 58 $ 937 $81,621
----------- --------- --------- -------- ------------- --------- ----------- -------- ----------
----------- --------- --------- -------- ------------- --------- ----------- -------- ----------
FOR NINE MONTHS ENDED SEPTEMBER 30, 1998
Hotels $ 10,260 $ -- $ 8,401 $1,466 $ 946 $ -- $ -- $ (553) $27,175
Commercial 6,756 -- 2,191 2,730 1,512 374 -- 697 49,816
Corporate 26 84 2,453 -- 52 -- -- (2,395) 1,396
----------- --------- --------- -------- ------------- --------- ---------- -------- ----------
Total $17,042 $ 84 $ 13,045 $4,196 $2,510 $ 374 $ -- $(2,251) $78,387
----------- --------- --------- -------- ------------- --------- ---------- -------- ----------
----------- --------- --------- -------- ------------- --------- ---------- -------- ----------
</TABLE>
10
<PAGE>
THE PEREGRINE REAL ESTATE TRUST
NOTES TO FINANCIAL STATEMENTS
----------
12. SUBSEQUENT EVENT
Peregrine has a non-recourse long-term mortgage note, which is secured
by a retail shopping center located at 6241 Sunrise Boulevard. The property
continued to be vacant during the first three quarters of 1999, despite efforts
to lease the property. The note requires a monthly debt service payment
(including tax impounds) of approximately $43,000. Due to negative cash flow
resulting from the required debt service payments, Peregrine ceased making
payments on the mortgage note as of April 1999. In July 1999, Peregrine was
notified that the lender had initiated judicial foreclosure proceedings against
the property securing the note. The property will be sold at a public sale on
November 17, 1999.
11
<PAGE>
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- --------------------------------------------------------------------------------
The following discussion should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this Form 10-Q.
Historical results set forth are not necessarily indicative of the future
financial position and results of operations of Peregrine.
In addition to historical information, this Form 10-Q contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as
those pertaining to Peregrine's ability to fund its operations or otherwise
satisfy capital requirements, both in the short and long term; to undertake
property repairs, maintenance, improvements, refurbishment, or other capital
expenditures; and to negotiate satisfactory terms with creditors, licensors,
franchisors, or others. Forward-looking statements involve numerous risks and
uncertainties. The following factors, among others discussed herein, could cause
results and future events to differ materially from those set forth or
contemplated in the forward-looking statements: increased interest rates and
operating costs, deteriorating market conditions affecting occupancy or lease
rates, loss of licenses or franchises, difficulties in finding buyers for
property dispositions, environmental uncertainties, risks related to natural
disasters, financial market fluctuations, changes in real estate laws, real
property taxes, and governmental regulation, as well as general economic trends
and the factors discussed elsewhere in this Form 10-Q. Readers are cautioned not
to place undue reliance on forward-looking statements, which reflect
management's analysis only as of the date hereof. Peregrine assumes no
obligation to update forward-looking statements. Readers should refer to
Peregrine's reports to be filed from time to time with the Securities and
Exchange Commission pursuant to the Exchange Act, including Peregrine's Annual
Report Form 10-K for the year ended December 31, 1998.
OVERVIEW
During the quarter ended September 30, 1999, management of Peregrine
concentrated on the development and implementation of an operating strategy
designed to maximize the income stream from the commercial and hotel properties.
Pursuant to this strategy, management continued its efforts to improve the
physical and operating condition of its commercial and hotel properties by
completing repairs and deferred maintenance on the commercial properties, and
completing required refurbishments at the hotel properties.
12
<PAGE>
COMPARISON OF THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 TO THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 1998
REVENUES
Total revenues were $17,948,000 during the nine months ended September
30, 1999, an increase of $822,000, or 5%, from revenues of $17,126,000 for the
nine months ended September 30, 1998. Total revenues were $6,402,000 during the
three months ended September 30, 1999, compared to $5,688,000 for the three
months ended September 30, 1998, an increase of $714,000 or 13%.
HOTEL PROPERTY REVENUES. Hotel revenues increased from
$10,260,000 for the nine months ended September 30, 1998 to $11,518,000 for the
nine months ended September 30, 1999, an increase of $1,258,000 or 12%. Hotel
revenues increased from $3,502,000 for the three months ended September 30, 1998
to $4,297,000 for the three months ended September 30, 1999, an increase of
$795,000 or 23%. The increase is attributable to the additional revenue for the
Concord Hotel that was purchased in July 1998 and increased room rates, which is
partially offset by lower occupancy at the hotels.
COMMERCIAL PROPERTY REVENUES. Commercial property revenues decreased
from $6,756,000 for the nine months ended September 30, 1998 to $6,353,000 for
the nine months ended September 30,1999, a decrease of $403,000 or 6%.
Commercial property revenues decreased from $2,161,000 for the three months
ended September 30, 1998 to $2,078,000 for the three months ended September 30,
1999, a decrease of $83,000 or 4%. The decrease is primarily attributable to
revenue lost as a result of the sales of the Commerce and Consumer industrial
properties in the third quarter of 1998, Burbank Mini-Storage facility and 3900
Lenanne Office Park in March 1999 and 11167 Trade Center Drive in June 1999.
INTEREST REVENUE. Interest revenue decreased from $84,000 for the nine
months ended September 30, 1998 to $60,000 for the nine months ended September
30,1999, a decrease of $24,000 or 28%. Interest revenues increased from $17,000
for the three months ended September 30, 1998 to $22,000 for the three months
ended September 30, 1999, an increase of $5,000 or 29%. The decrease for the
nine months ended September 30, 1999 is primarily attributable to a reduction of
cash balances. The increase for the three months ended September 30, 1999, is
primarily due to an increase of certain cash balances.
TOTAL EXPENSES
Total expenses were $21,890,000 and $19,751,000 for the nine months
ended September 30, 1999 and 1998, respectively, an increase in 1999 of
$2,139,000 or 11%. Total expenses were $7,701,000 during the three months ended
September 30, 1999, an increase of $480,000, or 7%, from total expenses of
$7,221,000 during the three months ended September 30, 1998.
13
<PAGE>
HOTEL PROPERTY OPERATING EXPENSES. Hotel property operating expenses
increased from $8,401,000 for the nine months ended September 30, 1998 to
$9,351,000 for the nine months ended September 30, 1999, an increase of
$950,000 or 11%. Operating expenses for the hotels increased $342,000, or
11%, from $3,138,000 during the three months ended September 30, 1998, to
$3,480,000 during the three months ended September 30, 1999. The increase is
attributable to operating expenses related to the Concord hotel, which was
purchased in July 1998.
COMMERCIAL PROPERTY OPERATING EXPENSES. Commercial property operating
expenses decreased from $2,191,000 for the nine months ended September 30, 1998
to $2,032,000 for the nine months ended September 30, 1999, a decrease of
$159,000 or 7%. Operating expenses for the commercial properties decreased
$35,000 or 5%, from $739,000 during the three months ended September 30, 1998,
to $704,000 during the three months ended September 30, 1999. The decrease is
primarily attributable to the absence of expenses for the Commerce and Consumer
properties that were sold in August and September of 1998, respectively, and
Burbank Mini-Storage facility and 3900 Lenanne Office Park that were sold in
March 1999, and 11167 Trade Center that sold in June 1999.
COMMERCIAL PROPERTY MANAGEMENT FEES. Commercial property management
fees increased from $0 for the nine months ended September 30, 1998 to $19,000
for the nine months ended September 30, 1999. Commercial property management
fees increased from $0 for the three months ended September 30, 1998 to $12,000
for the three months ended September 30, 1999. The increase is attributable to
management fees for the Downtown Mini-Storage facility paid to an outside
management company in 1999.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased from $2,510,000 for the nine months ended September 30, 1998
to $3,302,000 for the nine months ended September 30, 1999, an increase of
$792,000 or 32%. Depreciation and amortization expense increased $216,000, or
24%, to $1,102,000 for the three months ended September 30, 1999, up from
$886,000 for the three months ended September 30, 1998. The increase is
primarily attributable to an increase in depreciation and amortization at the
hotel properties due to the capital improvements for the hotels during 1998 and
during 1999, the purchase of the Concord hotel in July 1998 and the amortization
of loan fees related to the Line of Credit which were slightly offset with the
sales of the three buildings during the nine months ended September 30, 1999.
INTEREST EXPENSE. Interest expense increased from $4,196,000 for the
nine months ended September 30, 1998 to $4,726,000 for the nine months ended
September 30, 1999, an increase of $530,000 or 13%. Interest expense increased
$133,000, or 9%, from $1,524,000 for the three months ended September 30, 1998,
to $1,657,000 for the three months ended September 30, 1999. The increases are
primarily attributable to higher average balances outstanding under the Line of
Credit.
14
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased from $2,453,000 for the nine months ended September 30, 1998
to $2,460,000 for the nine months ended September 30, 1999, an increase of
$7,000 or 1%. General and administrative expense decreased $188,000, or 20%,
from $934,000 for the three months ended September 30, 1998, to $746,000 for the
nine months ended September 30, 1999. The increase for the nine months ended
September 30, 1999 is primarily attributable to an increase in wages and
benefits resulting from increases in staff and the costs related to the purchase
and installation of computer software, partially offset by a decrease in
consulting costs and legal fees. The decrease for the three months ended
September 30, 1999 and 1998 is primarily attributable to lower advisory fees
and a temporary reduction in personnel.
GAIN ON SALE OF INVESTMENTS
On June 17,1999, Peregrine sold a light industrial building located at
11167 Trade Center, Sacramento, CA, to Sam's Airpack Plus, Inc. for a gross
sales price of $1,902,000 resulting in a gain of $842,000.
On March 12, 1999, Peregrine sold an office building located at 3900
Lennane, Sacramento, California, to the Parsons Family Partnership for a gross
sales price of $4,800,000 resulting in a gain of $1,999,000.
On March 12, 1999, Peregrine sold a mini storage facility located at
1435 Sebastopol, Santa Rosa, California to James Ledwith, an individual, for a
gross sales price of $3,625,000 resulting in a gain of $1,980,000.
On August 4, 1998, Peregrine sold a light industrial building located
at 1541 Commerce Street, Corona, California, to James Scheuer, an individual,
for a gross sales price of $623,000 resulting in a gain of $205,000.
On September 4, 1998, Peregrine sold a light industrial building
located at 1525 Consumer Circle, Corona, California, to W.K. Machine Co. Inc,
for a gross sales price of $580,000 resulting in a gain of $169,000.
DIVIDENDS
Peregrine made no cash distributions during the three or nine months
ended September 30, 1999 and 1998. In addition, Peregrine is substantially
restricted from and does not anticipate making any cash distributions to
shareholders in the foreseeable future.
15
<PAGE>
OCCUPANCY
HOTEL AND COMMERCIAL PROPERTY OCCUPANCY. At September 30, 1999 and
September 30, 1998, overall weighted average occupancy levels for the Trust's
properties were as follows:
<TABLE>
<CAPTION>
Overall Weighted Average Occupancy
Property Type September 30, 1999 September 30, 1998
------------- ------------------ ------------------
<S> <C> <C>
Retail Shopping Centers 70% 72%
Office Buildings 90% 85%
Industrial Buildings 90% 81%
Mini-Storage Facilities 95% 89%
Hotels 59% 60%
</TABLE>
The overall weighted average occupancy level is calculated by
multiplying the occupancy by square footage (or rooms available) and dividing
the total by the total square footage (or rooms available) in the portfolio.
The hotel rooms available do not reflect rooms, which were temporarily out
of service due to the redevelopment of the Sacramento and Concord hotel
properties.
LIQUIDITY AND CAPITAL RESOURCES
The Trust's unrestricted cash totaled $1,227,000 on September 30, 1999
an increase from $165,000 at December 31, 1998. During the nine months ended
September 30, 1999, Peregrine's principal source of funds was from hotel and
commercial property revenues, as well as proceeds related to the sales of
investments and funds available from the Line of Credit. At September 30, 1999,
$3,302,000 remained available through the Line of Credit; however, pursuant to
the Line of Credit Agreement, Peregrine is subject to certain restrictions and
limitations on borrowing. The remaining borrowing capacity under the Line of
Credit is available to Peregrine only for i) capital improvements to certain
properties and improvements securing the Line of Credit, ii) costs incurred in
the ordinary course of business in connection with the Peregrine's acquisition
of income-producing commercial properties for its own account, or iii) certain
payments to Peregrine's public common shareholders. Borrowings under the Line of
Credit may not be applied for general corporate or working capital purposes.
At March 10, 1999, Peregrine replaced the Fleet Capital Line of Credit
("Old Line of Credit"), with a new line of credit pursuant to a loan and
security agreement with Fremont Investment & Loan ("Fremont"), to provide up to
$44,000,000, in borrowing capacity, under a revolving line of credit ("Line of
Credit"). The maximum amount that may be borrowed under the Line of Credit is
based upon the appraised value of certain parcels of real estate owned by
Peregrine. As of September 30, 1999, the current borrowing capacity for the Line
of Credit is $37,856,000. The maximum borrowing on the Line of Credit has been
reduced due to the sale of certain collateralized properties.
16
<PAGE>
The commitments made under the new Line of Credit expire on April 1,
2001, but may be extended until April 2, 2003 with Fremont's consent. The Line
of Credit is secured by a first lien on certain Peregrine properties. In
connection with the execution of the Line of Credit, the Trust entered into a
Fifth Amendment to Second Amended and Restated Note Agreement (the "Fifth
Amendment") with the Senior Lender Group to permit the Trust to enter into the
Line of Credit, to release collateral that had previously secured the Trust's
obligations under the Trust's outstanding Senior Notes and to allow interest on
the outstanding Senior Notes to be paid-in-kind rather than in cash if the Trust
does not achieve positive net cash flow in specified periods. Under the terms of
the Fifth Amendment and the new Line of Credit, the Senior Notes held by the
Senior Lender Group are now unsecured. Principal amounts borrowed under the Line
of Credit bear interest at 8.6% for the first year, then at a range from the
six-month LIBOR plus 350 basis points to LIBOR plus 400 basis points.
The Trust applied approximately $27,500,000 of borrowings incurred
under the new Line of Credit to repay all amounts outstanding under the Old Line
of Credit. An additional $10,000,000 of borrowings incurred under the new Line
of Credit was used to repay a portion of the amounts outstanding on the Senior
Notes to the Senior Lender Group, which are held by entities that are also
significant shareholders of the Trust.
Debt service paid on Peregrine's first mortgage notes totaled
$1,712,000 during the nine months ended September 30, 1999. Total debt service
requirements on first mortgage notes in 1999 are approximately $2,192,000.
Interest paid on the Senior Lender Group Notes during the nine months ended
September 30, 1999 totaled $3,210,000. Interest on the Senior Lender Group Notes
is required to be paid in cash on a monthly basis, with aggregate interest
payable during 1999 currently estimated at $1,366,000, based on $16,074,000
principal outstanding.
Peregrine is obligated to make debt service payments on its first
mortgage notes of approximately $2,646,000 per year; interest on its Senior
Notes, currently estimated at $1,385,000 per year; interest payments on the
Line of Credit, currently estimated at $1,950,000 per year, repayment of its
Line of Credit obligation on April 1, 2001; and repayment of principal on the
Senior Notes in October 2000 currently estimated at $16,074,000.
Based on cash flows from operations and its revolving Line of Credit,
Peregrine anticipates that it will be able to fund its day-to-day business
operations, meet its debt service obligations on its Line of Credit, first
mortgage notes and Senior Lender Group Notes, and fund its capital expenditures
through the end of 1999.
17
<PAGE>
Peregrine experienced a net increase in unrestricted cash of $1,062,000
for the nine months ended September 30, 1999 as compared to a net decrease in
unrestricted cash of $827,000 for the nine months ended September 30, 1998. For
the nine months ended September 30, 1999 cash provided by operating activities
was $160,000 a decrease of $929,000 from cash provided by operating activities
for the nine months ended September 30, 1998 of $1,089,000, is primarily
attributable to increase depreciation and amortization and operating expenses
attributable to the purchase of the Concord hotel in July 1998. Cash provided by
investing activities during the nine months ended September 30, 1999 was
$2,617,000 compared to cash used in investing activities for the nine month
period ended September 30, 1998 of $11,597,000. The increase of $14,237,000 is
attributable to the proceeds from the sales of investments in 1999 and the
purchase of the hotel investment in 1998, offset by and increase in improvements
at the hotel and commercial properties from 1998 to 1999, which were financed by
the Line of Credit. Cash used in financing activities for the nine months ended
September 30, 1999 was $1,715,000; a decrease of $11,396,000 from cash provided
by financing activities for the nine months ended September 30, 1998 of
$9,681,000. The decrease is attributable to a principal payment on the Senior
Lender Notes offset by decreased draws on the Line of Credit for financing the
hotel refurbishments.
SIGNIFICANT CHANGES IN THE ECONOMIC ENVIRONMENT
Peregrine is exposed to market risk related to interest rates and
inflation. Peregrine does not expect interest rates to materially fluctuate
throughout year. Thus Peregrine's fixed and variable interest debt obligations
will not be adversely affected in 1999. During 1998 and 1997, both rental rates
and real estate values increased; therefore, the effect of inflation is not
expected to have a significant effect on Peregrine's operations in 1999.
YEAR 2000
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of
Peregrine's computer programs or other date sensitive equipment may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculation causing disruptions of operations.
The Trust's plan to address the year 2000 issue affecting its application
systems had three phases:
- - In the first phase, Peregrine identified which systems required
modification, replacement or no adjustment. An inventory of all financial
application systems has been made and a plan for compliance developed. The
plan was for both Information Technology ("IT"), such as Peregrine's
accounting and property management system and non-IT systems such as
elevators, phone system, fire sprinkler & control panel, etc. The
determination of which systems required modification and a timetable for
such modifications were completed in the first quarter of 1998.
- - In the second phase, Peregrine made the necessary upgrades or modifications
to both the IT and non-IT systems. For the IT systems the accounting,
property and hotel management systems required replacement, and the Trust's
operating system required upgrading. The Trust replaced its accounting,
property and hotel management systems during 1998 with a
18
<PAGE>
new accounting and property management system for Windows. The new system
has been certified by the vendor to be Year 2000 Compliant. The Trust has
upgraded its Windows operating system with the purchase of Windows 98 for
several computers and will be completing the process during the fourth
quarter of 1999. The vendor has certified that Windows 98 is Year 2000
compliant. Peregrine purchased new personal computers and hardware, which
have been certified by the vendors to be Year 2000 compliant. For non-IT
systems, all required upgrades were completed in 1998. All of the
elevators, fire alarms, heating & air conditioning ventilation, and
security alarm systems were inspected by certified technicians to detect
any possible interruptions related to the year 2000. Peregrine is in the
process of upgrading the phone system and the Holiday Inn Encore & Holidex
Reservation systems. These modifications are expected to be complete by
fall 1999. The total cost for inspections, testing, and upgrades of
computer software and hardware was approximately $110,000, which was
incurred during the first three quarters of 1999.
- - In the third phase, the Trust determined the Year 2000 readiness of
relationships they have with vendors and service providers. The Trust
conducted a survey of major vendors and service providers to determine
their readiness and found that the majority of them will be compliant. For
example, the Trust has received a letter from its major depository
institution. The depository institution certified that its systems would be
Year 2000 compliant. The determination of compliance for major vendors and
service providers is complete.
Peregrine believes that it has identified all significant operating issues
that could affect day-to-day operations if Peregrine's systems are not compliant
with the year 2000. However, should these programs fail, certain measures are
being taken to ensure that the day-to-day operations of Peregrine's corporate
office, commercial properties, and hotel properties would continue. Peregrine
does not expect any material cost due to service interruptions. Peregrine will
have several back-ups performed prior to December 31, 1999 and will be able to
perform daily activities in a manual environment until a solution is found.
Additionally, a plan is currently being formulated for emergency procedures if a
system fails.
19
<PAGE>
- ----------------------------------------------------------------------------
Item 3. Quantitative and Qualitative Disclosure about Market Risk
- ----------------------------------------------------------------------------
The Trust's exposure to market risk for changes in interest rate relate
primarily to the Trust's current and future debt obligations. The Trust is
vulnerable to significant fluctuations of interest rates on its floating rate
debt, changes in the market value of fixed rate debt and future debt.
The following table presents information about the Trust's debt obligations. The
table presents principal cash flows and related weighted average interest rates
by expected maturity dates.
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 Thereafter
---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Mortgage Notes $124,000 $ 409,000 $ 448,000 $19,722,000 $159,000 $2,842,000
Average Interest Rate 9.5% 9.5% 9.5% 9.5% 8.7% 8.7%
Senior Notes -- $16,074,000 -- -- -- --
Average Interest Rate 8.5% 8.5%
Revolving Line of Credit -- -- $32,592,000 -- -- --
Average Interest Rate 8.6% 8.6% 8.6%
</TABLE>
20
<PAGE>
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
- ----------------------------------------------------------------------------
(a) Exhibits
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
3.1(a) Restated Declaration of Trust of The Peregrine Real Estate
Trust (1)
3.1(b) Bylaws of The Peregrine Real Estate Trust (1)
10.1 Second Amended and Restated Note Agreement dated September 27,
1994, by and among Commonwealth Equity Trust, the Noteholders
named therein, and The Prudential Insurance Company of America
as Agent for the Noteholders (1)
10.1.1 First Amendment to Second Amended and Restated Note Agreement
dated February 16, 1995. (13)
10.1.2 Second Amendment to Second Amended and Restated Note Agreement
dated December 4, 1997, by and among The Peregrine Real Estate
Trust, the Noteholders named therein, and The Prudential
Insurance Company of America as agent for the Noteholders (8).
10.1.3 Third Amendment to the Second Amended and Restated Note
Agreement dated May 1, 1998, by and among The Peregrine Real
Estate Trust, the Noteholders Named Therein, and The
Prudential Insurance Company of America as Agent for the
Noteholders. (10)
10.1.4 Fourth Amendment to the Second Amended and Restated Note
Agreement dated June 30, 1998, by and among The Peregrine Real
Estate Trust, the Noteholders Named Therein, and The
Prudential Insurance Company of America as Agent for the
Noteholders. (10)
10.1.5 Fifth Amendment to the Second Amended and Restated Note
Agreement dated February 15, 1999. (13)
10.2. Redeemable Convertible Preferred Stock Purchase Agreement
dated as of October 1, 1994, by and among The Peregrine Real
Estate Trust, Pacific Mutual Life Insurance Company, The
Prudential Insurance Company of America, PRUCO Life Insurance
Company, ORIX USA Corporation, Weyerhaeuser Company Master
Retirement Trust, TCW Special Credits Fund IV, TCW Special
Credits Plus Fund, TCW Special Credits Trust IV, and TCW
Special Credits Trust IVA (1)
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
10.2 Registration Rights Agreement dated as of October 1, 1994, by
and among The Peregrine Real Estate Trust, Pacific Mutual Life
Insurance Company, The Prudential Insurance Company of
America, PRUCO Life Insurance Company, ORIX USA Corporation,
Weyerhaeuser Company Master Retirement Trust, TCW Special
Credits Fund IV, TCW Special Credits Plus Fund, TCW Special
Credits Trust IV, and TCW Special Credits Trust IVA (1)
10.3.1 First Amendment to the Registration Rights Agreement (13)
10.4 Services and Confidentiality Agreement dated October 1, 1994,
between Commonwealth Equity Trust and FAMA Management, Inc.
(1)
10.5 Third Amended Plan of Reorganization of Commonwealth Equity
Trust (2)
10.6 Stock Purchase Agreement, dated as of January 3, 1997, by and
between The Peregrine Real Estate Trust and CalREIT Investors
Limited Partnership (3)
10.7 Form of Indemnification Agreement (4)
10.8 The Peregrine Real Estate Trust Trustee Stock Option Plan (5)
10.9 Form of Indemnification Agreement (7)
10.10 Loan and Security Agreement dated December 4, 1997, by and
among The Peregrine Real Estate Trust and Fleet Capital
Corporation (8)
10.10.1 Amendment Number One To Loan and Security Agreement dated June
30, 1998 by and between Fleet Capital Corporation and
Peregrine Real Estate Trust. (11)
10.11 Employment Agreement between The Peregrine Real Estate Trust
and Roger D. Snell, dated September 30, 1997 (9)
10.12 Exchange Agreement dated November 2, 1998. (12)
10.13 Agreement of Purchase and Sale dated March 23, 1998 between J.
Nebout and P. Nebout as trustees of the P. Nebout and J.
Nebout inter vivos trust dated July 20, 1995, as seller, and
The Peregrine Real Estate Trust, as buyer. (10)
10.14 Loan and Security Agreement dated February 15, 1999, by and
among The Peregrine Real Estate Trust, d.b.a. WinShip
Properties, and Fremont Investment & Loan. (13)
10.15 Secured Promissory Note dated February 15, 1999, by and among
The Peregrine Real Estate Trust, d.b.a. WinShip Properties,
and Fremont Investment & Loan. (13)
</TABLE>
22
<PAGE>
Financial Data Schedule
<TABLE>
<S> <C>
(1) Incorporated herein by reference to Peregrine's Report on Form 8-K
filed October 7, 1994.
(2) Incorporated herein by reference to Peregrine's Report on Form 8-K
filed August 25, 1994.
(3) Incorporated herein by reference to Peregrine's Report on Form 8-K
filed January 17, 1997.
(4) Incorporated herein by reference to Peregrine's Report on Form 10-Q for
the period ended September 30, 1996.
(5) Incorporated herein by reference to Peregrine's Report on Form 10-K for
the year ended December 31, 1996.
(6) Incorporated herein by reference to Peregrine's Report on Form 10-Q for
the period ended March 31, 1997.
(7) Incorporated herein by reference to Peregrine's Report on Form 10-Q for
the period ended June 30, 1997.
(8) Incorporated herein by reference to Peregrine's Report on Form 8-K
filed December 23, 1997.
(9) Incorporated herein by reference to Peregrine's Report on Form 10-K for
the year ended December 31, 1997.
(10) Incorporated herein by reference to Peregrine's Report on Form 8-K
filed on July 16, 1998.
(11) Incorporated herein by reference to Peregrine's Report on Form 10-Q for
the period ended June 30, 1998.
(12) Incorporated herein by reference to Peregrine's Report on Form 10-Q for
the period ended September 30, 1998.
(13) Incorporated herein by reference to Peregrine's Report on Form 8-K
filed March 22, 1999.
(b) Reports on Form 8-K
</TABLE>
23
<PAGE>
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.
THE PEREGRINE REAL ESTATE TRUST
November 12,1999 /s/ Larry Knorr
- ---------------- --------------------------
Date Larry Knorr
Vice President and
Chief Accounting Officer
24
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,448
<SECURITIES> 0
<RECEIVABLES> 929
<ALLOWANCES> (33)
<INVENTORY> 91
<CURRENT-ASSETS> 2,218
<PP&E> 86,944
<DEPRECIATION> (9,976)
<TOTAL-ASSETS> 81,067
<CURRENT-LIABILITIES> 2,449
<BONDS> 74,332
0
0
<COMMON> 47,405
<OTHER-SE> (42,565)
<TOTAL-LIABILITY-AND-EQUITY> 81,621
<SALES> 17,948
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> (11,402)
<OTHER-EXPENSES> (5,761)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,726)
<INCOME-PRETAX> (3,941)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,941)
<DISCONTINUED> 0
<EXTRAORDINARY> 4,878
<CHANGES> 0
<NET-INCOME> 937
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
