SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------------------- ----------------------
Commission file number 0-13754
NOONEY REALTY TRUST, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri
- --------------------------------------------------------------------------------
State or other jurisdiction of incorporation or organization)
43-1339136
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(I.R.S. Employer Identification No.)
7701 Forsyth Boulevard,
St. Louis, Missouri 63105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
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 subjcet to such filing
requirements for the past 90 days. Yes [X] No [ ].
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING 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
confimred by a court. Yes [ ] No [ ].
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date. As of June 30, 1996 there were 866,624 shares of the Registrant's
common stock, par value $1 per share, issued and outstanding.
Page 1 of 12 Pages
<PAGE>
<TABLE>
NOONEY REALTY TRUST, INC.
(A REAL ESTATE INVESTMENT TRUST)
BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
--------------- ---------------
<S> <C> <C>
ASSETS:
Cash ........................................................................ $ 573,394 $ 517,317
Accounts receivable ......................................................... 240,657 261,972
Prepaid expenses ........................................................... 55,382 84,803
Investment property, at cost:
Land ...................................................................... 2,568,955 2,568,955
Buildings and improvements ................................................ 17,595,756 17,587,161
--------------- ---------------
20,164,711 20,156,116
Less accumulated depreciation ............................................. 5,650,634 5,344,765
--------------- ---------------
14,514,077 14,811,351
Deferred expenses - at amortized cost ....................................... 279,881 333,574
--------------- ---------------
$ 15,663,391 $ 16,009,017
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses ....................................... $ 329,345 $ 328,529
Refundable tenant deposits .................................................. 33,511 46,851
Mortgage notes payable ...................................................... 4,872,188 4,912,421
--------------- ---------------
Total liabilities ........................................................ 5,235,044 5,287,801
Shareholders' Equity:
Common Stock, $1 par value; Authorized, 5,000,000 shares; Issued and
outstanding, 866,624 in 1996 and 1995 ..................................... 866,624 866,624
Additional paid-in capital .................................................. 14,252,532 14,252,532
Distributions in excess of net income ....................................... (4,690,809) (4,397,940)
--------------- ---------------
10,428,347 10,721,216
--------------- ---------------
$ 15,663,391 $ 16,009,017
=============== ===============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
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<PAGE>
<TABLE>
NOONEY REAL REALTY TRUST, INC.
(A REAL ESTATE INVESTMENT TRUST)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------- --------------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income ........................... $ 712,899 $ 711,821 $ 1,435,726 $ 1,408,543
Interest .......................................... 4,340 1,088 7,987 2,202
--------------- --------------- --------------- ---------------
717,239 712,909 1,443,713 1,410,745
EXPENSES:
Interest .......................................... 102,601 104,233 205,623 208,854
Depreciation and amortization ..................... 178,722 180,252 357,964 359,851
Real estate taxes ................................. 135,131 128,265 289,870 255,387
Advisory Fee ...................................... 29,424 29,062 58,650 58,024
Property management fees paid to
Nooney Krombach Company .......................... 26,611 26,378 53,576 52,302
Utilities.......................................... 69,694 71,489 136,231 135,560
Operating expenses ................................ 145,553 138,369 288,017 269,149
--------------- --------------- --------------- ---------------
687,736 678,048 1,389,931 1,339,127
--------------- --------------- --------------- ---------------
NET INCOME ..................................................... $ 29,503 $ 34,861 $ 53,782 $ 71,618
=============== =============== =============== ===============
EARNINGS PER SHARE ............................................. $ 0.03 $ 0.04 $ 0.06 $ 0.08
=============== =============== =============== ===============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
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<PAGE>
<TABLE>
NOONEY REALTY TRUST, INC.
(A REAL ESTATE INVESTMENT TRUST)
STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<CAPTION>
COMMON STOCK
-----------------------------------
ADDITIONAL DISTRIBUTION
NUMBER OF PAID-IN IN EXCESS OF
SHARES AMOUNT CAPITAL NET INCOME
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Balance, January 1, 1996 ............................. 866,624 $ 866,624 $ 14,252,532 $ (4,397,940)
Net Income ........................................... 53,782
Dividends Declared ................................... (346,651)
--------------- --------------- --------------- ---------------
Balance, June 30, 1996 ............................... 866,624 $ 866,624 $ 14,252,532 $ (4,690,809)
=============== =============== =============== ===============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
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<PAGE>
<TABLE>
NOONEY REALTY TRUST, INC.
(A REAL ESTATE INVESTMENT TRUST)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income from operations ...................................... $ 29,503 $ 34,861 $ 53,782 $ 71,618
Adjustments to reconcile net income from operations to net cash
provided by operating activities:
Depreciation and amortization ................................. 178,722 180,252 357,964 359,851
Changes in assets and liabilities:
Decrease (Increase) in accounts
receivable ............................................ 53,028 (43,950) 21,315 13,145
Decrease in prepaid expenses ............................... 45,614 93,447 29,421 29,240
(Increase) Decrease in deferred expenses ................... (257) (17,280) 1,598 (69,533)
(Decrease) Increase in accounts payable and
accrued expenses ..................................... (67,855) 11,549 816 (30,497)
(Decrease) Increase in refundable tenant
deposits ............................................. (13,340) 3,125 (13,340) 3,125
---------- ---------- ---------- ----------
Total Adjustments ..................................... 195,912 227,143 397,774 305,331
---------- ---------- ---------- ----------
Net cash provided by operating activities ............. 225,415 262,004 451,556 376,949
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Adjustments to investment property ................................ (8,595) (41,796) (8,595) (122,841)
---------- ---------- ---------- ----------
Net cash used in investing activities ................. (8,595) (41,796) (8,595) (122,841)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to shareholders ................................ (173,325) (129,994) (346,651) (259,988)
Payments on mortgage notes payable ................................ (20,327) (18,695) (40,233) (37,002)
---------- ---------- ---------- ----------
Net cash used in financing activities ................. (193,652) (148,689) (386,884) (296,990)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH ................................................ 23,168 71,519 56,077 (42,882)
CASH Beginning of period ...................................................... 550,226 487,203 517,317 601,604
---------- ---------- ---------- ----------
CASH End of period ............................................................ $ 573,394 $ 558,722 $ 573,394 $ 558,722
========== ========== ========== ==========
CASH Paid for interest ......................................................... $ 102,601 $ 104,233 $ 205,623 $ 208,854
========== ========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
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<PAGE>
NOONEY REALTY TRUST, INC.
(A REAL ESTATE INVESTMENT TRUST)
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
NOTE A:
Refer to the Registrant's financial statements for the year ended December 31,
1995, which are contained in the Registrant's Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without change
except as noted below. Also, refer to the footnotes to those statements for
additional details of the Registrant's financial condition. The details in those
notes have not changed except as a result of normal transactions in the interim
or as noted below.
NOTE B:
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at June 30, 1996 and for all periods
presented have been made.
NOTE C:
The Registrant has employed Nooney Advisors, Ltd., a Missouri limited
partnership, to serve as the Registrant's investment and financial counselor and
to supervise the day-to-day operations of the Registrant. The agreement between
the Registrant and Nooney Advisors, Ltd. has been renewed for a period of one
year effective April 1, 1996. Certain General Partners of Nooney Advisors, Ltd.
are also officers and directors of the Registrant. Advisory fees of $29,424 and
$58,650 were paid to Nooney Advisors, Ltd. for the three and six months ended
June 30, 1996. Advisory fees of $29,062 and $58,024 were paid to Nooney
Advisors, Ltd. for the three and six months ended June 30, 1995, respectively.
The Registrant's properties are managed by Nooney Krombach Company, a wholly
owned subsidiary of Nooney Company. Certain officers and directors of the
Registrant are also officers and directors of Nooney Company or one of its
subsidiaries.
NOTE D:
The earnings per share for the three and six months ended June 30, 1996 and 1995
has been computed based on 866,624 shares, the number outstanding during the
periods.
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<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash on hand as of June 30, 1996 is $573,394, an increase of $56,077 from year
end December 31, 1995. During the first six months of 1996 the operations of the
properties provided cash flow totaling $451,556 which enabled the Trust to pay a
dividend of $.20 per share in each of the first two quarters and reduce the
mortgage debt by $40,233. Based on the current cash position and the properties
ability to provide operating cash flow, the Trust expects the properties to fund
anticipated capital expenditures for the remainder of 1996. The anticipated
capital expenditures by property are as follows:
Other Leasing
Capital Capital Total
-------- -------- --------
Atrium at Alpha ......................... $ 18,000 $120,000 $138,000
Applied Communications Building ......... 0 0 0
Franklin Park Distribution Center ....... 15,000 0 15,000
-------- -------- --------
$ 33,000 $120,000 $153,000
During the remainder of 1996, approximately $153,000 of capital expenditures are
expected. Other capital at Atrium at Alpha will be expended to recarpet and
vinyl the property's halls and corridors and at Franklin Park Distribution
Center a capital contingency reserve has been established. The leasing capital
at Atrium at Alpha includes capital for tenant alterations and lease
commissions.
Results of Property Operations
The results of operations for the Trust's properties for the quarters ended
June 30, 1996 and 1995 are detailed in the schedule below. Expenses of the Trust
are excluded.
<TABLE>
<CAPTION>
Franklin Park Applied
Atrium at Distribution Communications
Alpha Center Building
--------------- --------------- ---------------
<S> <C> <C> <C>
1996
- -----------------------------------------
Revenues ................................ $ 274,508 $ 188,632 $ 249,289
Expenses ................................ 242,128 142,934 231,501
--------------- --------------- ---------------
Net Income .............................. 32,380 45,698 17,788
Depreciation and Amortization ........... 82,453 44,546 47,601
--------------- --------------- ---------------
Funds from Operations ................... $ 114,833 $ 90,244 $ 65,389
=============== =============== ===============
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Franklin Park Applied
Atrium at Distribution Communications
Alpha Center Building
--------------- --------------- ---------------
<S> <C> <C> <C>
1995
- -----------------------------------------
Revenues ................................ $ 267,916 $ 185,844 $ 252,168
Expenses ................................ 232,700 143,240 221,532
--------------- --------------- ---------------
Net Income .............................. 35,216 42,604 30,636
Depreciation and Amortization ........... 84,387 44,143 47,601
--------------- --------------- ---------------
Funds from Operations ................... $ 119,603 $ 86,747 $ 78,237
=============== =============== ===============
</TABLE>
Net income at Atrium at Alpha for the quarters ended June 30, 1996 and 1995 are
$32,380 and $35,216, respectively. Though net income remained relatively stable,
revenues and expenses increased $6,592 and $9,428, respectively. The increase in
revenues can be attributed to an increase in rental income stemming from an
increase in average occupancy for the quarter. The increase in expenses relates
to increases in real estate taxes and parking lot expenditures. At Franklin Park
Distribution Center the operations of the property for the second quarter ended
June 30, 1996 produced similar results when compared to the second quarter ended
June 30, 1995. At Applied Communications Building, revenues decreased and
expenses increased when comparing quarter ending results from June 30, 1996 to
June 30, 1995.The decrease in revenues can be attributed to a decrease in
escalation income partially offset by an increase in rental income. The decrease
in escalation income relates to a decrease in expenses that may be passed
through to the tenant, resulting in a reduction in expense recovery income. The
increase in rental income can be attributed to rent step-ups for the single
tenant user. The expense increase relates to increases in parking lot
expenditures and repairs and maintenance.
Occupancy levels at the Trust's properties during the first quarter remain at a
high level. These levels can be attributable to the Trust's ability to renew the
properties major tenants as their leases
mature.
The occupancy levels at June 30, 1996, 1995 and 1994 are as follows:
Property 1996 1995 1994
- -------- ---- ---- ----
Atrium at Alpha ............................... 95% 95% 82%
Franklin Park Distribution Center ............. 100% 100% 100%
Applied Communications Building ............... 100% 100% 100%
The leasing activity at Atrium at Alpha during the second quarter decreased
occupancy 4% to 95% as of June 30, 1996. The Trust had a single tenant move out
who previously occupied 3,144 square feet. The building has two major tenants
which lease approximately 15% and 23% of the available space with leases
expiring in 1999 and 1996, respectively. Subsequent to June 30, 1996, the major
tenant occupying 15% of the available space renewed their lease for the term of
five years effective August 1, 1996. The tenant occupying approximately 23% of
the available space has vacated a portion of their suite. Their lease has a
cancellation option which can be exercised prior to December 1, 1996 to cancel
their lease as of May 31, 1997. The Trust anticipates the tenant will exercise
this option.
Franklin Park Distribution Center currently is fully leased by two tenants. The
larger of the two tenants occupies approximately 57% of the building while the
other occupies approximately 43% of the building. The lease expires in December
1999 and June 1998, respectively.
-8-
<PAGE>
The Applied Communications Building has a single tenant who occupies the entire
building. The tenant's lease expires August 1999.
1996 Comparisons
As of June 30, 1996, the Trust's consolidated revenues for the quarter ended and
six month period ended are $717,239 and $1,443,713, respectively, an increase of
$4,330 and $32,968 when compared to the results of the same periods ended June
30, 1995. The increase in revenues for the six month periods ended can be
attributed to increases in rental income offset by decreases in expense recovery
income. Rental income increased $42,816 while expense recovery income decreased
$11,741 for the six months ended June 30, 1996 as compared to the six months
ended June 30, 1995. The increase in rental income relates to increases at
Atrium at Alpha ($28,818) and Applied Communications Building ($13,998). The
increase at Atrium at Alpha is a direct result of an increase in occupancy when
comparing average occupancy during the first and second quarters of 1996 to the
average occupancy during the same periods in 1995. The increase at Applied
Communications Building is attributable to rent step-ups for the single tenant
user. The decrease in escalation income relates to a decrease in expenses that
may be passed through to the tenant, resulting in a reduction in expense
recovery income.
Consolidated expenses are $687,736 and $1,389,931 for the quarter ended and six
month period ended June 30, 1996, respectively. For the same periods ended June
30, 1995 consolidated expense were $678,048 and $1,339,127, respectively.
Consolidated expenses increased $9,688 and $50,804 when comparing the three and
six month periods ended June 30, 1996 to June 30, 1995. The increase in
consolidated expenses for the six month periods ended June 30, 1996 and 1995
relate to increases in real estate taxes ($34,483) and other operating expenses
($19,539). The increase in real estate taxes can be attributed to an increase in
the property assessment and tax rates at Atrium at Alpha. Operating expenses
increased $19,539 or 4.83%. The increase relates to several expense categories
and they are as follows: parking lot expenditures ($13,224) due to timing of
various landscaping projects at Atrium at Alpha, cleaning ($7,280) due to
increases in occupancy at Atrium at Alpha, snow removal ($4,020), and
administrative costs ($4,002). These increases are partially offset by a
decrease in professional services ($9,147) relating to legal services rendered
in prior year pertaining to a single legal matter.
1995 Comparisons
As of June 30, 1995 consolidated revenues for the three and six month periods
ended were $712,909 and $1,410,745, respectively. For the same periods ended
June 30, 1994 consolidated revenues were $678,281 and 1,373,232, respectively.
On a consolidated basis revenues increased $34,628 and $37,513 when comparing
the three and six month periods ended June 30, 1995 to 1994.
The significant increase in revenues occurred in the second quarter of 1995 and
is attributable to all three of the Trust's properties. Franklin Park
Distribution Center, Applied Communications Building and Atrium at Alpha had
increases in revenues of approximately 6.50%, 2.50% and 1.50%, respectively.
Partially offsetting the increases in revenues was a minimal decrease in
interest income. The increase in revenues can be attributed to rental income
partially offset by decreases in expense recovery income. For the six month
periods ended June 30, 1995 and 1994, the Trust had rental income of $1,192,868
and $1,094,688, respectively. For the same period, expense recovery income
-9-
<PAGE>
was $16,195 and $78,649, respectively. The increase in rental income relates to
the Trust's ability to renew leases at higher rates and obtain new tenants for
the unoccupied space at Atrium at Alpha. The decrease in expense recovery income
can be attributed to Atrium at Alpha. At Atrium at Alpha, the operating expenses
decreased from 1993 to 1994 approximately 4% resulting in actual expenses being
lower than the tenant's base years for 1994. Therefore, in 1995 the Trust has
estimated that the expense levels will remain below the tenant's base years
resulting in minimal expense recovery income.
Consolidated expenses for the three and six month periods ended June 30, 1995
were $678,048 and $1,339,127, respectively. Consolidated expenses increased
$19,041 and $7,318, respectively for the three and six month periods ended June
30, 1995 when compared the June 30, 1994. The increase in consolidated expenses
for the quarter ended is attributable to an increase in real estate taxes and
depreciation and amortization partially offset by a decrease in interest
expense. The increase in real estate taxes can be attributed to increased
property value assessments at Franklin Park Distribution Center and Atrium at
Alpha. The increase in depreciation and amortization expense relates to
increased expenditures for tenant alterations and lease commissions at Franklin
Park Distribution Center and Atrium at Alpha. The decrease in interest expense
relates to the Trust's refinancing of the first mortgage debt in November 1994.
The interest rate decreased to 8.4%.
Inflation
The effects of inflation did not have a material impact upon the Trust's
operations in fiscal year 1995, and are not expected to have material impact in
1996.
-10-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index.
(b) Reports on Form 8-K
None
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.
NOONEY REALTY TRUST, INC.
Dated: August 14, 1996 By: /s/ Gregory J. Nooney, Jr.
------------------------- -------------------------------------
Gregory J. Nooney, Jr.
Chief Executive Officer
/s/ Patricia A. Nooney
----------------------------------------
Patricia A. Nooney
President and Treasurer
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<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- ---------------------------------------------------------------
3.1 Articles of Incorporation dated June 12, 1984, are
incorporated by reference to Exhibit 3(a) to the Registration
Statement on Form S-11 under the Securities Act of 1933
(File No. 2-91851).
3.2 Bylaws of the Registrant, as amended, are incorporated by
reference to Exhibit 3.2 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987, as
filed pursuant to Rule 13a-1 under The Securities Exchange Act
of 1934 (File no. 0-13754).
27 Financial Data Schedule (provided for the information of the
Securities and Exchange Commission only)
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR NOONEY REALTY TRUST, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000748580
<NAME> NOONEY REALTY TRUST, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 573,394
<SECURITIES> 0
<RECEIVABLES> 240,657
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 869,433
<PP&E> 20,164,711
<DEPRECIATION> 5,650,634
<TOTAL-ASSETS> 15,663,391
<CURRENT-LIABILITIES> 329,345
<BONDS> 4,872,188
866,624
0
<COMMON> 0
<OTHER-SE> 9,561,723
<TOTAL-LIABILITY-AND-EQUITY> 15,663,391
<SALES> 1,435,726
<TOTAL-REVENUES> 1,443,713
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,184,308
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 205,623
<INCOME-PRETAX> 53,782
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,782
<EPS-PRIMARY> .06
<EPS-DILUTED> 0
</TABLE>
