SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter period ended September 30, 2000
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
MAXUS REALTY TRUST, INC.
(Exact name of small business issuer as specified in its charter)
Missouri 43-1339136
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
104 Armour, North Kansas City, Missouri 64116
(Address of principal executive offices) (Zip Code)
Trust's telephone number, including area code (816) 303-4500
Indicate by check mark whether the Trust (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 Trust was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
<PAGE>
INDEX
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Balance Sheet 3
Statements of Operations 4
Statements of Cash Flows 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS 8
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 14
ITEM 2. CHANGES IN SECURITIES 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14
ITEM 5. OTHER INFORMATION 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
2
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAXUS REALTY TRUST, INC.
BALANCE SHEET
(UNAUDITED)
September 30, 2000
ASSETS:
Investment property
Land $ 2,322,000
Buildings and improvements 16,255,000
-----------
18,577,000
Less accumulated depreciation (6,168,000)
12,409,000
Investment property held for sale 3,277,000
-----------
Total investment property 15,686,000
Cash 697,000
Accounts receivable 326,000
Prepaid expenses and other assets 279,000
Deferred expenses, less accumulated amortization 493,000
-----------
Total assets $ 17,481,000
===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Mortgage notes payable $ 6,535,000
Accounts payable and accrued expenses 403,000
Real estate taxes payable 228,000
Refundable tenant deposits 89,000
-----------
Total liabilities 7,255,000
Shareholders' equity:
Common stock, $1 par value: authorized 5,000,000 shares
1,039,624 shares issued and outstanding 1,040,000
Additional paid-in-capital 15,463,000
Distributions in excess of accumulated earnings (6,277,000)
-----------
Total shareholders' equity 10,226,000
$ 17,481,000
===========
See accompanying notes to financial statements.
3
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MAXUS REALTY TRUST, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues:
Rental $ 743,000 655,000 2,071,000 1,977,000
Other 102,000 87,000 221,000 269,000
--------- --------- ---------- ----------
Total revenues 845,000 742,000 2,292,000 2,246,000
--------- --------- ---------- ----------
Expenses:
Depreciation and amortization 153,000 161,000 457,000 517,000
Repairs and maintenance, including common
area maintenance 92,000 84,000 232,000 254,000
Real estate taxes 112,000 146,000 356,000 482,000
Interest, net 116,000 94,000 301,000 281,000
Professional fees 22,000 255,000 211,000 499,000
General and administrative 41,000 101,000 86,000 340,000
Utilities 84,000 74,000 222,000 192,000
Property management fees - related parties 27,000 51,000 76,000 154,000
Other operating expenses 21,000 40,000 101,000 79,000
--------- --------- ---------- ----------
Total expenses 668,000 1,006,000 2,042,000 2,798,000
--------- --------- ---------- ----------
Net income/(loss) before
Extraordinary item $ 177,000 (264,000) 250,000 (552,000)
Extraordinary item:
Prepayment penalty on refinancing (43,000) -- (43,000) --
--------- --------- ---------- ----------
Net income/(loss) $ 134,000 (264,000) 207,000 (552,000)
========= ========= ========== ==========
Per share data (basic and diluted):
Net income/(loss) before extraordinary item $ .17 (.31) .26 (.64)
Extraordinary item-prepayment penalty (.04) -- (.04) --
--------- --------- ---------- ----------
Total .13 (.31) .22 (.64)
Dividends $ .16 --- .32 --
--------- --------- ---------- ----------
Weighted average shares outstanding 1,039,624 866,624 956,281 866,624
========= ========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
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MAXUS REALTY TRUST, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Nine Months Ended
Sept. 30, Sept. 30,
2000 1999
Cash flows from operating activities:
Net income (loss) $ 207,000 (552,000)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 457,000 517,000
Changes in accounts affecting operations:
Accounts receivable (76,000) (67,000)
Prepaid expenses, other assets and deferred expenses (276,000) 66,000
Accounts payable and other liabilities (82,000) 242,000
Deferred compensation -- 13,000
----------- -----------
Net cash provided by operating activities 230,000 219,000
----------- -----------
Cash flows from investing activities:
Capital expenditures (112,000) (490,000)
Acquisition of North Winn Apartments, net of
commission paid ($48,000) (2,677,000) --
----------- -----------
Net cash used in investing activities (2,789,000) (490,000)
----------- -----------
Cash flows from financing activities:
Repayment of mortgage notes payable (4,538,000) (79,000)
Proceeds from mortgage notes payable 6,286,000 --
Proceeds from line of credit 249,000 --
Issuance of common stock 1,384,000 --
Dividends paid ($.32 per share) (333,000) --
----------- -----------
Net cash provided by (used in) financing activities 3,048,000 (79,000)
----------- -----------
Net increase (decrease) in cash 489,000 (350,000)
Cash, beginning of period 208,000 505,000
----------- -----------
Cash, end of period $ 697,000 155,000
=========== ===========
Supplemental disclosure of cash flow information -
cash paid during the nine months ended September 30, 2000
for interest $ 311,000 290,000
=========== ===========
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
MAXUS REALTY TRUST, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
(1) Summary of Significant Accounting Policies
Refer to the financial statements of Maxus Realty Trust, Inc. (formerly Nooney
Realty Trust, Inc.) (the "Trust") for the year ended December 31, 1999, which
are contained in the Trust'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 Trust'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. In
the opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and changes in financial position at September 30, 2000 and for all
periods presented have been made. The results for the nine-month period ended
September 30, 2000 are not necessarily indicative of the results which may be
expected for the entire year.
Certain reclassifications have been made to the prior period amounts to conform
to the current period presentation.
(2) Pending Sale of Properties; Purchase of Property
On May 3, 2000, the Trust entered into a letter of intent to sell Franklin Park
to an unrelated third party, Chicago Industrial Partners, L.L.C. ("CIP"). The
sale price was $4,525,000 payable in cash at the closing, subject to any
prorations. The letter of intent was non-binding and was subject to a sale
contract being fully signed by May 22, 2000. As of October 30, 2000 no contract
was signed and negotiations with CIP have been terminated.
On August 15, 2000, the Trust entered into a sale contract to sell Franklin Park
to an unrelated third party, Industrial Holdings, L.L.C., a Delaware limited
liability company ("Industrial"). The sale price was $4,310,000. On October 23,
2000, the escrow was cancelled and the contract was terminated.
Franklin Park is currently being marketed for sale. The property is classified
as held for sale in the accompanying financial statements for the period ended
September 30, 2000, as at that time it was under contract for sale. The held for
sale status will be re-evaluated at December 31, 2000. At that time, if
determined appropriate, the property may be removed from held for sale
classification and depreciation may be recorded for the period of time which it
was held for sale.
On July 20, 2000, the Board of Trustees approved the purchase of the North Winn
Apartments ("North Winn") in Kansas City, Missouri. North Winn is located at
4523 N.W. Winn Road in Kansas City, Missouri. North Winn was constructed in
1972, and consists of 110 multi-family apartment units. North Winn was 87%
occupied as of September 30, 2000. KelCor, Inc., an affiliate of David L.
Johnson, the Trust's Chairman and trustee, executed an agreement to acquire
North Winn. KelCor, Inc. assigned it's right to acquire North Winn on August 7,
2000 to North Winn Acquisition, L.L.C., in which the Trust is the sole member
and manager. The purchase of North Winn closed on August 15, 2000. The purchase
price was $2,725,000. Funding was provided by a note from Prudential Multifamily
Mortgage, Inc. for $1,986,000, along with cash on hand in the Trust, and the
unsecured line of credit described in Item 2 - Liquidity and Capital Resources.
The loan term is seven years, with monthly payments based on a 30 year
amortization schedule, at an adjustable interest rate of 1.32% over the one
month LIBOR.
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(3) Dividends
The Trust paid a $.16 per share dividend on September 21, 2000. Based upon
current information, it is expected that this dividend will be treated as a
return of capital for tax purposes. However, if results for fiscal 2000 differ
significantly from current projections, the dividend could be treated as taxable
income to the Trust's Shareholders.
(The remainder of this page left blank intentionally)
7
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
This 10-QSB contains forward-looking information (as defined in the Private
Securities Litigation Reform Act of 1995) that involves risk and uncertainty,
including trends in the real estate investment market, projected leasing and
sales, and future prospects for the Trust. Actual results could differ
materially from those contemplated by such statements.
DESCRIPTION OF BUSINESS
Maxus Realty Trust, Inc., a Missouri corporation (formerly Nooney Realty Trust,
Inc.), was formed on June 14, 1984 for the purpose of making equity investments
in income-producing real properties, primarily commercial and light industrial
properties. The Trust's portfolio is comprised of Atrium at Alpha Business
Center, a multi-tenant office building located in Bloomington, Minnesota
("Atrium at Alpha"); Applied Communications, Inc. Office Building, a
single-tenant office building located in Omaha, Nebraska ("ACI Building");
Franklin Park Distribution Center, a warehouse and distribution facility in
Franklin Park, Illinois ("Franklin Park"); and North Winn Apartments, an
apartment complex located in Kansas City, Missouri ("North Winn") These
properties generated 43%, 37%, 11% and 9% of total revenues, respectively, for
the quarter ended September 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
Cash on hand as of September 30, 2000, was $697,000, an increase of $489,000
from December 31, 1999. The increase in cash is attributable primarily to the
Trust issuing 173,000 shares of its common stock, par value $1.00 per share, at
a price of $8.00 per share, solely to accredited investors (as such term is
defined in Rule 501 of Regulation D) pursuant to a private placement in
accordance with Rule 506 of Regulation D. The increase of $1,384,000 is offset
by the acquisition of North Winn, net of the mortgage note payable for North
Winn of $691,000 and $333,000 of dividend distributions to the Trust's
Shareholders. Management believes the Trust's current cash position and the
properties' ability to provide operating cash flow should enable the Trust to
fund anticipated capital expenditures and service debt in 2000. Expenditures for
leasing capital are dependent on the timing and actual dollars negotiated for
leases. The anticipated capital expenditures by property for 2000 are as
follows:
OTHER LEASING
CAPITAL CAPITAL TOTAL
Atrium at Alpha...................$ 18,000 $282,000 $ 300,000
Franklin Park..................... -- 225,000 225,000
ACI Building...................... -- 350,000 350,000
North Winn........................$232,500 -- 232,500
-------- -------- --------
$250,500 $857,000 $1,107,500
The leasing capital expenditures at Atrium at Alpha include tenant alterations
and lease commissions for new and renewal tenants. In addition, the Trust
anticipates spending capital funds for HVAC and minor roof replacements. At
Franklin Park, leasing capital for tenant alterations and lease commissions upon
the leasing of the vacant space is budgeted. At the ACI Building, the single
occupant in the building renewed their lease in 1998. The funds to reimburse the
tenant for certain tenant alterations up to a maximum of $350,000 may be paid
during 2000 or deferred until 2001 depending on when the tenant elects to
perform the work. Capital expenditures at North Winn reflect anticipated
expenditures in 2000 for various capital improvement projects. Funds for these
improvements have been escrowed with the lender and are included in cash.
8
<PAGE>
In August of 2000, the existing debt collateralized by all three properties of
$4,481,000 was paid off and refinanced with a note collateralized by the ACI
Building of $4,300,000. The interest rate is 8.63% with a term of ten years and
amortization of 30 years. Also in August of 2000, $1,986,000 of debt was
incurred relative to the acquisition of a new property, North Winn (as described
in Part I- Item 2. Description of Business). The interest rate is 1.32% over the
one month LIBOR, with a term of seven years and amortization of 30 years. In
addition, in August of 2000, the Trust initiated an unsecured line of credit
with Missouri Bank and Trust for $249,000 at a prime floating rate for a term of
six months. On August 15, 2000, the Trust drew $249,000 on the line of credit.
On September 14, 2000, the Trust modified the line of credit, secured it with
the Atrium at Alpha Business Center, increased the line of credit to $1,000,000
and increased the term to one year. On October 3, 2000, the Trust drew an
additional $150,000 (for a total of $399,000) on the line of credit. Both draws
on the line of credit were used to pay closing costs on the North Winn
Apartments, including a required escrow deposit of $232,350 for repairs required
by the lender for North Winn Apartments.
CONTINGENCIES
The Trust's multi-tenant office building located in Bloomington, Minnesota has
been classified in the Minneapolis Airport Committee's (the "MAC") Safety Zone A
in the future expansion of the Minneapolis Airport. The expansion runway is
anticipated to be completed in 2003. The MAC began buying out impacted buildings
during 1999. Safety Zone A is adjacent to the Federal Aviation Authority's noise
buy out zone. The MAC has not indicated whether or not it will buy out the
Trust's building. The Trust is monitoring whether the increased noise from the
new runway will have an impact on future leasing of the building. If the Trust
determines there is a negative impact, the Trust will petition the MAC to buy
the building. If the building continues to be classified in Safety Zone A, it
will be classified as nonconforming use. Given the preliminary state of the
future expansion, management is unable at this time to determine what impact, if
any, this matter will have on the Trust.
RESULTS OF OPERATIONS
The results of operations for the Trust's properties for the three and nine
months ended September 30, 2000 and 1999 are detailed in the schedule below.
Administrative expenses, including professional fees, of the Trust are excluded.
FUNDS FROM OPERATIONS
The white paper on Funds from Operations approved by the board of governors of
NAREIT in March 1999 defines funds from operations as net income (loss)(computed
in accordance with GAAP), excluding gains (or losses) from sales of property,
plus real estate related depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. Adjustment for
unconsolidated partnerships and joint ventures are calculated to reflect funds
from operations on the same basis. In 1999, NAREIT clarified the definition of
Funds from Operations to include non-recurring events, except for those that are
defined as "extraordinary items" under GAAP and gains and losses from sales of
depreciable operating property.
The Trust computes Funds from Operations in accordance with the guidelines
established by the white paper which may differ from the methodology for
calculating Funds from Operations utilized by other equity REITs, and,
accordingly, may not be comparable to such other REITs. Funds from Operations do
not represent amounts available for management's discretionary use because of
needed capital replacement or expansion, debt service obligations, distributions
or other commitments and uncertainties. Funds from Operations should not be
considered as an alternative to net income (determined in accordance with GAAP)
as an indication of the Trust's financial performance or to cash flows from
operating activities (determined in accordance with GAAP) as a measure of the
Trust's liquidity, nor is it indicative of funds available to fund the Trust's
cash needs including its ability to make distributions. The Trust believes Funds
from Operations is helpful to investors as a measure of the performance of the
Trust because, along with
9
<PAGE>
cash flows from operating activities, financing activities and investing
activities, it provides investors with an understanding of the ability of the
Trust to incur and service debt and make capital expenditures.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ATRIUM AT ALPHA FRANKLIN PARK ACI BUILDING NORTH WINN
(in thousands)
For the three months ended September 30, 2000 and 1999
2000 Revenues $ 369.1 $ 92.1 $ 311.8 72.0
Expenses 261.4 54.4 257.2 75.3
-------- ---------- --------- ----
Net Income (loss) 107.7 37.7 54.6 (3.3)
Depreciation and Amortization 87.5 2.7 46.2 12.8
-------- ---------- --------- ----
Funds from Operations 195.2 40.4 100.8 9.5
======= ========= ======= ===
1999 Revenues $ 326.6 $ 104.8 $ 310.5 $ --
Expenses 293.9 150.1 196.2 --
------- -------- ------- ----
Net Income (loss) 32.7 (45.3) 114.3 --
Depreciation and Amortization 99.5 36.3 14.9 --
-------- --------- -------- ----
Funds from Operations 132.2 (9.0) 129.2 --
======= ======= ======= ====
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ATRIUM AT ALPHA FRANKLIN PARK ACI BUILDING NORTH WINN
(in thousands)
For the three months ended September 30, 2000 and 1999
2000 Revenues $ 1,003.4 $ 303.3 $ 913.6 72.0
Expenses 790.5 265.2 662.9 75.3
-------- -------- ------- ------
Net Income (loss) 212.9 38.1 250.7 (3.3)
Depreciation and Amortization 253.5 43.1 135.3 12.8
-------- -------- ------- ------
Funds from Operations 466.4 81.2 386.0 9.5
-------- -------- ------- ------
1999 Revenues $ 995.6 $ 340.8 $ 909.5 --
Expenses 859.7 495.8 637.4 --
-------- -------- ------- ------
Net Income (loss) 135.9 (155.0) 272.1 --
Depreciation and Amortization 287.5 109.1 101.7 --
-------- -------- ------- ------
Funds from Operations 423.4 (45.9) 373.8 --
======== ======== ======= ======
</TABLE>
COMPARISONS BY PROPERTY
Revenues at the Atrium at Alpha for the quarter ended September 30, 2000
increased $42,500 compared to the same period in 1999. The increase in revenue
is primarily due to an increase in rental income due to increased occupancy and
an early termination fee of $25,000. Operating expense for the quarter ended
September 30, 2000 decreased $32,500 compared to the same period in 1999. The
decrease in operating expense was primarily due to a decrease in depreciation
and amortization of $12,000 and management fees of $8,700. Revenues at the
Atrium at Alpha for the nine months ended September 30, 2000 increased by $7,800
primarily due to a net increase in other income of $5,000. Other income
increased by $25,000 due to a lease termination fee, offset by decreases in
other income of $20,000. Operating expense for the nine months ended September
30, 2000 decreased $69,200 compared to the same period in 1999. The decrease in
operating expense was primarily due to a decrease in repairs & maintenance of
$17,000, general & administrative expenses of $19,900, management fees of
$27,000 and depreciation of $34,000, offset by an increase in other operating
expenses of $26,000.
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<PAGE>
At Franklin Park, revenues for the three months ended September 30, 2000
decreased $12,700 compared to the same period in 1999. The decrease in revenue
is primarily due to a decrease in CAM income of $19,800. Operating expense for
the three months ended September 30, 2000 decreased $95,700 compared to the same
period in 1999. The decrease in operating expense was primarily due to a
decrease in real estate taxes of $34,300, decreased depreciation of $33,600, and
a decrease in management fees of $11,000. The decrease in real estate tax
expense was due to a protest of the tax followed by a reduction in taxable value
of the Franklin Park property due to decreased occupancy. A Letter of Intent to
sell Franklin Park was executed on May 3, 2000. That sale was not consummated,
and on August 15, 2000, the Trust entered into a new contract to sell Franklin
Park. Although this contract has been subsequently terminated, it was pending at
September 30, 2000. Therefore, the Franklin Park property has been classified as
held for sale. Accordingly, the assets of Franklin Park were valued at the lower
of net book value or estimated net realizable value. In addition, no
depreciation was recorded for the quarter ended September 30, 2000 for Franklin
Park. Revenues at Franklin Park for the nine months ended September 30, 2000
decreased by $37,500 primarily due to a decrease in CAM income of $60,600 offset
by an increase in rental income. Operating expense for the nine months ended
September 30, 2000 decreased $230,600 compared to the same period in 1999. The
decrease in operating expense was primarily due to a decrease in real estate
taxes of $122,300, management fees of $31,200 and depreciation of $66,000.
Revenues at the ACI Building for the three months September 30, 2000 increased
$1,300 compared to the same period in 1999. Operating expense for the three
months ended September 30, 2000 increased $61,000 compared to the same period in
1999. The increase in operating expense was primarily due to a increase in
interest expenses of $19,300, general & administrative expenses of $13,900 and
depreciation of $31,300 offset by a decrease in management fees of $7,600.
Revenue at the ACI building for the nine months ended September 30, 2000
increased $4,100 compared to the same period in 1999. Operating expense for the
nine months ended September 30, 2000 increased $25,500 compared to the same
period in 1999. The increase in operating expense was primarily due to an
increase in general & administrative expenses of $12,200 and depreciation of
$33,600 offset by a decrease in management fees of $23,000.
The occupancy levels at September 30 were as follows:
OCCUPANCY LEVELS AT SEPTEMBER 30,
2000 1999
Atrium at Alpha 88% 84%
Franklin Park 57% 57%
ACI Building 100% 100%
North Winn 87% N/A
During the quarter ended September 30, 2000, the occupancy level at Atrium at
Alpha increased from 86% at June 30, 2000 to 88% at September 30, 2000. One new
tenant which occupied 600 square feet signed a lease in August of 2000. One
tenant which occupied 1,318 square feet bought out the remainder of their lease
for $25,000 and vacated as of September 30, 2000. Three tenants leases expired
and were renewed in different suite configurations for a total of 5,993 square
feet, a net increase of 1,766 square feet. The property has one major tenant
occupying 16% of the building. The lease for this tenant expires in December
2003.
Franklin Park has one tenant occupying 57% of the building. The lease expires in
December 2004.
The ACI Building has a single tenant occupying 100% of the building. The lease
expires in August 2008.
The Trust reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of a property may not be
recoverable. The Trust considers a history of operating losses or a change
11
<PAGE>
in occupancy to be primary indicators of potential impairment. The Trust deems
the property to be impaired if a forecast of undiscounted future operating cash
flows directly related to a property, including disposal value, if any, is less
than its carrying amount. If the property is determined to be impaired, the loss
is measured as the amount by which the carrying amount of the property exceeds
its fair value. Fair value is based on quoted market prices in active markets,
if available. If quoted market prices are not available, an estimate of fair
value is based on the best information available, including prices for similar
properties or the results of valuation techniques such as discounting estimated
future cash flows. Considerable management judgment is necessary to estimate
fair value. Accordingly, actual results could vary significantly from such
estimates.
Pro Forma Results
The table below presents the pro-forma results of operations with North Winn
Apartments for the three and nine months ended September, 2000 and September,
1999. North Winn was purchased in August, 2000. These pro forma operating
results are not necessarily indicative of what the actual results would have
been had North Winn Apartments been purchased at the beginning of the earliest
period presented.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
Revenues $ 918,000 891,000 2,657,000 2,695,000
Depreciation and amortization 155,000 165,000 467,000 530,000
Repairs and maintenance, including
common area maintenance 117,000 119,000 334,000 351,000
Interest, net 134,000 125,000 390,000 376,000
General and administrative 51,000 121,000 135,000 393,000
Other 292,000 635,000 1,093,000 1,584,000
-------- ----------- --------- -----------
Total expenses 749,000 1,165,000 2,419,000 3,234,000
-------- ----------- --------- -----------
Net income (loss) before
extraordinary item $ 169,000 (274,000) 238,000 (539,000)
======== =========== ========= ===========
Net income (loss) per share:
before extraordinary item $ .16 (.32) .25 (.62)
======== =========== ========= ===========
</TABLE>
12
<PAGE>
COMPARISON OF CONSOLIDATED RESULTS
For the three months ended September 30, 2000, the Trust's consolidated revenues
were $845,000. Revenues increased $103,000 (13.9%) compared to the same period
in 1999. The increases are primarily a result of the acquisition of North Winn
in the third quarter of 2000. The Trust's consolidated revenues for the nine
month period ended September 30, 2000 were $2,292,000, an increase of $46,000
(2.0%) compared to the same period in 1999.
For the three months ended September 30, 2000, the Trust's consolidated expenses
were $668,000. Expenses decreased $338,000 (33.6%) compared to the same period
in 1999. The decrease in consolidated expenses is due primarily to a decrease in
professional fees of $233,000, general & administrative expenses of $60,000,
real estate taxes of $34,000, and property management fees-related party of
$24,000. The decrease in professional fees was primarily due to a reduction in
legal fees related to lawsuit expense incurred in 1999 and not in 2000. For the
nine months ended September 30, 2000, the Trust's consolidated expenses were
$2,042,000, a decrease of $756,000 (27.0%) compared to the same period in 1999.
The decrease in expenses is due primarily to a decrease in professional fees of
$288,000, general and administrative expenses of $254,000, real estate taxes of
$126,000 and property management fees of $78,000.
The net income for the quarter ended September 30, 2000 was $134,000 or $.13 per
share. The net loss for the quarter ended September 30, 1999 was $264,000 or
$.31 per share. The extraordinary item of $43,000 was due to a prepayment
penalty on the payoff of the Trust's existing debt collateralized by all three
properties as described in Item 2--Liquidity and Capital Resources.
Cash flow provided by operating activities was $230,000 for the period ended
September 30, 2000 compared to the same period in 1999, in which cash provided
by operating activities was $219,000. The increase in cash flow provided by
operating activities was due primarily to an increase in net income, offset by a
decrease in accounts payable and other liabilities. Cash flow used in investing
activities was $2,789,000 for the period ended September 30, 2000 compared to
$490,000 in 1999. The increase in cash flow used in investing activities was due
primarily to the acquisition of North Winn Apartments, combined with a decrease
in capital expenditures. Cash flow provided by financing activities was
$3,048,000 for the period ended September 30, 2000 compared to the same period
in 1999, in which cash used in financing activities was $79,000. The primary
cause of the increase in cash flow provided by financing activities was the
$1,384,000 provided by the issuance of common stock, combined with the
$1,986,000 mortgage payable on North Winn. Reduction of the principal balance on
the mortgage note was the sole use of cash from financing activities for the
period ended September 30, 1999.
MARKET RISK
The Trust has considered the provision of Financial Reporting Release No. 48
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosure of Quantitative and Qualitative
Information about Market Risk Inherent in Derivative Financial Instruments,
Other Financial Instruments and Derivative Commodity Instruments". The Trust had
no holdings of derivative financial or commodity instruments at September 30,
2000 The Trust does not believe that it has any material exposure to interest
rate risk. The debt on the ACI building matures in 2010, the debt on North Winn
matures in 2007, and the line of credit matures in 2001. The debt on the ACI
building is at a fixed rated of 8.63%. The debt on North Winn and the line of
credit are each variable. The current interest rates on the line of credit and
North Winn are 9.5% and 7.941%, respectively. A 100 basis point increase in the
variable rate debt on an annual basis would impact net income by approximately
$24,000.
INFLATION
The effects of inflation did not have a material impact upon the Trust's
operations in the periods ended September 30, 2000.
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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
On July 20, 2000, the Board of Directors of the Trust declared a cash dividend
of $0.16 per share payable to the holders of record on August 31, 2000 of the
Trust's $1.00 par value, common stock. The dividend was paid on September 21,
2000. The Trust's Board of Director's has reinstated the quarterly cash dividend
and anticipates declaring a $.16 per share cash dividend each quarter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Exhibits Index on Page 16
(b) Reports on Form 8-K
The following reports on Form 8-K were filed by the Trust during the third
quarter of 2000:
On August 29, 2000, the Trust filed a report on Form 8-K (File No. 00-13457)
which reported the Trust's execution of a contract to sell one of its properties
(Item 5).
On October 4, 2000, the Trust filed a report on Form 8-K (File No. 00-13457)
which reported the Trust's Board of Trustees appointment of two additional
Trustees to fill the vacancies created when the Board increase the number of
Trustees from five to seven members (Item 5).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Trust has duly caused this report to be signed on its behalf by
the undersigned, there unto duly authorized.
MAXUS REALTY TRUST, INC.
Date: November 14, 2000 By: /s/ Daniel W. Pishny
Daniel W. Pishny
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on November 14, 2000, by the following persons on behalf
of the Trust and in the capacities indicated.
/s/ John W. Alvey
John W. Alvey
Vice President
Chief Financial and Accounting
Officer
15
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EXHIBIT INDEX
Exhibit
Number Description
3.1 Articles of Incorporation dated June 12, 1984, as amended, are
incorporated by reference to Exhibit 3.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000,
as filed pursuant to Rule 13a-13 under the Securities Exchange Act
of 1934 (File No. 000-13754).
3.2 Bylaws of the Registrant, as amended, are incorporated by reference
to Exhibit 3.2, to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000, as filed pursuant to Rule
13a-13 under the Securities Exchange Act of 1934 (File No.
000-13754).
4.1 Deed of Trust, Security Agreement and Assignment of Rents dated July
25, 2000 by and between ACI Financing L.L.C., Russell J. Kreikmeier,
as Trustee, and Principal Commercial Funding, L.L.C. (which was
assigned to and assumed by North Winn Acquisition, L.L.C. on August
10, 2000)
4.2 Multifamily Deed of Trust, Assignment of Rents and Security
Agreement dated August 10, 2000 by and between North Winn
Acquisition, L.L.C., Assured Quality Title Company, as Trustee, and
Prudential Multifamily Mortgage, Inc.
10.1 Management Agreement between Maxus Properties, Inc. and North Winn
Acquisition, L.L.C. dated August 16, 2000.
27.1 Financial Data Schedule
16
