SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
Commission file number 0-179
PALMETTO REAL ESTATE TRUST
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0405064
- --------------- -----------
(State or other jurisdiction (I.R.S. Employer
of incorporation of organization) Identification No.)
45 Liberty Lane
Greenville, SC 29607
- --------------- ------
(Address of principal (Zip Code)
executive offices)
Issuer's telephone number, including area code: (803) 233-6007
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) or the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of the Issuer's Shares of Beneficial
Interest: 1,570,006
<PAGE>
PALMETTO REAL ESTATE TRUST
Quarterly Report on Form 10-QSB
For the Quarterly Period Ended September 30, 1995
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Balance Sheet at September 30, 1995
Unaudited Condensed Statements of Income and Undistributed
Earnings for the Three Months and Nine Months Ended September
30, 1995 and 1994
Unaudited Condensed Statement of Cash Flows for the Nine Months
Ended September 30, 1995 and 1994
Unaudited Note to Interim Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
During the nine months ended September 30, 1995, the Trust sold
property located in Valdosta, Georgia for $332,500, and
recorded a gain for financial reporting purposes. For income
tax purposes, the sale of the property will be included as part
of a tax-free exchange and subject to neither Federal nor state
income taxes. The Trust acquired property in Columbia, South
Carolina for $745,000 to complete this exchange. This purchase
was partially financed by a bank loan of $445,000 with a
monthly payment of $4,395 for 5 years at 8.55% interest rate,
with the remaining balance due at that time.
Other than described above, there have been no significant
changes in the Trust's liquidity or financial condition since
December 31, 1994. At present, there are no large capital
expenditures planned that would present a liquidity problem.
<PAGE>
Results of Operations
Income from operations for the first nine months of 1995
increased by approximately 21% as compared to the same period
in 1994. Rental income increased 13% as a result of the Trust
acquiring new rental properties during the fourth quarter of
1994, and a number of lease renewal options being exercised at
an increased base rent. Other revenue increased approximately
$19 thousand due to an increase in interest revenue earned on
a note receivable issued by the Trust during September 1994
when it sold one of its properties.
Interest expense has increased approximately 48% due to the
Trust financing a portion of the rental properties acquired in
1994, and the interest rates on notes payable increased
approximately 2% during the current year.
Gain on the sale of real estate increased $42 thousand as a
result of the sale of the Valdosta, Georgia property described
above.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to its business, to
which the Palmetto Real Estate Trust is a party or of which any
of its property is the subject.
Item 2. Changes in Securities
There have been no changes in securities during the reporting
period.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission to Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibit A Selected Financial Statements
B. There were no reports on Form 8-K filed for the nine
months ended September 30, 1995.
<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PALMETTO REAL ESTATE TRUST
November 13, 1995 Bill Franks
- ----------------- -------------------------
Date Bill Franks
Property Manager
November 13, 1995 James A. Boling
- ----------------- -------------------------
Date James A. Boling
Chairman
<PAGE>
PALMETTO REAL ESTATE TRUST
Balance Sheet
September 30, 1995
September 30,
Assets 1995
- ------- (unaudited)
Investment in real estate
Rental property, net of accumulated depreciation $ 5,252,983
Timberlands 24,864
-----------
5,277,847
Cash 32,010
Rent receivable 23,697
Note receivable 293,655
Deferred loan and lease expense, net of
accumulated amortization 23,841
-----------
Total assets $ 5,651,050
Liabilities and Shareholders' equity
- -------------------------------------
Liabilities:
Mortgage notes payable $ 2,743,969
Demand note payable 280,000
Accounts payable and accrued expenses 83,152
Deferred revenue 172,513
-----------
3,279,634
Shareholders' equity:
Shares of beneficial interest, $1 stated value;
5,000,000 shares authorized; 1,570,006 shares
issued and outstanding 1,570,006
Capital surplus 198,734
Undistributed earnings 602,676
-----------
2,371,416
-----------
Total liabilities and shareholders' equity $ 5,651,050
<PAGE>
PALMETTO REAL ESTATE TRUST
Condensed Statements of Income and Undistributed Earnings
For the Three Months and Nine Months Ended September 30, 1995 and 1994
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(unaudited) (unaudited)
Income:
Rental income $ 245,670 $ 221,295 $ 774,409 $ 689,443
Other income 7,972 3,770 29,078 9,814
-------- -------- -------- --------
253,642 225,065 803,487 699,257
Expenses:
Depreciation and
amortization 52,048 51,881 155,949 153,096
Interest 56,057 48,600 165,900 111,869
Repairs and maintenance 6,532 7,608 12,785 19,486
Property taxes 31,035 28,134 87,165 84,264
General & administrative 30,580 32,929 100,736 98,345
-------- -------- -------- --------
176,252 169,152 522,535 467,060
-------- -------- -------- --------
Income from operations 77,390 55,913 280,952 232,197
Gain on sale of real estate 50,352 8,600 50,352 8,600
-------- -------- -------- --------
Net income 127,742 64,513 331,304 240,797
Undistributed earnings,
beginning 537,734 503,306 412,599 389,906
Dividends declared 62,800 62,800 141,227 125,684
-------- -------- -------- --------
Undistributed earnings,
ending $ 602,676 $ 505,019 $ 602,676 $ 505,019
-------- -------- -------- --------
Net income per share of
beneficial interest $ .081 $ .041 $ .211 $ .153
<PAGE>
PALMETTO REAL ESTATE TRUST
Condensed Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
Nine Months Ended
September 30
1995 1994
(unaudited)
Cash flows from operating activities
Net income $ 331,304 $ 240,797
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 151,605 150,806
Amortization of deferred expenses 4,344 2,290
Gain on sale of real estate (50,352) (8,600)
(Increase) decrease in:
Rent receivable 4,533 13,896
Deferred loan and lease expense (2,742) (1,877)
Increase (decrease) in:
Accounts payable and accrued expenses (16,175) (9,977)
Deferred revenue (4,911) -
Dividends payable (117,825) -
-------- --------
Net cash provided by operating activities 299,781 387,335
Cash flows from investing activities
Property additions and improvements (750,702) (256,633)
Proceeds from sale of real estate 314,089 10,000
Collections of mortgage note receivable 9,960 2,551
-------- --------
Net cash used in investing activities (426,653) (244,082)
Cash flows from financing activities
Payments on mortgage notes payable (93,328) (150,310)
Payments on demand note payable (120,000) -
Net borrowings 445,000 328,378
Purchase of shares of beneficial interest - (2,620)
Payment of dividends (141,227) (278,962)
Net cash provided by (used in) -------- --------
financing activities 90,445 (103,514)
-------- --------
Increase (decrease) in cash (36,427) 39,739
Cash at beginning of period 68,437 77,943
-------- --------
Cash at end of period $ 32,010 $ 117,682
(continued)
<PAGE>
PALMETTO REAL ESTATE TRUST
Condensed Statements of Cash Flows (continued)
For the Nine Months Ended September 30, 1995 and 1994
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
During September 1994, the Trust financed the sale of the Summerville, South
Carolina property by issuing a note receivable to the buyer in the amount of
$262,944, payable in monthly installments of $2,725, beginning October 1994
through January 2009. The sale has been accounted for under the installment
method and the gain of $176,707 will be realized over the term of the note
receivable.
<PAGE>
PALMETTO REAL ESTATE TRUST
Note to Interim Financial Statements
September 30, 1995
(1) Basis of Presentation
The accompanying unaudited condensed financial statements were prepared
in accordance with instructions for Form 10-QSB and, therefore, do not
include all information or footnotes necessary for a complete
presentation of financial condition, results of operations, and
increases (decreases) in cash flows in conformity with generally
accepted accounting principles. However, all adjustments which, in the
opinion of management, are necessary for a fair presentation of the
financial statements have been included. The results of operations for
the three and nine-month period ended September 30, 1995 and 1994 are
not necessarily indicative of the results which may be expected for the
entire year.
<PAGE>
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