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 June 30, 1996
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: 1,770,006
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PALMETTO REAL ESTATE TRUST
Quarterly Report on Form 10-QSB
For the Quarterly Period Ended June 30, 1996
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Balance Sheet at June 30, 1996
Unaudited Condensed Statements of Income and Undistributed Earnings
for the Three Months and Six Months Ended June 30, 1996 and 1995
Unaudited Condensed Statement of Cash Flows for the Six Months Ended
June 30, 1996 and 1995
Unaudited Note to Interim Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
There have been no changes in the Trust's liquidity or financial
condition since December 31, 1995. At present, there are no large
capital expenditures planned that would present a liquidity problem.
RESULTS OF OPERATIONS
Income from operations for the six months ended June 30, 1996
decreased approximately 12% as compared to the same period in 1995.
Rental income increased 26% as a result of the Trust acquiring new
rental properties during the third and fourth quarters of 1995, and
a number of lease renewal options being exercised at an increased
base rent. Other revenue decreased approximately $8 thousand mainly
due to the Trust receiving an insurance settlement claim during the
first quarter of 1995.
Depreciation, interest expense and property taxes increased 27%, 50%
and 25%, respectively, in relation to the purchase and financing of
new properties during the third and fourth quarter of 1995. Also,
administrative expenses, which include utilities and insurance,
increased 20% in relation to the properties acquired during 1995.
Repairs and maintenance increased $12 thousand due primarily to roof
repairs on various properties during 1996.
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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 six months
ended June 30, 1996.
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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
August 6, 1996 BY: /s/ Bill Franks
- --------------- --------------------
Date Bill Franks
Property Manager
August 6, 1996 BY: /s/ James A. Boling
- --------------- --------------------
Date James A. Boling
Chairman
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PALMETTO REAL ESTATE TRUST
Balance Sheet
June 30, 1996
June 30,
Assets 1996
--------
(unaudited)
Investment in real estate
Rental property, net of accumulated depreciation $7,940,626
Timberlands 24,864
--------
7,965,490
Cash 85,967
Rent receivable 23,051
Prepaid expense 868
Note receivable 282,980
Deferred loan expense, net of accumulated amortization 25,446
--------
Total assets $8,383,802
Liabilities and Shareholders' equity
Liabilities:
Mortgage notes payable $4,908,608
Demand note payable 370,000
Deferred revenue 167,294
Accounts payable and accrued expenses 86,207
--------
Total Liabilities 5,532,109
Shareholders' equity:
Shares of beneficial interest, $1 stated value;
5,000,000 shares authorized; 1,770,006 shares
issued and outstanding 1,770,006
Capital surplus 498,734
Undistributed earnings 582,953
--------
Total Shareholders' Equity 2,851,693
--------
Total liabilities and shareholders' equity $8,383,802
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PALMETTO REAL ESTATE TRUST
Condensed Statements of Income and Undistributed Earnings
For the Three Months and Six Months Ended June 30, 1996 and 1995
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(unaudited) (unaudited)
------ ------ ------ ------
Income:
Rental income $ 356,193 $ 248,180 $ 710,293 $ 528,739
Other income 6,601 8,729 13,280 21,106
------ ------ ------ ------
362,794 256,909 723,573 549,845
Expenses:
Depreciation
and amortization 72,113 51,985 143,270 103,901
Interest 109,630 57,483 219,842 109,843
Repairs and maintenance 7,886 3,440 18,767 6,253
Property taxes 37,487 28,065 74,974 56,130
General and
administrative 48,399 38,062 87,871 70,156
------ ------ ------ ------
275,515 179,035 544,724 346,283
Income from operations 87,279 77,874 178,849 203,562
Gain on sale of real estate 1,791 1,637 3,582 3,274
Net income 89,070 79,511 182,431 206,836
Undistributed earnings,
beginning 564,685 524,297 471,324 412,599
Dividends declared 70,802 62,800 70,802 78,427
Undistributed earnings,
ending $ 582,953 $ 541,008 $ 582,953 $ 541,008
Net income per share of
beneficial interest $ .050 $ .051 $ .103 $ .112
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PALMETTO REAL ESTATE TRUST
Condensed Statements of Cash Flows
For the Six Months Ended June 30, 1996 and 1994
Six Months Ended
June 30,
1996 1995
-------- --------
(unaudited)
Cash flows from operating activities
Net income $ 182,431 $ 206,836
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense 140,375 101,005
Amortization of deferred expenses 2,896 2,896
Gain on sale of real estate (3,582) (3,274)
(Increase) decrease in:
Rent receivable 24,650 4,990
Increase (decrease) in:
Accounts payable and accrued expenses (57,254) (46,871)
Dividends payable (185,850) (117,825)
-------- --------
Net cash provided by operating activities 103,666 147,757
Cash flows from investing activities
Property additions and improvements (27,343) (6,132)
Collections of mortgage note receivable 7,199 6,563
-------- --------
Net cash provided by (used in) investing activities (20,144) 431
Cash flows from financing activities
Payments on mortgage notes payable (100,819) (62,156)
Net borrowings(payments) on demand note payable 90,000 (50,000)
Payment of dividends (70,802) (78,427)
-------- --------
Net cash used in financing activities (81,621) (190,583)
-------- --------
Increase (decrease) in cash 1,901 (42,395)
Cash at beginning of period 84,066 68,437
-------- --------
Cash at end of period $ 85,967 $ 26,042
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PALMETTO REAL ESTATE TRUST
Note to Interim Financial Statements
June 30, 1996
(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 six-month period ended June 30, 1996 and 1995 are
not necessarily indicative of the results which may be expected for the
entire year.
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