SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR TRANSITION PERIOD FROM _______________ TO _______________.
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 $1 Beneficial
Interest as of June 30, 1997 was 1,770,006.
Transitional Small Business Disclosure Format:
Yes [ ] No [ X ]
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PALMETTO REAL ESTATE TRUST
Quarterly Report on Form 10-QSB
For the Quarterly Period Ended June 30, 1997
Form 10-QSB Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at June 30, 1997................1
Unaudited Statements of Income and Undistributed
Earnings for the Three Months and Six
Months Ended June 30, 1997 and 1996 ...................2
Unaudited Statements of Cash Flows for the Six
Months Ended June 30, 1997 and 1996....................3
Notes to Unaudited Financial Statements.................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..........5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................6
Item 2. Changes in Securities...................................6
Item 3. Defaults Upon Senior Securities.........................6
Item 4. Submission of Matters to a Vote of Security Holders.....6
Item 5. Other Information.......................................6
Item 6. Exhibits and Reports on Form 8-K........................6
Signatures..............................................7
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PALMETTO REAL ESTATE TRUST
Balance Sheet
(unaudited)
June 30, 1997
Assets
Investment in real estate
Rental property, net of accumulated depreciation $ 8,391,113
Timberlands 24,864
----------
8,415,977
Cash 101,013
Rent receivable 19,354
Prepaid expense 4,034
Note receivable 266,661
Deferred loan expense, net of accumulated amortization 23,919
----------
Total assets $ 8,830,958
===========
Liabilities and Shareholders' equity
Liabilities:
Mortgage notes payable $ 5,592,607
Demand note payable 95,372
Income taxes payable 2,000
Deferred revenue 159,795
Accounts payable and accrued expenses 91,741
-----------
5,941,515
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 620,703
-----------
2,889,443
-----------
Total liabilities and shareholders' equity $ 8,830,958
===========
The accompanying notes are an integral part of these financial statements.
1
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PALMETTO REAL ESTATE TRUST
Statements of Income and Undistributed Earnings
For the Three Months and Six Months Ended June 30, 1997 and 1996
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30,
1997 1996 1997 1996
------ ------ ------ ------
(unaudited) (unaudited)
Income:
Rental income $ 376,567 $ 356,193 $ 769,805 $ 710,293
Other income 6,179 362,794 22,582 13,280
-------- -------- -------- --------
382,746 362,794 792,387 723,573
Expenses:
Depreciation and
and amortization 77,067 72,113 153,544 143,270
Interest 119,613 109,630 227,966 219,842
Repairs and maintenance 16,063 7,886 27,066 18,767
Property taxes 37,487 37,487 74,974 74,974
General and administrative 47,463 48,399 95,270 87,871
-------- -------- -------- -------
297,693 275,515 578,820 544,724
-------- -------- -------- -------
Income from operations 85,053 87,279 213,567 178,849
Provision for federal and state
income taxes (1,000) - (2,000) -
Gain on sale of real estate 1,960 1,791 3,918 3,582
-------- -------- -------- -------
Net income 86,013 89,070 215,485 182,431
Undistributed earnings,
beginning 605,490 564,685 476,018 471,324
Dividends declared 70,800 70,802 70,800 70,802
-------- ------- -------- -------
Undistributed earnings,
ending $ 620,703 $ 582,953 $ 620,703 $ 582,953
========= ========= ========= ========
Net income per share of
beneficial interest $ .05 $ .05 $ .12 $ .10
========= ========= ========= ========
The accompanying notes are an integral part of these financial statements.
2
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PALMETTO REAL ESTATE TRUST
Statements of Cash Flows
For the Six Months Ended June 30, 1997 and 1996
SIX MONTHS ENDED
JUNE 30,
1997 1996
------ ------
(UNAUDITED)
Cash flows from operating activities:
Net income $ 215,485 $ 182,431
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 150,791 140,375
Amortization of deferred expenses 2,753 2,896
Gain on sale of real estate (3,918) (3,582)
(Increase) decrease in:
Rent receivable 18,002 24,650
Increase (decrease) in:
Accounts payable and accrued expenses (22,001) (57,254)
Income taxes payable 2,000 -
--------- --------
Net cash provided by operating activities 363,112 289,516
--------- --------
Cash flows from investing activities
Property additions and improvements (34,125) (27,343)
Collections of mortgage note receivable 8,779 7,199
---------- ----------
Net cash used in investing activities (25,346) (20,144)
--------- ----------
Cash flows from financing activities
Payments on mortgage notes payable (138,880) (100,819)
Net borrowings (payments) on demand
note payable (65,000) 90,000
Payment of dividends (225,677) (256,652)
--------- ----------
Net cash used in financing activities (429,557) (267,471)
--------- ----------
Increase (decrease) in cash (91,791) 1,901
Cash at beginning of period 192,804 84,066
--------- ----------
Cash at end of period $ 101,013 $ 86,967
========== ==========
The accompanying notes are an integral part of these financial statements.
3
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PALMETTO REAL ESTATE TRUST
Notes to Financial Statements
June 30, 1997
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements, which are for interim
periods, do not include all disclosures provided in the annual financial
statements. These unaudited financial statements should be read in
conjunction with the financial statements and the footnotes thereto
contained in the Annual Report on Form 10-KSB for the year ended December
31, 1996 of Palmetto Real Estate Trust (the "Trust"), as filed with the
Securities and Exchange Commission.
(2) INTERIM PERIODS
In the opinion of the Trust, the accompanying unaudited financial
statements contain all adjustments (which are of a normal recurring nature)
necessary for a fair presentation of the financial statements. The results
of operations for the six months ended June 30, 1997 are not necessarily
indicative of the results to be expected for the full year.
4
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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, 1996. At present, there are no large
capital expenditures planned that would present a liquidity problem.
Results of Operations - Six months ended June 30, 1997 compared to
six months ended June 30, 1996.
Income from operations for the six months ended June 30, 1997
increased approximately 18% as compared to the same period in 1996.
Rental income increased 8% as a result of a number of lease renewal
options being exercised at an increased base rent.
Depreciation, interest expense and property taxes remained
relatively stable in 1997 as compared to the first six months of
1996. Repairs and maintenance increased $8,300 due primarily to roof
repairs on various properties during 1997.
5
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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 to 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 of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibit Description: 27 Financial Data Schedule
B. Reports on Form 8-K: None.
6
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SIGNATURES
In accordance with 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.
PALMETTO REAL ESTATE TRUST
August 6, 1997 By: /s/ Bill Franks
- ---------------- ----------------
Date Bill Franks
Property Manager
(Principal Financial and Accounting Officer)
August 6, 1997 By: /s/ James A. Boling
- ---------------- --------------------
Date James A. Boling
Chairman
(Principal Executive Officer)
7
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