SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 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
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PALMETTO REAL ESTATE TRUST
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(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 September 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 September 30, 1997
Form 10-QSB Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at September 30, 1997................ 1
Unaudited Statements of Income and Undistributed
Earnings for the Three Months and Nine Months Ended
September 30, 1997 and 1996................................ 2
Unaudited Statements of Cash Flows for the Nine Months
Ended September 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
The accompanying notes are an integral part of these financial statements.
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PALMETTO REAL ESTATE TRUST
Balance Sheet
(unaudited)
September 30, 1997
Assets
Investment in real estate
Rental property, net of accumulated depreciation $ 8,314,471
Timberlands 24,864
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8,339,335
Cash 74,955
Rent receivable 19,415
Prepaid expense 4,034
Note receivable 262,567
Deferred loan expense, net of accumulated amortization 22,543
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Total assets $ 8,722,849
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Liabilities and Shareholders' equity
Liabilities:
Mortgage notes payable $ 5,523,231
Income taxes payable 3,000
Deferred revenue 157,836
Accounts payable and accrued expenses 131,186
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5,815,253
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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 638,856
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2,907,596
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Total liabilities and shareholders' equity $ 8,722,849
===========
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 Nine Months Ended September 30, 1997 and 1996
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, September 30,
1997 1996 1997 1996
(unaudited) (unaudited)
Income: ------- ------- ------- -------
Rental income $ 379,374 $ 351,667 $1,149,179 $1,061,960
Other income 6,099 6,554 28,681 19,834
------- ------- ------- -------
385,473 358,221 1,177,860 1,081,794
Expenses:
Depreciation
and amortization 78,018 73,912 231,562 217,182
Interest 118,248 109,171 346,214 329,013
Repairs and maintenance 27,007 6,744 54,073 25,511
Property taxes 37,487 37,487 112,461 112,461
General and administrative 36,719 40,048 131,989 127,920
-------- -------- -------- -------
297,479 267,362 876,299 812,087
-------- -------- -------- -------
Income from operations 87,994 90,859 301,561 269,707
Provision for federal and
state income taxes (1,000) - (3,000) -
Gain on sale of real estate 1,958 3,581 5,876 7,164
-------- -------- -------- -------
Net income 88,952 94,440 304,437 276,871
Undistributed earnings, beginning 620,703 582,953 476,018 471,324
Dividends declared 70,799 70,800 141,599 141,602
-------- ------- -------- -------
Undistributed earnings, ending $ 638,856 $ 606,593 $ 638,856 $ 606,593
========= ========= ========= ========
Net income per share of
beneficial interest $ .05 $ .05 $ .17 $ .16
========= ========= ========= ========
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 Nine Months Ended September 30, 1997 and 1996
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
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(UNAUDITED)
Cash flows from operating activities:
Net income $ 304,437 $ 276,871
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 227,433 212,838
Amortization of deferred expenses 4,129 4,344
Gain on sale of real estate (5,876) (7,164)
Decrease in:
Rent receivable 17,941 33,525
Increase (decrease) in:
Accounts payable and accrued expenses 17,444 (17,682)
Income taxes payable 3,000 -
------- -------
Net cash provided by operating activities 568,508 502,732
------- -------
Cash flows from investing activities:
Property additions and improvements (34,125) (702,447)
Collections of mortgage note receivable 12,873 10,925
------- -------
Net cash used in investing activities (21,252) (691,522)
------- -------
Cash flows from financing activities:
Payments on mortgage notes payable (208,256) (151,915)
Net borrowings(payments) on demand note payable (160,372) 761,000
Payment of dividends (296,477) (327,452)
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Net cash used in financing activities (665,105) 281,633
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Increase (decrease) in cash (117,849) 92,843
Cash at beginning of period 192,804 84,066
------- -------
Cash at end of period $ 74,955 $176,909
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The accompanying notes are an integral part of these financial statements.
3
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PALMETTO REAL ESTATE TRUST
Notes to Financial Statements
September 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 nine months ended September 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 - Nine months ended September 30, 1997
compared to nine months ended September 30, 1996.
Income from operations for the nine months ended September 30, 1997
increased approximately 12% 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 and interest expense increased in 1997 as compared to
the first nine months of 1996 in relation to the purchase of
property during the fourth quarter of 1996. Repairs and maintenance
increased $28,562 due primarily to glass replacement and painting 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
October 16, 1997 By: /s/ Bill Franks
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Date Bill Franks
Property Manager
(Principal Financial and Accounting
Officer)
October 16, 1997 By: /s/ James A. Boling
- ---------------- --------------------
Date James A. Boling
Chairman
(Principal Executive Officer)
7
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
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<BONDS> 5523231
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0
<COMMON> 1770006
<OTHER-SE> 1137590
<TOTAL-LIABILITY-AND-EQUITY> 8722849
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<INCOME-PRETAX> 301561
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