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 MARCH 31, 1998
[ ] 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
--------------------------
(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
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(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 March 31, 1998 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 March 31, 1998
Form 10-QSB Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at March 31, 1998 . . . . . . 1
Unaudited Statements of Income and Undistributed
Earnings for the Three Months Ended
March 31, 1998 and 1997. . . . . . . . . . . . . . . . 2
Unaudited Statements of Cash Flows for the Three
Months Ended March 31, 1998 and 1997 . . . . . . . . . 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)
March 31, 1998
Assets
------
Investment in real estate
Rental property, net of accumulated depreciation $8,219,783
Timberlands 24,864
---------
8,244,647
Cash 69,335
Rent receivable 32,125
Prepaid expense 7,000
Note receivable 254,518
Deferred loan expense, net of accumulated amortization 19,790
--------
Total assets $8,627,415
=========
Liabilities and Shareholders' equity
------------------------------------
Liabilities:
Mortgage notes payable $5,377,192
Demand notes payable 165,000
Income taxes payable 1,000
Deferred revenue 153,735
Accounts payable and accrued expenses 70,000
---------
5,766,927
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 591,748
---------
2,860,488
---------
Total liabilities and shareholders' equity $8,627,415
=========
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 Ended March 31, 1998 and 1997
THREE MONTHS ENDED
March 31,
1998 1997
Income: ------ ------
Rental income $396,105 $393,238
Other income 5,646 16,403
------- -------
401,751 409,641
Expenses:
Depreciation and amortization 65,504 76,477
Interest 126,367 108,353
Repairs and maintenance 10,824 11,003
Property taxes 39,352 37,487
General and administrative 47,250 47,807
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289,297 281,127
------- -------
Income from operations 112,454 128,514
Provision for federal and state income taxes (1,000) (1,000)
Gain on sale of real estate 2,142 1,958
------- -------
Net income 113,596 129,472
======= =======
Undistributed earnings, beginning 478,152 476,396
Dividends declared - 380
------- -------
Undistributed earnings, ending $591,748 $605,488
======= =======
Basic earnings per share of beneficial interest $.06 $.07
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 Three Months Ended March 31, 1998 and 1997
THREE MONTHS ENDED
MARCH 31,
1998 1997
------ ------
(UNAUDITED)
Cash flows from operating activities:
Net income $113,596 $129,472
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 64,128 75,101
Amortization of deferred expenses 1,376 1,376
Gain on sale of real estate (2,142) (1,958)
(Increase) decrease in:
Rent receivable 10,888 5,672
Prepaid expense (7,000) -
Increase (decrease) in:
Accounts payable and accrued expenses (53,396) (54,342)
Income taxes payable 1,000 1,000
Dividends payable - (154,500)
------- -------
Net cash provided by operating activities 128,448 1,821
------- -------
Cash flows from investing activities
Collections of mortgage note receivable 3,866 4,785
Cash flows from financing activities
Payments on mortgage notes payable (74,278) (70,706)
Borrowings on demand note payable 165,000 (65,000)
Payment of dividends (222,225) (380)
------- -------
Net cash used in financing activities (131,503) (136,086)
------- -------
Increase (decrease) in cash 811 (129,480)
Cash at beginning of period 68,524 192,804
------- -------
Cash at end of period $ 69,335 $ 63,324
======= =======
The accompanying notes are an integral part of these financial statements.
3
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PALMETTO REAL ESTATE TRUST
Notes to Financial Statements
March 31, 1998
(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, 1997 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 three months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the full
year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
The Trust is in the process of refinancing its long term debt as of
the date of the filing of this report. There have been no other
changes in the Trust's liquidity or financial condition since December
31, 1997. At present, there are no large capital expenditures planned
that would present a liquidity problem.
Results of Operations - Three months ended March 31, 1998 compared to
three months ended March 31, 1997.
Income from operations for the three months ended March 31, 1998
decreased approximately 12% as compared to the same period in 1997.
Rental income remained relatively stable.
Interest expense increased in 1998 as compared to the first three
months of 1997 in relation to discount points paid for the pending
refinancing of long term debt. Depreciation expense decreased as a
result of property being fully depreciated during 1997.
4
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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.
5
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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
April 30, 1998 By: /s/ Bill Franks
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Date Bill Franks
Property Manager
(Principal Financial and Accounting Officer)
April 30, 1998 By: /s/ James A. Boling
- -------------- -----------------------
Date James A. Boling
Chairman
(Principal Executive Officer)
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
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<PP&E> 8244647
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<CURRENT-LIABILITIES> 236000
<BONDS> 5377192
0
0
<COMMON> 1770006
<OTHER-SE> 1090482
<TOTAL-LIABILITY-AND-EQUITY> 8627415
<SALES> 0
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<INCOME-PRETAX> 112454
<INCOME-TAX> 1000
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<EXTRAORDINARY> 0
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