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 JUNE 30, 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
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, 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 June 30, 1998
Form 10-QSB Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at June 30, 1998................1
Unaudited Statements of Income and Undistributed
Earnings for the Three Months and Six Months
Ended June 30, 1998 and 1997.........................2
Unaudited Statements of Cash Flows for the Six
Months Ended June 30, 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)
June 30, 1998
Assets
------
Investment in real estate
Rental property, net of accumulated depreciation $ 8,157,261
Timberlands 24,864
----------
8,182,125
Cash 159,121
Rent receivable 26,753
Note receivable 221,931
Deferred loan expense, net of accumulated amortization 16,410
----------
Total assets $ 8,606,340
===========
Liabilities and Shareholders' equity
------------------------------------
Liabilities:
Mortgage notes payable $ 5,465,000
Income taxes payable 2,000
Deferred revenue 151,592
Accounts payable and accrued expenses 103,380
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5,721,972
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 615,628
---------
2,884,368
---------
Total liabilities and shareholders' equity $ 8,606,340
===========
3
The accompanying notes are an integral part of these financial statements.
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PALMETTO REAL ESTATE TRUST
Statements of Income and Undistributed Earnings
For the Three Months and Six Months Ended June 30, 1998 and 1997
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
---- ---- ---- ----
Income:
Rental income $ 383,617 $ 376,567 $ 779,722 $ 769,805
Other income 6,034 6,179 11,680 22,582
-------- -------- -------- -------
389,651 382,746 791,402 792,387
Expenses:
Depreciation and 83,472 77,067 148,976 153,544
amortization
Interest 108,880 119,613 235,247 227,966
Repairs & maintenance 22,081 16,063 32,905 27,066
Property taxes 39,355 37,487 78,707 74,974
General & administrative 43,101 47,463 90,351 95,270
-------- -------- -------- --------
296,889 297,693 586,186 578,820
-------- -------- -------- --------
Income from operations 92,762 85,053 205,216 213,567
Provision for income taxes (1,000) (1,000) (2,000) (2,000)
Gain on sale of real estate 2,143 1,960 4,285 3,918
-------- -------- -------- --------
Net income 93,905 86,013 207,501 215,485
Undistributed earnings,
beginning 521,723 605,490 478,152 476,018
Dividends paid - 70,800 70,025 70,800
-------- -------- -------- --------
Undistributed earnings,
ending $ 615,628 $ 620,703 $ 615,628 $ 620,703
========= ========= ========= =========
Basic earnings per share
of beneficial interest $ .05 $ .05 $ .12 $ .12
========= ========= ========= =========
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PALMETTO REAL ESTATE TRUST
Statements of Cash Flows
For the Three Months Ended June 30, 1998 and 1997
SIX MONTHS ENDED
JUNE 30,
1998 1997
------ ------
(UNAUDITED)
Cash flows from operating activities:
Net income $ 207,501 $ 215,485
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 128,265 150,791
Amortization of deferred expenses 20,711 2,753
Gain on sale of real estate (4,285) (3,918)
(Increase) decrease in:
Rent receivable 16,258 18,002
Deferred loan expense (15,955) -
Increase (decrease) in:
Accounts payable and accrued expenses (20,016) (22,001)
Income taxes payable 2,000 2,000
--------- ---------
Net cash provided by operating activities 334,479 363,112
--------- ---------
Cash flows from investing activities:
Property additions and improvements (1,615) (34,125)
Collections of mortgage note receivable 36,453 8,779
--------- ----------
Net cash provided by (used in) investing activities 34,838 (25,346)
--------- ---------
Cash flows from financing activities:
Payments on mortgage notes and demand note (5,486,470) (138,880)
payable
Borrowings on mortgage note payable 5,500,000 (65,000)
Payment of dividends (292,250) (225,677)
--------- ---------
Net cash used in financing activities (278,720) (429,557)
--------- ---------
Increase (decrease) in cash 90,597 (91,791)
Cash at beginning of period 68,524 192,804
--------- ---------
Cash at end of period $ 159,121 $ 101,013
========== ==========
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PALMETTO REAL ESTATE TRUST
Notes to Financial Statements
June 30, 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 and six months ended June 30,
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 refinanced its long term debt of $5,500,000 during June
1998. Repayments will be payable in monthly installments of $17,500
at an interest rate of 7.75% through April 2003 with a final
balloon payment of $4,467,500 due on that date. 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 - Six months ended June 30, 1998 compared to
six months ended June 30, 1997.
Income from operations for the six months ended June 30, 1998
decreased approximately 4% or $8,000 as compared to the same period
in 1997. Rental income remained relatively stable, while operating
expenses increased by approximately $7,000.
Depreciation expense decreased as a result of certain property
becoming fully depreciated during 1997. Repairs and maintenance
increased primarily due to painting and resurfacing parking lots
during 1998. Interest expense increased in 1998 in relation to
discount points paid toward the refinancing of long term debt.
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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.
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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, 1998 By: /s/ Bill Franks
- ------------------------------- ---------------
Date Bill Franks
Property Manager
(Principal Financial and Accounting Officer)
August 6, 1998 By: /s/ James A. Boling
- --------------- -------------------
Date James A. Boling
Chairman
(Principal Executive Officer)
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 159121
<SECURITIES> 0
<RECEIVABLES> 248684
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 185874
<PP&E> 8182125
<DEPRECIATION> 0
<TOTAL-ASSETS> 8606340
<CURRENT-LIABILITIES> 256972
<BONDS> 5465000
0
0
<COMMON> 1770006
<OTHER-SE> 1114362
<TOTAL-LIABILITY-AND-EQUITY> 8606340
<SALES> 0
<TOTAL-REVENUES> 791402
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 350939
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 235247
<INCOME-PRETAX> 205216
<INCOME-TAX> 2000
<INCOME-CONTINUING> 203216
<DISCONTINUED> 4285
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 207501
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
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