<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended September 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 2-95449
NATIONAL PROPERTIES INVESTMENT TRUST
Formerly Richard Roberts Real Estate Growth Trust I
(Exact name of registrant as specified in its charter)
Massachusetts 06-6290322
- -------------------------------- --------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
P.O. Box 148 Canton Center, CT 06020
- ---------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (860) 678-1109
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12,13 or 15(d) of 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
filing requirements for the past 90 days. Yes X No
----- -----
<PAGE>
PART I
------
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NATIONAL PROPERTIES INVESTMENT TRUST
INDEX
Accountants' Review Report
Comparative Balance Sheet as of September 30, 1996 and December 31, 1995
Comparative Statement of Operations for the Nine Months Ended September 30,
1996 and 1995
Comparative Statement of Changes in Shareholders' Equity for the Nine
Months Ended September 30, 1996 and 1995
Comparative Statement of Cash Flows for the Nine Months Ended September 30,
1996 and 1995
Notes to the Financial Statements
<PAGE>
[LETTERHEAD OF BERNARDI, ALFIN & KOOS, L.L.C. APPEARS HERE]
November 11, 1996
Trustees
National Properties Investment Trust
P.O. Box 148
Canton Center, Connecticut 06020
We have reviewed the accompanying balance sheet of National Properties
Investment Trust as of September 30, 1996 and the related statements of
operations, changes in shareholders' equity and cash flows for the nine months
ended September 30, 1996 and 1995, included in the accompanying Securities and
Exchange Commission Form 10-Q for the period ended September 30, 1996 in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of National Properties Investment Trust.
A review of interim financial information consists principally of inquiries of
company personnel and analytical procedures applied to financial data. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of December 31, 1995, and the related statements
of operations, shareholders' equity and cash flows for the year then ended (not
presented herein). In our report dated March 28, 1996, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying balance sheet as of December 31, 1995,
is fairly stated in all material respects in relation to the balance sheet from
which it has been derived.
Respectfully submitted,
/s/ Bernardi Alfin & Koos
BERNARDI, ALFIN & KOOS, L.L.C.
Certified Public Accountants
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
------------------------------------
CANTON CENTER, CONNECTICUT
--------------------------
COMPARATIVE BALANCE SHEET
-------------------------
See Accountants' Review Report
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS:
- -------
Investments in real estate and personal property $ 917,045 $ 930,294
Cash and cash equivalents 75,054 108,081
Receivables 23,196 13,911
Other assets 38,561 50,002
------------- -------------
TOTAL ASSETS $ 1,053,856 $ 1,102,288
- ------------ ============= =============
LIABILITIES:
- ------------
Accounts payable and accrued expenses $ 28,575 $ 25,121
Security deposits held 18,196 18,196
Mortgage payable 579,186 598,353
------------- -------------
Total Liabilities 625,957 641,670
------------- -------------
SHAREHOLDERS' EQUITY:
- ---------------------
Shares of beneficial interest, no par value, unlimited
authorization, shares issued and outstanding were
718,860 in 1996 and 718,860 in 1995 11,735,447 11,735,447
Accumulated deficit (11,307,548) (11,274,829)
------------- -------------
Total Shareholders' Equity 427,899 460,618
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,053,856 $ 1,102,288
- ------------------------------------------ ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
------------------------------------
CANTON CENTER, CONNECTICUT
--------------------------
COMPARATIVE STATEMENT OF OPERATIONS
-----------------------------------
See Accountants' Review Report
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-------------
1996 1995
---- ----
<S> <C> <C>
PROPERTY OPERATIONS:
- --------------------
Gross rental income $ 260,265 $ 259,518
Rental expenses 184,054 125,333
---------- ----------
Net Income from Property Operations 76,211 134,185
---------- ----------
OTHER INCOME (EXPENSE):
- -----------------------
Interest income 1,342 -
General and administrative expenses (73,933) (104,241)
---------- ----------
Total Other Income (Expense) (72,591) (104,241)
---------- ----------
NET INCOME $ 3,620 $ 29,944
- ---------- ========== ==========
INCOME PER SHARE OF BENEFICIAL INTEREST $ 0.01 $ 0.04
- --------------------------------------- ========== ==========
AVERAGE NUMBER OF SHARES OF BENEFICIAL INTEREST 718,860 717,372
- ----------------------------------------------- ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
------------------------------------
CANTON CENTER, CONNECTICUT
--------------------------
COMPARATIVE STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
--------------------------------------------------------
See Accountants' Review Report
<TABLE>
<CAPTION>
For the Nine Months Ended For the Nine Months Ended
September 30, September 30,
------------- -------------
1996 1995
----------------------------------- -----------------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHARES OF BENEFICIAL INTEREST
- -----------------------------
Balance - Beginning of the Period 718,860 $ 11,735,447 718,860 $ 11,735,447
--------- --------------- ---------- ---------------
Balance - End of the Period 718,860 $ 11,735,447 718,860 $ 11,735,447
========= =============== ========== ===============
ACCUMULATED DEFICIT
- -------------------
Balance - Beginning of the Period $ (11,274,829) $ (11,327,800)
Net income 3,620 29,944
Dividends paid (36,339) -
--------------- ---------------
Balance - End of the Period $ (11,307,548) $ (11,297,856)
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
------------------------------------
CANTON CENTER, CONNECTICUT
--------------------------
COMPARATIVE STATEMENT OF CASH FLOWS
-----------------------------------
Increase (Decrease) in Cash and Cash Equivalents
See Accountants' Review Report
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net income $ 3,620 $ 29,944
---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 37,329 35,047
Changes in Assets and Liabilities:
Receivables (9,285) (2,645)
Other assets 4,709 -
Accounts payable and accrued expenses 3,454 (41,988)
---------- ----------
Total Adjustments 36,207 (9,586)
---------- ----------
Net Cash Provided By Operating Activities 39,827 20,358
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Purchase of personal property (17,348) -
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Principal payments on debt (19,167) (22,887)
Dividends paid (36,339) -
---------- ----------
Net Cash Used In Financing Activities (55,506) (22,887)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (33,027) (2,529)
- ----------------------------------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 108,081 3,378
- -------------------------------------------------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 75,054 $ 849
============================================ ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Organization and Summary of Accounting Policies:
------------------------------------------------
A. Organization:
-------------
National Properties Investment Trust (formerly Richard Roberts Real
Estate Growth Trust I) (the "Trust") was organized on January 16, 1985
as a Massachusetts Business Trust. The Trust invests directly in equity
interests in commercial, industrial and/or residential properties in
the United States which have income-producing capabilities and intends
to hold its properties for long-term investment (approximately four to
seven years). The Trust currently owns a single property located in
central Florida. Due to past adverse conditions in the real estate
market, and the economy in general, the Trustees have determined that
it would be necessary to extend the holding period for its property
beyond the property's anticipated four to seven years. The results of
the Trust's operations depend upon the Trust's property's competitive
position in its respective leasing market. The Shoppes at Lake Mary, a
strip shopping center located in Lake Mary, Florida, is the Trust's
sole remaining property. The Trust extends credit to its lessees in the
State of Florida.
B. Method of Accounting:
---------------------
The financial statements of the Trust have been prepared on the
accrual basis of accounting.
C. Cash Equivalents:
-----------------
For financial statement purposes, the Trust considers all highly
liquid investments with original maturities of three months or less to
be cash equivalents.
D. Income Taxes:
-------------
The Trust has made for prior years, and intends to make for 1996,
an election to file as a real estate investment trust (REIT) for
federal tax purposes, and if so qualified, will not be taxed on
earnings distributed to shareholders. Accordingly, no provision for
federal income taxes has been made for the periods ended September 30,
1996 and September 30, 1995. However, the Trust is subject to state
income taxes, where applicable.
E. Depreciation:
-------------
Depreciation was computed using the straight-line method over an
estimated depreciable life of 40 years for real property, 7 years for
personal property, and over the life of the related lease for tenant
improvements.
F. Accumulated Deficit:
--------------------
The accumulated deficit, reported as a reduction of Shareholders'
Equity, includes net losses recognized and distributions made to
Shareholders as a return of capital invested.
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Organization and Summary of Accounting Policies: (Continued)
------------------------------------------------
G. Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NOTE 2 - Related Party Transactions:
---------------------------
The Trust has entered into a temporary management agreement with
the Managing Trustee for a one year term. The agreement calls for the
Managing Trustee to be paid $4,000 per month plus Trust related
expenses. The Trust paid the Managing Trustee $34,000 as compensation
for managing the Trust property for the nine months ended September 30,
1996. In addition, the Trust offices are located at premises owned by
the Managing Trustee. No rent is being charged to the Trust.
The Trust gave Salvatore Carabetta, a Trustee of the Trust, a hold
harmless agreement in exchange for Mr. Carabetta's resignation as
Trustee of the Trust during July 1996.
NOTE 3 - Earnings Per Share:
-------------------
Earnings per Share of Beneficial Interest are computed on the
weighted average number of Shares of Beneficial Interest outstanding
during the period.
NOTE 4 - Investment in Real Estate and Personal Property:
------------------------------------------------
The Trust purchased The Shoppes at Lake Mary, a 38,125 square foot
shopping center located in Lake Mary, Florida on March 31, 1986 for
$3,200,000. Pursuant to the purchase agreement, the seller guaranteed
that the revenues generated by the project during the first two years
of its operation would be at least equal to the aggregate of all
expenses incurred in connection with the use and operation of the
project during each such year plus $360,000. The seller placed $300,000
of the purchase price in an interest bearing escrow account as security
for the guarantee. On September 26, 1986, the Trust released the seller
from the guarantee in consideration for the funds held in escrow. The
funds held in escrow were forwarded to the Trust on October 2, 1986.
The basis of the property acquired has been reduced by the amount
received under the terms of the cash flow guarantee. On December 31,
1991 the Trust reduced the book value of real property by $1,677,901 to
its net realizable value .
All of the Trust's property are recorded at historical cost, except
for it's real property which is recorded at its historical cost, less
$310,762 for the reduction in basis due to the release of funds
escrowed at closing, and less $1,677,901 loss reserve to reduce the
property value to its net realizable value.
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - Investment in Real Estate and Personal Property: (Continued)
------------------------------------------------
The Trust's property and equipment are as follows:
The Shoppes at Lake Mary
September 30, December 31,
1996 1995
---- ----
Land $ 195,299 $ 195,299
Buildings 1,147,584 1,147,584
Tenant Improvements 202,877 188,925
Furnishings and Equipment 19,545 16,149
----------- -----------
Total 1,565,305 1,547,957
Less: Accumulated Depreciation ( 648,260) ( 617,663)
----------- -----------
Net Investment in Real Estate
and Personal Property $ 917,045 $ 930,294
=========== ===========
NOTE 5 - Receivables:
------------
Receivables consist of the following:
9/30/96 12/31/95
------- --------
Tenant Receivables $ 23,197 $ 13,911
Allowance for Doubtful Accounts - -
--------- ---------
Tenant Receivables net of Allowance $ 23,197 $ 13,911
========= =========
NOTE 6 - Mortgages Payable:
------------------
9/30/96 12/31/95
------- --------
Mortgage payable in monthly
installments of principal of $7,201
plus interest charged at 2% over
prime on the outstanding balance.
The balance of principal & interest
is due in full in October, 1998.
The loan is secured by a first
mortgage lien on the Shoppes
at Lake Mary. $ 579,186 $ 598,353
========= =========
The following sets forth the principal payments due on the
mortgages payable:
September 30, 1997 25,376
September 30, 1998 28,242
September 30, 1999 525,568
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - Tenant Leases:
--------------
The Trust has entered into operating lease agreements with tenants
of its rental property which have various termination dates. Certain
leases also contain provisions for inflationary increases and the pass
through of a portion of operating expenses under specified
circumstances. Future minimum lease payments under noncancellable
operating leases are as follows:
1997 $ 295,679
1998 170,340
1999 85,324
2000 46,604
2001 4,145
-------
Total $ 602,092
=======
NOTE 8 - Dividends Paid to Shareholders:
-------------------------------
A one time dividend was paid on January 29, 1996, to shareholders
of record as of September 30, 1995, of $0.05 per share. This dividend
was a return of capital to the shareholders. The dividend was declared
by the sole vote of the Managing Trustee and was approved by the
shareholders' at their annual meeting held June 28, 1996.
NOTE 9 - Contingencies:
--------------
George Knude, an Independent Trustee, resigned on November 13,
1995. A successor Trustee, Jay W. Goldman, was elected by the
shareholders' at their annual meeting held June 28, 1996. The
Declaration of the Trust requires a new Trustee to be appointed within
60 days. Additionally, prior to June 28, 1996, Peter Stein, the
Managing Trustees had been acting on behalf of the Trust without the
express approval of the majority of the Trustees. Prior to June 28,
1996, Peter Stein and Salvatore Carabetta were the sole Trustees and
since a majority of Trustees need to be present to have a vote, both
Trustees need to be present to hold a vote. Effective July 1996, Mr.
Carabetta resigned as Trustee of the Trust.
A trustee meeting has not been called, which has delayed the full
implementation of the self managed trust organization. The Trustees
need to draft an amended and restated Declaration of Trust to define
the powers and limitations on the "Officers" and "Board of Directors"
of the Trust for a vote by the shareholders. A group of Trustee's has
not been appointed to serve as the "Board of Directors" to oversee the
management of the Trust by the Managing Trustee.
Management is unable to determine the effects the above events will
have on the financial condition of the Trust, if any.
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - Supplemental Disclosure of Cash Flow Information:
-------------------------------------------------
9-30-96 9-30-95
------- -------
Cash paid during the year -
Income taxes $ - $ -
Interest $46,618 $32,675
NOTE 11 - Reclassifications:
------------------
Certain prior year amounts have been reclassified to conform with
the current year presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
NATIONAL PROPERTIES INVESTMENT TRUST (the "Trust") was organized on January
16, 1985, as a Massachusetts Business Trust. On July 23, 1993, the Trust
changed its name from Richard Roberts Real Estate Growth Trust I to its current
name. The Trust has made for 1995 and prior years, and intends to make for
1996, an election to file as a real estate investment trust "REIT" under the
provisions of the Internal Revenue Code and intends to maintain this status as
long as it will benefit the Trust's shareholders. The Trust considers its
business to be operating in one industry segment, investment in real property.
Liquidity and Capital Resources
- -------------------------------
The Trust's primary cash requirements are for capital expenditures and operating
expenses, including utilities, insurance, sales taxes, maintenance and
management costs. Historically, the Trust's primary sources of cash have been
from operations and bank borrowings.
At September 30, 1996 the Trust has cash of approximately $75,054, which is
comprised almost entirely of proceeds from the refinancing of the first and
second mortgages on the Trust's property. The proceeds were used to repay the
first and second mortgages, in which the first mortgage was due in December
1996, pay the prior years and current year property taxes, provide working
capital to perform tenant improvements for two new tenants, provide capital to
install sewer lines mandated by the Town of Lake Mary, and provide funds to
issue a shareholder dividend. The Trust anticipates the need for $75,000 to
$100,000 for capital expenditures for mandated new sewer lines and tenant
improvements during 1996.
The Trust is currently searching for potential new properties for acquisition.
When a new property is identified, the Trust plans to raise new capital or
exchange shares of beneficial interest to finance the purchase of the property.
In exchange for capital raised, the Trust intends to issue stock to the new
investors. This stock will be in addition to the stock now outstanding for the
Trust. Currently no new properties have been contracted for purchase and no new
capital has been raised.
The principal assets of the Trust consists of an equity position in an income
producing commercial property and cash.
Inflation
- ---------
Inflation has been consistently low during the periods presented in these
financial statements and, as a result, has not had a significant effect on the
operations of the Trust.
<PAGE>
Competition
- -----------
The Trust's remaining property investment is subject to competition from similar
types of properties in the vicinity in which it is located. While the market in
which the property operates is experiencing a recovery, the property values
generally remain below the highs realized in the mid-1980's. The properties
current 98% occupancy rate, and the Trust's holding of several long-term leases
with automatic escalation clauses, are indicators that the Trust is not
currently facing heavy competition for tenants.
Results of Operations
- ---------------------
For the nine months ended September 30, 1996, the Trust reported net income from
property operations (before General and Administrative expenses) of $76,211 as
compared to net income from property operations of $134,185 for the nine months
ended September 30, 1995. This decrease is related to increased repairs and
maintenance and insurance costs. Also, the Trust experienced a net income from
operations of $3,620 for the nine months ended September 30, 1996, compared to a
income of $29,944 for the nine months ended September 30, 1995. The difference
is primarily due to the increase in rental expenses partially offset by
reduction in costs associated with operational expenses, and the travel and
related costs incurred with evaluating new investments.
The Managing Trustee is continuing conversations with other REITs and real
estate portfolios concerning merging in order for both entities to benefit from
the ability to share overhead. The Trustee's primary goal is to protect the
shareholders' current investment and to enhance their current return by reduced
general and administrative costs. These conversations are preliminary and the
Managing Trustee is unable to predict whether such a merger will become a
reality and if consummated, whether the shareholders will receive an increased
return on their investment. While this direction is not without risk, the
Managing Trustee feels it is in the best interest of the Shareholders.
<PAGE>
PART II
-------
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
NONE
ITEM 2. CHANGES IN SECURITIES.
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF HOLDERS OF BENEFICIAL INTEREST
NONE
ITEM 5. OTHER INFORMATION.
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
NONE FILED FOR THE QUARTER
<PAGE>
Signatures
Pursuant to the requirements of Section 13 of 15(d) 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.
NATIONAL PROPERTIES INVESTMENT TRUST
Date: ___________________ By: __________________________________
Peter M. Stein
Managing Trustee
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated:
Signature Title Date
___________________________ Managing Trustee ______________
Peter M. Stein
___________________________ Trustee ______________
Jay W. Goldman
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF NATIONAL PROPERTIES INVESTMENT TRUST AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 75,054
<SECURITIES> 0
<RECEIVABLES> 23,196
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 136,811
<PP&E> 1,565,305
<DEPRECIATION> 648,260
<TOTAL-ASSETS> 1,053,856
<CURRENT-LIABILITIES> 46,771
<BONDS> 579,186
0
0
<COMMON> 0
<OTHER-SE> 11,735,447
<TOTAL-LIABILITY-AND-EQUITY> 1,053,856
<SALES> 0
<TOTAL-REVENUES> 260,265
<CGS> 0
<TOTAL-COSTS> 184,054
<OTHER-EXPENSES> 73,933
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,618
<INCOME-PRETAX> 3,620
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,620
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,620
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
