<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended September 30, 1995 Commission file number 0-16508
USA REAL ESTATE INVESTMENT TRUST
(Exact Name of Registrant as specified in its Charter)
California 68-0109347
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 Scripps Avenue, Suite 201, Sacramento, California 95825
(Address of registrant's principal executive offices) (Zip Code)
(916) 564-4532
(Registrant's telephone number, including area code)
COMMONWEALTH EQUITY TRUST USA
(Former name)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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
such filing requirements for the past 90 days.
/ X/ Yes / / No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the latest practical date.
Certificates of Beneficial Interest Outstanding at September 30, 1995
par value one dollar per share 4,153,469
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USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - September 30, 1995 and
December 31, 1994 ................................. 3
Statements of Income - For the Three Months
Ended September 30, 1995 and 1994 ................. 4
Statements of Income - For the Nine Months
Ended September 30, 1995 and 1994 ................. 5
Statements of Cash Flows - For the Nine
Months Ended September 30, 1995 and 1994 .......... 6
Notes to Financial Statements ....................... 7
Management's Discussion and Analysis of the
Financial Condition and Results of Operations ..... 8
Part II. Other Information ................................... 9
<PAGE> 3
PART I. FINANCIAL INFORMATION
USA REAL ESTATE INVESTMENT TRUST
Balance Sheets
September 30, December 31,
1995 1994
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $2,148,682 at September 30,
1995 and $1,903,027 at December 31, 1994
and valuation allowances of $5,713,000
at September 30, 1995 and $6,051,000 at
December 31, 1994 $ 21,109,416 $ 23,983,095
Notes receivable 857,051 966,047
---------- -----------
21,966,467 24,949,142
Cash 1,981,654 378,411
Other assets 485,961 596,319
----------- -----------
Total assets $ 24,434,082 $ 25,923,872
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 2,268,052 $ 3,344,907
Accounts payable and accrued expenses 93,083 133,003
Lease deposits 70,371 73,658
----------- -----------
Total liabilities 2,431,506 3,551,568
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 7,500,000 shares;
4,153,469 shares outstanding at September
30, 1995 and 4,177,723 at December 31, 1994 $ 4,153,469 $ 4,177,723
Additional paid-in capital 30,487,172 30,535,678
Distributions in excess of cumulative
net income (12,638,065) (12,341,097)
----------- -----------
Total shareholders' equity 22,002,576 22,372,304
----------- -----------
Total liabilities and shareholders' equity $ 24,434,082 $ 25,923,872
=========== ===========
See accompanying notes to financial statements.
<PAGE> 4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income (Loss)
(Unaudited)
Three Months Ended
September 30,
1995 1994
---------- ----------
Revenues:
Rent $ 640,306 $ 569,791
Interest 47,236 49,089
---------- ----------
687,542 618,880
---------- ----------
Expenses:
Operating expenses 72,970 223,658
Property taxes 54,970 69,985
Property management fees 12,000 36,417
Interest 54,314 146,979
Depreciation and amortization 186,210 151,341
General and administative 94,091 264,843
Legal settlement 0 0
---------- ----------
474,555 893,223
---------- ----------
Net income (loss) before loss on disposition
of note receivable and gain on sale of
rental properties $ 212,987 $ (274,343)
Loss on disposition of note receivable 0 0
Gain on sale of rental properties 0 0
---------- ----------
Net income (loss) $ 212,987 $ (274,343)
========== ==========
Net income (loss) per share of beneficial interest $ 0.05 $ ( 0.07)
========== ==========
See accompanying notes to financial statements.
<PAGE> 5
USA REAL ESTATE INVESTMENT TRUST
Statements of Income (Loss)
(Unaudited)
Nine Months Ended
September 30,
1995 1994
---------- ----------
Revenues:
Rent $ 2,058,526 $ 2,030,831
Interest 109,573 184,527
---------- ----------
2,168,099 2,215,358
---------- ----------
Expenses:
Operating expenses 236,703 767,929
Property taxes 163,321 121,340
Property management fees 42,000 184,515
Interest 219,735 436,295
Depreciation and amortization 515,000 453,544
General and administrative 466,515 605,076
Legal settlement 250,000 0
---------- ----------
$ 1,893,274 $ 2,568,699
---------- ----------
Net income (loss) before loss on disposition
of note receivable and gain on sale of
rental properties 274,825 (353,341)
Loss on disposition of note receivable 0 (250,000)
Gain on sale of rental properties 411,254 0
---------- ----------
Net income (loss) $ 686,079 $ (603,341)
========== ==========
Net income (loss) per share of beneficial interest $ 0.19 $ (0.14)
========== ==========
See accompanying notes to financial statements.
<PAGE> 6
Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
1995 1994
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 686,079 (603,340)
---------- ----------
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 515,000 449,045
Loss on disposition of note receivable 0 403,387
Gain on disposition of rental
properties (411,254) 0
Changes in other assets and liabilities:
Decrease (increase) in other assets 110,358 (57,365)
Increase (decrease) in accounts
payable and accrued expenses (39,920) 95,386
Decrease in lease deposits (3,287) (7,321)
---------- ----------
Total adjustments to income 170,897 883,132
---------- ----------
Net cash provided by
operating activities 856,976 279,792
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to rental properties (1,032,562) (85,350)
Proceeds from the sale of rental properties 3,799,241 0
Collections on note receivable 108,996 248,673
---------- ----------
Net cash provided by
investing activities 2,875,675 163,323
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of shares (72,760) 0
Principal payments on long-term notes payable (1,076,855) (47,449)
Distributions paid (979,793) (783,375)
---------- ----------
Net cash used by
financing activities (2,129,408) (830,824)
---------- ----------
Net increase (decrease) in cash 1,603,243 (387,709)
Cash, beginning of period 378,411 1,012,594
---------- ----------
Cash, end of period $ 1,981,654 $ 624,885
========== ==========
See accompanying notes to financial statements.
<PAGE> 7
USA REAL ESTATE INVESTMENT TRUST
Notes to Financial Statements
1. In the opinion of the Trust, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly
the Trust's financial position as of September 30, 1995, and the
results of its operations for the nine months ended September 30,
1995 and 1994 and cash flows for the nine months ended September 30,
1995 and 1994.
The accounting policies followed by the Trust are set forth in
Note 1 to the Trust's financial statements in the 1994 Form 10-K,
which are incorporated herein by reference.
2. In 1987, the Trust elected to be taxed as a real estate investment
trust and, as such, will not be taxed on that portion of its
taxable income which is distributed to shareholders provided that
at least 95% of its real estate investment trust taxable income
is distributed.
The Trust intends to continue to qualify as a real estate
investment trust and, accordingly, no provision for income taxes
has been made in the financial statements.
<PAGE> 8
USA REAL ESTATE INVESTMENT TRUST
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Rent revenues increased $70,515 and $27,695 for the three months
and nine months ended September 30, 1995, respectively, compared to
the same periods in 1994.
Interest revenues decreased $1,853 and $74,954 for the three months
and nine months ended September 30, 1995, respectively, compared
to the same periods in 1994, primarily due to the collection of
the $940,000 note receivable collateralized by 151 and 175
Opportunity Street in December, 1994.
Operating expenses decreased $150,688 and $501,226 for the three
months and nine months ended September 30, 1995, respectively,
compared to the same periods in 1994. The decrease is primarily
due to the cost to repair uninsured earthquake damage at 19401
Parthenia Street, in Northridge, California, incurred in 1994.
Repairs related to the earthquake damage were $83,048 and $373,464
for the three months and nine months ended September 30, 1994,
respectively.
Property management decreased $24,417 and $79,340 for the three
months and nine months ended September 30, 1995, respectively,
compared to the same periods in 1994, because of the termination
of the former property management agreement and the hiring of a new
property manager who provided similar service at a reduced cost.
Interest expense decreased $92,665 and $216,560 for the three
months and nine months ended September 30, 1995, respectively,
compared to the same periods in 1994, due to lower outstanding
borrowings and lower interest rates.
The legal settlement was attributed to the settlement of all
litigation with its former advisor. The Trust is not now engaged
in litigation in any court with any party.
The loss on disposition of investments for the nine months ended
September 30, 1994 was attributed to the payoff of a note
receivable in June, 1994, which had been delinquent since 1991.
The gain on sale of rental properties for the nine months ended
September 30, 1995, was attributed to the sale of 1450 Hatch Road
in Ceres, California in May, 1995.
CAPITAL RESOURCES AND LIQUIDITY
The Trust anticipates that operating income, proceeds from the sale
of rental properties, collections on notes receivable, and
borrowings collateralized by specific properties will provide for
its future liquidity and capital resource needs.
<PAGE> 9
PART II. OTHER INFORMATION
USA REAL ESTATE INVESTMENT TRUST
ITEM 6: REPORTS ON FORM 8-K
The Trust filed no reports on Form 8-K during the quarter ended
September 30, 1995.
<PAGE> 10
USA REAL ESTATE INVESTMENT TRUST
Signatures
Pursuant to the requirement 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.
USA Real Estate Investment Trust
----------------------------------------
October 24, 1995 Gregory E. Crissman
-------------------- ----------------------------------------
Date Gregory E. Crissman
Chairman
October 24, 1995 Benjamin A. Diaz
-------------------- ----------------------------------------
Date Benjamin A. Diaz
Trustee
<PAGE> 11
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Financial Condition at September 30, 1995 (Unaudited) and
the Statement of Income for the Nine Months Ended September 30, 1995
(Unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,984,654
<SECURITIES> 0
<RECEIVABLES> 55,142
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,036,796
<PP&E> 28,971,098
<DEPRECIATION> 2,148,682
<TOTAL-ASSETS> 24,434,082
<CURRENT-LIABILITIES> 93,083
<BONDS> 0
<COMMON> 4,153,469
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,434,082
<SALES> 2,168,099
<TOTAL-REVENUES> 2,168,099
<CGS> 0
<TOTAL-COSTS> 1,893,274
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 219,735
<INCOME-PRETAX> 686,079
<INCOME-TAX> 0
<INCOME-CONTINUING> 524,825
<DISCONTINUED> 161,254
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 686,079
<EPS-PRIMARY> 0.190
<EPS-DILUTED> 0.190
</TABLE>
