<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 June 30, 1996 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)
One Scripps Drive, 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 June 30, 1996
par value one dollar per share 4,060,908
<PAGE> 2
USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - June 30, 1996 and
December 31, 1995 ................................. 3
Statements of Income - For the Three Months
Ended June 30, 1996 and 1995 ...................... 4
Statements of Income - For the Six Months
Ended June 30, 1996 and 1995 ...................... 5
Statements of Cash Flows - For the Six
Months Ended June 30, 1996 and 1995 ............... 6
Notes to Financial Statements ....................... 7
Management's Discussion and Analysis of the
Financial Condition and Results of Operations ..... 8
Part II. Other Information ................................... 8
<PAGE> 3
PART I. FINANCIAL INFORMATION
USA REAL ESTATE INVESTMENT TRUST
Balance Sheets
June 30, December 31,
1996 1995
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $2,433,193 at June 30,
1996 and $2,218,805 at December 31, 1995
and valuation allowances of $5,060,000
at June 30, 1996 and $5,837,000 at
December 31, 1995 $ 20,739,206 $ 21,153,860
Notes receivable 739,595 818,869
---------- -----------
21,478,801 21,972,729
Cash 1,437,768 1,487,661
Other assets 365,813 341,333
----------- -----------
Total assets $ 23,282,382 $ 23,801,723
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 2,073,603 $ 2,098,919
Accounts payable and accrued expenses 52,361 35,320
Lease deposits 70,371 70,371
----------- -----------
Total liabilities 2,196,335 2,204,610
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 7,500,000 shares;
4,060,908 shares outstanding at June 30,
1996 and 4,120,430 at December 31, 1995 $ 4,060,908 $ 4,120,430
Additional paid-in capital 30,244,342 30,395,534
Distributions in excess of cumulative
net income (13,219,203) (12,918,851)
----------- -----------
Total shareholders' equity 21,086,047 21,597,113
----------- -----------
Total liabilities and shareholders' equity $ 23,282,382 $ 23,801,723
=========== ===========
See accompanying notes to financial statements.
<PAGE> 4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
June 30,
1996 1995
---------- ----------
Revenues:
Rent $ 646,229 $ 690,862
Interest 31,312 39,658
---------- ----------
677,541 730,520
---------- ----------
Expenses:
Operating expenses 76,712 83,565
Property taxes 63,501 53,886
Property management fees 12,000 15,000
Interest 40,764 71,534
Depreciation and amortization 152,000 162,070
General and administative 99,997 178,457
Legal settlement 0 250,000
---------- ----------
444,974 814,512
---------- ----------
Net income (loss) before gain
on disposition of investments $ 232,567 $ (83,992)
---------- ----------
Gain on disposition of investments 0 411,254
---------- ----------
Net income $ 232,567 $ 327,262
========== ==========
Net income per share of beneficial interest $ 0.06 $ 0.08
========== ==========
See accompanying notes to financial statements.
<PAGE> 5
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Six Months Ended
June 30,
1996 1995
---------- ----------
Revenues:
Rent $ 1,293,088 $ 1,418,220
Interest 65,756 62,337
---------- ----------
1,358,844 1,480,557
---------- ----------
Expenses:
Operating expenses 147,890 163,733
Property taxes 129,213 108,351
Property management fees 24,000 30,000
Interest 81,767 165,421
Depreciation and amortization 308,000 328,790
General and administrative 230,970 372,424
Legal settlement 0 250,000
---------- ----------
$ 921,840 $ 1,418,719
---------- ----------
Net income before gain
on disposition of investments 437,004 61,838
Gain on disposition of investments 0 411,254
---------- ----------
Net income $ 437,004 $ 473,092
========== ==========
Net income per share of beneficial interest $ 0.11 $ 0.11
========== ==========
See accompanying notes to financial statements.
<PAGE> 6
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 437,004 473,092
---------- ----------
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 308,000 328,790
Gain on disposition of investment
properties 0 (411,254)
Changes in other assets and liabilities:
Decrease (increase) in other assets (24,480) 137,674
Increase (decrease) in accounts
payable and accrued expenses 17,041 (47,533)
Decrease in lease deposits 0 (4,460)
---------- ----------
Total adjustments to income 300,561 3,217
---------- ----------
Net cash provided by
operating activities 737,565 476,309
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of rental properties 245,882 3,799,241
Improvements to rental properties (139,228) (662,917)
Collections on notes receivable 79,274 0
---------- ----------
Net cash provided by
investing activities 185,928 3,136,324
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of shares (210,714) (72,760)
Principal payments on long-term notes payable (25,316) (1,051,419)
Distributions paid (737,356) (626,725)
---------- ----------
Net cash used by
financing activities (973,386) (1,750,904)
---------- ----------
Net increase (decrease) in cash (49,893) 1,861,729
Cash and cash equivalents, beginning of period 1,487,661 378,411
---------- ----------
Cash and cash equivalents, end of period $ 1,437,768 $ 2,240,140
========== ==========
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 June 30, 1996, and the results of its operations
for the six months ended June 30, 1996 and 1995 and cash flows for the six
months ended June 30, 1996 and 1995.
The accounting policies followed by the Trust are set forth in Note 1 to
the Trust's financial statements in the 1995 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 decreased $44,633 and $125,132 for the three months and six
months ended June 30, 1996, respectively, compared to the same periods in
1995. This decrease is primarily attributed to the sale of 1450 Hatch Road
in Ceres, California in May, 1995.
Interest expense decreased $30,770 and $83,654 for the three months and six
months ended June 30, 1996, respectively, compared to the same periods in
1995, due to lower outstanding borrowings and lower interest rates.
General and administrative expense decreased $78,460 and $141,454 for the
three months and six months ended June 30, 1996, respectively, compared to
the same periods in 1995 primarily as a result of fewer legal fees in 1996.
The gain on disposition of investments for the three months and six months
ended June 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
properties, collections on notes receivable, and borrowings collateralized by
specific properties will provide for its future liquidity and capital
resource needs.
PART II. OTHER INFORMATION
USA REAL ESTATE INVESTMENT TRUST
ITEM 5: OTHER INFORMATION:
On May 13, 1996, the Annual Meeting of the Shareholders of the Trust was held
in Sacramento, California. At said meeting, the shareholders renominated and
relected Gregory E. Crissman, Benjamin A. Diaz, William M. Gallagher and
Joyce A. Marks as trustees of the Trust.
ITEM 6: REPORTS ON FORM 8-K
None.
<PAGE> 9
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
----------------------------------------
August 7, 1996 Gregory Crissman
-------------------- ----------------------------------------
Date Gregory Crissman
Chairman
August 7, 1996 Benjamin Diaz
-------------------- ----------------------------------------
Date Benjamin Diaz
Trustee
<PAGE> 10
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 June 30, 1996 (Unaudited) and the
Statement of Income for the Six Months Ended June 30, 1996 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,437,768
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,437,768
<PP&E> 28,232,399
<DEPRECIATION> 2,433,193
<TOTAL-ASSETS> 23,282,382
<CURRENT-LIABILITIES> 106,173
<BONDS> 0
<COMMON> 4,060,908
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,282,382
<SALES> 1,358,844
<TOTAL-REVENUES> 1,358,844
<CGS> 0
<TOTAL-COSTS> 921,840
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,767
<INCOME-PRETAX> 437,004
<INCOME-TAX> 0
<INCOME-CONTINUING> 437,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 437,004
<EPS-PRIMARY> 0.110
<EPS-DILUTED> 0.110
</TABLE>
