<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 March 31, 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 March 31, 1996
par value one dollar per share 4,116,829
<PAGE> 2
USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - March 31, 1996 and
December 31, 1995 ................................. 3
Statements of Income - For the Three Months
Ended March 31, 1996 and 1995 ..................... 4
Statements of Cash Flows - For the Three
Months Ended March 31, 1996 and 1995 .............. 5
Notes to Financial Statements ....................... 6
Management's Discussion and Analysis of the
Financial Condition and Results of Operations ..... 7
Part II. Other Information ................................... 8
<PAGE> 3
PART I. FINANCIAL INFORMATION
USA REAL ESTATE INVESTMENT TRUST
Balance Sheets
March 31, December 31,
1996 1995
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $2,374,805 at March 31,
1996 and $2,218,805 at December 31, 1995
and valuation allowances of $5,837,000
at March 31, 1996 and $5,837,000 at
December 31, 1995 $ 21,108,121 $ 21,153,860
Notes receivable 779,726 818,869
---------- -----------
21,887,847 21,972,729
Cash and cash equivalents 1,256,019 1,487,661
Other assets 464,261 341,333
----------- -----------
Total assets $ 23,608,127 $ 23,801,723
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 2,086,381 $ 2,098,919
Accounts payable 35,595 35,320
Lease deposits 70,371 70,371
----------- -----------
Total liabilities 2,192,347 2,204,610
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 7,500,000 shares;
4,116,829 shares outstanding at March 31,
1996 and 4,120,430 shares outstanding at
December 31, 1995 $ 4,116,829 $ 4,120,430
Additional paid-in capital 30,384,143 30,395,534
Distributions in excess of cumulative
net income (13,085,192) (12,918,851)
----------- -----------
Total shareholders' equity 21,415,780 21,597,113
----------- -----------
Total liabilities and shareholders' equity $ 23,608,127 $ 23,801,723
=========== ===========
See notes to financial statements.
<PAGE> 4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
March 31,
1996 1995
---------- ----------
Revenues:
Rent $ 646,859 $ 727,358
Interest 34,444 22,679
---------- ----------
681,303 750,037
---------- ----------
Expenses:
Operating expenses 71,178 87,493
Property taxes 65,712 54,465
Property management fees 12,000 15,000
Interest 41,003 93,887
Depreciation and amortization 156,000 166,720
General and administative 130,973 193,967
---------- ----------
476,866 611,532
---------- ----------
Net income $ 204,437 $ 138,505
========== ==========
Net income per share of beneficial interest $ 0.05 $ 0.03
========== ==========
See notes to financial statements.
<PAGE> 5
USA REAL ESTATE INVESTMENT TRUST
Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1996 1995
---------- ----------
OPERATING ACTIVITIES:
Net income $ 204,437 138,505
---------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 156,000 166,720
Changes in other assets and liabilities:
Increase in other assets (122,928) (138,327)
Increase in accounts payable 275 33,080
Decrease in lease deposits 0 (4,460)
---------- ----------
Total adjustments to income 33,347 57,013
---------- ----------
Net cash provided by
operating activities 237,784 195,518
INVESTING ACTIVITIES:
Improvements to properties (110,261) (79,118)
Collections on notes receivable 39,143 0
---------- ----------
Net cash used by investing activities (71,118) (79,118)
FINANCING ACTIVITIES:
Redemption of shares (14,992) 0
Payments on long-term notes payable (12,538) (25,356)
Distributions paid (370,778) (313,375)
---------- ----------
Net cash used by financing activities (398,308) (338,731)
---------- ----------
Net decrease in cash (231,642) (222,331)
Cash and cash equivalents at beginning
of period 1,487,661 378,411
---------- ----------
Cash and cash equivalents at end of period $ 1,256,019 $ 156,080
========== ==========
See notes to financial statements.
<PAGE> 6
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 March 31, 1996, and the
results of its operations and cash flows for the three months
ended March 31, 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> 7
USA REAL ESTATE INVESTMENT TRUST
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Rent decreased $80,499 for the three months ended March 31, 1996
compared to the same period in 1995 due to the sale of 1450 Hatch
Road in Ceres, California in May, 1995.
Interest expense decreased $52,884 for the three months ended
March 31, 1996, compared to the same period in 1995, due to
the significantly lower outstanding indebtedness and
significantly lower interest rates.
General and administrative expense decreased $62,994 for the
three months ended March 31, 1996, compared to the same period
in 1995, primarily as a result of fewer legal fees in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Trust expects that operating income, cash in the bank,
collections on notes receivable, proceeds from the sale of
properties, and borrowings collateralized by properties will
adequately meet its liquidity and capital resource requirements
in the future.
<PAGE> 8
PART 11. OTHER INFORMATION
USA REAL ESTATE INVESTMENT 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
----------------------------------------
May 6, 1996 Gregory Crissman
-------------------- ----------------------------------------
Date Gregory Crissman,
Chairman
May 6, 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 March 31, 1996 (Unaudited) and the
Statement of Income for the Three Months Ended March 31, 1996 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,256,019
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,256,019
<PP&E> 29,319,926
<DEPRECIATION> 2,374,805
<TOTAL-ASSETS> 23,608,127
<CURRENT-LIABILITIES> 88,187
<BONDS> 0
<COMMON> 4,116,829
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,608,127
<SALES> 681,303
<TOTAL-REVENUES> 681,303
<CGS> 0
<TOTAL-COSTS> 476,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,003
<INCOME-PRETAX> 204,437
<INCOME-TAX> 0
<INCOME-CONTINUING> 204,437
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 204,437
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
