<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, 1998 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 303, 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, 1998
par value one dollar per share 3,946,327
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USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - March 31, 1998 and
December 31, 1997 ................................. 3
Statements of Income - For the Three Months
Ended March 31, 1998 and 1997 ..................... 4
Statements of Cash Flows - For the Three
Months Ended March 31, 1998 and 1997 .............. 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,
1998 1997
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $3,017,316 at March 31,
1998 and $2,859,213 at December 31, 1997 $ 24,805,334 $ 24,939,462
Notes receivable 726,000 726,000
---------- -----------
25,531,334 25,665,462
Cash and cash equivalents 115,510 168,236
Other assets 299,144 263,728
----------- -----------
Total assets $ 25,945,988 $ 26,097,426
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 6,110,123 $ 6,145,044
Accounts payable 68,793 30,688
Lease deposits 67,157 67,157
----------- -----------
Total liabilities 6,246,073 6,242,889
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 7,500,000 shares;
3,946,327 shares outstanding at March 31,
1998 and 3,960,855 shares outstanding at
December 31, 1997 $ 3,946,327 $ 3,960,855
Additional paid-in capital 29,962,584 29,998,871
Distributions in excess of cumulative
net income (14,208,996) (14,105,189)
----------- -----------
Total shareholders' equity 19,699,915 19,854,537
----------- -----------
Total liabilities and shareholders' equity $ 25,945,988 $ 26,097,426
=========== ===========
See notes to financial statements.
<PAGE> 4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
March 31,
1998 1997
---------- ----------
Revenues:
Rent $ 826,767 $ 593,534
Interest 17,915 61,788
---------- ----------
844,682 655,322
---------- ----------
Expenses:
Operating expenses 71,679 77,470
Property taxes 47,913 52,803
Property management fees 12,000 12,000
Interest 130,104 40,295
Depreciation and amortization 162,000 150,000
General and administative 93,632 92,897
---------- ----------
517,328 425,465
---------- ----------
Net income $ 327,354 $ 229,857
========== ==========
Net income per share of beneficial interest $ 0.08 $ 0.06
========== ==========
See notes to financial statements.
<PAGE> 5
USA REAL ESTATE INVESTMENT TRUST
Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1998 1997
---------- ----------
OPERATING ACTIVITIES:
Net income $ 327,354 229,857
---------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 162,000 150,000
Changes in other assets and liabilities:
Increase in other assets (35,416) (48,252)
(Decrease) Increase in accounts payable 38,105 (6,949)
---------- ----------
Total adjustments to income 164,689 94,799
---------- ----------
Net cash provided by
operating activities 492,043 324,656
INVESTING ACTIVITIES:
Improvements to properties (23,975) (121,483)
---------- ----------
Net cash used by investing activities (23,975) (121,483)
FINANCING ACTIVITIES:
Redemption of shares (50,815) (41,139)
Payments on long-term notes payable (34,920) (13,448)
Distributions paid (435,059) (403,992)
---------- ----------
Net cash used by financing activities (520,794) (458,579)
---------- ----------
Net decrease in cash (52,726) (255,406)
Cash and cash equivalents at beginning
of period 168,236 3,909,665
---------- ----------
Cash and cash equivalents at end of period $ 115,510 $ 3,654,259
========== ==========
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, 1998, and the
results of its operations and cash flows for the three months
ended March 31, 1998 and 1997.
The accounting policies followed by the Trust are set forth in
Note 1 to the Trust's financial statements in the 1997 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 revenues increased $233,193 or 39 percent for the three months
ended March 31, 1998 compared to the same period in 1997 primarily
due to the purchase of 1590 Sycamore Drive in Hercules, California
in May, 1997.
Interest revenues decreased $43,873 or 71 percent for the three
months ended March 31, 1998 compared to the same period in 1997 due
to lower average cash balances.
Interest expense increased $89,809 or 228 percent for the three
months ended March 31, 1998 ocmpared to the same period in 1997 due
to a higher level of outstanding debt during 1998.
Net income was $327,354 or 8 cents per share for the three months
ended March 31, 1998 compared to $229,857 or 6 cents per share for
the same period in 1997.
The Trust paid distributions of 11 cents per share for the three
months ended March 31, 1998 and 10 cents per share for the same
period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Trust expects that operating income, borrowings collateralized
by properties, cash in the bank, proceeds from the sale of
properties and collections on notes receivable 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 11, 1998 Gregory Crissman
-------------------- ----------------------------------------
Date Gregory Crissman,
Chairman
May 11, 1998 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, 1998 (Unaudited) and the
Statement of Income for the Three Months Ended March 31, 1998 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 115,510
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 414,654
<PP&E> 28,548,650
<DEPRECIATION> 3,017,316
<TOTAL-ASSETS> 25,945,988
<CURRENT-LIABILITIES> 135,950
<BONDS> 0
<COMMON> 3,946,327
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,945,988
<SALES> 844,682
<TOTAL-REVENUES> 844,682
<CGS> 0
<TOTAL-COSTS> 517,328
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 130,104
<INCOME-PRETAX> 327,354
<INCOME-TAX> 0
<INCOME-CONTINUING> 327,354
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 327,354
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
