<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, 1999 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, PMB 314, PO Box 255427, Sacramento, California 95865-5427
(Address of registrant's principal executive offices) (Zip Code)
1-800-308-4532
(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, 1999
par value one dollar per share 125,025
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USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - June 30, 1999 and
December 31, 1998 ................................. 3
Statements of Income - For the Three Months
Ended June 30, 1999 and 1998 ...................... 4
Statements of Income - For the Six Months
Ended June 30, 1999 and 1998 ...................... 5
Statements of Cash Flows - For the Six
Months Ended June 30, 1999 and 1998 ............... 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,
1999 1998
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $3,225,279 at June 30,
1999 and $3,421,976 at December 31, 1998 $ 24,703,970 $ 24,606,111
Notes receivable 1,076,000 726,000
---------- -----------
25,779,970 25,332,111
Cash 26,153 24,097
Other assets 234,269 302,272
----------- -----------
Total assets $ 26,040,392 $ 25,658,480
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 6,619,594 $ 5,999,580
Line of credit 1,242,000 730,000
Accounts payable and accrued expenses 0 5,460
Lease deposits 62,282 62,282
----------- -----------
Total liabilities 7,923,876 6,797,322
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 250,000 shares;
125,025 shares outstanding at June 30,
1999 and 128,056 at December 31, 1998 $ 125,025 $ 128,056
Additional paid-in capital 32,994,634 33,363,866
Distributions in excess of cumulative
net income (15,003,143) (14,630,764)
----------- -----------
Total shareholders' equity 18,116,516 18,861,158
----------- -----------
Total liabilities and shareholders' equity $ 26,040,392 $ 25,658,480
=========== ===========
See accompanying notes to financial statements.
<PAGE> 4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
June 30,
1999 1998
---------- ----------
Revenues:
Rent $ 797,943 $ 793,573
Interest 23,987 15,763
---------- ----------
821,930 809,336
---------- ----------
Expenses:
Operating expenses 73,473 73,366
Property taxes 48,957 47,913
Property management fees 13,200 12,800
Interest 118,695 130,125
Depreciation and amortization 162,000 162,000
General and administative 75,835 69,165
---------- ----------
492,160 495,369
---------- ----------
Net income $ 329,770 $ 313,967
========== ==========
Net income per share of beneficial interest $ 2.63 $ 2.40
========== ==========
See accompanying notes to financial statements.
<PAGE> 5
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Six Months Ended
June 30,
1999 1998
---------- ----------
Revenues:
Rent $ 1,601,331 $ 1,620,340
Interest 39,113 33,678
---------- ----------
1,640,444 1,654,018
---------- ----------
Expenses:
Operating expenses 147,183 145,045
Property taxes 99,957 95,826
Property management fees 26,400 24,800
Interest 245,620 260,229
Depreciation and amortization 324,000 324,000
General and administrative 165,425 162,797
---------- ----------
$ 1,008,585 $ 1,012,697
---------- ----------
Net income before loss on sale of rental properties 631,859 641,321
Loss on sale of rental properties 92,558 0
---------- ----------
Net income $ 539,301 $ 641,321
========== ==========
Net income per share of beneficial interest $ 4.26 $ 4.80
========== ==========
See accompanying notes to financial statements.
<PAGE> 6
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 539,301 641,321
---------- ----------
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 324,000 324,000
Loss on sale of rental properties 92,558 0
Changes in other assets and liabilities:
Increase (decrease) in other assets 68,003 (78,066)
Increase (decrease) in accounts
payable and accrued expenses (5,460) (6,663)
---------- ----------
Total adjustments to income 479,101 239,271
---------- ----------
Net cash provided by
operating activities 1,018,402 880,592
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of and improvements to
rental properties (3,550,994) (77,598)
Increase in notes receivable (350,000) 0
Proceeds from the sale of properties 3,036,577 0
---------- ----------
Net cash used by
investing activities (864,417) (77,598)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term notes payable 2,600,000 0
Line of credit 512,000 155,000
Redemption of shares (372,263) (144,621)
Principal payments on long-term notes payable (1,979,986) (70,576)
Distributions paid (911,680) (903,042)
---------- ----------
Net cash used by
financing activities (151,929) (963,239)
---------- ----------
Net increase (decrease) in cash 2,056 (160,245)
Cash and cash equivalents, beginning of period 24,097 168,236
---------- ----------
Cash and cash equivalents, end of period $ 26,153 $ 7,991
========== ==========
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, 1999, and the results of its operations
for the six months ended June 30, 1999 and 1998 and cash flows for the six
months ended June 30, 1999 and 1998.
The accounting policies followed by the Trust are set forth in Note 1 to
the Trust's financial statements in the 1998 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
The $92,558 or $0.73 per share loss on sale of rental properties was attributed
to the sale of 170-174 West Shaw Avenue in Clovis, California in March, 1999.
Net income was $2.63 and $4.26 per share for the three months and six months
ended June 30, 1999, repsectively, compared to $2.40 and $4.80 for the three
months and six months ended June 30, 1998, respectively.
The Trust paid distributions of $3.60 and $7.20 per share for the three months
and six months ended June 30, 1999, respectively, compared to $3.60 and $6.90
per share for the three months and six months ended June 30, 1998, respectively.
CAPITAL RESOURCES AND LIQUIDITY
The Trust expects 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 12, 1999, the Annual Meeting of the Shareholders of the Trust was held
in Sacramento, California. The three trustees were re-elected: Gregory E.
Crissman, Benjamin A. Diaz and Joyce A. Marks.
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 14, 1999 Gregory Crissman
-------------------- ----------------------------------------
Date Gregory Crissman
Chairman
August 14, 1999 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, 1999 (Unaudited) and the
Statement of Income for the Six Months Ended June 30, 1999 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 26,153
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,153
<PP&E> 27,929,249
<DEPRECIATION> 3,225,279
<TOTAL-ASSETS> 26,040,392
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 125,025
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 26,040,392
<SALES> 1,640,444
<TOTAL-REVENUES> 1,640,444
<CGS> 0
<TOTAL-COSTS> 1,008,585
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 245,620
<INCOME-PRETAX> 631,859
<INCOME-TAX> 0
<INCOME-CONTINUING> 631,859
<DISCONTINUED> 92,558
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 539,301
<EPS-BASIC> 4.260
<EPS-DILUTED> 4.260
</TABLE>
